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S/4HANA transformation

What you need to consider as an automotive supplier

engineers walking while discussing by car chassis

With SAP S/4HANA With SAP S/4HANA, SAP has created the successor to SAP ECC. The end of maintenance in 2027 (or 2030 with extended maintenance) makes the change necessary for all SAP users. Automotive suppliers that have to map special OEM requirements must be particularly careful during the transformation.

Table of contents

1. ERP systems from SAP: What do ECC and S/4HANA mean?

Enterprise resource planning systems are used for central resource planning in a company. These IT systems are used to manage, control and plan personnel, capital, equipment, materials and other resources. SAP has long been the market leader in the field of ERP systems.

SAP ERP Central Component, or ECC for short, was the successor solution to R/3 in 2004, but was regarded more as a continuation, particularly in terms of versioning. Most users therefore make no distinction between R/3 and ECC. The renewed successor S/4HANA was released in 2015. The official end of maintenance for ECC was initially stated as 2025, then 2027. With an extended maintenance license, companies can still use the old system until 2030. The result is that companies, some of which have been working with SAP ERP systems for decades and want to continue doing so, are forced to convert their central IT system.

2. differences between ECC and S/4HANA

A lot has changed in IT since the 90s. There are major differences between the two ERP systems from SAP. It is important for all companies, including those outside the automotive industry, to be aware of these differences, as they have a major influence on the setup of the new system and the design of internal company processes. The major technological differences are as follows:

  • Database: Under S/4HANA, the underlying database is, as the name suggests, the SAP HANA database. Under ECC, however, databases from third-party providers (Oracle, IBM, etc.) were common. 
  • General Ledger (GL)In accounting, a new general ledger is used under S/4HANA, whereas two different GLs were possible with ECC. The newer GL under ECC is very similar to the GL of S/4HANA.
  • FI and COWhile accounts from General Ledger Accounting (FI) are assigned to primary cost elements from Controlling (CO) in ECC, this is mapped in the Universal Journal under S/4HANA, where both accounts and costs are stored in combination.
  • Bringing partners togetherIn SAP ECC, a distinction is made between customers and suppliers, even if the same company performs both roles for you. In S/4HANA, both functions are combined in a business partner directory under the term "Business Partner" (BP).
  • DiscountsInstead of SD discount processing in ECC, there is now settlement via condition contracts.
  • New user interfaceThe most obvious change for users is the new user interface called Fiori. This is strongly oriented towards current applications, with easy-to-use tiles that each user can put together themselves. Key figures or real-time information can also be made available directly in the Launchpad. 

Whitepaper: OEM supply

Here you will encounter the biggest problems

What would be unthinkable in other industries is commonplace in the automotive industry: customers, i.e. automotive manufacturers (OEMs), place very precise and complicated demands on their suppliers in terms of how deliveries and all communication relating to deliveries should take place.
In this white paper, we explain the biggest problems and challenges that suppliers face in these processes.

Cover page to whitepaper: OEM delivery - Here you will encounter the biggest problems, illustrated on a tablet.

3. greenfield or brownfield: different approaches to transformation

Anyone already using an existing SAP system landscape can of course decide to migrate existing processes to the S/4HANA world as comprehensively as possible. However, this is not the only way:

  1. Brownfield migration:If you want to retain processes, add-ons and extensions, choose the brownfield method. You continue to work on the field already in use, as before, without making any adjustments.
  2. Greenfield migration:The opposite is called the greenfield approach. Here, you start on the proverbial greenfield and set up all processes under S/4HANA from scratch.
  3. Bluefield migration (also known as Selective Data Transition, SDT): As a middle way between greenfield and brownfield, parts are rebuilt and other parts are taken over.

 

There is no general recommendation for one of these methods. Depending on the requirements in the respective industry, but also for the individual company, different scenarios can make sense.

Many companies initially tend towards greenfield or bluefield. There is a simple reason for this: SAP systems that have been used in companies for many years are often heavily modified. With every new requirement or necessary adjustment, specially developed Z programs are added - also known as "tinkered systems". Such systems are very costly to maintain and operate. Based on this experience, companies want to return more to the standard.

4. why automotive suppliers need to pay attention during the transformation

Automotive suppliers must comply with their customers' special delivery requirements. On the one hand, this applies to series or sequential deliveries, but on the other hand it also applies to special processes for data exchange between suppliers and automotive manufacturers (including OEMs). Regardless of the ERP system used, as a supplier you must ensure that you process the EDI messages with delivery call-offs, save the data they contain and output them correctly as shipment documents, ASNs or labels when shipping.
The standard under SAP ECC was not able to do this: cumulative quantities, time zone conversion, schedule line-related additional data or adjustments in ASNs - suppliers already had to map the OEM processes under ECC with the help of Z programs or add-ons.
In terms of the migration scenario, this has consequences for the setup of the system: the SAP standard under S/4HANA still does not fully cover OEM special requirements. This means that if you have already used enhancements under SAP ECC to map OEM processes, there is a very high probability that you will also have to do this under S/4HANA.
The decision in favor of a migration scenario (i.e. green, brown or bluefield) in the automotive industry is therefore often more a decision as to whether you want to continue using existing add-ons or extensions, or whether you can use them at all, or whether you want to replace them with new ones.

5 You must definitely take these technological changes into account

In addition to the existing challenges posed by special processes, there are some additional technological changes that automotive suppliers need to consider when switching to S/4HANA. These have a direct impact on the implementation of OEM processes.

 

As you can see from these points, it is difficult for automotive suppliers to use only standard SAP processes. Those who were already unable to implement this under ECC will also have to work with system extensions for S/4HANA. Accordingly, the greenfield approach is only possible in the sense that the system can be completely rebuilt, but the fact that additions are necessary for OEM processes must be taken into account.

Tip: Regardless of whether you are currently working with add-ons from WSW Software or another provider for your OEM processes under SAP: Contact your add-on partner as early as possible in your transformation project. In this way, you can ensure early on that you can also take all your customers' requirements into account under S/4HANA.

Whitepaper: When the SAP standard reaches its limits

This is the best way to implement OEM process requirements!

SAP consultants working for automotive suppliers are familiar with this conflict: On the one hand, they are confronted with complex requirements from automotive manufacturers that include very precise guidelines for data exchange with their suppliers. And on the other hand, there is often an SAP system that is not designed to meet these requirements. In this white paper, we examine how exactly to deal with this problem and what solutions are available.

Cover page of the white paper: When the SAP standard reaches its limits - this is how you best implement OEM process requirements!, shown on a tablet.
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