Enterprise Resource Planning (ERP) applications have become fundamental technological pillars for the streamlined management of modern businesses. SAP has been the pioneer of ERP technology and has provided enterprises with digital enterprise management solutions for decades. SAP has continued to develop an ever-evolving series of ERP applications to meet the changing technology and requirements of the industry. Currently, for large-scale enterprises, SAP offers its legacy SAP ECC and its latest SAP S/4HANA applications to enable the smooth running of the company. Both applications have seen widespread implementation across various industries while offering their unique features and benefits. However, understanding the difference between SAP S/4HANA and SAP ECC, identifying the ideal solution for one’s business, and understanding the integration best practices can be daunting, especially for those new to SAP.
In this article, we will dive into understanding the distinguishing features between SAP S/4HANA and SAP ECC and identify the key factors to determine the ideal ERP application for a business.
If you have multiple systems running in your business and want to seamlessly connect all of them with your SAP application under one single platform to automate the business processes, employ the APPSeCONNECT Integration Platform and achieve a noticeable improvement in your business metrics.
What is SAP ECC?
SAP ECC or SAP ERP Central Component started out as a financial software package called in 1972 and is one of the longest-running enterprise-grade ERP solutions in the industry with continued widespread implementation. The ERP application is designed to be able to work on third-party databases like Oracle, IBM DB2, etc.
The latest version of the SAP ECC software suite was released in 2004 and comes packaged with modules for all essential business workflows such as financials, human resources (HR), warehousing, and logistics.
While the legacy SAP ECC application continues to be the core of an enterprise’s digital infrastructure, SAP aims to phase out SAP ECC by the end of 2023, with optional extended maintenance until the end of 2030. The ERP application planned to replace SAP ECC is SAP S/4HANA.
What is SAP S/4HANA?
Released in 2015, SAP S/4HANA is the latest generation of ERP software that works across both on-premises and cloud infrastructures. As of 2022, SAP S/4HANA had 20,000 subscribers across the industry. The new advantages the ERP brings to its users are AI (Artificial Intelligence), machine learning, and automation functionalities to analyze enormous amounts of data in real time. The new features offer personalized business insights, integrated processes, and embedded cybersecurity.
While SAP S/4HANA offers a myriad of additional features and benefits as compared to its predecessor, the only limitation of the platform is that it runs only on its dedicated SAP HANA database. Thus, organizations currently third-party databases need to shift to the HANA database to be able to run SAP S/4HANA.
Differences Between SAP S/4HANA and SAP ECC
SAP S/4HANA is the next generation of SAP ERP software while SAP ECC is the legacy solution. Both bring their own range of benefits to their users, which needs to be analyzed properly to make an informed decision on which solution is the best for an enterprise.
SAP S/4HANA and SAP ECC – Core Differences
Built-in Functionalities: The SAP ECC software suite is packaged with modules for financials, human resources (HR), warehousing, and logistics to allow effortless management of all essential business workflows. SAP S/4HANA comes packed with several modern features to increase business efficiency. It combines multiple data modules into a single table called the ACDOCA (the Universal Journal), which significantly reduces the data footprint by eliminating numerous aggregate and index tables, making it a highly efficient system. SAP S/4HANA also comes with AI and Machine Learning backed features to provide more in-depth analytics into business operations and make data-driven predictions of future outcomes.
Database Architecture: The SAP S/4HANA can run only on the modern, in-memory HANA database as compared to SAP ECC, which can work on third-party databases. The limitation of only using the HANA database reduces the flexibility of operation; however, with the SAP HANA Cloud database, SAP S/4HANA runs faster and more efficiently than SAP ECC. SAP S/4HANA reads data directly from the main memory instead of the hard disk, which enables faster data processing.
Global Trade Functionalities: With modern businesses often operating at a global scale, functionalities to stream integrational trade are a necessity. SAP S/4HANA features Global Trade Services (GTS), which serves as a replacement for the foreign trade functions in SAP ECC. Implementing SAP GTS streamlines the processes for previously manual workflows in SAP ECC through automation, leading to increased efficiency. Some of the automation for international trade compliance includes licenses, embargoes, and declarations for both imports and exports.
Customizability: When it comes to customizability, SAP S/4HANA offers lesser integration capabilities as compared to SAP ECC. SAP ECC is highly customizable for business needs which makes it flexible to work with but also makes it more complicated. The limited customizability of SAP S/4HANA helps it focus on providing a simplified user experience.
Deployment Options: SAP ECC has the limitation of being deployed only to the on-premises infrastructure of a business. SAP S/4HANA can be deployed across both on-premises and cloud systems. This gives organizations more flexibility in choosing the deployment option that best fits their needs.
Cost of Implementation: The cost of implementing SAP S/4HANA can be higher than the cost of implementing SAP ECC, due to the need for new hardware and the cost of shifting to a HANA database.
SAP S/4HANA and SAP ECC – Deployment Capabilities
SAP S/4HANA and SAP ECC offer different deployment options, allowing organizations to choose the option that best fits their needs and requirements. Understanding the differences between the deployment options of these two systems is important for organizations to make an informed decision.
SAP S/4HANA Deployment Options:
On-premises: Organizations can deploy SAP S/4HANA on their own servers and hardware, providing them with complete control over their digital environment and the ability to customize the system to meet their specific requirements. The on-premises deployment option requires a significant investment in hardware and software infrastructure, and personnel to maintain and manage the system.
Cloud: Organizations can subscribe to SAP S/4HANA as a cloud service, which is managed and maintained by SAP. The cloud deployment option eliminates the need for organizations to invest in additional hardware, and personnel, as these are provided by SAP. The deployment option is more cost-effective and allows organizations to scale their systems as needed, making it an attractive option for smaller organizations or those with limited resources.
SAP ECC Deployment Options:
On-premises: Organizations can choose to deploy SAP ECC on their on-premises servers, granting them complete control over their hardware and software ecosystem and the flexibility to customize the system to their specific needs. However, the on-premises deployment option also requires a substantial investment in hardware infrastructure, and personnel to sustain and manage the system.
Thus, when it comes to application deployment capabilities SAP S/4HANA offers more flexibility as compared to SAP ECC. Organizations must weigh the benefits and drawbacks of each deployment option to determine which is best for their specific needs.
Identifying the Best SAP ERP for a Business
SAP S/4HANA offers advantages over SAP ECC across many fields, however, upgrading to it is not a simple decision. Shifting to SAP S/4HANA from an existing SAP ECC infrastructure has several significant barriers to it. Thus, identifying the best ERP application between SAP ECC and SAP S/4HANA for a business requires a thorough evaluation of the organization’s specific needs and requirements.
There are many compelling reasons for enterprises to continue using SAP ECC over SAP S/4HANA. The change is not an upgrade, it is a new implementation of an ERP solution. SAP ECC has been in use for several years and many organizations have heavily customized and deployed in-depth SAP ECC integration with their existing infrastructure. Migrating to a new system, such as SAP S/4HANA, would require significant effort and resources to re-implement these customizations and integrations. Furthermore, migrating to SAP S/4HANA can be a costly exercise, both in terms of the upfront investment in the new system and the ongoing operational costs of maintaining it.
However, with official support for SAP ECC ending by 2027, making the transition to SAP S/4HANA is inevitable. SAP S/4HANA also offers several leaps of advanced features to the end user over SAP ECC. SAP S/4HANA as the next-generation ERP solution is built on the more advanced HANA infrastructure which is more optimized for in-memory computing. This results in improved performance and faster response times as compared to SAP ECC. Also, SAP S/4HANA is designed to be deployed on both the cloud and on-premises infrastructures, providing organizations with increased flexibility and scalability. Furthermore, SAP S/4HANA also brings in advanced data analytics capabilities with its AI and Machine Learning features to enable organizations to quickly and easily analyze big data to gain insights into their operations and performance.
Businesses need to weigh these factors and identify the position their organization is currently in before implementing either SAP ERP solutions. With enterprises having a long-running SAP ECC system in place, they might consider sticking to it until the change becomes an absolute necessity. On the other hand, for businesses not currently having an ERP solution or planning to shift from an existing non-SAP ERP application to an enterprise-grade SAP ERP application, SAP S/4 HANA makes a more beneficial option.
SAP S/4HANA or SAP ECC Integration is a Priority
No matter what SAP ERP solution is opted for, integration of the ERP solution should take priority for any enterprise. Both ERP solutions process vast volumes of data through it and therefore make it prudent to deploy an end-to-end bidirectional integration with other lines of business applications to automate and accelerate business workflows. Utilizing a smart low-code Business Process Automation (BPA) and integration platform like APPSeCONNECT can make the integration deployment process fast and effortless. With pre-configured integration packages offered by low-code BPA solutions, enterprises can deploy the necessary integration for SAP ECC or SAP S/4HANA without expending additional time or resources. Thus, SAP ERP integrations are essential to ensure businesses can stay ahead of the competition with faster time to market and effortless scalability.
Final Thoughts: SAP S/4HANA vs SAP ECC
In our current digitally driven world, companies across the industry must depend on enterprise management software solutions to maintain operational efficiency and keep pace with the shifting market trends. SAP S/4HANA and SAP ECC are both the most widely used ERP systems in the world and offer a range of benefits to organizations of all sizes and in all industries.
SAP S/4HANA is a next-generation ERP system designed to meet the evolving needs of organizations in the digital age. With its simplified data model, advanced analytics capabilities, and cloud-based deployment options, SAP S/4HANA is well-suited for organizations that are looking for a modern, flexible, and scalable ERP system.
On the other hand, SAP ECC is a legacy ERP system that has seen widespread adoption by organizations over the past decades. While it may not have the same level of performance, scalability, and flexibility as SAP S/4HANA, it still forms a deeply integrated digital backbone for enterprises across the globe with its robust and reliable ERP system.
In the end, the best ERP system for a business will depend on its specific needs, requirements, and budget. Organizations considering implementing an ERP system should carefully evaluate both SAP S/4HANA and SAP ECC and choose the system that best meets their needs.
If you have multiple systems running in your business and want to seamlessly connect all of them with your SAP application under one single platform to automate the business processes, employ the APPSeCONNECT Integration Platform and achieve a noticeable improvement in your business metrics.
