SAP is renowned for its ERP (Enterprise Resource Planning) software, having served businesses across the globe since 1972. The SAP ERP journey has evolved from R/1, R/2, and R/3 to SAP ECC and SAP S/4HANA, with SAP ECC being widely used in organizations worldwide today. However, SAP has announced that SAP ECC will no longer be supported after 2027, marking a significant shift towards its latest ERP solution, SAP S/4HANA. This blog will delve into the key difference between SAP ECC and SAP S/4HANA, their unique features, and the business benefits of upgrading.
What is SAP ECC?
SAP ERP Central Component (SAP ECC) is a modular ERP solution that allows businesses to optimize operations across various functions such as Finance, Logistics, HR, Product Planning, and Customer Service. Its flexibility enables businesses to customize and integrate the modules they need, though this flexibility can introduce complexities. Changes in one module can impact others, requiring meticulous testing before any updates or enhancements.
SAP has announced the end of maintenance for SAP ECC by 2027, urging businesses to migrate to SAP S/4HANA.
What is SAP S/4HANA?
SAP S/4HANA is SAP’s latest ERP solution, built on the powerful SAP HANA in-memory database. This ERP system processes transactional and analytical data in real time, offering a significant upgrade in terms of performance and speed compared to traditional systems. It also introduces a modern user experience with SAP Fiori, streamlining business processes and improving decision-making.
With more than 40,000 SAP ECC customers expected to transition to SAP S/4HANA by 2027, this system is poised to become SAP’s flagship ERP solution.
Key Differences Between SAP ECC and SAP S/4HANA
Universal Journal (ACDOCA) – A Single Source of Truth
Consolidates the data structures from Financial Accounting (FI), Asset Accounting (AA), Controlling (CO), CO-PA, and the Material Ledger into a single table, ACDOCA, also known as the Universal Journal. This eliminates redundant tables and significantly reduces data duplication, streamlining financial reporting.
MATDOC – New Line Item for Inventory Management
In SAP ECC, inventory management involved multiple tables like MKPF and MSEG. SAP S/4HANA simplifies this by introducing MATDOC, a single line item for all inventory transactions, eliminating the need for over 26 tables and improving efficiency in data processing.
In-Memory HANA Database
While SAP ECC supports third-party databases like Oracle and IBM DB2, SAP S/4HANA is exclusively designed for the SAP HANA database. HANA’s in-memory capabilities enable real-time data processing, faster query execution, and simplified data storage. It also merges Online Transaction Processing (OLTP) and Online Analytical Processing (OLAP) into one system, allowing real-time reporting and predictive analysis.
CO and FI Merger
In SAP ECC, General Ledger (GL) accounts are mapped to CO primary cost elements. SAP S/4HANA combines these into a single source, removing the need for reconciliations between CO and FI, speeding up period-end closing.
Business Partner as Mandatory
Unlike SAP ECC, where Business Partners were optional, SAP S/4HANA mandates that all customers and vendors be integrated as Business Partners. This standardization simplifies master data management.
Extended Material Number
SAP S/4HANA offers an optional feature to extend material numbers from 18 to 40 characters, giving businesses more flexibility in identifying materials, though careful planning is needed for its adoption.
Advanced Credit Management
In SAP ECC, credit management relied on manual processes through FI-AR-CR. SAP S/4HANA replaces this with FSCM (Financial Supply Chain Management), which automates credit risk scoring, master data updates, and workflows for credit approvals.
Real-Time MRP
SAP ECC’s Material Requirement Planning (MRP) required batch jobs, but SAP S/4HANA enables real-time MRP execution, eliminating the need for batch jobs and simplifying processes like subcontracting.
Global Trade Services (GTS)
SAP ECC’s foreign trade functionalities are replaced by SAP S/4HANA’s GTS, which automates processes like Sanctioned Party List (SPL) screening, embargo checks, and license verifications.
Mandatory Material Ledger
The Material Ledger, optional in SAP ECC, becomes mandatory in SAP S/4HANA. It allows businesses to track inventory in multiple currencies and apply multi-valuations, improving financial transparency.
Difference Between SAP ECC and SAP S/4HANA
| Feature | SAP ECC | SAP S/4HANA |
| Database Support | Compatible with third-party databases like Oracle, IBM DB2 | Exclusively runs on SAP HANA in-memory database |
| User Interface | Traditional SAP GUI | Modern SAP Fiori UI for improved user experience |
| Data Structure | Multiple tables for different functions (FI, CO, AA) | Single Universal Journal consolidating all financial data |
| Material Management | Requires multiple tables for inventory (MKPF, MSEG) | Simplified with MATDOC for single-line inventory transactions |
| Credit Management | Manual through FI-AR-CR | Automated with FSCM (Financial Supply Chain Management) |
| Real-Time Processing | Relies on batch jobs for data processing | Real-time processing with no batch jobs required |
| Custom Code Adjustments | Requires manual changes | Compatibility views allow smooth transition of custom code |
| Business Partners | Optional | Mandatory, simplifying master data management |
| Material Ledger | Optional | Mandatory, allowing multi-currency and multi-valuation tracking |
| MRP (Material Requirement Planning) | Batch job-based | Real-time MRP execution, eliminating the need for batch jobs |
Business Benefits of SAP S/4HANA
Migrating from SAP ECC to SAP S/4HANA delivers numerous benefits for businesses looking to optimize their operations and future-proof their ERP investments. Here’s a deeper look into the key advantages of moving to SAP S/4HANA:
Real-Time Business Insights
Processes data in real-time, allowing businesses to access live insights for faster decision-making. This feature helps companies react quickly to market trends and make more informed business decisions.
Simplified IT Landscape
The new architecture of SAP S/4HANA reduces data footprint by eliminating redundant tables and simplifying the overall IT infrastructure. This means fewer complexities, easier system maintenance, and more straightforward upgrades.
Improved Financial Management
With Universal Journal, financial processes are streamlined, making reporting faster and more accurate. The system consolidates multiple financial modules into a single table, reducing data duplication and manual reconciliation efforts.
Enhanced Performance with In-Memory Computing
Powered by the SAP HANA database, it leverages in-memory computing to accelerate transaction speeds and data processing. This results in quicker access to data and allows for large-scale data analysis without performance issues.
Reduced Total Cost of Ownership (TCO)
With simplified architecture and efficient resource usage, it helps reduce the total cost of ownership. Businesses can save on hardware, reduce operational costs, and optimize performance, which ultimately leads to long-term cost savings.
Flexibility and Scalability
Provides a flexible platform for businesses to scale as needed. Whether it’s adding new functionalities or extending operations, the system’s modern architecture supports business growth and adaptability.
Integration of AI and Machine Learning
It is built with an open platform that fosters innovation. It allows companies to integrate advanced technologies like AI and machine learning to predict outcomes, automate routine tasks, and optimize operations, leading to increased efficiency and profitability.
Future-Proofing Business Operations
Migrating to SAP S/4HANA not only ensures that businesses remain compliant with SAP’s support roadmap but also positions them for future technological advancements. The ability to seamlessly integrate new technologies and innovations makes this a long-term solution for businesses aiming to stay competitive.
First Step for Moving from SAP ECC to SAP S/4HANA
The first step in transitioning from SAP ECC to SAP S/4HANA is to develop a robust business case for migration. This involves a thorough analysis of the current system, identifying the potential benefits, and mapping out the goals of the migration. It’s important to move early to avoid the costs of delayed migration, such as higher license fees and rushed project timelines.
How to Start the Move from ECC to S/4HANA?
To ensure a smooth and successful migration, businesses should begin with a comprehensive SAP S/4HANA readiness assessment. Tools like KTern are designed to assess the state of your SAP ECC system and create a detailed transition roadmap. KTern evaluates readiness, estimates the required effort, and provides a step-by-step execution plan, ensuring that the move to SAP S/4HANA is seamless. By conducting this assessment, businesses can define the scope of the migration and outline the necessary steps for a successful transition.
Conclusion
Migrating from SAP ECC to SAP S/4HANA is more than just a technical upgrade—it is a transformative journey that unlocks real-time insights, streamlined processes, and the ability to innovate with cutting-edge technologies. By moving early and preparing thoroughly, organizations can capitalize on the numerous benefits this solution offers.
At KaarTech, we specialize in guiding businesses through their SAP S/4HANA migration, ensuring a smooth and successful transition. With over 18 years of SAP expertise and a team of 800+ certified consultants, we’re your best partner for SAP S/4HANA implementation. Contact us today to learn how we can help you drive your digital transformation forward.
Get started with KaarTech – Your trusted SAP S/4HANA implementation partner.
FAQ’s
1. What is the difference between SAP ECC and SAP S/4HANA?
SAP ECC supports third-party databases and uses multiple tables for functions, while SAP S/4HANA is built on the SAP HANA in-memory database, consolidating data into a single Universal Journal for real-time processing and improved performance. Additionally, SAP S/4HANA provides a modern SAP Fiori interface for a better user experience.
2. Why should businesses migrate from SAP ECC to SAP S/4HANA?
With SAP ECC support ending in 2027, businesses must migrate to SAP S/4HANA to access real-time insights, streamlined processes, enhanced performance, and future-proofed operations. It also helps businesses stay competitive by integrating advanced technologies like AI and machine learning.
3. How does SAP S/4HANA improve financial reporting?
SAP S/4HANA’s Universal Journal consolidates financial and controlling data, simplifying financial processes, speeding up reporting, and reducing manual reconciliations. This leads to faster period closings and more accurate financial insights.
4. What is the first step in migrating to SAP S/4HANA?
The first step is conducting an SAP S/4HANA readiness assessment to evaluate your current SAP ECC system and plan a smooth transition with clear project goals and timelines. This ensures a structured migration process, reducing risks and improving outcomes.
