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Author's profile photo Komathi T

S/4HANA Cloud Two-Tier ERP FAQ’s

Welcome back to the next blog in the SAP S/4HANA Cloud 2-tier ERP blog series. 

In this blog let us look into the key topics that are covered in the two-tier ERP knowledge base article that has been published with the two-tier ERP FAQ’s (Link – SAP Note 2603912).

This blog is to introduce you to the knowledge base article that was published as part of SAP note 2603912, which gives you FAQ’s in two-tier ERP. These FAQ’s have been from our various customer projects, workshops and our own learning working in the two-tier ERP projects.

Before getting into the details of the knowledge base article, let us first understand what is two-tier ERP and how is it going to benefit the customer.

Two-Tier ERP

SAP’s Two-Tier deployment provides enterprises with an opportunity to standardize the end to end business processes across multiple tiers. you could correlate multiple tiers to headquarters and subsidiaries which are typically having two different landscapes since they are two different legal entities. Both entities may belong to same corporate group and hence would want to run seamless business process across both headquarters and subsidiaries.

Utilizing SAP S/4HANA Cloud for their Tier 2, customers get the benefit of Software as a Service (SaaS) which can be implemented by standard template thereby reducing the cost, removing shadowed IT by having pre-configured solution.

Two-Tier ERP FAQ

In this FAQ, I would present to you the various questions that you may have in two-tier ERP starting from the very generic questions to the LOB specific questions.  I have articulated this from the learnings that we have had during the customer workshops and during the implementation phase of a project.

The FAQ has below sections.

  1. General

The generic queries with respect to Two-tier ERP like the definition, SAP’s offering in the two-tier ERP space, release details, activate methodology, two-tier assets.

  1. Implementation considerations

This section covers the implementation aspects of the project like activate methodology, fit to standard approach for two-tier to validate the customer requirements against the product scope, data migration activities involved in a two-tier project, localization content for two-tier ERP etc.

  1. Finance

Under finance the FAQ is covered under 3 umbrellas namely –

  • Visibility scenarios – Plan data upload and cash visibility of subsidiary at headquarters.
  • Consolidation scenarios – Consolidation options available in a two-tier deployment model
  • Customer payments – Centralized customer payments application for headquarters and subsidiaries.
  1. Manufacturing

Under manufacturing the below scenarios are covered.

Basic Manufacturing

  • Subsidiary as a production unit and internal supplier to HQ
  • 3rd party Warehouse management integration
  • Integration with MES
  1. Procurement

In manufacturing the below scenarios are covered.

External & Basic Internal procurement

  • Procurement directly by Subsidiary with process visibility to HQ
  • HQ as internal supplier to subsidiary via central contract
  • Replenishment
  1. Sales

In sales, the below scenarios are covered.

Subsidiary as Local Sales Office

  • Sale from Local (Goods & basic Services)
  • Sale from Central Stock (drop shipment from HQ)
  • Returns handling with Credit & Debit Memos support
  • Sale from HQ Direct procurement from Subsidiary

In addition to the above topics, the FAQ also covers the master data and analytics approach in a two-tier deployment model.

Related information :

The latest release in Two-Tier ERP is SAP S/4HANA Cloud 1802 and the release highlights for the same can be found in the blog – Two-tier ERP 1802 release highlights

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      Author's profile photo Julien Delvat
      Julien Delvat

      Thanks for this article. It might be worth mentioning the corresponding scope item:

      Subsidiary Integration of SAP S/4HANA Cloud to Central Finance (1W4)

      How about the case when we want to setup the headquarters in S/4HANA Cloud Entreprise Management? Some headquarters are just financial holdings and this solution would be simpler than setting up S/4HANA On-Premise with Central Finance in a cloud hosting.

      Author's profile photo Manish BHANDARI
      Manish BHANDARI

      Dear Julien,


      I have the same question. Did you get any feedback on this?



      Manish Bhandari

      Author's profile photo Julien Delvat
      Julien Delvat

      Hi Manish,

      The official position here is that this scenario is not supported with Central Finance but with Group Reporting, available in the cloud or on-premise.

      If you're interested, check out this new openSAP course on two-tier ERP:

      Author's profile photo Manish BHANDARI
      Manish BHANDARI


      Dear Julien,

      Thanks for sharing this. The course begins in a few days. I was planning to position this scenario to an existing ECC customer - so that they can begin their cloud journey. So, if I understood you correctly, we can offer this to a customer, where all LOB's remain on S/4OP or ERP and only Finance moves to S/4HC. Did I understand your feedback correctly?


      Thanks for your support.

      Warm Regards,

      Manish Bhandari

      Author's profile photo Julien Delvat
      Julien Delvat

      Hi Manish,

      Not really. S4HC doesn't support this.

      You have 2 options:

      • setup S/4HANA On-Premise edition in a hosted environment and deploy Central Finance
      • use Group Reporting in the cloud, but the scope would be limited to Consolidation

      Hope this helps.

      Author's profile photo Jelena Perfiljeva
      Jelena Perfiljeva

      Thanks for sharing! Could you please include in the title that this is S/4HANA related? Otherwise it leaves an impression that this is some generic ERP overview.

      Thank you.

      Author's profile photo Victor Sokov
      Victor Sokov

      Many thanks! Please update the FAQ with the 1808 integration capabilities (if any).