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The S/4 HANA Revolution

The S/4 HANA Revolution

SAP Business Suite 4 SAP HANA (or SAP S/4 HANA) has been called “SAP’s biggest update to its ERP strategy and platform in over two decades” (Forbes)

SAP, meanwhile, recognizes S/4 HANA as “the biggest launch in 23 years, if not in the entire history of the company”.

S/4 HANA is, first of all, the evolution proposed by SAP to its R/3 suite; moreover, the leading ERP systems company has decided to provide support exclusively to S/4 HANA as of 2026. It means that, in practice, all R/3 users worldwide must have completed their transition to the new tool by December of 2025.

But what exactly is S/4 HANA? Is it a change of release just like the one experienced with the migration to SAP ECC 6 in the past decade?

According to SAP, the transition to S/4 HANA is not a mere update of its software, but a complete mutation to a newer, more modern and efficient suite, simpler to use and plenty of improved business utilities.

In addition, SAP has delivered multiple implementation variants of its new utility. From cloud versions, where companies can only use the SAP standard features (in constant grow and improvement) to those On-Premise, which allow their holders to maintain the hardware and software is their own facilities. Of course, all kinds of intermediate combinations (private clouds, cloud single tenant, etc.) are available and can be considered according to each entity specifics needs.

On the other hand, what can we find when moving an old-fashioned ERP system to S/4 HANA? Is it really such a complex process as it has sometimes been exclaimed?

Actually, there is good news for SAP R/3 owners, especially if you have an SAP ECC 6 updated to its latest patch level. Choosing the On-Premise version, it is possible the migration, without major changes, of all own-developed programs and applications from the R/3 ABAP layer. Regarding add-ons, their compatibility is variable, so it is advisable to check with the provider the S/4 HANA compliant versions availability.

SAP also provides specific tools to help with data conversion, so undertaking a brownfield‑type transition project is fully supported by its utilities, if the right product is chosen for it (usually, On-Premise or private cloud)

And regarding the new architecture and the new functionalities, what changes await the enterprise willing to drive its business flow with an S/4 HANA system?

Although it is impossible to give here deep details of all the options and variants available (including aside systems dedicated to RRHH, business partners relationship or extended warehouse management) some of the highlights would be the following:

  • A revolutionary database concept: S/4 HANA is executed under HANA DB only. This new database resides in RAM and has features that make it much faster and more efficient than the traditional persistence layers.

  • Single data source: unlike the relational databases from the previous generation, HANA groups many old R/3 data tables into a single data entity. It allows the dawn of concepts as Universal Journal, called to revolutionize the financial area, or a new structure for material documents that condenses up to 26 former R/3 tables and largely simplifies inventory processes.

  • Real-time processes: taking advantage of HANA database speed and flexibility, it is possible to move from the old flows in R/3, mainly based on batch processes, to the business key data instant access. Consequently, in S/4 HANA OLTP (transactions) and OLAP (analysis) can be called simultaneously.

  • Fiori: Although the traditional SAP GUI client exec is still available in On-Premise versions, S/4 HANA is linked with a new interface concept for the relationship between the user and the suite’s applications. The new Fiori presentation layer is well‑fashioned at visual level and also friendlier and “lighter” than its predecessor. In addition, it simplifies the daily activities, since it only allows access to predefined business-role based elements, that is, the users only see the processes and utilities related to their work environments.

  • New functional capabilities: intelligently exploiting the possibilities delivered by memory operations, S/4 offers a better financial data harmonization (via Central Finance), achieves qualified and instantaneous information which facilitates decision‑making and risks anticipation (as in Cash Management), uses OLAP capabilities to plan and unify consolidations in an efficient way (BPC) or natively integrates advanced independent solutions, such as Transportation Management and Extended Warehouse (EWM)

  • FI-CO integration: thanks to the single data concept, G/L and cost elements master data have been merged, reconciliation activities between FI and CO become unnecessary, financial closing procedures are expedited, asset accounting is fully integrated into the parallel ledger architecture, while in the controlling area simultaneous execution of analytical and accounting processes is allowed.

  • R/3 key concepts redesigned: for instance, the new Business Partner approach now integrates customers and suppliers into a single entity; the redefined material number can, optionally, be extended up to 40 characters; changes in the Sales and Distribution area increase functionality in pricing and its conditions, etc.

  • Traditional processes rebuilt: many other features have been modernized to take advantage of HANA capabilities such as:
    • Material Requirements Planning (MRP) is now executed in real time.
    • New Credit Management system, which automates tasks that were previously performed manually.
    • Import/export and foreign trade are now more automatic and efficient activities.
    • Possibility of having the inventory valuation in up to three different currencies, thanks to the new Material Ledger (ML)
    • Revenue Accounting and Reporting (RAR) provides unified information and audit mechanisms.
    • Rebate agreements process is associated with contractual conditions and driven through Settlements Management tool.

Last but not least, these changes applied in S/4 HANA are not static, but SAP promises the periodic availability of patches and updates that will add improvements and new features to the tool. In fact, cloud versions already have quarterly updates, while they are annual with quarter corrective patches for the On-Premise releases.

In conclusion, SAP has launched its new, fresh and stylish generation of ERP tools, enabling multiple versions in order to facilitate the transition to all possible business models. The advantages over its predecessor in terms of efficiency and immediacy, both in the processes and in the data analysis, seem unquestionable. Therefore, SAP R/3 holders, looking at the not so distant January 2026, are already beginning to include their transition projects to S/4 HANA in the short- and medium-term strategic planning. It seems to be the most advisable approach, given the relatively limited timeframe that SAP offers to undertake a task of such magnitude.

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