SAP S/4HANA was introduced in 2015. Since then, most of us have been conforming to the technologies and simplifications in SAP S/4HANA. We’re also curious about SAP S/4HANA’s functionalities and business benefits. The question now is, what is the difference between SAP ECC and SAP S/4HANA? This post will discuss some of the key differences between SAP S/4 HANA and SAP ECC. As a result, you will have a concise overview of the SAP ECC SAP S/4HANA distinction by the end of this article.
What is SAP ECC?
SAP ECC (also known as SAP ERP) is SAP’s legacy enterprise application suite. ECC was built to work with a third-party database. In 1973, it began with a financial software package called RF, followed by a material management module called RM/1. As more components were added, the box was renamed R/1.
R/2 was released in 1979, and it integrated multiple enterprise functions such as accounting, manufacturing processes, supply chain logistics, and human resources. In 1992, R/3 was released. It was their first client/server package (no mainframes required) and supported a wide range of operating systems and databases. SAP renamed its core ERP product SAP ERP Central Component in 2004. (ECC). SAP ERP and ECC are now interchangeable terms.
What is SAP HANA?
SAP HANA, introduced in 2010, is an in-memory database designed to accelerate SAP applications and the business processes they support dramatically. It is the foundation for running SAP Business Suite in the future. HANA design innovations like in-memory computing and a simplified data structure significantly improve performance, resulting in increased productivity, real-time visibility, and better analytics use. Companies, for example, can respond to market conditions based on real-time data rather than relying on quarterly reports.
What is SAP S/4HANA?
SAP completely rebuilt its ERP solution, SAP ECC, to leverage HANA’s performance and innovative data models. S/4HANA, which was released in 2015, includes an award-winning user interface called SAP Fiori and a slew of application and use case-specific benefits. S/4HANA also addresses common technical issues with traditional ERP systems, such as batch latency, manually driven processes, and data sprawl. This translates into lower IT costs, improved stability, and less disruption from future SAP upgrades.
Now that you have understood the fundamentals, let’s look at the differences between SAP ECC and SAP S/4HANA.
The Difference between SAP ECC and SAP S/4HANA
The Database Element of SAP S/4HANA and SAP ECC
SAP S/4HANA can only be run on the HANA database. This is not the case with SAP ECC. SAP ECC can work with Oracle, IBM DB2, and other databases. SAP S/4HANA makes use of SAP HANA’s in-memory capabilities and design concepts. The HANA in-memory database reads the data faster than the traditional databases that use hard discs to retrieve data. The data is read from memory, i.e., data resides in the main memory RAM. In SAP S/4HANA, there will be no accumulation (overall), index, or history tables. This is due to on-the-fly dynamic aggregate creations based on line item tables.
Single Source of Truth as well as SAP S/4HANA Universal Journal
SAP S/4HANA combines data frameworks from various components such as FI, AA, CO, CO-PA, and ML into a single line item table. ACDOCA, also known as the Universal Journal, is the name of this table. The visibility of the universal journal eliminates several accumulation and index tables. Currently, data is inserted into a single table rather than several tables. As a result, the data footprint is significantly reduced.
New Functional Capabilities
New functional capabilities for SAP S/4HANA and HANA in-memory computing are now available. Central Finance, SAP Cash Management, and SAP BPC Optimized for S/4HANA are a few examples. These, however, necessitate the acquisition of additional licenses.
Unison of CO and FI
We may see FI GL accounts mapped to CO primary cost elements in SAP ECC. However, in SAP S/4HANA, the universal journal uses only one area to store GL accounts and cost elements. Cost elements have been converted to GL accounts. When they are created and maintained, an appropriate cost element group is used (in FS00). Reconciliation is no longer required. As a result, period-end closings will be quicker.
Intro of a New GL in SAP S/4HANA
SAP S/4HANA is technically equivalent to SAP ECC’s new GL. This is due to the Data structure. Customers who use the classic GL do not need to use the document split or the parallel ledger. However, the new GL’s functionality (Parallel ledger) is required for a new Asset Accounting.
Addition of standalone solutions to SAP S/4HANACore
Some standalone SAP Solutions are now included in the SAP S/4HANA Core. SAP Transportation Management and SAP Extended Warehouse Management are two common examples.
The Custom Code
Because of a unique setting at the database interface level, custom code checked out operations in SAP S/4HANA redirect to compatibility sights, i.e., invisible to source code. As a result, custom reports function normally.
Business Partners and Material Number Extensions
Customer and supplier master data must be integrated/migrated as Business Partners in SAP S/4HANA. Customer-vendor integration (CVI) is a required step in conducting business with SAP S/4HANA. One significant difference between SAP ECC and SAP S/4HANA is that the Material number can now be 40 characters long instead of the existing 18 in SAP ECC. This is an optional property. As a result, the impact of this extension on interfaces, custom coding, and other SAP applications must be evaluated. This must be completed before changing to 40 characters.
New Credit Management System
SAP S/4HANA now includes a new Credit Management System. by the acronym FSCM-CR, it is Financial Supply Chain Management’s credit management. It takes the place of SAP ECC’s FI-AR-CR. FSCM-CR is built on a distributed architecture. This enables interfaces with third-party credit rating agencies. The FI-AR-CR credit control setting in traditional SAP ECC requires significant manual work.
SD Data Model Changes
Rates and condition methods are adjusted across data models. The new PRCD ELEMENTS table with expanded fields, for example, replaces the existing KONV table. For more information, please see note 2267308.
Live Material Requirement Planning
MRP runs in SAP ECC are performed by batch jobs during off-peak hours. However, the batch job is not required in SAP S/4HANA. MRP runs in SAP S/4HANA can be completed in real-time by leveraging the power of SAP HANA. One key distinction between SAP S/4HANA and SAP ECC is that, whereas MRP can be run at the plant and MRP area levels, it cannot be run at the storage location level in SAP S/4HANA. Storage locations in SAP ECC can either be excluded from MRP or planned separately. SAP recommends using the MRP area with MRP type for circumstances at the storage location level in SAP S/4HANA. Furthermore, MRP with subcontracting has been streamlined in SAP S/4HANA.
Material Ledger Mandate
The Material Ledger (ML) must be activated in SAP S/4HANA. Inventory is evaluated in multiple currencies by ML. In general, SAP ERP evaluates inventory using a single currency. ML in SAP S/4HANA now supports valuation in two more currencies. This is primarily useful for multinational corporations with operations in multiple countries. They frequently assess their inventories in various currencies.
Revenue Accounting as well as Reporting
Revenue Accounting and Reporting (RAR) in SAP S/4HANA replaces SAP ECC SD revenue Acknowledgement. This is because the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) jointly released new accounting criteria (IASB). The new guidance is also included in IFRS 15. SD Revenue Acknowledgement in SAP ECC is based on Generally Accepted Accounting Principles (US-GAAP), International Accounting Standards (IAS), and Financial Reporting Standards (FRS). As a result, in addition to the traditional way of understanding revenue on billing, it provides the option of acknowledging revenue based on an event.
Settlement Management with Condition Agreements in SAP S/4HANA replaces customer rebates processed through SAP ECC’s existing SD rebates.
The main distinction between S/4HANA and ECC is that SAP Fiori is the new user interface in S/4HANA that provides a rich and intuitive user experience.
You can now see that SAP S/4HANA has undergone significant changes. As a result, IT leaders must understand the functional and technical differences and develop their best business case for why their company needs to migrate to S/4HANA. If you want to improve your technical skills and learn SAP S/4HANA, Tekskilled is the place to be. Contact the experts today to advance your career.