Choosing the right ERP system is challenging for businesses looking to streamline operations and drive growth. If you are evaluating SAP’s ERP options, read this article to learn about SAP ECC and SAP S/4HANA. We will explore the key differences between these systems, how S/4HANA’s advanced HANA database improves performance, and whether the transition from ECC to S/4HANA is worth the investment.

Let’s start with the basics and learn how ERP software supports business functions.

SAP’s Focus: Enterprise Resource Planning (ERP) Software

Enterprise Resource Planning (ERP) helps organizations manage their core business processes as a unified system, such as integrating different functions of business e.g. production, human resources, supply chain management and sales into a single platform, due to a centralized database which enables access to information for different departments by becoming single source for all business data.

Implementing the ERP system provides many benefits such as increased efficiency by automating routine business tasks and reducing the manual efforts of the employees so they can spend their time on other important activities. ERP also improves customer experience by providing accurate data for customer-related processes, which delivers better service and quick response to customer needs. ERP also enhances areas such as Finance & Accounting, Inventory & Asset Management, Sales & Customer Relationship Management, Human Resources, Marketing and Product Development & Manufacturing.

SAP ECC: Definition: SAP ERP Central Component

ECC stands for ERP Central Component, the legacy ERP solution that was the cornerstone of enterprise infrastructure before the new SAP S/4HANA release. It offers deep integration, flexibility, and scalability for business functions, which organizations use to manage different operational processes, from finance to human resources and supply chain management.

History and Evolution of SAP ECC

SAP ECC was the successor to SAP R/3, which was introduced in 1992 and was the first client-server ERP system, allowing businesses to move away from mainframe computing. SAP R/3 laid the groundwork for SAP ECC, introducing modularity and scalability in the ERP solution. It was the first solution that integrated financial, logistics, and HR operations in a single platform, improving data consistency and workflow automation. Multiple versions of ECC were released over the years, with SAP ECC 6.0 released in 2005 becoming enterprises’ most widely used version.

Key Characteristics of SAP ECC

SAP ECC is a modular-based architecture that provides flexibility to businesses when selecting and integrating the modules they only need. It provides enhanced customizability for all sizes of companies and industries. The interconnected business process modules of SAP ECC impact multiple areas. For example, an update in the Material Management (MM) module directly impacts Sales & Distribution (SD) and Financial Accounting (FI).

SAP ECC is deployed mostly on-premises infrastructure, which involves servers, infrastructure, and databases in-house, providing support for multiple databases, e.g., IBM DB2, Microsoft SQL Server, and Oracle databases.

SAP ECC Features and Functionalities

SAP ECC offers a wide range of functions with different modules, which ensures that different departments operate interactively. Key business functions include Financials, Logistics and Supply Chain, and Human Capital Management.

Below are several important modules for specific functions:

Module name	Functions
Controlling (CO)	Handles cost tracking, budgeting, and profitability analysis.
Financial Accounting (FI)	Handles General ledger, asset accounting, financial reporting, and accounts payable/receivable.
Human Capital Management (HCM)	Handles personnel employee management, payrolls, and HR analytics.
Material Management (MM)	Handles inventory, procurement and supply chain operations.
Plant Maintenance (PM)	Manages asset management, preventive maintenance and equipment servicing.
Production Planning (PP)	Supports capacity planning, scheduling and manufacturing processes.
Project Systems (PS)	Helps with project planning, cost management and execution.
Quality Management (QM)	Can be used for quality control, inspection and compliance tracking.
Sales and Distribution (SD)	Helps with customer contracts, sales orders, billing and pricing.

SAP ECC 6.0

The most stable and advanced version of SAP ECC is version 6.0, which provides enhanced ERP functions and scalable architecture, which can be deployed on-premises. It is built on the SAP NetWeaver integration platform. It connects SAP internal applications and allows organizations to integrate external applications, business processes, and data from various sources into the SAP system applications. Businesses can make informed decisions based on real-time unified insights. SAP ECC has built-in analytics and reporting tools to track performance and improvement continuously.

SAP S/4HANA: Definition

SAP S/4HANA, sometimes called S4 HANA, is the newest generation of ERP software from SAP. It is the successor to SAP ECC and runs on the SAP HANA database, an in-memory database that provides real-time business process efficiency, insights, and automation.

Launch of SAP S/4HANA

Early development of the SAP HANA database, the core in-memory database for S/4HANA, started as early as 2005. Still, it was pre-released and announced in November 2010 and has been offered to 10 select customers by SAP SE. The first customer started using the SAP HANA platform in 2011.

SAP HANA was used with ERP ECC and other supported databases, such as SQL, Oracle, etc. By the end of 2012, the number of customers reached 345, increasing its importance in the ERP market.

SAP S/4HANA was launched as a next-generation enterprise suite in the third quarter of 2015, along with the general availability of SAP HANA version 2.0. This version runs on SAP HANA database in-memory processing, and external databases are no longer supported.

SAP S/4HANA was released in both cloud and on-premises editions. It uses enhanced automation, AI-driven analytics, and machine learning features.

Key Features of SAP S/4HANA

SAP S/4HANA uses advanced technologies like machine learning, AI, robotic process automation, and predictive analytics to increase business efficiency.

Feature	Description
Real-Time Data Analysis	SAP S4HANA uses in-memory processing for instant data analysis. Removing batch processing decreases data lag, improving accurate reports and forecasts.
Personalized Insights	SAP S/4HANA provides AI-enabled dashboards for role-based access information, machine learning models for actionable information, and predictive analytics to increase business planning.
Integrated Processes	Provides flawless integration between several business functions such as finance, HR, Sales, and Logistics, reduces manual data entry, and increases data consistency across all departments with improved automation.
Embedded Cybersecurity	SAP S4HANA provides built-in security features to prevent unauthorized access to data and automated monitoring for compliance with regulatory bodies such as SOX and GDPR. Sensitive business data is protected by end-to-end encryption.
Deployment Options: On-Premises and Cloud	SAP S/4HANA can be deployed on the company’s on-premises servers, and on the cloud, a hybrid on-premises and cloud infrastructure is also supported.

S/4HANA Features and Functionalities

SAP S/4HANA introduces several new features and enhancements over SAP ECC.

• Introduces Business Partner Approach by replacing customer/vendor master records, which integrates supplier and customer data for simplified transactions.
• Reduces data duplication and improves data consistency to ensure a smooth transition from SAP ECC to SAP S/4HANA as customer vendor integration (CVI).
• SAP UI5 enables SAP Fiori to be the default user interface, a modern web-based UI that delivers a modern UI across all devices, such as desktops, mobiles, and tablets.
• SAP S/4HANA provides an automated approval process using flexible Sales, HR, and Finance workflows. Users can customize workflows without coding knowledge.
• SAP S/4HANA uses SAP HANA in-memory database for high-speed data processing, which removes legacy database dependencies and IT complexity.
• SAP S/4HANA uses AI to detect patterns, optimize operations, processes, and live data for faster decision-making.

Key Differences Between SAP S/4HANA and SAP ECC

Category	ECC	S/4HANA
Database	ECC supports multiple databases, such as Oracle, SQL, or DB2, which could be slower and impact performance. Also, redundant tables and multiple copies of data could exist.	S/4HANA runs only on the SAP HANA in-memory database, which computes data in real time for processing with a simplified data model and fewer tables.
Deployment	ECC can only be installed on-premises infrastructure, which means higher physical hardware and IT maintenance costs due to dependency.	S/4HANA provides several options, such as on-premises, scalable public/private cloud, and hybrid deployments, which reduces the overall cost of in-house infrastructure.
User Interface	ECC uses traditional SAP GUI, which is mainly desktop-based. It has complex navigation and sometimes requires SAP expertise.	S/4HANA uses SAP Fiori, a modern web-based UI that works on desktop, tablet, and mobile and provides role-based dashboards for a better user experience.
Data Processing	ECC uses batch data processing, which could be slower due to batch processing, and may require separate data warehousing tools for reporting.	S/4HANA uses real-time processing with an in-memory database, providing faster response for analytics with real-time information and in-built reporting.
Customization	ECC is highly customizable but requires extensive coding in ABAP, which could often break during upgrade processes.	S/4HANA provides limited customization but uses SAP UI5 and Fiori for low-code extensibility, with the best practices from SAO for upgrading risks.
Data Truth	ECC uses multiple databases, which could lead to data duplication and multiple sources of information. It also uses separate master data objects for vendors and customers.	S/4HANA uses a consistent centralized database across all business modules, which reduces the duplication of records, being a single source of truth, with a business partner model for customer vendor data.

Specific Feature Changes in SAP S/4HANA

Several architectural changes and functional enhancements are introduced in SAP S/4HANA across Finance, Logistics, and Inventory Management, with many others to improve real-time processing, data integrity, and performance.

Finance

Feature	SAP ECC	SAP S4/Hana
Account-based Profitability Analysis (CO-PA)	Costing-based CO-PA is used by default in SAP ECC and is separate from the General Ledger.	Account-based CO-PA is the default in SAP S/4HANA integrated with Universal Journal.
FI and CO Merger	SAP ECC uses separate Financial Accounting (FI) and Controlling (CO) ledgers.	Uses the accounting document table (ACDOCA) as the Universal Journal by combining FI and CO data. It is a central repository for financial accounting and controlling data in SAP S/4HANA.
Material Ledger	Optional feature for material costing in ECC.	Provides more detailed and accurate information about material costing and is mandatory in S/4HANA.
Credit management	ECC uses the FI-AR-CR module for credit management.	S/4HANA uses Financial Supply Chain Management (FSCM) which offers advanced credit management features, replaced.

Logistics

Several logistics process improvements were made in SAP S/4HANA, especially in sales and distribution, warehousing and material management.

Feature	SAP ECC	SAP S/4HANA
Material Number Extension	ECC has an 18-character material extension number limit.	S/4HANA extended this number to 40 characters, increasing flexibility.
Integrated Business Partners	ECC uses separate customer and vendor master data.	S/4HANA combines customer and vendor data using the business partner concept.
Real-Time MRP	ECC uses batch processing for Material Requirements Planning.	S/4HANA uses real-time data processing for more accurate and faster material requirement planning.
Integrated SAP APO	Uses Advanced Planning and Optimization (APO).	Replaces APO with SAP Integrated Business Planning (IBP) and S/4HANA digital core features.
Global Trade Services (GTS)	ECC uses manual processes for foreign trade services.	S/4HANA uses automated foreign trade services with the SAP GTS edition.
Warehouse Management (WM)	Uses the traditional WM module.	WM module is replaced by the Extended Warehouse Management module, which now has advanced warehouse operations and automation.
Revenue Recognition	Traditional revenue accounting.	Traditional revenue accounting has been replaced by Revenue Accounting and Reporting (RAR) by S/4HANA to comply with Accounting Standard Codification (ASC 606) and International Financial Reporting Standards (IFRS 15).

Inventory Management

SAP S/4HANA enhances inventory management by improving real-time stock visibility and management by simplifying data structures.

Feature	SAP ECC	SAP S/4HANA
Inventory Management	There were more than 26 tables for inventory transactions in ECC.	26 tables were replaced by MATDOC (Material Document), a single inventory table in SAP S/4HANA, to improve inventory accuracy and reduce data duplication.
Real-Time Inventory Updates	Inventory updates and stock movement were delayed in ECC due to batch processing.	It is now happening in real-time in SAP S/4HANA due to an in-memory database for more accurate reporting and faster decision making.
Stock Valuation	Optional in ECC.	S/4HANA makes the material ledger mandatory to ensure multi-currency stock valuation

Additional Features in S/4HANA

Below are some additional features introduced by SAP S/4HANA.

Feature	SAP ECC	SAP S/4HANA
Advanced ATP (aATP)	ECC uses Available-to-Promise (ATP).	ATP is replaced with Advanced ATP (aATP) for intelligent product allocation, such as real-time stock, demand, and order fulfillment, based on AI-based analysis.
SAP Fiori User Interface	ECC uses a traditional SAP GUI that can run only on desktop devices.	S/4HANA introduces a new, modern, user-friendly web-based UI optimized for mobile, tablet, and desktop devices.
SAP Central Finance (CFIN)	It was introduced as an add-on, bringing some financial simplifications and the Universal Journal.	SAP S/4HANA Central Finance provides real-time consolidation and insight for financial data across multiple SAP and non-SAP systems. It reduces delays by manually reconciling data. Organizations transitioning to S/4HANA from legacy SAP or non-SAP systems can first implement central finance to make their transition smooth.

Benefits of Migrating to SAP S/4HANA

Migrating to SAP S/4HANA offers several business and operational benefits, including real-time data processing, automation, and simplified architecture for improved efficiency.

Business Advantages

• Improved Efficiency: Real-time reporting and automating repetitive tasks and workflows accelerate business processes, reducing manual work and operational delays.
• Greater Customer Satisfaction: Organizations can achieve better service delivery and greater customer satisfaction with real-time order processing, predictive analytics, faster response time, and advanced available-to-promise functionality.
• Better Integration with SAP Products: Organizations can integrate SAP solutions, such as SAP CRM, SAP SuccessFactors, SAP Ariba, SAP Fiori, SAP Cloud, and SAP IBP, using the S/4HANA unified data model, which provides enhanced data sharing and collaboration.
• Lower Operational and Ownership Costs: SAP cloud and hybrid deployments lower the infrastructure and IT maintenance costs, lowering the total cost of ownership (TCO).
• Smaller Database Footprint: Data compression and simplified data models, such as unified tables like MATDOC and ACDOCA, decrease storage consumption and perform better.
• Automated Processes and Increased Productivity: Optimized finance, HR, and supply chain automated workflows using built-in Robotics Process Automation (RPA), Machine Learning, and AI, provides increased productivity.
• Faster and Smarter Decision-Making: Businesses can make informed decisions based on real-time analytics, predictive analysis, and reporting.
• Higher Overall Profits: Lower costs, improved efficiency, better customer satisfaction, and faster financial closing rates can help organizations achieve higher profits and better financial performance.

Data Advantages

• Flexible and Scalable: Business operations can be more flexible and scaled across multiple locations using cloud environments with faster SAP HANA database driven technology.
• Enhanced Data Integration: The unified in-memory database with Universal Journal, Material Ledger, and Business Partner model enhances data integration across multiple platforms, making it a single source of data truth.
• Customer Insights: Demand forecasting and customer understanding can be improved using AI-driven predictive analytics and insight based on a faster data processing model.
• Real-Time Business Intelligence: Instant access to performance data and KPIs made available using SAP Fiori based dashboards and SAP Analytics Cloud (SAC).

Migration to S/4HANA: A Necessary Transition

SAP’s 2027 Deadline for SAP ECC Maintenance

With the S/4HANA release reaching 10 years old, SAP ECC maintenance support is announced to end in 2027. This means that SAP ECC will not receive security updates or patches. It is now crucial for businesses to stay competitive and migrate to SAP S/4HANA to avoid the risk of an unsupported system, which could generate security and compliance risks, and to use enhanced flexibility, scalability, and support for the new generation ERP platform. Delays in transition could cause rushed implementations, operational risks, and higher costs.

Preparing for Migration

Below are some key steps to make sure a smooth migration.

1. Perform a thorough assessment of current data landscape by identifying custom developments, dependencies and legacy data.
2. Clean up data by archiving, deleting or standardizing, as large legacy data can slow the overall migration process, and inconsistent or duplicate data may increase errors.
3. Take decisions on migration approaches such as Greenfield, Brownfield or Bluefield (Hybrid).
4. Train users and IT teams on new SAP S/4HANA processes and Fiori UI.
5. Plan for downtime and testing for reduced business disruption before going live.

Conclusion: The Future is S/4HANA

SAP S/4HANA has combined real-time insight, AI-based decision-making, and automation, introducing a new era of enterprise resource planning.

S/4HANA: Streamlining Processes and Reducing Redundancy

S/4HANA is designed to streamline and simplify business processes and reduce redundant data by eliminating multiple legacy tables from ECC modules. It integrates many modules, such as FI and CO, for real-time calculations, improving data accuracy and reducing complexity.

Enhancing Efficiency and Customer Experience Through Automation and AI

S/4HANA automates repetitive tasks using AI, robotic process automation, and machine learning. This increases productivity and customer experience and removes manual workloads in finance and logistics by providing real-time insight to make informed decisions. As a result, businesses become customer-centric and offer greater customer satisfaction.

The Compelling Business Case for S/4HANA

Migration to S/4HANA is not just upgrading to a new system; it is also about unlocking new features, growth, and digital transformation, and the benefits it provides can be a compelling business case.

Frequently Asked Questions

Is SAP ECC going to end?

Yes, SAP has announced that SAP ECC mainstream support is scheduled to end in 2027, but an extended maintenance support date could be offered to 2030 for large businesses to migrate with conditions and extra fees fully.