Siar Sarferaz

Compendium
on Enterprise
Resource
Planning
Market, Functional and Conceptual
View based on SAP S/4HANA
Compendium on Enterprise Resource
Planning
Siar Sarferaz

Compendium
on Enterprise
Resource
Planning
Market, Functional and Conceptual
View based on SAP S/4HANA
Siar Sarferaz
SAP SE
Walldorf, Germany

ISBN 978-3-030-93855-0 ISBN 978-3-030-93856-7 (eBook)

https://doi.org/10.1007/978-3-030-93856-7

# The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland
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Preface

In the digital age business processes can no longer be implemented based on

spreadsheets. Thus, enterprise resource planning (ERP) systems are used to manage
business information and processes. Essentially, an ERP system is a software
solution for running the entire enterprise based on automated and integrated business
processes. The complete process chain from research and development to
manufacturing, marketing, sales, logistics, and services is digitalized. Due to central
data management the cross-departmental visibility is increased, and it empowers
organizations to analyze crucial scenarios and improve the efficiency of their
business processes, which leads to cost savings and higher productivity. The ERP
systems are composed of numerous modules which implement specific process
components, for example, supply chain or manufacturing. The business data is
synchronized and kept consistent among modules. For example, application data
for the business process product receiving impacts immediately inventory manage-
ment. Thus, data redundancies are eliminated, and efforts for maintaining data are
reduced.
Another significant advantage is the improved efficiency and productivity. For
example, ERP systems provide applications for routine transactions like quality and
cash management or sales realization. Consequently, cycle times of the
superordinated processes like sales to cash or procurement to pay are reduced.
Furthermore, ERP systems support many decision-making capabilities, for example,
simulation functionality or planning engines to improve the organization’s demands.
Therefore, resources as materials or headcounts can be effectively provided. Valu-
able is also the built-in analytics for identifying business insights which can be
enhanced with ad-hoc reports.
In summary ERP systems build the backbone of companies and enable the digital
transformation of daily operations, business decision-making, and tracking of
enterprise’s critical data. SAP provides with SAP S/4HANA the next generation of
the intelligent and integrated ERP system. SAP S/4HANA is based on SAP HANA,
which is an in-memory database providing analytical capabilities for evaluation and
monitoring of key performance indicators in real time in addition to transactional
processing.
The objective of this book is to explain the functional scope, the data model, the
solution architecture, the underlying engineering concepts, and the programming

v
vi Preface

model of SAP S/4HANA. In the first part the reader learns about the market view of
the ERP solutions and vendors. The second part deals with the business processes for
sales, marketing, finance, supply chain, manufacturing, services, procurement, and
human resources, which are covered with SAP S/4HANA. In the third part the
underlying concepts of SAP S/4HANA are described, for example, in-memory
storage, analytics and search, artificial intelligence, process and data integration,
security and compliance, lifecycle management, performance and scalability, con-
figuration, and implementation. The book is concluded with a final chapter
explaining how to deploy an appliance to explore the SAP S/4HANA system.
The target audience for the book are managers and business analysts who want to
understand the market situation and the ERP future trends, end users and process
experts who need to comprehend the business processes and the corresponding
solution capabilities provided with SAP S/4HANA, architects and developers who
have to learn the technical concepts and frameworks for enhancing the SAP
S/4HANA functionality, consultants and partners who require to adopt and config-
ure SAP S/4HANA.
The support of the following persons is sincerely appreciated and gratefully
acknowledged: M. Alnaser, M. Angermeier, G. Beck, M. Benner, A. Berbescu, J.
Bertrand, L. Blank, J. Eger, T. Emig, N. Fuerhaupter, L. Ganss, B. Grimm, T. Gross,
J. Gruebener, T. Janson, T. Kessler, F. Klinke, D. Kossack, K. Krempels, T. Lorenz,
N. Meffert, C. Meli, M. Mertens, P. Mischka, D. Neumann, A. Ochel, J. Pines, V.
Popp, A. Richert, T. Scheuermann, A. Schweig, A. Siebert, P. Vittoria, M. Vonend,
and J. Zecevic.

Walldorf, Germany Siar Sarferaz

Disclaimer

This publication contains references to the products of SAP SE or an SAP affiliate

company. The SAP products and services mentioned herein as well as their respec-
tive logos are trademarks or registered trademarks of SAP SE or an SAP affiliate
company. For the SAP product screenshots included in this publication copyrights
are reserved by SAP. All other product and service names mentioned are the
trademarks of their respective companies. Data contained in this document serves
informational purposes only. National product specifications may vary. SAP is
neither the author nor the publisher of this publication and is not responsible for
its content. SAP Group shall not be liable for errors or omissions with respect to the
materials. The only warranties for the SAP Group products and services are those
that are set forth in the express warranty statements accompanying such products and
services, if any. Nothing herein should be construed as constituting an additional
warranty.

vii
Contents

Part I Market View

1 Challenges and Characteristics of ERP Systems . . . . . . . . . . . . . . . 3
2 ERP Market Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3 ERP Future Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Part II Functional View

4 Functional Departments and Enterprise Domains . . . . . . . . . . . . . . 55
5 Master Data of Business Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6 Master Data of Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7 Master Data of Bill of Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
8 Process of Idea to Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
9 Process of Source to Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
10 Process of Plan to Fulfill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
11 Process of Lead to Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
12 Process of Recruit to Retire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
13 Process of Acquire to Decommission . . . . . . . . . . . . . . . . . . . . . . . . 199
14 Process of Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
15 Process of Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
16 Industry Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253

Part III Conceptual View

17 ERP Product Qualities: Customer View . . . . . . . . . . . . . . . . . . . . . 279
18 ERP Product Qualities: Provider View . . . . . . . . . . . . . . . . . . . . . . 291

ix
x Contents

19 In-Memory Persistency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303

20 Virtual Data Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
21 Transactional Programming Model . . . . . . . . . . . . . . . . . . . . . . . . . 327
22 Analytics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
23 Search . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359
24 Artificial Intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373
25 Internet of Things . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389
26 Process Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401
27 Data Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419
28 In-App Extensibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435
29 Side-by-Side Extensibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453
30 User Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467
31 Identity and Access Management . . . . . . . . . . . . . . . . . . . . . . . . . . 485
32 Data Protection and Privacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499
33 Secure Development and Operations . . . . . . . . . . . . . . . . . . . . . . . . 515
34 Globalization and Localization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529
35 Scalability and Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545
36 Lifecycle Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559
37 Configuration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 571
38 Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583

Appendix
39 Explore the SAP S/4HANA System . . . . . . . . . . . . . . . . . . . . . . . . . 599

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615
About the Author

Siar Sarferaz is a chief software architect for the enter-

prise resource planning (ERP) solution SAP S/4HANA,
working in the research and development department of
SAP’s headquarters in Walldorf, Germany. In this role,
he drives the digital transformation by defining the
solution architecture for the product and by providing
inventive concepts scaling for mission critical business
processes. For example, he is the lead architect for
artificial intelligence implementations in SAP S/4HANA
and is responsible for all conceptions how to add intelli-
gence to business processes. In the context of ERP
software, he owns 30+ patents. Furthermore, he is
author of numerous ERP books and gives university
lectures on ERP software. Siar had studied computer
science and philosophy and holds a Ph.D. in computer
science. He began his career as a method researcher at
Siemens, before moving to SAP, where he has now
worked for more than 20 years.

xi
 Part I
Market View

In this part the Enterprise Resource Planning (ERP) market perspective is explained.
The ERP market size is constantly growing and diverges by the type of customers
and deployment options. While traditional vendors continuously expand their foot-
print, new start-up companies enter the market due to changing technology and
shifting paradigm. The challenges and characteristics of ERP systems are described
as they have been evolving steadily in the last years. To be prepared for the future,
upcoming ERP trends are summarized. The ERP market size varies by the type of
customer use cases as depicted in Fig. 1. Services-based companies require mainly
finance and procurement functionality. Manufacturing-based firms expected from
their ERP systems in addition capabilities for digitalizing their factories. Generic
features like human capital management or travel expense are typically needed in all
types of enterprises.
In general, software architecture and technological innovations serve to provide
business value and to best meet the needs of customers. Such requirements have
shifted dramatically in the digital age. However, in order to understand the architec-
ture challenges of modern ERP solutions, it is necessary to first look back at what
made SAP’s ERP software so successful. While addressing the needs of a constantly
changing market, these qualities of the past must be retained by an ERP solution.
And, without a doubt, they must be advanced in order to deal with emerging
challenges and enable future business processes. Clearly, globalized and localized
business process coverage, as well as industry variants, is an important factor in
selecting SAP ERP software. However, there are architecture and technology drivers
that are at the heart of SAP’s success and have led to the adoption of its systems by
thousands of businesses.
 2

Market for ERP+ HCM+ Expenses for

Rev. in €Millions Market for ERP for Services-Based Firms
(Customer Segment: Over 500 Employees) Manufacturing-Based Firms
31,539
24,216 1,295
Market for ERP for Time & Attendance
Services-Based Firms PPM 1,209 3,680
Expenses & Travel
Procurement 2,557
19,967 Sourcing, Spend Analysis

PPM 1,209 Manufacturing Core HCM 6,597

Digital Manufacturing 4,249
Procurement 2,557 Manufacturing,
Sourcing Planning, Scheduling
Spend Analysis PPM 1,209
Production Execution
Quality Mgt Procurement 2,557
Sourcing
Contract
Spend Analysis

Financial
Financial Accounting 16,201
Accounting 16,201 Financial
FP&A Accounting
FP&A Treasury 16,201
Treasury
FP&A
Asset Mgt Treasury
Asset Mgt
Risk Mgt Asset Mgt
Risk Mgt
Receivables Mgt Risk Mgt
Receivables Mgt
Real Estate Mgt Receivables Mgt
Real Estate Mgt
Rev. Mgt Real Estate Mgt
Rev. Mgt
Rev. Mgt

2019 2019 2019

Fig. 1 The ERP market size varies by the type of customer use case
Part I Market View
Challenges and Characteristics of ERP
Systems 1

ERP systems are not new to the software market. But where does the need for ERP
systems come from, and how have the systems and their requirements evolved? This
chapter takes the reader on a journey through the history of ERP systems,
demonstrating the systems’ strengths and weaknesses as well as how providers,
particularly SAP as the market leader, deal with the constant change in requirements.

Introduction

This chapter provides an overview of ERP systems, as well as challenges and key
features. ERP is an abbreviation for Enterprise Resource Planning system. But what
exactly is an ERP system? Enterprise Resource Planning (ERP) is a term associated
with a multimodule software for managing and controlling a wide range of activities
that assist a manufacturer or other business. Data capture, storage, product planning,
parts purchasing, inventory control, purchasing, customer service, and order tracking
can all be aided by ERP. ERP also includes finance and human resource manage-
ment application modules. The implementation of an ERP system necessitates
extensive business process reengineering and retraining. Because of the rapid prog-
ress of information technology and the ongoing digitalization of both the private and
business sectors, the demand for highly sophisticated ERP systems is becoming an
increasingly important issue. Reasons for this include the need for quick deliveries of
goods and services, as well as a quick, easy, and secure way to conduct transactions
across multiple instances. This chapter describes the evolution of ERP systems as
well as the changes in requirements and features. In the area of challenges to modern
ERP solutions, the focus is on SAP ERP system as SAP is actually the inventor of
ERP solutions and since decades the leading vendor worldwide.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 3

S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_1
4 1 Challenges and Characteristics of ERP Systems

ERP Evolution

ERP systems can be traced back to the 1960s or 1970s in the literature, depending on
the author. Everything started with so-called MRP systems at the time. MRP is an
abbreviation for Material Requirements Planning system. At the time, the
manufacturing sector was the primary focus of MRP systems. It was defined as a
system for calculating the materials and components required to manufacture a
product (Essex 2020). The MRP system was invented in 1964 by Joseph Orlicky,
an IBM engineer at the time. MRP systems have some flaws. Aside from the already
mentioned narrow focus of the systems, there is also no possibility of providing
feedback to the production plan in the event that the material plan was found to be
infeasible due to a shortage of capacity. As a result, MRP systems have gradually
improved. One thing quickly became clear: in order to have a functioning and
comprehensive system, a holistic approach is required, which means that other
processes, all the way up to the entire organization, must also be integrated. The
continuous evolution crossed several barriers, including the establishment of links
between manufacturing execution and production planning activities, known as the
Master Production Schedule (MPS), among others. Other approaches, ranging from
rough capacity planning to detailed capacity planning, have been developed to
address the problem of capacity shortage. These approaches help with financial
planning at the same time. These and other improvements resulted in a more
advanced MRP system, the MRP II systems. These ideas and developments also
resulted in market events, as various companies were founded in the early 1970s that
also dealt with standard software for businesses. SAP was one of the start-ups,
founded in Germany as “Systemanalyse Programmentwicklung” (in English, “Sys-
tem Analysis and Program Development”). The founding members were all IBM
Corporation employees. The early stages of start-ups concentrated primarily on
finance and the use of a single database, as well as real-time processing. The various
systems were available at the time as mainframe software on large computers. Back-
office processes such as human resources and accounting were gradually integrated.
Until the 1980s, this development and integration were continued until all of a
company’s business functions were integrated. However, this was only possible
because enormous progress was being made in the field of computer technology at
the same time: both hardware and software were developing rapidly and steadily.
But let’s get back to the MRP II systems. MRP II stands for Manufacturing
Resource Planning and was created in 1983 by management expert Oliver Wight
(1984). According to Wight, MRP II is a comprehensive market and resource-
oriented planning of sales, production, and stock levels, beginning at the executive
level. But what does this mean, and how did it come to be that several areas of a
company were further developed and linked? Each department within a company
has its own way of doing things. At the start of computer technology’s introduction,
each area attempted to map its own working methods using a system. As a result,
each area had its own software and database that was tailored to its specific way of
working. However, this did not exactly support the work done across all divisions
within a company, because manufacturing planning and control activities are closely
ERP Evolution 5

related to the activities of other functional areas such as accounting and finance,
marketing and sales, product/process engineering and design, purchasing, and
materials management (Sridharan and LaForge 2000). The attempt to connect
different areas of a company suggests the idea of a uniform database and a single
system, because double data management frequently leads to inconsistencies and
increased time expenditure. This also leads to the fundamental concept of the MRP
II’s development and emergence: There is one physical system in operation in a
company, and there is no justification for having more than one information system
representing different dimensions of the physical system. With the advancement of
computer technology, MRP II systems provided the ability to perform various
simulations based on data sets in addition to a company-wide information base.
Simulations do not alter data sets within the database, but instead work with fictitious
numbers. They assist the company in making various operational decisions. This can
include a wide range of decisions in various areas, such as examining individual
trading positions, forecasting for best- and worst-case scenarios, and much more. By
combining these functions, the company becomes more efficient and can serve
customers better. So, based on the previous points, three key characteristics of
MRP II systems can be deduced: interfunctional coordination, closed loop planning
(from MRP systems to MRP II systems), and what-if analysis capability. In sum-
mary, an MRP II system is a business planning system because it connects various
managers from different areas of the company through a single central information
system. However, the MRP II system has a major flaw: all of the points mentioned,
and the system’s basic concept are always related to production. A company, on the
other hand, consists of other sectors that are not directly related to production.
Furthermore, there are not only manufacturing companies on the market, but also
other sectors of the economy that do not find MRP II systems useful under these
conditions. This is how the next stage of evolution arose: the ERP system, which was
supposed to bridge the market gap.
ERP systems first appeared in the 1990s. According to Essex (2020) analysts at
the research firm Gartner recognized the need for uniform naming and spearheaded
its implementation. They were inspired by business software vendors such as SAP,
PeopleSoft, Baan, and others. Despite the fact that the terms MRP or MRP II system
are no longer commonly used, they are considered the forerunners of ERP systems.
The various ideas and thoughts are still used in ERP systems today. MRP packages
are typically integrated into ERP systems in most systems. But, exactly, what is an
ERP system? ERP systems are cross-industry systems that support all major business
processes across a broad range of company types. ERP systems thus map not only
production processes, but also all other more general business processes. The
peculiarity that should be highlighted is that ERP systems are intended for all
industries, because every company, regardless of the sector or industry to which it
belongs, has to write invoices and interact with other companies in some way.
Simultaneously, ERP systems were confronted with the trends of globalization,
global markets, international networks, and others, which presented new challenges.
These new challenges reintroduced the need for multilingual and multicurrency
systems, including conversions, to meet the global changing market environment
6 1 Challenges and Characteristics of ERP Systems

and competition. ERP systems had to overcome several obstacles: Developing

distributed systems, customized data views, and processing capabilities for various
roles and employees. Engineering, Technical Change Control and Documentation,
Procurement or Purchasing, Materials Management, Manufacturing, Human
Resources, Cost Accounting, Finance, Marketing and Sales were typical
functionalities that an ERP system had to support in 2000. With the introduction
of the term ERP, system vendors began to reconsider as well. There was a shift away
from mainframe computers and toward a server-client architecture. This enabled
multiuser operation. Different user interfaces were gradually integrated to make
work easier. At the same time, SAP switched over. SAP R/3 also made it possible
to work with the software in real time at one’s own workstation for the first time.
Other features revealed at this time included a distributed relational database system
with query and reporting capabilities, electronic data interchange capability to
communicate with both suppliers and customers, decision support systems for
managers, a graphical user interface, and standard application programming
interfaces. However, the progress of computer technology did not stop in the year
2000. In the 10 years that followed, a new trend emerged on the market. Data should
be accessible and retrievable at all times and from any location. Cloud computing is a
term that came up frequently in this context. Cloud computing and the Internet
enabled companies to communicate with one another in real time. Some businesses
have shifted away from traditional desktop applications and toward browser-based
user interfaces. From the 2010s to the present, there have been numerous new issues
within computer technology advancements that have kept ERP system providers
facing new challenges. This includes issues such as artificial intelligence and
machine learning, blockchain, predictive analytics, and other emerging technologies
that necessitate the cloud’s superior computing power and Internet connectivity. The
challenges and characteristics of modern ERP systems, as well as how they are
addressed, are presented in the following chapter, which is based on the SAP’s ERP
product named as SAP S/4HANA.

Characteristics of Modern ERP Systems

SAP was one of the aforementioned start-ups during the transition from MRP
systems to ERP systems. SAP is now the market leader in ERP systems. What are
the characteristics and features of SAP SE solutions, and how have they been
implemented in recent years? SAP S/4HANA is SAP’s most recent generation of
ERP systems. It is the evolution of SAP ERP into a simplified system of engage-
ment, leveraging SAP HANA’s in-memory capabilities such as embedded analytics,
simulation, prediction, decision support, artificial intelligence, and machine learning
in conjunction with mobile, social, Big Data, and deployment choice to deliver
applications with a new user experience for people directly in the context of their
lives. SAP’s goal with SAP S/4HANA is to build on the previous success of its ERP
systems while improving the features and principles. This chapter begins by describ-
ing the successful features of SAP ERP solutions. These are then supplemented by
Characteristics of Modern ERP Systems 7

SAP S/4HANA solution features. At the time, the unique selling points of SAP’s
ERP solution included not only adaptability to custom business process needs via the
used ABAP-based system from SAP, but also a certain stability of the system. This
was also true during the update period. SAP in year 1992, with the architecture of the
so-called SAP R/3 system, was a pivotal point in the company’s success at the time.
It was a groundbreaking three-tier architecture that separated the front end, applica-
tion server, and database, allowing for independent scalability. This architectural
feature enabled SAP to stand out in the market by providing performance, robust-
ness, and scalability. However, as time passed, customer requirements changed,
posing new challenges for SAP and other ERP providers. SAP had a very clear idea
of what features were and still are critical to customers. Seven key characteristics for
modern ERP systems emerged (Saueressig et al. 2021b) high performance and
scalability, user experience, extensible architecture, simple and standardized
implementations, intelligent ERP processes, cloud and on-premise implementations,
and security in terms of data protection, compliance, and data isolation.
The rapid technological development is responsible for the high performance and
desire for scalability. As a result, there is a desire for high speeds and a high degree
of adaptability to meet adaptations. This can only be accomplished through system
scalability. But what exactly is scalability? Scalability is the ability of a software
system to handle a higher load volume by utilizing additional resources. A modern
ERP system’s foundation is a future-proof architecture for constantly increasing
system loads as enterprises collect sentiment data, sensor data, spatial data, market
feeds, and experience data in unprecedented quantities. The digital era necessitates
even greater speed and adaptability. Companies frequently encountered issues with
multiple-batch run dependencies in ERP implementations over the last few decades,
limiting scalability, and overall system performance. In-memory database systems
enable a new generation of business applications that combine transactions, analyt-
ics, machine learning, and more, without the traditional complexities of persisted
aggregates, redundancy, inconsistency, or latency imposed by standard database
technology. The elimination of aggregate tables and indexes, as well as the use of
insert-only models, lay the groundwork for significantly reduced processing time
and greatly increased parallel throughput and scalability in modern ERP
applications. The ability to run online transaction processing (OLTP) and online
analytical processing (OLAP) applications on the same in-memory database system
without replication results in significant cost savings and productivity gains. Real-
time business processes, planning, and simulation also improve accuracy because
reporting and analytics based on replicated, potentially outdated data can lead to
poor decisions. Because of the elimination of application-controlled materialized
aggregates, in-memory computing allows to avoid traditional batch programs, thus
facilitating to create many innovative new business processes. The insert-only
paradigm of in-memory databases enables lock-free, scalable software with signifi-
cantly increased throughput. In-memory capabilities help to finally reimplement and
simplify large portions of the application logic while meeting the scalability and
functional requirements expected of a modern ERP system. Inventory management
is an example of how the aforementioned batch-process scalability issues were
8 1 Challenges and Characteristics of ERP Systems

addressed using in-memory capabilities. Inventory management in SAP ERP

necessitates database updates on the aggregate table for quantity-in-stock informa-
tion (table MARD). Due to the architecture of SAP HANA as in-memory database
system, these updates can be removed in the simplified SAP S/4HANA data model.
Intensive scalability tests with inventory management were performed to compare
the performance and throughput of SAP Business Suite powered by SAP HANA and
SAP S/4HANA. The results revealed a significant increase in throughput, which
increased by a factor of 25 when a greater number of material movements were
posted in parallel. This is a game-changing innovation, particularly for companies in
the automotive industry, where backflush processes have a high number of common
parts in the material documents. Column store of in-memory database systems
enables data to be searched and analyzed without the use of additional indexes.
This has a significant impact on the application architecture because it provides full-
text searching for end users without replicating search-relevant data into an external
instance, significantly reducing data volume in ERP systems. The desire for a good
user experience stems from the fact that computer technology has now infiltrated
many aspects of people’s personal lives. Users’ attitudes toward enterprise
applications have shifted as a result of the digital era. Members of generation Y
and Z, in particular, expect enterprise applications to be visually appealing, accessi-
ble from any device at any time, simple to use, responsive, and easily customizable.
Applications that do not provide the same level of comfort that these users are
accustomed to from consumer-grade applications or websites are frequently rejected
and used less frequently. Thus, UX is concerned with meeting a user’s needs in the
most efficient and enjoyable manner possible. ERP systems should ideally be
intuitive and simple to use without the need for extensive training. This necessitates
a redesign geared toward an intuitive user experience, understandable terminology,
and context-sensitive user assistance. The key requirement for applications today is
that they be visually appealing, accessible from any device at any time, simple to use,
responsive, and easily personalized. The properties of extensible architecture and
simple and standardized implementations are inextricably linked. Many customers
have customized the application’s standardized processes to meet their specific
needs. There must be a way to continue to provide this flexibility without
jeopardizing upgrade capabilities and maintainability, as well as removing the fear
of the next release. As previously stated, terms like artificial intelligence and
machine learning, blockchain, predictive analytics, and other emerging technologies
have also entered people’s minds. This is something that various ERP providers are
aware of. However, these can take advantage of the rapidly advancing computer
technological development to provide the user with entirely new options. Integration
of these technologies is a step forward in automation, which can lead to more
efficient work. It is critical that a modern ERP solution allows for the integration
and configuration of the capabilities that businesses require today and in the future.
This necessitates that the ERP system be built on an extensible architecture, which is
accomplished through flexible integration capabilities based on open standards on
the one hand and powerful in-app extensibility mechanisms on the other. To ensure
that upgrades do not break extensions or configuration, the system architecture must
Characteristics of Modern ERP Systems 9

separate standard coding, custom extensions, and content. ERP products, of course,
must provide standardized implementation packages. However, they must also
provide options for tailoring the product to the specific needs of an organization
without jeopardizing upgradability and long-term maintainability. Software
architectures, particularly in the cloud, are distributed and service-oriented.
Although extensions are frequently used to modify the standard system in the
context of an ERP application, a modern ERP system embraces more and more
extension capabilities through the integration of new cloud services. This approach
is known as side-by-side extensibility. With this strategy, the system architecture
transitions from less flexible, traditional, monolithic concepts developed on a single
stack to federated services that allow for better service-level agreements (SLAs),
such as scalability, availability, and resilience, and ensure maximum adaptability
while ensuring update stability through separation via stable APIs. Customization of
UI and business scenarios through field and process extensions, adaptations or
extensions of business workflows, and open and flexible integration with third-
party products via standardized APIs are critical requirements for both in-app and
side-by-side extensibility and must be reflected in the software architecture. Most
businesses have written a significant amount of custom code to enhance, partially
replace, or even modify the ERP software implementation. Furthermore, they have
heavily customized their systems. As a result, the IT landscape is disjointed, with a
ERP system that is difficult to upgrade to the next release. As a result, massive
modifications to standard software have locked enterprises in and are preventing
them from taking the next step toward digital transformation. This includes reducing
complexity by standardizing and simplifying business processes. ERP applications
in the digital age necessitate the delivery of preconfigured packages that allow for
rapid implementation. This necessitates a thorough understanding of the industries
for which the business configuration content packages are designed. ERP configura-
tion, particularly in the public cloud, must largely meet an organization’s needs out
of the box. This necessitates the use of a modern ERP to provide self-service
implementation tools, which help to significantly reduce implementation costs.
Tools that guide users through the implementation process step by step, as well as
standardized data migration tools, are especially important. The aforementioned
extensibility options can be used in cases where an organization’s own practices
are more beneficial. The desire to provide both cloud and SaaS solutions stems from
the diverse needs of customers. There are several arguments in favor of and against
each option. One reason why business may not want to use the cloud exclusively is
that users do not want to entrust the security of their sensitive data to a cloud. They
want to keep control of the situation. However, hybrid models are also an option.
Hybrid models are not uncommon at this point. In terms of data protection and
security, the use of the cloud, and thus the Internet, presents a new challenge.
Operational processes, in particular, frequently work with data that could be critical
to the company if third parties gain access. As a result, security is and will continue
to be a critical issue for ERP systems in the future. SAP S/4HANA is also attempting
to meet these requirements while adding new features. But what makes SAP
S/4HANA so unique? SAP HANA was created to enable a new generation of
10 1 Challenges and Characteristics of ERP Systems

business applications that combine transactions, analytics, machine learning, and

more, without the traditional complications of persisted aggregates, redundancy,
inconsistency, or latency imposed by standard database technology. To accomplish
this, SAP S/4HANA provides an in-memory platform with an insert-only model that
shortens processing time, increases parallel throughput and scalability, and allows
transactions to be processed in real time. Six principles guided the development of
the SAP S/4HANA application (Saueressig et al. 2021b):

• Stable but flexible digital core: A clean and stable core is established, allowing for
faster software deployment and easier adoption of SAP software innovations as
well as regulatory software changes. This lowers the costs of upgrade projects,
resulting in a lower total cost of ownership (TCO). However, this does not imply
that flexibility is in jeopardy. SAP S/4HANA aims to provide the same level of
extensibility and flexibility as SAP ERP, but with significantly increased stability
contracts to best support upgradeability. With the separation of concerns para-
digm, the new concepts of in-app extensibility and side-by-side extensibility
address this critical need. These flexibility mechanisms are built on a large set
of publicly available APIs and objects with guaranteed stability contracts.
• Simplification with the principle of one: This is one of SAP S/4HANA’s core
architecture principles, and it describes the deprecation of redundant frameworks,
data models, UIs, and other SAP ERP elements. The principle of one achieves
simplification and reduced complexity in this manner. An important step toward
addressing this is the significant simplification of solution offerings through the
elimination of nonessential components in the simplified deployment. This is
accomplished through quarantine and deprecation. The number of tables, data
elements, and transactions in SAP S/4HANA has been drastically reduced by
eliminating redundant functionalities.
• Open to innovations through service orientation: To avoid redundancies and
achieve both efficiency and consistency, SAP S/4HANA introduces a virtual
data model (VDM). As a result, it can create accurate cross-references between
business processes and analytical scenarios. The user interface and application
integration of SAP S/4HANA are based on a service-oriented architecture, which
leverages web services built on open standards. The VDM in SAP S/4HANA
provides a solid foundation for both RESTful UI services for SAP Fiori apps and
integration APIs.
• Modularization into (hybrid) integration scenarios: SAP S/4HANA aims to
support users in such a way that end-to-end processes are possible. It
accomplishes this by integrating a container technology and a logical data
model across all services. This SAP S/4HANA modularization is an important
prerequisite for supporting hybrid scenarios, in which enterprises run parts of
their SAP S/4HANA functionality in the cloud and other parts on-premise. As
previously stated, hybrid deployments will be the integration reality for many
ERP implementations for many years to come, providing enterprises with the
flexibility to approach both digitalization and cloud migration with public, pri-
vate, and hybrid approaches.
Characteristics of Modern ERP Systems 11

Industry Best Practices

LoB Coverage

Intelligence & Automation

UX (role based, any device, digital assistant)

Security & Compliance Openness & Extensibility In-App Custom Partner

SAP S/4HANA Apps
Extensions Apps

ONE Data Model • ONE Semantic • ONE User Experience

SAP S/4HANA Public Cloud SAP S/4HANA Private Cloud SAP S/4HANA OnPremise
as a Service as a Service as a Product

Fig. 1.1 SAP S/4HANA key capabilities

• Cloud first, but not only: There are numerous distinctions between a cloud-based
SaaS solution and an on-premise application. Cloud architecture must be
designed to take advantage of shared resources, enabling high availability and
elastic scalability. SAP S/4HANA Cloud is a pure SaaS solution that incorporates
every aspect of a modern distributed and service-oriented cloud architecture.
Every customer tenant uses the same software stack. Large parts of the hardware
resources, system data, and coding are shared across multiple tenants in
multitenancy clusters for scaling effects. The solution provides fully dynamic
tenant density, zero downtime for maintenance events, and complete automation
of lifecycle management.
• Semantic compatibility to support evolution with the fewest disruptions: SAP
S/4HANA supports the market needs for hybrid deployment models by providing
homogeneous data models and integration points across on-premise and cloud
versions. When an organization plans to migrate to a modern ERP solution such
as SAP S/4HANA, new digital capabilities are always taken into account. The
semantic compatibility of SAP ERP and SAP S/4HANA data models, as well as
SAP S/4HANA on-premise and cloud deployments, enables enterprises to transi-
tion in a reasonable timeframe. Many of SAP ERP’s extension points remain
available with this compatibility paradigm, reducing the adoption effort for
custom coding when migrating to SAP S/4HANA.

All of these features are combined and implemented by the market leader in SAP
S/4HANA to provide users with the best possible ERP application experience. The
named features are clearly summarized in Fig. 1.1.
12 1 Challenges and Characteristics of ERP Systems

Business Value

Enterprises face numerous challenges with ERP today, including a lack of integra-
tion, an inability to adapt to a rapidly changing business environment, the complex-
ity of business transformation, change management, data conversion, and migration,
and total cost of ownership (TCO). Furthermore, the COVID-19 pandemic
necessitated radical ERP flexibility, for example, think cash management and
financial agility, production and distribution changes, drastic cost cutting, customer
demand changes, remote people management or working from home. While intelli-
gent ERP is a growing market that is designed to address rapidly changing business
needs, the crisis has altered the nature of many ERP transformation projects. As a
result, value capture must occur quickly and incrementally. Installing or running an
ERP system has an impact on business processes throughout an organization, which
naturally creates a number of challenges. Long implementation projects can cost
businesses a lot of money, not just in fees, but also in lost time to value. Furthermore,
the knowledge and capabilities of a consulting implementation partner can have a
significant impact on the project’s success. These difficulties are exacerbated when
complex, multifunctional systems that must integrate a wide range of tasks across an
enterprise are introduced. Most organizations require from the ERP solution to
support their mission-critical processes from start to finish. These processes can be
divided into commodity processes, which seek maximum efficiency through
standardization and automation, and differentiating processes, which generate com-
petitive advantage and necessitate a high degree of flexibility to adjust and extend.
Commodity and differentiating processes covering the core scenarios lead-to-cash,
recruit-to-retire, design-to-operate, and source-to-pay which are supported by ERP
systems and provide instant value. Lead-to-cash is concerned with following up on a
customer’s intent or interest in purchasing a product or service. Basically, it is how a
company generates revenue from product or service sales covering the various stages
of this process, such as the attract customer, offer, sell, fulfill, and collect phases.
Recruit-to-retire oversees all aspects of the workforce involved in business
operations. Functionalities range from workforce demand planning to staffing,
onboarding, support during the working phase, travel, and payment for terminated
work engagements. Source-to-pay encompasses and supports the sourcing and
acquisition of goods and services covering the phases of sourcing and contracting,
planning and forecasting, purchasing and delivery, and finally invoicing and pay-
ment. Design-to-operate aids in the design, manufacture, shipping, operation, and
maintenance of products and services. For planning and manufacturing support, as
well as the delivery process and continuous operation, various applications are
combined. This process is a prominent example of the possible hybrid interaction
between on-premise and cloud, with components that frequently run at the edge—
close to controlled and monitored machinery and equipment. Organizations are
increasingly requiring solutions that address specific scenarios or business problems
or support dedicated processes, and companies are increasingly preferring to pay for
what they use rather than pay for vendor-determined packages. This flexibility is
possible, especially in the cloud, because traditional product boundaries are blurring
Business Value 13

and being replaced by highly flexible services. ERP is transitioning from a broad,
fixed-scope solution that covers every critical business process a company may have
to a commercial construct that bundles capabilities along predefined scenarios and
end-to-end processes that organizations can consume as needed. While technically
decoupled, this bundle still provides the most critical value for organizations that use
ERP solutions in the first place: From the user experience (UX) to data and process
integration, these solutions are highly integrated. Configuration flexibility is greatly
increased, allowing for rapid adaptation of those services to meet the demands of a
changing business environment. The current reality demonstrates that every industry
participant must plan for the worst and strive for the best, including repaying
technical debt and investing in a transformation strategy that is authentically focused
on the consumer. SAP reflects this ethos by adhering to the fundamental principles of
migrating to SAP S/4HANA and cloud-based digital transformation. Organizations
have had to quickly recast key operational business processes, and this need for
change is expected to be the new normal in the future. Business processes must be
constantly read-jousted by shifting to automated, flexible, analytics-driven, project-
and industry-oriented applications that play a role within a larger ecosystem. SAP’s
intelligent ERP offerings can help drive business by providing real-time insights,
real-time planning, forecasting, simulation, and embedded analytics at each step of
the way by recognizing those needs and meeting them with SAP S/4HANA.
Business value can be divided into strategic and operational value. Both elements
are critical for organizations to reap the full benefits of implementing a new ERP
software system. Compared to the past of mostly monolithic ERP systems, today’s
IT environments are often driven by best-of-breed strategies, different technology
stacks, and the move to cloud solutions from multiple vendors with unaligned
release schedules. All these developments have made the job of IT managers
much more challenging. At the same time, they are confronted with reduced IT
budgets and skill gaps, while the demands from business stakeholders to implement
new requirements in an agile way grow and timelines shorten. New regulatory
requirements, data privacy laws, and cybersecurity threats do not make things easier.
With SAP S/4HANA Cloud these IT operation tasks are offloaded to SAP as cloud
service provider. The calculation of a financial business case is the starting point for
every ERP implementation project. Multiple tools, approaches, and templates are
provided by SAP and its ecosystem to complete this exercise and make the financial
business case as standardized and convenient for organizations as possible. The
standardization of business processes has more than just a positive effect on
operations. With a solution based on industry best practices combined with
preconfigured content, customers can implement ERP solution in the cloud much
more quickly than ever conceived in the on-premise world. This standardization
translates directly into lower project costs, faster rollouts, lower training
requirements, leaner operations, and lower TCI. Currently the fastest SAP
S/4HANA Cloud implementation was completed in 26 days. The cloud has substan-
tially helped companies drive standardization, reduce implementation times for new
ERP solutions, and increase the chances of a successful ERP implementation. In
addition, they more directly see the implication of deviating from the standard, as the
14 1 Challenges and Characteristics of ERP Systems

costs of integration and extension can explode and destroy the positive business case
of moving to the cloud. Ease of use in software and simplicity can also help users
accept compromises on functionality since people working with the software directly
experience new possibilities and new analytical insights. The high degree of
standardization across all dimensions—process definitions, infrastructure, imple-
mentation, operations, and updates—directly translate into TCO savings. In the
initial TCO calculation, many companies forgot to integrate the costs of ongoing
operations with their IT systems. Having the internal IT team and multiple
contractors working constantly on the ERP system to keep the lights on is often
seen as an unavoidable cost element and, in many cases, not directly assigned to one
system. In addition, the costs of lost business user productivity because of system
upgrades, integration into long-running IT projects, and missing analytical insights
are rarely taken into consideration. As for upgrade costs, many organizations still
using the SAP ERP application are on quite old releases of the solution and are afraid
to upgrade because of expectations of huge costs and business disruption. Therefore,
their users cannot take advantage of the latest innovations of software and may not
be motivated to work with business software from the 1980s or 1990s in the year
2021 and beyond. The result is not only missing productivity and inspiration, but
also workaround solutions in many areas. The costs for all these specific solutions
attached to the large house called ERP are assumed directly by the business and are
not attributed to the ERP system in most cases. If this cycle has continued for some
years, a potential upgrade or change in the underlying ERP software gets more and
more difficult which drives costs and requires extensive change management to
transition end users who have gotten comfortable working with these legacy
systems. Although a bit counterintuitive, unfortunately, ERP systems which were
initially implemented to manage operational processes at scale and to support the
growth of organizations, have become just the opposite—major change inhibitors—
due to customizations and modifications over time. As described many organizations
today look for cloud enterprise management systems for multiple reasons. One
reason is a high degree of standardization, which again is the prerequisite for a
high degree of automation. SAP has made major investments in recent years to
increase the degree of process automation across all lines of business (LoB) to free
users from routine tasks and allow them to shift their focus from transactional
processing toward complex decision-making and from backward-oriented analytical
tasks toward using predictive and simulation capabilities to determine the next best
action based on situations that previously triggered an alert and to react to specific
data patterns. One example of SAP S/4HANA shows how automation reduces
redundancies for greater workforce productivity. For example, the Chinese branch
of a worldwide leading manufacturer of polymer products relied on its in-depth
knowledge of materials and extensive experience in technologies and manufacturing
processes to meet the wide-ranging needs of its customers from across industries.
However, to protect its status as a leader in polymers, this subsidiary knew it needed
to create smoother customer experiences. One central element to change the cus-
tomer experience was to revolutionize billing processes—ensuring billing occurs on
time as well as with all the consolidation and flexibility end customers expect. By
Conclusion 15

implementing robotic process automation (RPA) the company achieved greater

process efficiency through automatic billing workflows and the automatic upload
of a thousand financial accounting documents, turning 4 days of work into a
10-minute task.

Conclusion

Overall, ERP systems can be described as extremely powerful. The rapid develop-
ment of computer technology, on the other hand, is constantly pushing vendors to
their limits. To keep up with the competition, they must be creative and not rely on
what they currently have. With SAP S/4HANA, SAP introduced a new generation of
ERP systems to the market, which is continuously further developed. However,
unlike many other systems, the new generation is already designed to be far more
adaptable than the original MRP and ERP systems. Nonetheless, it is critical at this
point that SAP does not rest on its laurels and keeps up with the times. Machine
learning and artificial intelligence are constantly evolving technologies. Other
technologies may also emerge and provide a breath of fresh air, necessitating
additional action and innovation from ERP system providers.
ERP Market Analysis
2

This chapter describes the state of the ERP market. This includes revenue size,
customer types, and vendor analysis. Depending on the cloud and on-premise
deployment the figures can vary. In addition, different lines of business and regions
develop diversely. This chapter also takes a look at the different market shares of the
biggest competitors in ERP market and tries to give an answer why these competitors
became so big. There will also be an outlook for the future growth in ERP market
and how the different competitors try to achieve to go ahead of the others.

Introduction

Enterprise resource planning (ERP) is the software used to manage business pro-
cesses. This allows organizations to plan their resources like human resources,
technological resources, and other functions in a system of integrated applications.
Therefore, an ERP system has different applications for different tasks. These
applications run together as a complete product with a database, user interfaces,
and specific applications to cover all facets of an operation like product develop-
ment, manufacturing, sales, and marketing. While using ERP software a lot of data is
generated. This data is useful for managers to evaluate success. Therefore, ERP
software can also be used to get automated reports. Automated reports avoid the
necessity of manual arrangement of data from different sources within the organiza-
tion. For many companies, ERP systems are business critical, as they manage their
processes. The company size can differ from small to large businesses. This is the
reason why ERP systems have a growing market. ERP software can be used either
on-premise, in a cloud environment, or as a hybrid solution between cloud and
on-premise. Because of these different types of solutions there are different types of
market volumes for on-premise or cloud-based ERP software. The market growth
and the market shares are also different between these solutions. To get an under-
standing of the different market competitors in the ERP market a deeper look on the
values for market growth, market shares per competitor, and market volume is

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 17

S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_2
18 2 ERP Market Analysis

needed. Another difference can be made by the different module types of ERP
systems. To get an understanding how competitors became successful in the ERP
market the history of the competitors is an important factor. To stay on top there are
different strategies the competitors might choose. Based on the different strategies a
future outlook can be given on how the market could behave in the next couple of
years. One of the key factors of business success will be data. To satisfy customers a
customer-centric and data-driven approach is key for competitors. Next to this,
service offerings will become more important for customers, because they want to
focus on their main business which is mostly not providing IT infrastructure for their
used software. Therefore, cloud strategies must be offered by ERP software vendors.
In the following chapter a closer look at the different mentioned topics is provided.

Market Volume

The market value of the ERP market was $35.81 billion in 2018. For 2020 the
market size was expected to be $49 billion (Reinbolt 2021). In 2019, the top ten ERP
software vendors accounted for nearly 32.1% of the global ERP applications market
which grew 1.1% to approach nearly $94 billion in ERP license, maintenance, and
subscription revenues (Pang et al. 2020). SAP led the ERP market in 2018 with a
market share of nearly 6.8%. Oracle was on second place followed by Intuit, FIS
Global, and Fiserv (Pang et al. 2020) (Fig. 2.1).
In 2019 the ERP market size was 53 billion euros. The biggest market
competitors by share value are SAP with 10.8%, Oracle with 6.1%, Sage with
2.8%, Microsoft with 2.5%, and Inform with 2.4%. Together these companies nearly
had a total market share of a quarter of the whole worldwide ERP market. Together
with other big companies the total market share is again over 30% of the whole
market. In comparison to the worldwide market share, SAP is only on second place
in the North American market with 7.3%. Leading in the North American market is
Oracle with 8.7%. For Europe Middle East Africa (EMEA) SAP has the biggest
market share with 15.1% followed by Sage with 4.8% and Datev with 4.6%. Oracle
is only on fourth place with 3.7%. The total market size of the EMEA market was
18 billion euros in 2019. For the Asia Pacific Japan (APJ) and China market, SAP
had a market share of 10.1% of the total market size of 9.4 billion euros. On second
place was Yonyou with 4.5% followed by Oracle with 4.2% and MYOB with 3.1%.
For the Latin American (LA) market SAP was also leading with a market share of
17.5% followed by Totvs with 13.2% and Oracle with 6.5% of the total market size
of 2 billion euros. According to these numbers the biggest players in the ERP market
are SAP, Oracle, Sage, and Microsoft. The numbers also show that on different
markets different vendors have the biggest impact. For most markets SAP has the
biggest market share (Fig. 2.2).
In 2019 SAP had the most revenue in the most significant ERP modules com-
pared to the biggest competitors Oracle, Sage, Microsoft, Inform, Salesforce,
NetSuite, and Workday. The biggest revenue was in financial with 2217 million
euros. On second place in financial is Sage with 986 million euros. Third and fourth
Market Volume 19

WORLD WIDE
MARKET SIZE: €53B

SAP
10.8%

Sage
Oracle 2.8%
6.1%

Microsoft
2.5%

Infor
2.4%

Dassault
2.2%
DATEV
Other Vendors
1.6%
60.4%
NetSuite
1.4%
Wolters Kluwer
1.4%
BlueYonder (JDA)
1.2%
Siemens Visma
1.1% 1.1%
FIS Global RealPage
0.7% 0.9%
Deltek Yonyou
0.7% 0.8%
Epicor
0.7%
Rockwell Automation Workday
0.6% 0.6%

Fig. 2.1 Worldwide ERP market share in 2019

place are Oracle and NetSuite. The second most revenue was provided by travel and
expenses. SAP led this category with 1768 million euros, followed by Oracle with
86 million euros. In core HR SAP made a revenue of 1048 million euro. In this field
Workday is the biggest competitor with 1042 million euros followed by Oracle with
909 million euros. SAP’s revenue was also leading in the fields of manufacturing
with 774 million euros, procurement with 487 million euros, and sales management
with 394 million euros. In service management Salesforce led the revenue with
860 million euros, followed by Oracle with 286 million euros. SAP was only at
fourth place with 88 million euros. In the year-over-year comparison of the total
revenue between 2018 and 2019 the ERP market size of the biggest players grew.
The companies with a smaller market share mostly grew the most compared to
companies with an almost big market share. Workday for example has a small
market share with nearly 1% of 2019’s market size compared to SAP, but therefore
its growth rate is nearly as high as 50%. SAP has a market share over 10% and has a
growth rate of a little over 10% from 2018 to 2019. Oracle’s growth rate is under
10% and has a market share of over 5%. On the other end Infor shrank about 2%
from 2018 to 2019 with a market share of approximately 2%. For cloud revenues the
numbers look a little different. Microsoft made a growth of almost 55% with a
market share of more than 2%. Workday and SAP also made a big growth with over
20 2 ERP Market Analysis

SAP
EUROPE MIDDLE EAST AFRICA
15.1% NORTH AMERICA
MARKET SIZE: €18B MARKET SIZE: €23.5B

Sage Oracle
4.8% 8.7% Infor
SAP 3.1%
7.3%
DATEV NetSuite
4.6% 2.6%
Microsoft
Oracle 2.5% BlueYonder
Other Vendors 3.7% 1.8%
54.4% Visma Other Vendors Sage
3.4% 65.6% 1.7% FIS Global

Dassault Epicor 1.5%

3.2% 1.4%

Microsoft Deltek RealPage

3.1% 1.3% 1.3%
Infor
Siemens 2.1% Wolters Kluwer
1.5% Wolters Kluwer 1.3%
1.7%
Unit4 Zucchetti
1.3%
22
1.3%

Yonyou
4.5%
SAP
10.1%
SAP
Oracle 17.5%
4.2%

MYOB
3.1%

Dassault
3.0%

Other vendors Totvs

Kingdee 13.2%
53.4%
2.7%
Other Vendors
59.5% Works Applications
Co. Ltd.
2.4%
Sage
2.0% Oracle
Xero 6.5%
1.9%

Inspur Microsoft
1.7% 1.7% Dassault
Siemens 2.4%
1.6% Microsoft
Rockwell Automation 1.7%
Infor
1.2%
1.5%
Siemens Infor WoltersKluwer BlueYonder
0.9% 0.9% 1.0% 1.4%

MARKET SIZE: €9.4B MARKET SIZE: €2.0B

ASIA PACIFIC JAPAN CHINA LATIN AMERICA

Fig. 2.2 Regional ERP market share in 2019

45%. The difference is the market share. SAP has a market share of approximately
6% and Workday has a market share of approximately 1.5%. Oracle has the highest
market share in cloud revenue with over 6.5%, therefore the market growth was a
lower with only a little over 20%. NetSuite, Sage, and Salesforce are in a different
growth range around 20% to 25%. The difference between them is their market
share, where Sage has the biggest market share compared to NetSuite and Sage.
NetSuite and Sage have a similar market share of over 3%. The lowest growth rate
and smallest market share have Infor. Infor shrank a little and has only a market share
of under 2%. So far, the investigations were focused on ERP product license
revenue. However, the neighboring market segments must be also considered.
There are numerous businesses with high market volume around ERP systems as
shown in Fig. 2.3. For example, implementation and consulting business, cloud
operations and infrastructure services, hardware for on-premise deployment, analyt-
ics and business intelligence platforms for data warehousing and complementary
third-party software must be taken into account.
Competitors 21

Fig. 2.3 ERP top vendor worldwide. Source: Gartner, 2021

Competitors

An approach to explain why companies like Microsoft, Oracle, or SAP have a higher
market share than other vendors can be made from their history and other factors.
Microsoft for example used dynamic product offerings and fully integrated tools to
become successful in ERP market. Another aspect is acquisitions like Great Plains
(Davidson 2020). SAP in comparison has been a leader in business applications
since the launch of its first ERP system in 1972 (Davidson 2020). SAP has customers
in over 180 countries and offers dozens of ERP solutions for almost every use case
and every business size. The scalability of the software is also an advantage. Oracle
is known for selling databases, software, cloud systems, and enterprise software
products. They became a leading ERP company after some acquisitions in the early
2000s. In 2016 Oracle acquired NetSuite which was working on ERP systems in the
cloud. Oracles cloud applications are based on machine learning (Fig. 2.4).
Sage has like SAP a long history in ERP software. They started in 1981 focusing
on software for small businesses. Sage’s ERP solutions are highly modular and
customizable. Infor is one of the leading companies in cloud-computing after they
aggressively modernized their product line since 2010. They also used acquisitions
22 2 ERP Market Analysis

30% Disruptor Contested Cloud

Cornerstone
Peer Index Performance Growth

20%
OnDemand
29.9%
Workday
22.8%
10% Microsoft
5.0% Zucchetti
9.8%

Oracle
0% SAP
4.0%
2.1%
Sage
1.3% UKG
-10% Infor 0.0%
-5.3%

-20% Reimagine Reinvent Reap

0% 10% 20% 30%
PIP Market Share

PIP
Market PIP YoY
Vendor Share Growth Revenue Growth

SAP 21% -1% 8,584 2.1%

Oracle 11% 0% 4,373 4.0%

Workday 15% 20% 3,735 22.8%

Sage 8% 0% 2,206 1.3%

UKG 11% 0% 1,876 0.0%

Infor 4% -5% 1,626 -5.3%
Microsoft 4% 3% 1,440 5.0%
Visma 52% 5% 1,286 20.6%
Zucchetti 6% 1% 830 9.8%
Cornerstone OnDemand 4% 18% 705 29.9%

The size of the bubble denotes revenue in millions of

U.S. dollars. Percentages refer to the organization’s
overall growth rate, not the PIP growth rate.

Fig. 2.4 ERP top vendor worldwide. Source: Gartner, 2021

Market Forecast 23

to provide ERP software for different industries (Davidson 2020). To get ahead of
the others the market competitors have different strategies. These strategies can be
divided into revenue growth, technology, and industry. Oracle plans to get a growth
in revenue by migrating its legacy apps to the cloud. They also want to use synergies
with their Oracle Cloud Infrastructure and PaaS. They want to acquire vertically and
take shares of other competitors’ customers. Their technology strategy is their cloud
infrastructure stack and a unified cloud environment. They want to provide low- and
no-code development (Fig. 2.5).
Another technology Oracle wants to use is analytics and AI. They focus on the
industries’ professional services, public sector, financial, oil and gas, healthcare, and
manufacturing. Workday in comparison wants to achieve a revenue growth by
migrating SAP’s and Oracle’s finance systems to their Workday Cloud. They also
want to expand incrementally in their ERP segment. They plan to use technologies
based on analytics and predictions. This is extended by the usage of AI technology
and rapid implementation. They focus on the industry sector’s public sector and
government, higher education, healthcare, and professional services. Infor wants to
grow their revenue with upgrading their customers to cloud. They also want to move
their acquisition to the cloud. They focus on using rapid development and AI
technologies. Furthermore, they target the automotive sector, aerospace and defense,
industrial machinery, fashion, food and beverages, and distribution. Microsoft plans
to bundle up their products and use azure as a key role in their enterprise strategy. For
technologies, they focus on the Azure platform to provide development and deploy-
ment. They also plan to give developers the opportunity to build AI-based apps using
AI as a platform. They focus on retail, public sector, telecommunication, life science,
energy and utilities, insurance, and media and entertainment. SAP’s strategy is also
based on cloud business. It is planned to migrate users to SAP S/4HANA and
cloudify the underlying IT infrastructure. Along this SAP plans to focus on customer
experience using Qualtrics (Hackmann 2020) (Fig. 2.6).
This shows that all competitors have different strategies to get ahead. They have
in common that they want to use upcoming technologies like AI and cloud services.
Those technologies enable their customers to derive more insights from data and
improve business processes. In general, the focus is very customer-centric and cloud
based.

Market Forecast

The evolution of ERP software can be split into four big time slots. The first ERP
systems from 1980s to 1990s had no focus on specific industries. The architecture
was fragmented, and the integration was complex. Currently, there are only some
buyers using this kind of systems. The time between 1990s and 2000s had focus on
manufacturing and distribution industries. The architecture was mostly monolithical
with the beginning of some architectural changes. The integration can be described
as tight. Many companies are still using these kinds of systems. The postmodern
ERP systems from 2010s can be described as service-centric and product-centric.
24 2 ERP Market Analysis

30% Disruptor Contested Cloud

IFS
24.6%
Peer Index Performance Growth

15%
Sage SAP
Microsoft -1.6% -4.2%
-2.8%

UKG
0.0%
0% TOTVS
-14.6% Zucchetti
7.8%

Infor Oracle
-12.1% -15.6%

-15% Reimagine Reinvent Reap

0% 10% 20% 30%
PIP Market Share

PIP
Market PIP YoY
Vendor Share Growth Revenue Growth
SAP 26% 3% 5,296 -4.2%
Oracle 9% -5% 1,859 -15.6%
Sage 13% 5% 1,585 -1.6%

Microsoft 6% 4% 1,065 -2.8%

Infor 5% -4% 1,057 -12.1%
Visma 56% 1% 855 13.8%
Zucchetti 12% 2% 651 7.8%
IFS 2% 27% 415 24.6%

UKG 6% 0% 347 0.0%

TOTVS 4% 0% 335 -14.6%

The size of the bubble denotes revenue in millions of

U.S. dollars. Percentages refer to the organization’s
overall growth rate, not the PIP growth rate.

Fig. 2.5 ERP top on-premise vendor worldwide. Source: Gartner, 2021
Market Forecast 25

20% Disruptor Contested Cloud

Microsoft
36.5%
Workday
22.8%
Peer Index Performance Growth

Cornerstone Oracle

The size of the bubble denotes revenue in millions of

OnDemand 25.5%

U.S. dollars. Percentages refer to the organization’s

29.9%
Infor

overall growth rate, not the PIP growth rate.

10.4%
0%

UKG
0.0%
Sage SAP
9.6% Ceridian 14.2%
11.9%

-20% Reimagine Reinvent Reap

0% 10% 20% 30%
PIP Market Share

Fig. 2.6 ERP top cloud vendor worldwide. Source: Gartner, 2021

Systems of this kind use different kinds of architecture. The different applications are
mostly loosely coupled. In general ERP system vendors are still highly relevant for
this kind of system. For the future it is expected that the focus will be multiindustry
and will suit the buyer as best as possible. The strategy for these systems is modular
parts and end-consumer-centric. The architecture is expected to be cloud based on
multiple clouds. On-premise systems are also used if there is a valid use case for
it. The integration is expected to be self-connecting even if there are specific
demands on different processes. In general, the cloud market of ERP is growing.
Due to the pandemic the general growth paused temporarily. The pandemic had an
impact on how ERP is used. Customers are using the system in a more flexible and
analytic-driven approach. There are also current trends like AI and cloud, which are
used more often in ERP. It is expected that the ERP cloud market growth will
increase after the disruption of the Covid-19 pandemic in the year-over-year com-
parison. The growth of ERP cloud market dropped from 2019 to 2020 from 25.9% to
12.2%. From 2020 to 2021 there was also a slight drop to 10.3% growth in cloud.
On-premise systems had an even bigger drop of growth from 2019 to 2020. The
growth shrank about 15% to 9.9%, but it grew a little from 2020 to 2021 to about
6% growth. It is expected that the on-premise growth will raise to 0.2% to the year
2024. For cloud a growth of 22.1% is expected for 2024. In comparison to these
year-over-year growths the absolute numbers of revenues of the on-premise revenue
will shrink over the years. The cloud revenue is expected to grow linear from 15,815
million euros to 33,947 million euros in 2024. This means the revenue of 2024 in
cloud market is expected to be more than two times the revenue of 2019. It should
also be mentioned that it is projected that the cloud revenue will overtake the
26 2 ERP Market Analysis

Fig. 2.7 Trends impacting

the ERP market Big
IoT
Data

ERP
Market

Cloud AI

on-premise revenue in 2021. Which means that the cloud is a future trend of ERP
systems. If the cloud revenue is split across different industries, there is big growth in
banking, defense and security, healthcare, public sector, telecommunications,
and utilities. Industries which shrank significantly from 2019 to 2020 are aerospace
and defense, higher education and research, sports and entertainment, and travel and
transportation. The shrink of some of these industries can directly lead back to the
pandemic and the associated restrictions. Sports and entertainment and travel and
transportation are industries, which were highly impacted by the pandemic
restrictions. Therefore, a shrink is expected to happen. The ERP market size is
influenced by different trends. The market size grows because businesses need
operation efficiency and transparent business processes. An increase of the cloud
market can be expected because companies using ERP software want to reduce their
costs for computation. Mobile devices become more and more a part of the working
culture. This leads companies to invest in cloud-connected mobile apps. With cloud-
connected mobile apps information can be accessed anytime and anywhere.
Together with trends like Internet of Things (IoT), Artificial Intelligence (AI), and
Big Data this leads to a big growth in ERP market size (Valutes Reports 2020). The
future trends in ERP market are shown in Fig. 2.7.
Other factors that influence the ERP market growth are for example shortages and
digitalization. In the past many businesses used Word and Excel files to manage their
business. On top often documents were kept as paper files (Balaban 2019). Today
business owners start to think about how to use data more effectively in order to
better see their strengths and weaknesses and also to provide better services to their
clients (Balaban 2019). The shortage of staff on the other hand influences the usage
of automation. Along with this, companies try to get rid of their use of human labor
and use automation and standardization on their processes instead. New technologies
can be used to avoid skilled workers doing routine tasks. ERP systems can free their
workloads and allow these employees to focus on important things like solving
business critical problems. In the future adoption of technologies like IoT, AI, and
Big Data will provide further growth of the ERP market size. With these rising
Conclusion 27

technologies it is expected that many opportunities will be generated for ERP market
in Asia-Pacific countries. Small- and mid-sized businesses will increase the ERP
market size in the future. During the forecast period until 2026 it is expected that
North America will hold the largest market share. This is attributed to the constantly
growing number of new businesses. It is also expected that these businesses will
move to cloud-based solutions due to the lower costs for maintenance and hosting.
For the Asia-Pacific region the biggest growth rate in ERP market is forecasted. This
can be attributed to the growing number of small- and mid-sized businesses which
start using ERP solutions for a more efficient management of their processes
(Valutes Reports 2020). Studies point out that there is a positive correlation between
data-driven decision-making and business outcome. This correlation also applies for
pervasive analytics or AI-based approaches. However, not only the ability to gener-
ate more data and analyze it in a more efficient way than competitors leads to a
higher business outcome. For a higher outcome it is needed that businesses can
continuously learn, reflect, and adapt from the data in a better way than their
competitors. The process of continuous learning and collecting information from
different sources to get more knowledge and skills can be described as enterprise
intelligence. This enterprise intelligence will define the winners in the market in the
future. Additionally, it is necessary that employees become more and more data
literate. For a better fail-safe it is important that processes in companies become
more resilient in the future to prevent things like pandemics to have a big impact on
the company (Vesset et al. 2020). Some predictions about the future of intelligence
in the enterprise include that G2000 companies will use cloud computation to benefit
from hyper-customization for AI and Big Data workloads. Next to this most of these
companies will supplement their staff with social science experts. With this they
want their data science and data engineering staff to work hand in hand with the
social science experts for better recommendations in data analysis. It is predicted that
by 2026 25% of the G2000 companies will invest in swarm intelligence solutions
(Vesset et al. 2020).

Conclusion

The understanding of ERP systems changed over the years. Along with this the
functionalities and customer requirements changed. In general, the focus became
more customer-centric and service orientated. With this the ERP market grew over
the years. The growth can also be explained because of the customers’ needs to
manage their business processes more efficiently. This can only be achieved if the
collected data is analyzed. There is also a need to collect the data from processes
inside the business. The usage of ERP systems makes it easier for customers to get
everything under control, because data is stored in one system and there is no need to
manually condense the different data sources. With this said there is also a need for
ERP systems in the future. Next to this the current ERP market situation is based on
some big players like Oracle, SAP, Microsoft, and NetSuite. These competitors got
their position mostly with two strategies. The first strategy is building own ERP
28 2 ERP Market Analysis

solutions for many years, which led to the superior role. The second approach to get
a big player in ERP market is acquisitions. The way of acquisitions presupposes the
possibility to buy other companies. Therefore, financial capacity is required which
makes it easier to raise for big players in the market. The usage of synergies can help
to speed up this process and make it more successful. This could be the reason why
companies like Oracle became successful using their knowledge of databases and
information technology systems. To achieve a continuous growth, the ERP software
vendors have to adopt their strategies to their customers’ demands. This means to
offer more services and to provide the ERP software as a service. This is a big
change, because currently many customers of the ERP software vendors have
on-premise systems. Therefore, it is necessary to use future trends like cloud
solutions, so customers can focus on their main business instead of operating ERP
systems. Also cloud systems (public or private cloud) can better handle the growing
amount of data in the period of Big Data. This data is generated due to the use of IoT
systems and process monitoring. The pandemic depicted that customers ask for more
flexible usage of ERP systems. There is a need for a resilient business which can
easily adapt new features and technologies.
ERP Future Trends
3

This chapter depicts the future trends of ERP solutions. Customers are expecting due
to the pandemic experience a more flexible, analytic-driven product. Composable
applications, industry, and scenario-based applications are the future as they can
realize these needs. Cloud and AI remain key technology drivers in the near term as
they enable current trends.

Introduction

ERP systems have been an indispensable part of businesses since at least the 1960s.
From material planning to finances—ERP systems lay the digital foundation of
every successful business today. Accompanying businesses for several decades,
ERP systems have undergone the same transformations as the businesses them-
selves. Especially the digital transformation in recent years gave the popularity of
ERP systems an additional boost, strengthened even further by the Covid pandemic.
Several other trends are already starting to take shape today. In the near future, and
already happening today, ERP systems are expected to meet the ever-growing
demand for flexibility. Alongside this, companies expect their IT to utilize the
company’s data to its fullest within the next 2 years, aiming for automation and
AI-supported processes. Looking even further into the future, companies expect
ever-increasing process modularity, providing businesses with custom-tailored and
industry-specific applications. Companies expect IT products to provide modular
services, enabling them to pay for what they need and quickly assembling
applications for specific purposes, even further deepening this development in the
next 2–5 years. Aside from these trends, ERP systems are also prone to change
alongside the industries they are applied in. Trends such as Industry 4.0 and IoT will
reinvent how people think about IT not just as business supporting but business-
critical even more. Nothing changed human behavior quite so radically in the last
few years as the Covid-19 pandemic has. While some of the observed changes have
been a trend in years before, the pandemic has accelerated them greatly within little

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 29

S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_3
30 3 ERP Future Trends

more than a single year. Especially the digital transition experienced more attention
than it ever has. As a result, companies worldwide are forced to accelerate their
digitalization measures to keep up with the rapidly changing demands of their
customers and ever-evolving circumstances. Two examples that indicate an increase
in mobility and flexibility of people are the increase in mobile phone usage during
the past few years and an increase of people working remotely or from home. The
first trend is supported by data on mobile phone usage in Germany. A survey from
2020 shows (Gentner 2020) that 89% of people own a smartphone, of which 95%
use their device on a daily basis. While this is mostly for private usage, mobile access
to work recourses is not negligible. Even among the age group of 65+ years, 79%
own a smartphone, making it an essential point of contact between people and their
work. An increase in flexibility is supported by another study from 2020
(Bockstahler et al. 2020) which depicts, that while most people are forced to work
from home due to the Covid-19 pandemic, over 60% of respondents claim that their
flexibility regarding spatial and temporal aspects of their work will increase in the
future. This is supported further by the expectation of executives, who also believe
that the future of work will shift toward being more flexible. To react to these rapid
changes and the increase of flexibility, companies need to work faster as well. They
need to streamline their processes and decisions and find ways in which to abandon
the slow old and introduce the fast new. One implication of designing companies to
act fast is to abandon slow-moving hierarchies and replace them with flat structures
that decide fast. Reinventing the organization for speed comes with multiple
consequences (de Smet et al. 2020):

• Faster decision-making: Companies need to abandon slow decision-making pro-

cesses and replace them with newer and faster ones. By making decisions in just
one meeting with a few involved people and recourses condensed to the most
crucial part, not everything will take a few weeks to discuss and decide on.
• Leave it to the employees: By abandoning micromanagement and embracing
employee responsibility, companies can leverage their workforce’s true potential.
Companies work at their best when everyone does what they do best, and goals
and responsibilities are communicated concisely.
• Do not act alone: By trusting others and forming partnerships, companies can
leverage mutual benefits. The ability to quickly work together with other
businesses to achieve a common goal is vital in surviving in a fast world.
• Flat hierarchies: Instead of an endless stream of approvals and bureaucracy,
companies need to design their hierarchies in a flat and lean way, such that they
can respond quickly to emerging challenges and opportunities.
• Agile teams: Responsiveness does not stop at the hierarchies of a company. The
teams themselves need to be organized in an agile way, each with concrete goals.
Only then can the teams respond quickly, and their success can be measured.
• Hybrid work: As mentioned before, the days of everyone working on-site and
from the same location every single day are over. Companies need to make way to
both flexible workplaces and hours. Doing so increases employee satisfaction and
thereby productivity.
Introduction 31

• Value young talent: During the pandemic, companies are able to see who is ready
to take action and take on responsibility—especially among the youngest
employees. Seeing how employees act during a crisis gives executives insights
into how the people in a company work in a very short duration of time.
• Adapt and learn: Together with agile teams, the importance of employees capable
of adapting quickly has become ever so more important. Instead of experts that,
by definition, are limited to their fields, executives put more value on talents who
are—if needed–able to take on completely new challenges and adapt quickly to
new tasks.
• Rethink leadership: Instead of typical leadership roles such as decide, command,
and control, the role of executives is shifting toward enabling their teams to
unleash their full potential.

To keep up with the ever-changing world, not only organizational structures need
to be adapted but also the IT of companies. ERP systems play a major role in keeping
businesses operational and need to be aligned with the overall strategy. Adapting to
radical flexibility in the ways described above requires IT infrastructure capable of
fulfilling flexibility expectations of the modern business. By connecting a large
portion of working resources to the cloud, companies can quickly transition a
large part of their workforce to remote locations while maintaining high levels of
operability. An integral part of this is supplying employees with SaaS accessible
from everywhere and a strong integration with HR processes. Companies need to be
able to react quickly to challenges and opportunities with monetary measures. This
includes preserving liquidity by actively monitoring cash flows and taking action
when sudden changes in revenue are detected. Utilizing highly developed cash and
treasury management solutions together with predictive analytics enables companies
to react quickly to these changes. Enterprises need to be able to quickly adapt the
way in which their products are built, packaged, sourced, and shipped. Picture the
first lockdown during the pandemic 2020: on a moment’s notice, companies were
not able to sell their products via traditional channels, such as retail, anymore.
Instead, only companies that quickly managed to sell their products online and
ship them directly to the consumer saw their business growing even among the
pandemic, requiring tight integration with flexible sourcing and material manage-
ment, highly operational warehouse and distribution management, and functioning
alignment with the entire supply chain of the business and its suppliers. This could
only be achieved using proper IT systems. As described above, companies need to be
able to react to sudden changes regarding their business. This requires quick action
to keep their business operational and the ability to cut cost quickly while simulta-
neously preparing for a return of workforces and business. Implementing organiza-
tional changes to design a business for speed comes with multiple consequences
regarding HR and talent management. Companies are expected to experience high
fluctuations in employee count to meet the demands of business reality. Depending
on the projects that are realized at any point in time, companies might frequently
change their talent and workforce requirements. An ability to do so needs to be
tightly integrated with HR, talent, and project management. Enterprises
32 3 ERP Future Trends

implementing measures in both organizational structure and their IT to meet

demands of radical flexibility will quickly see benefits in rapidly changing times.
They will be able to preserve existing customers and meet the needs of new
customers quickly. By acquiring new customers and beating their competition
when it comes to responsiveness and adaption to shifts in demand, they ensure
long-term success. In contrast, companies failing to embrace the need for radical
flexibility will experience much more difficult project management and completion,
leading to potential loss of not only customers but employees and talent as well.
Moreover, suffering from financial viability, companies risk losing their market
share to their competitors. In the next sections some of the key ERP trends are listed
and explained.

Data Fabric

All major trends that significantly changed people’s lives in the past two decades are,
in one way or the other, related to the digitalization of everything. Business,
entertainment, and everything else people do in their private and professional life
have undergone a major shift toward utilizing digital systems to increase efficiency
and streamline processes. It is the nature of these digital systems that causes the
abundance of data to increase every year. In 1965 Gordon Moore, the cofounder of
Intel, famously predicted that the number of transistors within a set volume of
integrated circuits will double every 2 years (Moore 1965). While Moor’s Law in
this context can be interpreted as the increase in data processing power, similar
trends can be observed for the capacity of storage devices, such as hard drives, the
number of pixels on a display that can be acquired for a set amount of money, and
many other developments of computer hardware (van der Aalst 2016). The overall
amount of data, the digital universe, which includes all digital data created,
replicated and consumed in a single year, is estimated to be about 40,000 exabytes
or 40 zettabytes in volume in 2020 (Gantz and Reinsel 2012). An incredible volume
of data that would need 40 billion commonly used hard drives of 1 terabyte size for
storage. Compared to 2012, this volume signifies a growth by a factor of 300.
Furthermore, just like the trend of ever-faster CPUs and larger storage mediums,
this trend is also observed to be exponential. While most of the data seems to be in an
unorganized form, more and more companies start to see value in extracting infor-
mation from data. In this context, data can be divided into three categories (Gantz
and Reinsel 2012):

• Private data, the data everyone has on their personal computers, tablets, and
phones, such as photographs and text messages. This kind of data is usually
inaccessible for further processing by companies since it is protected by being
private people’s property and by physical barriers. However, the latter one has
seen a significant decrease in recent years through the increasing popularity of
cloud storages.
Data Fabric 33

• Organizational data which includes all data directly accessible to a company, as it

is created by the company itself. This can include a wide range of different data,
such as roadmaps, white papers, and datasets on employee information.
• Data created through the interaction of companies and customers, this data is
believed to hold the most value for companies since it includes potential informa-
tion about customer needs, trends, causal relationships, and correlations between
variables. The processing of this data is a challenge, at least. Data protection
regulations such as the General Data Protection Regulation (GDPR) in the
European Union prevent companies from freely accessing all their accumulated
data for not predestined purposes. While data regulations are a complex topic for
others to take a closer look at, it should be noted that it is an important factor
companies need to consider if they want to extract value from their data.

While most of the world’s data is unorganized and remains unexplored, the
ultimate goal when talking about data shifts toward not collecting more and more
of it but rather extracting value from already collected data. Data science is what
drives customer satisfaction in modern systems. Whether it is about recommending
content consumers might like on Netflix, product suggestions on Amazon or more
industry-specific applications of data science such as predictive maintenance, data
science is often taken for granted. However, the underlying truth is that companies
need to acquire a deep understanding of their collected data before they can roll out
features their customer will appreciate. This is exactly where data science comes into
the picture (Shah 2019). Data science can be described as the application of scientific
methods and principles, especially from the area of statistics to data collection,
analysis, and reporting. The process of doing data science can be divided into
multiple phases:

1. Project initiation and defining the problem statement.

2. Data acquisition, or rather collecting the data needed to achieve a solution to the
problem defined in step 1.
3. Data preparation and quality check to ensure the collected data suits the purpose.
Data science cannot extract insights from bad and low-quality data, but it
definitely can do so if applied correctly to a dataset of sufficient quality.
4. Data modeling, meaning to formulate each step and technique to apply to the data
to achieve the goal of the data analysis and executing these steps.
5. Reporting and communication of insights. Just like the following utilization of
these insights, this step greatly depends on the results and insights extracted in
step 4 and the target audience.

The goals of data science can be summarized in the two points: solving a concrete
problem statement and gathering insight on a set of data, although the latter one is
more of a means to achieve the first. Using data as a means to solve problem
statements is becoming more attractive by the day. As stated before, the amount of
data produced and stored is increasing exponentially, therefore creating more
opportunities for data science to become the solution to problems. Big Data is
34 3 ERP Future Trends

often coined as the gold of the twenty-first century (Lukic 2015) and companies that
showed an early adoption of this mindset could be observed to be successful today.
The most prominent example probably being Amazon, which early on realized, that
data science can be utilized to clarify how users interact with the web and how
insights generated by data science can be used to inform critical business strategies.
Since management decisions require as much high-quality information as possible,
data science plays a vital role in providing such information to the management.
Besides these strategic uses, data science also has applications in keeping a business
operational. Both from a perspective of operating business processes—think predic-
tive maintenance and automated anomaly detection—and operational controlling—
think keeping the business competitive. Both these areas can profit majorly from the
use of data science. Connecting data science principles with data gathered in ERP
systems brings value to the data not only from the perspective of keeping processes
operative but also by enabling companies to utilize the full potential of their data. By
turning data into knowledge and insight, companies can achieve a deeper under-
standing of their customers and how their processes operate. These insights can be
used to tune products to customer demands, improve processes, and gain valuable
information on what factors drive a business.
Using the data that companies naturally generate in their ERP systems simply by
operating their day-to-day business can help drive the digital transformation of
companies and—as already mentioned—gain insights. Since ERP systems tend to
contain a large amount of data about sales, it is only reasonable to assume that
valuable insights can be derived from such data. Using the data to answer concrete
problem statements such as: How much material will most likely be needed for the
next quarter? or Which factors influence the buy-decisions of our customers? can be
answered using classic statistical methods such as time series analysis and regression
models. Using the same set of data, companies can analyze financial data and predict
major financial events that require action in advance. With the transition to
connected assets under the keywords Industry 4.0 and Internet of Things (IoT),
there has been an ever-increasing amount of real-time sensor data. This opened the
door to a multitude of new services relating to the maintenance and automation of
assets, be it automated anomaly detection or predictive maintenance. Achieving
useful services regarding this area is easier said than done. Applying data science
to these problems not only requires a deep understanding of data science methods
but also of the underlying assets and affected machinery. Utilizing natural language
processing and computer vision systems, companies can automatically extract the
information they need from documents such as invoices. This could be used to
streamline the process of invoicing. Similar techniques can be used to classify
documents, such as tickets and assign them to a responsible employee automatically.
Using chatbots, employees untrained in querying databases can extract information
from such data sources by linking the bot to queries of analytical tools. Just like the
other examples, this requires a large amount of insight into how users interact with
language and documents. Utilizing all the above, data science, in particular high-
level reports with drill-down capabilities, can be used to communicate complex
matters in a simple way to high-level management. This not only makes it easier for
Autonomous ERP 35

the management to access information but also increases ease of insight and data
transparency. While both data science and ERP systems are nothing new, the
synergies between them are. For many years, data science has been applied to
ERP data to some degree, for example, using regression models to predict revenue,
but the scale on which it is happening today is new. Diverging from such classical
use cases, data scientists try to find meaningful insights from their data to help their
companies. Additionally, the increase of research focusing on applying machine
learning algorithms to data science problems in recent years has opened the door to
many new solutions to old problems. Especially in the areas of automation and
natural language processing, machine learning algorithms play a huge part in
enabling systems and machine to act autonomously while communicating easier
with humans. Utilizing data science effectively comes with several advantages for
businesses. While increasing the return of investment by improving the operational
efficiency and reducing (human-caused) errors, it also allows businesses to react
faster to required changes in products and services, pricing or availability to stay
competitive. Additionally, data science enables companies to work as a unit by
enabling the top management to include more relevant information into their execu-
tive decision-making process. Failing to leverage the advantages of data science and
the improvement of business processes that come with it means a potential decrease
in customer satisfaction. Growing customer demands might not be met by a com-
pany but by their competitors who did not fail to do so. This, in turn, will lead to a
loss in customers and market share. Additionally, not improving on processes might
threaten the profitability of a business when compared to its competitors.

Autonomous ERP

The ultimate goal is to provide an autonomous ERP with self-directed business

processes and self-diagnostic operations. In order to achieve this objective today’s
ERP systems must become more intelligent. Typically, intelligence is a quality that
humans attribute to themselves and other living beings as the ability to learn,
understand, and think logically about things. But what does the term intelligence
in context of ERP systems mean? Despite a long history of research and debate, no
universal definition of intelligence exists. Scientists have proposed various models
for mathematical, linguistic, technical, musical, and emotional intelligence, but none
have gained widespread acceptance. But how can ERP systems be made intelligent
without knowing what this means? The operationalization method is used to resolve
this quandary and make the term intelligence measurable by defining different
automation levels, similar to how psychologists define IQ values. In the context of
ERP systems, intelligence is not merely a means to an end. Rather, it is about
increasing automation toward an autonomous ERP system in order to reduce total
cost of ownership (TCO), such as through faster process runtimes or optimized
resource consumption. As a result, the following equation holds true: the greater the
level of automation of a business process or system, the greater the level of intelli-
gence. ERP systems serve as a centralized management system for an organization’s
36 3 ERP Future Trends

business processes. Understanding the common structure of all those business

processes is essential for defining automation levels. As shown in Fig. 3.1a, there
are four dimensions to consider for automation in a business process (Sarferaz and
Banda 2020). This is an industry standard that has been adapted for use in ERP
software. Each dimension’s level of automation is rated from 1 (low) to 5 (high). The
overall level of automation can be determined by determining the level of automa-
tion for each dimension of a given business process or system. As a result, the
current and target levels of intelligence can be determined, and an execution plan for
making the business process more intelligent can be defined. The process of entering
data into ERP systems using devices such as a keyboard, scanner, disk, or voice is
known as data acquisition. The following characteristics could be used to determine
the various levels of automation for data acquisition: (1) Manual entry by user,
(2) Manual entry and data integration, (3) Data integration and manual entry
(exceptional), (4) Conversational AI and data integration, (5) AI-based data extrac-
tion and integration (e.g., PDF document is transformed to structured data and
entered by robotic bot).
The process of studying and interpreting data in order to derive meaningful
conclusions is known as information analysis. The following characteristics could
be used to determine the various automation levels for information analysis:
(1) Descriptive (what happened), (2) Diagnostic (why it happened), (3) Predictive
(what will happen), (4) Prescriptive (what should we do), (5) Cognitive (autonomous
self-learning analysis of happenings). The process of selecting a logical choice from
the available options while taking into account the consequences is known as
decision-making. The following characteristics could be used to determine the
various levels of automation for decision-making: (1) User makes decisions manu-
ally, (2) User consumes system events and changes for decisions, (3) System
provides relevant information to the user for making decisions, (4) System actively
evaluates and recommends decisions, (5) System autonomously makes decisions
that are traceable and auditable. The process of enforcing instructions to achieve a
specific goal is known as action execution. The following characteristics could be
used to determine the various levels of automation for action execution: (1) User
performs actions manually, (2) User consumes system events and changes for
performing actions, (3) System provides relevant information to the user for
performing actions, (4) System actively evaluates and recommends actions, (5) Sys-
tem autonomously performs actions that are traceable and auditable.
To make a business process more intelligent, first the current level of automation
based on the described methodology must be determined. This is the foundation
from which solution managers can derive the target level based on business
requirements. The next question is how to achieve the specified level of automation
per dimension. To realize the specified intelligence level for the dedicated
dimensions, there is not just one tool, but a number of concepts and technologies.
However, as illustrated in Fig. 3.1b, techniques can be classified in order to accom-
plish different levels: manual, rule-based, and self-learning. Business processes can
be carried out manually without the use of automation. To address this, various rule-
based techniques can be used to boost automation and intelligence. Examples for
Autonomous ERP 37

a Data Acquisition
Automation level
5

2
Intelligence level of
a business process*

Information Analysis
1
Action Making
Automation level

Automation level
5 4 3 2 1 1 2 3 4 5

5
Automation level
Decision Making

b Data Acquisition
Automation level
5

2
Information Analysis

1
Automation level
Action Making

Automation level

5 4 3 2 1 1 2 3 4 5
Manual
1

2
Rule-Based

4
Self-Learning
5
Automation level
Decision Making

Fig. 3.1 (a) Four dimensions of process automation, (b) categorization of techniques based on
automation level
38 3 ERP Future Trends

rule-based technologies are Java code performing input or process validations and
displaying error messages with resolution instructions to the user, a workflow for
executing individual tasks/decisions moving from one step to the next until a
predefined process is complete, an insight-to-action analytics scenario beginning
with a key performance indicator (KPI) notifying the user about drifting trends.
However, rule-based approaches are no longer sufficient for reaching level 5. They
must be expanded to include self-learning techniques. Rather than programming
explicit rules, these techniques make sense of raw data and discover hidden insights
and relationships by learning from it. Some examples for this category of technology
are deep learning for image recognition, conversational AI for natural language
processing (NLP), bots to make decisions and perform actions autonomously. To
infuse ERP systems with more intelligence, business processes must be moved to
levels 4 and 5, targeting an autonomous ERP system. The majority of business
processes in ERP systems are currently on those levels so that there is a long journey
to targeting the autonomous ERP. Practically an autonomous ERP is most likely
never achievable due to technical, legal, and functional limitations. However,
already the interim steps—which means evolving individual use case to level 5—
are valuable. For example, failure of high-tech equipment is a critical issue for
manufacturers. The health of these machines can be predicted by combining sensor
data with business information in ERP systems and applying machine models.
Maintenance scheduling and logistics planning for spare parts and repair crew
management can thus be turned into a proactive business process. A second example
is, validating that a product was manufactured exactly according to its specifications
and configuration is an important step in final quality assurance and readiness checks
for product shipments. Image-recognition algorithms help with this by performing
visual product quality checks. As a result, the accuracy and automation level of
quality processes in production can be increased, resulting in fewer returns, higher
customer satisfaction, and improved profitability. A third example is that as the
foundation for ERP business processes, high-quality master data is critical. To
ensure data consistency, artificial intelligence can automate the identification and
implementation of validation rules. Autocompletion of attribute values based on
artificial intelligence while maintaining master data simplifies interaction with end
users and saves money by reducing manual activities. This kind of intelligent
scenarios can be categorized into the following AI application patterns:

• Matching: Assigns relationships and detects similarities and anomalies in a given

dataset, such as reducing the number of duplicates in the system during consoli-
dation as a master data specialist. While manual matching takes a long time for
users, intelligent systems can significantly speed up matching decisions by using
artificial intelligence methods. To link similar objects, the system can present one
or more strategies and their quality. Users only need to approve or reject the
suggestions or modify them to meet their specific requirements.
• Recommendation: Makes suggestions for datasets or actions based on the current
context, for example, a material requirements planner wants to see potential
Autonomous ERP 39

solutions for resolving a material shortage issue. Intelligent systems can assist
users by recommending relevant content or recommending an action or input that
the user may prefer. The most common recommendation types are content, input,
and solution recommendation.
• Ranking: Differentiates between relevant and less relevant datasets of the same
type in relation to the current context. For example, a purchaser wants to see the
top X suppliers for a specific product in the context of a given purchasing request.
Ranking makes complex decisions easier for business users by displaying the best
options first. Items in a group are ranked by comparing criteria relevant to the
user’s business context, such as a dollar amount, priority, or score. Two types are
distinguished, ranking based on a predefined value and ranking based on a
calculated AI score.
• Prediction: Forecasts future data and trends based on patterns found in past data,
taking into account all potentially relevant information. A master data manager,
for example, wants to estimate the number of change requests the team will need
to process in the coming quarter in order to leverage the workload. Intelligent
systems based on predictive models significantly reduce the cost of forecasting
business outcomes, environmental factors, competitive intelligence, and market
conditions for businesses. Predictive models are classified as either metric or
nonparametric.
• Categorization: Assigns datasets to predefined groups (classes), for example, a
service agent wants to classify the priority of incoming requests (high/medium/
low) based on their content in order to improve customer service. It also finds new
groups (clusters) in datasets, for example, segmenting customers for appropriate
product offerings, targeted marketing, or fraud detection. Categorization is a
complex task for which intelligent systems can aid in increasing automation by
utilizing self-learning algorithms.
• Conversational AI: Interacts with the system using natural language conversation
and enables the hand-free paradigm, for example, a purchaser wants to create a
purchase order by talking to the system. The ability to converse with a digital
assistant for business processes is an important part of the user experience for an
intelligent application. Conversation AI (CAI) technology recognizes common
natural language patterns to query for business entities using various parameters,
look up a specific business entity by name or id, retrieve the value of a specific
business entity’s attribute, and create simple new entities, including line items.

ERP systems should provide for each pattern a standardized framework for
implementation so that those AI application patterns can be applied as reusable
building blocks by development teams for accelerating the implementation. Finally,
to outline again, the autonomous ERP is a visionary direction which entirely might
never be realizable. However, the interim step by infusing more and more intelli-
gence into business processes is valuable as the degree of automation is increased
and TCO reduced. Always there will be a symbiosis between human being and
machine where the machine is going to assist the user and augment its capabilities.
40 3 ERP Future Trends

Composable ERP

This trend is triggered by two business requirements. On the one hand, companies
are faced with the challenge of having to react more quickly and flexibly to changes
in the company and its environment in order to remain competitive. This was
particularly outlined by the Covid 19 pandemic. But also, the advancing globaliza-
tion, the associated increase in competitors, and the containment of climate change
are forcing companies from a wide range of industries to continuously change. On
the other hand, users expect personalized applications tailored to their activities.
Solutions with a monolithic architecture, which contain superfluous program
functions for the user’s activity, overtax the user and lead to a poor user experience.
From their everyday usage of smartphone apps, users are accustomed to using
modular applications tailored to their needs (Gaughan et al. 2020). Composable
enterprises shall meet both of these requirements, meaning they can respond quickly
to change and deliver intuitively usable modular applications to their employees.
They achieve this through packaged business capabilities (PBCs). These are modular
building blocks of applications that are tailored to the roles of employees in
companies. From a technical perspective, PCBs can be implemented by using a
service-oriented architecture consisting of microservices. PBCs access
microservices via application programming interfaces (APIs). PBCs do not always
have to access exactly one microservice but can also comprise several microservices
(Iakimets 2020). The key question is, what exactly is now the new aspect regarding
composable ERP? The requirement for providing customers the ability to flexibly
adapt business processes and incrementally implement them is as old as the first ERP
systems. The only new aspects in this context is the controverse debate whether a
monolithic or microservice architecture is better appropriated for resolving this
requirement. To conclude on this, first both approaches must be discussed. Figure 3.2
depicts the basic architecture of monolithic- and microservice-oriented applications. In
monolithic applications the database schema is shared by all modules. Table visibility
is controlled by access grants between packages. When inserting or updating data from
multiple modules, a single database transaction is used to ensure overall data and
process consistency. Modules communicate by calling local functions. In most cases, a
function call is served synchronously in the same process context. Furthermore,
modules can operate on the same data (e.g., via accessing the same database tables).
Upgrading a single component usually necessitates upgrading the entire system.
Modules are made up of several packages that are then bundled together to form

Fig. 3.2 (a) Monolithic

application, (b) microservice
application
A B C A B
Composable ERP 41

larger software components. Software components have specific version requirements

in relation to the other software components on which they rely.
Microservices applications build the foundation for cloud native approach.
Although microservices can share the same physical database/storage, they use
separate logical schemas, resulting in decentralized data management. This also
means that database transactions cannot be used for service coordination and
communication. The interaction among microservices is based on REST APIs.
Usually, there is no sophisticated middleware or mediator component involved,
nor is there any business functionality (e.g., data conversion or key mapping).
This also implies that services that are linked together must use the same message
interface definition. A microservices-based solution, ideally, provides software
vendors (particularly in the cloud) and their customers with a high degree of
flexibility in configuring the system, such as supporting the use of only selected
services or replacing a service implementation without disruption. In some cases,
customers are willing to use their own implementation of a service. When traditional
customizing is insufficient to provide the required flexibility, service toolboxes make
a lot of sense. Customers must have a high degree of freedom in defining the user
experience or supporting new sales channels in this case. However, for this to work,
the interfaces and behavior of the respective services must be stable, regardless of
how they are implemented. For highly standardized domains where regulations limit
flexibility, providing configuration options via module-level customization can be
simpler and more appropriate. Also, it is less likely that the customer will provide
their own implementation for complex functionality.
While it is already proven that ERP software can be implemented based on the
monolithic approach, still it is an open question whether microservice architecture is
sufficient for this task. The microservices concept is geared toward high scalability
on specific functionality. As a result, this architecture pattern’s services are
decoupled, independent, and small in size. Microservices provide the elasticity
required for a load-adaptive and cost-effective operations model in cloud
applications with highly fluctuating and partially unpredictable usage profiles. Scal-
ability may be less of an issue for ERP systems that are not used for external-facing
scenarios, such as web-shops. Scalability is more important for the entire application
system than for isolated functionality when these systems serve complex and highly
interdependent business processes. Thus, while the microservices-based scalability
is definitely required for applications like Netflix, Spotify, Amazon Shopping-App,
or Google Search, this is usually not the case for ERP systems. The usage patterns in
ERP systems are deterministic and foreseeable. The hardware requirement for a
particular ERP installation is known in advance. Even in very large ERP
deployments the majority of the transactions are used by two to three persons,
often not in parallel. Specific applications with high need of CPU-time, memory,
and storage are known also in advance and mitigated accordingly, for example, by
optimizing the underlying implementation or scaling the application out as a side car.
Almost every business application requires data and process consistency in terms of
atomicity, consistency, isolation, and durability (ACID). ACID transactions are an
appropriate and proven method for ensuring this, so application developers have
42 3 ERP Future Trends

little to worry about. In essence, they only need to decide which operations should be
covered by a single transaction. Because different microservices use different logical
databases, a database transaction cannot span operations triggered by different
services. When overall consistency is dependent on data managed by separate
microservices, application developers must ensure data integrity in other ways.
Typically, such systems can only guarantee eventual consistency, because updates
from one microservice are only processed by another microservice managing depen-
dent data after a certain amount of time. However, eventual consistency is appropri-
ate for some application domains (e.g., streaming applications as Netflix, Spotify)
but typically not for ERP systems. For example, finance transactions in ERP systems
by legal obligations cannot be founded on eventual consistency. Furthermore, a
microservice approach necessitates a thorough understanding of the business domain
in order to define the appropriate service cuts for microservices. From the standpoint
of application architecture, this is a challenge. An erogenous cut of services, in
contrast to tightly integrated modules, results in the reimplementation of several
services—and, more than likely, incompatible APIs. Even if data can be primarily
managed locally by services for transactional scenarios, analytics frequently
necessitates a holistic view in which data from various services is combined. All
data required for analytics should reside in a single database schema in order to
achieve good performance and support flexible drill-down into various aspects and
levels of content. A common approach for microservices-based systems is to repli-
cate service-local data into a single central schema for reporting. Replication is a
common strategy for strategic reporting, where actuality is less important than access
to historical data. However, replication is problematic in the case of operational
reporting, which should ideally be based on the most recent application data. Not
only does redundant information clutter the system, but permissions must be defined
for the replicated data as well. Additionally, the information will be slightly outdated
due to the replication delay. This excludes, for example, insight-to-action scenarios
in which the user must identify issues to follow up on based on analytical data and
immediately resolve them using a transactional application. Even minor differences
between analytical and service-local (transactional) data can be extremely inconve-
nient if users frequently encounter false-positive issues that another user has already
resolved. Analytics is just one example for cross-topics in context of ERP systems
which are more complex to resolve with microservices. Extensibility, artificial
intelligence, search, semantic data layer, localization, verticalization, legal compli-
ance, lifecycle management, configuration, and implementation are additional cross-
topics which are vital for an ERP system but hard to realize with microservices. Data
privacy as an instance requires to delete and block personal data immediately when
there is no purpose. Already in a monolithic system with one database this is very
sophisticated to implement, in a microservice-oriented one the implementation
becomes an even bigger challenge due to the distributed logical databases.
Thousands of background jobs must be performed in order to determine end of
purpose concerning personal data so that the scalability advantages of microservices
might be depleted. Lifecycle management as a second example becomes more
complex, for example, versioning dependencies or upgrades of thousands of
Industry 4.0 43

microservices must be taken into account and reliably orchestrated. Extensibility as a

third example for enterprise readiness requires more sophisticated concepts for
microservices. Field extensibility as instance is simple to resolve with monolithic
systems due to central persistency and uniform database schema. The storage of
microservices is independent of each other. Thus, if a customer enhances for
example the sales order object with additional fields, those must be propagated
consistently and simultaneously to all related microservices persistency which is
very challenging and hard to solve.
In summary, microservices-based architecture suites well for loosely coupled and
heavy scalable applications, while monolithic approach targets tightly coupled and
high consistent applications. The business processes covered by ERP systems are
tremendously interdependent and therefore tightly coupled, for example idea-to-
market, source-to-pay, plan-to-fulfill, lead-to-cash, recruit-to-retire, or acquire-to-
decommission. Already an update on a status field (e.g., sales order status) has
implications on numerous processes (e.g., material resources planning run, procure
to receipt job). Customers expect that such kind of interplay among the business
processes is performed in real time with guaranteed data consistency. The same is
true also for the mentioned cross-topics (e.g., legal compliance, lifecycle manage-
ment) which are crucial for ERP systems in terms of enterprise-readiness. Thus, the
monolithic architecture very well resolves these requirements. However, the conclu-
sion is to combine both approaches. The implementation of ERP core processes can
apply the monolithic approach while specific decoupled applications with high
performance demand can be based on microservices to leverage the scalability
benefits. SAP S/4HANA for example follows this complementary approach and
implements deep-learning use cases with the need of scalability based on
microservices, docker, and Kubernetes technology. Finally, for the requirement
described in the beginning of this section concerning the adaptability of business
processes and their incremental implementation, not monolithic or microservice
debate is relevant but to provide the necessary product qualities. Monolithic ERP
systems can be incrementally implemented based on business scoping and the
underlying configuration infrastructure. Thus, business processes can be
implemented and consumed stepwise along with customers needs. SAP S/4HANA
for example provides various in-app and side-by-side extensibility techniques and
frameworks in order to enhance the business process from database level to user
interfaces. Furthermore, SAP S/4HANA offers numerous configuration concepts,
tools, and content so that customers can adopt the business processes to their
industry- and regional-specific requirements including the ability of incremental
implementation.

Industry 4.0

Until recently, supply chains were primarily assessed using efficiency metrics.
Today, new trends are emerging that pose complex challenges and place supply
chain and manufacturing at the heart of not only business success but also a
44 3 ERP Future Trends

company’s differentiation strategy. Manufacturing companies face a number of

challenges. In volatile markets, they must produce smarter products while
maintaining high quality. Customers expect customized products down to lot size
1. Product lifecycles are becoming increasingly short. Staying competitive
necessitates a faster time to market. The business model shifts from selling products
to providing solutions. Many businesses see Industry 4.0 as a strategic priority for
transforming these challenges into opportunities. Industry 4.0, also known as the
Industrial Internet of Things (IIoT), is concerned with industrial transformation
through the use of new digital technology that allows for the collection and analysis
of data across machines and business systems, enabling faster, more flexible, and
more efficient processes to produce higher-quality, individualized goods at a lower
cost. This transformation will boost resource productivity and efficiency, increase
agility and responsiveness, accelerate time to market, and allow for customization to
meet customer needs. Industry 4.0, in more specific terms, refers to the intelligent
networking of machines and processes for industry through the use of information
and communication technology. The digitalization of the industrial production
environment in factories, plants, and warehouses is being driven by technological
innovations that emerged in the aftermath of the Internet and cloud revolution:
IoT-connected devices; machine-to-machine communication; distributed comput-
ing; new edge and cloud technologies such as containers, microservices, and event-
driven architecture; times series and BPM. Most large corporations and many
mid-sized businesses have tested use cases to determine the business value of
Industry 4.0. According to a recent McKinsey global survey (McKinsey & Company
2019) of discrete manufacturing customers, 68% recognize the strategic priority.
While 41% are still piloting, 29% have begun to deploy at scale, with significant
purchase decisions visible in the market. Companies that successfully implement
Industry 4.0 at scale focus on business value rather than technology, mobilize and
train their workforce on new technologies, and transition to an integrated IT infra-
structure and automation technology stack. And they run the company through data-
driven processes rather than transactional ones. Creating value from Industry 4.0
necessitates a sector-specific approach, as business objectives and challenges differ
by industry and even by company. There is no one-size-fits-all approach to Industry
4.0. Based on the average lot size and the number of variants per factory, three
distinct clusters can be identified for discrete manufacturing. Engineer-to-order
production models, which are common in industries such as shipbuilding,
high-end machinery, and aerospace, strive for high efficiency in manufacturing
down to lot size 1. Mass-customized production, which is common in automobiles,
agricultural equipment, and industrial components, aims to maintain high-sequence
throughput and consistent quality in the face of increased product variances. In
high-volume production, such as consumer electronics, commercial equipment, or
semi-conductor chips, full automation (lights-out production) drives increased pro-
ductivity, whereas changing product mixes necessitate greater flexibility or produc-
tion line adaptation. In process manufacturing, lot size is converted to batch size, and
variants per factory are the number of different formulas or recipes per plant.
Multiproduct facility utilization becomes critical for order-based specialty
Industry 4.0 45

production. Tailoring is now possible thanks to new technologies. Adapting

products to individual needs, however, necessitates efficient use of manufacturing
equipment. High throughput objectives are increasingly being combined with com-
pliance, regulation, and traceability requirements in mass-production, batch-ori-
ented industries such as fine chemicals, paper, metals, construction materials, food,
or pharma. Asset efficiency of continuous flow production on a global scale drives
further optimization for commodities such as petrochemicals, bulk chemicals, and
ore in mining. The number of IoT endpoints worldwide grew by approximately 20%
annually, from 3.96 billion in 2018 to 4.81 billion in 2019 (Gartner 2019). IoT
endpoints are computing devices that are often microcontroller-based and perform a
specific task or have specific functionality as a part of a process or a product. Many
of these endpoints provide data which is often of great value to organizations
because it can be used to make better decisions and automate processes. The value
of this data only comes in combination with an ERP system designed to process the
data. The role of ERP systems here is to act as a data hub for passing on IoT data to
other systems. Additionally, the ERP system takes on the role of an interpreter and
adds semantic information to make this data interpretable. The role of the ERP
system is particularly central for industrial manufacturing companies that optimize
their production processes through the IoT. Ideally, the IoT data is so extensive and
the ERP system so well adapted that the ERP system is the digital shadow of the
value chain. That means it maintains a digital image of the value chain. The merit of
an ERP system that is a digital shadow is the optimal utilization of resources
(Bitkom-Arbeitskreis Enterprise Resource Planning 2016). The key insight is that
while the Industrial Internet of Things (IIoT) drives ERP innovation, a smart factory
is only created by the combination of IIoT with other technologies inside ERP
systems. IoT endpoints provide the data, but these can only be optimally used
when they are processed in the ERP system with the support of data science methods
and algorithms. Parts of the evaluated data remain in the ERP system and are used
there, for example, by managers to make decisions. Another part of the data is fed
back to IoT endpoints, for example to control machines. In this way, endpoints can
perform tasks controlled via the Internet. This opens completely new possibilities in
the area of ERP: Many business processes can be carried out directly by the
interaction of IoT endpoints and the ERP system, and machines are thus increasingly
replacing humans as the interface to the ERP system. Another part of the data is
given to augmented reality and virtual reality glasses. These can be used to help
employees perform tasks that cannot be fully automated yet. For example, service
incidents, recognized through data from sensors on a machine, can be reported to
technicians via their augmented reality glasses. The technicians can be navigated
directly to the machine through the augmented reality glasses. Another innovation in
the context of Industry 4.0 are digital twins. These are computer models that
represent the behavior of physical assets in real time. To do this, they consume
data from the ERP system, but also return important information to the ERP system.
Applying digital twins based on ERP systems adds enormous value because
operating manuals, diagrams, service instructions and records, performance records,
and failure modes can be maintained and updated in near-real time across the
46 3 ERP Future Trends

Indust ry 4.0

Int elligent product Int elligent fact ory Int elligent asset Empowered people

Fig. 3.3 Industry 4.0 themes

network, reducing manual effort and errors. Companies can build capabilities on this
data to predict future states based on historical data, change behavior or performance
by adjusting variables, and simulate possible outcomes by adjusting several
variables to determine the best result before instructing the physical system. As
shown in Fig. 3.3 four themes are driving Industry 4.0, each of which adds distinct
value to the business. Intelligent products are designed and configured to precisely
meet the needs of their customers. Intelligent assets are dynamically maintained and
linked to all processes. Intelligent factories use data and intelligence to operate
autonomously and deliver customized products at scale. People who are empowered
have all of the tools and information they need to do their best work.
SAP S/4HANA Manufacturing for production engineering and operations as
instance supports the intelligent product theme. SAP S/4HANA Extended Ware-
house Management and SAP S/4HANA Quality Management for example facilitate
the intelligent factory theme. SAP S/4HANA Asset Management as instance helps
with the intelligent asset theme. With SAP S/4HANA Environment Health Safety
for illustration enables empowered people theme. The promise, benefits, and value
of the IoT have been extensively documented, but it also brings with it a slew of
concerns about IoT security. It is unsurprising that the majority of IoT privacy and
security failures occur in the consumer space. The industrial operator can put
pressure on vendors and make educated decisions about how to implement security
best practices. Environmental factors and physical constraints must also be consid-
ered depending on where the connected devices are deployed. Given the connectiv-
ity of equipment to cloud systems, all communication and access must be properly
secured using end-to-end encryption. Modern security practices use a risk-based
approach that takes into account both the ease of an attack and the impact if one
occurs—providing a strong indicator of how much security you’ll require. The
promise of standards in smart manufacturing is critical in a fragmented market. It
is difficult to transition existing machines and assets into the age of networked
production. The success of Industry 4.0 is dependent on open standards. They enable
lower integration costs, faster adoption, and scale, and they are the only way to
enable seamless interoperability between multiple vendors. While technical lower-
level standards are widely used in factories today, most providers have yet to
implement higher-level standards that describe semantics, data models, data man-
agement principles, and part classification rules. Historically, the ecosystem supply-
ing factory, plant, and warehouse owners and operators has been highly fragmented,
with multiple players playing multiple roles at multiple levels within the factory.
Two-Tier ERP 47

Advancing Industry 4.0 necessitates close collaboration among ecosystem players.

Nobody can do it alone, given the current market fragmentation, complexity of the
shop floor, and digitalization expectations. SAP orchestrates with SAP S/4HANA a
strong ecosystem with partners with complementary strengths and delivers Industry
4.0-relevant solutions to the owners and operators of manufacturing sites, plants, and
factories in collaboration with partners.

Two-Tier ERP

Building a comprehensive enterprise software strategy capable of serving a large

global enterprise has always necessitated some degree of compromise. The software
and technology required to run headquarters operations have not always been the
best choice for running subsidiaries and other smaller operating units within the
enterprise. In many cases, software that can run headquarters was deemed too robust
and expensive to be effective in a subsidiary operation, and the autonomy granted to
many subsidiaries meant that it was easier to let these entities make their own choices
rather than impose a solution that could be deemed overreaching, impractical, or
both. As a result, many businesses adopted a two-tier ERP strategy that supported a
standard enterprise system from one vendor in the headquarters and a multiple-
choice ERP strategy for subsidiaries, effectively creating a multivendor, two-tier
environment as shown in Fig. 3.4a. A large number of mid-market ERP vendors
stepped up to the plate and created largely effective products that could be easily
implemented in subsidiaries. These systems could provide some connectivity back to
the headquarters, primarily for the purposes of consolidating financial, inventory,
and other basic operational data across the enterprise. That model served well for
many years, but its inherent limitations are beginning to emerge as the global
business world shifts at an unprecedented rate to all-digital, real-time operations.
Two-tier architectures that rely on integrating different vendor systems have become
barriers to innovation, cost-containment, and operational efficiency, rather than a
means of replicating the structural flexibility of the global enterprise. This has
become increasingly true as the nature of subsidiary operations has evolved to
necessitate higher levels of functionality and support for innovation. This is very
much the status quo in the enterprise software industry, and until recently, it was a
fact of life that businesses had to accept. However, the status quo is being challenged
in the SAP enterprise ecosystem, and companies that run SAP in their headquarters
now have the opportunity to reconsider whether running a non-SAP ERP system in
their subsidiaries is the best strategic choice. This new opportunity is enabled by
SAP S/4HANA’s ongoing evolution, which is now available both on-premise and in
the cloud, allowing organizations to leverage a consistent code line and data
structure extending from a fully functional headquarters system running SAP
S/4HANA on-premise to a flexible and adaptive subsidiary solution, also based on
SAP S/4HANA, running in the public cloud. With the availability of SAP’s PaaS
solution, SAP Business Technology Platform extends this model even further by
providing a platform for additional functionality not found in SAP S/4HANA, such
48 3 ERP Future Trends

ERP Tier 1
a

Connectivity

ERPx Tier 2 ERPx Tier 2 ERPx Tier 2

b
Subsidiaries

Local Production Unit Local Inventory Local Finance

Tier Two

Subsidiary
Corporate
Tier One

Digital Core SAP Planning and SAP Central Global HR

Consolidation Finance
Headquarter

Fig. 3.4 (a) Two-tier ERP, (b) SAP S/4HANA Cloud and on-premise for headquarter-subsidiary
scenario

as direct connectivity to other SAP cloud assets such as SAP Ariba, SuccessFactors,
Hybris, and Concur, as well as a platform for developing net-new functionality. The
ability to use the same product family—with its shared data structures, APIs, and
extensibility platform—in a two-tier deployment allows for a better way to support a
high level of operational integration between headquarters and subsidiary operations
without sacrificing the autonomy and local requirements that many subsidiaries
value. Indeed, the two-tier ERP opportunity will unleash a level of integration and
business orchestration between headquarters and subsidiary operations that far
exceeds what has traditionally been considered.
Figure 3.4b shows an example for two-tier ERP where the manufacturing plants
run their local finance and consolidate back to the headquarter, whereas the
Two-Tier ERP 49

manufacturing, inventory process runs locally only. This approach would equally
apply for Warehouse management or Retail processes. Thus, hybrid scenarios in
which enterprises run parts of their functionality in the cloud and other parts
on-premise must be supported by ERP solutions. Hybrid deployments will be the
integration reality for many ERP implementations for many years to come,
providing enterprises with the flexibility to approach both digitalization and cloud
migration with public, private, and hybrid approaches. Traditional constraints in
document flows and workflows are resolved across those application areas to make
each transaction atomic within an application area. Workflows in the digital age must
be designed around the user’s role and span end-to-end processes across solution
components. This enables the rapid process changes required in the digital era. In
case of public cloud ERP, a third-party cloud service provider owns and operates the
system including the underlying hardware and software which are delivered over the
Internet. In a public cloud, customers share the same hardware, storage, and network
devices as other cloud tenants. A private cloud ERP is a collection of cloud hardware
and software resources that are used solely by one organization. The private cloud
can be physically located at customer’s on-site datacenter or hosted by a third-party
service provider. In a private cloud, however, the services and infrastructure are
always maintained on a private network, and the hardware and software are solely
dedicated to the customers organization. On-premise ERP system is deployed on a
company’s server, is protected by an internal firewall, and operated by the customer.
Crucial for enabling two-tier ERP is semantical compatibility between the involved
private, public, and on-premise ERP systems. This starts with a homogeneous data
model which makes business semantics available for external use, analytics, search,
and key user extensibility. Semantic compatibility applies also to the business
processes concerning the different deployment options. This can be optimally
achieved by having the same code line as for example SAP ERP and SAP
S/4HANA (public, private, and on-premise edition) do. A subsidiary can run a
separate instance of the cloud assets or connect to an enterprise-wide instance,
depending on the business model. Furthermore, both the headquarters and
subsidiaries can add new functionality as needed, providing a single-vendor option
for integrating key business processes in areas such as finance, human resources,
talent management, contingent labor, time and expense billing, customer interaction,
and procurement. Two-tier and multitier offerings are an important refinement to the
notion that local subsidiaries must be given the option of running whichever ERP
system is realistic in their local setting, or that a low-cost ERP system from a third-
party vendor is sufficient to meet the needs of a subsidiary operating in today’s
global economy. Rather, the strategic choice that really matters at this point in the
evolution of business and technology is about changing, adapting, or implementing
new business processes enabled in software—whether they are enterprise-wide
processes or those specific to a local or micro-vertical need—without requiring
extensive customization that would break the cloud model. This is a far cry from
the argument that local autonomy trumps interconnectivity and synchronization of
business processes with headquarters. This new definition of choice necessitates that
local subsidiaries capitalize on the new opportunities available in the cloud—while
50 3 ERP Future Trends

using the same single-vendor platform and software to ensure business continuity
across the entire enterprise. The ability to leverage processes, data, and analytics
across the enterprise without having to maintain the interoperability of subsystems
that would be required to accommodate the complexity inherent in a multivendor
n-tier system defines this continuity. SAP S/4HANA is poised to change the stakes
in two-tier and n-tier enterprise software systems by making this functionality
available from a single vendor’s code base, data model, and platform. This new
model of two-tier functionality brings with it a slew of new capabilities. The
knowledge gained from implementing in one tier can be used to accelerate imple-
mentation in another. Attributes established in one tier, such as master data, enter-
prise wide KPIs, and business processes, can be easily transferred to the other.
Indeed, once the configuration of a specific tier has been finalized, it can be used
as a template to quickly bring on other subsidiaries. The semantic compatibility of
SAP ERP and SAP S/4HANA data and process models, as well as SAP S/4HANA
on-premise and cloud deployments, enables enterprises to transition in a reasonable
timeframe. Many of SAP ERP’s extension points remain available with this com-
patibility paradigm, reducing the adoption effort for custom coding when migrating
to SAP S/4HANA.

Conclusion

The world of ERP is changing rapidly due to technological progress and changing
business requirements. ERP systems will become more modularized. From the
business perspective, ERP systems will cover increasingly more specific industry
and scenario-based applications. When it comes to implementation, there is a need to
engage early across all levels and offer more sustainable and better-targeted training
in the future. The market maturities of various innovative technologies like the
blockchain, the Internet of Things, and virtual and augmented reality are driving
some other trends. Industry 4.0 enables factories and businesses to become smarter.
Due to the increasing number of cyberattacks and stricter privacy regulations, ERP
systems must become more secure across all levels from the architecture to the users.
Not only the characteristics of an ERP system itself but also the process of its
implementation determines the success that a company derives from the ERP
system. Therefore, and due to frequent budget overruns, time overruns, and imple-
mentation failures, companies will also strive for improvements of the implementa-
tion. Implementation here refers to the entire process from the decision to deploy,
replace, or upgrade an ERP system to the point where the organization is using the
system.
 Part II
Functional View

This part deals with the functional scope of SAP S/4HANA. All enterprises run the
business processes, develop products and services, generate demand, fulfill demand,
and plan and manage the enterprise. Those business processes are described and
mapped to the solution capabilities of SAP S/4HANA. The application features and
architecture are elaborated along the SAP S/4HANA modules for sales and market-
ing, finance, manufacturing, supply chain, service, research and development/engi-
neering, sourcing and procurement, asset management, and human resources. Main
master data entities and industry verticalizations are also covered.
SAP S/4HANA is rich in functionality and covers the entire business processes of
enterprises as illustrated in the next figure (Fig. 1).
Idea to Market supports the ideation, requirement analysis, and design of
products and services. The outcome is used in the context of Source to Pay to
contract suppliers, to procure the necessary materials and services, and to pay the
corresponding invoices. Plan to Fulfill covers receipt and inspection of goods,
manufacturing products respectively provisioning services. Marketing activities for
generating leads, transferring opportunities to quotes and orders are ensured with
Lead to Cash. In addition to those core processes corresponding supportive pro-
cesses are necessary to serve an enterprise. Recure to Retire manages the complete
lifecycle of employees starting with recruiting and onboarding, following with
developing and rewarding, to retirement. Acquire to Decommission enables
planning, acquisition, onboarding, operating, and offboarding of assets like
manufacturing machines. Companies must manage risks and compliance, identity
and access, cybersecurity and data privacy, IT infrastructure, trade, and tax
regulations. Those are ensured by the supporting process Governance. Finance
covers invoice to pay and cash, managing treasury and real states.
The described core and supporting processes are implemented based on applica-
tion modules in SAP S/4HANA as depicted in the next figure. The application
architecture founds on different software layers. As database system SAP HANA
is used to store configuration, transactional, and master data. The semantic layer
Virtual Data Model is provided for accessing the application data in a unified and
simplified manner. The software modules on the application server provide reusable
52 Part II Functional View

Idea to Market
IDEA TO Plan to Optimize Idea to Design to
MARKET Products / Requirement Release
Services

Products / Manage
Services to Products /
Market Services

Source to Pay
SOURCE TO Plan to Optimize
Source to Plan to Optimize
PAY Sourcing and
Contract Fulfillment
Procurement

Procure to Request to Invoice to Pay

Receipt Resolution

Manage
Supplier and
Collaboration

Plan to Fulfill
PLAN TO
Plan to Optimize Procure to
FULFILL Make to Inspect
Fulfillment Receipt

Deliver Product Deliver Service Manage

to Fulfill to Fulfill Fulfillment

Fig. 1 The SAP S/4HANA business processes

functionality to realize the business processes. There is not a bijective mapping

between the application modules and the core/supporting processes. Usually features
of multiple software modules are required to realize one core/supporting process. In
addition, extension components are used for the implementation as SAP Ariba, SAP
Fieldglass, SAP Integrated Business Planning, SAP Concur, and SAP
SuccessFactors. R&D and Engineering implements major parts of the core process
Idea to Market. The software components Procurement, Supply Chain, and
Manufacturing cover the core processes Source to Pay and Plan to Fulfill. The
core process Lead to Cash is covered principally with Sales and Services. Recruit to
Retire is managed with software modules Human Capital Management and SAP
Concur. Acquire to Decommission is primarily realized with Asset Management.
The supporting process Finance is mainly handled with the component Finance. For
Governance various technical features of the SAP S/4HANA platform are used, for
example, SAP Identity & Access Management, SAP Information Lifecycle Man-
agement, SAP Process Control, or SAP Risk Management.
Part II Functional View 53

Lead to Cash
LEAD TO Plan to Optimize
Opportunity to
CASH Marketing and Market to Lead
Quote
Sales

Request to
Order to Fulfill Invoice to Cash
Service

Manage
Customer and
Channels

Recruit to Retire
RECRUIT TO
Plan to Optimize Recruit to Develop to
RETIRE
Workforce Onboard Grow

Manage
Reward to
Workforce and
Retain
Retirement

Acquire to Decommission
ACQUIRE TO Plan to Acquire to Operate to
DECOMMISSION Optimize Assets Onboard Maintain

Offboard to Manage
Decommission Assets

Governance
Manage Manage Identity
GOVERNANCE Plan to Optimize
Enterprise Risk & Access
Enterprise
& Compliance Governance

Manage Cyber- Manage

security, Data International
Manage IT
Protection & Data Trade, Tax &
Privacy Legal

Manage
Projects &
Operations

Finance

FINANCE Plan to Optimize

Invoice to Pay Invoice to Cash
Financials

Record to Manage Manage Real

Report Treasury Estate

Fig. 1 (continued)
54 Part II Functional View

SAP S/4HANA

Application Server

SAP Ariba, SAP Fieldglass, SAP Integrated Bus. Planning, SAP Concur, SAP SuccessFactors
Industry Solutions

Supply Chain
Extended Human Capital
Transportation
Warehouse … Management
Management
Management

Manufacturing
R&D and
Production Quality
… Engineering
Execution Management

Asset
Procurement Sales Service
Management

Financials

Accounting Payables Receivables

Treasury …
Management Management

Virtual Data Model

Configuration Data Transactional Data Master Data

Database System

Fig. 2 The SAP S/4HANA application architecture

On top of the core modules Industry Solutions are provided. Thus, the core
functionality is enhanced with industry-specific features for around
25 verticalizations. Covered are industries like Retail and Fashion, Banking, Insur-
ance, Oil and Gas, Utilities, Waste and Recycling, Automotive, Public Sector,
Defense, or Professional Services (Fig. 2).
Functional Departments and Enterprise
Domains 4

This chapter deals with the functional departments of the enterprise domains:
product and services, customer, supply, and corporate. The basic organization
structure of enterprises and how this is managed by SAP S/4HANA are explained.
Firstly, several significant terminologies such as the value chain, functional
departments, domains and processes are explained. In accordance with that, the
technical term organizational form is defined and some organizational forms such as
the divisional organization or the line organization are expounded.

Business Requirement

The Value Chain and Domains

The value chain describes the total amount of processes of an enterprise. The value
chain can be used for a first analysis on how to identify and create strategic
competitive advantages. In the context of the value chain all interrelated activities
for providing products or services are considered as components in a complex chain.
Each component of the value chain causes costs and contributes to the value of the
final product. As a consequence, it is necessary to analyze each component of the
chain. The activities of a company are divided into two categories, the primary
activities and the support activities. The primary activities deliver an immediate
value-adding contribution for generating a product or a service. The support
activities contribute to efficiency and effectiveness of the primary activities. The
primary activities comprise inbound logistics, manufacturing, outbound logistics,
marketing, sales and service, whereas the support activities include procurement,
technological development, human resources management, and enterprise infra-
structure. The value chain is divided into four different enterprise domains: the
customer domain, the supply domain, the corporate domain, and the products and
services domain which are depicted in Fig. 4.1.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 55

S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_4
56 4 Functional Departments and Enterprise Domains

Develop Products Generate

& Services PRODUCTS & CUSTOMER Demand
SERVICES

Value Chain

CORPORATE SUPPLY
Plan & Manage Fulfill
the Enterprise Demand

Fig. 4.1 Enterprise domains

The functional departments aligned to the products and services domain are
responsible for developing products and services. In contrast, the functional
departments aligned to the customer domain are relevant for generating demand.
The functional departments being part of the corporate domain are responsible for
planning and managing the enterprise and the responsibility of the departments
aligned to the supply domain is fulfilling the demand of the customers.

Functional Departments and Processes

This section explains the functional departments and the corresponding processes
that are assigned to the enterprise domains. The functional departments aligned to
the corporate domain comprise finance, indirect procurement, asset management,
human resources, corporate strategy, and corporate operations. The finance depart-
ment is in charge of accounting, annual financial statements, treasury management as
well as risk and compliance management. The department being called indirect
procurement has the objective to reduce the product costs by large lot sized and fix
demand planning. The department human resources focuses on choosing, hiring, and
motivating employees and is responsible for training courses and compensations.
The departments in the customer domain include marketing, sales, customer service,
and omnichannel commerce. The marketing department is responsible for market
research, advertising, public relations, trade shows, corporate identity, product
flyers, and other activities leading to a higher recognition of the enterprise by its
customers. The objective of marketing is to strengthen the brand and market share.
The sales department is competent for the new customer acquisition, the process
from an inquiry to the sales success, defining a sales strategy to convince the
customers of the corporate products and the customer relationship management.
The functional departments aligned to the supply domain contain supply chain
Business Requirement 57

R&D / Engineering RD Marketing MKT

Product Management PM Sales SAL
PRODUCTS & CUSTOMER Customer Service CUS
SERVICES
Omnichannel Commerce COM

Value Chain
Finance FIN Supply Chain Planning SCP
Indirect Procurement PRO Sourcing and Procurement PRO
Asset Management AM Manufacturing MFG
CORPORATE SUPPLY
Human Resources HR Service Delivery SDL
Corporate Strategy CST Supply Chain Execution SCX
Corporate Operations COP Supply Chain Enablement SCE

Fig. 4.2 Functional departments assigned to enterprise domains

planning, sourcing and procurement, manufacturing, service delivery, supply chain

execution, and supply chain enablement. The manufacturing department comprises
the business processes production planning and production execution. The business
process production planning itself contains sub business processes such as bill of
material, production requests, production orders, production schedule or production
inventory. The business process production execution includes sub-business pro-
cesses as well such as transferred material to production floor, machine usage or
returned material to warehouse. The supply chain planning as one of the two main
functions of supply chain management comprises demand planning, procurement
planning, production planning, and distribution planning. The other main function of
supply chain management being called supply chain execution refers to order
fulfillment varying from transport processing and production processing to ware-
house management. The products and services domain comprises the departments
product management and research and development. The product management has
the objective to optimize the product portfolio by introducing new products and
optimize the assortment, whereas research and development is responsible for
optimizing products by product tests and product changes. Figure 4.2 illustrates
the assignment of functional departments to enterprise domains.

Organizational Forms

There are numerous external as well as internal requirements concerning organiza-

tional forms of enterprises which have to be fulfilled. The external prerequisites
comprise a market and competition orientation, flexibility, and innovative capability.
The internal requirements contain efficiency concerning leadership processes, ser-
vice processes, human resources, and material resources. In the context of
58 4 Functional Departments and Enterprise Domains

organizational forms, it can be differentiated regarding the formal organization of an

enterprise between the organizational structure and the process organization.

Organizational Structure

The organizational structure portrays the static, hierarchical structure of an enterprise

and arises by revolving the total creation of outputs, such as products or services,
into single subtasks. Moreover, the organizational structure specifies task areas and
the creation of positions. A position is the smallest organizational unit of an
enterprise and executes multiple subtasks forming a certain task complex. Addition-
ally, it summarizes positions into greater units, such as divisions or functional
departments. The organizational structure is depicted in an organizational chart.
The organizational structure is classified into one-dimensional and multidimensional
forms. In the classical organizational chart, the upper level illustrates the manage-
ment board, whereas the lowest level indicates the operational units. Besides, it is
possible to establish staff positions in each of these organizational forms to relieve
corporate management. Instances for one-dimensional organizational structures are
the functional and divisional organization, whereas the matrix organization is
assigned to the multidimensional organizational structures. These organizational
forms are expounded in the subsequent sections.

Functional Organization
The way of contracts, instructions, and notifications is not determined by instance
ways, but rather determined by the way of the concerning tasks in the functional
organization. The functional organization depicts the initial form of an industrial
enterprise. It was found especially in seller markets and still is widely spread in
enterprises with a low product diversification. The decision for the functional
organization is often justified in the growth of an enterprise, so that only one
management level is not sufficient anymore. As a consequence, in smaller businesses
in the level below the corporate management a technical and a commercial func-
tional department with a clearly differentiated scope of responsibility arises. In case
of further growth of the enterprise, further hierarchical levels are inserted, and the
functional structure is retained in the third and the underneath levels. There are
several conditions for the success of this organizational form. For instance, one
condition is that the functions concurrently are the core competencies of the enter-
prise. Besides, there are no big differences between the customer segments. Addi-
tionally, the sales markets exhibit small disparities such as countries, languages, and
cultural aspects. Moreover, the products are largely homogenous. The functional
organization has several advantages, for example, clear functional responsibilities,
the simple control enabled by the closed functional departments, and the easier
recruitment due to the functional alignment of numerous skilled occupations. The
drawbacks of this organizational form include a missing complete overview about
the operations of the functional instances in many cases, power struggles, a missing
profit orientation, restricted career opportunities, and a high need for communication
Business Requirement 59

Corporate
management

Research and
Administration Manufacturing Procurement Marketing
development

Fig. 4.3 Functional organization

and coordination. The following illustration shows a functional organization with the
administration, marketing, research and development, procurement, and marketing
as functions in the second level (Fig. 4.3):

Divisional Organization
The divisional organization forms relative autonomous departments which are also
called business units, divisions, and lines of business. These divisions are set up in
particular by products, product categories, markets, problem areas, or geographical
considerations. It is also possible to form the divisions based on customers. The
prerequisite therefore is distinguishability between customer segments, such as
business customers and private customers. The managers of the divisions lead the
businesses in their own responsibility. That is why the divisions take the responsi-
bility for their area measured by their profit. As a result, the divisions are also
denoted as profit centers. The created services between the divisions are exchanged
by transfer prices. It is also possible to configure the divisions as cost centers or
investment centers depending on the flexibility in decision-making. Divisions
regarded as cost centers only have decision-making authority concerning the
predefined cost budget, whereas the managers of investment centers determine the
appropriation of profits in the context of reinventive measures. The lines of business
contain the most significant functions of an economically independent unit, includ-
ing for example sales, production, and funding. This means, that they are subdivided
into functional areas again. It is possible to construct the divisional organization as a
single line system or as the line-and-staff organization. The prerequisites for the
success of the divisional organization are a sufficient size of the enterprise and a
sufficient heterogeneity of the product segments. Besides it is necessary that the
product divisions reckon as the core competencies of the enterprise and the selling
markets of the divisions have to be varying, so that they don’t have to compete with
each other. On the one hand, the benefits of a divisional organization vary from the
possibility of the holistic delegation of tasks and responsibilities and a better and
faster decision-making within the divisions to the opportunity to react flexible on
changes regarding the environment. On the other hand, the drawbacks comprise the
risk of short-term profit and rentability focus, the possibility of a suboptimal resource
allocation, and the necessity of central functions concerning the overlapping coordi-
nation of the divisions. The following figure indicates an instance for a divisional
60 4 Functional Departments and Enterprise Domains

Corporate
management

Menswear Ladieswear Children‘s wear

Procurement Manufacturing Sales … Procurement Manufacturing Sales … Procurement Manufacturing Sales …

Fig. 4.4 Divisional organization

organization with the product divisions: menswear, ladieswear, and children’s wear
in the second hierarchical level (Fig. 4.4).

Matrix Organization
In contrary to the functional and divisional organization, the matrix organization
belongs to the multidimensional organizational forms which means that in the matrix
organization the organizational entities in the second hierarchical level are formed
with concurrent application of two design dimensions. Therefore, the matrix organi-
zation is a multidimensional multiline organization. It is typical to usually form the
matrix sites horizontal by functions and vertical by object-orientation, whereby
however the application of other design patterns is possible. The matrix sites are
directly subordinated to the corporate management and have the authority to issue
directives toward the interfaces of the matrix. The matrix interfaces are responsible
for the actual task execution as organizational units. The matrix interfaces can be
management units to which other organizational units are assigned to or execution
units. To each matrix interface there are two superior matrix units. As a consequence,
this leads to competence conflicts which is why an equal coordination is targeted.
The matrix interfaces don’t have to consist of organizational units. It is possible that
these matrix interfaces involve problem areas that must be solved together. The
benefits of the matrix organization vary from short communication paths and a
flexible adjustment of the organization to requirements concerning the market and
the competition to a diverse range of opportunities regarding the human resources
development. The drawbacks include the risk of too many trade-offs, the necessity of
high information processing capacity, and a high need for qualified executives. The
matrix organization is depicted in Fig. 4.5.

Process Organization

The process organization structures the enterprise in comparison to the organiza-

tional structure from a different perspective. The process organization considers the
dynamic, time logical processes of an enterprise. The outputs of enterprises are
generated in processes. As a result of this it is necessary to design the processes of an
Solution Capability 61

Corporate
management

Procurement Manufacturing Sales …

Product 1

Product 2

Product 3

Fig. 4.5 Matrix organization

enterprise. Suitable methods for modeling processes are event-driven process chains
or the business process model and notation.

Solution Capability

Organizational forms and structures are technically implemented with SAP

S/4HANA Organizational Management which is described in this section. Organi-
zational Management maintains the master data for the client, respectively the
organizational structure by identifying manpower requirements, creating new jobs,
assigning responsibilities, and managing performance and compensation. Organiza-
tional Management is a component inside the module SAP S/4HANA HCM and
helps to maintain timely and correctly reports including organizational plans, hierar-
chical structures, and the positions of the employees, which is crucial for every
enterprise. Organizational Management determines the relationships between work-
force by using certain objects, for example, organizational units, positions, jobs, and
cost centers. This means that organizational hierarchies are turned into data by
defining which task is executed by which employee, in which department and
business area under whom. It must be considered that the first step in implementing
SAP S/4HANA applications comprises determining the specific organizational
structures of the enterprise in the SAP S/4HANA system. The first step consists of
analyzing the structures and procedures in the enterprise, followed by assigning
them to the SAP S/4HANA structures. Organizational units being provided for
accounting, logistics, and human capital management functions comprise the
following:

• The client as the highest-level element of all organizational units represents the
enterprise or headquarters group.
62 4 Functional Departments and Enterprise Domains

• The controlling area contains one or multiple company codes and portrays
internal business transactions.
• The company code represents the national tax law view of the enterprise, the fiscal
calendar, the local currency, and the tax reporting requirements. The company
code in the SAP S/4HANA system is a legal, independent accounting unit which
represents the central organizational unit of financial accounting.
• The personnel area represents a subdivision of the enterprise and is organized
according to aspects of personnel.
• The personnel subarea is defined as an organizational unit representing a specific
area of the enterprise organized according to certain aspects of personnel. This
means that a group of people work under similar employment conditions within a
personnel subarea.
• The sales organization responsible for the sale and distribution of products and
services is an organizational, logistical unit structuring the enterprise based on its
sales requirements.
• The division delineates an organizational unit being responsible for sales or
profits from saleable materials or services. Articles are assigned uniquely to one
division, whereby divisions are assigned to sales organizations.
• The plant describes a place where either materials are produced or goods and
services are provided.
• The storage location is an organizational unit differentiating between several
types of stocks in an enterprise and represents warehouses.

Figure 4.6 illustrates how to assign the structure of an enterprise.

SAP

Client

Europe North America Controlling Area

Germany France Company Code

Germany Production Germany Service … Personnel Area

Hamburg Berlin Frankfurt Personnel Subarea

FRA BER HAM Sales Organization

Pumps Paints Pharma Division

FRA BER HAM Plant

0001 0002 … Storage Location

Fig. 4.6 Exemplary enterprise structure

Solution Capability 63

Objects in SAP S/4HANA Organizational Management

The Organizational Management deals with objects which means that it uses an
object-orientated data model for the representation of organizational structures
whereby each individual object in the organizational structure represents
components of the organization having their own responsibilities and tasks assigned
to them. It is required to maintain the components in the structure referring to objects
to maintain the hierarchical structure. It must be differentiated between several
object types such as the object types: Organizational unit, job, position, cost center,
task, task group, and legal entity. Every object type has a unique object key.
The following section describes the most important SAP-delivered objects:

• Organizational Unit: The Organizational Unit also known as Org. Unit is an

object type referring to a department or a group of employees and is indicated by
the object key “O.” The Organizational Unit is a significant object type regarding
the organizational structure because it contains the positions. An instance for an
Org. Unit is financials.
• Position: The Position as an object type, for example, mechanic, relates to a job
title and is described by the object key “S.” It plays a significant role concerning
the structuring of Organizational Management by designating the titles of
individuals. The Position object is used as well for integrating Organizational
Management and Personnel Administration.
• Person: The object type Person refers to employees in Organizational Manage-
ment. This means that it indicates the name of the person holding a certain
position, for example, the Person Johnson holds the Position Mechanic. The
SAP S/4HANA user is redirected to Personnel Administration when creating a
Person object in Organizational Management.
• Job: The object type Job concretizing the generic tasks executed by multiple
Positions of the same level. For instance, there are multiple Positions in the
management level of an enterprise such as HR Manager, Finance Manager, and
Operations Manager and to each of these Positions tasks are assigned. On this
occasion it must be mentioned that some of these tasks are common among the
different Positions because they are all in the same hierarchical level of the
enterprise. There is the possibility to group common tasks at the managerial
level such as approving leaves and appraisals together under the job, instead of
assigning them to each of the Positions so that the duplication of work is reduced.
Besides, it is necessary to assign not common tasks separately. For instance, the
task Hiring Planning is only assigned to the Positions HR Manager.
• Cost Center: The Cost Center object is the only external object in SAP S/4HANA
HCM which means that it has its database in another module of SAP and is
connected to other Organizational Management object types such as Positions or
Org. Units through relationships. This means that it is not directly used in
Organizational Management and belongs to the Cost Accounting module.
• Task: A task is defined as a duty and responsibility belonging to individual
employees. A single task relates to a single activity having to be performed.
64 4 Functional Departments and Enterprise Domains

Therefore, the task object determines the work executed by a Person holding a
position. A list of all tasks is available in the task catalogue.
• Task Group: The Task Group object refers to a row of activities or tasks having to
be carried out in sequence. A Task Group is created by creating relationships
between different rows of tasks.
• Legal Entity: The Legal Entity object in Organizational Management represents a
company code which is the basis for the categorization within a client. These
company codes are provided in Financial Accounting. It has to be mentioned that
each of these company codes has an organizational structure. It is possible to
connect the organizational structure to a Legal Entity object by using the General
Structure tool.

Additionally, it is possible to generate further custom-delivered objects besides

the SAP-delivered objects.

Relationships in SAP S/4HANA Organizational Management

Relationships connect the objects with each other to create a structure and rely on
their object type. There are SAP-defined relationships for the objects delivered by
SAP ensuring the structural accuracy in the organizational plan, and it is possible
that one type of relationship occurs between multiple object types. Moreover, it is
differentiated concerning relationships between two objects. These kinds of
relationships include the hierarchical, lateral, and unilateral types of relationships.
A hierarchical relationship distinguishes between the other types of relationships by
a relationship of the manager with a subordinate position. In a lateral relationship the
relationship exists between positions at the same level, such as the Quality Analyst
and Quality Inspector. Unilateral relationships are relationships with only one
direction, for example, a cost center is assigned to a position. The already mentioned
SAP-delivered relationships consist of codes containing two components: the direc-
tion of the relationships being common to all relationships and a unique code for
each relationship. The standard syntax of a relationship is “A/B 000.” The most
important relationships for organizational units are “A/B 002 Org. Unit to Org. Unit
relationship,” “A/B 003 Org. Unit to Position relationship,” and “A/B 011 Org. Unit
to Cost Center.”49 Org. Units play a crucial role in context of forming the organiza-
tional structure of an enterprise. Positions are assigned to Org. Units and are more
specific entities than jobs. The most significant relationships concerning positions
are “A/B 003 Org. Unit to Position relationship” and “A/B 012 Position manages
Org. Unit.” Jobs which define a Position because they are general sets of functions
and assign tasks to a manager or secretary have a relationship with a position which
is called “A/B 007.” Persons normally depict the employees in a company holding a
position which is why the most significant relationship to a person object type is the
“A/B 008 Person to Position hierarchical relationship.” A task as an individual
responsibility has to be executed for a particular job or position. The most important
relationship is the “A/B 007 Task to Job relationship.” Cost centers either have
Conclusion 65

relationships with Org. Units or with positions. The most important relationship
concerning a cost center object is “A/B 011 Position to Cost Center.” The letters A
and B point out the direction of the relationship whereby A is used when someone is
in charge of another and B indicates that someone reports to someone. This means
that A represents a passive relationship and B indicates an active relationship.

Organizational Plan in SAP S/4HANA Organizational Management

The organizational plan in SAP S/4HANA Organizational Management represents

the task-related structure of an enterprise and comprises of different objects and
relationships between these objects. The organizational plan applies plan versions
for planning purposes. The technical entity plan version enables creating and
working with information and contains as well as the organizational plan the
organizational structure. Moreover, it is possible that an enterprise requires multiple
organizational structures, for example, as a result of acquiring a new company. As a
consequence, it is possible to use plan version statuses which comprise the statuses:
ACTIVE, PLANNED, SUBMITTED, REJECTED, and APPROVED whereby only
one organizational plan is active at any time.

Conclusion

In all companies there are four enterprise domains to which functional departments
are assigned to:

• Products and Services for developing products and services. The functional
departments engineering and product management are aligned to this enterprise
domain.
• Customer to generate demand. The functional departments’ marketing, sales,
customer service, and omnichannel commerce are aligned to this enterprise
domain.
• Supply to fulfill the demand. The functional departments’ supply chain planning,
sourcing and procurement, manufacturing, service delivery, supply chain execu-
tion, and enablement are aligned to this enterprise domain.
• Corporate to plan and manage the enterprise. The functional departments’
finance, indirect procurement, asset management, human resources, corporate
strategy, and operations are aligned to this enterprise domain.

To implement the organizational and process structures SAP S/4HANA provides

the solution Organization Management. This module offers all the necessary func-
tionality for designing, maintaining, and operating organization structures. The
component interacts with additional SAP S/4HANA solutions for facilitating sup-
plementary capabilities.
Master Data of Business Partner
5

This chapter provides a detailed view on the business partner master data, which is
relevant for most business transaction that companies process. For the business
partner entity the challenges, the data model and the underlying concepts in SAP
S/4HANA are described.

Business Requirement

Master data is information that is created to last for a longer period of time. The
information which is maintained within the master data has huge implications for all
day-to-day transactions. To put it more precisely, master data are business objects
which are involved in business transactions. Master data is a vital part of any ERP
system but also adds a lot of challenges like mergers and acquisitions, divestitures,
corporate restructuring, business process optimization and consolidate IT landscapes
(Fig. 5.1).
The way those challenges are resolved has implications all over the company.
Most notably it has effects on the financials, company IT, sales, and supply chain.
This includes for example the effectiveness of sales, the efficiency of the supply
chain, the decision-making in procurement, the optimized utilization of assets, and
the readiness of finance. Master data management ensures that there is complete and
consistent master data available for the whole company despite business dynamics.
Master data governance facilitates that the master data meets the company’s
standards concerning the data’s quality. It handles the complete master data life
cycle from creation, to changing and deletion. For business processes in context of
ERP systems, the most important master data are business partner, product, and bill
of material which will be explained in this and the following chapters.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 67

S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_5
68 5 Master Data of Business Partner

Mergers & Acquisitions

Acquisition, joint venture

Company Carve-
out Company Carve-
out
Divestitures
Business area organized as independent company, subsidiary spun off, part of company sold

Corporate restructuring
Change organizational units in landscape accordingly

Business process optimization

Adapt processes in systems, unified accounting, master data cleansing

Consolidate IT landscapes
Merge systems, harmonize system landscape, provide cross-system functions, reduce TCO

Fig. 5.1 Master data structural challenges

Solution Capability

Master data in SAP S/4HANA is maintained centrally and reused by all business
processes. This is also the case for the master data of business partner with regard to
various business transactions. This is especially necessary if a business partner has
multiple roles for a company, such as sold-to party and ship-to party. Roles are used
to classify a business partner from a business perspective. Business transactions built
the basis for defining business partner roles. The attributes for the business partner
role are specified to the needs of the respective business transaction. A business
partner can be created in numerous roles and can take on further business partner
roles over time. General data for a business partner which is independent on its
function is maintained once to avoid redundancy. When a business partner is created,
a business partner category must be selected. Based on the business partner category,
specific set of fields must be filled with data. There are three business partner
categories available:

• The category person denotes a natural person. This private individual has a
defined role in the organization in which that person is employed. This could
be a contact person for a particular project for example. For a business partner of
the category person, person-specific data is entered. This information includes
first name, last name, title, gender, address, birthdate, and language.
• The category organization denotes an egal person/entity or part of a legal entity,
such as a department with which there are business relations. This could be a
company for example. For a business partner of the category organization,
attributes concerning an organization are maintained. These include organization
name, organization title, legal entity, and industry sector.
• The category group allows to depict a more complex structure of a business
partner. This could be a married couple or a joint venture for example. For a
Solution Capability 69

Fig. 5.2 Supplier and

customer as business partner
Supplier & Customer

Business Partner Attributes

Central Data Roles

Bank Details Identification

Tax Numbers Industry Sectors

Addresses with Usage and Versions

Business Partner Relationships

business partner of category groups attributes like address, two names, partner
group type (marriage, shared living arrangement) are maintained.

The business partner is one of the most important business objects in the SAP
S/4HANA system because master data for customers and suppliers is maintained
based on this artifact. SAP ERP customers and suppliers were maintained differently
but through an extension to the business partner model they still work with SAP
S/4HANA. Thus, all departments of a company can work with the same business
partners and ultimately in the same system. The change from the SAP ERP cus-
tomer/supplier data model to SAP S/4HANA business partner model caused changes
in business partner master data but also resulted in advantages. With SAP S/4HANA
it is possible to maintain multiple addresses within one business partner. This is
necessary to enter different addresses for shipping and for invoicing. To be able to
view one business partner as customer and supplier the SAP S/4HANA business
partner model gives users the opportunity to maintain different business roles. This
results in one business partner being able to act as a supplier, a customer, and/or
other roles at the same time. By being able to declare a single person as a business
partner it is possible to offer business-to-consumer processes whereas in former SAP
ERP versions with the customer/vendor data model that wasn’t possible (Fig. 5.2).
Parts of the business partner data are time dependent in terms of being valid for a
defined time period. This is the case for roles where relationships among business
partners are maintained with the attributes valid_from and valid_to. Thus, for
example a supplier will not further be considered as valid after a particular period
of time. Similar to business partner roles, validity time period can be also defined for
addresses. For example, after a specific date an address of a business partner can no
longer be used for shipping and invoicing. Bank details can also have time
dependencies, for example a bank account for a company is from a particular data
70 5 Master Data of Business Partner

on no more valid. This is also the case for payment cards which have an expiring
validity period.
A relationship connects two business partners and is defined by business partner
relationship categories. For example, a business partner of type person and a
business partner of type organization can be connected with a business partner
relationship to define a contact person for that organization. For this the contact
person relationship with the relationship category Is Contact Person for must be
created. For creating a relationship between business partners, a business partner
relationship category to the business partner relationship must be assigned. The
business partner relationship category represents the features of the business partner
relationship. Attributes like company address for the business partner relationship
can be assigned to a relationship to avoid redundant data storage. The relationship
can also be time dependent in terms of defining a start and end date for the
relationship. Thus, the history of periods in which specific business partners were
contact persons for a company can be displayed. The following basic business
partner relationship categories are provided: Belongs To A Shared Living Arrange-
ment, Has The Employee, Has The Employee Responsible, Is Shareholder Of, Is
Activity Partner For, Is Identical To, Is Married To, and Is Replaced By.

Data Model

The data model for the business partner master data is illustrated in Fig. 5.3. All
relations of the business partner table (BUT000) with other tables are depicted. This
contains the bank information of the business partners (table BUT0BK), the payment
cards of the business partners (table BUT0CC), the roles of the business partners
(BUT100), which were explained with their time dependency in the last section, and
the business partner addresses (table BUT020) with their respective time dependent
address usages (table BUT021_FS). Business partner identification information
(table BUT0ID) are personal data, for example for an employee, regarding important
information like social security number, driver’s license number or passport number.
The address information, which is maintained in table ADRC, can be divided into
three categories: an organization/company address, a private address (for example of
an employee), or a contact person address (for example the workplace address of that
contact person).
The data model of the business partner relationship is shown in Fig. 5.4. Business
partners can be linked via relationships. There are predefined relationship categories
available but also own relationship categories can be created. Business partner
relationship can be time dependent and displayed in form of lists, hierarchies, or
networks.
Customer-vendor-integration mapper (CVI)—vendors were the earlier name for
suppliers—integrates business partners that are customers and/or suppliers in their
respective tables in the SAP HANA database. Within the SAP S/4HANA application
the frontend components of business partner SAP Fiori apps and SAP GUI
 1..*
Role

Business Partner
Common Credit Standing
0..1 0..1
Solution Capability

Address *
Adress Information
Usage Identification Credit Rating
*

Bank Details Occupation

* * * * *
Postal Payment Card
Telephone Fax Email Web Financial Statement
Address Details

incl. national
representations
Industry Sector Alias
*

1
Communication Data
Tax Number

General Product
* * * Tax Exemption

Telephone Fax Email

Group

Person Organisation

Fig. 5.3 Business partner data model

71
 72

First *
Business Partner
Relationship
Second

Business Partner
Business Partner

Workplace

incl. national
representations
Contact Person
0..1
Telephone
*

Adress Information Workplace Address

Fax
5

Shareholder
Email

Other
Relationship
Category
Web

Fig. 5.4 Business partner relationship data model

Master Data of Business Partner
Solution Capability 73

transaction expose the information stored in the SAP HANA database. These
frontend applications are the interaction point to the end user.

Fiori Applications

In Fig. 5.5 the most important apps for managing business partner master data are
depicted and explained briefly in this section. There are also GUI transactions for
business partner available which expose by far more functionality.
Manage Business Partner Master Data allows create, change, search, display, and
copy business partner master data. With Create Business Partner Master Data a new
business partner instance of type person or organization can be created. In this
context information such as basic data, roles, or addresses can be maintained. The
feature Edit Business Partner Master Data can be used to alter values and informa-
tion of already saved business partner master data entries. A record can be selected
from the list report page and displayed in draft mode in order to change values. Copy
Business Partner Master Data facilitates efficient creation of new entries by using
existing business partner as copy templates. A record from the list report page can be
selected for copying. The prefilled values can be changed to meet the requirements
of the new master data instance. In addition to these core features Manage Business
Partner Master Data also provides further technical capabilities and options. Role
Based Navigation, for example, allows the user to use the specific app when
handling or maintaining business partner master data. When the role FLCU01 for
customer or FLVN01 for supplier is chosen, the user can navigate to the
corresponding app Manage Customer Master Data or Manage Supplier Master Data.
The Manage Customer Master Data application is very similar to the already
explained Manage Business Partner Master Data. It ensures creating, editing, and
copying of customer master data. While creating and editing are exactly alike, Copy
Customer Master Data gives the user more options compared to Copy Business
Partner Master Data. When copying customer master data all fields of an already
existing record can be copied (Copy All) or just preselected fields (Copy with
Preselection). This option can be triggered in a dialog box by clicking the copy

Fig. 5.5 Fiori apps for managing business partner

74 5 Master Data of Business Partner

button. In addition, Copy at Facet allows the user to copy information of customers
at facet level, for example, address, bank accounts, sales area, or company code. The
deletion at facet level (Delete at Facet) is also possible. Additionally, to these core
features there are also more technical capabilities and options offered by Manage
Customer Master Data application. These include for example Time Dependency for
defining time validities, Address Usage for managing different addresses of a
particular customers, or Attachments for adding corresponding attachments to
customers.
Manage Supplier Master Data works analogues to Manage Customer Master
Data. The core capabilities are the same, only they are concerned with managing
of supplier master data. This means the following key features, technical
functionalities, and options are the same as in Manage Customer Master Data only
with supplier data:

• Create Supplier Master Data

• Edit Supplier Master Data
• Copy Supplier Master Data
– Copy All
– Copy with Preselection
– Copy at Facet
• Delete at Facet
• Time Dependency
• Address Usage
• Attachments

Data Privacy

The business partner master data contains personal related information like name,
postal address, telephone number, and email address. These are information that
identifies individuals in terms of making them directly addressable or contactable.
Therefore, General Data Protection Regulation (GDPR) must be ensured. The core
requirements are to use personal data only for particular business purposes (e.g.,
order fulfillment) and to erase personal data as soon as it is not required anymore for
the particular purpose (e.g., after 2 years when warranty is expired). Often personal
data cannot be erased because of regulations in the form of legal retention periods
(e.g., keep invoice documents 10 years for audit purposes). When legal retention
periods apply personal data needs to be blocked as soon as the business purpose
expires. Blocking means to restrict access to personal data and to prevent personal
data to be used on a regular base. Only a few privileged users can have further access
such as data privacy officers or auditors. Against this legal background SAP has to
enable its customers to set up a legally compliant information lifecycle management
in an efficient and flexible manner. Here the SAP Information Life Cycle Manage-
ment (ILM) is an important building block to help SAP customers to comply with the
various laws and regulations governing the retention of information. Information
Solution Capability 75

lifecycle management means managing a company’s business data along its entire
lifecycle—from the time it is created in the application system, through its long-term
storage in a storage system, until its final destruction at the end of its lifecycle.
Historically the business partner component provided data archiving for data volume
management and a deletion report for test purposes. In order to enable customers to
comply with legal requirements regarding the destruction of personal data a compre-
hensive destruction scenario for business partner based on the SAP ILM framework
was provided additionally. Business data are stored in the database of SAP
S/4HANA systems related to business objects such as business partner, sales
order, article, contract, purchase order, material, payment, bank account, and loan
contract. Business objects represent a specific view of well-defined and outlined
business content. They can be classified for example into master data such as
business partner, article, or material and transactional application data object. Busi-
ness objects can use other business objects. For example, a sales order refers to a
business partner as customer, a sales order item refers to an article, a bank account
refers to a business partner as account holder, a payment order refers to a receiver
account. When it comes to blocking, archiving, and destruction of expired personal
data the dependencies between the business partner and business partner using
applications have to be taken into account. For example, a business partner can
only be blocked or archived if using applications do not need the business partner
anymore, because the business with the business partner and the residence time
ended already.
If retention time must be considered, personal data must be blocked when the
business is complete, and the residence time is over in a way that regular users have
no longer access and only a few authorized users can access this data. For blocking
of business partners, a new preparation process was required. This process shall
basically check end of purpose (EoP)—meaning whether business is complete, and
the residence time is over—perform blocking and save the returned start of retention
time (SoRT) for business partners with completed purpose. For the end of purpose
check a new event was required. For this a corresponding interface has to be
provided and implemented by the applications. Application components shall regis-
ter their specific purpose completion check in corresponding customizing table.
Thus, only if all registered application components raise the event purpose complete,
the processed business partner record is considered for blocking, destruction, or
archiving. When checking purpose completion not only applications deployed in the
local system have to be taken into account, but for multisystem landscape scenarios
application checks in remote systems have to be considered. When purpose is
complete a particular business partner has to be blocked locally as well as in remote
systems. Doing this new authorization roles had to be provided (e.g., for data
protection officers). When the purpose is over access to business partner data has
to be limited (blocking) in the database as well as in the archive if business partner
data is archived after residence time. To resolve error situations unblocking also
needs to be supported. However, unblocking shall be allowed only for authorized
users. Blocking might not be required in all countries. Therefore, blocking is
optional by customizing (e.g., configure residence time ¼ retention time). The end
76 5 Master Data of Business Partner

of retention time (EoRT) for a business partner depends on the retention periods of
the applications that refer to a particular business partner. Storage of start of retention
time (SoRT) from each application perspective for a business partner is required.
Support regarding destruction of archived business partner data after retention
time is required. Thus, the existing archiving process of the business partner was
enhanced toward the SAP ILM standard in terms of considering blocked business
partners and taking retention times into account. It has to consider start of retention
time (SoRT) info from all relevant applications. SoRT info is part of archived data.
Support regarding business partner data destruction in database after retention time is
also required. Therefore, the existing deletion process for business partner was
enhanced toward the SAP ILM standard in terms of considering blocked business
partners and taking retention times into account. The structure of the destruction logs
is customizable. One or more SAP ILM objects for the business partner had to be
provided. Those objects are the basis for definition and evaluation of residence and
retention time rules. It was ensured to maintain residence and retention time rules for
the business partner from an application perspective. Usually the rules are defined by
customers. Nevertheless, example rules were provided in the context of application
documentation. Applications that use business partner data in their processes have to
support the business partner data destruction scenario due to their dependencies—for
example purchase order or bank account depends on business partner. The end of
purpose check and the start of retention time are business process specific and vary
from application to application. Thus, application components have to provide the
new business partner end of purpose check. They also have to take care of business
partners that have been blocked after residence time. And they should inspect their
existing business partner checks ARCH1 and DELE1. It is also necessary to check
the SAP ILM enablement for those dependent business objects maintained by
applications in regard to retention management. The handling of residence periods
and blocking might also be required for dependent business objects.

Extensibility and Integration

The business partner can be extended from data model and functional point of view.
Thus, specific requirements of customer can be met. For this the standard extensibil-
ity mechanism of SAP S/4HANA must be applied. The business partner can be
extended by adding attributes to perform customer-specific evaluations or enter
additional information. It is also possible to expand the roles of business partners.
Conducting specific checks for business partner fields is also permitted as extension.
For example, the check that a last name must contain at least three letters can be
assigned. Finally, also relationships can be extended by including attributes. The
following business contexts can be used to extend out-of-the-box SAP S/4HANA
business partner master data:

• Business partner model with BP_CUSTVEND1

• Customer model with CUSTOMER_GENERAL
Conclusion 77

• Customer company code model with CUST_COMPANYCODE

• Customer sales area model with CUST_SALES
• Supplier model with SUPPLIER_GENERAL
• Supplier company code model with SUP_COMPANY
• Supplier purchasing organization model with SUP_PURORG

Business partner master data can be replicated to and from an external system
such as SAP ERP that is connected to the SAP S/4HANA system. Different
communication protocols are supported. SOAP APIs allow asynchronous business
partner master data replication with data replication framework (DRF). OData APIs
facilitate synchronous create-, read-, update-, and delete-operations (CRUD
operations). And IDoc APIs enable communication format for the older SAP ERP
version to ensure downward compatibility.

Conclusion

Master data plays a central role in SAP S/4HANA as it is the foundation for all
business processes. To avoid data redundancies and achieve high consistency master
data is handled centrally and reused by all transactions. Core master data are business
partner, products, and bill of material. Business partner represents an organization
(company, subsidiary), person, or group of people or organizations in which com-
pany has a business interest. With business partner master data different business
relationship scenarios can be depicted (for example a business partner of type person
can be a contact person for a business partner type organization). This business
partner data model in SAP S/4HANA has evolved from the customer/vendor data
model of the classic SAP ERP. This evolution comes with a couple of advantages,
for example the ability of advanced maintaining of time dependencies and business
roles.
Master Data of Product
6

This chapter tackles the product master data which builds the foundation for
enterprises to offer services and solutions. For the product entity the challenges,
the data model and the underlying concepts in SAP S/4HANA are described. Master
data consists of a uniform and consistent set of identifiers and extended attributes to
describe core entities and serve many different business processes in SAP S/4HANA
as a single source of truth.

Business Requirement

In the context of SAP S/4HANA master, transactional and configuration data are
distinguished. Master data refers to the characteristics of an object and remains
unchanged over a longer period of time. They contain information that is required
over and over again. Product is an example for master data. While master data is
static, transaction data is dynamic and refers to all the transactions that are carried
out. Usually transactional data is limited to a certain period of time and changes
frequently.
Examples here is for data that arises in daily business processes, such as changes
in purchase orders or invoices. Finally, configuration data corresponds to the techni-
cal information to control and customize business processes. Those are maintained
during the implementation phase of SAP S/4HANA systems. Examples for configu-
ration data are settings for organizational structures or fiscal years definition for
finance.
Master data is the most important data object that is relevant for companies. The
main characteristics of master data include long validity and temporal statistics.
Master data is vital for both business administration and information technology. It
contains the essential information about the objects that are relevant for business
processes. Thus, it is data that plays a key role in the business activity and is needed
in the long term. Accordingly, master data is referred to as master data or core data.
The single objects of master data are also called master records, which are usually

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 79

S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_6
80 6 Master Data of Product

stored in SAP HANA. One of the most important characteristics of master data is its
long validity. They are usually not related to time and schedule. This characteristic is
accompanied by a time-independent statistic. Often, the data changes little over time.
Companies often use their master data in several enterprise areas. They are broken
down into partial master records and are used simultaneously in accounting, sales,
materials planning, engineering, and purchasing, for example. For master data, the
focus is on correctness and consistent maintenance. They need to be relied on
because they serve as basic information for transactional data and many business
processes. Therefore, data maintenance is essential to ensure the permanent correct-
ness of the data. Last but not least, master data forms the basis for analytical
evaluations. It is used for many analytical processes and is essential for online
analytical processing (OLAP).

Solution Capability

The product master data is a vital element of central master data in SAP S/4HANA. It
is the central source of information about all materials an organization procures,
produces, and keeps in stock. Especially there are lots of information about the
purpose of a material in a process. For example, analysis is provided to determine
how a material is used in different processes, like procurement, planning, storage, or
accounting. Regarding the process procurement, product master data holds informa-
tion about the responsible purchasing group used for creating a purchase order in
later stages. Furthermore, it can contain information about over- and underdelivery
tolerances or the purchase order unit of a specific material. The material master also
owns additional functionalities which were originally planned to be implemented in
specific SAP solutions, for example, SAP for Retail or SAP Supply Chain Manage-
ment (SAP SCM). The retail article master provides several retail-specific views and
the ability to maintain various types of articles, prepacks, and display views.
Processes like extended warehouse management (EWM) and advanced planning
and optimization (APO) including demand planning or production planning are
supported by SAP Supply Chain Management. SAP S/4HANA applies principle
of one which supports optimization of processes by simplification. This means that
there is only one solution for any business process. Therefore, the various
functionalities of the material master in SAP S/4HANA are condensed into product
master. For example, in the SAP Fiori application Manage Product Master Data there
are various article types, like a single article, generic article, and structured article
which can be easily maintained. Various supportive functionalities are offered such
as variant matrix to configure generic article variants or bill of materials integration
to fulfill the required integrations. While having a simplified user experience the
complexity of the data model increases drastically. Since it may not be possible to
fully define product master data in a single step there is a functionality enabling
creating drafts. The SAP Fiori application Manage Product Master Data is a draft
enabled solution. This means that the entered field values are persisted locally. The
Solution Capability 81

Product

Product
UoM EAN/GTIN Product Sales
Procurement

Sales

Product Quality Advanced

eSPP
Storage Management Planning

Procurement

Plant Sales Tax BOM EWM

Inventory
Management
Plant Quality
Storage Loc. Plant Sales
Procurement Management

Finance
Supply Plant Work
MRP Area
Planning Forecast Scheduling

...
Advanced
Plant Costing Purchase Tax eSPP
Planning

Valuation Variants Seasons Replenishment

Material
Costing
Ledger

Fig. 6.1 Product master data model in SAP S/HANA

maintained data is not lost in case of a disconnection. Figure 6.1 depicts the Product
Master Data Model in SAP S/4HANA (Saueressig et al. 2021b).
Firstly, the business object is organized as a tree-like structure. Thus, the root
node of the data model is product. General behavior of the product is defined by
basic attributes on root node level so that the product master can be already used in
business processes. These basic attributes consist of the product type (impacts the
user interface facets and fields), the base unit of measure, its dimensions, packaging
data, danger classification from environmental, health, and safety perspectives. For
each product several Units of Measure (UoM) can be defined. Instead of using base
unit measures, there is also the possibility to use alternative units of measure defined
for use in various processes. Purchasing could for example use a different UoM
(order Unit) than sales (sales unit). The UoM in which products are issued from a
warehouse (unit of issue) can be different from the UoM in which products are
managed in warehouse management (WM unit). To be able to manage the inventory
a conversion of the quantities entered in the WM unit to the base unit of measure will
82 6 Master Data of Product

be executed. There are many ways to define a UoM depending on the underlying
requirements. For example, if a product is normally managed using pieces as the
base UoM, but the different pieces are being stored in a box it might be more
reasonable to define a WM unit that is more suitable for purposes regarding
warehouse management. The European Article Number (EAN) and Global Trade
Item Numbers (GTIN) are unique numbers to identify products referring to a unit of
measure or type of packaging. For each unit of measure defined for a product, one or
more unique numbers (EAN or GTIN) can be assigned. There are a lot of down-
stream functions in SAP S/4HANA which are impacted by the elements of the
product master data model. Since discussing all downstream functions in SAP
S/4HANA would be too much a couple of important areas will be briefly discussed.

Finance

For strategic decision-making processes it is important that product inventory

valuation data is accurately recorded in the organization’s financial accounting
system. There is a valuation area, which is usually a plant, where the product is
valuated at organizational level. Several attributes determine how the inventory is
valuated including the price control indicator. This is an attribute controlling if the
inventory valuation is done using standard price or moving average price. Due to
goods movements and the entry of invoices the moving average price changes. The
calculation is possible by dividing the value of the product by the quantity of product
in stock. This procedure will be automatically executed by the system after each
goods movement or invoice entry. In addition, posting the stock values of products
of the same product type to different general ledger accounts using valuation classes
is facilitated. The decision of the valuation procedure is an accounting function. This
evaluation class simply helps directing inventory value to the appropriate general
ledger account. The structure of the general ledger is defined by the accountant or
financial controller.

Sales

In the sales section, product master data defines the structure of the sales areas
responsible for a product. It impacts sales functions like price calculation by defining
classifications for country-specific taxes, specifying grouping terms like pricing
group or rebate group. Additionally, it also defines quantity stipulations like the
minimum order quantity. Furthermore, attributes which are relevant for the sales
sector are maintainable both for the complete product and for specific sales area,
defined as a combination of sales organization, distribution channel, and division.
The distribution channel defines possibilities of how products or services reach the
customer, for example as wholesale, retail, or direct sales. In contrast, the sales
organization defines the organizational unit responsible for the sale of certain
products. Finally, a division is a concept aimed at grouping similar products. For
Solution Capability 83

example, if a sales organization sells electric and nonelectric cars through both the
retail and wholesale distribution channel, then it might be reasonable to further split
into electric car and nonelectric car divisions.

Purchasing

In the purchasing area information is stored which supports the procurement pro-
cesses, for example, the purchasing group which is available at the plant level
identifying the responsible buyer for the procurement of a product or a class of
products. Another important attribute is the purchasing value key which is defined at
the product level. Providing a useful way of automating communication with the
supplier the key also defines other attributes like reminder days, tolerance limits, or
order acknowledgment requirement of the product being procured. To make sure
product master data can be used adequately alongside multiple systems or modules
in the SAP S/4HANA system there are various functionalities supporting different
tasks and challenges.

Product Hierarchy

Offering a huge variety of products in sales processes, companies often organize

products in product hierarchies allowing to structure products along multiple levels.
Among others, product hierarchies play a significant role in sales. For instance, a
product hierarchy can be used within price maintenance and calculation by adding a
field in the pricing condition table to define the validity of a price of discount
providing an input to the pricing application in all relevant documents, like sales
orders or billing documents. In SAP S/4HANA hierarchies have been completely
built from scratch and are not stored as a part of the product data model. Instead,
there are hierarchy runtime tables storing information about product assignments to a
hierarchy. Generally, there are no restrictions regarding the number of hierarchy
levels in the new implementation. To visualize the product hierarchy in SAP
S/4HANA Fig. 6.2 depicts the SAP Fiori application Manage Product Hierarchies.
On the left side one notices the product Hierarchy ID and hierarchy version infor-
mation. Furthermore, validity from and to dates are displayed. Product hierarchy
information is not an attribute in the product data model. Moreover, it is displayed as
a tree structure in the application (see right side of Fig. 6.2). Typically, products can
be assigned at the leaf nodes in the tree structure.

Data Migration

When beginning to use SAP S/4HANA, migrating data is one of the first activities
performed by companies. To allow an organization to efficiently handle the complex
data migration process regarding product master data new migration objects have
 84

Fig. 6.2 Visualization Product Hierarchies

6 Master Data of Product
Solution Capability 85

been provided. In terms of product master data there are two migration objects
available both on-premise and in the cloud. One object is defined to create new
products in SAP S/4HANA and the other one is used to extend existing products
with new organizational data. When looking at migration extensibility, the data
migration objects support all the extensibility business contexts in the extensibility
registry of SAP S/4HANA. Therefore, field extensibility is supported while migrat-
ing for different components like product basic data, plant, and location.

Replicate Product Master Data Between Multiple Systems

There is the possibility to replicate product master data between multiple systems.
Therefore, an asynchronous SOAP service has been provided based on the data
replication framework defining which business object will be replicated to which
targeting system using a specific interface. By creating an implementation for the
outbound interface, one has fulfilled a prerequisite to be able to use the SOAP service
due to the use of the push mechanism on the data replication framework. In terms of
data replication filter objects and filter are important topics. A filter object defines the
selection criteria used to determine the data object which needs to be replicated. A
filter essentially carries out the comparison of a given set of objects against the
maintained filter criteria. There are two different types of filters. Firstly, explicit
filters are configured explicitly by the user. The user can define simple or complex
filters. A simple filter is defined for attributed on a single entity root Table. A
complex filter needs to be evaluated by certain function modules or methods, for
example in merchandise category hierarchy. Using corresponding APIs, the seman-
tic interpretation of complex filters is coded. Secondly, segment filters are special
filters not limiting the number of objects. They are rather used to exclude segments
of business objects from replication.

Maintaining Product Master

The SAP Fiori application Maintain Product Master can be used to search, display,
edit, create, and copy master data for products and single articles, generic articles,
and structured articles, effectively and quickly. The application guarantees that the
master data displayed is always consistent. Furthermore, it can be also used to mark a
product for deletion. For creating the product master, by default the industry sector
M (Mechanical) is assigned to the new record. In case of editing, existing records
belonging to any industry sector can be updated. Key features of the applications are
automatic calculation of sales tax, attachment and reference handling, integration of
supply change and extend warehouse management, classification, and variant
matrix. Additional capabilities are for example compliance and subscription
handling, just in time management, extended service parts planning, and the support
of material ledger. Figure 6.3 shows some of the core functionality of this SAP Fiori
application.
 86

Fig. 6.3 Product master maintenance

6 Master Data of Product
Solution Capability 87

Product Master Extensibility

In many scenarios organizations deploying SAP S/4HANA require adding custom

fields to the product data model which needs to be supported from end to end. In the
SAP S/4HANA Extensibility Registry there is the possibility to extend business
contexts for product master data for product general data, plant, storage, and location
data. Therefore, the corresponding database tables and ABAP Data Dictionary
(DDIC) offer an extension include providing a stable anchor for field extensions.
This activity is usually performed by a key user having additional authorizations to
adapt artifacts like UIs, views on services, and so on. The key user can access the
SAP S/4HANA Fiori launchpad to add custom fields to the required extensibility
business contexts which are automatically updated in the UI by extending database
tables, OData services, data migration objects and so on.

Self-Service Configuration

In SAP S/4HANA master data is used across multiple functional areas and modules.
Therefore, master data needs to be configurable. That’s why SAP S/4HANA
provides various amounts of central configuration options. Firstly, attributes of the
International Article Numbers (EAN) can be defined. For example, the number range
object, interval assignment, and EAN length can be specified. Secondly, there is the
possibility of defining valuation classes grouping different products with the same
account determination. For example, if a user creates a product, the user must enter
its valuation class in the accounting data. Afterwards, the system uses the entered
values to check whether the valuation class is allowed for the product type. Thirdly,
it is allowed to define the format for product IDs and specific attributes of product
types. Regarding the format of product IDs there is the option of defining the length
having a maximum length of 40 digits and the display template. In terms of product
types there are different configuration alternatives when assigning a created master
record to a product type. For example, the user departments (e.g., purchasing or
accounting) or the price control (e.g., standard or moving average price) can be
defined. It has to be noticed that these are just a couple of many configuration options
available in SAP S/4HANA.

SAP Master Data Governance

Master data needs to be used across multiple modules in an ERP system. Therefore,
master data needs to be well managed to make sure no errors occur when using
across multiple modules. Master data management (MDM) is a process which
creates a uniform set of data for various entities (e.g., business partner, products,
or bill of material) from different IT systems. MDM helps organizations in improv-
ing data quality by ensuring the accuracy and consistency of identifiers and other key
data elements enterprise wide. Many companies don’t have a clear view of their
customers because customer data differs from one system to another. Therefore,
88 6 Master Data of Product

MDM solutions enable organizations receiving a single customer view by

consolidating data from multiple source systems into standard format. Duplicate
customer records will be eliminated, giving data analysts, business executives, and
operational workers a whole picture of individual customers without putting differ-
ent pieces of information from different sources together. Furthermore, effective
master data management enables organizations to use this information in business
intelligence and analytics applications, increasing trustworthiness. Managing master
data in an ERP system is very important because many different modules will rely on
a single source of truth. Therefore, SAP Master Data Governance application has
been implemented to consolidate and manage master data across the organization in
SAP S/4HANA. It provides a unified, trusted view of master data across different
domains. SAP Master Data Governance is an advanced master data management
application, providing preconfigured, domain-specific master data governance to
monitor and remediate possible data quality issues or centrally create, change,
distribute, and consolidate master data across the complete enterprise system
landscape.
The key features of SAP Master Data Governance are the following:

• Consolidation or central governance for consistent master data

While enabling centralized governance, compliance, and transparency of master
data, SAP Master Data Governance also provides consistent definition, authori-
zation, and replication of key master data entities, thereby eliminating error-prone
manual master data maintenance processes across multiple systems. Furthermore,
through consolidation of decentralized master data in any enterprise system it
supports the creation of records and key mapping between duplicates.
• Data quality
SAP Master Data Governance enables processes like analyzing process quality,
managing, and monitoring data quality and optionally integrating with platforms
like SAP HANA smart data quality or SAP Business Technology Platform Data
Enrichment.
• Integration and reuse
Lastly the system enables native integration or integration of third-party services.
In addition, SAP data models, already existing business logic, or configurations
for data validation can be reused.

SAP Master Data Governance is part of SAP S/4HANA and enables end-to-end
integration of master data in heterogenous landscapes. Figure 6.4 depicts different
landscapes where master data is integrable but there are many more integration
examples. Therefore, master data can be used in SAP S/4HANA (e.g., providing
Master Data Governance for Central Finance), in Enterprise Resource Planning (e.g.,
usage of Material master data in purchasing, production, and so on), in Product
Catalog and eCommerce (e.g., customer consolidation via open web service by
synchronizing product master data toward product catalog and ecommerce solutions),
in Business Analytics (e.g., export of MDG key mapping to SAP BI), or in Customer
Relationship Management (e.g., allowing decentral look-up and ad-hoc replication or
decentral creation and subsequent global governance) (Fig. 6.5).
 Solution Capability

Fig. 6.4 SAP master data governance—product overview

89
90 6 Master Data of Product

Fig. 6.5 End-to-end

integration in heterogenous
landscapes
SAP S/HANA

Customer Enterprise
Relationship Resource
Management Planning
SAP Master
Data
Governance

Product
Business
Catalog and
Analytics
eCommerce

Conclusion

Master data is an important part of every ERP system because it is a uniform and
consistent set of identifiers and extended attributes that describe the core entities of
the enterprise including customers, prospects, citizens, suppliers, sites, hierarchies,
and chart of accounts. Therefore, it is no surprise that SAP S/4HANA is using master
data to a large extent. In SAP S/4HANA one of the core master data entities is
product master. This consists of different material data which is vital for an organi-
zation. It is the central source of information about all materials an organization
procures, produces, and keeps in stock. Concerning the product master there is a data
model implemented influencing several downstream functions, such as Finance,
Sales, and Purchasing. To be able to support different modules adequately with
product master data there are various functionalities implemented, such as data
migration procedures, procedures to replicate product master data between multiple
systems, specific self-service configurations in different business areas, or product
master extensibility to add new fields in existing product master objects. SAP Master
Data Governance has been implemented to consolidate and manage master data
across the organizations in SAP S/4HANA. It provides a unified, trusted view of
master data across different domains. The key benefits of SAP Master Data Gover-
nance are the consolidation or central governance for consistent master data, data
quality, and integration and reuse. Using the SAP Master Data Governance solution,
it enables end-to-end integration of master data in heterogenous landscapes.
Master Data of Bill of Material
7

This chapter focuses on the bill of material (BOM) master data, which is basically
the list of the raw material for assembling products. For the bill of material entity the
challenges, the data model and the underlying concepts in SAP S/4HANA are
described. Particularly, the structure type of the BOM, the SAP classification system,
and the variant configuration are explained.

Business Requirement

A lot of companies are using enterprise resource planning (ERP) applications to

handle their business. For that, it is important that such a system supports all core
business processes and functions of today’s enterprises. The core task of ERP
systems is managing the resources of a company, like material, money, or people.
For this SAP S/4HANA includes various components like procurement, sales,
service, asset management, manufacturing, research and development, supply
chain, human resources, financials, and various industry extensions. The objective
of those components is to implement the underlying business process. Particularly,
all those business processes must have access to the required master data. Therefore,
all the necessary master data is stored within SAP HANA which is the underlying
in-memory database of SAP S/4HANA. From the SAP customer’s point of view
master data management is crucial as many of their business processes are based on
master data. The customers are asking for integration across the SAP products as
well as flexible integration with non-SAP products. Furthermore, they want an
out-of-the-box integration and high extensibility and adaptability. Especially, the
role of master data management is growing to be the core foundation of an intelligent
enterprise. To help companies optimize their value chain, understand, and serve the
customers and adapt to the globalizing world, it’s important to provide them with
access to trusted and high-quality master data. On the one hand there is the process of
master data integration, which is all about synchronization of master data across all
applications. It supports many domains out-of-the-box, but also provides integration

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 91

S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_7
92 7 Master Data of Bill of Material

with third-party applications. On the other hand, the process of master data manage-
ment ensures high quality for trusted master data across the enterprise. This is
usually only applied to selected, relevant domains, as the investment both in cost
and time, is relatively high. The typical approaches to master data management are
consolidation, central governance, and data quality management. That means that
master data is consolidated from decentral sources and these data will be centrally
governed and distributed to the relevant parts of the system landscape. With central
governance and consolidation, error-prone manual maintenance processes can be
eliminated to achieve consistent master data in multiple systems. Apart from that,
these functions deliver a consistent definition, authorization, and replication of key
master data entities. The consolidation can be used to prepare high-quality and
deduplicated master data. In contrast, central governance is used to keep high-
quality data clean in the long term.
Typically, organizations rely on the help of stakeholders to serve its customers.
Sales partner, suppliers, or employees are examples of stakeholders. All of them
provide different inputs to the company, which will then be transformed into an
output directly aimed at the consumer. This transformation process depends heavily
on several types of data. The core data of an enterprise is called master data, which
can fall into several categories. Two of the most important are product master data
and business partner master data. Product master data describes various aspects of
products purchased, sold, and produced by the organization. Business partner data
on the other hand captures information about entities relevant to business. Besides
these two there is also a master data type describing how products are characterized,
composed, produced, and configured: Bill of Materials (BOM). This type of master
data is considered more closely in the next sections.

Solution Capability

A company has the choice of manufacturing a product in-house or purchasing the

product from an external supplier. This situation is known as the make-or-buy
decision. Companies usually use quantitative analysis to choose whether making
or buying is the best choice for them. If the organization decides to produce a product
by themselves, all raw materials and assemblies used for creating the final product
are listed in a BOM.
A product can have several variations of structure and that’s why the same
product can have multiple BOMs. One reason is that there are different phases of
the product lifecycle. For example, in the first iteration the engineers structure a
product in one way, in the second the manufacture team needs another structure of
the product, so that it fits better into the factory line: this produces an engineering
BOM and a product BOM. Adding to that, there are often different alternative ways
to manufacture the same product, the most obvious reason being a different produc-
ing location, which leads to difference in availability of material, machinery, and
knowledge.
Solution Capability 93

Fig. 7.1 Bill of material

conceptual model Product

1 1

Product
BOM

Bill Of Material *
(Header)

BOM Item
*

Simple
Assembly
Item 1,0

Phantom
Assembly

For a better understanding, Fig. 7.1 (Saueressig et al. 2021b) shows a simplified
conceptual model of BOM. Only products produced by the company itself have a
BOM. This BOM consists of two parts: the BOM header and the item list. The BOM
header includes different properties about the BOM, like assignment to a plant or the
validity period of the BOM. Every BOM header has a list of BOM items assigned to
it. A BOM item includes the product’s ID, component description as well as the
quantity and units of measure. Also, a BOM item is either a simple item, which is a
raw material, or a part purchased from suppliers, or an assembly, which is a produced
product. This means that an assembly has its own BOMs. If a user wants the
complete hierarchical structure of a product, the user must replace the assemblies
by their own BOMs recursively, which is known as the BOM explosion process.
Sometimes it’s required to have phantom assemblies. These assemblies aren’t
physically in stock, they only exist in the manufacturing process.
94 7 Master Data of Bill of Material

Structure Types of Bill of Materials

After the general overview of BOM, a closer look at the two different main structure
types is provided. One of them is the single-level bill of materials, the other one is
called multilevel bill of materials. A single-level BOM is a simple and flat list of
items for one product and is the more basic type of both. BOMs of this type list each
component only once and state the required number of parts to produce the product.
Also, it consists only of one level of children, such as BOM items or assemblies. One
advantage of this type is that it’s very easy to create, but it’s not recommended for
complex items, because single-level bill of materials gives no information about the
relationship between parent and child components. In case of the product failing, it’s
difficult to find the right part to be replaced or repaired. Multilevel BOMs are more
complex than single-level BOMs. This type of BOM structure offers more detail and
specificity on the parent and child parts in the product. As with the single-level
BOMs, the total number of required components is also shown in multilevel BOMs.
In addition the multilevel structure is intended to show all items of the product that
are in parent-children relationships. Figure 7.2 shows an example of both types.

Type of Bill of Materials

Besides the different structure types of bill of materials, there are also different types
of bill of materials, depending on the lifecycle of the product. Each type of BOM
describes the product with a different structure and level of detail. It can be
distinguished between engineering, sales, and manufacturing bill of materials. An
engineering BOM (EBOM) is developed by the engineering department using
computer-aided (CAD) design or electronic design automation (EDA) tools. An
EBOM defines all raw materials and assemblies and describes the product structure
from a functional perspective. Normally one product has multiple EBOMs, because
the design of a product is checked and improved several times, before it’s produced.

Fig. 7.2 Single- and Single-Level BOM Multi-Level BOM

multilevel BOM structure Skateboard Skateboard

Board 1x Board 1x

Screw 8x Screw 8x

Axle Assy 2x Axle Assy 2x

Axle 1x

Screw 5x

Wheel 2x
Solution Capability 95

A sales document can include a BOM. These BOMs are called sales bill of materials
(SBOM) and they represent the finished product and its individual components. A
sales bill of materials defines a product in the sales stage. A manufacturing bill of
materials (MBOM) describes a structured list of all raw materials or assemblies,
which are required to produce a shippable finished product. MBOM contains the
information about the individual components, as well as information about
components, which must be processed before assembly, and information about the
relationship between different components. All the information in the MBOM is
shared with all business relevant systems, like procurement and manufacturing. In
summary, three different types of BOM can be identified depending on the lifecycle
of a product. Each type has different fields of application. The next section deals with
the classification system of master data as well as important aspects of variant
configuration.

Classification System

After the bill of materials has been described in detail as part of the master data, the
classification system should now be introduced. Not all characteristics are described
by the product master data, so different products can have various characteristics.
With the help of a classification system, it is possible to define characteristics of
products and to classify the products with the same characteristics. With using the
classification system no changes to the software or database structure are necessary.
Furthermore, the classification system allows the company to restrict the
characteristics of a product. Such restrictions are called characteristic dependencies.
For example, drills have the characteristic length, diameter, and material type. To
describe them, the best way is to create a class. Whenever the company has a new
drill to add as a product, it assigns it to the drill class and specifies the object with the
correct characteristics. If one of the characteristics of a drill has a dependency, for
example the length is restricted to 16 mm, this violation must not be allowed as all
dependencies must be complied to. This classification system is not only used for
product master data records, but also for bill of materials records or other documents.
The classification system is used for maintaining the master data, because it is used
to assign individual products, BOMs, or other documents to classes.

Variant Configuration

The BOM model described above doesn’t consider the possibility that a product has
different variations, which are based on several configurations. For example, as a
customer of an automotive company, it is possible to configure your car by yourself.
Popular properties to select are color, engine type, power, seat material, or drive
assistance. For such configurable products, like a car or bicycle, a variant configura-
tion is used. The system will create a concrete instance of this product, with the
resulting BOM and the routing, based on the selected configuration values. The
96 7 Master Data of Bill of Material

routing provides important information for the manufacturing process. In SAP

S/4HANA there are two different variant configurators with which products can be
configured in different variations: advanced variant configurator (AVC) and the
traditional variant configurator. The AVC is based on a new configuration engine,
which has been developed together with Fraunhofer Institute Kaiserslautern. It
comes with an SAP Fiori-based UI and several other features. The AVC can be
used in SAP S/4HANA on-premise as well as SAP S/4HANA Cloud. In contrast, the
traditional configurator can only be used in SAP S/4HANA on-premise. The variant
configuration uses master data, which is based on the following elements:

• Variant classes • Object dependencies

• BOMs, super BOM, routings • User interface/grouping
• Configuration profiles

For a better understanding, these elements will be described in the next

subsections.

Variant Classes
The classification system is used by the variant configuration to define the configu-
ration parameters and their allowed values. A class reserved for variants is of a
specific class type and called a variant class. Variant classes have configuration
parameters as characteristics, that are selected during the configuration process. Each
configurable product is linked to a specific variant class. Let’s have a look at a
specific variant class:

Variant Class Car

Characteristic Characteristic value
Engine type Electric, petrol, diesel
Version Standard, premium, sport

If a customer wants to order a car, the customer must decide which engine type
and version are favored. The customer can’t choose two different engine types in one
configuration. A finished configuration contains the selected values of the variant
class characteristics.

BOM/Super BOM
Since products can be configured differently, each configuration consists of diverse
parts. To handle these different variant structures of a product easier, the company
can create either super BOMs or BOMs with class items. A super BOM contains all
selectable items of a variant class characteristic. All items of one characteristic have
mutually exclusive selection condition. Looking at the car example above, a super
BOM of a car has three values for the possible engines: electric, petrol, and diesel.
The selection of one motor type excludes the other two. For example, when a car is
configured with an electric engine, no further engine type selection is possible. The
same applies to the different versions of a car. The second option to handle
configurable products in BOMs is to use class items. Super BOMs include all
selectable items, whereas a BOM can contain configurable placeholders for variable
Solution Capability 97

components. That means for different engine types, a BOM includes only one item,
which refers to an engine variant class. The engine variant class is replaced with a
concrete product of this class, during a BOM explosion.

Variant Configuration Profiles, and User Interface and Grouping

The configuration user interface and the interactive configuration process can be
controlled by the variant configuration profile. It provides various settings for these.
Furthermore, the variant configuration profile contains dependencies, that help consis-
tency and automatic derivation of values. Besides that, the user interface and grouping
help the user to handle complex configuration models with many characteristics by
being able to create individual user interfaces or characteristic groups.

Object Dependencies
The variant configurator uses object dependencies. This ensures consistency of the
configurations, controls whether a selected value of a characteristic violates another
choice, and determines the actual structure of the product based on the selected
values of the configuration. The object dependencies are very useful and important
for complex configuration products like a car. The higher the number of different
variations of a product are, the greater the complexity, which imposes greater risk
that the final configuration is valid. To counteract this causality, the object
dependencies are used. The variant configuration consists of many different parts,
which are related to each other. It is an important part of the data governance and
should be carefully maintained.

Fiori Applications

There are numerous applications available in SAP S/4HANA to manage and create
version controlled BOMs and use additional features for converting engineering
BOMs to manufacturing BOMs, for example, display BOMs, to create planning
BOMs with items for long-time components, or to create assembly BOMs for
serialized materials. To just provide an impression of those features two exemplary
SAP Fiori Applications are described in this section.
Maintain Bill of Materials facilitates to display and manage all BOMs. Using the
available filters allows to find and view existing BOMs, drill down to the required
level of detail, and perform the necessary actions, for example, copy or delete BOMs
or assign change records to BOMs. The application helps to create new BOMs
whether classical, version-based, or alternative BOMs. Furthermore, it inserts the
relevant components along with the required data, including attachments. BOMs can
be searched for using a variety of filter criteria such as material, plant, BOM usage,
and alternative BOM. The transfer of engineering bills of material (EBOMs) to
manufacturing bills of material (MBOMs) is also supported. It is possible to create
BOMs for configurable materials and maintain object dependencies using the classic
application. Additionally, the application ensures to take tentative decisions while
working on a BOM and save changes as a draft. Assigning BOMs to a change record
and navigation to change instances using the change timeline are facilities. The
98 7 Master Data of Bill of Material

Fig. 7.3 Maintain bill of materials and detail view

solution helps to create a change number and assign it to a material. Documents or

files can be attached to a material. The application supports to create a version BOM
for manufacturing and operations. Software and the corresponding versions can be
defined in a BOM. International systems of units can be used to calculate BOMs.
The hand over to bill of material components to the SAP Asset Intelligence Network
is provided. In order to increase effectivity engineering change numbers (ECN) are
created automatically (Fig. 7.3).
Manage Multilevel Bill of Material facilitates to display and maintain the hierar-
chical tree structure of a multilevel BOM. The application enables to view the BOM
header of the multilevel BOM followed by the nested list of components, assemblies,
and materials. It helps to expand the subassemblies in a multilevel hierarchical tree
structure. Each level offers details of the usage in the production and the parent-child
relationship among the subassemblies. The application allows to search for a BOM
by making entries in the key fields. Subassemblies of a multilevel BOM are
displayed in a hierarchical tree structure by using the application. Additionally, the
Solution Capability 99

Fig. 7.4 Manage multilevel bill of material and variant configuration overview

engineering change numbers (ECN) associated with the subassemblies can be

viewed. With or without ECNs single or multiple BOM items in the hierarchical
tree structure can be changed. Especially, existing BOM items can be added to single
or multiple components. The draft mechanism is support so that single or multiple
subassemblies can be deleted in draft status. Variants of the BOM items table views
can be created to save personal settings and favorites. The columns of the BOM item
table view are enabled for sorting, filtering, and freezing. The subassemblies are
displayed in the same usage as the root BOM. If BOM for that usage doesn’t exist,
the system chooses minimum usage by default. Toggling between multiple
alternatives to view the subassemblies is provided. The application supports differ-
ent devices like desktops, tablets, and smartphones (Fig. 7.4).
100 7 Master Data of Bill of Material

Variant Configuration Overview facilitates to display an overview for variant

configuration. Navigations to changed or locked variant configuration objects such
as locked sales order items, recently changed object dependencies, recent configura-
tion simulations, and favorite configurations are supported from the overview page.
The main cards of the application are locked sales order items and locked/
changed variant. A list report is launched, when navigating to locked or changed
variant configuration objects. On the list, individual line items are shown, from
where the item’s corresponding app can be opened to maintain the object. Naviga-
tion to different variant configuration objects is supported, for example,
characteristics, classes, constraints, dependencies, or profiles. With quick links the
navigation to further applications is provided, for example, simulate configuration
models, variant configuration modeling, manage classes, or manage characteristics.
Thus, searching for configurable products and configured objects and starting a
configuration simulation with them are facilitated. Moreover, also searching for
and opening previously created and saved simulation are supported. The simulation
can be used to test and analyze configuration model by configuring objects based on
the integrated characteristic value assignments and check whether the dependencies
work appropriately. Especially, simulation for single-level and multilevel
configurations is enabled.

Conclusion

Master data is a big and important part of SAP S/4HANA. This chapter gave an
overview about master data and in particular bill of materials. BOMs can be used in
different phases of the product lifecycle and can have different structure types. In
addition to the default BOMs, it is possible to use the configuration system to
configure BOMs with predefined characteristics and create different variants of
BOMs. The various elements surrounding them have been introduced and explained
for better understanding of the configuration system. As mentioned in the introduc-
tion the core capabilities of a company need access to the required data as well as to
ensure data quality. SAP S/4HANA enables the customer to apply processes for
getting trusted and high-quality master data and for distributing this data in the
system landscape across the enterprise.
Process of Idea to Market
8

This chapter describes the business process idea to market consisting of the
subprocesses plan to optimize products/services, idea to requirement, design to
release, products/services to market, and manage product/services. Additionally,
the application capabilities of SAP S/4HANA to resolve those business processes
are explained.

Business Process

The general process of idea to market is depicted in Fig. 8.1 and explained in detail in
the next sections.
The process from idea to market can be divided into five individual processes. It
starts with the Plan to Optimize Products/Services which focuses on the portfolio
management in terms of defining an appropriated product/service strategy, creating
the portfolio, planning, and monitoring the investments. Ideas for products/services
are validated and corresponding development requirements are derived from them.
Those requirements are transferred to concrete design for products/services. In this
context prototypes are implemented, and dependencies identified. Based on the
detailed design the product/service delivery is prepared. Furthermore, the go-to-
market offering including the pricing is defined. Supportive tasks like managing
intellectual property, compliance requirements, or maintaining product/service data
are also in focus of this end-to-end process. Comprehensive set of solutions and
capabilities for ideation, portfolio management, and project management are
required which can be used as a crowdsourcing tool to collect and evaluate ideas
in order to implement the right ideas based on customer desirability, technical
feasibility, and market viability. Based on corporate strategy, innovation managers
can manage the fuzzy front end by creating campaigns to request the submission of
ideas, which can lead to collaboration to improve on ideas, evaluating them before
they become concepts and are chosen for implementations as projects or changes in a
product or service. The ideation process can be sped up, which saves money. The

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 101
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_8
 102

Idea to Market
Plan to Optimize Products / Services
Product / Service Portfolio Management

Plan and monitor

Manage products / Manage products / portfolio
services strategy services portfolio investments

Idea to Requirement
Ideation Management Product / Service Design Management

Generate new Define

Perform discovery Analyze new ideas
concepts development
research and requirements
requirements

Design to Release
Product / Service Design Management
Test market for Perform
Design and Manage cross- Manage products /
new or revised lifecycle
prototype products / portfolio services
products / costing
services dependencies configuration
services

Product / Service Production Management

8

Source to Contract Prepare for

Create detailed
production /
design
services delivery

Fig. 8.1 Process idea to market

Process of Idea to Market
 Idea to Market
Products / Services to Market
Product / Service Go-to-Market Preparation

Measure customer
Define go-to Develop and
satisfaction with
market offering manage pricing
products / services
Business Process

Manage Products / Services

Product / Service Lifecycle Management

Manage Manage Perform products / Manage products /

products / services Manage products / services change
intellectual services lifecycle
projects services data management
property

Product Compliance Management Product / Service Development Collaboration

Operate products /
Manage regulatory services
requirements collaboration
platform

Fig. 8.1 (continued)

103
104 8 Process of Idea to Market

recipe development serves as the foundation for product development in process

manufacturing industries such as food, beverage, chemicals, life sciences, and
consumer goods. This process must address the entire product development, begin-
ning with ideation, requirements, and trials and continuing through formulation and
development to the handover to the enterprise, including manufacturing and supply
chain. The specification management allows for the creation and maintenance of
specifications which represent substances, packaging, and their properties. Recipe
developers create optimized formulas based on existing specifications for the fol-
lowing activities:

• Perform calculations, such as determining a product’s nutritional value, costs,

composition, and loss calculation.
• Define processes as sequences of chemical, physical, or biological activities that
result in the production of a product or intermediate products.
• Ensure product compliance by performing compliance checks using quantitative
or qualitative constraints, such as identifying prohibited substances and ingredi-
ent thresholds.
• Distribute recipes to manufacturing, developing master recipes for use in
production.
• Label sets with recipe information can help with final product labeling and
artwork.

Businesses in the discrete manufacturing industry frequently use various

authoring systems, such as mechanical and electronic CAD systems during the
detailed design phase of product development. The basic scenario for CAD entails
the creation and management of master data from the CAD structure.

Plan to Optimize Products/Services (Fig. 8.2)

The Plan to Optimize Products/Services covers in general the Product and Service
Portfolio Management. The portfolio management is in charge of the following
tasks:

1. Collect and describe portfolio elements

2. Characterize and evaluate portfolio elements
3. Compare and decide on portfolio elements
4. Monitor portfolio elements

Fig. 8.2 Plan to optimize Plan to Optimize Products / Services

products/services Product / Service Portfolio Management

Plan and monitor

Manage products / Manage products / portfolio
services strategy services portfolio investments
Business Process 105

These tasks are performed using various metrics and are used for comparison.
The implementation of the individual elements will take place later in the project
management. So, in conclusion the Product and Service Portfolio Management is in
charge of managing the products and services strategies and the products and
services portfolio and planning and monitoring the portfolio investments.

Idea to Requirement (Fig. 8.3)

The Idea to Requirement process includes Ideation Management and Product and
Service Design Management. The first one is ideation management. The focus of
ideation management is on recording systematically new ideas for products/services
or product/service variations and even to record systematically new ideas for existing
products/services, to improve or adapt them. Ideation management not only includes
the recording but also the viability valuation. For the valuation several evaluation
criteria are necessary such as cost and competitive analysis. It is important to perform
a discovery research first before the new concepts get defined. After that the new ideas
and requirements are analyzed. With the completion of ideation management Product
and Services Design Management can start which includes the definition of the
requirements. It is necessary here to keep in mind the Business Process Segment
which is the group of the business activities and the business capabilities. Those cover
the creation of a defined value or outcome for a stakeholder.

Design to Release (Fig. 8.4)

The Design to Release process is divided in three subprocesses. The Product and
Service Design Management which already takes place partly in the Idea to Require-
ment process, the Source to Contract, and the Product and Service Production
Management.
With the completion of the main requirement analysis the concept and detailing
phase can start. An initial structure is created, which is constantly improved and
adapted. It is possible to create an independent structure or to combine the func-
tional, conceptual, and development structure into one. In order to carry out the
subsequent validation, a prototype is necessary, on the basis of that the product or
service validation is proofed. The developed products or services are normally very
complex and must achieve strict quality and efficiency standards. In general, the
assurance is the planning, control, and execution of examinations of the outcome, for

Idea to Requirement
Ideation Management Product / Service Design Management

Generate new Define

Perform discovery Analyze new ideas
concepts development
research and requirements
requirements

Fig. 8.3 Idea to requirement

106 8 Process of Idea to Market

Design to Release
Product / Service Design Management
Test market for Perform
Design and Manage cross- Manage products /
new or revised lifecycle
prototype products / portfolio services
products / costing
services dependencies configuration
services

Product / Service Production Management

Source to Contract Prepare for

Create detailed
production /
design
services delivery

Fig. 8.4 Design to release

example, a prototype. Every malfunction or error must be documented and closed in

order to guarantee success. It is important to identify every malfunction because in
the end they would cause additional costs and negatively impact the quality of the
product or service. The product or service validation depends on the previously
defined requirements and objectives. All insights if they are conflicts or a success
must be incorporated into the product or service improvement. It is necessary to
make a validation in every product or service development step. The goal of the
validation is to make sure that all quality standards are reachable and to optimize the
process. The budget of employees and other costs should be monitored regularly.
Product validation is a combination of several components. The combination
includes document administration, quality management, process management, prod-
uct management, and operational maintenance. It shows that advance planning is
very important for the validation and that the validation is needed to be checked on a
regular basis during the whole process. In conclusion services and products must be
designed and prototyped, the cross-portfolio dependencies and configurations must
be managed, a test market for revised or new products must be found and the
lifecycle costing must be performed and monitored. All that happens before the
Source to Contract and the Product and Service Production Management take place.
The Product and Service Production Management includes the detailed design of a
product or service and the preparation for the actual production or the delivery of a
service. It is the integration of the development and the actual production of a product.
The bills of material (BOM) during a production must be monitored and controlled
systematically. The bill of materials (BOM) is a list of all materials required in a
process, along with the quantities required. The administration of the BOM is a basis
to implement other concepts like digital factories and Industry 4.0. Digital factories
are connectors between product development, planning, and production. They con-
nect the data from the production with the development data for manufacturing. Tools
for modeling and various methods for simulation and visualization are also necessary.
The goal is to work digital and to construct the products three-dimensional. Industry
4.0 does not provide the tools and various methods; it supports the digital factories in
real time and takes care of the operation and optimization of digital factories.
Business Process 107

Products and Services to Market (Fig. 8.5)

After the product or the service is provided and designed the market entry can be
planned. That means the go-to market offering needs to be defined, the pricing needs
to be developed and managed, and the customer satisfaction with the products or
services needs to be measured. That is all included in the process Products and
Services to Market and describes the process of the market entry and the preparation
of it.

Manage Products and Services (Fig. 8.6)

The fifth and last process of Idea to Market is the Management of Products and
Services. That includes the Product or Service Lifecycle Management, the Product
Compliance Management, and the Product and Service Development Collaboration.
The Product and Service Lifecycle Management supports projects, intellectual
property, performance and lifecyle for products and services. The Product Compli-
ance Management handles the regulatory requirements. It is important to always have
an eye on the requirements. Next to the Product Compliance Management is the
Product and Service Development Collaboration which covers the operation of the
products or services collaboration platform. The establishment of a proper project
structure by the project manager or a project financial controller serves as the
foundation for all project-related planning, execution, and monitoring activities.
Project creation process covers structuring of simple projects involving single
accounting objects to complex project that may include a hierarchy of work packages,
depending on the needs. Cost planning for a project at an early stage usually

Fig. 8.5 Products/services to Products / Services to Market

market Product / Service Go-to-Market Preparation

Measure customer
Define go-to Develop and
satisfaction with
market offering manage pricing
products / services

Manage Products / Services

Product / Service Lifecycle Management

Manage Manage Perform products / Manage products /

products / services Manage products / services change
intellectual services lifecycle
projects services data management
property

Product Compliance Management Product / Service Development Collaboration

Operate products /
Manage regulatory services
requirements collaboration
platform

Fig. 8.6 Manage products/services

108 8 Process of Idea to Market

necessitates a significant amount of effort. Furthermore, because expertise is based on

personal bias or strategic considerations, it is frequently inaccurate or even skipped
entirely.

Solution Capability

The end-to-end process Idea to Market is mainly implemented by SAP S/4HANA

R&D/Engineering and SAP Enterprise Product Development (EDP) as depicted in
Fig. 8.7. While SAP S/4HANA R&D/Engineering covers the core functionality SAP
EDP includes extended features for engineering, visualization, collaboration,
connected products, and partner applications.
The Extended Enterprise Portfolio and Project Management increases efficiency
and automation for gaining insights for products and projects into cost, time, scope,
resources, and quality performance. Product Lifecycle Management handles product
information holistically and efficiently across the complete lifecycle, ensuring end-
to-end visibility from requirements to design manufacturing to service in process and
discrete industries. Product Compliance ensures compliance of products and
chemicals to secure the right to market, sell, and ship products. Furthermore, it
provides safe and compliant transportation of hazardous materials. Product Engi-
neering provides a 360-degree view of all relevant aspects in the early stages of a
product’s life, from first product idea through design to handover to manufacturing.
Enterprise Portfolio and Project Management gains insight into cost, time, scope,
resources, and quality performance of products and projects.

SAP S/4HANA R&D/Engineering

Extended Enterprise Portfolio & Project Management Product

Compliance
SAP Enterprise Product Development

Commercial
Portfolio Project Project Product
Project
Management Management Connection Marketability &
Management
Chem. Compl.

Dangerous
Goods
Product Lifecycle Management Management

Integrated Integrated Advanced Safety Data

Handover to Sheet & Label
Recipe Product Variant
Manufacturing Management
Development Development Configuration

Enterprise Portfolio & Project Management Product Engineering

Project Project Product
Variant
Financials Logistics Development
Configuration
Control Control Foundation

Fig. 8.7 SAP S/4HANA R&D/Engineering—functional architecture

Solution Capability 109

Enterprise Portfolio and Project Management

This module is part of the R&D/Engineering solution in SAP S/4HANA. The

Portfolio and Project Management is divided in two parts, the Project Financials
Control and the Project Logistics Control. The Project Financials Control is for
planning and monitoring costs and budgets. It supports tracking costs which are
tightly integrated with core business processes. With this capability it is possible to
define work breakdown structures (WBS) which are a basis for hierarchical project
accounting. With the cost and budget tracking it is possible to avoid extra costs and
to protect the project. This capability includes 13 key features, such as maintenance
of standard WBS, milestones, operative and group WBS. Furthermore, changing
projects, networks, project versions, and many more are supported (Fig. 8.8).
The Project Logistics Control is integrated with previous capability Project
Financials Control. It enables defining project structures consisting of work break-
down structures and network structure, plan and schedule project activities, control
all procurement processes integrated with the core business process, and provide an
insight into all logistic related execution aspects of a project. Every step is simplified
and designed for easy handling. This capability includes seven key features. These
cover for example the maintenance of standard and operative networks, defining of
network schedules, assigning materials to project and grouping requirement.

Product Engineering

This module is divided in two parts, the Product Development Foundation and the
Variant Configuration. The Product Development Foundation provides a product
innovation platform as basis for the whole development process. It is possible to
integrate innovations and also to manage and translate them, to promote the product
design, initiate master data and product structures, and also to integrate the change and
configuration management. The embedded software management can be used for a
unified product modeling. The Product Development Foundation also includes the bill
of material (BOM). The BOM is a list of all materials required in a process together
with the required quantities. The administration of the BOM builds the foundation for
implementing other concepts like digital factories and Industry 4.0. In general the
Product Development Foundation covers BOM handling, product structure manage-
ment, embedded systems development, engineering change management, classifica-
tion, document management, attachment service, and variant configuration (Fig. 8.9).
Variant Configuration is part of Product Lifecycle Management (PLM) and is also
referred to as product configuration, as it allows customers to create their own model
of a product. The users of SAP Variant Configuration define all rules and designs of
the product themselves. At the same time a suitable work plan and a bill of materials
for production are created. The software also offers other functions, such as price
calculation. With the help of variant configuration, the customer or sales representa-
tive can specify the product and ensure that the product can be manufactured in the
desired way it can be manufactured. The configuration allows not only specified
products, but also supports seamless sales and manufacturing processes.
 110
8

Fig. 8.8 SAP S/4HANA R&D/Engineering—monitor project progress

Process of Idea to Market
 Solution Capability

Fig. 8.9 SAP S/4HANA R&D/Engineering—variant configuration overview

111
112 8 Process of Idea to Market

Product Compliance

This module includes three subsolutions, the Product Marketability and Chemical
Compliance, the Dangerous Goods Management, and the Safety Data Sheet Man-
agement and Hazard Label Data. Product Marketability and Chemical Compliance
assists in the management of material and ingredient information as well as meeting
legal and customer requirements. It collects compliance data from suppliers and
customers and makes compliance information available to the public. In addition,
this application automatically tracks volumes of regulated substances and assess and
verifies products and materials for different compliance requirements including
required registrations and tracked-versus-allowed quantities. This solution includes
five key features. These are management of compliance requirements, management
of compliance assessment processes, compliance controls embedded in business
processes, compliance explorer and monitoring, and the management and publishing
of compliance documents (Fig. 8.10).
The Dangerous Goods Management handles dangerous goods information cen-
trally for all products, regions, and modes of transport. It automates dangerous goods
(DG) classification and provides regulatory content. Furthermore, the application
ensures that all shipments are DG compliant through integrated dangerous goods
checks, providing adequate packaging, accurate transportation modes and routing,
and to automate the creation and provisioning of dangerous goods documents. This
solution includes four key features. These are dangerous goods classification, dan-
gerous goods processing, dangerous goods embedded into key business processes,
and output of dangerous goods information (Fig. 8.11).
The objective of the Safety Data Sheet Management and Hazard Label Data is to
manage substance and regulatory information centrally, streamline component and
product classification, and automate safety data sheet and label creation. Further-
more, it uses regulatory content to reduce effort and ensure ongoing compliance and
to automate label printing and safety data sheet shipping integrated in logistics
processes. This solution includes four key features which are data management for
safety data sheets and hazard labels, safety data sheet generation using templates,
safety data sheet publishing, and hazard labels embedded into business processes.

Product Lifecycle Management

This module consists of Integrated Recipe Development, Integrated Product Devel-

opment, Handover to Manufacturing, and the Advanced Variant Configuration
(AVC). The Integrated Recipe Development is a tool to describe the manufacturing
of products or the execution of a process. Recipes comprise information about the
products and components of a process, the process steps to be executed, and the
resources required for the production. There are recipe types which are also included
in the recipe development. These recipe types help to create a description of the
product by considering the instructions and create the product. By making the data of
enterprise-wide recipes more concrete, customers are enabled to derive site- and
plant-specific recipes from it (Fig. 8.12).
 Solution Capability

Fig. 8.10 SAP S/4HANA R&D/Engineering—compliance information for products

113
 114
8

Fig. 8.11 SAP S/4HANA R&D/Engineering—classification of dangerous goods

Process of Idea to Market
 Solution Capability

Fig. 8.12 SAP S/4HANA R&D/Engineering—recipe analysis

115
116 8 Process of Idea to Market

The Integrated Product Development is for discrete manufacturing. It accelerates

design by integrating product lifecycle management in a single, real-time environ-
ment. The solution validates and controls complex products structures, including the
definition and management of hardware and software compatibility. It creates
individualized products by defining and reusing variant product structures across
the supply chain. In addition, this application differentiates the product from the
competition and improves its reliability by collaborating with customers and end
users and by incorporating real-time operational feedback into the product develop-
ment processes. The Integrated Product Development includes embedded systems
development, visual instance planner, visual asset planner, 3D visual enterprise
manufacturing planner, access control management, engineering change and record
management. The Handover to Manufacturing is the efficient handover from Product
Engineering to Production Engineering by working in one integrated real-time
solution. It minimizes product cost by thoroughly understanding product- and
resource-related master data. The solution improves agility by deploying flexible
manufacturing practices based on plant resources and capabilities. The end-to-end
visualization helps to eliminate errors and improves quality. For the Advanced
Variant Configuration, it is important to react quickly and to meet the demands of
the customer. Variant configuration facilitates a simpler and faster exchange of
information within the company up to delivery to the customer. It improves sales
and product engineering performance for advanced variant configuration by
implementing a new state-of-the-art configurator. This utilizes a comprehensive
simulation environment for variant configuration models and enables user-friendly
classification capabilities. The integrated advanced variant configurator supports
multilevel variant configuration models. It efficiently manages constraints without
coding, supported by a new tracing and inconsistency handling functionality.

Extended Enterprise Portfolio and Project Management

This module covers Portfolio Management, Project Connection, Project Manage-

ment, and Commercial Project Management. It is based on Enterprise Portfolio and
Project Management and was just extended. The Extended Enterprise Portfolio and
Project Management help to increase efficiency and automation for gaining insights
for products and projects into cost, time, scope, resources, and quality performance.
It combines the four parts: Portfolio Management, Project Management, Project
Connection, and Commercial Project Management.
Portfolio Management aligns portfolios with strategy while analyzing risk and
performance in real time with SAP S/4HANA. It supports investing in the right
projects and identifies those that can generate the most business value by instantly
scoring and ranking proposals. Furthermore, the solution gains rapid insights into the
performance of entire project portfolio through real-time analytics and monitoring.
Project Management allows to plan, carry out, and monitor projects in real time to
minimize deviations in schedule, cost, and scope. Thus, real-time insights into
project cost, time, scope, and quality performance are possible. The solution
manages the resources, schedule, and financial performance for each project phase,
 Solution Capability

Fig. 8.13 SAP S/4HANA R&D/Engineering—project monitoring

117
118 8 Process of Idea to Market

from project initiation through closure. It minimizes delays and prevents business
interruptions by monitoring the progress of projects in real time (Fig. 8.13).
Project Connection streamlines and automates a bidirectional exchange of project
information with external scheduling tools. It oorchestrates exchange through busi-
ness rules defining the sequence of creating and modifying project elements—
dynamically, based on project types and other criteria. The application exchanges
plant maintenance orders with third-party scheduling tools for full processing main-
tenance, from planning and scheduling to execution and progress tracking. Com-
mercial Project Management covers multiple processes in an end-to-end scenario
spanning the selling, planning, performing, monitoring, and controlling of projects.
Companies that sell projects (e.g., in professional services or the engineering and
construction industries) can so professionalize their core business processes and
expand beyond back-office capabilities.

Conclusion

The Idea to Market is a core business process in companies for developing products
and services. It starts with defining product and service strategy, portfolio manage-
ment, planning of investments, and continues with transferring ideas to requirements
and detail design. In SAP S/4HANA this end-to-end process is mainly covered by
SAP S/4HANA R&D/Engineering component. This solution provides capabilities
for portfolio and project management, product engineering, and compliance but also
handles the whole product lifecycle management. The SAP S/4HANA modules are
deeply integrated and frequently interacting so that also additional components
contribute to handle this end-to-end process.
Process of Source to Pay
9

This chapter describes the business process source to pay consisting of the
subprocesses plan to optimize sourcing and procurement, source to contract, plan
to optimize fulfillment, procure to receipt, request to resolution, manage supplier and
collaboration. Additionally, the application capabilities of SAP S/4HANA to resolve
those business processes are explained.

Business Process

The general process of Source to Pay is depicted in Fig. 9.1 and explained in detail in
the next sections.
Sourcing and procurement are critical functions in almost every organization. In
general, a procurement process occurs when one organization purchases a good or
service from another organization or individual. These procurement activities are
classified as either direct or indirect. Direct procurement involves purchasing
materials and services that contribute to the production or delivery of a product,
whereas indirect, or supporting, procurement involves the acquisition of materials
and services to keep the firm running. The Source to Pay refers to an end-to-end
process handling purchasing, ordering, and paying for goods or services. The
process starts with analyzing the spend profile and clarifying the purchasing
requirements. Based on this information purchase quotas for products and services
are defined and procurement contracts are negotiated. Purchasing requisitions are
assigned to sources and purchase orders are created. Receiving products and services
are prepared by coordinating dock and yard logistics. The process also covers
supplier claims and return management. Furthermore, supplier invoices are
processed and considered in account payable. Supportive tasks like certifying and
validating suppliers, managing supplier catalogs, or evaluating supplier performance
are enclosed.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 119
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_9
 120

Source to Pay
Plan to Optimize Sourcing and Procurement
Procurement Planning and Analytics
Analyze Clarify
organization's Plan spend purchasing
spend profile requirements

Source to Contract
Sourcing

Define purchase
Prepare RFX Process RFX Select suppliers quotas for products
and services

Procurement Contract Management

Manage
Negotiate
procurement
business terms
contracts
Plan to Optimize Fulfillment

Procure to Receipt
Operational Procurement
Manage Assign Manage Manage scheduling
Requisition
purchasing source purchase agreement
product or service
requisitions
9

order releases

Dock and Yard Logistics Receiving

Coordinate dock Receive Receive

and yard logistics products services

Fig. 9.1 Process source to pay

Process of Source to Pay
 Source to Pay
Request to Resolution
Supplier Claims and Returns Management
Request
Manage supplier
return Ship product
recovery claims
authorization
Business Process

Invoice to Pay
Supplier Invoice Management

Process supplier
invoice

Payables Management Treasury Management

Manage Process Manage Manage payments
Process
financial accounts payables and bank
payments
settlement payable (AP) financing communications

Manage Suppliers and Collaboration

Supplier Management Procurement Collaboration
Certify and Manage Manage Evaluate Operate supplier
validate supplier supplier supplier collaboration
suppliers information catalog performance platform

Fig. 9.1 (continued)

121
122 9 Process of Source to Pay

Plan to Optimize Sourcing and Procurement (Fig. 9.2)

An organization typically identifies and sources the requirement before purchasing a

good or service. Sourcing is the process of matching the organization’s needs with a
supplier who can provide the necessary goods or services. Identifying and under-
standing the requirements, narrowing down the pool of bidders to the most viable
suppliers, requesting information and bids from suppliers, awarding the purchase to
the supplier with the best proposal, and then moving to the procurement process by
creating a purchase order or contract are all steps in the sourcing process. The first
subprocess deals with the analysis of the general purchasing strategies of a company.
Thus, the organization’s spending profile is investigated, expenditures are planned,
and purchasing needs are clarified. The goal is to get an overview of the required
purchases.

Source to Contract (Fig. 9.3)

The subprocess of the selection of the source takes place over a RFx. Request for x
(RFx) describes a procedure, to organize an invitation to tender. Typically, RFx
consists of three components: Request for Information (RFI), Request for Quote
(RFQ), and Request for Proposal (RFP). Thus, the first step is to prepare and initialize
the RFx. Usually, the RFx starts with the RFI and then passes through the RFQ and
RFP. During the RFx phase the different potential suppliers are compared. The RFx
phase ends once a company has decided on a source. Once a source is selected, the

Fig. 9.2 Plan to optimize Plan to Optimize Sourcing and Procurement

sourcing and procurement Procurement Planning and Analytics
Analyze Clarify
organization's Plan spend purchasing
spend profile requirements

Source to Contract
Plan to Optimize Fulfillment

Sourcing

Define purchase
Prepare RFX Process RFX Select suppliers quotas for products
and services

Procurement Contract Management

Manage
Negotiate
procurement
business terms
contracts

Fig. 9.3 Source to contract

Business Process 123

final step is to define the purchasing quotas for the various products and services with
the source. In context of Procurement Contract Management, the business terms are
negotiated, and the contracts are created. The follow-up process to Source to Contract
is Plan to Optimize Fulfillment. This process accompanies the most important steps to
achieve optimal fulfillment of the orders. The activities involved in sourcing goods
and services range from day-to-day sourcing requirements such as locating a supplier
for office supplies to more strategic sourcing activities such as projecting and
forecasting demand in a key spend category for the company and negotiating the
best prices with an optimal supplier mix. Sourcing isn’t always or even always only
about price. A supplier may offer the best price, but if the supplier is unable to deliver
on that price or is challenged by external factors, having the best price may be an
unacceptable trade-off, resulting in a large-scale supply chain disruption or a degra-
dation in the quality of the end product.

Procure to Receipt (Fig. 9.4)

Procurement usually picks up where sourcing leaves off, creating purchase

requisitions and issuing purchase orders for goods or services to the supplier
identified as the source of supply during the sourcing process. In general, the Procure
to Receipt describes the process from procurement to goods receipt. The first
intermediate step is the Operational Procurement. The objective here is to determine
which products or services are needed for manufacturing. Based on information
adequate sources are assigned to the individual required products and services. Once
a source is selected, the next task is to create corresponding orders and release the
scheduling agreement. Dock and Yard Logistics covers the coordination of the
loading bays and the traffic on the plant premises. The last subprocess of goods
movement is receiving the ordered goods. The Receiving of products and services
differs. While services are consumed, products are stored in warehouse. Depending
on the production strategy of the company and the capacities, incoming goods can
also be processed immediately. In many industries, a growing trend is to move from
traditional business models based on the production and selling of goods toward

Procure to Receipt
Operational Procurement
Manage Assign Manage Manage scheduling
Requisition
purchasing source purchase agreement
product or service
requisitions order releases

Dock and Yard Logistics Receiving

Coordinate dock Receive Receive

and yard logistics products services

Fig. 9.4 Procure to receipt

124 9 Process of Source to Pay

bundling diverse offerings combining goods, warranties, continuous maintenance,

and licenses into an overall service offering. A typical example might be selling a
driving experience through lease options instead of selling a car, together with a
service plan, guaranteed work, and standard repairs. As a result, services are
infiltrating the heart of the business world more and more. Employees are the
primary drivers of operational procurement. An employee recognizes a need and
enters it into the system to place an order. Stock, consumables, and external services
are the three main types of procurement conducted in operational procurement.
Stock procurement is commonly used for direct procurement activities, and it entails
purchasing stock items and storing them in inventory for management and distribu-
tion. A consumable item is frequently an indirect item that is consumed and
replenished on a regular basis but is not managed as inventory in the system. Pens,
paper, coffee for the office kitchen, and other consumables may be ordered by the
office manager or directly by an employee who notices that the office is running low
on a particular item. This type of indirect purchasing is typically of low value and
high volume. Because of the high volume, it has a significant impact on an
organization’s overall spending. Consumable spending is also an ideal area to
manage procurement using self-service processes in a system, allowing buyers to
focus on strategic spending in the organization and allowing the requesting
employee to select exactly what they require without going outside the
organization’s regular approval and spend processes. Purchasing services such as
building maintenance, consulting, or other tasks suitable for contingent labor fall
under the purview of external services procurement. External services are provided
by individuals or groups who are not employees of the organization but are only
involved in that specific scope of work. External services can be included in both
direct and indirect procurement activities.

Request to Resolution (Fig. 9.5)

Failures can occur in the procurement of products or services. Thus, Request to

Resolution deals with the handling of complaints and returns. Goods or services that
don’t meet the expectations result in claims. Once the claims are recorded and
resolved with the supplier, the return process is triggered. In most cases, the provider
of the goods must coordinate the return transport. Claims are in focus of analytics in
order to identify gaps and continuously improve the processes and products.

Fig. 9.5 Request to Request to Resolution

resolution Supplier Claims and Returns Management
Request
Manage supplier
return Ship product
recovery claims
authorization
Business Process 125

Invoice to Pay (Fig. 9.6)

Finally, the process concludes with payment, which includes receiving and processing
receipts and invoices in subsequent processes. While payments are typically triggered
at the end of a procurement process and the beginning of a sourcing process, some
procurement scenarios are common enough exceptions to call a one-size-fits-all
sequence into question. The Invoice to Pay is handled by the end-to-end process
Finance. However, this is of course essential for the procurement of goods as it deals
with the payment of the invoices. A supplier invoice is a payment document from a
supplier for materials that were delivered or services that were performed. Supplier
Invoice Management includes processing of supplier invoices which is about
obtaining the invoice and to trigger the payment. Based on accounts payable the
financial settlements are incorporated and financing payables initiated which performs
the payments. The financial settlements are considered as the main element within the
process. Starting from the financial settlements, the accounts payable are processed.
Another element of the accounting office is the settlement of the open liabilities. Due
to the integration in the process of goods procurement, the liabilities to the various
suppliers are to be settled here. Treasury Management focuses on the communication
with banks to process the payments. Treasury Management provides assistance with
treasury processes such as cash and liquidity management, debt and investment
management, and foreign exchange risk management.

Manage Suppliers and Collaboration (Fig. 9.7)

Manage Suppliers and Collaboration is divided into two subprocesses. The objective
of the Supplier Management is to organize and analyze the existing suppliers. Thus,
the first step is to certify and validate the existing suppliers based on internal criteria.
Such an approach allows a better classification of the existing suppliers. Next the
supplier information is managed which covers for example master data but also
various RFx documents. An up-to-date and comprehensive listing of all relevant
information is essential to be able to select the right supplier. Suppliers are categorized
in a catalog. So, for the selection of the source this catalog with all important
information can be used. A final step, which is carried out in connection with the

Invoice to Pay
Supplier Invoice Management

Process supplier
invoice

Payables Management Treasury Management

Manage Process Manage Manage payments
Process
financial accounts payables and bank
payments
settlement payable (AP) financing communications

Fig. 9.6 Invoice to pay

126 9 Process of Source to Pay

Manage Suppliers and Collaboration

Supplier Management Procurement Collaboration
Certify and Manage Manage Evaluate Operate supplier
validate supplier supplier supplier collaboration
suppliers information catalog performance platform

Fig. 9.7 Manage suppliers and collaboration

SAP S/4HANA Sourcing & Procurement

SAP Ariba, SAP Fieldglass, Central Procurement

Operational Procurement

Services
Self Service Purchase Order Purchase Order Requirements
Purchasing &
Requisitioning Processing Collaboration Processing
Recording

Supplier Management & Procurement Analytics Purchasing

Rebate
Management
Real-time
Classification & Supplier
Spend Visibility Reporting &
Segmentation Evaluation
Monitoring

Sourcing & Contract Management Invoice Management

Purchase
Source Invoice Invoice
Contract
Assignment Processing Collaboration
Management

Fig. 9.8 SAP S/4HANA Sourcing and Procurement—functional architecture

suppliers, is the evaluation of the performance. This step allows the company to decide
which source to choose for a new order based on the previous deliveries. Access to
supplier networks is essential for which supplier collaboration platforms are used.

Solution Capability

The end-to-end process Source to Pay is mainly implemented by SAP S/4HANA

Sourcing and Procurement as depicted in Fig. 9.8. While SAP S/4HANA Sourcing
and Procurement covers the core functionality, SAP Ariba and SAP Fieldglass add
extended features, for example, guided buying capability and catalog.
For practically every company the process of sourcing and procurement is vital.
Procurement is about purchasing of goods or services from other organizations or
individuals. While direct procurement refers to purchasing materials and services
Solution Capability 127

that contribute to a product being produced or delivered, indirect procurement is

about acquiring materials and services to keep the firm itself functioning. The
purchasing department must track the procurement process including purchase
orders, goods and invoice receipts, and services entry sheets. Before companies
purchase goods or services, they typically identify and source their requirements.
Sourcing is defined as the process of matching the product and service needs with
potential suppliers for provisioning. For this the requirements have to be analyzed in
detail and winnowed down the pool of bidders to the most adequate suppliers.
Furthermore, information and bids have to be requested from suppliers. Awarding
the purchase to the supplier with the best proposal, and then moving to the procure-
ment process by creating a purchase order or contract belong also to the core steps of
the process. By integrating automated or manual functions, Operational Procurement
streamlines the purchasing process. Analytic visualization embedded within trans-
actional applications aids human decision-making. In addition, the solution
determines the actual cost of product-based purchasing rebate agreements with
suppliers. Sourcing and Contract Management ensures delivery of committed
quantities and values. It finds, negotiates, and contracts the most qualified, reliable
sources and suppliers efficiently. Invoice Management provides accurate invoices to
accounts payable faster with electronic invoicing and automated verification. The
solution improves the invoice processing lifecycle by increasing transparency and
speed. Supplier Management and Procurement Analytics gains visibility to deter-
mine the right mix of suppliers, best serve to business objectives, and reduce overall
supply risk. It reveals near-real-time insights into organizational spend, suppliers,
and market information. Central Procurement integrates the SAP S/4HANA hub
system with multiple SAP ERP and SAP S/4HANA back-end systems.

Operational Procurement

A purchase requisition is defined as a request to procure a certain quantity of a

material or a service with a defined delivery time point. A purchase requisition builds
the starting point in purchasing and can be created manually in SAP S/4HANA.
However, also a demand from a material requirement planning (MRP) job can also
result in a purchase requisition. Usually purchase requisitions are subject to a release
strategy or trigger an approval process based on the workflow engine. A purchase
order is defined as a request to an external supplier to deliver a specific quantity of
material at defined time point, or to perform certain services within an explicit time
period. Operational procurement is performed usually at the employee level. An
employee identifies a requirement and creates an order. Stock, consumables, and
external services are the main types of procurement. Stock is for direct procurement
activities and entails purchasing stock items and taking them into inventory for
distribution. Consumable procurement is about indirect items which are consumed
and replenished on an ongoing basis but not handled in the inventory. Buying
services, such as real-estate maintenance or consulting are covered by the category
of external services procurement. External services are provided by persons or
128 9 Process of Source to Pay

Fig. 9.9 SAP S/4HANA Sourcing and Procurement—purchase order and monitor purchase
order

organizations that typically are not employed by the company. External services can
be in focus of direct as well as indirect procurement activities.
Self Service Requisitioning provides consumer-grade UX and cross-catalog
search that enables employees to adopt procurement processes and policies. It
supports enhanced workflow to complete purchase requisitions including workflow
inbox Fiori app and notification center. Purchase Order Processing and Collabora-
tion enable indirect and direct procurement leveraging integration with other busi-
ness areas, automation, and harmonized UX. The solution provides analytical apps
to monitor the status of purchase orders. Comprehensive business process integra-
tion with Business Network is also supported. Flexible workflow enhancements such
Solution Capability 129

as keeping purchase order deadlines or adding tax dates are provided by the
application. Thus, increased visibility by including quantity delivery deficit
situations is ensured (Fig. 9.9).
Requirement Processing allows control over automation and manual intervention
where appropriate. In addition, human decision-making is supported by analytical
visualization embedded within transactional applications. Service Purchasing and
Recording provides harmonized UX for both goods and service purchasing pro-
cesses. It simplifies limit (value-only) purchase order items to control over
unplanned services and record details via Fiori service entry sheet application.
Purchasing Rebate Management handles the purchasing rebate lifecycle, from
planning to tracking, settling, and analyzing rebate agreements.

Sourcing and Contract Management

Sourcing of goods and services is about finding the optimal supplier but also covers
more strategic activities for projecting and forecasting demand in a core spend
category for the business and includes negotiating the best prices with the best
supplier mix. However, even if suppliers offer the best price, they might not be
selected due to quality gaps or delayed delivery time point. Thus, elementary for the
procurement process is the Source Assignment. In practice, this is supported by SAP
S/4HANA and SAP Ariba. SAP Ariba is an online business to business marketplace
that can be used to identify new potential suppliers. SAP enables the seamless
integration of SAP Ariba and SAP S/4HANA. In addition to integration, SAP
S/4HANA also offers various analytics apps to monitor different RFQs or compare
different supply offers. By the interaction of the SAP S/4HANA’s core functions and
the integrated SAP Ariba, the user is enabled to perform a complete source search.
Purchase Case Contract Management provides analytic apps to manage the status of
contracts and agreements. A purchase contract is an outline purchase agreement
between the supplier and the company which procure special materials or services.
In SAP S/4HANA an overview of all existing contracts is provided with various
sorting and grouping functions. From the list of contracts, the renewing process can
be triggered. Validity status of each contract including navigation into contract
details are provided. To avoid manual activities the prices and conditions from the
contract are copied automatically into the purchase order when referring to a
contract. Contract template enables reusing data that is inherited from the template
whenever new contracts are created. This reduces both the time and effort for
spending on filling out the data. With flexible workflow approvers can easily
approve or decline purchase contracts. This workflow process can be implemented
based on automatic, one-step, or multi-step approval. Predictive algorithm allows to
monitor contracts to help plan contract negotiations. Furthermore, templates and
mass changes are offered to increase efficiency in managing a large number of
contracts. Unplanned services are stored with reference to purchasing contracts to
simplify the process.
130 9 Process of Source to Pay

Invoice Management

Supplier invoices are created after receiving the invoice from the supplier. They can
be created with reference to a purchase order or without any reference. In case of
references the corresponding delivery note or service entry sheet can be used. To
ensure that the supplier invoice is correct, the invoice verification checks are
performed. The supplier invoice can be simulated before posting the document to
show the account movements. Furthermore, one clerk can park the invoice document
while another clerk completes and posts the process. In case the invoice reduction
functionality is activated during the creation of an invoice, output management is
triggered automatically to inform the supplier. The output can also be scheduled
based on a regular job. It is as well possible to post a supplier invoice to a purchase
order limit item that defines a value limit either for unplanned materials or for
unplanned services. In such cases, the invoice amount must be directly checked
against the value limit. Supplier invoices can be searched, and the results used as a
supplier invoice worklist. This worklist allows displaying the detail data, for exam-
ple, showing a list of blocked supplier invoices for later release. Invoices can be
released manually by selecting the blocked invoices using different filters. However,
also automatic release of invoices is supported. For this, the system checks each
blocking reason to evaluate whether it is still valid. Supplier invoices assigned to
clerk can be performed by workflow. The clerk approves or rejects the corresponding
work item. If necessary, work items are forwarded to a different employee for further
processing. Invoice Processing and Collaboration enable uploading of supplier
invoice attachments and allow fully automated implementation without user interac-
tion. The solution helps to manage supplier invoices and payment blocks. Uploading
scanned invoice copies for manual invoice processing with optional integration with
OCR via OpenText is provided. Native integration with SAP Business Network is
possible which is a cloud-based offering for cooperation with logistics partners.
Thus, isolated supply chains are managed into a homogeneous, collaborative, and
intelligent network that is barrier-free and centralizes data (Fig. 9.10).

Supplier Management and Procurement Analytics

The classification and segmentation of suppliers is an ongoing process in which

suppliers are assessed and classified at regular intervals and allocated to segments of
different importance. Purchasers can then focus especially on those suppliers that are
strategically important and critical to the business, thus enabling them to develop and
manage their business relationships. Purchasing categories enable buyers to manage
suppliers based on specific types of goods and services, such as hardware and
software or installation and inspection. The categories enable to monitor the pool
of suppliers and optimize the purchasing process. Purchasing categories are as well a
significant structuring element in the supplier evaluation process. They enable
purchasers to compare the evaluations of all suppliers in the same purchasing
category. A central overview of the master data is provided for each supplier, such
 Solution Capability

Fig. 9.10 SAP S/4HANA Sourcing and Procurement—procurement overview

131
132 9 Process of Source to Pay

as address details, contact person, bank, and tax data. In the context of supplier
evaluation, corresponding requests are sent out to appraisers, asking them to fill out
questionnaires about a supplier. The question and answer options are created first,
and then they are included in one or more questionnaires. The questionnaires can be
included in evaluation templates, which will be used to send out evaluation requests.
Questions can also be created in the question library. For a better overview, sections
can be used to structure the questions. Evaluation scorecards can be displayed that
show the overall result of a supplier evaluation for one supplier. Classification
Segmentation and Supplier Evaluation provide increased flexibility in supplier
evaluation by defining individual supplier evaluation criteria like weighting and
scoring. The solution allows for real-time analysis of the parts per million score in
order to discuss potential quality improvement activities with the supplier. Real-time
supplier evaluation analytics are generated automatically from transactional data.
Furthermore, activities with suppliers or internal employee surveys to additional
perspective on supplier evaluations are handled (Fig. 9.11).
Spend Visibility and Real-time Reporting and Monitoring enable increased
transparency about the automation rate: high touch—low touch, how many
documents were processed manually instead of automatically. The solution provides
a real-time multidimensional spend report that can be manipulated like a pivot table
and includes drill-down functionality. KPI tiles are provided so that at-a-glance
exceptional situations can be identified and drilled-down for root cause analysis.
With corresponding insight-to-action capabilities issues can be immediately
resolved with the underlying transactional applications.

Central Procurement

This solution enables integration of the SAP S/4HANA hub system with multiple
SAP ERP and SAP S/4HANA back-end systems. Contract management, purchas-
ing, and requisitioning processes can be centralized with the hub system. Optionally
leverage SAP Ariba solutions can be leveraged. Central Purchase Contract Hierar-
chy enables large enterprises to standardize requirements across multiple business
groups. New updated source lists in connected back-end system are provided after
central purchase contract distribution. Central Requisitioning allows employees to
have a unified shopping experience where they can create self-service requisitions in
SAP S/4HANA. Items for materials or services can be created which are extracted
from external catalogs and from an integrated cross-content search based on SAP
S/4HANA. Additionally, free-text items can be created if none of the materials in the
connected system or the ones extracted into the hub system matches the
requirements. This scenario also enables the user to confirm the ordered goods or
services in the hub system. Central Sourcing facilitates purchasers to get an overview
of all purchasing needs across various plants of the company and to source for all
plants centrally. This results in an optimized procurement process and increases the
overall savings. Purchasers can check all purchase requisitions in the connected
systems and source for these purchase requisitions centrally. Central Sourcing
Solution Capability 133

Fig. 9.11 SAP S/4HANA Sourcing and Procurement—automation rate and supplier evaluation

allows the creation of central requests for quotations, publishing them and after the
bidding process is completed and providing supplier quotations on behalf of
suppliers. Central Purchase Contracts facilitates the creation of central contracts
which cover long-term agreements between organizations and suppliers regarding
the supply of materials or the performance of services within a certain period as per
predefined terms and conditions. The solution enables purchasers from different
parts of a company in different locations to benefit from the negotiated terms and
conditions. Central Purchasing provides a single point of access for viewing and
managing purchasing documents. Purchase requisitions and purchase orders are
examples of such documents. SAP S/4HANA supports the integration with external
134 9 Process of Source to Pay

Fig. 9.12 SAP S/4HANA Central Procurement—commodity pricing and contract hierarchy

procurement systems (e.g., SAP Ariba Sourcing). If an external procurement system

is integrated and supports the features below, central supplier quotations and follow-
on documents such as central purchase contracts or purchase orders can be created
automatically (Fig. 9.12).
Extended functionality with commodity management for procurement and sales
processing is offered to enable advanced commodity pricing on procurement
documents. It allows to create commodity sales contracts priced on market quotes,
automate price calculations, and streamline invoicing by supporting provisional,
differential, and final invoices. With the introduction of new commodity pricing, key
users can easily apply complex pricing formulas, commodity weights, and price
conditions in Central Procurement.
Conclusion 135

Conclusion

The Source to Pay is a core business process in companies for procuring materials
and facilities that are required to manufacture products or provide services. For this,
corresponding suppliers have to be sourced first. The process starts with planning
and optimizing of sourcing and procurement and continues with sourcing and
contracting suppliers. Receiving and payment of products and services are covered.
In SAP S/4HANA this end-to-end process is mainly covered by SAP S/4HANA
Sourcing and Procurement component. This solution provides capabilities for sup-
plier management and procurement analytics but also handles operational procure-
ment and invoice management. Furthermore, sourcing and contract management are
also covered by the solution. The SAP S/4HANA modules are deeply integrated and
frequently interacting so that also additional components contribute to handle this
end-to-end process.
Process of Plan to Fulfill
10

This chapter describes the business process plan to fulfill consisting of the
subprocesses plan to optimize fulfillment, procure to receipt, make to inspect, deliver
product to fulfill, deliver service to fulfill, and manage fulfillment. Additionally, the
application capabilities of SAP S/4HANA to resolve those business processes are
explained.

Business Process

The general process of Plan to Fulfill is depicted in Fig. 10.1 and explained in detail
in the next sections.
Planning and optimizing every step of a company’s production are crucial for
every product or service launch. Successful planning is key for cost and time
efficiency and reduced man hours. Before launching a product or service, one has
to derive every single step inside its supply chain, starting with a plan to optimize
fulfillment, to making inspections, to further deliver the product or service to
fulfillment and ending with the fulfillment management. Supply chain covers the
planning, fulfillment, regulation, and tracking of supply chain activities, and
includes also warehouse and transportation management. The various modes of
production can be divided into the following categories:

• Discrete manufacturing is one of the most popular modes of manufacturing used

by businesses that use production orders. A product can be assembled or
disassembled and reworked in this mode of manufacturing, and it is typically
manufactured across multiple work center operations. Manufacturing stages can
be clearly distinguished between one operation and the next. Manufacturing
begins with a production order, which is created to meet demand based on
forecasts in a make-to-stock (MTS) scenario or sales orders in a make-to-order
(MTO) scenario. A production order is so important in this type of manufacturing
that direct materials, indirect materials, labor and overheads, and scheduling

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 137
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_10
138 10 Process of Plan to Fulfill

Plan to Fulfill
Plan to Optimize Fulfillment
Supply Chain Strategy Management Manufacturing Strategy Service Fulfillment Strategy and Planning
Management
Develop supply Develop Develop Develop service Create and
chain network materials manufacturing fulfillment manage service
strategy

Procure to Receipt
and policies strategy strategy resource plan

Demand Planning Inventory Planning Supply Planning

Generate Define target and Create material Generate

Develop baseline / replenishment collaborative
collaborative safety stock
demand forecast plan supply plan
demand plan levels

Sales and Operations Supply Chain

Supply Planning Planning Performance Management
Create and manage Create Perform sales Control and
master production deployment and operations monitor
schedule plan planning supply chain

Make to Inspect
Production Planning and Manufacturing Operations Management
Scheduling
Plan and Manage Stage Produce / Maintain
Perform
schedule manufacturing production assemble production
quality testing
production project material physical product records

Production Execution of Intangible Products Quality Management Receiving

Manage Produce / Manage Receive

Perform
production assemble quality products
quality testing
project digital product conformance

Manufacturing Performance Management

Assess Monitor and

production optimize production
performance process

Fig. 10.1 Process plan to fulfill

information are all captured within the production order to provide a clear picture
of the actual time, material consumption, and production costs.
• Process manufacturing is a common manufacturing method used in the chemical,
consumer products (food/beverage and home care products), and pharmaceutical
industries. Within these industries, process manufacturing integrates various
stages of production, from filling and mixing silos or tanks with inbound
materials, to actual production, to filling the finished product in tanks or
containers for transportation. This type of manufacturing also takes into account
materials that are fed into the process via pipelines, thus covering a wide range of
process possibilities. Process manufacturing is typically done in phases and
spread across resources, but it is not always possible to distinguish one phase
from another. The majority of these industries employ batch-managed
manufacturing driven by a process order. Process orders, like production orders
in discrete manufacturing, play an important role in process manufacturing, for
example, by providing a view of the actual factors of production.
Business Process 139

Plan to Fulfill
Deliver Product to Fulfill
Order Promising Warehouse and Inventory Management Dock and Yard Logistics

Manage Coordinate
Manage stock
product Ship products dock and yard
transfers
availability logistics

Transportation Management Supply Chain Performance

Management
Perform Review and
Source Plan Execute
transportation report logistics
transportation transportation transportation
settlement performance

Deliver Service to Fulfill

Service Planning and Service Fulfillment
Scheduling
Manage Execute Record Manage travel
Plan service Track service
resource service activities and expenses
tasks and consumption
scheduling delivery
resources

Service Fulfillment Service Fulfillment Performance

Management
Complete Project
Perform rating Prepare Review and
service report service
Management
and charging service billing
delivery performance

Manage Fulfillment
Manufacturing Warehouse and Circular Economy Product Genealogy
Engineering Inventory Management Logistics
Define Manage inventory and Manage packaging Manage product
manufacturing setup warehouse operations and empties genealogy

Logistics Material Identification Track and Trace Supply Chain Collaboration

Manage material Track and Operate supply chain

identification trace collaboration platform
© All rights reserved CONFIDENTIAL

Service Fulfillment Data

Service Partner Management Sustainability Operations
Management
Manage service Manage and collaborate Develop and execute
fulfillment data with service partners functional EHS program

Fig. 10.1 (continued)

• Repetitive manufacturing is a mode of production in which similar products are

produced repeatedly and continuously on a set of work centers. The primary
distinction between repetitive, discrete, and process manufacturing is that repeti-
tive manufacturing is driven by times and quantities in production rather than
orders. In this mode of production, the rate at which each product is produced is
an important metric. Planned orders are the result of a material requirements
planning (MRP) run. Planned orders determine the run schedule, which
determines production quantities and times. Material consumption is typically
done in retrospect, via periodic backflushing. Depending on the material being
140 10 Process of Plan to Fulfill

produced, the costs associated with production are calculated and settled on a
regular basis.

In addition to these modes of manufacturing, there is also lean manufacturing or

just-in-time (JIT) manufacturing, primarily via Kanban.

Plan to Optimize Fulfillment (Fig. 10.2)

Before launching service or manufacturing a product corresponding supply chain

network must be developed. This network includes several policies that must be
applied. In addition to that, a strategy for the materials must be defined. Planning the
supply chain helps to anticipate and manage the demands of the customers, the
inventory and operational risks and opportunities. Developing and managing a
manufacturing strategy is key to keep the manufacturing stage of a product’s
lifecycle organized and structured for the future. Manufacturing Strategy Manage-
ment gives the user the opportunity to record a manufacturing strategy for a
particular business unit and plan according to it. First there has to be a strategy
developed how the service of a company is supposed to be fulfilled. This strategy has
to contain all the necessary resources to achieve a successful fulfillment. When a
strategy has been developed it is necessary to estimate which and how much
resources are required. For that reason, creating and managing a service resource
plan is also part of Service Fulfillment Strategy and Planning. Demand Planning is a
set of processes and functionality that revolves around demand management, statis-
tical forecasting, promotion, and lifecycle planning. It is an integral part of any
organization’s Sales & Operations Planning Process including the development of a
baseline demand forecast and to generate a collaborative demand plan. With Inven-
tory Planning organizations can plan the optimal stock of products at a specific
location. The company considers whether it is better to stock or destock at a location,

Plan to Optimize Fulfillment

Supply Chain Strategy Management Manufacturing Strategy Service Fulfillment Strategy and Planning
Management
Develop supply Develop Develop Develop service Create and
chain network materials manufacturing fulfillment manage service
strategy
Procure to Receipt

and policies strategy strategy resource plan

Demand Planning Inventory Planning Supply Planning

Generate Define target and Create material Generate

Develop baseline / replenishment collaborative
collaborative safety stock
demand forecast plan supply plan
demand plan levels

Sales and Operations Supply Chain

Supply Planning Planning Performance Management
Create and manage Create Perform sales Control and
master production deployment and operations monitor
schedule plan planning supply chain

Fig. 10.2 Plan to optimize fulfillment

Business Process 141

and calculates the economic order quantity in conjunction with safety stock for each
location product. As a result, the company keeps stockholding costs as low as
possible and reduces ordering costs. At the same time, it ensures a high level of
customer service. The main task of Supply Planning is to balance demand with
supply within the company’s supply chain. This includes the creation of a material
and replenishment plan, the generation of a collaborative supply chain, the creation
and management of the master production schedule and deployment plan. With
effective supply planning, companies are able to optimize inventory levels and
resource utilization, as well as achieve customer satisfaction with the on-time
delivery of orders.
Sales and Operations Planning is a versatile forecasting and planning activity that
allows sales, production, and other supply chain targets to be set based on historical,
current, and projected future data. Rough-cut planning can also be used to determine
the quantities of capacities and other resources needed to meet these targets. Sales
and Operations Planning can be used to streamline and consolidate a company’s
sales and production operations and is particularly suitable for long- and medium-
term planning. The Supply Chain Performance Management helps companies to
make their supply chain more effective and responsive in the face of complex and
fast-changing market conditions. By focusing on the right process metrics,
companies can track performance, identify bottlenecks, and uncover opportunities.
It enables both departmental and organizational performance management. Thus,
end-to-end supply chain visibility is provided for enabling both departmental and
organizational performance management.

Make to Inspect (Fig. 10.3)

Material requirements planning ensures the availability of materials and performs

basic production planning. Sufficient supplies have to be planned to cover

Make to Inspect
Production Planning and Manufacturing Operations Management
Scheduling
Plan and Manage Stage Produce / Maintain
Perform
schedule manufacturing production assemble production
quality testing
production project material physical product records

Production Execution of Intangible Products Quality Management Receiving

Manage Produce / Manage Receive

Perform
production assemble quality products
quality testing
project digital product conformance

Manufacturing Performance Management

Assess Monitor and

production optimize production
performance process

Fig. 10.3 Make to inspect

142 10 Process of Plan to Fulfill

requirements—whether from sales orders, stock transfer orders, or from production.

The goal is to ensure that both costumer and production demands are available on
time and to avoid any disruptions due to missing parts. Manufacturing Operations
Management has the objective to manage the manufacturing project. This includes
staging production materials, producing and assembling physical products,
maintaining productions records, and performing quality testing.
Production Execution of Intangible Products focuses on immaterial assets like
services and has therefore only the objectives to manage the production project,
produce and assemble digital products, and perform quality testing. Production
materials aren’t required here and therefore no staging. Quality planning ensures
the quality of products, processes, and services right from the start. It is important
during early stages of product design and development to implement appropriate
quality-planning strategies inside every process. Receiving is about obtaining
products in stores by displaying and posting incoming handling units. In this context
checks are performed regarding the content of handling units with the expected and
actually received product quantities. Manufacturing Performance Management has
the objective to assess the production performance and to monitor and optimize the
production process.

Deliver Product to Fulfill (Fig. 10.4)

Customers have high expectations when it comes to order promises. They want their
products as fast and as reliable as possible. Customers are no longer willing to buy
something without knowing the exact delivery date. Managing the product avail-
ability is therefore the main objective of Order Promising. Many companies run
production facilities in different regions. They have to evaluate which facility
handles the request. Other companies may evaluate alternatives for an out-of-stock
product. All these factors must be taken into account when promising an order, in
order not to run the risk of breaking the delivery promise. Inventory Management
addresses the recording and tracking of materials on a quantity and value basis. This
includes planning, entry, and documentation of stock movements such as good

Deliver Product to Fulfill

Order Promising Warehouse and Inventory Management Dock and Yard Logistics

Manage Coordinate
Manage stock
product Ship products dock and yard
transfers
availability logistics

Transportation Management Supply Chain Performance

Management
Perform Review and
Source Plan Execute
transportation report logistics
transportation transportation transportation
settlement performance

Fig. 10.4 Deliver product to fulfill

Business Process 143

receipts, goods issues, physical stock transfers and transfer postings as well as the
performance of physical inventory.
While Inventory Management handles the stocks by quantity and value, the
Warehouse Management component reflects the special structure of a warehouse
and monitors the allocation of the storage bins and any transfer transactions like
shipping in the warehouse. Thus, organizations manage their material flow, using
advanced put away and picking strategies. It is important to get products and services
to market faster and to improve customer service by identifying, avoiding, and
solving potential issues. Dock and Yard Logistics accelerate gate-in and gate-out
processes for executing activities faster and increasing yard throughput. Thus,
resource usage, planning, execution and billing are optimized. Transportation Man-
agement reduces costs and improves service with streamlined transportation man-
agement processes. It supports the complete transportation management lifecycle for
both domestic and international freight to improve customer satisfaction. Further-
more, transportation needs are met by planning, optimizing, tendering, and settling
freight, booking carriers, managing forwarding orders, and adhering to international
trade and hazardous goods regulations. Supply Chain Performance Management is
important to review and report logistics performance. Bad performance can lead to
extra costs and slower delivery. This can be avoided by analyzing the reviews and by
taking corrective actions.

Deliver Service to Fulfill (Fig. 10.5)

Service Planning and Scheduling is required to perform optimized Just-in-Time

productions. The company has to plan service tasks and required resources. Addi-
tionally, the resource scheduling has to be developed in order to have a working
supply chain with as little downtime as possible. Service Fulfillment involves several
jobs that have to be performed. This task manages the whole service fulfillment like
executing service delivery, recording activities, managing travel and expenses,
tracking the service consumption, performing rating and charging, preparing service
billing, and completing service delivery. Service Fulfillment Performance Manage-
ment focuses on reviewing and reporting of performance. Bad performance can lead

Deliver Service to Fulfill

Service Planning and Service Fulfillment
Scheduling
Manage Execute Record Manage travel
Plan service Track service
resource service activities and expenses
tasks and consumption
scheduling delivery
resources

Service Fulfillment Service Fulfillment Performance

Management
Complete Project
Perform rating Prepare Review and
service report service
Management
and charging service billing
delivery performance

Fig. 10.5 Process plan to fulfill

144 10 Process of Plan to Fulfill

to extra costs and slower delivery. This can be avoided by analyzing the reviews and
by taking corrective actions.

Manage Fulfillment (Fig. 10.6)

Before starting the manufacturing step of the products lifecycle, it has to be

established how exactly this step needs to take place. Manufacturing Engineering
helps to establish and develop the manufacturing of a product and define the
manufacturing setup for a smooth production. By focusing on inventory manage-
ment, inbound and outbound processing, goods movement, physical inventory, and
reporting, Warehouse and Inventory Management improves stock transparency and
control. The process optimizes material flow control, yard and labor management,
value-added services, kitting and cross-docking. Inventory management handles the
mapping of physical stock in real time by logging all stock-moving transactions,
allowing for real-time stock updates at any point in time. Not only are stock
quantities and values updated with each goods movement, but related general ledger
accounts for financial accounting are also updated via automatic account determina-
tion. This allows an inventory manager to view the current stock situation for a
specific material as well as manage many of its own and external special stock forms.
Warehouse Management helps users take control of their warehouse operations to
keep up with changing demand while lowering costs. Circular business models reuse
everything and cut waste to near zero. Sustainability, especially circularity, is one of
the best paths for profitability. These practices are becoming more widespread as a
result of growing urbanization and consumer preferences for products, services, and
brands that demonstrate a commitment to sustainability. Managing packaging and
empties is therefore the most important aspect of Circular Economy Logistics.
Managing a products genealogy is vital including forward and backward traceability

Manage Fulfillment
Manufacturing Warehouse and Circular Economy Product Genealogy
Engineering Inventory Management Logistics
Define Manage inventory and Manage packaging Manage product
manufacturing setup warehouse operations and empties genealogy

Logistics Material Identification Track and Trace Supply Chain Collaboration

Manage material Track and Operate supply chain

identification trace collaboration platform

Service Fulfillment Data

Service Partner Management Sustainability Operations
Management
Manage service Manage and collaborate Develop and execute
fulfillment data with service partners functional EHS program

Fig. 10.6 Manage fulfillment

Business Process 145

of the product from the main material to its subassemblies. The information
displayed on products helps to identify what happened in certain operation activities.
For example log of issues, as well as what actions were performed by the production
operator are collected. Product Genealogy helps supervisors and quality engineers to
identify quality issues in the manufacturing process or to detect if there were any
missing or defective components. Material identification is managed in a production
instruction sheet by way of dynamic methods. This includes completeness check,
sequence check, automatic goods issue posting after the completeness check or
sequence check, automatic transfer of data from material identification to the batch
record, and a check for completeness of picking. Track and Trace is important to get
real-time insights into the availability of materials and products to reduce supply
chain risks and optimize costs. Traceability is a core capability to efficiently orches-
trate goods to market and mitigate risks. Traceability of the entire supply chain
includes visibility into both product creation and the movement of goods and assets
across company and system boundaries. Track and Trace provides end-to-end
process visibility and status monitoring, enhanced by multitier logistics network
capabilities, for all types of logistics and execution processes, as well as serialized
object tracking. The supply chain is changing dramatically as a result of technologi-
cal advancements, improved processes, the availability of alternative resources, and
the adoption of innovative business models. There are various stakeholders at
various levels who are in charge of multiple tasks that require decision-making.
People from various business units and organizations who may not have similar
working styles or work environments must collaborate using various modern
methods to achieve a common goal with high accuracy and speed. When all
stakeholders work effectively together in a network, the organization benefits in a
variety of ways. This is the objective of the Supply Chain Collaboration. During the
process of service fulfillment data is collected to archive, record, and analyze the
process. This leads to a large amount of data which has to be managed to be able to
analyze the records. Therefore, Service Fulfillment Data Management helps its users
to manage and organize the recorded service fulfillment data.
Service Partner Management focuses on optimization of partner relationship.
Partners are individuals who are associated with the resellers, brokers, service
providers, distributors, or other entities with which an organization collaborates.
Theses collaborations can be useful to share ideas and to deliver superior content.
Sustainability Operations develops and executes a functional Environment,
Health and Safety (EHS) program. Through ongoing analysis of operational data
and the provision of relevant information, the process engages the workforce and
identifies and acts on hazards before they impact safety. It also improves EHS
performance by incorporating risk management into daily operations through
integrated business processes, shared data, and workflows.
146 10 Process of Plan to Fulfill

Solution Capability: Supply Chain

The end-to-end process Plan to Fulfill is mainly implemented by SAP S/4HANA

Supply Chain and SAP S/4HANA Manufacturing. In this section capabilities of SAP
S/4HANA Supply Chain are explained as depicted in Fig. 10.7. While this covers the
core functionality, various extension modules like SAP Warehouse Insights, SAP
Integrated Planning or SAP Global Batch Traceability are provided.
Logistics Material Identification manages batches, serial numbers, and handling
units to increase efficiency and improve compliance across shipping and
warehousing operations. Oder Promising generates accurate delivery date estimates
during order creation and makes changes based on actual stock information to
improve customer satisfaction. Delivery and Transportation orchestrates all delivery
demands, plan and executes your transport, using functionality for basic agency
billing and subcontracting. It ships the right products to the right place at the right
time. Warehouse Management stores and handles goods and materials efficiently. It
improves asset usage, increases throughput, and supports accurate on-time order
fulfillment with a maximum of warehouse transparency. The component Inventory
tracks and controls inventory and stock quantities in a transparent manner and ensure
a streamlined material flow across all in and outbound logistics operations.
Advanced Order Promising commits to orders quickly and accurately by automati-
cally considering relevant stock in real time, all the while protecting business
priorities and profitability goals. Advanced Transportation increases transportation
efficiency by managing all inbound and outbound freight holistically. Advanced
Warehousing optimizes orders by leveraging features such as cross-docking, work-
force management, slotting, inventory optimization, transit warehousing support,
and connectivity to warehouse automation equipment. Extended Service Parts
Planning plans service parts inventory accurately across distribution networks,

SAP S/4HANA Supply Chain

SAP Warehouse Insights, SAP Integrated Business
Planning, SAP Global Batch Traceability,…

Advanced Features
Advanced Advanced
Advanced
Extended Order
Order Transportation Service Parts Promising
Warehousing
Promising Management Planning

Logistics Material Identification Delivery and Transportation

Purchase Transportation
Batch Serial Number Handling Unit Source
Assignment
Contract Management
Management Management Management Management

Inventory
Inventory Returnable Warehouse
Goods Physical Empties
Movement
Analytics & Packaging
Inventory Management Management
Control Logistics

Fig. 10.7 SAP S/4HANA Supply Chain—functional architecture

Solution Capability: Supply Chain 147

based on parts volumes, velocity, and segments. It strategically calculates trade-offs

between costs and service.

Inventory

Good warehousing helps to store and handle goods and materials efficiently. It
improves asset usage, increases throughput, and supports accurate on-time order
fulfillment with a maximum of warehouse transparency. Goods Movement uses
simplified goods issue postings for transfer and scrapping. It experiences real-time,
high-volume processing using sensor data. The solution benefits from locking
elimination and material ledger valuation. Inventory Analytics and Control
experiences the power of simplification by using state-of-the-art analytical apps,
which take full advantage of the simplified data model and the 40-digit long material
number. It optimizes inventory and material flows based on real-time information
(Fig. 10.8).
Returnable Packaging Logistics tracks shipping and receiving of returnable
packaging materials to and from business partners. It gains visibility in materials
distribution and reduces overall volume of materials by integrating logistics infor-
mation into a single version of the truth. Physical Inventory enables real-time
reporting on warehouse stocks and inventory. It records the physical quantities of
your warehouse stocks/own stock and other stock types. Additionally, the solution
enables faster and more-efficient inventory adjustments. Empties Management
tracks empties to and from business partners and processes high-volume transactions
for empties returns.

Warehouse Management

Basic warehouse management facilitates real-time transparency into managing and

processing material movements flexibly for optimized warehouse operations. Basic
warehouse management helps organizations from the very beginning, starting with
structuring the warehouse by defining physical structures, individual storage types
and creating storage bins. The entire warehouse can be mapped into the system,
down to storage bin level. Thus, an overview of the total quantity of each product in
the warehouse is provided. Additionally, it is possible to always see exactly where a
specific product is, at any time, in the warehouse complex. The product quantities
can be managed in different stock categories at the following levels: At storage bin
level, in intermediate locations, on resources, in handling units or in nested handling
units.
A handling unit is a physical unit made up of packaging materials and the goods
contained within it. It is always a blend of products and packaging materials. All of
the information contained in the product items is stored in the handling units and is
always accessible (Fig. 10.9).
148 10 Process of Plan to Fulfill

Fig. 10.8 SAP S/4HANA Supply Chain—inventory turnover analysis and physical inventory
document overview

Inbound processing allows receiving products from vendors, production, other

parts of the company, customer returns including unplanned returns. Warehouse
capacity can be optimized and material flow by using put-away strategies. Thus,
appropriate storage bins can be searched for incoming products by automatically
determining suitable storage bins for the incoming products. Outbound processing
allows to pick products and send them out of warehouses for example for sending
ordered products to external customers or internal customers such as other plants,
supplying products to production or returning products to vendors.
Solution Capability: Supply Chain 149

Fig. 10.9 SAP S/4HANA Supply Chain—pick by cart

Logistics Material Identification

Leveraging Batch Management improves product quality, ensures end-to-end trace-

ability, and reduces customer and legal risks. The solution enables the creation of
batch master records and the assignment of specific batch numbers, the classification
of batches and the assignment of characteristics, the creation of a batch genealogy to
automatically comply with legal requirements, and the tracking of batches. Serial
Number Management identifies and differentiates between individual items of a
material or equipment. It enables to create specific serial number profiles for
materials, to create serial number master records to carry important data on the
serialized material, and to identify single items to track in inventory management,
physical inventory, and equipment. Handling Unit Management reflects
packing-based logistics structures and tracks the movements of the entire handling
units rather than each material individually. The solution manages materials that are
relevant for segmentation in handling units from cartons to containers. It uses unit
management in inbound and outbound business processes, goods movement, and
transfer posting to improve product traceability. Additionally, the application
expands on the existing packing function in shipping and warehouse processing
(Fig. 10.10).

Delivery and Transportation

Delivery Management executes and confirms on transportation demands from all

sources (sales order, purchase order, stock transport order) in an automated fashion.
It leverages electronic collaboration to accelerate the process and avoids
150 10 Process of Plan to Fulfill

Fig. 10.10 SAP S/4HANA Supply Chain—manage outbound deliveries and analyze delivery
performance

redundancies and human error. The goods receipt step for inbound deliveries is the
final activity organizations complete before they receive goods. The substantial
benefit of depicting the goods receipt process through the inbound delivery job is
that many processes can be executed in advance, even before the actual goods receipt
posting takes place. All the necessary information is available beforehand as the
supplier notifies of the inbound delivery in advance. Thus, an effective and efficient
inbound delivery process is ensured to plan for the put-away, packing, and storing of
goods. Inbound deliveries are derived from a purchase order document or they are
part of a two-step stock transfer process. The goods issue step for outbound
Solution Capability: Supply Chain 151

deliveries is the last step to complete before companies send goods to customers. An
effective and efficient outbound delivery process allows to plan for the picking,
packing, and shipping of outbound deliveries.

Transportation Management

This solution supports the entire transportation chain and allows to manage the
transportation demands by planning, tendering, and settlement of freight processes.
Furthermore, it enables booking carriers in accordance with the requirements of
hazardous goods. Transportation Management is used for domestic and international
transportation not only for the shipper industry but also for inbound and outbound
freight management. It enables to create and use central master data such as business
partners and products for transportation-related processes but also for setting up
transportation networks. Freight agreements can be used which are contracts
between business partners that detail their commitment to conduct business with
each other in an agreed manner. Furthermore, charges can be calculated for
transporting goods between locations based on the rates maintained in a rate table
or local rate table. When calculating transportation charges, this is based on master
data such as agreements, calculation sheets, local calculation sheets, rate tables, and
local rate tables. Transportation Management practices inbound or outbound
deliveries to create freight units. Additionally, the logistics integration allows to
continuously react to changes of original documents that occur in the system.
Facilitating freight order management allows to create and edit freight orders and
freight bookings which contain information required for transportation planning and
execution, such as source and destination locations, dates or times, and product
information, and resources used. With tendering fright requests for quotation can be
sent out to one or more carriers. This can be handled manually or automatically by
consuming the direct tendering process. Based on planning, freight units are created
on the basis of inbound or outbound deliveries manually or automatically depending
on the settings that are configured. Freight settlement enables to trigger the verifica-
tion of an invoice, which has been received from a supplier or carrier, against a
freight settlement document.

Order Promising

Advanced Features
Extended Service Parts Planning provides planning functionality specific to service
parts as well as transparency throughout the supply chain, from the time demand
occurs until the product is delivered. It enables forecasting, inventory planning,
procurement, and large-scale distribution of service parts to customers. These
capabilities ensure that the service levels that have been set are maintained. As a
result, it is ideal for distribution-centric businesses that distribute large volumes of
aftermarket service parts to multiple stocking locations. Advanced Warehousing
152 10 Process of Plan to Fulfill

provides tooling for delivering the optimal order by leveraging features like cross-
docking, workforce management, slotting, inventory optimization and support for
transit warehousing as well as connectivity to warehouse automation equipment
(Fig. 10.11).
Advanced Transportation Management supports the entire transportation chain.
By planning, optimizing, tendering, subcontracting, and settling freight processes,
the user can manage transportation demands. Additionally, carriers can be booked in
accordance with the requirements of international trade and hazardous goods.
Advanced Order Promising helps companies to commit to orders quickly and
accurately by automatically considering the relevant stock in real time, while
protecting the company’s business priorities and profitability goals.

Solution Capability: Manufacturing

The end-to-end process Plan to Fulfill is mainly implemented by SAP S/4HANA

Supply Chain and SAP S/4HANA Manufacturing. In this section capabilities of SAP
S/4HANA Supply Chain are explained as depicted in Fig. 10.12. While this covers
the core functionality, there are various extension modules like SAP Digital
Manufacturing Cloud, SAP Integrated Planning, or SAP Manufacturing Suite.
Production Planning enables planning products and components to initiate inter-
nal and external procurement using Material Resource Planning (MRP) live in
memory for improved performance and more current planning results. Production
Engineering designs products/resources and manages the change throughout the life
cycle including master data as materials, routings, BoMs, recipes, work centers.
Production Operations control manufacturing operations for discrete, process, and
repetitive industry with fully integration with Supply Chain and Finance. Quality
Management inspects production processes and goods receipts. It manages inspec-
tion lots and applies usage decisions to improve manufacturing output. Extended
Production Planning and Scheduling extends core production planning and schedul-
ing functionality (ePPDS) leveraging the visual planning board. The solution
automates consumption bases replenishment through demand driven MRP and use
simulation capabilities with predictive MRP. Extend Production Engineering and
Operations engineers and operates the production processes. It bridges the gap
between product engineering and manufacturing operations by converting product
design into production process design, which serves as the foundation for production
order management and shop floor execution.

Production Engineering

During the product engineering phase, products are designed and developed. New
products or product lines are designed to take advantage of current process technol-
ogy and to improve quality and reliability. Existing products might be changed due
to shifting market or customer requirements. As the result of this product phase
 Solution Capability: Manufacturing

Fig. 10.11 SAP S/4HANA Supply Chain—transportation cockpit

153
154 10 Process of Plan to Fulfill

SAP S/4HANA Manufacturing

SAP Digital Manufacturing Cloud, SAP Integrated

Business Planning, SAP Manufacturing Suite
Extended Features Production Planning
Production Production Material Manufacturing
Capacity
Planning & Engineering & Requirements
Scheduling Operations
Planning Insights
Planning

Quality Management Production Engineering

Routing Mgmt.
Quality Quality Quality Production BoM
Recipe
Planning Inspection Improvement Management
Development

Production Operations
Subcontracting/
Production Repetitive Just-in-Time Production
Kanban External
Execution Manufacturing Processing Control
Processing

Fig. 10.12 SAP S/4HANA Manufacturing—functional architecture

corresponding drawings and a list of all the parts required to produce the product are
provided. This list is the bill of material (BoM). Production BoM Management
structures products to manage components and assemblies and defines separate
BoMs for different areas (e.g., Engineering, Production, Sales and Services). The
solution determines the valid BoM version for the respective date, production
version, and purpose. Reporting function can be used to determine all components
(assemblies and individual parts) in a product and displays them per low-level code.
Reporting also helps to find out where an object (e.g., material) is used and the
quantity that is required. During the process engineering phase, manufacturing
equipment and production facilities are designed and continuously improved.
Thus, the capabilities of the manufacturing equipment can be modeled, and the
performance is monitored. Routing Management Recipe Development plans the
operations during manufacturing activities. Operations provide the basis for sched-
uling dates, capacity requirements for work centers and material consumption.
Recipes define the product formulation process and the development of
manufacturing products. Work centers/resources are used to represent machines,
production lines, employees, or groups of employees. In addition to BoM and
routing/master recipes, the work centers/resources belong to the most important
master data in the production planning and control system. They are used for
scheduling, costing, capacity planning, and for simplifying operation maintenance.
Routing/master recipes describe the operations/process steps that must be
performed to produce a material. Furthermore, routing/master recipes include details
about the work centers/resources at which the operations/process steps are
performed and the BOM components that are needed. In order to keep the produc-
tion process running smoothly and efficiently the shop floor must be provided with
up-to-date information. For this, it must be defined how the production process is to
Solution Capability: Manufacturing 155

Fig. 10.13 SAP S/4HANA Manufacturing—MRP simulation and scheduling board

be executed and the data that have to be collected during production. By comparing
this data with the existing one, continuous improvements to the process can be made
(Fig. 10.13).

Production Planning

Production Planning has the objective to plan products and components to initiate
internal and external procurement. Managers have to consider two aspects: Material
Requirements and Capacity. Based on BoM explosion of finished product
requirements companies have to plan raw materials. Additionally, proposals for
internal and external procurement based on quantities and date requirements must
be created. To plan the capacity the production planner must balance production
156 10 Process of Plan to Fulfill

requirements with available capacity of the respective work centers and shift
calendars. Material Requirements Planning ensures the availability of materials
and performs basic production planning. Usually this is performed by the MRP
controller who monitors the material shortage and resolves any issues immediately.
Furthermore, it guarantees that sufficient supplies have been planned to cover
requirements. The objective is to allow that both customer and production
requirements are available timely. The current supply and demand can be monitored
and adjusted. Material shortages can be detected and also uncovered requirements
and issues regarding process or production orders. Tools for automated solving of
issues and communicating them to suppliers are provided. Planned orders can be
converted into production orders or process orders. This can happen manually or
automatically based on jobs. Material Requirements Planning (MRP) facilitates the
coverage of demand by supply elements without considering the available capacity.
It is the task of capacity planning to support the MRR planners in changing the
production plan in such a way that the capacity constraints are considered while
keeping the demands in time and quantity in mind. MRP allows to review when and
how much capacity is available for a work center which is called the capacity
definition. This definition can be managed for instance, by reducing the work time
or by including additional work time. With MRP also the capacity load on work
centers can be reviewed. Available and required capacities can be compared, thus the
issues are identified which must be resolved (Fig. 10.14).

Production Operations

Production Execution bundles execution, controlling, monitoring, and confirmation

of the manufacturing process with real-time data from shop floor, contract
manufacturers, and suppliers. To do this, the production operator must transfer
planned orders, release production orders, confirm operations, and track work in
progress. Released production/process orders can be displayed by providing access
to all the information required to produce the product including dates, times, and
quantities. Repetitive Manufacturing processing can be simplified using mass
processing and streamlined financial controls in periodic actions. In repetitive
manufacturing, the material flow can be planned and monitored in a much higher
level of detail. Planned orders are used to model, plan, and trigger material flow and
product cost collectors to collect the costs. The product costs are collected based on
the complete quantity produced during an accounting period. Deviations are
aggregated. Repetitive manufacturing supports the make-to-stock and make-to-
order production. The first one is controlled without a direct reference to the sales
order while for the second scenario the system creates one or several planned orders
which directly reference the sales order item. Using Kanban inventory enables to
automatically replenish by implementing self-steering control circuits. This can be
achieved for example with empty bins triggering the procurement process. Kanban is
a methodic for controlling production and material flow based on physical material
stock in production. The basic idea is to keep material that is required on a regular
Solution Capability: Manufacturing 157

Fig. 10.14 SAP S/4HANA Manufacturing—manage production orders and manage production
operations

basis available in small quantities in production. Thus, the replenishment or produc-

tion of a material is only triggered when a certain quantity of the material has been
consumed. Kanban approach ensures that the production process controls itself and
the manual posting effort is kept to a minimum. This results in shorter lead times and
reductions in stock levels. Production Control provides central cockpits to minimize
bottlenecks and mitigate risks. Therefore, production operators must control full
shop floor production for handling materials, BoMs, recipes, routings, components,
work centers, and resources all the way up to the finished products. This process
facilities to manage and regulate the manufacturing process. It is usually executed by
the production supervisor who is in charge of dispatching production operations to
individual machines. This person also decides on measures to mitigate machine
breakdowns or missing components. Subcontracting can be used to outsource
158 10 Process of Plan to Fulfill

production via subcontracting procurement. To make use of this companies must

provide components to the contractor according to the BoM structure. Additionally,
companies have to manage and track component inventory and work in progress on
contractor site. With External Processing organizations can even outsource produc-
tion operations to third party providers or other production units within the coopera-
tion. External operations in routings and production orders can manage this process.
Just-in-Time Processing can avoid inventory buffers by delivering components and
subassemblies directly to the production line of the customer. With just-in-sequence
the assembly is delivered in sequence according to the requested specifications. Just-
in-Time outbound processing allows to replenish direct materials required for
manufacturing in the exact quantity and at exactly the time required. Just-in-Time
inbound processing facilitates to produce and deliver materials in the exact quantity,
for the exact time, and even in the sequence defined by the customer. For this
scheduling agreements are used with delivery schedules for sales and production
planning processes.

Quality Management

Quality Management provides tools to inspect production processes and goods

receipts. The solution manages inspection lots and applies usage decisions to
improve manufacturing output. Quality Management involves planning, inspection,
and improvement of quality. Quality Planning is important to plan the quality of
products, processes, and services. Therefore, control plans are used to perform an
integrated inspection planning for goods receipt inspections and during production.
Control plans, in conjunction with the Failure Mode and Effects Analysis, can be
used to perform integrated inspection planning for goods receipt inspections and
production inspections. The control plan depicts how products and processes are
monitored. It includes tasks that are executed for each phase of the process. Quality-
related master data like specifications and processes on a long-term basis must be
defined as quality info records. Quality Inspection uses inspection lots to perform
and record a quality inspection completed by the usage decision. Examples of usage
decisions may be inspection determination, defects recording to record individual
defect items, sample management for processing and managing samples, calibration
inspection for test equipment, and quality certificates for inbound and outbound
processes. The inspection planning function is used to define inspection criteria, for
example, material to be inspected, how the inspection is to take place, characteristics
to be inspected, required test equipment, work center, and inspection specifications.
Quality notifications and root cause analysis allow to record and process quality
problems and complaints and to execute the problem-solving process including root
cause analysis. Corrective and preventive actions can be triggered in order to solve a
problem and to prevent the issues from recurring. Nonconformance management
enables to record and process defects. Quality Improvement focuses to improve the
quality of products and processes. This can be achieved by quality notifications to
carry out problem-solving processes and root cause analysis, corrective and
Conclusion 159

preventive actions to solve problems and to prevent reoccurrence. Quality analytics

and quality evaluations are provided based on inspection results or issue data. Audit
management helps for determining, evaluating, and documenting quality defects.

Manufacturing Insights

This cross-capability helps to analyze manufacturing data for process improvements,

decision support, and reporting and documentation purposes. The solution provides
alerts for exception-based management. Real-time alerts based on production
bottlenecks, such as time or component delays or resource bottlenecks, can be
used to reduce shortfalls and scrap with high efficiency.

Extended Production Planning and Scheduling

This advanced solution has the purpose to create procurement proposals for in-house
production or external procurement to cover product requirements and also to
optimize and plan the resource schedule and the order dates/times in detail. The
availability of resources and components must be considered here. It is used to plan
critical products, such as those with long replenishment lead times or those produced
on limited resources. Extended Production Planning and Scheduling is used to create
executable production plans and to reduce lead times, increase on-time delivery
performance, and to increase the throughput of products and reduce the stock costs,
through better coordination of resources, production, and procurement (Fig. 10.15).

Extended Production Engineering and Operations

This advanced solution provides tools to handle highly engineered and complex
products. It bridges the gap between product engineering and manufacturing
operations by converting product design into production process design. This is
crucial when producing highly engineered products that are subject to continual
design changes. Furthermore, the manufacturing process can be modeled in great
detail, including detailed work instructions for production operators. With the help
of planning BoMs and planning routes, it is also possible to perform production
planning concurrently with production engineering.

Conclusion

The Plan to Fulfill is a core business process in companies for manufacturing

products or providing services. For this supply chain and manufacturing strategy
has to be defined and the demand and inventory planning to be completed. Products
are assembled and intangible services are provisioned, following strict quality
160 10 Process of Plan to Fulfill

Fig. 10.15 SAP S/4HANA Manufacturing—pMRP simulation and operation activities

inspections. Products and services are delivered, and corresponding invoices created.
In SAP S/4HANA this end-to-end process is mainly covered by SAP S/4HANA
Supply Chain and Manufacturing components. SAP S/4HANA Supply Chain
supports among others logistics material identification, order promising, delivery
and transportation, inventory and warehouse management. SAP S/4HANA
Manufacturing enables for example production planning, quality management,
production engineering, and operations or manufacturing insights. The SAP
S/4HANA modules are deeply integrated and frequently interacting so that also
additional components contribute to handle this end-to-end process.
Process of Lead to Cash
11

This chapter describes the business process lead to cash consisting of the
subprocesses plan to optimize marketing and sales, market to lead, opportunity to
quote, order to fulfill, request to service, and manage customer and channels.
Additionally, the application capabilities of SAP S/4HANA to resolve those busi-
ness processes are explained.

Business Process

The general process of Lead to Cash is depicted in Fig. 11.1 and explained in detail
in the next sections.
Lead to Cash begins with marketing and ends with revenue collection. First of all,
strategy and budget for marketing must be defined. Sales forecasts and measurable
goals have to be developed. In the context of marketing execution, the relevant
customer profiles, sales prices, and promotional activities must be specified. Sale
execution manages leads/opportunities, point of sales, bids and quotes and
omnichannel presence. The order to fulfill process handles customer contracts and
orders for entitlement. For delivered products and provided services corresponding
supportive processes are enabled for managing customer complaints, processing
returns, handling warranty claim and recalls. As final step, invoicing to customers
is performed and accounts receivable processed for cash management. Frequently,
the sales process begins with a sales inquiry from a customer, such as a request for a
quotation or sales information without the requestor being under any immediate
obligation to buy. An inquiry can be about products or services, terms and
conditions, and, if necessary, delivery dates. The sales area that accepts the inquiry
is in charge of the subsequent processing. Sales inquiries allow to manage all the
important sales-related information that is used during the sales order processing
process. Customers have the option to change or cancel the inquiry. However,
ideally customers proceed from an inquiry to a purchase. In that case, the logical
next step is for the customer to request an official quotation or to purchase the

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 161
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_11
162 11 Process of Lead to Cash

Lead to Cash
Plan to Optimize Marketing and Sales
Customer Service Strategy
Marketing Strategy and Planning
and Planning
Develop Establish Design and Develop customer
marketing marketing manage customer care/customer service
strategy budgets loyalty program strategy

Sales Planning and Performance Management

Develop Establish sales

Establish overall Manage sales
sales goals and
sales budgets commissions
forecast measures

Market to Lead
Marketing Execution

Identify Develop and Perform Analyze and

Plan and define Generate
market manage promotional customer respond to
sales prices leads
segments activities profiling customer insight

Opportunity to Quote
Sales Execution

Enable Manage shopping Manage sales

Manage leads/ Manage
omnichannel carts and check-out proposals, bids,
opportunities point of sale
shopping experience via self-service and quotes

Sales Execution

Manage Determine and Idea to

configuration of calculate Requirement
product & services sales price

Fig. 11.1 Process lead to cash

products directly. A quotation is a formal set of business terms provided by the

quoting company to the customer. The primary distinction is that a quotation can be
referred to in a new sales order. A quotation is a legally binding offer to the customer
to deliver a product or provide a service under specific conditions. This offer is only
legally binding for the company for a limited time.

Plan to Optimize Marketing and Sales (Fig. 11.2)

In the subprocess of Marketing Strategy and Planning the first step is to develop a
suitable marketing strategy and establish the corresponding marketing budgets. It is
also recommended to design and manage a best fitting customer loyalty program.
Customer Service and Planning helps to develop customer care and also customer
service strategy for generating a unique customer experience. Sales Planning and
Performance Management supports in generating a sales forecast. After that, an
overall sales budget, sales goals, and measures can be established. In addition, sales
commissions can be calculated and managed.
Business Process 163

Lead to Cash
Order to Fulfill
Customer Order and Contract Management
Manage Manage Orchestrate Project
Manage
customer customer fulfillment Management
entitlement
contracts orders process

Plan to
Design to Procure to
Optimize
Release Receipt
Fulfillment

Deliver Deliver
Make to
Product to Service to
Inspect
Fulfill Fulfill

Request to Service
Customer Service and Support
Enable Manage customer Manage Process Manage
omnichannel service problems customer customer warranty
customer service and requests complaints returns claims

Customer Service and Support

Request to
Manage customer
Manage recalls Resolution
recovery claims

Fig. 11.1 (continued)

Market to Lead (Fig. 11.3)

Marketing Execution covers the main steps for implementing the marketing process.
The market segments are identified, as well as the sales prices are planned and
defined. At the same time, promotion activities are developed and monitored.
Certain customer profiles are determined in order to reach a suitable target group.
Based on that, the marketing activities can be carried out. The given results make it
possible to analyze and react to customer insights, whereby interested parties who
would like to purchase a certain product or service can be identified.

Opportunity to Quote (Fig. 11.4)

Sales Execution Process

Within the process of Sales Execution different channels, such as the Internet or local
shops, are enabled and used for sales. In addition, the shopping carts and the
checkout are managed by self-service. Also leads and opportunities as well as the
164 11 Process of Lead to Cash

Lead to Cash
Invoice to Cash
Customer Invoice Management Receivables Management
Perform pre- Manage Manage Manage
3rd party Invoice
invoicing of financial customer
invoice customer
billing content settlement credit risk

Receivables Management Treasury

Management
Process Manage Manage and Manage payments
accounts Process receivables process and bank
receivable (AR) disputes financing collections communications

Manage Customers and Channels

Customer Data Management Product Information Management

Manage Manage omnichannel

Onboard
customers and product content
customer
accounts

Sales Partner Omnichannel Management

Management
Orchestrate Operate Plan and
Manage
cross-channel omnichannel operate physical
sales partners
customer experience customer platforms store
and alliances

Fig. 11.1 (continued)

point of sale are managed by that. It is also necessary to check sales proposals,
received bids, and quotes. In the course of this, the configuration of the products and
services must be adapted and managed, whereby sales prices are determined and
calculated.

Order to Fulfill (Fig. 11.5)

After a successful customer acquisition, it is necessary to negotiate and process a

customer contract. Such a customer contract is defined within the subprocess of
Customer Order and Contract Management and stored in the respective system. In
this way, customer contracts and orders are managed, and the fulfillment process is
then orchestrated. Ultimately, the entitlements can be managed. Once a customer
order has been completed, the production processes begin. In the meantime, how-
ever, an order with special requests can lead to changes in the entire design. Order to
Fulfill is also accompanied by processes such as project management. In the course
of this, for example the optimization of the order fulfillment is planned and the
product or the service is delivered for fulfillment. An internal sales representative’s
primary responsibilities are order capture and order fulfillment. In today’s world,
Business Process 165

Plan to Optimize Marketing and Sales

Customer Service Strategy
Marketing Strategy and Planning
and Planning
Develop Establish Design and Develop customer
marketing marketing manage customer care/customer service
strategy budgets loyalty program strategy

Sales Planning and Performance Management

Develop Establish sales

Establish overall Manage sales
sales goals and
sales budgets commissions
forecast measures

Fig. 11.2 Plan to optimize marketing and sales

Market to Lead
Marketing Execution

Identify Develop and Perform Analyze and

Plan and define Generate
market manage promotional customer respond to
sales prices leads
segments activities profiling customer insight

Fig. 11.3 Market to lead

Opportunity to Quote
Sales Execution

Enable Manage shopping Manage sales

Manage leads/ Manage
omnichannel carts and check-out proposals, bids,
opportunities point of sale
shopping experience via self-service and quotes

Sales Execution

Manage Determine and Idea to

configuration of calculate Requirement
product & services sales price

Fig. 11.4 Opportunity to quote

Order to Fulfill
Customer Order and Contract Management
Manage Manage Orchestrate Project
Manage
customer customer fulfillment Management
entitlement
contracts orders process

Plan to
Design to Procure to
Optimize
Release Receipt
Fulfillment

Deliver Deliver
Make to
Product to Service to
Inspect
Fulfill Fulfill

Fig. 11.5 Order to fulfill

166 11 Process of Lead to Cash

where increasing order volumes and tight control of sales operations costs are critical
contributors to a company’s margins, efficiency, and effectiveness are key
components of a modern order and contract management process. Unlike 20 years
ago, the person in charge cannot manually capture all incoming sales orders and keep
track of the statuses of open sales orders today. As a result, automatic sales order
capture, low- to no-touch order management, integrated compliance with export and
product regulations, credit and financial risk management, and exception-based
working models are all critical. Contracts can help to sell more products and services
while also ensuring that agreed-upon terms and service-level agreements (SLAs) are
easily managed and taken into account during fulfillment.

Request to Service (Fig. 11.6)

Previously, the focus of brand building and loyalty was on designing and building
excellent products. Of course, there is benefit to providing excellent service, but the
primary focus of businesses has been on the products they sell. Service was
frequently treated as an afterthought. The term after-sales service alludes to this.
When things were broken, they were fixed. Offering good service was primarily used
to drive the product’s reputation and price, with the service itself being treated as a
cost center. The limitations of the previous approach are today clear. As businesses
demand end-to-end experiences rather than just products, the service function is
becoming an integral part of the overall offering and value proposition, as well as a
profit driver. Furthermore, in today’s competitive environment, businesses cannot
rely solely on reactive break-fix services, which are always more expensive and less
profitable than a well-managed and effective service business. Service contracts that
consider not only reactive but also predictive scenarios, combined with service
offerings that are designed, planned, and managed as a profitable part of the
company portfolio, are what companies require to maximize their service business
and secure their customer base. Companies are changing the way the service
department is integrated into their organizations to drive these changes. Service is

Request to Service
Customer Service and Support
Enable Manage customer Manage Process Manage
omnichannel service problems customer customer warranty
customer service and requests complaints returns claims

Customer Service and Support

Request to
Manage customer
Manage recalls Resolution
recovery claims

Fig. 11.6 Request to service

Business Process 167

transitioning from a local cost center to a central business offering and must be
planned, managed, and controlled as such. The transition from a purely cost-driven
to a business-driven approach to service is currently underway, in tandem with a
growing shift toward solution selling, with service being one component of this type
of deal, which drives profitability through products, subscriptions, contracts,
services, and even projects.
All support activities that are required after tangible or intangible products are
provided to customers, are in focus of Request to Service. Such customer services
can be offered via several channels like Internet or telephone hotline. Customer
service issues and inquiries are managed in this process as well as customer
complaints. Such complaints can result in returns which is also managed by Request
to Service. Another far-reaching and important point is the management of warranty
claims. In addition, recalls and customer recovery claims must be handled during the
service process. Most businesses require not only a proper sales process, but also a
dependable after-sales process that includes complaint processing, repairs, and
returns processing. The returns process is expected to be of high quality, with
transparent handling, efficient management, and an immediate refund process. The
sale of returned, refurbished, or recycled products is gaining prominence and paving
the way for a circular economy. Return and refund clerks face daily challenges in
managing these complex processes. Accelerated returns management in sales is used
to manage buyer and supplier returns and it offers a number of advanced functions
for returns management. One of the most important aspects of gaining customer
loyalty is customer satisfaction. As a result, in today’s world, returns have become
increasingly important because they are critical to success in satisfying the customer.
Returns must be completed in a highly efficient manner because they can be costly
and time-consuming.

Invoice to Cash (Fig. 11.7)

The process of Customer Invoice Management follows after a completed customer

delivery, a successfully provided service or, in general, the fulfillment of a customer
contract. This is succeeded by billing. The preparation of the prebilling of the invoice

Invoice to Cash
Customer Invoice Management Receivables Management
Perform pre- Manage Manage Manage
3rd party Invoice
invoicing of financial customer
invoice customer
billing content settlement credit risk

Receivables Management Treasury

Management
Process Manage Manage and Manage payments
accounts Process receivables process and bank
receivable (AR) disputes financing collections communications

Fig. 11.7 Invoice to cash

168 11 Process of Lead to Cash

content is covered by this step. The administration of third parties is included if

subcontractors are involved. Ultimately, the invoice to customer follows. Receiv-
ables Management handles financial settlement, controls the customer’s credit risk,
and processes accounts receivables. In addition, disputes are also resolved. Further-
more, the receivables financing is managed, and collections are processed. Treasury
Management covers payments and communication to the bank. This includes for
example bank transfers. Billing documents are legal invoices created for the pur-
chase of goods or services and can be emailed, printed, and mailed to customers.
These documents also act as interfaces to financial accounting and serve as the
foundation for financial postings. Billing clerks play an important role because they
are in charge of the entire billing process. These persons collaborate closely with
internal sales representatives, shipping specialists, and accounts receivable
accountants to ensure that billing documents are created on time and that customers
pay them without complaint.

Manage Customers and Channels (Fig. 11.8)

Customer Data Management handles all information regarding customers and

accounts. Also, the onboarding of customers is considered. When multiple channels
are offered, the product content must be provided multiple time which is supported
by Product Information Management. Handling of sales partners and alliances is the
main objective of Sales Partner Management. In the subprocess of Omnichannel
Management the cross-channel customer experience is orchestrated. Additionally, it
supports operating omnichannel customer platforms. Furthermore, a physical store is
planned and operated.

Manage Customers and Channels

Customer Data Management Product Information Management

Manage Manage omnichannel

Onboard
customers and product content
customer
accounts

Sales Partner Omnichannel Management

Management
Orchestrate Operate Plan and
Manage
cross-channel omnichannel operate physical
sales partners
customer experience customer platforms store
and alliances

Fig. 11.8 Manage customers and channels

Solution Capability: Sales 169

Solution Capability: Sales

The end-to-end process Lead to Cash is mainly implemented by SAP S/4HANA

Sales and SAP S/4HANA Service. In this section capabilities of SAP S/4HANA
Sales are explained as depicted in Fig. 11.9. While this covers the core functionality,
there are various extension modules like SAP Marketing Cloud, SAP Sales Cloud,
SAP Commerce Cloud, and SAP Customer Data Cloud.
Sales Force Support manages customer engagement cycles with embedded
presales capabilities for lead, opportunities, and relevant tasks. Order and Contract
Management ensures consistent master data, including pricing across the organiza-
tion. It processes sales documents accurately and improves customer satisfaction.
The solution provides access to real-time sales performance KPIs for supporting
decision-making. Sales Performance Management (ICM) realizes strategic enter-
prise goals with effective monetary and nonmonetary incentives management. SAP
S/4HANA Sales includes an extensive variety of sales processes, providing flexible
business configuration for the integration with procurement, logistics, and finance. A
product which is sold, can be either in stock, or can be produced/procured. Usually
the sales process starts with a sales inquiry, succeeded by a quotation that is used as a
reference to create a sales order. Alternatively, sales order can be created based on
long-term agreements like sales contracts or scheduling agreements. Sales contracts
basically specify which products are delivered in certain quantities or for a certain
value within a certain time. Scheduling agreements define delivering products in a

SAP S/4HANA Sales

Commerce Cloud, SAP Customer Data Cloud, ...
SAP Marketing Cloud, SAP Sales Cloud, SAP

Sales Performance Management

Sales Force Support

Account &
Sales Lead Opportunity Activity
Contract
Management Management Management
Management

Order and Contract Management

Sales Master Sales Contract Sales Order
Price
Data & Quotation Management &
Management
Management Management Processing

Sales Rebates, Claims, Returns Sales

Sales &
Incentive & & Refund Monitoring &
Solution Billing
Commissions Management Analytics

Fig. 11.9 SAP S/4HANA Sales—functional architecture

170 11 Process of Lead to Cash

certain quantity on regular basis. The final step within the sales process is billing
which is about sending invoices to customers for payment. Billing documents are
posted to financial accounting and consequently universal journal entries are created.

Order and Contract Management

Sales Master Data Management facilitates to leverage simplified data models and the
central business partner. Sales master data is created, modified, or displayed in a
harmonized user experience. Customer materials definition is used when customer
products have identifications that differ from the number that the company uses. By
maintaining material determination records the automated replacement of a product
number entered in sales documents with a target product number is enabled. Material
listing records and exclusion records can be maintained specifying which products
customers can or can’t buy. The Price Management controls the price master data
definition and perform price calculation. This feature is used to set up the pricing
process in business documents. This covers how price master data is determined and
how net values are calculated. The solution allows to calculate and adapt accurate
prices based on the price master data and the configuration of pricing.
Sales Contract and Quotation Management supports contract types, such as sales
contracts, condition contracts for settlement management, scheduling agreement, or
trading contracts. It is also possible to use real-time and predictive analytics to
effectively manage sales contracts and sales quotations. This application enables to
create, change, or display a quotation for customers. The process is triggered when a
request for quotation (RFQ) is received from customers. In response to the
customer’s RFQ, a quotation is provided which is then either accepted or rejected
by customers. This step assures the business partners that the product quantity at a
specified time and price is delivered. In case of acceptance, the quotation is trans-
ferred into a sales order. Additionally, all quotations, expiring quotations, expired
quotations, completed quotations, and incomplete quotations can be listed. Sales
Order Management and Processing provides a 360-degree view of sales order
execution. It maximizes low-touch order rate and leverages exception-based order
management. It allows also to prevent overall delivery delay with embedded predic-
tive analysis. The solution streamlines sales processes with workflows. This solution
allows to execute business transactions based on sales documents, such as inquiry,
quotation, and sales order, defined in the system. Within sales order management
and processing, a sales document is entered based on customer requirements. When
creating or changing sales documents, the system confirms dates and quantities. The
sales documents to respond to customer questions can be displayed and changed.
When a sales document is processed, the SAP S/4HANA Sales automatically carry
out basic functions like pricing, availability check, transferring requirements to
materials planning (MRP), delivery scheduling, shipping point and rout determina-
tion, and credit limit check. Sales and Solution Billing covers manual and automated
billing and invoicing scenarios. External billing data can be combined with sales
documents into one single invoice. Billing documents can be created, posted to
Solution Capability: Sales 171

financial accounting, and output to a variety of channels. But also billing-related

documents such as invoice lists, preliminary billing documents, and billing docu-
ment requests can be created and managed. Key features are debit and credit memo
processing, billing document and invoice list processing, approval for preliminary
billing documents, and invoice correction processing. The solution billing is used to
combine billing data from sold products, services, and projects into a single,
combined customer invoice.
Sales Rebates, Incentive and Commissions Management allows to handle busi-
ness volume-based sales rebates with condition contract settlement. With the help of
the Claims, Returns and Refund Management the customer service and support cost
can be reduced by streamlining return processes and customer return analysis. The
solution facilitates improved tracking, helps service organizations process requests
faster, and reduces operational costs. The capture and handling of all complaints and
returns are improved. Those trigger logistical follow-up actions such as inspection of
returned products, resolution of issues, and claims and refunds management.
Warranties are created and assigned with technical objects which enable
manufacturers, importers, or vendors of complex products and their suppliers to
better deal with many warranty claims. Claims with negative results of the automatic
checks are included in manual processing.
The Sales Monitoring and Analytics enables to monitor and analyze core sales
business processes, from quotations and contracts, to sales orders, including their
fulfillment up to invoices. Sales planers set sales targets on various dimensions and
can be created, changed, released, and displayed. It can be analyzed to what extent
sales targets are being achieved and thus gain insights into current sales perfor-
mance. Sales quotations can be analyzed according to flexible combinations of
dimensions. The solution enables to focus on quotations with the highest net values
and quotations with the lowest conversion rates. Drill down to quotation conversion
rates by selected criteria are supported. Modeling-based predictions can be
performed on quotation conversion according to selected criteria. It is possible to
forecast the extent to which quotations will be converted into sales orders by
comparing the actual and predicted results (Fig. 11.10).

Sales Force Support

This solution supports the entire presales lifecycle, from an appointment, through
the creation of leads and then opportunities. The objective of Sales Lead Manage-
ment is to collect any potential sales information at the beginning phase of the sales
pipeline. The application ensures the company’s chance to do business by
automating the initial presales process and creating a link between first interest and
sales. Whereas the Opportunity Management records the recognized sales
possibilities and tracks the progress across the sales cycle. The solution allows to
control the sales opportunity which describes the sales prospect, the requested
products or services, budget, potential sales volume, and the estimated sales proba-
bility. Activity Management helps to plan, track, and organize sales activities
172 11 Process of Lead to Cash

Fig. 11.10 SAP S/4HANA Sales—customer overview and sales order fulfillment issues

throughout the entire customer relationship lifecycle. It records all activities of the
employees of the company. This includes making appointments and creating tasks.
Account and Contact Management delivers sales force a holistic view of each
customer with identified key contact and account data. It manages and provides
easy access to accounts and contacts (Fig. 11.11).

Sales Performance Management

With the help of the Sales Performance Management sales forces can be motivated to
increase revenue by provided incentive and compensation policies. The sales perfor-
mance of the company can be improved with SAP software for incentive and
commission management by implementing compelling variable compensation
programs. Organizations can enable to handle programs for employees and partners,
Solution Capability: Sales 173

Fig. 11.11 SAP S/4HANA Sales—sales order transaction history and preliminary billing document

building and maintaining an accurate, strategically aligned incentive and compensa-

tion plan, so that the company can retain and motivate top performers and achieve
corporate goals. Furthermore, industry best practices can be leveraged for the
company’s requirement.
174 11 Process of Lead to Cash

Solution Capability: Service

In this section capabilities of SAP S/4HANA Service are explained as depicted in

Fig. 11.12. While this covers the core functionality, there are various extension
modules like SAP Field Service Management or SAP Asset Intelligence Network.
SAP S/4HANA Service is in charge of the entire lifecycle of service management.
Service Master Data and Agreement Management handles customer asset records,
service history, and commercial agreements. It plans preventive maintenance
services based on the relevant information readily available. The solution monitors
operations and business outcome of services by holistically looking at the entire
service processes. Service Operations and Processes engages with customers on
multiple platforms for handling their requests, complaints, and any other
interactions. It combines services and products as a packaged solution. The module
performs services efficiently and effectively, with all the required material and
human resources. In the scope is also billing customers in a timely manner in
accordance with contractual agreements. Service Parts Management improves effi-
ciency in parts fulfillment, planning, procurement, and warehousing with integration
of core materials management, and finance functions. Subscription Order Manage-
ment extends commercial service offerings with enhanced subscription manage-
ment. Financial Shared Service Management leverages intelligent shared service
capabilities with automation based on machine learning and artificial intelligence.
Service orders capture the customer’s request for the execution of a service. Service
confirmations document and log the execution of service orders. In case of in-house
repair, the service is provisioned in an internal service center. For regular execution
of services corresponding service contracts are agreed on. Solution orders facilitate
the bundling of one-time and periodic services including the sales of physical items. SAP Field Services Management, SAP Asset

SAP S/4HANA Service

Financial Shared Services Management Subscription Order Management

Intelligence Network, …

Service Master Data and Agreement Management

Service
Tech. Assets, Service Service Service Business
Parts
Structure & Maintenance Contract & Monitoring & Solution
History Plan Warranty Mgmt. Analytics Portfolio Mgmt.

Service Operations and Processes

Service In-House Service Billing Package
Service Order Customer
Request Repair & Service Service
Management Engagement
Management Management Fulfillment Offering

Fig. 11.12 SAP S/4HANA Service—functional architecture

Solution Capability: Service 175

Service Master Data and Agreement Management

With Technical Assets, Structure and History precise information on customer

location and installed equipment can be provided to call center, field service, depot
repair, and sales staff. It is also possible to plan and perform maintenance services
with complete records of a piece of equipment or a system via equipment master
data, maintenance plan, measuring point, task list, and bill of materials. Service
Maintenance Plan allows to schedule service commitments and major maintenance
events, like shutdowns and turnarounds, to enable preventive and predictive service
activities, based on time, counter, condition, or risk. Service Contract Management
and Warranty Management deals with service agreements, price arrangements, and
customer entitlements in a single repository. It allows triggering of automatic
periodic billing. Contracts are long-term service agreements between companies
and their customers. They define the content and scope of the services that are
guaranteed within specific tolerance limits for certain parameters, such as within a
predefined timeframe. Service contracts contain detailed information regarding
routing tasks for devices, prices for the routine tasks, objects for which services
can be claimed, and conditions under which the contract can be canceled. Periodic
billing plans can be used to schedule individual dates for the billing of service
contracts, independent of the provisioning of the service. Typically, periodic billing
plans have a start and end date. Fixed amounts are billed at regular intervals, for
example, a recurring yearly maintenance fee. Warranties specify the scope of the
services and parts usage which organizations perform in the event of damage or
problems. This process ensures processing service deliveries with automatic checks
for warranty agreements. With the help of Service Monitoring and Analytics and
Business Solution Portfolio operations and business outcome of service businesses
can be monitored by holistically capturing and measuring service performance and
profitability using operational reporting and dashboards. Business solution portfolios
pack service contract items, service order items, sales order items, and subscription
contract items which are belonging to a solution and its corresponding customer.
Thus, an overview of these items in the customer’s business solution is retained. In
case an external reference is added to a solution quotation, the system creates the
business solution portfolio using APIs and automatically assigns the relevant service
contract items, service order items, sales order items, and subscription order items.
Overview information related to important key performance indicators of service
transactions can be depicted. This comprises, for example, KPIs referring to service
contract management and service execution process (Fig. 11.13).

Service Operations and Processes

Service Request Management lets the user create, track, and manage service requests
with full visibility of current and historical service agreements and activities. It
improves customer satisfaction by providing the frontline service agent with full
view of customers, installed equipment, and service history is also part of that. Using
176 11 Process of Lead to Cash

Service Management Overview

Maintenance Plan

Fig. 11.13 SAP S/4HANA Service—service management overview and maintenance plan

solution quotations enables to create quotations for combinations of different types

of products, for example tangible products, services, and service contract items.
These combinations of products are modeled as product bundles. For providing
frontline field service teams with access to up-to-date information on service history
and equipment configuration to expertly perform maintenance service work Service
Order Management is responsible. The solution facilitates the entire lifecyle, from
creating of service order quotations through to processing service orders and service
confirmations. For example, customer service orders including technical details,
Solution Capability: Service 177

prices, and ad-hoc service requests can be created. Furthermore, the execution of
services can be planned, including required service parts and perform follow-on
processes such as monitoring and confirming of services. Service order templates
can be used for defining reusable sets of service-related data that minimize the
amount of time required to create a service transaction. Service confirmations help
to report working time, service parts, and expenses used while performing a service.
Incidents can be used to report events to the service desk when something in the
infrastructure is not working as expected. In-House Repair Management supports
companies that offer an in-house repair and maintenance service for products.
Planning and performing in-house repairs are more effective by integrating the
repair process across various lines of business for greater transparency. The service
is performed in-house at repair centers. The in-house repair process includes core
repair and maintenance activities such as prechecking, quotation processing,
planning, repairing, and billing for repair objects. The solution facilitates to create
in-house repairs and then add repair objects, edit, and send out repair quotations, and
to record whether the customer has accepted or rejected the repair quotation.
Furthermore, it enables to schedule a repair and add the service employee who is
to perform the repair. Also, triggering the billing process for the repair is supported.
Service Billing and Service Fulfillment allows delivery services in the most efficient
manner from simple to most complex services, through planning, scheduling, parts
provisioning, service work, and billing. Thus, costs can get reduced with a complete
logistical and financial insight. Customer Engagement supports efficient issue reso-
lution through multichannel customer engagement and smart interactions. Packaged
Service Offerings bundles items automatically and leads to corresponding follow-on
processes all the way to the billing process (Fig. 11.14).

Service Parts Management

The use of Service Parts Management allows to facilitate the optimization of spare
part stock processing according to usage and availability. In addition, improving
efficiency in parts fulfillment, planning, procurement, and warehousing with inte-
gration with core materials management and finance functions as well as support for
language and localization requirements is ensured. The solution covers all aspects of
service parts management, including planning, execution, fulfillment, collaboration,
and analytics. It comprises the service parts planning and service parts execution
scenarios.

Subscription Order Management and Financial Shared Services

Management

This component allows customers to offer their business solutions as a combination

of products and subscriptions to services. Those can be recurring fees, usage-based
charges, and one-off charges, based on consumption pricing model. The solution
178 11 Process of Lead to Cash

Manage In-House Repair

Product bundles used in a

solution quotation

Fig. 11.14 SAP S/4HANA Service—manage in-house repair and solution quotation

manages all parties involved in the business transactions and all data regarding
subscription products. It handles products and product bundles consisting of various
combinations of products and subscriptions. Business processes are supported which
are required for the complete execution of customer orders using order management.
The component supports change processes for existing contracts and a wide range of
customer care functions using contract management are enabled. These include for
example change and update of subscription contracts. The conditions that have been
Conclusion 179

negotiated are implemented as partner agreements. The solution defines a contractual

agreement with constituent parts for future single contracts. These include defining
which legal unit can order which type of product for which price, the address to
which the invoice is sent, and the conditions that must be met in order to be eligible
for a special type of discount. Mass run functionality can be used to plan the creation
or the processing of a preselected number of subscription orders and contracts and
ensure high-performance execution, track the progress, and support monitoring of
the results and further processing on the new or changed entities.
Financial Shared Services Management encompasses using service management
capabilities natively integrated into end-to-end processes for generating synergies
and improve efficiencies with a single working environment. The solution supports
efficient, scalable operations by simplifying and automating execution of key finan-
cial processes across departments. It boosts quality and compliance by delivering
standard, consistent, and repeatable services across diverse business systems. Fur-
thermore, it reduces operational costs by replacing manual processes with automated
processing of finance transactions.

Conclusion

The Lead to Cash is a core business process in companies for transferring

opportunities to quote customer orders to contracts and invoices to cash. The process
starts with developing a strategy for marketing and sales which includes planning
budgets. Market segments are identified, prices are defined, and sales execution
performed which at the end turn opportunities into quotes. Customer order contracts
are orchestrated and fulfilled accordingly. Complaints, returns, and warranty claims
are processed. For the delivered products or provided services invoices are created
and sent to customers for payment. In SAP S/4HANA this end-to-end process is
mainly covered by SAP S/4HANA Sales and Services component. The focus of SAP
S/4HANA Sales is on managing orders and contracts, supporting the sales force, and
realizing sales performance management. SAP S/4HANA Service handles service
operations, service parts management, and the underlying master data and
agreements. The solution is rounded up with capabilities for financial shared services
and subscription order management. The SAP S/4HANA modules are deeply
integrated and frequently interacting so that also additional components contribute
to handle this end-to-end process.
Process of Recruit to Retire
12

This chapter describes the business process recruit to retire consisting of the
subprocesses plan to optimize workforce, recruit to onboard, develop to grow,
reward to retain, manage workforce, and retirement. Additionally, the application
capabilities of SAP S/4HANA to resolve those business processes are explained.

Business Process

The general process of Recruit to Retire is depicted in Fig. 12.1 and explained in
detail in the next sections.
The process supports the employee from recruiting and onboarding until the
retirement. The process Recruit to Retire is divided into five subprocesses. The
first one is Plan to Optimize Workforce which includes financial, strategic, and
organizational management of all employees. The sum of the employees is called the
workforce. The subprocess Recruit Onboard is responsible for recruiting new talents
from advertising the brand over the interviews to the onboarding of new employees.
Develop to Grow is the part where the employees set goals and learn or improve
skills. Those skills help the employees’ personal and the company growth. Reward
to Retain focuses simply on the gratification of employees like financial compensa-
tion. Manage Workforce and Retirement provides supportive processes during
employment phase. This includes the Human Resources (HR) administration
keeping information about all employees, their contracts, and the time management
of the employees including the absences, as well as the traveling expenses and the
process of the payroll.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 181
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_12
182 12 Process of Recruit to Retire

Recruit to Retire
Plan to Optimize Workforce
Financial Planning HR Strategy and Planning
and Analysis
Manage workforce Forecast plan and Establish
Perform planning / strategy and approve resourcing workforce
budgeting / forecasting policies needs budget

Organizational Management
Define Plan employee
organizational resourcing
structure demand

Recruit to Onboard
Talent Acquisition
Develop
corporate Manage job Source & recruit Screen & select
Request position
branding requisition candidates candidate

Talent Acquisition

Manage Manage Offer job & hire Onboard

purchasing purchase order candidate new hires
requisitions

Develop to Grow
Talent Management

Set employee Develop skills and Plan career

goals & review competencies development
performance

Learning Management
Align learning Establish
Identify and Develop and
programs with employee
develop training manage training
competencies and learning needs
methods programs
skills

Fig. 12.1 Process recruit to retire

Plan to Optimize Workforce (Fig. 12.2)

The subprocess Plan to Optimize Workforce starts with planning and analyzing the
requirements regarding financial and human resources. For this, goals are defined,
and the necessary resources forecasted. Strategy and Planning of Human Resources
covers the definition of the HR strategy which sets the direction for the workforce to
achieve the specified goals. Furthermore, policies for the entire workforce are
described and finalized. Before the workforce budget can be established, the fore-
casted human and financial resources must be approved by management. Organiza-
tional Management develops the organizational structure and the employee
resourcing demands. This includes how many resources with which skills are needed
to achieve the defined goals.
Business Process 183

Recruit to Retire
Reward to Retain
Rewarding

Develop and Manage and

manage administer
compensation plan benefits

Manage Workforce and Retirement

HR Administration

Manage life events Manage and Manage employee Manage HR Relocate

and maintain maintain promotion/ reports employees
employee data employment data demotion

HR Administration Workforce Experience Management

Manage employee Manage employee

Manage employee Offboard Enrich employee
requests and assistance and
separation employee experience
enquires retention

Time Management

Manage work Manage

Record activities Record Record
pattern and workforce
absences attendances
availability rostering

Procurement Planning and Analytics Travel & Expense

Travel and Expense Request
Analytics
Management
Manage travel
Manage cash
Analyze and expense
Plan spend Analyze travel advance
organization’s request
and expenses
spend profile

Travel Management Expense Management

Manage travel Manage travel Manage expense

Book travel
risk and security experience report

Payroll and Reimbursements

Process Manage payroll
expense Process payroll taxes and legal
reimbursements deductions

Invoice to Pay
Supplier Invoice Management Payables Management Treasury Management
Process Manage payments
Process supplier Process
accounts and bank
invoice payments
payable (AP) communications

Fig. 12.1 (continued)

Recruit to Onboard (Fig. 12.3)

The objective of Recruit to Onboard is the acquisition of new talents based on the
previous planning and optimization process. It starts with developing a corporate
branding strategy for the company. Once the requested positions are approved,
corresponding job requisitions are created which are the basis for the potential
candidates to apply for vacancies. The received applications are matched to the
open positions and the best fitting candidates are recruited. Purchasing requisitions
and orders utilizes for example the necessary equipment for the new employees as
184 12 Process of Recruit to Retire

Plan to Optimize Workforce

Financial Planning HR Strategy and Planning
and Analysis
Manage workforce Forecast plan and Establish
Perform planning / strategy and approve resourcing workforce
budgeting / forecasting policies needs budget

Organizational Management
Define Plan employee
organizational resourcing
structure demand

Fig. 12.2 Plan to optimize workforce

Recruit to Onboard
Talent Acquisition
Develop
corporate Manage job Source & recruit Screen & select
Request position
branding requisition candidates candidate

Talent Acquisition

Manage Manage Offer job & hire Onboard

purchasing purchase order candidate new hires
requisitions

Fig. 12.3 Recruit to onboard

Develop to Grow
Talent Management

Set employee Develop skills and Plan career

goals & review competencies development
performance

Learning Management
Align learning Establish
Identify and Develop and
programs with employee
develop training manage training
competencies and learning needs
methods programs
skills

Fig. 12.4 Develop to grow

hardware or software. As soon as the candidates are hired, they are onboarded. In
onboarding the tasks, the policies, the strategy, and everything the new employees
need are explained so that they can become productive.

Develop to Grow (Fig. 12.4)

This process is around growth aspirations and development needs serving to plan the
employee’s own development, and to achieve the best possible balance between
Business Process 185

individual development goals and company and departmental targets. There should
be a dialog between employee and manager to support each employee to develop in
the near, medium, and long term so that they can apply their strengths and abilities to
the best advantage of the company. The employee is in the driver’s seat of their own
development and the manager actively supports and provides the space for it. This is
an iterative process consisting of establishing new development goals or adjusting
the existing development plan, checking-in on the status of current development and
reflecting on challenges, reviewing and archiving achieved development goals. All
employees—regardless of their role—need to invest in their development for both
current and long-term growth and success. Development isn’t only about changing
roles; it can also be about consciously building skills in a way that fits with
competencies and intended direction for work life. There are different methods to
train employees’ skills, for example virtual classrooms or on the job training. Thus,
the appropriated methods must be identified for the employee and aligned with
learning programs and competencies of the employee. For this learning programs
must be developed and managed.

Reward to Retain (Fig. 12.5)

Often the total target cash consists of the base salary which employees receive every
month and variable pay respectively bonus. In some roles, the bonus is paid annually
and in others, bonuses may be paid more often, such as quarterly. Bonuses are paid
for outstanding achievements of a department or single employee. It is used to
reward high performance employees. An example is to reward the employee with
best achieved sales revenue. The goal of this subprocess is to focus on the employees
and to retain them as workforce by rewarding them. In addition to direct financial
compensation, companies may also offer a well-defined benefits package to inspire
employees to perform at optimum and maintain a healthy work-life integration.
Benefits offerings aim to improve health and productivity and protect employees
against risks to future income. Benefits offerings can differ by country and include
local statutory benefits and requirements, for example, sports facilities or health
checks. Those benefits must be managed and administrated continually.

Reward to Retain
Rewarding

Develop and Manage and

manage administer
compensation plan benefits

Fig. 12.5 Reward to retain

186 12 Process of Recruit to Retire

Manage Workforce and Retirement

HR Administration

Manage life events Manage and Manage employee Manage HR Relocate

and maintain maintain promotion/ reports employees
employee data employment data demotion

HR Administration Workforce Experience Management

Manage employee Manage employee

Manage employee Offboard Enrich employee
requests and assistance and
separation employee experience
enquires retention

Fig. 12.6 HR administration

HR Administration (Fig. 12.6)

In the context of this process, employment and employee data are maintained. This
not only includes administrative information like name, address, or age of the
employee but also contractual data as full-time job, salary, or fixed-term contract.
In accordance with the defined career development and achieved goals, employees
can be promoted to the next career level or in worse case also demoted. The guiding
principles for promotions must be transparently communicated to the employees and
managers. To improve processes and serve better employee’s need reporting and
analytics are performed by HR departments on a regular basis. In a globalized world
often, teams are relocated and reorganized. This might also result in physical
relocation of employees to other regions. The process of relocation covers aspects
like adjusting employment contracts, paying moving expenses, or changing pension
contributions. In everyday work employees have numerous enquiries as questions to
payroll, to contracts, or overtime hours. Such enquiries must be systematically
handled by the HR administration. For example, ticketing solution could be used
so that requests can be processed efficiently and effectively. Another important facet
is the offboarding of employees. There are various reasons triggering the termination
of the employment relationship, for example change of employer, retirement or
fixed-term contracts. Finally, handling employee assistance and retention, including
enriching employee experience is covered by this subprocess.

Time Management (Fig. 12.7)

This subprocess facilitates that employees record their working and absence times.
This information is important not only for the financial and workforce planning but
also for the payroll and labor laws. Different working patterns and availability must
be supported, for example, part-time jobs. This is also valid for variability for
workforce rostering, for example, night or weekend shifts. To enable accurate
analysis and planning usually working hours are recorded on activity level. For
instance, a software developer may record working hours along the activities design,
Business Process 187

Manage Workforce and Retirement

Time Management

Manage work Manage

Record activities Record Record
pattern and workforce
absences attendances
availability rostering

Fig. 12.7 Time management

Manage Workforce and Retirement

Travel & Expense Travel and Expense Request
Procurement Planning and Analytics
Analytics Management
Analyze Manage travel
Analyze travel Manage cash
organization’s Plan spend and expense
and expenses advance
spend profile request

Travel Management Expense Management

Manage travel Manage travel Manage expense

Book travel
risk and security experience report

Fig. 12.8 Travel and expense

implementation, and testing. Absence time due to vacations or illness must also be
recorded.

Travel and Expense (Fig. 12.8)

Accurate analysis of the organization’s spend profile and planning is the prerequisite
for the travel management process. Employees must travel in order to visit customers
and suppliers, attend conferences and trainings, collaborate with remote teams.
Therefore, a corresponding travel and expense process must be established. This
starts with analyzing the travel needs as hotel and flight bookings and concludes with
managing the expenses. Thus, travel booking solution is required which must reflect
the company’s travel policies, for example, train trips to be preferred compared to
flights due to carbon footprint and environment protection. There are expenses that
are paid by the company in advance to the travel like hotel accommodation.
However, there are also unforeseeable costs like taxi charges. Usually those are
paid by the employee and must be requested back later based on the reimbursements
process.

Payroll and Invoice Pay (Fig. 12.9)

As explained in travel expense management, unforeseeable and ad-hoc expenses are

typically paid by the employee and requested back. For this the invoices must be
188 12 Process of Recruit to Retire

Manage Workforce and Retirement

Payroll and Reimbursements
Process Manage payroll
expense Process payroll taxes and legal
reimbursements deductions

Invoice to Pay
Supplier Invoice Management Payables Management Treasury Management
Process Manage payments
Process supplier Process
accounts and bank
invoice payments
payable (AP) communications

Fig. 12.9 Payroll and invoice pay

submitted and refunded based on the reimbursements process. The submission and
processing of expense invoices are usually automated as the corresponding solutions
are able to transfer the unstructured documents into relational system records.
Besides the expenses the monthly salary must be paid to the employee which is
enclosed by payroll process. During the payroll run taxes and legal deductions must
be considered. For example, church rates, payroll tax, health insurance, and pension
insurance must be held back and transferred directly to the corresponding parties.
The Invoice to Pay process handles supplier invoices but also manages payables.
Treasure Management leverages the actual payments with the bank. Here the
communication with the bank is managed and salaries are wired to the employee’s
bank account.

Solution Capability

The end-to-end process Recruit to Retire is mainly implemented by SAP S/4HANA

Human Resources as depicted in Fig. 12.10. While SAP S/4HANA Human
Resources covers the core functionality, SAP Success Factors and SAP Concur
include extended features for example for performance management, travel and
expense management. The integration of SAP Success Factors is a recommended
solution and gives different benefits. First it allows to link HR strategies with
business strategies and analytics of the workforce. It reduces HR cost per FTE and
a perfect engagement of talents across the organization.
Human Resources is the strategic and coherent approach to the management of
people working for an organization. The goal of human capital management is to
help an organization to meet strategic goals by attracting and developing employees
and also managing them effectively. SAP S/4HANA Human Resources supports
business processes in key areas. Talent management supports people during every
phase of their employment—from recruitment through training, development, and
retention. It helps in finding the right people, put their talent to the best use, align
employee goals with corporate goals, maximize the impact of training, and retain top
performers. Workforce process management automates and integrates critical work-
force processes such as employee administration, organizational management, time
Solution Capability 189

SAP S/4HANA Human Resources

SAP SuccessFactors, SAP Concur

Human Resources Reporting

Personnel Talent & Training &

Shared
Time Payroll Performance Event
Services
Management Management Management

Personnel Management
Personnel
Recruitment Benefits Personnel Compensation Travel
Admin.& Org.
Management Administration Development Management Management
Management

Fig. 12.10 SAP S/4HANA HR—functional architecture

management, benefits administration, payroll, and legal reporting. SAP S/4HANA

Human Resources standardizes and consolidates all workforce-related processes and
data onto a single platform, while also ensuring compliance with country-specific
regulations and laws. Workforce deployment facilitates the right people with the
right skills to the right positions at the right time. It enables the formation of project
teams based on skills and availability, the tracking of project progress, the tracking
of time, and the analysis of results for strategic decision-making. SAP S/4HANA
Human Resources supports the assignment of workers to appropriate jobs, projects,
and teams and the optimal scheduling of call center staff and retail staff.

Personnel Management

Personnel Administration deals with the administrative activities related to employee

master data, such as employee personal data, address details, bank details, or work
agreement information. Employee master data has multiple country-specific
specificities and needs to be compliant to legal requirements. Examples are tax
details, social security rules, and pension administration. The applications Benefits
Administration and Compensation Management are based on Personnel Adminis-
tration. Infotypes are the units of information. One infotype defines the data structure
for semantically related data, which is stored together in the database and also
displayed together on the user interface. Each infotype has its own database table
structure in which all instances of the infotype are stored as records. In Personnel
Administration data is typically valid for only a certain period of time. For example,
the employee’s bank details are valid from March 1, 2021, to October 30, 2021.
Therefore, infotypes support the time-dependent storage of data. When data is
updated, then old data is internally kept as time-delimited using a date-dependent
validity of the record. Personnel actions facilitate basic personnel procedures within
190 12 Process of Recruit to Retire

master data administration, such as hiring employees or performing organizational

reassignments. Each personnel action specifies the data types that must be entered in
relation to the action. Personnel action fast entry can be used for specific personnel
actions, speeding up data entry. When you use the personnel action fast entry
function, a view is displayed that only shows the input fields where data for the
selected personnel action must be entered.
Organizational Management is used to create an organizational plan, which
describes the functional structure of an enterprise. It includes organizational unit,
position, task, job, and so on. Organizational Management is used, for example, to
evaluate headcount, identify reporting structures, and assign agents to workflow
tasks. So Organizational Management is integrated with Personnel Management
bidirectionally in a way that the changes made in personnel data (e.g., change of
position) is correctly reflected in the organizational plan and vice versa. The autho-
rization concept uses Organizational Management too. The access rights of many
objects within SAP S/4HANA Human Resources depend on the organizational
structure of the enterprise. For example, a manager is only allowed to access data
of employees reporting to the manager. It is possible to define authorization profiles
based on the user’s position and generate the corresponding authorization role and
profile. There are infotypes available for defining the position-based authorization
profiles. Organizational Management gives managers and HR professionals an
overview about the budget and the organizational structure. Based on this data the
cost planning can be done as well as creating job positions. The Organizational
Management component covers various user group-specific modes and views to edit
organizational plans. The organization and staffing view supports a simplified user
interface for creating and editing organizational plans. The general structure view
facilitates to edit organizational plans with any structure including self-defined
object types. The matrix view enables creation and editing matrix structures.
With Recruitment Management, job applicants and candidates can search for job
offers, register themselves in a talent pool, and provide their job applications online.
Thus, the component supports the entire recruitment procedure, from creating
applicant data to filling vacant positions. Recruiters can post job requisitions and
also on external job boards via HR-XML interfaces. Applicant tracking and
reporting functions help recruiters to process job applications in an organized way
and to monitor the effectiveness of the recruitment department and process.
Applicants not deemed suitable for a particular vacancy can be stored in the
applicant pool, where they can be considered for future vacancies. This component
facilitates to define a recruitment procedure that fulfills the needs of the company.
Tasks can be distributed, and responsibilities assigned to different people involved in
the recruitment process. Recruitment Management helps in dividing and assigning
administrative and decision-making task areas. Tasks can be performed via mass
processing parallelly. The component supports dynamic actions to enable
automating many processes. When applicant data is entered, for example, the system
generates a receipt confirmation in the form of an applicant activity and a letter
confirming receipt of the application. Thus, the administrative tasks required of the
HR department for applicant correspondence are reduced.
Solution Capability 191

Benefits Administration provides services for queries related to the various

benefits plans, like health plans, insurance plans, savings plans, credit plans, miscel-
laneous plans, stock purchase plans, flexible spending accounts, and flexible spend-
ing account claims. The business object modeled here is employee benefits
administration. Benefits are vital in the total compensation that employers offer to
attract and retain the best talents. This component provides employers a flexible
framework for creating and managing tailor-made benefits packages for their
employees. It supports configuration capabilities to offer a diverse range of benefits
and to accommodate even complex plan definitions. By streamlining the administra-
tive activities, for example, benefits inquiries are handled by employee self-services
to minimize the volume of paperwork, it helps cut costs. Reporting capabilities
support benefits staff and executives having direct access to structured benefits data
to assist them in their analytical tasks. Numerous activities can be performed
digitalized with component, for example enrolling employees in benefits plans and
terminate enrollments, monitoring continuing eligibility for plans, displaying provi-
sion of evidence of insurability, viewing information about current benefit
enrollments, printing enrollment and confirmation forms, transferring data electron-
ically to plan providers and administering retirement plans.
Personnel Development deals with the activities related to employee development
for example, capture employee potential and qualifications, career and succession
planning, and creation of development plans. Personnel Development as well is
based on infotypes. The component enables to plan and implement specific person-
nel and training measures to promote the professional development of employees. It
also ensures that staff qualification requirements are met and planned. By developing
qualification potentials, it is ensured that employees in functional areas are qualified
to the standards required now and in the future. Career and succession planning
scenarios are also a capability of Personnel Development. These can include
measures to impart qualifications in order for employees to retain and keep up
with technological advancements. With the solution qualification catalogs are
structured and managed. Thus, profiles can be created based on the qualifications
catalog and the organizational structure which can be used to manage, evaluate, and
compare object characteristics. The component helps to plan, perform, and evaluate
appraisals. Appraisals aid in the planning and monitoring of individual personnel
development initiatives. In career planning, possible career goals can be identified,
and career plans can be drawn up for employees. Such development plans are also
used to manage short-term and long-term personnel development measures.
Compensation Management facilitates an enterprise for the implementation of novel
reward strategies such as performance- and competency-based pay, variable pay plans,
and long-term incentive reward programs. It also allows for the analysis and compari-
son of compensation packages using internal and external salary data to ensure market
competitiveness. Compensation administration handles processes concerning compen-
sation guidelines, planning, eligibility, reviews, granting salary increases, and bonuses.
Long-term incentives cover functionality related to incentives like equity and stock
purchase. Budgeting manages features regarding creating and monitoring budgets on
the basis of organizational structures. The solution allows for differentiation between
192 12 Process of Recruit to Retire

compensation strategies and those of competitors while maintaining flexibility, control,

and cost-effectiveness. It provides a set of tools for strategic remuneration planning that
reflects organizational culture and pay strategies, and it allows line managers to work
within a flexible budget control framework. The component facilitates to control
bottom-line expenditures and offer competitive and motivating remuneration, be it
fixed pay, variable pay, stock options, merit increases, or promotion. The core func-
tionality includes the ability to create centralized and decentralized budgets, plan and
administer compensation adjustments at the manager level, plan and administer com-
pensation adjustments within budget, perform job pricing, define pay grades and salary
structures, and identify the internal value of jobs and positions within the organization.
Travel Management covers all processes involved in handling business trips. The
functionality is integrated with settlement, taxation, and payment processes. It includes
the entire procedure to request, plan, and book trips, create expense reports, and transfer
expense results to other business function areas. Travel request includes the general trip
data, required travel services, cost estimates, and the manager’s approval. Travel
planning provides access to booking services (e.g., flight, hotel, rental cars, rail),
applies travel policies for queries and bookings, sets up custom hotel catalogs,
considers agreements with travel service providers, and stores travelers’ personal
preferences. Travel expense report supports creating general data for the travel expense
report, settlement of travel expenses, payment of expenses via financial accounting and
payroll.

Personnel Time Management

This component supports all processes related to planning, recording, and valuation
of internal and external work as well as absence data. Time and labor data can be
recorded centrally by a time clerk or by each employee himself or herself. Master
data required for time management is stored in infotypes. Examples are absences
(infotype 2001) and quotas (infotype 2006). For decoupled access to time infotypes,
an additional business logic layer, the business logic processor layer, has been
introduced. Time sheet enables an efficient way to record time and manage
it. Employees can create and update time entries where they can fill in their working
time and the absences. This can be a task, project, or nonproject time log, too.
Managers have the ability to approve, review, and reject time entries of the
employees. Time capture is for recoding of working time. Different formats for
time recording are provided, for example, hours. Those can be displayed in weekly,
monthly, and annual calendars. Time calculation allows to define and manage time
elements for payroll schedules, and shifts. Work schedules can be created based on
this information. An integration to payroll is in place. Absence management defines
working calendars and vacation allowances for the employees. It allows integration
with employee and manager self-services. Employees can create attendances and
absences which are approved by the manager (Fig. 12.11).
Solution Capability 193

Time Recording

Approval Timesheet

Fig. 12.11 SAP S/4HANA HR—time recording and approval timesheet

Payroll

The component supports all processes related to the remuneration of employees.

Based on the employee’s time recordings and working contract, the payroll applica-
tion calculates the gross and net pay, which comprises the individual payments and
deductions that are calculated during a payroll period. The payroll result is generally
194 12 Process of Recruit to Retire

transferred to SAP S/4HANA Financials, which posts the cost and triggers payment
to the employee, for example, via check or bank transfer. Payroll administrators can
configure payroll runs using the HR process workbench. The HR process workbench
is a design time tool to design a process template for executing payroll runs and
initiate subsequent activities like posting the results to financial accounting and
providing pay slips for the employee. The administrator selects a process template,
which defines the sequence of activities (e.g., payroll posting and bank transfer
document preparation) to be performed before and after payroll runs. Payroll
administrators can start, and monitor payroll runs manually using the HR process
workbench. As payroll runs are executed regularly on a monthly basis, the adminis-
trator typically plans payroll runs as jobs starting at a defined point in time using the
job scheduler. The payroll driver is the main program used to run the payroll. For
each supported country version, there is a country-specific payroll driver. The
payroll driver is configured by a country-specific schema and by rules. A schema
is the central customizing object of the payroll application and defines the payroll
functions and personnel calculations rules for one payroll run. Typically, a country-
specific payroll driver uses only one main schema, but some companies use the
option of different schemas for different processing units based on geographic and
enterprise structures. Payroll functions provide logic for payroll calculations. Payroll
functions access personal administration to retrieve information about the employee,
the contract, and organizational information. In addition, the payroll driver calls
payroll functions to calculate benefits, taxes, and net and gross amount. For example,
there is one payroll function that considers employees’ time data, which results from
time evaluation driver. Payroll personnel calculation rules define which payroll
operations are executed by the payroll driver and under which conditions. The
rules contain the most basic logic used in payroll. Payroll operations are the basic
operations that provide smallest possible granularity of operations like mathematical
operands. Payroll operations are used to manipulate the wage types, which are
basically the placeholders for storage of rates, amounts, and numbers. The properties
of a wage type define how the processing happens on amounts and rates during a
payroll run. An example for a payroll operation is to multiply the number of working
hours by an hourly rate and store the result in the amount of a wage type. Payroll
results are communicated to the employee using pay slip forms. These forms are
defined as smart forms or Adobe forms using the HR forms tool. In addition, the HR
forms tool can be used to define forms for legal reporting.

Talent and Performance Management

This component allows to flexibly develop and foster talents in enterprises. It aids in
the hiring of personnel, further education and development of talents, the identifica-
tion and formation of future management personalities, and the alignment of
employees with enterprise goals and compensation.
Employee performance management helps enterprises define and monitor
objectives for the entire enterprise, individual departments, and employees
Solution Capability 195

themselves. Objectives can be monitored using key figures and appropriate

benchmarking. Performance Management helps in objective setting and designing
appraisals that enable formalized and standardized appraisals. All of the standard
phases for an appraisal process, such as the planning meeting, review, and appraisal,
can be mapped. For example, in Performance Management, it is possible to map
performance and potential appraisals, 360 appraisals, goal appraisals, references, or
checklists. Workflows can be used to support the flow of the appraisal process. The
appraisal catalog facilitates to create reusable appraisal templates. Appraisal
documents can be generated centrally or individually. Objective setting agreements
can be added to these appraisal documents either manually or automatically. Passing
of qualifications to Personnel Development or the passing of rating results to
Compensation Management can be automated.
Talent Management is used to perform the core processes such as succession
planning or talent development for the employees. HR professionals and business
leaders can give an objective assessment for the employee. The objective of skill
management is the maximization of employee’s utility and the company’s needs. It
helps in planning and measuring personal training. Qualified employees have an
increased job satisfaction. Succession management helps to create careers. Careers
are paths for the employee development. It makes sure that the company has a
collection of qualified persons. The process of employee assessment is supported.
Depending on the configuration, managers can evaluate the potential or competencies
of employees, or nominate the employee as a talent. Talent management specialists
can use the talent review meetings functionality to prepare, hold, and follow-up on
meetings for discussing talents.

Training and Event Management

This solution has a wide range of powerful functions to plan and manage all kinds of
business events from training events to conventions simply and efficiently. It
provides flexible analytics and appraisal capability. Training and Event Management
is the basis for extending and updating employees’ skills and knowledge. Integration
with Personnel Development allows to convert training proposals directly into
bookings for employees with qualification deficits or needs. Due to integration
into SAP Knowledge Warehouse direct access to a variety of training materials is
enabled, for example, online training for self-study. Training and Event Manage-
ment contains an extensive range of functions like business event preparation,
setting up hierarchical structured business event catalogs, calculating business
event costs and proposing prices, booking individual and group attendees,
performing billing, appraising attendees and events, reporting for all events-related
data. The component serves as the administration area for organizing, publishing,
and booking classroom training. Training Management comprises course offering,
which involves course planning and the creation of a course catalog, and training
administration, which involves booking activities. The instructor portal is the user
interface for instructors and tutors. Instructors can access their courses to manage the
course participants. They can perform appraisals to get feedback from the
196 12 Process of Recruit to Retire

participants. Achieved qualifications can be assigned to participants and are then

stored in the corresponding infotypes. All offered classroom and e-learning courses
are presented to the learners within the learning portal. The learning portal includes
functionality to search course content and to book training courses. It also includes a
content player for playing e-learning content. The content player loads the e-learning
content from the content management system whenever a learner starts it in his or her
Web browser. The separate offline player can be used to learn offline and synchro-
nize the learner’s progress with the central learning portal online.

Shared Services

The component standardizes and automates shared services processes and self-
services for employees and managers. Throughout the enterprise, uniform processes
and services can be implemented in order to reduce the lead times of operations and
ensure a continuous high level of service. Self-services play a significant role in the
interaction between a company’s employees. The self-services solution enables the
creation and operation of employee self-services (ESS) and manager self-services
(MSS). Examples of employee self-services are employee personal information,
leave and time management, benefits and compensation, and travel management.
Examples for manager self-services are employee administration, compensation and
budget planning, and project planning. To support managers in decision-making,
self-services are provided to access information about the team birthdays, holidays,
and deadlines. Managers also have graphical support and get information on the
recruiting, talent management, planning, projects, organization, and reports.
Employee self-service enables employees to control personal data. The employee
can create, display, and cancel own bookings. Additionally, qualification manage-
ment self-services can be consumed (Fig. 12.12).

Human Resources Reporting

For improving the processes and services complete and real-time analytics for
human resources is required which is the focus of this component. As SAP
S/4HANA Human Resources contains all relevant employee data, the necessary
analytical operations can be performed to support decision-making. Numerous
standard reports are provided that enable companies to report on data along hierar-
chical structures, and access standard analytics easily. Furthermore, cross-
application reports can be created, and formatted according to the needs. Standard
reports can be searched in individual applications, or across several applications.
Application-specific analytical reports are offered in the info systems of individual
human resources components. The reports are clustered together by content in the
info system. For example, recruitment reports are organized in groups according to
applicant, vacancy, or advertisement data. The standard reports are ready to use and
Conclusion 197

Benefits Enrolment

Changing Mail Address

Fig. 12.12 SAP S/4HANA HR—benefits enrollment and changing address

cover areas like personnel management, time management, payroll, training and
event management, and organizational management.

Conclusion

The Recruit to Retire is a core business process in enterprises and covers the entire
employee lifecycle. The process starts with recruiting and onboarding employees
and continues with developing and growing staffs. To keep the employees satisfied
198 12 Process of Recruit to Retire

and loyal to the company corresponding reward and retain processes are established.
Travel and time management and also payroll and offboarding employees are
included. In SAP S/4HANA this end-to-end process is mainly covered by SAP
S/4HANA Human Resources component. This solution provides capabilities not
only for personnel administration, organization management, recruitment and per-
sonnel development, benefits and compensation administration but also for time,
travel, talent, and performance management. The SAP S/4HANA modules are
deeply integrated and frequently interacting so that also additional components
contribute to handle this end-to-end process.
Process of Acquire to Decommission
13

This chapter describes the business process of acquire to decommission consisting of

the subprocesses plan to optimize assets, acquire to onboard, operate to maintain,
offboard to decommission, and manage assets. Additionally, the application
capabilities of SAP S/4HANA to resolve those business processes are explained.

Business Process

The general process of Acquire to Decommission is depicted in Fig. 13.1 and

explained in detail in the next sections.
The Acquire to Decommission Process is an essential process for businesses
which compromises the complete lifecycle of an asset, from acquisition to decom-
mission. For manufacturing business, an asset could be a machine which is used for
production, while an asset for a service-focused business might also be a company
car or even a coffee machine. The core of this process is the managing of this asset.
From its acquisition to managing its lifecycle by maintaining and finally
decommissioning the asset. All this can be supported by digital processes. The
Acquire to Decommission process consists of four subprocesses which are running
partially in parallel. Plan to Optimize Assets is about defining the asset strategy
including maintenance aspects. Acquire to Onboard refers to obtaining assets and
assembling them if necessary. Operations to Maintain deals with asset maintenance
planning and execution. Assets end of life is covered with Offboard to Decommis-
sion. In this context the asset is sold or disposed according to the exit strategy.
Manage Assets mitigates risks and ensures environment safety. Maintaining physical
assets allows to keep them as available as possible at the lowest possible cost, while
also ensuring safe operations. For this comprehensive processes and seamless
integration into other domains such as finance, sourcing and procurement, or work-
force management are required. The availability of resources, such as technicians,
spare parts, and tools, at the right time and place is critical, as is proper financial
planning and cost settlement. Companies that rely on physical assets for business

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 199
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_13
200 13 Process of Acquire to Decommission

Acquire to Decommission
Plan to Optimize Assets
Asset Strategy and Planning Asset Maintenance Strategy and Analysis

Define asset Define property Create asset Define asset Analyze assets and
strategy strategy investment plan maintenance maintenance
strategies performance

Acquire to Onboard
Asset Acquisition

Acquire asset Lease asset

Asset Construction and Build Asset Commissioning

Manage capital Design and plan Manage asset

Manufacture
project for asset asset construction On-board asset
asset
construction project

Operate to Maintain
Asset Maintenance Planning Asset Maintenance Execution
Define Plan asset
Monitor asset and maintenance tasks Perform asset
maintenance events Refurbish asset
and resources maintenance
plans and rules

Fig. 13.1 Process acquire to decommission

operations may seek to improve maintenance management practices in order to

increase profitability and productivity, as well as to achieve environmental and
social goals. Assets are becoming increasingly intelligent. They are connected and
can help answer questions such as When is maintenance required? and What is
required? to mitigate potential failures or even avoid break-downs. This enables a
broader range of maintenance strategies, from reactive to prescriptive, and
necessitates a comprehensive approach as well as well-defined maintenance
programs. Simultaneously, a shift has occurred in the roles of organizations involved
in maintaining assets at peak performance. New asset-based business models neces-
sitate a true collaborative approach with a single source of truth for data among
business partners. Manufacturers and third-party service providers expand their
businesses by providing equipment monitoring and maintenance as service
(EQaaS) models.

Plan to Optimize Assets (Fig. 13.2)

To improve the maintenance processes and asset performance, enterprises should

continuously assess and improve the effectiveness of their maintenance programs to
support safe, dependable, and efficient asset operation. Reliability engineers assess
the risk of the assets using best-practice methodologies such as reliability-centered
Business Process 201

Acquire to Decommission
Offboard to Decommission
Asset Decommissioning and Disposal

Decommission Perform waste and

Develop exit Perform asset
productive hazardous goods
strategy sale or trade
assets management

Manage Assets
Asset Information Asset Review and Sustainability Asset
Management Risk Management Operations Collaboration
Manage asset Operate asset
Manage asset Manage asset
environment, collaboration
master data risk
health and safety platform

Fig. 13.1 (continued)

Plan to Optimize Assets

Asset Strategy and Planning Asset Maintenance Strategy and Analysis

Define asset Define property Create asset Define asset Analyze assets and
strategy strategy investment plan maintenance maintenance
strategies performance

Fig. 13.2 Plan to optimize assets

maintenance to determine the best maintenance and service strategies that minimize
maintenance costs and reduce the risk of failure for critical assets. By transforming
them into data-driven processes, next-generation asset performance management
refines and extends such long-standing methods in this area. Before the actual life
cycle of the asset begins, the subprocess Plan to Optimize Assets is triggered. In this
subprocess, the acquisition of the asset is planned, as well as the general acquisition
strategy. This can further be categorized into two parts: The asset strategy and
planning, and the asset maintenance strategy and analysis. The asset strategy and
planning process defines the strategies to be set for acquiring new assets. Firstly, an
asset strategy has to be defined for the company. Requirements from other processes,
like the Governance process, are also important. Secondly, the property strategy has
to be defined. It is decided on, whether an asset should be owned or leased. Here,
consultation with the financial aspects is key. Finally, an asset investment plan has to
be created. For the maintenance strategy, the asset maintenance policy needs to be
defined. After that, the assets need to be analyzed, as well as the maintenance
performance. The asset maintenance strategies are defined by reliability engineers.
For that they perform an asset risk and criticality assessment to derive respective
scores for own defined impact categories, allowing to focus on the most important
assets. They decide and choose between the typical maintenance strategies based on
detailed knowledge of the asset’s potential failure patterns: reactive maintenance
(also known as run to failure); time-, usage-, or condition-based maintenance; or
202 13 Process of Acquire to Decommission

predictive or prescriptive maintenance. The recommended maintenance strategy

includes more than just dedicated repair work to keep the asset operational.
Recommendations can also include the definition of inspection needs, design
changes, and the like to reduce the likelihood of potential failures. A reliability
engineer can decide to revise a maintenance strategy for better business results.
Maintenance planner can review and comprehend the reliability engineer’s
recommended strategy and measures. The planner can use and implement these
definitions in a collaborative process.

Acquire to Onboard (Fig. 13.3)

Next in the lifecycle of an asset is its acquisition and onboarding. The Acquire to
Onboard subprocess compromises asset acquisition, asset construction, and asset
commissioning. Firstly, the asset has to be either acquired or leased. This decision
has to be run by the financial processes, as it influences the cash flow and/or the
general liquidity of the company. This decision might also be made by lines of
business departments with focus on functional and nonfunctional qualities. Some-
times assets must be constructed and built by the company itself. In some
circumstances, this could make sense for a company, as there could be cost saving
effects with building one’s own assets. Perquisite is that the necessary skills and
materials are available inhouse. Usually acquired or leased assets must be assem-
bled. For that capital project for the asset must be managed. Furthermore, asset
construction must be designed and planned. The construction project must be
handled in order to assemble the asset. Before assets can be productively used,
they must be onboarded in context of commissioning.

Operate to Maintain (Fig. 13.4)

One of the most important and probably the longest running subprocesses begins
right after the asset has been onboarded. The Operate to Maintain subprocess
consists of two mayor topics. These are asset maintenance planning and asset

Acquire to Onboard
Asset Acquisition

Acquire asset Lease asset

Asset Construction and Build Asset Commissioning

Manage capital Design and plan Manage asset

Manufacture
project for asset asset construction On-board asset
asset
construction project

Fig. 13.3 Acquire to onboard

Business Process 203

Operate to Maintain
Asset Maintenance Planning Asset Maintenance Execution
Define Plan asset
Monitor asset and maintenance tasks Perform asset
maintenance events Refurbish asset
and resources maintenance
plans and rules

Fig. 13.4 Operate to maintain

management execution. When planning asset maintenance, several steps have to be

taken. First, maintenance plans and rules have to be defined. This is also highly
dependent on the asset itself, as different assets need different maintenance intervals.
Next, the asset has to be monitored, as well as the events that concern this asset.
Periodically, the asset maintenance tasks and allocated resources have to be planned.
When a planned or unplanned asset maintenance has to be executed, there are two
steps to be taken. Firstly, the asset maintenance has to be performed by qualified
personnel. After that, the asset has to be refurbished. Operate to Maintain is running
as long as the asset is in use respectively until it is decommissioned. Maintenance
management enables to demand, plan, and execute maintenance to better meet the
needs of a next-generation taskforce. In maintenance execution, end-to-end pro-
cesses typically span multiple phases. The following phases are covered in an
industry’s best-practice scenario:

• Initiation by raising a work request

• Screening and approval of the work request
• Handover to detailed work-scope planning
• Order approval and release with subsequent scheduling and dispatching
• Work execution
• Work confirmation and closure

In traditional terms, proactive maintenance is scheduled for equipment before it

falls out of tolerance or breaks, preventing costly scheduled repair or emergency
repair and downtimes. A maintenance planner can plan ahead of time the work scope
and time required for time- or usage-based measures such as inspections and
maintenance work using maintenance plans and task lists. Moving away from a
one-size-fits-all approach with traditional time- or performance-based maintenance
plans, condition-based and predictive or prescriptive maintenance are applied. As a
result, enterprises can transition to a much more individualized asset maintenance
program, with optimized time windows and work scopes, for improved asset perfor-
mance and availability.
204 13 Process of Acquire to Decommission

Offboard to Decommission (Fig. 13.5)

The Offboard to Decommission subprocess marks the end of the asset lifecycle. If
the asset is no longer useful or is getting replaced, this subprocess takes place. The
subprocess contains the asset decommissioning and its disposal. First, an exit
strategy has to be developed. Next, the productive assets have to be
decommissioned. After that, the asset has to be sold or traded. Finally, the waste
has to be taken care, as well as any hazardous goods that need to be disposed.

Manage Assets (Fig. 13.6)

The Manage Assets subprocess is the only one which runs parallel to the other
processes from the asset’s lifecycle point of view. One of the tasks in this subprocess
is the asset information management. This task is about handling the asset master
data which must be maintained consistently and kept up to date permanently.
Another continuous task is to inherently review and manage the asset’s risks. This
process covers identifying, assessing, and controlling threats regarding assets. Based
on the risk management plan mitigation procedures are performed if necessary. By
considering potential risks systematically before they occur, a company can save
money and protect their assets. Another very important task is the sustainability
operation. This task is about managing the environment, health, and safety around
the asset. Thus, the daily operation is made safe, the workforce is engaged to identify
and act on hazards before they impact safety. By safeguarding the operations
continuity, asset integrity is protected, and production is optimized by reducing
unplanned downtime and outages through proactively identifying and mitigating
safety issues. The last task is asset collaboration, which concerns itself with the
operation of the asset collaboration platform. Another shift in the roles of

Offboard to Decommission
Asset Decommissioning and Disposal

Decommission Perform waste and

Develop exit Perform asset
productive hazardous goods
strategy sale or trade
assets management

Fig. 13.5 Offboard to decommission

Manage Assets
Asset Information Asset Review and Sustainability Asset
Management Risk Management Operations Collaboration
Manage asset Operate asset
Manage asset Manage asset
environment, collaboration
master data risk
health and safety platform

Fig. 13.6 Manage assets

Solution Capability 205

organizations involved in asset operation and maintenance can be seen in the

following ways:

• The operator does not always maintain the assets. Under EQaaS models,
manufacturers or third parties offer to monitor and maintain assets.
• The processes for in-house maintenance by an operator and customer service by a
supplier are merging. Third parties are increasingly responsible for the upkeep of
complex assets.

These market trends drive a greater demand for collaborative business services
and network concepts. Sharing asset data in a secure and standardized manner is
critical to assisting peers in the maintenance and service business.

Solution Capability

The end-to-end process Acquire to Decommission is mainly implemented by SAP

Asset Management as depicted in Fig. 13.7. While SAP S/4HANA Asset Manage-
ment covers the core functionality SAP Intelligent Asset Management and SAP
Geographical Enablement Framework include extended features for predictive asset
insights, mobile management, or geolocation.
With Maintenance Management a holistic approach including planning, execu-
tion, improvement, and collaboration can be leveraged. Furthermore, it facilitates to
combine material management and plant maintenance functionality to plan
and achieve a holistic strategy for maintenance management. Tracking costs and
conducting thorough damage analysis are also supported. Asset Operations and
Maintenance extends core planning functionality with detailed scheduling
capabilities and resource planning. Environment Health and Safety (EHS) ensures
safety and business continuity. The solution mitigates health and safety risks by

SAP S/4HANA Asset Management

SAP Intelligent Asset Management,
SAP Geographical Enablement

Maintenance Management
Asset
Maintenance
Operations &
Framework, ...

Maintenance Maintenance
Demand
Planning Execution Maintenance
Processing

Environment, Health and Safety

Maintenance
Incident Environment Health & Safety Management of
Safety & Permit
Management Management Management Change
to Work

Fig. 13.7 SAP S/4HANA Asset Management—functional architecture

206 13 Process of Acquire to Decommission

performing risk assessments, creating safety instructions, and managing incidents.

Intelligent Asset Management is the newest offering in the field of asset manage-
ment. It makes use of the newest technological trends to get the most intelligent asset
management system possible. It uses state-of-the-art business processes which use
new technologies to enable new asset management business processes anywhere and
anytime. The solution allows to gain real-time insights on strategic, tactical, and
operational levels. With connected assets, information from operational and business
systems are combined, using the Internet of Things for scalable transparency. The
component makes use of prediction, optimization, and simulation which allow to
drive smarter decisions, improve reliability, and reduce outages. With collaboration
throughout the asset lifecycle, asset information can be shared and enable business
networks.

Maintenance Management

The maintenance master data builds the basis for various processes of asset manage-
ment solution. The key features are structuring of technical objects in a hierarchical
as well as a horizontal manner, creating master records for functional locations and
pieces of equipment but also the creation of maintenance bills of materials. Addi-
tionally, reading measuring points and counters and creating measurement
documents, accessing context-sensitive information and processing master data in
the information center are supported. Furthermore, visualizing technical objects in
the master data and viewing technical objects in the asset viewer are provided. With
this set of features, asset master data can be maintained systematically and consis-
tently. Maintenance Demand Processing allows users to create and process any type
of work request, from classical corrective toward condition-based, predictive or
prescriptive maintenance methodologies. Maintenance work can also be requested
to be performed and mobile devices or a desktop can be used to describe the
technical faults. This process can also be enhanced with SAP Intelligent Asset
Management which allows to synchronize notification and order data. With Mainte-
nance Planning, maintenance can be planned, and the ideal technician can be found
to use appropriate tools and resources and perform maintenance activities. Also, a
full view of asset status, maintenance cost, and breakdown causes are provided.
Maintenance costs can be reduced by efficiently using labor, material, equipment,
and schedules. Another function is classifying maintenance plans to allow for better
searching and analyzing and monitoring maintenance costs. Operations can be
classified into pre-, main-, and post-work. Key features that are offered in this
solution are planning of complex maintenance cycles with strategies, processing
maintenance plans, and planning recurrent maintenance work with task lists. Addi-
tionally, performing inspection rounds, accessing context-sensitive information,
processing maintenance plans and items from a personal object worklist are
supported. The solution facilitates selecting spare parts and viewing visual
instructions in task lists and viewing relationships between maintenance objects in
the asset viewer. After maintenance is scheduled, it has to be performed. With
Solution Capability 207

Maintenance Execution, planned or emergency maintenance can be performed and

the access of relevant information on any device enabled. Employees can access,
transfer, complete, and manage assigned work orders remotely and can gain real-
time insights of asset performance for timely, relevant decisions. They can also
review ongoing maintenance activities with the ability to reschedule multiple times a
day. Key features include the reporting of a malfunction using notifications and
executing maintenance work using maintenance orders but also processing and
confirming maintenance jobs. Furthermore, accessing context-sensitive information
and processing maintenance documents in the order and notification information
center are enabled. The selecting of spare parts and viewing visual instructions in
maintenance orders and viewing relationships between maintenance objects in the
asset viewer are also supported (Fig. 13.8).

Asset Operations and Maintenance

Maintenance Scheduling allows users to reduce excessive downtime and decrease

costs by having the right systems and processes in place. It takes the availability
windows for maintenance, work center capacity, and maintenance plans into consid-
eration. The solution embeds resource scheduling. This means that insight into
maintenance workload can be gained and available capacities for current and
upcoming maintenance activities can be controlled. Additionally, the component
facilitates to identify critical planning situations early and take action to improve
planning relevant KPIs. Maintenance order can be planned efficiently based on work
center utilization to make sure that all maintenance jobs can be completed. Alterna-
tively, work center capacity can be adjusted quickly. Statuses to schedules can be
assigned and work center capacity can be optimized. Maintenance orders are
visualized in work centers to gain transparency about what needs to be done at
which time. The solution allows to set up, share and monitor schedules, as well as
provide feedback for a schedule and plan own work accordingly. The application
provides a dashboard for monitoring key figures, such as work center utilization and
number and priority of maintenance orders that are needed to work on. It also
supports quick access to the schedules that are currently relevant. The utilization
chart allows to visualize the current work center utilization by specific attributes, for
example, to show the load caused by maintenance plans by using the processing
status attribute. There are several options to manage the utilization of work centers.
Order operations can be dispatched to confirm the planned dates and work center. If
a work center is overloaded, it is possible to level work center utilization by moving
order operations to another date or work center. Additionally, the available work
center capacity for a specific target week can be adjusted. Scheduling of maintenance
order operations usually covers multiple steps. First one or more schedule
simulations for the target week are created. When the optimal schedule is deter-
mined, the scheduled order operations can be dispatched, and the final schedule can
be frozen. When the target week has started, schedule execution can be tracked. One
or multiple maintenance order operations can be assigned to a responsible person,
208 13 Process of Acquire to Decommission

Maintenance Planning Overview Page

Maintenance orders and operations

Fig. 13.8 SAP S/4HANA Asset Management—maintenance planning overview and maintenance
order

existing assignments can be changed or even deleted. With multiresource manage-

ment, processes for defining and fulfilling project resource demands can be stream-
lined and automated. It also provides functionality for tracking, assigning and
Solution Capability 209

scheduling resources, collecting assignment approvals, and generating relevant

reports like demand overview and resource utilization reports. This results in faster
project staffing, improved resource utilization, more accurate demand forecasts, and
increased project margins (Fig. 13.9).

Environment Health and Safety

The solution supports in managing business processes related to the safety of the
environment and the health and safety of people. It enables to plan the required
activities for managing the compliance of the company with emission-related envi-
ronmental regulations. Additionally, the solution enables to record and process
incidents, safety observations, and near misses. It helps to report the data to internal
and external stakeholders to fulfill legal, regulatory, and company reporting
responsibilities. Environment Health and Safety (EHS) enables to assess and manage
risks in the organization. It can take the appropriate actions necessary to reduce risk
to acceptable levels and prevent any harmful effects to the health and safety of
employees and the environment. With Incident Management, EHS incidents, near
misses, and observations can be recorded. Transparency and standardizations can be
created with templates, task tracking, and analytical automated reporting. Injury,
illness and incident rates can be decreased, EHS penalties and fines can be reduced,
as well as unplanned downtimes. The component manages investigations, follow-up
activities, and improves employee engagement. Role-based analytics provides
insights into incident root causes. The process of incident management consists of
the following steps:

1. An incident is reported by creating initial incident record.

2. The incident is processed and the formal reporting is performed. The following
activities are executed during this step:
(a) Inquiries are sent to get more details regarding the incident.
(b) The financial impact of the incident is tracked.
(c) Environmental releases are reported which occurred with the incident.
(d) Equipment is assigned to the incident record and the damage is reported.
(e) Incident is reported to authorities or for internal purposes.
(f) Notices of violation are recorded that were issued to organization with
regards to the incident.
3. Analyze and investigate the incident.
4. Analytics apps are used to get an overview of coherences concerning injuries and
illnesses, and incidents.
5. Finally, corrective or preventive actions are implemented. Furthermore, the
completion of actions and tasks is verified (Fig. 13.10).

Environment Management enables to forecast emissions data based on past

emission data with the help of predictive learning algorithms and statistical methods.
Greenhouse gas emissions, as well as other air or water emissions can be managed to
210 13 Process of Acquire to Decommission

Maintenance Scheduling board

Schedule Maintenance Order Operations

Fig. 13.9 SAP S/4HANA Asset Management—maintenance scheduling board and maintenance
order operations

fulfill legal requirements while fostering proactive data transparency and monitor-
ing. This allows to reduce risk of environmental noncompliance and penalties. The
application component enables companies to stay compliant with emissions-related
environmental regulations. The solution supports the processes and subprocesses of
managing compliance scenario activities to ensure compliance. These processes
ensure to create and incorporate a strategy of managing environmentally related
data from data collection, sampling, calculation, and aggregation of emissions into
the daily operations within companies. Health and Safety Management supports to
manage general and equipment-related safety instructions centrally and prevents
incidents and reduces EHS risks. This is due to standardized, cost-effective approach
Solution Capability 211

Fig. 13.10 SAP S/4HANA Asset Management—maintenance scheduling board and maintenance
backlog overview

for managing operational risks. The solution helps to minimize workplace exposures
and related health impacts. The component manages industrial hygiene, monitoring
by planning and performing workplace sample campaigns and related
measurements. Maintenance Safety and Permit to Work facilitates to control main-
tenance work through clear safety instructions and permits. It links EHS information
to technical equipment and plant maintenance tasks. The component ensures flexible
levels of permits natively integrated with the work-order process in enterprise asset
management and automates the permit process and enforces fully auditable
212 13 Process of Acquire to Decommission

Emissions Forecasting

Manage Schedule

Fig. 13.11 SAP S/4HANA Asset Management—emissions forecasting and manage schedule

procedures that promote consistent behavior. Management of Change helps to

streamline change requests. The solution automates the involvement of the right
people to mitigate risks caused by changes to equipment, substances, operating
conditions, and procedures. It manages operational changes with thorough review,
risk mitigation, and documentation approval (Fig. 13.11).

Conclusion

The whole lifecycle of an asset is compromised in the Acquire to Decommission

process. Furthermore, continuous tasks outside of the asset lifecycle are included.
First, an asset acquisition strategy is planned, then the asset is acquired and
Conclusion 213

onboarded. During the asset’s life inside the company, a maintenance strategy is
planned and executed. With the asset’s end of life, it is decommissioned and
disposed of. During the lifecycle of all the asset in a company, the assets are
supported, regarding their master data, risk management as well as health, environ-
ment, and safety impacts. In SAP S/4HANA this end-to-end process is mainly
covered by SAP S/4HANA Asset Management component. This solution provides
capabilities for maintenance management, asset operations, environment health and
safety. The SAP S/4HANA modules are deeply integrated and frequently interacting
so that also additional components contribute to handle this end-to-end process.
Process of Governance
14

This chapter describes the business process governance consisting of the

subprocesses plan to optimize enterprise, manage enterprise risk and governance,
manage identity and access governance, manage cybersecurity/data protection/data
privacy, manage international trade/tax/legal, manage IT, manage projects and
operations. Additionally, the application capabilities of SAP S/4HANA to resolve
those business processes are explained.

Business Process

The general process of Governance is depicted in Fig. 14.1 and explained in detail in
the next sections.
The Governance process is one of the corporate processes. The goal of these
processes is to plan and manage the company. This includes the departments of
finance, indirect procurement, asset management, human resources, corporate strat-
egy, and corporate operations. The Governance process consists of seven
subprocesses. The main task of the process is to manage different areas: The
enterprise’s risk and compliance must be managed as well as the identity and access
governance. Furthermore, handling of cybersecurity, data protection, and data pri-
vacy plays a big role to ensure that the data of the enterprise is safe and compliant.
Moreover, the Governance process manages the international trade, tax, and legal as
well as the IT. Additionally, the projects and operations of the company must be
managed. Besides these managing tasks, another objective of the process is the
optimization of the enterprise, which is the first subprocess of the Governance
process.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 215
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_14
216 14 Process of Governance

Governance
Plan to Optimize Enterprise
Corporate Strategy and Planning

Manage Develop Define business Perform Compensate

business operating model information Manage corporate
connected unplanned
models strategy strategy branding strategy
planning events

Business Process Management

Design Implement Monitor Improve

and model and execute and analyze and optimize
business processes business processes business processes business processes

Manage Enterprise Risk and Compliance

Governance Risk and Compliance
Manage
Manage audits business Manage risk Manage
and assurance integrity & fraud and controls regulatory
prevention compliance

Manage Identity and Access Governance

Identity and Access Governance

Manage access
Manage Manage
governance &
identity authentication
authorizations

Manage Cybersecurity, Data Protection and Data Privacy

Cybersecurity, Data Protection and Data Privacy

Manage data Manage data Manage

privacy protection cybersecurity

Fig. 14.1 Governance process

Plan to Optimize Enterprise (Fig. 14.2)

The Governance process starts with the subprocess Plan to Optimize Enterprise. This
process starts with managing the business models because these are never static. A
good example for that is the business model of Amazon: when Amazon was
founded, they only sold books. Today Amazon is selling practically everything,
from products to services. Therefore, their business model changed from only selling
books to selling a lot more different goods. Therefore, it is important to always
optimize and adjust the model of the business. To ensure this corresponding
operating model strategy is developed. Moreover, it is significant to design a strategy
to cope with business information as data of a company is sensitive and legally
relevant and should not be accessible without appropriate authorization. The Gover-
nance process includes a global planning across all the end-to-end processes to
facilitate an integrated planning. Specific attention is required for unplanned events.
Business Process 217

Governance
Manage International Trade, Tax & Legal
Legal Matter Management Corporate Tax Indirect Tax and International Trade
Management
Manage legal Manage Manage
Manage Manage indirect
templates and intellectual international
corporate taxation
contracts property trade processes
taxation

Manage IT
IT Management

Define and Define IT service Develop & manage IT

manage IT fulfillment strategy and infrastructure and
service offering infrastructure solutions

IT Management
Deploy IT Manage and Manage Develop and
infrastructure fulfill IT support business manage IT
and solutions request information resilience & risk

Manage Projects and Operations

Ideation Management Portfolio and Program Management
Perform Analyze new Manage project Manage/monitor
Generate new Define and plan
discovery ideas and and investment programs and
concepts portfolios
research requirements proposals portfolios

Project Management

Execute Review and

Plan projects Prepare
projects report project Close projects
project billing
performance

Corporate Operations Management Sustainable Operations

Define Orchestrate Develop and Manage

operating model Operate operational
central manage functional
practices shared services compliance
operations EHS program

Fig. 14.1 (continued)

Plan to Optimize Enterprise

Corporate Strategy and Planning

Manage Develop Define business Perform Compensate

business operating model information Manage corporate
connected unplanned
models strategy strategy branding strategy
planning events

Business Process Management

Design Implement Monitor Improve

and model and execute and analyze and optimize
business processes business processes business processes business processes

Fig. 14.2 Plan to optimize enterprise

218 14 Process of Governance

These must be compensated and mitigated to avoid negative impacts on the com-
pany. Finally, the corporate branding strategy must be defined which for example
impacts the reputation and public relations of the company. All business processes of
a company are interrelated and must therefore be considered inherently to achieve
high level of optimization. For that the business processes are designed and
modelled globally to have a consistent foundation for implementing them. During
the execution phase the processes are monitored and analyzed. Thus, they can
continuously be improved and optimized. This helps in making the business pro-
cesses even more efficient and it also eliminates bottlenecks.

Manage Enterprise Risk and Compliance (Fig. 14.3)

Apart from optimizing the enterprise, the Governance process manages risks and
compliance. Thus, an enterprise is able to effectively handle risk, control, and
assurance tasks. To reduce risks and ensure compliance it is necessary to perform
audits and assurances. Business integrity must be managed, and fraud prevention
measures are implemented. For global companies with locations in various countries
this can be a challenging task due to cultural and mentality differences. Additionally,
the company must manage and control risks by developing corresponding risk plans
and mitigation procedures. Finally, the regulatory compliance must be handled by
defining adequate action plans and execution processes.

Manage Identity and Access Governance (Fig. 14.4)

This subprocess is in charge of the technical access to critical infrastructure and

systems. This subprocess handles which employee can access which information in
the company through authentication. Thus, it is ensured that employees only know
what they need to know and do not have access to everything. This can prevent
security vulnerability. The entire lifecycle management of identities must be covered
from provisioning to decommissioning. For these corresponding policies,

Fig. 14.3 Manage enterprise Manage Enterprise Risk and Compliance

risk and compliance Governance Risk and Compliance
Manage
Manage audits business Manage risk Manage
and assurance integrity & fraud and controls regulatory
prevention compliance

Fig. 14.4 Manage identity Manage Identity and Access Governance

and access governance Identity and Access Governance

Manage access
Manage Manage
governance &
identity authentication
authorizations
Business Process 219

authentication mechanisms and corresponding implementation strategies must be

defined. This is also true for the topic authorizations regarding data, processes, and
systems. Apart from information identity and access governance must be also
covered for additional assets like buildings.

Manage Cybersecurity, Data Protection and Data Privacy (Fig. 14.5)

This subprocess handles cybersecurity, data protection, and data privacy which are
also key aspects of the governance process. There are more and more requirements
for data privacy and security like the General Data Protection Regulation (GDPR)
and the Consumer Privacy Act of California which must be considered in enterprises
for legal compliance. Furthermore, business data is very sensitive and valuable and
therefore in focus of cybersecurity. Successful security attacks can result in huge
financial damages and can impact the public creditability of companies. Therefore,
data privacy measures must be implemented to ensure legal compliance, data
protection procedures must be applied to safeguard business data from unauthorized
access, and cybersecurity mechanism deployed to defend the company from security
vulnerabilities.

Manage International Trade, Tax and Legal (Fig. 14.6)

Another task of the Governance process is handling the international trade, tax, and
legal. This ensures that the company does apply the international regulations. In
context of legal matter management corresponding templates and contracts are
defined and provided for reuse. For example, sales contracts need to be drafted

Manage Cybersecurity, Data Protection and Data Privacy

Ma
Cybersecurity, Data Protection and Data Privacy

Manage data Manage data Manage

privacy protection cybersecurity

Fig. 14.5 Manage cybersecurity, data protection, and data privacy

Manage International Trade, Tax & Legal

Legal Matter Management Corporate Tax Indirect Tax and International Trade
Management
Manage legal Manage Manage
Manage Manage indirect
templates and intellectual international
corporate taxation
contracts property trade processes
taxation

Fig. 14.6 Manage international trade, tax, and legal

220 14 Process of Governance

beforehand. Companies invent new products and services to have a competitive

advantage. The underlying intellectual property must be protected and handled
through the entire lifecycle. Companies must pay corporate tax on their profits.
This covers the company’s taxable income, which includes revenue minus cost. To
be compliant with tax evasion laws, corporate taxation must be managed systemati-
cally. This is also true for indirect taxation which is collected usually by a producer
or retailer and paid to the government. International trade is about exchanging goods
and services between countries. Trading globally provides consumers and countries
the opportunity to have access to goods and services not available in their own
countries. International trading is subject of additional regulations and processes
which must be managed for the company.

Manage IT (Fig. 14.7)

The subprocess Manage IT starts with defining and managing the different IT
services offerings based on the company’s requirements. The need of the IT services
depends on the sector the company focuses on. To meet the IT requirements with
corresponding services, fulfillment strategy and infrastructure concept must be
defined. These are the foundation for developing and managing the IT infrastructure
and software solutions. As companies have to cover the entire lifecycle of products
or services, they usually deploy Enterprise Resources Planning (ERP) systems. The
selection and the implementation of ERP systems require in-depth analysis and
support of consultants.
While using IT solutions, problems or bugs can occur. The users must be able to
report these and get help to fix the problems. For that IT support must be established
which manages and fulfills the requests of the users. Enterprises handle large number
of documents. Those must be created, updated, deleted, exchanged, archived,
protected, and classified. Thus, corresponding strategies and procedures for handling
business information must be provided. Finally, it is important to develop and
manage the IT resilience and risk to ensure that the IT services have a high
availability, and the risks are minimized and mitigated immediately.

Fig. 14.7 Manage IT Manage IT

IT Management

Define and Define IT service Develop & manage IT

manage IT fulfillment strategy and infrastructure and
service offering infrastructure solutions

IT Management
Deploy IT Manage and Manage Develop and
infrastructure fulfill IT support business manage IT
and solutions request information resilience & risk
Business Process 221

Manage Projects and Operations (Fig. 14.8)

The subprocess Manage Projects and Operations consists of five different processes.
The first one is the ideation management. A company usually has many employees.
Every one of these employees has their own thoughts and ideas. These ideas can be
valuable for the company. The ideation management facilitates the submission of
ideas by employees. Those ideas are grouped and prioritized by a central committee
that also decides on the implementation. With ideation management employees are
involved into the improvements of products, services, and processes. This increases
the motivation of employees as their ideas are considered as relevant. It is also
important to reward the employees whose ideas are implemented. Thus, the accep-
tance of the ideation management and the motivation of employees to submit ideas
are increased. Portfolio and program management are crucial for enterprises as they
have to deal with various products and services. Thus, portfolio must be defined and
planned in accordance with the company’s product or service strategy. Already the
portfolio definition is a complex task with numerous involved stakeholders and
objectives so that a program might need to be set up for successful execution.
Programs consist of multiple parallel running projects which need orchestration
and synchronization. There are many tasks in companies where programs must be
established for execution. Thus, standardized methodology must be developed to
harmonize the programs, make them comparable and more effective. Portfolio and
program management require continuous monitoring and controlling to achieve the
predefined goals but also to improve the underlying processes. As already men-
tioned, programs comprise several projects. The daily works in enterprises are often
organized based on projects, for example, analyzing market opportunities, defining
portfolios, or designing products. Thus, managing projects must be streamlined in
companies concerning methodologies and tooling for planning, execution, and
closing projects. This helps particularly in reviewing projects and reporting on
their performance. Often projects are stuffed with third-party members. Therefore,

Manage Projects and Operations

Ideation Management Portfolio and Program Management
Perform Analyze new Manage project Manage/monitor
Generate new Define and plan
discovery ideas and and investment programs and
concepts portfolios
research requirements proposals portfolios

Project Management

Execute Review and

Plan projects Prepare
projects report project Close projects
project billing
performance

Corporate Operations Management Sustainable Operations

Define Orchestrate Develop and Manage

operating model Operate operational
central manage functional
practices shared services compliance
operations EHS program

Fig. 14.8 Mange projects and operations

222 14 Process of Governance

project billing must be considered. This can also be the case for project members
from different cost centers of the company. In context of corporate operations
management, the operating model practices are defined. Enterprises can decide
whether operations are outsourced to shared services or handled internally. Typi-
cally, there is a hybrid strategy applied which combines both options. Anyhow the
operations are distributed and must be orchestrated centrally.
The last subprocess of the Manage Projects and Operations process is handling
the sustainable operations. For companies’ sustainability is not only about protecting
the environment but also improving the image and branding. Being a sustainable
company also helps in being compliant to regulations and avoiding financial
penalties. Therefore, it is important to develop and manage a functional EHS
program. EHS stands for Environment, Health, and Safety, and it refers to laws,
rules, regulations, professions, programs, and workplace actions aimed at protecting
employees and the general public’s health and safety.

Solutoin Capability

The end-to-end process Governance is not implemented with one SAP S/4HANA
module but includes several, for example, the subprocesses Portfolio and Program
Management as well as Project Management can be implemented with the help of
the Enterprise Portfolio and Project Management solution of the SAP S/4HANA
R&D/Engineering. However, core subprocesses of Governance can be implemented
with the SAP Governance Risk and Compliance (GRC) solutions as depicted in
Fig. 14.7. This solution is complemented with lines of business (LoB), industry and
partner extensions (Fig. 14.9).
SAP GRC can be codeployed on SAP S/4HANA to lower the cost of operations
for IT departments. Therefore, there is no need for data replication for mass data

SAP GRC Solutions

LoB Extensions, Industry Extensions,

Public Cloud In-Memory

Partner Extensions, …

SAP Cloud SAP Cloud

SAP Watch List SAP Privacy
Identity Access Identity Access
Screening Governance
Governance Governance

SAP Business
Integrity
On-Premise Screening

SAP Access SAP Process SAP Risk SAP Tax

Control Control Management Compliance

Fig. 14.9 SAP GRC solutions—functional architecture

Solutoin Capability 223

analysis or plug-ins for extracting and transferring the required data. The plug-ins
don’t require complex connectivity setups to the business system anymore as it is
directly embedded into the SAP S/4HANA processes. Enterprises which are using
both are therefore enabled to have a real-time preventative compliance management.
SAP GRC solution includes different public cloud, in-memory and on-premise
solutions. These different technical capabilities depend on the business scenario
and use case. The technical foundation of the cloud-based solutions is the
SAP Business Technology Platform (SAP BTP). The cloud solutions include the
SAP Cloud Identity Access Governance which governs access in the cloud, the SAP
Watch List Screening which verifies business partner compliance, and the SAP
Privacy Governance which addresses today’s data privacy challenges. In-memory
capabilities are used when high volumes of data must be analyzed and extracted from
SAP S/4HANA. There are three solutions based on in-memory: the SAP Audit
Management which transforms audit beyond assurance, SAP Business Integrity
Screening which implements efficient fraud detection, and SAP Tax Compliance
which complies with tax regulations. On-premise-based solutions rely on the SAP
ABAP platform and are mostly used for the optimization of existing manuals and
automated GRC processes and workflows while balancing implementation costs.
There are three different solutions for SAP S/4HANA: the SAP Access Control
which manages access risks, the SAP Process Control which ensures effective
controls and ongoing compliance, and the SAP Risk Management which manages
enterprise risk across the organization.

SAP Cloud Identity Access Governance

The SAP Cloud Identity Access Governance solution simplifies and manages the
identity and access management in the cloud. To ensure that users get the necessary
access they need as seamlessly and effectively as possible. The SAP Cloud Identity
Access Governance solution provides key capabilities to solve the access manage-
ment and compliance challenges for SAP S/4HANA. The Access Analysis Service
helps to analyze flexible and extendable the access risk and get recommendations
during the remediation process. Moreover, it enables to streamline access with real-
time visualizations. Access Certification Service allows to review and certify access
for on-premise and cloud source applications. This happens periodically, in order to
identify changes in individual usage behaviors and prevent people from having
unnecessary access privileges. Access Request Service enables to create self-service
requests to applications. This helps with providing users only the access they need to
perform their tasks and therefore preventing security breaches. Privileged Access
Management Service handles the creating of self-service requests for emergency
access to systems and applications. It also flags and monitors sensitive or adminis-
trative transactions as well as what is being executed with these authorizations.
Based on self-learning algorithms it immediately flags suspicious activities by
identifying anomalies and behavior changes. Finally, the Role Design Service
handles the business roles of the processes. The service includes the creating and
224 14 Process of Governance

Access Analysis Overview

Fig. 14.10 SAP cloud identity access governance—access analysis overview

optimizing as well as the maintaining of these roles. This helps in simplifying the
role administration and the process of access assignment with machine learning-
based role adoption (Fig. 14.10).

SAP Watch List Screening

The SAP Watch List Screening facilitates to verify the compliance of business
partners by screening the names and addresses of these against sanctioned party
lists. This ensures compliance with guidelines, regulations, and legislation. With
SAP Watch List Screening, provider-defined sanctioned-party list can be uploaded
to screen name and address information against the sanctioned-party list. The
solution allows to resolve the hits found during screening by either confirming or
rejecting them. The component integrates with other business processes and
applications, for example, calling the screening service within the trade compliance
document in SAP S/4HANA. To enable collaboration the decisions of the screening
specialists are made available for further actions.

SAP Privacy Governance

This solution enables compliance with data protection and privacy regulations. It
offers a single point of entry for the data protection officer (DPO) for everything
related to data protection. SAP Privacy Governance handles the proper
Solutoin Capability 225

documentation of the organizational structure including the organizational hierarchy

and units as well as the documentation of the business processes. Besides ensuring
appropriate documentation it creates and distributes the organizational policies,
manages legal and regulatory compliance requirements through regulation registry
as well as the requests from data subjects for access their data. The application helps
to ensure compliance as well and reduces risks by controlling the activities. SAP
Privacy Governance has an extra risk framework which helps documenting and
assessing potential risks to the organization. Moreover, it stores information about
the processing of personal data while highlighting potential risks in those processes.
The solution documents specific laws and regulations that are relevant for the
organization’s compliance with privacy legislation, creates and disseminates policies
related to data protection, privacy, and security. The module allows to create records
of processing activities (RoPA) surveys, publish surveys to gather RoPA informa-
tion, use survey results to evaluate whether a data protection impact assessment is
required. The application supports criticality of data protection and privacy (DPP)
relevant processes with data privacy impact assessments and enables a lean risk
evaluation to assess and monitor risks associated with DPP relevant processes.
Finally, the solution facilitates managing automated procedures as well as monitor-
ing their runs.

SAP Audit Management

With the help of the SAP Audit Management, it is possible to automate and improve
internal auditing procedures. The auditing process is separated into five phases:
planning, preparation, execution, reporting, and follow-up. These five phases
include tasks such as building audit plans, preparing audits, analyzing, documenting,
and communicating results, forming an audit opinion, and monitoring the progress.
To plan audits corresponding audit engagement plans for a planning period are
created and assigned to proper resources. Master data such as risks and dimensions
are used to build a risk-based audit plan. An overview of risk coverage is provided
by auditable items and audits. To prepare audits work programs are created manu-
ally, using predefined templates, or by copying them from previous audits. Mass
uploading tools can be used to easily upload work programs. Test procedures,
questionnaires, and automatic detection tasks are also available. Optionally, audit
announcement letters can be generated and distributed to the stakeholders. To
execute audits work packages are processed online or offline using Adobe forms.
Working papers are managed, audit work is documented, findings are created, and
action plans based are proposed on audit evidence. Audit reports can be prepared,
reviewed, approved, and issued. Predefined report templates in multiple formats help
to generate audit reports online. Follow-ups with auditees are supported so that the
status of findings and action plans can be monitored. Historical action plans can be
viewed to decide if further actions are needed (Fig. 14.11).
226 14 Process of Governance

Display Historical Action Plans

Track Open Findings

Fig. 14.11 SAP audit management—display historical action plans and track open findings

SAP Business Integrity Screening

This solution implements an effective fraud detection that not only detects but
prevents and deters fraud in big data environments by detecting, investigating, and
analyzing irregularities in data. It helps enterprises to mitigate fraud risk and reduce
losses. For the detection of fraud and irregularities, detection strategies are created.
Master Data and business transactions are screened against screening lists. With the
help of efficient alert management, detected irregularities are investigated. The
detection accuracy is continuously improved by minimizing false positives with
real-time calibration and simulation capabilities. This increases productivity of
Solutoin Capability 227

investigation team. It refines searches and improves fraud detection accuracy, even
across very large volumes of data. The solution uses deterministic rules and predic-
tive algorithms to identify common patterns. The number of false-positives is
reduced by using what-if analyses on historical data and assessing which approaches
are most effective. Quickly react to permanently changing patterns by leveraging
machine learning. Multirule strategies to calculate risk scores and optimize analyses
of fraud scenarios can be used. Analysis is supported to compare which approaches
are most effective in deterring fraud and make better decisions. Reporting tools are
provided to display a large range of key performance indicators on alerts. Investiga-
tion overview can be consumed to focus on outstanding activities for alert
processing. Integration with other products is supported, for example, with payment
proposals in SAP S/4HANA (Fig. 14.12).

SAP Tax Compliance

The last of the three in-memory-based solutions is the SAP Tax Compliance. It
ensures that the enterprise is compliant with tax regulations to avoid fines and other
penalties. To enable that, the solution helps to find and resolve tax compliance
issues. The solution supports in gaining of transparency and insight into compliance
or risk problems and therefore finding and resolving these issues quickly. It
automates detection of the compliance issues and documents activities in resolving
the issues. The application manages compliance checks on SAP and non-SAP data
sources, across the company. Compliance checks are organized into compliance
scenarios, in order to run them together. Compliance scenarios can be performed in
simulation mode to test and evaluate them. However, job scheduling is supported to
automatically repeat compliance scenario runs. Self-learning algorithms are used to
find compliance issues and mitigate them using machine learning for decision-
making as well as tasks and task lists. Workflow is used to process tasks which
can be created-based task templates. Reporting capabilities are provided to analyze
the number of hits over time for various checks and scenarios, and to relate the
number of hits with the underlying.
amounts (Fig. 14.13).

SAP Access Control

The SAP Access Control helps to manage the access risk by controlling access and
preventing fraud. This helps in minimizing the time and cost of compliance. The key
capabilities of SAP Access Control are the monitoring of privileges such as emer-
gency access and transaction usage, the certification of authorizations to check if
access assignments are still warranted, the integration with connected systems, the
analyzing of risks as well as the automated access administration and the maintaining
of roles. To analyze risks comprehensive, predefined rule set can be used to perform
cross-system analysis for enterprise applications in real time. If necessary, actions
228 14 Process of Governance

Investigation Overview

Ad Hoc Screening

Fig. 14.12 SAP business integrity screening—investigation overview and ad-hoc screening

can be taken to remediate and mitigate access risks. To manage access self-service,
automated access requests are provided based on workflow-driven approval process.
Roles can be defined and configured in business terms and are aligned with business
processes. Continues analysis and optimization of business roles are supported.
Certifying role content and assignment to users are facilitated including automated
periodic user-access reviews. Systemic monitoring privileges are supported allowing
to manage emergency access, review user and role transaction usage details, get
proactive notification of conflicting or sensitive action usage, and customize
dashboards and reports.
Solutoin Capability 229

Compliance Results Overview

Manage Compliance Scenarios

Fig. 14.13 SAP tax compliance—compliance results overview and manage compliance scenarios

SAP Process Control

The SAP Process Control is a solution for compliance and policy management and
enables organizations to manage and monitor their internal control environments and
when finding an issue to proactively remediate it. The solution ensures effective
controls and ongoing compliance by identifying, prioritizing, and focusing on key
business process risks. Moreover, it helps by managing the overall policy life cycle.
Other key capabilities of the SAP Process Control solution are the unified repository
230 14 Process of Governance

for compliance, control and policy information, the embedded controls for
strengthening business processes as well as improved compliance and control
processes at optimal cost. These enable reduced costs of compliance, improve
management transparency and confidence in compliance management processes.
The solution provides a unified repository for compliance, control, and policy
information. Thus, it ensures cross-function standardization and drive consistency
across the company and manages multiple regulatory policies and compliance
procedures with a single solution. The component optimizes the planning of control
assessment and testing activities and aligns internal controls and policies with
business objectives and risks. Key business processes are monitored and analyzed
in real time. Thus, comprehensive online and offline control evaluations with flexible
workflows and configurable forms are performed. Collaborative tools and surveys
are provided. Issue management and certifications with workflows are standardized.

SAP Risk Management

The solution facilitates to manage enterprise risk across the organization. The
module has four key capabilities. Firstly, it is important to create a risk strategy
and plan. This includes identifying risk-relevant business activities, assigning risk
appetite, risk owners and responsibilities as well as defining a key risk indicator
(KRI) framework for automated risk monitoring. Next is the risk identification,
where potential root causes and consequences of risks are documented. Risk analysis
is about the likelihood of occurrence and the potential impact of an identified risk by
running quantitative and qualitative risk analysis. Finally, a report with an analyza-
tion on the company’s risk situation is created. SAP Risk Management contains
enterprise risk content and tools for industry-specific operational risk management.
Graphical view is provided to create and analyze risks. Data monitoring controls and
manages data from internal and external systems in real time. Starter kits include a
library of standard business controls, basic regulations, direct entity-level controls,
enterprise risks, risk drivers, and impacts. KRIs are classified according to risk
drivers, risk categories, and industries. SAP Risk Management makes use of the
various work centers in which all activities can be carried out. Work centers ensure
easy access to application activities, and contain menu groups and links to further
processes.

Conclusion

Governance is a core business process in companies for defining the corporate

strategy and designing the corporate business processes. Governance manages
enterprise risk and compliance, identity and access, cybersecurity, data protection,
and privacy. Handling international trade, tax, and legal is also in focus of the
Governance process. The entire IT lifecycle starting with developing the IT strategy
to fulfillment and execution is covered by Governance. The processes and
Conclusion 231

methodologies for ideation, portfolio, program, and project management are also
streamlined in context of Governance. Key aspects of the Governance process are
implemented in SAP S/4HANA based on SAP GRC solutions. This component
governs access and enterprise risks, ensures process controls and compliance,
addresses data privacy challenges, and enables fraud detection. The SAP
S/4HANA modules are deeply integrated and frequently interacting so that also
additional components contribute to handle this end-to-end process.
Process of Finance
15

This chapter describes the business process finance consisting of the subprocesses’
plan to optimize financials, invoice to pay, invoice to cash, record to report, and
manage treasury and real estate. Additionally, the application capabilities of SAP
S/4HANA to resolve those business processes are explained.

Business Process

The general process of Finance is depicted in Fig. 15.1 and explained in detail in the
next sections.
The Financial process has a supporting function in every value chain and keeps
track of the finances in the company. The process starts with planning and analyzing
which cover budgeting and forecasting for optimizing the financials. The process also
includes management accounting which encompasses many aspects of accounting
intended to improve the quality of information provided to management about busi-
ness operation metrics, for example, the cost and sales revenue of goods and services.
Invoice to pay process covers the entire lifecycle management of supplier invoices
from receipt to payment. Invoice to cash processes customer invoices and ensures that
they are paid. The financial close process comprises reviewing and reducing account
balances beforehand the accounting cycle closes. It starts with recording the journal
entry for all transactions that results to the review stage. Financial closing and financial
accounting are performed in scope of record to report process. Handling payments and
communication to banks are covered by treasury management. Companies have
various real estates like office spaces or plants which must be acquired and operated.
These facets are handled by the real estate management process. The Invoice to Pay
and Invoice to Cash processes cover vendor- and customer-related finance processes.
The Invoice to Pay process, also known as payables management, is the finance
component of the larger Procure to Pay process, which extends from vendor relations
and actual procurement all the way through to payment. The Invoice to Cash process,
also known as receivables management, encompasses all financial accounting

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 233
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_15
234 15 Process of Finance

Finance
Plan to Optimize Financials
Financial Planning and Analysis
Perform Perform
Perform financial
planning/budgeting/ management
analysis
forecasting accounting

Invoice to Pay
Supplier Invoice Management
Process
supplier
invoice

Payables Management Treasury Management

Manage Manage payments

Process accounts Manage payables
financial Process payments and bank
payable (AP) financing
settlement communications

Invoice to Cash
Customer Invoice Management Receivables Management

Perform pre-
Manage 3rd party Invoice Manage financial Manage customer
invoicing of billing
invoice customer settlement credit risk
content

Receivables Management Treasury Management

Manage Manage and Manage payments
Process accounts
Process disputes receivables process and bank
receivable (AR)
financing collections communications

Fig. 15.1 Process of finance

operations pertaining to accounts receivable, such as billing customers and managing

disputes, collections, and customer credit risk. Today’s receivables managers must
constantly strike a balance between the need to reduce days sales outstanding (DSO)
and bad debt write-offs while providing excellent customer service. To meet margin
targets, these managers must ensure that cash is available to fund business operations
and new growth opportunities at a low cost.

Plan to Optimize Financials (Fig. 15.2)

The first subprocess in Finance is the Plan to Optimize Financials. The subprocess
can be divided into planning, operational, and analysis phase. The planning phase
includes which key performance indicators (KPI) should be recorded in the opera-
tional phase and for what period a budget and forecasting should be performed. To
create a guide for the operating phase the budget for all departments is planned, and
the spending and income forecasted. In the operational phase each department has its
budget and should keep track of their books by having proper accounting manage-
ment. The income and spending should be recorded. Management accounting is
Business Process 235

Finance
Record to Report
Accounting & Financial Close

Create financial Perform financial Perform financial Perform financial

record accounting closing reporting

Manage Treasury
Treasury Management
Analyze and
Manage payments implement treasury
Manage cash and Secure financial
and bank procedures and
working capital risk
communications policies

Manage Real Estate

Real Estate Management

Acquire and Allocate real

Define & plan real
onboard real estate &
estate strategy
estate workspace

Operate real Retire real estate Manage real

estate & assets & assets estate master data

Fig. 15.1 (continued)

Fig. 15.2 Plan to optimize Plan to Optimize Financials

financials Financial Planning and Analysis
Perform Perform
Perform financial
planning/budgeting/ management
analysis
forecasting accounting

about identifying, measuring, analyzing, interpreting, and communicating financial

information to managers for tracking the company’s objectives. Thus, managers are
supported in making well-informed business decisions. Cost accounting is a subdi-
vision of management accounting which particularly aims on capturing the total
costs of production by considering variable and fixed costs. It helps managers to
identify and decrease unnecessary spending and exploit profits. Finally, in the
analysis phase the plans are compared to the recorded information in the operational
phase. Thus, deviations can be determined, and corrective measure be taken.

Invoice to Pay (Fig. 15.3)

This objective of Invoice to Pay is to ensure that the bills are paid. It keeps track of
the debt owed by the company. Supplier invoice management processes the invoices
from suppliers, after a service was provided or a product delivered. Payables
236 15 Process of Finance

Invoice to Pay
Supplier Invoice Management
Process
supplier
invoice

Payables Management Treasury Management

Manage Manage payments

Process accounts Manage payables
financial Process payments and bank
payable (AP) financing
settlement communications

Fig. 15.3 Invoice to pay

management is responsible for keeping track of monetary assets. The process begins
with managing financial settlements and continues to process accounts payables so
that the company has a financial overview. The process also covers the payables
financing which is in charge of clearing supplier’s invoices and processing the
payments to the right creditors. Accounts payable represents an account within the
general ledger which denotes an organization’s obligation to pay off a debt to its
creditors or suppliers. Basically, accounts payable are amounts as a result of received
goods or services from suppliers that have not yet been cleared. The total of the
outstanding amounts owed to suppliers is depicted as the accounts payable balance
on the company’s balance sheet. Increase or decrease in total accounts payable from
the prior period is reflected on the cash flow statement. Payable financing is a form of
credit where companies borrow money from a supplier in order to purchase products
and goods from the supplier. Companies that require additional working capital,
payable financing is an adequate solution. With this type of financing, companies
don’t have to tap into their assets or resources to purchase additional inventory.
Treasury management handles the payments and communication with banks. It aims
to optimize a company’s liquidity, while also mitigating its financial, operational,
and reputational risk.

Invoice to Cash (Fig. 15.4)

This process is similar to Invoice to Pay process with the difference of owing the
debt to the company by customers.
Customer invoice management performs the preinvoicing of billing content.
Furthermore, third-party invoices are handled and if necessary, included in the
invoice which is sent to the customer. Receivables management ensures that
payments are received in an orderly manner. This subprocess starts with the man-
agement of financial settlements and continues with managing the customer credit
risk. Accounts receivable and disputes are processed. Receivable financing and
collection processing are performed. Accounts receivable represents the balance of
money that must be paid by customers for received goods or services. Accounts
receivables are recorded on the balance sheet as a current asset considering any
Business Process 237

Invoice to Cash
Customer Invoice Management Receivables Management

Perform pre-
Manage 3rd party Invoice Manage financial Manage customer
invoicing of billing
invoice customer settlement credit risk
content

Receivables Management Treasury Management

Manage Manage and Manage payments
Process accounts
Process disputes receivables process and bank
receivable (AR)
financing collections communications

Fig. 15.4 Invoice to cash

amount of money owed by customers for purchases made on credit. Accounts

receivable is comparable with accounts payable, but instead of money to be received,
money to be owed is in focus. Accounts receivable can be analyzed with the turnover
ratio or days sales outstanding to have an expectation of when the money will
actually be received. Receivables financing is relevant when customers receive
funding based on issued invoices. Those invoices due to purchased goods or service,
but the payment hasn’t been received so far. Treasury management handles the bank
interactions and finalizes the payment process.

Record to Report (Fig. 15.5)

The subprocess is composed of creating a financial record, performing financial

accounting, financial closing, and financial reporting. This process generates infor-
mation which can be used by the management to examine the state of the company.
Financial accounting is a subdivision of accounting which records, summarizes, and
reports the myriad of transactions resulting from business operations over a period of
time. These transactions are concised in the financial statements, the balance sheet,
the income statement, and the cash flow statement. Financial accounting uses several
established accounting principles. The relevant accounting principles are subject to
the regulatory and reporting requirements of the company. For example, companies
located in the United States of America must perform financial accounting in
accordance with generally accepted accounting principles (GAAP). The GAAP
provides consistent information to investors, creditors, regulators, and tax
authorities. Financial closing is a periodic process in management accounting.
Accounting teams prove and adjust account balances at the end of a defined period

Record to Report
Accounting & Financial Close

Create financial Perform financial Perform financial Perform financial

record accounting closing reporting

Fig. 15.5 Record to report

238 15 Process of Finance

(e.g., annually or quarterly) for creating financial reports for the company. The goal
is to inform the management, investors, lenders, and regulatory agencies regarding
the financial situation of the company. Closing the books encompasses consolidating
transactions from various accounts, reconciling the data to confirm its correctness,
and identifying irregularities and anomalies. It is vital that at the end the sum of all
debts is equal to the sum of all credits. The general ledger accountant, the closing
specialist, the business analyst, and the consolidation expert are the four main
personas that ensure accounting accuracy and transparency.

Manage Treasury (Fig. 15.6)

Every company has bank accounts that deal with incoming and outgoing cash flows
due to payments. These must be monitored and managed. In small businesses,
accounting or even management takes care of it itself. However, the larger a
company is, the larger and more complex payment transactions are usually. To
manage it efficiently, a full-time position or even several is often needed: a treasurer
or treasury department is hired or established. The main goal of treasury manage-
ment is to control the liquidity of the company in such a way that it remains solvent
at all times. In addition to cash or liquidity management, the tasks of Treasury
Management are also risk management in the area of enterprise finance, as well as
asset management and capital procurement. Treasury Management is a subdivision
of financial management in many companies. While financial management focuses
on managing financial resources so that revenue targets are met, treasury manage-
ment focuses on ensuring liquidity at all times. Financial Management defines the
financial plan that contains the strategies for achieving the financial goals of the
company. Treasury Management ensures that the strategies defined for the short- to
medium-term goals are implemented.
One task of Treasury Management is liquidity or cash management. It captures
and controls the cash flows of liquid funds and is used for the internal and external
financing of the company. The aim is to ensure solvency. Corporate financial risk
management is also in focus of Treasury Management. For the success of a com-
pany, it is important that payment flows are managed in such a way that there is no
deficit at any point in time that could cause the company to fall into late payment. To
manage these cash flows efficiently, Treasury Management is required. It performs
this task as part of liquidity management. In this way, a company ensures that
working capital is used in an optimum and optimal way so that the long-term
financial targets (revenue increase, cost reduction, and so on) are met.

Manage Treasury
Treasury Management
Analyze and
Manage payments implement treasury
Manage cash and Secure financial
and bank procedures and
working capital risk
communications policies

Fig. 15.6 Manage treasury

Solution Capability 239

Fig. 15.7 Manage real estate Manage Real Estate

Real Estate Management

Acquire and Allocate real

Define & plan real
onboard real estate &
estate strategy
estate workspace

Operate real Retire real estate Manage real

estate & assets & assets estate master data

Manage Real Estate (Fig. 15.7)

This process has one subprocess Real Estate Management which is responsible for
managing the real estate of the company. The process to manage real estate begins
with defining and planning a real estate strategy and continues to purchase and
onboard real estates. Real Estate Management focuses on profit-oriented and value-
based procurement, management, and marketing of real estate in organizations that do
not have real estate as core business. Often these properties are also referred to as
corporate real estate. After allocating the real estate and workspace the process of
operations is triggered which covers for example paying rents and performing regular
inspections and maintenance. Once the real estate is no longer needed, they are retired.
Managing of the real estate master data is an essential task and also considered.

Solution Capability

The end-to-end process of Finance is mainly implemented by SAP S/4HANA

Finance as depicted in Fig. 15.8. While SAP S/4HANA Finance covers the core
functionality SAP Digital Payments, SAP Multi-Bank Connectivity and SAP Cash
Application include extended features.

SAP S/4HANA Finance

SAP Digital Payments, SAP Multi-Bank Connectivity,
SAP Central Finance, SAP Cash Application, …

Cost Management and Profitability Analysis Subscription

Enterprise
Commodity Billing &
Overhead Cost Product Profitability Risk &
Management Costing Analysis Management Revenue
Compliance
Management

Accounting and Financial Close

Revenue &
Financial Financial
Treasury Real Estate
Cost Entity Close Management Management
Accounting Reporting
Accounting

Financial Operations
Electronic Bill
Accounts Accounts Cash Settlement Travel
Presentment &
Payable Receivable Management Management Management
Payment

Fig. 15.8 SAP S/4HANA Finance—functional architecture

240 15 Process of Finance

Financial Operations processes outgoing and incoming invoices and responds

rapidly to fluctuating market dynamics. Advanced Financial Operations balances the
need to decrease days sales outstanding (DSO) and bad debt write-offs, while
maintaining superior customer service and reduced costs with automated exception
handling, validation, and routing of invoices. Accounting and Financial Close
simplifies corporate accounting and financial close, close books, creates financial
statements, and manages according to IFRS as well as local legal regulations.
Advanced Accounting and Financial Close drives a faster, compliant financial
close with less cost and effort and a high degree of automation. Treasury Manage-
ment improves the management of every activity associated with cash, payments,
liquidity, risk, and compliance by simplifying working capital, risk management,
and compliance. Real Estate Management performs activities from portfolio analysis
and investment tracking to lead qualification, lease posting, rent escalation, and
maintenance and repair service orders. Cost Management and Profitability Analysis
collects, assigns, and analyzes costs by project, order, cost center, or business
process. It evaluates the profitability of markets, channels, products, and segments.
Enterprise Risk and Compliance manages risks, controls, and regulatory
requirements in business operations, especially import and export compliance, as
well as free trade agreements. Commodity Management identifies and qualifies
financial risks associated with commodity price volatility in sales and procurement
and mitigates by hedging them with commodity derivatives. Subscription Billing
and Revenue Management leverages flexible models to include subscription and
usage-based billing, partner revenue share, receivables management and payment
handling as well as credit and collection management.

Financial Operations

Financial Operations is a function that keeps track of incoming and outgoing

payments in real time. It provides an overview of the financial state of an organiza-
tion by keeping track of all the financial operations in the company. The financial
information is divided into different areas that each deal with their own topic. In
Accounts Payable the way the data is recorded and managed is simplified. The
money that is owed by a company to its creditors is presented as a liability in the
company’s balance sheet. This function provides a simple overview of the money
owed and the due dates which help with management. Accounts Receivable
manages customer accounts receivable efficiently. Accounts receivable involves
money a company is owed from its clients or customers for goods supplied or
services rendered. In Accounts Receivable the management of accounts that owe
the company money is facilitated by automating invoice-to-cash processes which
can be triggered automatically to accounts in response to changes in the general
ledger. With this solution insights into the sales can be gained instantly in real time.
If there are any problems the system will react and notify the person in charge who
can react quickly and avert a crisis. With Cash Management the company can
monitor everything that involves managing cash and liquidity centrally by
Solution Capability 241

monitoring the cash flow in real time to make sure that the company maintains
sufficient liquidity. In today’s digitalized world, an Electronic Bill Presentation and
Payment is mandatory. This function provides an electronic bill and the option of
paying online. This function also supports companies in creating electronic invoices
for their customers according to company format guidelines. The solution improves
service by empowering customers with a payment portal and e-billing. Electronic
Bill Presentment and Payment involves presenting bills on the web and offering
customers the option of paying their bills online. Settlement Management involves
complex, high-volume financial payment processes that companies offer to business
partners. To simplify this process SAP S/4HANA integrates core-business functions
in the order-to-cash cycle. The Travel Management manages all processes involved
with business trips and travel expenses. This solution keeps track of the expenses
incurred and is responsible for reimbursing employees accordingly.
Advanced Financial Operations is an extension of the Financial Operations. By
automating exception handling, validation, and routing of invoices the company can
reduce costs and maintain superior customer service. Receivables management
includes billing to customers and managing disputes, collections, and customer credit
risk. Today, receivables managers must constantly balance the need to reduce days
sales outstanding (DSO) and bad debt write-offs, though maintaining superior cus-
tomer service. SAP S/4HANA Finance provides automated, integrated, and collabo-
rative processes for receivables management. A streamlined payables management
reduces costs and gains better control of invoicing. Furthermore, it integrates elec-
tronic documents into accounts payable process to ensure high collaboration, easy
document exchange and archiving (Fig. 15.9).

Accounting and Financial Close

To keep the company’s books clean and organized SAP S/4HANA Finance provides
the Accounting and Financial Close module. The general ledger created in this
function is the foundation of the company’s finances. On the basis of that ledger
insights into legal reporting and management profitability are provided. The solution
supports the company by keeping all financial data in a central place so that reporting
and accounting can be done properly. Revenue and Cost Accounting keeps track of
the incoming and outgoing cashflow on a detailed level. The company can increase
accuracy by keeping up with cost accounting changes on an ongoing basis. By
automating the recognition of revenue and costs processes one can reduce audit cost,
days to close the annual books, and the overall finance cost. The universal journal,
SAP S/4HANA’s general ledger is the heart of Finance as the single source of truth,
providing the basis for instant insight into legal reporting and management profit-
ability on a detailed level. Financial Accounting enables real-time reporting. This
function streamlines financial processes which provide granular information. It
enables financial reporting and real-time, self-service analytics directly from highly
granular operational data, which support the management of assets and the closing of
the books at the end of the year. Due to data model simplification, the asset worklist
242 15 Process of Finance

Fig. 15.9 SAP S/4HANA Finance—payment management overview and process flow payment
items

is included as central entry point. The solution improves extensibility for managing
fixed assets and supports for year-end closing for multiple ledgers and company
codes. At the end of the year the subprocess Entity Close can efficiently close the
books and create a financial statement according to the preferred layout that complies
with international financial reporting standards. The Financial Reporting provides
information that discloses an organization’s financial status to the management,
Solution Capability 243

investors, and government. The information helps managers make fact-based

decisions as well as support the company with audits and compliance. The solution
extends revenue accounting and reporting with additional value-add scenarios and
optimizes integration with the universal journal.
Advanced Accounting and Finance Close provides financial insight and control
through a faster, compliant financial close with less cost and effort, for example,
efficiently close books on time and create financial statements at entity and corporate
levels for International Financial Reporting Standards, U.S. GAAP, or other local
requirements. Based on accounting data, together with logistic data, processes like
central tax, central closing, and forecast analysis on group level are available on the
single source of truth. The financial closing cockpit streamlines and orchestrates the
full closing process. Companies can also use an approach to centralize their finance
functionality in a central and separate SAP S/4HANA system, leveraging the
procedures and replications on SAP Central Finance (Fig. 15.10).

Cost Management and Profitability Analysis

This solution keeps track of the costs and profitability of a service or a product. With
the overview of costs and profitability, the company can adjust their product
portfolio or optimize the costs for the products or services. It compares the costs to
the turnover to create a profitability analysis. Overhead Cost Management provides
high transparency and insights on the overhead allocation process with the speed of
the universal journal. For cost centers (actuals and plan), profit centers (actuals and
plan) and margin analysis are available. Overhead allocation assessment, distribu-
tion, and top-down distribution for actual data are supported. To keep track of the
overall spending in the company the Overhead Cost Management calculates all the
costs needed for a certain period. It then takes the plan and compares it to the actual
spending in the period. SAP S/4HANA Finance provides the user with information
displayed in graphs that highlight outliers. By flagging these discrepancies, an
employee can react quickly and prevent damage to the company or eliminate the
reason for the deviation. Product Costing enables the creation of financial statements
on group level which means the costs created by the production of a single product or
service can be calculated. This happens without extract, transform, and load pro-
cesses so that a continuous accounting is facilitated. Profitability Analysis offers an
overview of the profitability of products including the risks and the costs. The central
storage of the company’s data facilitates the process of analyzing the profitability in
real time. This solution assists in creating the product portfolio of the company. It
reduces risk and cost due to real-time financial reporting and multidimensional data
analysis for accounting standards. For business reporting, for example, cash flow
statement, semantic tagging is used (Fig. 15.11).
244 15 Process of Finance

Fig. 15.10 SAP S/4HANA Finance—allocation flow and display journal entries in
T-account view

Treasury Management

Treasury Management is responsible for the cash management and communication

with banks. The solution enables cash, liquidity, and risk management as well as
integrated financial reporting. It improves the management of every activity
Solution Capability 245

Fig. 15.11 SAP S/4HANA Finance—project profitability overview and cash-flow overview

associated with cash, payments, liquidity, risk, and compliance by simplifying

working capital, risk management, and compliance. Treasury Management gains
complete transparency into and control over interrelated activities and automate
critical processes to better understand the risks of those activities and how to mitigate
them. The control over these complex demands ensures adequate liquidity to drive
growth and innovation, while preventing exposure to the growing financial risks.
The solution includes payments and bank communications, cash and liquidity
management, debt and investment management and financial risk management.
246 15 Process of Finance

Fig. 15.12 SAP S/4HANA Finance—cash-flow analyzer and process receivables

The module provides enhanced reporting capabilities, expanded coverage of

legislations in foreign currency hedge management and accounting for
U.S. GAAP. Treasury Management allows to check the actual and forecasted cash
positions to assist cash allocation decision-making. It supports to display, create, and
change data about the banks that companies, their customers, and their suppliers use
to transact business. Master data of the company’s corporate or business bank
accounts can be managed centrally, as well as house bank accounts. Additionally,
future liquidity trends can be forecasted (Fig. 15.12).
Solution Capability 247

Real Estate Management

The solution facilitates all processes across the real estate lifecycle. These include
investment and construction, sales and marketing, lease and space management but
also maintenance and repair. It performs activities from portfolio analysis and
investment tracking to lead qualification, lease posting, rent escalation, and mainte-
nance and repair service orders. Real estate objects management provides a dual
view of master data, with an architectural view and a usage view. Furthermore, it
creates and manages all types of real estate objects, including business entity, land,
building, rental unit, rental space, and rental room objects. The contract management
capability handles all contracts associated to real estate portfolio, including lease-in,
lease-out, customer, and vendor contracts. Additionally, it assigns rental objects
from diverse business entities, buildings, or company codes to contracts. Space
optimization offers accounts for exceptional architectural structures, usage
considerations, and technical amenities. Moreover, it defines space flexibly and
rents them, extracting them from a larger available space, represents the real estate
objects visually via data exchange with external graphic systems. With credit-side
view of lease-in processes for example cash flow to the landlord can be controlled
but also expense posting be organized. Various centralized business processes are
supported, for example, integrated asset management postings and reports, real
estate controlling, planning of new building developments, maintenance, and mod-
ernization projects.

Enterprise Risk and Compliance

This solution assists with managing risks, controls, and regulatory requirements in
business operations. For the purpose of minimizing risk and checking compliance of
all payments of any nature, incoming or outgoing, are checked based on Enterprise
Risk and Compliance. If there are any issues the solution alerts the responsible
automatically which shortens the response and reaction time. The solution provides
the necessary information to make a quick and information-based decision to
minimize the risk. Enterprise Risk and Compliance helps in ensuring compliance
guidelines and identifying risks. For example, letter of credit keeps track of credit
scores of customers and blocking shipment of products if the credit score is not
compliant with company guidelines. The international trade management provides
information and layouts for legal control and compliance in the international market.
The solution improves business performance and decreases the cost and effort of
managing governance, risk, and compliance—and provides transparency through
compliance check results. The goal is to streamline and automate processes, antici-
pate and manage risk events, reduce compliance violations, and extend governance,
risk and compliance programs into value-adding business activities. International
trade classification allows for the classification of products using commodity codes,
intrastate service codes, and customs tariff numbers, as well as product classification
using control classes and control groupings for legal control. International trade
248 15 Process of Finance

Fig. 15.13 SAP S/4HANA Finance—compliance rung and data monitor

compliance manages licenses in accordance with legal control for export and import
processes and controls statutory regulations for import and export. Furthermore, it
handles blocked legal control documents, countries/regions under embargo and
intrastate declarations and their master data (Fig. 15.13).
Solution Capability 249

Commodity Management

Commodity Management is responsible for identifying and qualifying financial risks

associated with commodity price volatility in sales and procurement. The solution
helps to keep track of suppliers, resources, and the development of prices. This way
the company can better decide on a procurement strategy for their resources or
mitigate the risk by hedging them with commodity derivatives. Additionally, the
exchange rate can be monitored for provided services in a different country with
another currency. The module supports material management contracts from com-
modity pricing to risk analytics and makes mark-to-market queries including stock
logistics documents and financial derivatives. Commodity procurement facilitates to
enter, process, and manage purchasing contracts, purchase orders, goods receipts
and invoices for commodities of all industries. It performs an easy-to-use formula-
based commodity pricing, also for future dates and uses the market data management
based on derivative contract specifications. Furthermore, commodity procurement
helps entering and allocating price fixations, and performing period-end valuations.
Commodity risk management deals with commodity futures, commodity forwards,
commodity swaps, listed options, OTC options, and process the respective master
and market data. In practice, option contracts are mainly traded on forward
exchanges. This means that the purchaser and seller of an option do not interact
directly with each other. As an alternative to this indirect, commercial execution,
direct trade has established which is also referred as over the counter (OTC) trading.
OTC options are contracts that are processed exclusively in direct trade. Commodity
risk analytics helps in analyzing commodity price risks for commodity derivative
and logistics positions. The commodity price risk-related information is derived
from the document flows, commodity derivatives, and logistics transactions. Com-
modity Sales allows entering, processing and managing sales documents, deliveries
and billing documents for commodities of all industries. It uses the market data
management based on derivative contract specifications and allocates price fixations
and performs period-end valuations.

Subscription Billing and Revenue Management

This function allows organizations to use flexible payment models to include

subscriptions and usage-based billing. Subscription Billing and Revenue Manage-
ment is the preferred subledger in SAP S/4HANA Finance for industries with high
volume and high-performance requirements, as well as for service-based scenarios,
for example, Utilities, Telco, and Insurance. It offers a lot of flexible and creative
models to include subscription and usage-based billing, partner revenue share,
receivables management and payment handling and credit and collection manage-
ment. Key feature are subscription business models with recurring- and one-time
charges, rating and billing of millions of usage transactions converged from multiple
transactional platforms, complex, volume-based discounts and surcharges, revenue
sharing and partner settlement. Subscription order management helps customers to
250 15 Process of Finance

Fig. 15.14 SAP S/4HANA Finance—classify product commodity codes and finance analytics

provide their business solutions as a combination of products and services. It enables

the customers to offer their products as-a-service and usage-based services with
consumption-based pricing models. Convergent invoicing combines information
from numerous billing streams as well as rated events. It allows service providers
to consolidate charges into a single invoice and offer a complete view of the
customer. Providers are able to accommodate partnerships with third parties and
offer new services by outlining which party is accountable for any given charge.
Conclusion 251

Furthermore, they can handle sophisticated rules for invoice-level discounting. By

significantly streamlining complex billing processes, providers can offer customers a
single, consolidated invoice, while delivering better, more personalized services.
Contract accounting allows to assign individual clearing strategies, automate pay-
ment reconciliation, and create reports which are aligned with accounting principles.
Due to automated processing payments days sales outstanding is reduced. Credit and
collections management offers credit scoring of new and existing customers based
on historical customer data connected with external credit rating agencies. It
automates routine tasks in the collections process for mass volumes of customers,
for example, the calculation of interest payments. Collections strategies can be
continuously optimized by using champion/challenger analysis. By providing an
overview of the credit and collection history of new and existing customers the days
sales outstanding and the risk of nonpayment can be reduced, while retaining loyal
customers. Financial customer care facilitates customer service agents to manage
customer financial inquiries efficiently and consistently (Fig. 15.14).

Conclusion

Finance is a supporting business process in the value chain that receives financial
information from the other core processes. The process starts with performing
planning, budgeting, and forecasting. Invoice to pay manages supplier invoices
based on account payable. Customer invoices are handled with invoice to cash
process based on accounts receivable. Accounting and financial close are also in
scope of this supportive process. Treasury management covers payments and bank
communications while real estate management deals with the entire lifecycle of real
estates. In SAP S/4HANA this end-to-end process is mainly covered by SAP
S/4HANA Finance. SAP S/4HANA Finance provides functionality for financial
operations, enterprise risk and compliance, cost management and profitability anal-
ysis, accounting and financial close, real estate and treasury management. The SAP
S/4HANA modules are deeply integrated and frequently interacting so that also
additional components contribute to handle this end-to-end process.
Industry Solutions
16

This chapter tackles the verticalization specific functionality of SAP S/4HANA.

Covered are the industries for the consumer, discrete industries, services, energy and
natural resources, financial and public services. The switch framework is depicted,
which enables the implementation of industry solutions.

Functional Scope

SAP S/4HANA offers more than 25 industry solutions that provide tailored industry-
specific business processes. These solutions can be grouped into consumer industry,
financial services, energy and natural resources, service industry, public services and
production industry. As depicted in Fig. 16.1 the industry solutions are built by
enhancing the S/4HANA core modules like R&D/engineering, procurement, supply
chain, manufacturing, sales, service, finance, and asset management.
Key question is how those different industry solutions are isolated while they are
enhancing the S/4HANA Core functionality? The underlying concept for this is the
Switch Framework which enables switching code so that industry functionality can
be implemented. Thus, customers can activate explicitly industry solutions in accor-
dance with their business scope. In the next sections some of the industry solutions
are briefly explained to provide an impression of their functionality.

Consumer Industry

This category covers the industry solutions for consumer products, life science, retail
and wholesale distribution.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 253
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_16
 254

SAP S/4HANA

Industry Solutions

Higher Engineering,
Defense & Professional Telecommuni-
Healthcare Education & Public Sector Construction,& Media
Security Services cations
Research Operations

Travel & Sports & Oil & Gas /

Chemicals Mill Products Utilities Banking Insurance
Transportation Entertainment Mining

Industry,
Consumer Wholesale Aerospace &
Life Sciences Retail Automotive High Tech Machinery &
Products Distribution Defense
Components
Switch Framework

ERP Core

R&D Asset
Procurement Supply Chain Manufacturing Sales Service Finance
/Engineering Management
16

Fig. 16.1 SAP S/4HANA industry solutions

Industry Solutions
Consumer Industry 255

Consumer Products

Consumers of the current generation are demanding, spontaneous, and savvy. How can
consumer products companies meet these demands and remain profitable? The answer
is to target all aspects of business activities toward the end customer, that is, the
consumer. With last-mile distribution, the process of distributing consumer products to
the retail outlets and retail chains is supported. Manufacturers and suppliers can view
and coordinate all phases of the sales process centrally. This industry solution provides
many functions for route planning, execution, and monitoring.

Retail

Current trends in retail are online trade, new and innovative shopping opportunities,
and sustainable businesses. Customers require a smooth shopping experience without
interruption which is on the other hand as personalized as possible. To meet these high
expectations, companies need to embrace intelligent and efficient digital solutions.
Optimal master data management is therefore one of the key components of the
consumer products industry. The associated industry solution enables companies to
maintain products with all related product master data and context information,
display them compactly, and navigate to related business objects from there. In
addition, products can be grouped together across processes and products that meet
selected criteria and can be adjusted quickly. Product hierarchies can be used to
analyze how customers can find a product that they want to buy. Season management
can use yearly periods as a time-dependent characteristic for products. Assortment
management allows companies to create assortments and assign validity periods to
them. This information can be combined with location information to deliver the right
products to a store at the right time. Buying is also a key component. The industry
solution supports best-order planning and processing, as well as collective order
management, when combining several purchase orders from different stores and
managing perishable goods. To save time, the industry solution forwards warehouse
stocks and sales figures to vendors and manufacturers, so that they can optimize their
material requirements and replenishment planning. It also supports the internal pro-
curement processes and the industry solution as the basis for the replenishment
process. Distribution curves define in which ratio different variants of a product are
required. As a result, repeat orders are easier and more precise.

Solution Functional scope

Agriculture • Agricultural contract management
• Third Party sales and purchase end-to-end process
• Contract tolerances, flexible pricing, revenue recogniation
Consumer • Last mile distribution for direct distribution
products • Route assembly based on freight orders
• Settlement and route monitoring
Life sciences • Drug formulation and recipe development
• Clinical trial supply management
• Strategic sourcing and procurement
(continued)
256 16 Industry Solutions

Solution Functional scope

Retail • Assortment management, merchandise buying, vendor-managed
inventory, replenishment planning, demand forecasting, Inventory
management
• Retail for merchandise management, Store layout and retail price
management, promotion management
• Demand and supply segmentation, Supply assignment, Sales order
management and processing
• Manufacturing
Wholesale • Demand-side forecast collaboration
distribution • Invoice automation, extended warehouse optimization
• Business network for logistics

Agriculture—maintain ACM trading contract, consumer products—route overview

Production Industry 257

Production Industry

This category covers the industry solutions for aerospace and defense, automotive,
high tech, travel and transportation, industry machinery and components.

Automotive

The automotive industry currently has two goals: on the one hand, it is important that
traditional business remains profitable and continues to grow. On the other hand, it is
important to find and implement innovative ideas and solutions in the new world of
mobility. The industry solution in the automotive industry focuses on the wholesale
and retail trade of vehicles. It supports the sale of vehicles that are in stock by
searching for desired configurations and by reserving the results. It also supports
delivery documents, trade-ins, and the buyback of used vehicles. In addition, it
allows to order vehicles that have not yet been manufactured. The configuration is
then forwarded to the manufacturer. Dealer vehicle orders for the warehouse are also
supported with receiving the vendor invoice and posting. The industry solution also
provides a web portal through which dealers can find and order vehicles and view the
status. Spare parts can also be ordered and returned. Management of warranty claims
and the related return delivery and recalls from manufacturers can also be managed.

Solution Functional scope

Aerospace and defense • Grouping, pegging, distribution
• Transfer/Borrow loan payback
• Resource-related billing and incoming orders
• Project earned value
• Inventory management, initial provisioning
• Maintenance planning and stock calculation
Automotive • Enhanced configuration management
• Packaging logistics, just-in-time inbound and outbound
• Planning, tracking and execution
• Parts interchangeability, production backflush
• Self-billing, evaluated receipt settlement, supplier
workplace
Engineering, construction and • Bill of services, equipment and tools management
operation • Plant engineering and construction
• Homebuilding, real estate sales
High tech • Software license and installed based management
• Contract management and billing process
enhancements
• Condition techniques in distributor reseller
management,
• Manufacturer and supplier processing
• Distributor and reseller processing
Industry, machinery and • Product design with 3D visual and variant configuration
components • Predictive material requirements planning
• Asset networks and predictive services
(continued)
258 16 Industry Solutions

Solution Functional scope

Travel and transportation • Passenger travel and leisure
• Cargo transportation and logistics services
• Billing and revenue management

Automotive—JIT delivery scheduling, travel, and transportation—travel and expenses

Energy and Natural Resources 259

Energy and Natural Resources

This category covers the industry solutions for chemicals, mill products, mining, oil
and gas and utilities.

Oil and Gas

Oil and gas customers have some requirements, for IT systems that other industries
do not have. Throughout the entire value chain, it is necessary to comply with
regulations and to pay customs duties and taxes, even when it comes to support
and resale. The industry solution supports the management of all these requests.
Volumetric reports can be used to prove compliance. Taxes can be calculated or
proposed automatically for goods movements, purchase orders, and goods receipts
and issues. In addition, the oil and gas industry uses volumes, mass, energy, density,
and heating value as units. The industry solution provides functions for quantity
conversion and the storage of values depending on environmental conditions such as
pressure and temperature. Furthermore, silo and tank management can be used to
read material stocks in silos on a regular basis. For prices, the industry solution offers
some enhancements such as the storage of five decimal places, contract prices,
generation of customer price lists, and time-dependent pricing. Load information
can be forwarded to external systems via an interface. In addition, enhancements for
the administration of checks and the grouping of goods into batches are part of the
industry solution.

Utilities

In the utilities industry, retail is different compared to other industries. Customers

consistently receive a service. This is measured and corresponding payable amounts
are calculated based on this data. This calculation can be performed on a regular or
event-based basis. The industry solution can be used to define products and their
characteristics, and to create timelines for billing. Furthermore, payments can be
simulated so that no unnecessary posting takes place later. Incidental costs are
distributed over the entire delivery period. Typically, providers offer network-related
services such as grid usage for other market participants. The provider then sends
grid usage bills to the users. Electronic invoices can be created, notifications can be
processed, and incoming payments can be posted accordingly, and payments can be
allocated. Measurements can produce discrete data or equidistant time series values
which are validated by the solution. Schedules are created and issued for the periodic
meter reading orders. The module also provides functions for uploading and entering
measurement data. Device management enables the handling of procurement, stor-
age, and stock movements, as well as the installation, replacement, and removal of
meters and other devices at the customer site. Separation and reconnection manage-
ment is also part of the industry solution and enables automatic or manual
260 16 Industry Solutions

separations and reconnections at the request of the customer or for other events such
as forfeited claims. The industry solution also offers a web application template for
customer self-services. Customers can manage their online account, as well as all
personal and contact information, pension orders, and payments. Bills and consump-
tion can be displayed and there are options for communicating with the utility
company. Customer service employees can use a co-browsing function to help
customers by considering the same information as a customer on their screen and
thereby providing them with more precise support. There are also functions for
regulations and requirements that apply in certain countries and regions.

Solution Functional scope

Chemicals • Embedded sample management including safety and products service quality
• Scenario simulation toward assumptions, risks or business events
• Physical assets and legal compliance
Mill • Original batch management and fast entry of characteristics
products • Reel calculation and characteristic-based packing in outbound deliveries
• Classifying purchasing info records and cutting stock transfers, single unit
batches and setting final delivery indicator
• Delivery-related trading unit change, packaging material items in delivery
• Enhancements in production planning and control
• NF metal processing
Mining • Maintaining and optimizing all mining processes
• Collecting data on all mining processes
• Planning long and short-term production objectives
• Managing costs of entire supply chain
• Managing distribution processes
Oil and gas • Production and revenue accounting
• Upstream operations management
• Field data capture for upstream allocations
• Downstream
Utilities • Device management
• Energy data management
• Contract billing and invoicing
• Customer service and work management
• Intercompany data exchange and advanced metering
Financial Services 261

Utilities—periodic meter reading, chemicals—chemical inventory reporting

Financial Services

This category covers the industry solutions for banking and insurance.

Banking

The main business areas of banks are deposits, loans, and collateral. For all three, the
industry solution module offers functionalities. Deposit management enables to
262 16 Industry Solutions

manage checking accounts, fixed-term deposits, and savings credits. This includes
various functions to support the lifecycle of deposit contracts and the management of
master data. It is also possible to monitor payables and receivables, to manage
business transactions such as the creation of debit memos and checks. Incoming
and outgoing payments and standing orders can also be managed with the industry
solution. Credit management includes structured loans like in area of retail loans as
well as complex loans such as mortgage loans. The industry solution also supports
the lifecycle of loan contracts and the management of master data. Cash flows can be
calculated and various business transactions managed such as disbursement, waiver,
write-off, borrower change, or disbursement. There are functions for billing pro-
cesses for loans as well as for incoming and outgoing payments, such as repayments,
interest payments, and disbursements. The module provides front- and back-end
support in the area of collateral management. Integration into the operational
transaction systems for customer information management, risk management, docu-
ment management, and instruction creation are ensured. The solution contains
capabilities for managing and monitoring the use of collateral. Integrated object
management can be used to supply and evaluate data for various collateral objects,
such as real estate, and to retrieve and consume credit information. This minimizes
manual processing tasks and enables to assign simple and complex relationships
between exposures, collaterals, collateral providers, and collateral recipients.
Calculations such as collateral coverage, distribution of deposits, relationship of
credit to value, calculation of free collateral, and under coverage of collateral are
supported. In addition, the module helps to create, post, and manage cash
impairments for balance sheet and off-balance-sheet transactions, and make
proposals for individual loan officers. The component contains interfaces with
which both SAP and non-SAP systems can be used as data sources. When the risk
provision is posted, the system immediately transfers all balance-sheet-relevant data
to financial accounting. Moreover, there are functions for regulations that apply in
certain countries and regions.

Insurance

The industry solution for insurance supports policy management and allows to
handle insurance contracts and contains capabilities along the lifecycle of a contract.
This includes issuing policies and the current contract maintenance up to contract
termination. The module enables life, claim, accident, and vehicle insurance. In the
area of claims management, the industry solution maps the entire entitlement cycle
to automate and manage the whole claim process from the first claim notification, to
the adjustment of claims, and to financial reporting. The solution also supports
additional types of insurances like liability insurance, health, and care insurance,
as well as insurance for workers. Its features can be used to record loss notifications
received through different channels and to create entitlements. As a result, relevant
information can be maintained, and entitlements can be evaluated. The industry
solution provides functions for payroll, and payment. Thus, collection and payment
Financial Services 263

tasks can be performed centrally for various business areas, which enables more
accurate payment processing and improves credit control. Functions related to
collections and disbursements for reinsurers enable integration with the general
ledger. Thus, almost nondisruptive end-to-end business processes are guaranteed,
transaction costs of reinsurance business processes reduced, and improved customer
satisfaction achieved. The accounting of open items, payment processing, corre-
spondence, and dunning can also be carried out using this industry solution. In
addition, broker accounting and coinsurance business can be mapped and the
automation of business processes and integration with business insurance systems
and back-office applications such as the general ledger are facilitated. The industry
solution also offers features for compensation processes. Sales structures can be
reproduced, and flexible incentive systems can be set up. Standard agreements can
be used as the basis for creating individual agreements and processing commission
cases. Compensation planning can be utilized to create consistent plans, to distribute
the company strategy to specific sales targets, and to cascade plan changes. Thus,
new organizations can easily integrate with sales composition and reward for selling
redesigned products can be adjusted. Customer segments can be assigned to field
service providers and commercial portfolio relationships. Employees are kept up to
date with the latest rules and regulations. Internal and external sales targets can be
aligned with the company’s overall strategy and sales force compensation can be
automated to achieve these targets. The industry solution also supports legal
reporting to be provided by insurance companies. This is enabled through quarterly
reporting and analytics on premium reserve funds. It is also ensured to create reports
for capital investments in accordance with legal requirements and send them to
BaFin. Required reports in specific layouts or electronic formats are provided to
correctly record risks and portfolio data to national and international authorities.
Forms or electronic formats from actual subledgers are created, and legal authorities
can be preconfigured with relevant data for report layouts for country-specific/
regional or international versions. The insurance product engine consists of a design
time environment for product modeling and a runtime environment for product
operations. Moreover, there are features for regulations and requirements that
apply in certain countries and regions.

Solution Functional scope

Banking • Deposits and loans management
• Collateral management
• Reserve for bad debts
Insurance • Collection and disbursements
• Policy and claims management
• Incentive and sales force management
264 16 Industry Solutions

Banking—manage restriction for debiting, insurance—claims supervisor overview

Public Services

This category covers the industry solutions for defense and security, healthcare,
higher education and research and public sector.

Defense and Security

The internal and external security industry has some special requirements that are
covered by the associated industry solution. An important task within the industry is
the planning of deployments. This includes the creation of all available armed forces
structures, organizational units, material planning objects, and personnel. By using
Public Services 265

hierarchical relationships, these can be displayed, and reference structures can be

used as templates. Wartime functions can also be defined. When planning personnel,
position, job, qualifications, and persons are available as additional characteristics.
Staffing requirements can be represented by assigning positions to motorized
elements. Scenarios can be used to structure capability-based planning and develop-
ment processes and to compare possible scenario age native processes. Operations
and exercise items with the characteristics of procurement, rotation, and readiness
can also be defined and managed with the industry solution. Within the military
supply chain, defense equipment management is an important task that also requires
support from software systems. This includes comparing authorized and actual
materials, managing personal and functional equipment, planning accruals for
nonconsumable materials, and identifying materials using the manufacturer part
number. Furthermore, maintenance can be planned, and critical status indicators be
defined. The industry solution also provides support in the planning and execution of
complex procurement of consumable goods and defensive materials. Nonetheless,
the module offers support in the execution of replenishment procurement of con-
sumable goods and defensive materials. The industry solution supports also defining
explosive locations and all related characteristics to store explosive materials safely.
In addition, information such as the net explosive weight for all of the explosive
location and the compatibility status can be recorded.

Higher Education and Research

The industry solution focuses into a student information system. This includes
functions for the teachers as well as for the students. The application and admission
process are supported by creation and editing of forms using templates. The integra-
tion of admission processes in self-services is supported so that applicants can track
the status of their applications. For curriculum management course or program
catalogs enable students to book, change, or cancel course bookings online. Require-
ment catalogs can be created and managed to control admission to a course or the
receipt of a degree. Students can execute what-if scenarios to indicate the
requirements for a course. With centralized management of grades, students can
review exam grades and make requests to change grades as needed. They can also
monitor their academic progress and assess their graduation status. Administrators,
consultants, and teaching staff can also view student progress and make better
decisions, prepare support offerings, and accompany the completion process. Stu-
dent administration can also be used to efficiently maintain and manage student data,
and to organize all types of requests for the university and students, such as leave of
absence or part-time study.

Public Sector

The industry solution for the public sector contains many features for the areas of
funds management, grants, tax, and social services.
266 16 Industry Solutions

For funds management, the industry solution offers features around budget
maintenance, budget execution, budget closing, and financial reporting. The objec-
tive of budget maintenance is on management and monitoring of public funds.
Budgets can be transferred to other projects and departments and changes can be
tracked and monitored throughout the entire budget cycle. Approved budgets can be
uploaded to the system and rules for adjusting a budget increase based on revenue
can be defined. It also contains monitoring functionality for budget overview,
comparisons of budget versions and revenues increasing the budget. Budget execu-
tion focuses on integration of operational and accounting processes with the
maintained budget. The industry solution enables real-time and parallel budget
controls that can operate on multiple levels, helping to monitor and control funds
while reducing procurement and operating costs. Parts of the available budget can be
earmarked for expected revenues or expenditures. A separate cash ledge and a
budgetary ledger for the creation of financial statements for governmental reporting
are also available. There are also reports for a budget execution, an overview of
budget availability, operational transactions affecting budget execution, a compari-
son of fiscal years, commitment and actual line items, the comparison of budget lines
versus commitment and/or actual line items and earmarked funds journal available.
Budget closing and financial reporting contains the planning, standardizing, sched-
uling, and monitoring of financial and budget close activities. Open remaining
commitments, budget committed, and residual budget at the end of the fiscal year
can be managed. Budgetary accounting data with financial and managerial account-
ing can be reconciled. Here are also reports available that support the monitoring of
the commitment carry forward, cash flow reporting, and cash basis reporting.
The grants management is split into the areas: sponsor management, budget
management, grants billing and receivables and closeout. Sponsor management
covers functionality for defining sponsor master data, documenting sponsor com-
munication, and all budgetary agreements. Available funds can be controlled by
releasing budget in tranches throughout the fiscal year or lifetime of the grant based
on sponsor defined rules. Reports on all attributes of a specific or series of sponsors
and grant agreements can be created and the grants management keeps all informa-
tion based on the sponsor perspective. Those are the sponsor’s currency, time
frames, and fiscal years. Budget management is about the maintenance and monitor-
ing of grant budgets. The industry solution provides the functionality to enter and
update grant budget data as required, to control the use of available funds and to
define rules for when and how a budget increase is permitted. It also offers reports for
a budget overview, comparison of budget versions, and an overview of revenues
increasing the budget. Grants billing and receivables contain maintaining sponsor
billing methods, ensuring proper accounting and timely reimbursement as well as
documenting and automating many processes, including billing and receivables. It
supports manual, resource related, milestone, and periodic billing. Reports of bill-
able amounts based on status (open, partially, or completely billed) for one grant,
group of grants, sponsor, or group of sponsors are available. Closeout contains
functionality for creating customized closeout rules that meet sponsor guidelines
and requirements. It helps ensuring that the grantee properly concludes all programs
and projects according to sponsor specifications. Also, overhead, or indirect cost
Public Services 267

calculation can be run, and residual budgets transferred. Reports on all grants are
offered. Public sector collection and disbursement are used to manage taxes, charges,
and state benefits from or for taxpayers like business partners, citizens, and students.
Contract accounts receivable and payable manage the business partners, their
accounts, and contract objects, as well as the related business transactions. Also,
the processing and management of mass data are supported by the industry solution.
Tax identification and returns processing enable government agencies to adminis-
trate the complex and lengthy tax and revenue management lifecycle. This includes
key processes such as registration, account maintenance, tax return filing and
remittance processing, billing, correspondence and contact management, audit and
compliance. With the capabilities of the industry solution, revenue types can be
defined, the taxpayer registration enabled, tax return and registration capture used.
Furthermore, automatic and manual form-based tax return processes are
implemented, tax objects are processed, and invoicing is managed.
Investigative case management enables to handle investigation processes from start
to finish. It allows to set up and run functions and processes for cases, activities,
incidents, persons and organizations, objects, locations, documents, including all their
relationships. The social services management solution helps social services agencies
to receive benefit applications from their customers, determine an applicant’s eligibil-
ity, and calculate the benefit entitlements. Eligibility and entitlement rules can be
implemented without coding and are used to automate the decision-making process.
The industry solution provides functionality for case management, benefit and deduc-
tion decision processing, payables management, payment handling, business rules
processing as well as activity, business partner and document management. Multi-
channel foundation for Public Sector is a constituent-facing solution that enables
public sector organizations to interact with their constituents using a set of
standardized and reusable services. Thus, users can manage online accounts, constitu-
ent details, payments, and external users. Moreover, process forms can be created,
billing information accessed, and communication displayed. Additionally. the industry
solutions contain country and region-specific features.

Solution Functional scope

Defense and security • Material planning and operations
• Military supply chain
• Explosives management
• Support for flight operations
• Investigative case management
Healthcare • Patient management
• Ambulatory case management
• Clinical systems
Higher education and research • Student lifecycle management
• Planning of academic offerings
• Administration of fees and grants
Public sector • Public sector management
• Collection and disbursement
• Tax, revenue and social services management
• Multichannel foundation for public sector
268 16 Industry Solutions

Defense and security—manage force structure, public sector—funds management

Service Industry 269

Service Industry

This category covers the industry solutions for engineering, construction and
operations, media, professional services, telecommunications, sports and
entertainment.

Professional Services

The industry solution for professional services consists of three parts: Project and
engagements, resource management, and service management. Projects and engage-
ment enable users to create projects with the creation of sales documents like
quotations, contracts, or sales orders. Projects can also be created with the standard
work breakdown structure. Resource management provides a range of tools and
reports to establish links between employees and business objects, and thereby
adjust processes and workflows to suit the size of the company and the spectrum
of the services. These tools can also be used to manage assignments of employees to
both client-facing and internal engagements. With the lean stuffing feature the right
professionals for engagements can be easily identified, selected employees can be
assigned to engagements, the employee assignments can be monitored, and time
recordings can be validated. Reliable reports and forecasts about employee utiliza-
tion can be obtained and integrated functions for service-specific billing and finan-
cials can be used. With enhanced time recording, data for staff assignments from
lean staffing can be displayed and used to perform automatic input checks during
time recording and integrate service attributes to enhance the data record structure.
Also, employees can plan their time, while documenting their availability in parallel.
This improves the assessment of the employee commitments, raises visibility of
employee utilization, and increases the reliability of the business forecast. In service
management additional attributes can be used that allow flexible definition and
capture of diverse requirements for service providers. These parameters are then
available throughout the commercial service process, and can be used selectively in
individual process steps, especially to control processes in resource-related billing.
Work periods can also be used to add enhanced capabilities for billing services. In
resource-related billing, the system consolidates work and cost assigned to a project
and considers these values for invoice creation. With power lists, lean staffing can be
combined with specific processes or used to invoke actions based on the information
chosen to be displayed. Also, power lists can be used for staffing assignments, sales
documents, and debit memo requests.

Solution Functional scope

Engineering, construction and • Pre-construction
operations • Construction supply chain
• Project delivery and asset management
Media • Media sales and distribution, self-services
• Advertising and campaign management
(continued)
270 16 Industry Solutions

Solution Functional scope

• Title lifecycle management, customer interaction
center
Professional services • Projects and engagement
• Resource management
• Service management
Telecommunications • Contract accounts receivable and payable
• Management of telecommunications services
• Incentive and sales force management
Sports and entertainment • Fan management
• Venue and business operations
• Teams performance

Professional services—project costs and maintain resources

Solution Concept 271

Solution Concept

The Switch Framework builds the foundation for the implementation of the industry
solutions in SAP S/4HANA. It allows users to externally control the visibility of
repository objects or their components by means of switches. Since the Switch
Framework is integrated in the ABAP Workbench and already contains all industry
solutions, these no longer need to be installed before they can be activated. With
switches, enhancements can be installed in SAP S/4HANA in an inoperative mode,
without affecting the system behavior. Only when the switches are turned on, the
corresponding enhancements become effective. This approach can be used to import
mutually exclusive enhancements into the same SAP S/4HANA system, as long as
only one is switched on afterwards. Typically, only one industry solution can be
effective in the same system, but with the switch technology they can be installed
into the same system in an inoperative state. Another feature of the switch and
enhancement framework is the good performance, since in most cases enhancements
and switching are handled by the ABAP compiler that generates corresponding code
and thus avoids interpretation of meta data at runtime. A switch determines whether
an associated switchable development object is effective or inoperative. Switches are
repository objects. The difference between a switch and a field in a customizing table
is that a switch can define which parts of the source code will be compiled—
inoperative code will not be compiled and therefore will not be available at all. A
switch determines

• whether data dictionary (DDIC) objects such as types are available in SAP
S/4HANA,
• whether a development object, for example an enhancement implementation, is
effective and can be used in the system,
• the visibility of maintenance views within view cluster and view fields in mainte-
nance views,
• the visibility of screen fields and which modules are called in user interface flow
logic.

There are various types of development objects that can be switched, but the
possibilities to declare them so at design time differ slightly: Most types of objects,
for example all enhancement implementations for ABAP are assigned to a switch
indirectly by associating their package with a switch as shown in Fig. 16.2. Some
development objects do not belong to a package; they can be associated with one or
multiple switches, depending on the object type. Furthermore, switchable user
interface elements can be specified whether they should be visible when the switch
is turned on, or whether they are hidden. Although area menus belong to packages,
their package switch is not used but switches can be defined per node. Thus,
granularity of switching is increased, and switch definition is aligned with
customizing which use the same hierarchy tool. A package can be assigned to
exactly one switch; a switch, on the other hand, can be assigned to multiple
packages. All switchable repository objects are affected by the package’s switch
272 16 Industry Solutions

state. Packages can be nested. The state of a switchable object depends on the switch
assignment of its package; if there is none, then on the assignment of its super
package, and so on. Therefore, a subpackage switch overrides a super package
switch. Not all development entities can be switched in the same way. While it is
simple to either compile or not compile a source code section, switching table
definitions and other DDIC structures have to be treated carefully. Therefore,
switches provide three states:

• Off: All associated objects are switched off. The system behaves as if the objects
don’t exist.
• Standby (enabled, but not effective): All declarative repository objects such as
DDIC structures, tables, and static source code enhancements—that can only
contain declarative statements—are switched on. All other repository objects are
switched off. Standby has system-wide consequences.
• On: All associated objects are switched on. They are available in the system like
nonswitched objects. This activation can be client- or user-specific.

At a given point in time, a switch has one of three states: OFF, STANDBY, or
ON. Simply spoken, an object is not visible in the system if the switch is OFF, only
visible at development time if the switch is STANDBY, and visible at runtime if the
switch is ON. Except for DDIC switches and business configuration sets, switch
states can be client-specific. A use case for standby switch state is when an industry
solution requires some data types of an industry extension without having to activate
the coding. In case a switchable object is not assigned to a switch—for example
because neither its package nor super packages are assigned to a switch—then it is
regarded as switched on. Since there may be many switches that have to be switched
as a group to enable a new functionality, it is not possible to change the state of a
switch directly. Instead, the concept of business functions has been introduced that
map one specific business function to a set of technical switches.
Note that the sets of switches assigned to different business functions are not
disjoint. The same switch can be assigned to multiple business functions. Even if
some business function is switched off, some of the assigned switches may be on if
they are controlled by other business functions as well. This might lead to surprising
results if the switches and the switch assignment were not designed carefully.
Switches are assigned to business functions either as an activation switch or as a
standby switch. From an administrator’s point of view, business functions are the
most fine-grained units that can be turned on or off, thus changing the state of
assigned switches. Initially, all switches are in state OFF. When a business function
is set to ON, activation switches are turned to ON, and standby switches to
STANDBY. When a business function is switched OFF, the framework has to
check all assigned business functions. If one of them is ON, then the switch will
not be turned off. Standby switch assignment is needed when packages with mixed
content—for example type definitions and executable code—are needed by multiple
business functions, and some of them only need the type definitions.
Conclusion 273

Business
Codebase
Function Set 1
Switch 1
Business Function 1 Package
Switch 2
Business Function 2
Package
Switch 3
Business Function 3

Switch 4 Codebase

Fig. 16.2 Switch framework

A business function is a self-contained function from a business perspective that

refers to a set of switches. A switch can be assigned to more than one business
function. By activating a business function, all assigned switches are turned on or to
standby respectively, depending on the definition of the business function. Business
functions may be declared reversible if their switches don’t affect the data dictionary.
Only reversible business functions can be turned off again. However, this is not
recommended in production systems. When assigning switches to business
functions, it can be chosen whether a switch should be turned on or turned to standby
when the business function is activated. A business function may depend on another
business function as a prerequisite, or may be not allowed in conjunction with
another business function. Those dependencies can be defined by developers and
are checked before turning business functions on or off. A business function set is a
group of business functions that usually corresponds to an industry solution. A
business function can be part of multiple business function sets. Business function
sets are used to bundle business functions that should work together in an industry
solution. Business function sets can be nested, for example to include one industry
solution in another. Therefore, they can be insertable, that is to structure business
function sets only, and they can be selectable, that is they are able to be switched
on. A business function set can be selected using the Switch Framework customizing
tool. This provides a selection of industry business functions which can be turned
on. The selection of the business function set can be only changed to a set that also
contains the industry business functions that already have been turned on.

Conclusion

SAP S/4HANA provides a variety of industry solutions that extend the core ERP
functionality. Some capabilities are quite common while some are specific and
provide better workflows and full support for unique use cases. Additionally, the
industry solutions contain features that were particularly developed for countries and
regions with unique regulations or challenges. The Switch Framework enables the
implementation of industry solutions so that they can be easily activated and used
with minimal effort. The Switch Framework provides a structured approach for
274 16 Industry Solutions

installing software in S/4HANA in an inoperative state, with the option to activate it

later. In inoperative state the software exists in SAP S/4HANA but is not executed.
The Switch Framework allows installing enhancements without activating them.
 Part III
Conceptual View

This part describes the conceptual foundation of SAP S/4HANA applications. It

presents the technology components and programming model that form the basis of
SAP S/4HANA, both on premise and in the cloud. The section starts with the
product qualities which are expected from ERP products and explains how they
are implemented based on the SAP S/4HANA solution architecture as depicted in
the next figure. From the database system, to application server and user interface
layer the corresponding conceptual approaches are elucidated by clarifying the use
case and defining the solution (Fig. 1).
SAP S/4HANA is available for on-premise, public, and private cloud deploy-
ment. However, SAP S/4HANA has basically one code line for different deployment
options. Thus, the concepts are principally the same and are explained in the next
chapter uniquely, even if there might be minor differences in the transition time.
Usually, new features are developed first for public cloud and made available for on
premise and private cloud later as shown in Fig. 2.
Being able to quickly grow the feature set and to address the scope that large-
enterprise customers require is one of the key differentiators of SAP S/4HANA
Cloud. So, what would be a better basis for a software-as-a-service ERP than the
classic on-premise SAP ERP? SAP ERP alone has 80 million lines of code—the
whole SAP Business Suite has more than 300 million—it supports 25 industry
solutions, globalization, and localization for all countries—and all the best-practice
business processes that made SAP successful. As a functional basis for a software-
as-a-service ERP this is a valuable foundation. It is all there and just needing to be
enabled. Thus, the path to SAP S/4HANA Cloud started with SAP ERP and was
continued with S/4HANA On Premise. SAP began re-architecting and refactoring
SAP ERP to benefit from SAP HANA’s native capabilities—like, for example,
combined transactional and analytical processing in one SAP HANA instance,
getting rid of persisted aggregates and index tables. To be able to complete this
journey, in 2015 SAP branched into a new SAP HANA-only product code line,
which enabled even completely new processes on an SAP HANA-optimized model.
For example, real-time inventory management in materials management, which is
now built without any persisted aggregates and a lock-free, insert-only architecture
276 Part III Conceptual View

User Interface

Implementation
Management
Lifecycle

Design/Conversational/Mobile

Application Server

Core Business Internet of

Localization

Configuration
Performance
Scalability &

Processes Things

Transactional Analytics & Artificial Process/Data

Processing Search Intelligence Integration

Virtual Data Model

Security & Privacy

Extensibility
Database System

In-Memory/Column-based/Engines

Fig. 1 The SAP S/4HANA architecture and concepts

Fig. 2 One code line for on

premise and cloud

SAP S/4HANA
Cloud Scope

SAP ERP
Compatible

SAP S/4HANA
On-Premise Scope
Part III Conceptual View 277

that drastically increases the throughput. It is important that with this new code line,
SAP ensured semantic compatibility, which means that the semantic business data
model is kept compatible to SAP ERP, so that especially integration interfaces like
BAPIs and IDOCs are compatible to a large degree. Only exception here are
so-called deprecations that SAP manages on a so-called simplification list.
So, what is now SAP S/4HANA Cloud? SAP S/4HANA Cloud is a full software-
as-a-service ERP with Finance, Sales, Procurement, Logistics, covering more and
more functionality from the former SAP ERP scope. And this scope is a subset of
SAP S/4HANA On Premise. SAP S/4HANA On Premise and Cloud have the same
code base—but of course this does not mean that the products are identical—but
they are highly compatible, which is especially important for hybrid deployments.
Scope of SAP S/4HANA Cloud can rapidly grow as features are already available
under the hood in the code line; they just need to be cloud enabled. It is also clear that
effort is required to prepare these business processes to work in a software-as-a-
service (SaaS) deployment efficiently. The software and the application architecture
must be prepared for cloud scalability like multi-tenancy, guided configuration and
simplification, cloud extensibility, and integration. And, therefore, a large portion of
development efforts is invested on public cloud qualities to make SAP S/4HANA
Cloud a compelling SaaS offering.
Most customers start their cloud transformation with their commodity and
non-differentiating business processes like HR, Travel Management, or Finance.
Consequently, customers will have at least temporary hybrid landscapes requesting
very good integration between on-premise systems and their cloud solutions SAP
SuccessFactors, SAP Ariba, SAP Fieldglass, and SAP Concur. As SAP S/4HANA
On Premise and Cloud have the same development code line, SAP can offer a native
integration between cloud and on-premise applications. The APIs are just the same,
and the business processes are semantically compatible. Thus, especially two-tier
SAP S/4HANA On Premise to SAP S/4HANA Cloud scenarios are supported. An
example is manufacturing plants running their local finance in SAP S/4HANA
Cloud and consolidate back to the headquarters, which is running SAP S/4HANA
On Premise, whereas the manufacturing, inventory process run locally only.
ERP Product Qualities: Customer View
17

This chapter deals with the qualities that an ERP system must provide from the
perspective of a customer. The qualitative characteristics that make an ERP system
useful and provide users with the desired advantages are described in detail. For this,
the qualities are clustered and explained one by one.

ERP Qualities Expected By Consumers

Companies implement ERP systems for example to integrate their business pro-
cesses, minimize interfaces, improve scalability, enable multilingual capability,
centralize the system for reducing complexity, develop uniform data structures and
processes, and ensure security. In addition, they want to significantly improve their
productivity, service delivery, business network collaboration, and transparency.
Thus, customers have a clear expectation regarding quality attributes and value of
ERP systems. Figure 17.1 summarizes the most relevant qualities consumers require
from ERP systems. Those are explained in detail in the next sections. Important to
outline is that those qualities are interrelated. For example, higher response time is
often achieved by data redundancy, on the other hand data redundancy results into a
more sophisticated solution for legal compliance requirements like data privacy.
Therefore, the qualities must be balanced and optimized as a whole. This is the task
of the architects who design the solution concepts and enable the implementation of
the qualities.

Data Isolation

Data Ownership and Isolation

Customer data that is exclusively owned by the customer. It must be separated from
the data of other customers. There should also be techniques in place to ensure data
and network isolation for tenant’s service. To reduce total cost of ownership (TCO)

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 279
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_17
 280

Data Isolation Security TCO Performance Service Oriented

Custom Data Isolation Legal Compliance Subscription Model Response Time Always Available
Data Residency Web/Internet Security Pay per Service E2E Processing Time Web Services
Tenant Flexibility Backup No IT costs Perceived Performance Self-Services
Segregation of Duties Disaster Recovery Fast time to value/ Zero downtime Embedded/Online Support
Preconfiguration
Decommissioning Liability of Provider Resilience
17

Innovation Standardization Flexibility Extensibility

Continuous Innovation Best Practices Scoping End-to-end Extensibility

Customer Involvement Consistency Customization Industry Verticalization
Web/Internet Standard Personalization Integration
UI Adaption/Branding Openness to Standards

Fig. 17.1 ERP qualities expected by consumers

ERP Product Qualities: Customer View
ERP Qualities Expected By Consumers 281

specially for cloud, network resources and common data are reduced to a minimum
number of system deployments and databases. The concentration of data and
resources introduces new risks, such as sharing the underlying infrastructure with
unknown and untrustworthy tenants. To mitigate these risks, a cloud infrastructure
provider or software as a service solution should provide strong guarantees for data
isolation. Independent of the solution, a customer should be the only owner of
their data.

Data Residency
This requirement is about the physical or geographic location of an organization’s
data or information. Data residency, like data sovereignty, refers to the legal or
regulatory requirements imposed on data bases in the country or region in which
they reside. For example, according to EUDP, cloud systems and services for
European customers must be operated by a team located in EU. Furthermore, there
must be full transparency of data center and data storage locations on request. Cloud
computing, which enables businesses to deliver hosted services over the Internet, can
raise concerns about data residency. Users of cloud computing are frequently
unaware of the physical location of their data, as cloud providers store data globally
across multiple data center locations. As a result, cloud service consumers must
understand where their cloud provider’s data centers are located around the world
and how different data residency policies apply to each location.

Tenant Move
Reorganization that leads to the consolidation or split of IT systems and conse-
quently to the moving, splitting, or merging of the application data of cloud services.
Also, a box-move of a tenant from one data center to another should be supported.
Often subsidiaries’ or subcompany’s businesses are the first to transition to the cloud
which is referred as two-tier model. As the company grows, change is unavoidable,
whether it is a reorganization, the acquisition of another company, or a merger with a
competitor. Especially the move of legal business entities into another geographical
area requires some flexibility in transferring data from one data center to another.

Segregation of Duties
Segregation of duties (SoD) is an internal control that ensures that at least two
individuals are responsible for the separate parts of any task in order to prevent error
and fraud. Sensitive data needs to be handled according to user role and duty.
Consequently, different authorizations are needed. An application running with
privileges more than what is required for the job, might be misused by attackers to
gain unauthorized access to data and system resources beyond the direct control of
the application. Apart from providing defense in depth, following minimal privilege
rules helps classify data and define access to it. The principle is that no single
individual is given authority to execute two conflicting duties. The requirement is
even more important if certain administrative tasks are delegated to third parties, be it
via complete outsourcing or by employment of third party resources.
282 17 ERP Product Qualities: Customer View

Decommissioning/Offboarding
The automated formal process to remove or retire something from active service.
Data return concept as well as a self-service scenario should be provided. After
contract end or tenant move, there must be an option to return and destroy the data
which is usually a legal requirement. The customer may request the export of their
own data to an appropriate media and in an appropriate data format such as .csv or
another standard format.

Security

Legal Compliance
Conformity with expected norms for security, breach prevention, privacy, operations
in cloud computing. Customers should have access to these audited reports,
certifications, and attestations. There are standards from bodies such as the ISO or
the Cloud Security Alliance which are applicable to virtually all customers around
the world. The next are regulations and standards that are based on regional or
national needs or data protection laws. Finally, regulations that have been put in
place for different industries. The cost benefits for cloud service providers come
from the ability to scale multiple clients across shared resources. Compliance can be
difficult as regulations frequently require encryption, auditing, and data separation,
which increase hardware requirements and limit resource sharing. Cloud compliance
requires a two-way partnership between the customer who owns the data along with
the legal obligations for the handling of the data and the cloud vendor who acts as the
data processor and must also handle the data in compliance with regulations.

Web/Internet Security
State-of-the-art web security standards must be ensured, for example, XSS, CSRF,
SQL injection, URL manipulation, Faked requests and forms, Cookie visibility and
theft, Session hijacking, Remote system execution, File-upload abuse, Denial of
service, Phishing, Malware, etc. Malware prevention/management with SLA should
be in place. Fast security patching. Web servers by design open a window between
the network and the world. The care taken with server maintenance, web application
updates, and the web site coding will define the size of that window, limit the kind of
information that can pass through it, and thus establish the degree of web security.

Backup
Each component must ensure the capability of online backup for all business
application data. Online backup means without shutdown of the component. To
minimize the risk of data loss, customers need to back up their business data
regularly.
ERP Qualities Expected By Consumers 283

Disaster Recovery
Possibility to recover data after loss. Recovery from backup must be possible also
across distributed landscapes and data centers. This includes that replicated data
needs special handling on application site, for instance data needs to be kept
consistent. Backup and restore must not imply an unavailability during the process
of data recovery. After a crash of one component within a scenario, it must be
possible to restore to a consistent state of the complete scenario. This requires that, in
addition to the component backup concept, the scenario backup concept must
include information about data dependencies between components and necessary
steps to come to a consistent state for the complete scenario.

Liability of Provider
For all services of the provider, security and data protection risks shall be identified
and transparently managed to achieve a secure service lifecycle protecting customers
and preventing liability risks. Consumer and provider should both agree and imple-
ment on a joint organizational interface including SLAs to discuss and to resolve
assumed or happened information security incidents. Liability remains a cornerstone
in the further expansion of cloud computing into all areas of business. For a company
planning on moving its data and processing into the cloud two factors are decisive:
risks associated and benefits to be gained. A right balance needs to be achieved
between attributing rights and liabilities among the parties as well as diversifying the
risks through cloud insurance. In addition, new approaches to the protection of
intellectual property rights in the digital world are being developed with the respec-
tive obligations of cloud providers.

Total Cost of Ownership (TCO)

Subscription Model
With a subscription licensing model, consumers pay a per-user fee, either monthly or
annually, which allows them to use the software during the subscription term. The
customer doesn’t own the software, instead it is leased. The subscription payment
includes software licenses, access to support services, and new versions of the
software as they are released. Subscription-based pricing model is applicable to all
service models (IaaS, PaaS, SaaS). The traditional pricing models are not applicable
in the Cloud as such for pricing of software products, for example, perpetual license,
application bundles. Customers are not owning the software anymore but consuming
services. There is a need for a clear and systematic pricing framework that allows a
customer or organization to purchase or subscribe to a vendor’s IT services for a
specific period of time for a set price. Subscribers typically make a monthly or
annual commitment to the services.
284 17 ERP Product Qualities: Customer View

Pay per Service

This is about a model in which the customer begins with a zero account, provisioned
cloud resources on demand, and is charged based on actual consumption (Pay-As-
You-Go). To support the customer digital transformation and to offer more flexibil-
ity and quick access to new product functionalities, providers offer new usage-based
commercial model (Pay-Per-Use) for cloud services.

No IT Costs
This requirement is about only paying for services instead of for hardware, software,
power and the support for keeping these items secure, stable, and functioning
properly. No additional costs for setup, maintenance, or upgrade of standard stack
(SaaS model) or underlaying platform (PaaS) or infrastructure (PaaS) are considered.
Upgrades are included in the monthly fees. Thus, no admin work and no IT skillset
are needed. The use of cloud computing eliminates the need for on-premises servers.
Customers no longer need to spend large sums of money up front on the hardware
and software required to run their network thanks to cloud computing. In most cloud
environments, these costs, as well as the cost of network maintenance, are included
in a flat monthly fee. Furthermore, when the server and network backbone need to be
upgraded, it is the cloud provider’s responsibility to do so—at no additional cost to
the user.

Fast Time to Value/Preconfiguration

Especially cloud deployment is the alternative to the do-it-yourself approach. In
many companies the Lines of Business (LoB) are leading the discussions with
specific insight to move into a cloud solution. The traditional internal-facing IT
department can be quickly left behind by buy-and-go cloud service adoption,
especially since the job of maintaining, patching, upgrading is all handled by the
cloud provider. As a matter of fact, a company now wants to get its cloud computing
arrangement off the ground in a very short time, with services running out-of-the-
box. Thus, this requirement is about fast time to availability, timely provisioning of
productive systems, fast go-live, predelivered content, best practice processes,
services running out-of-the-box, guided configuration, seamless data integration,
easy-to-use, intuitive, principle of one, low training effort, conversion/migration of
legacy systems, and online tutorials.

Performance

Response Time
Single transactions, often represented by backend calls, should have acceptable
response times even if the system is under load. An appropriate performance test
mechanism should be in place to identify performance bottlenecks. Also, response
times in production should be recorded. That is a good practice because none can
ERP Qualities Expected By Consumers 285

foresee and test all situations in a synthetic environment. Good response times are
especially important when users must work interactively.

E2E Processing Time

This quality is about optimized end-to-end processing time of business services. This
is the time to fulfill a task or a job, from login time until end of a process including
network latency. The most important indicators for performance are response time
and throughput. Good response times are especially important when users must work
interactively. For example, web shops lose business if their users perceive the shop
to be reacting too sluggishly. Also, network latency is the most significant factor in
poor response times when using Wide Area Networks (WAN) because latency time
adds significantly to the end-to-end response time.

Perceived Performance
This requirement refers to how quickly a software feature appears to perform its task.
This is the total time to get a reaction of the system considering the quality of the
outcome. Humans do not like to wait. Thus, the active and passive modes of a person
using a website or application must be considered. During the active mode users do
not realize they are waiting at all while during the passive mode their brain activity
drops, and they get bored. When real performance cannot be increased due to
physical limitations, techniques shall be used to streamline the end user’s experience
and increase the perceived performance. It’s about how fast a user thinks the
application is.

Zero Downtime
Zero downtime describes a quality with no perceived service downtimes from the
end-user’s perspective. Especially, updates or patches happen transparent to the user
without moving the application into a maintenance mode. The application can be
used by the users at any time. Any unplanned outage of the application can lead to
frustration of the users. For business-critical applications, any outage can even lead
to financial losses or potentially lost sales.

Service Oriented

Always Available
Services must be always accessible and available, ideally also on any device. If one
service fails, then the remaining services continue running (service degradation). If
one availability zone fails, then redirection to another. Also, the customer service
center can be contacted at any time with immediate response. Customers have high
demand of business continuity and need high availability of the computing infra-
structure. This also includes the response time to users’ requests. Especially in the
cloud they expect 24/7 access to the business data and applications no matter the
device or their location. There is also an increase in the use of mobile devices for
business applications which outlines the importance of the requirement.
286 17 ERP Product Qualities: Customer View

Web Services
Standard web access shall be provided for all applications and services, also for any
kind of administration or auxiliary services like Output Management, Business
Workflows, User Management. The SaaS distribution model provides applications
via the Internet that are accessed from a web browser, while the software and data are
stored on the servers. Web services are sometimes called application services. Web
services are made available from a business’s web server for users or other connected
programs.

Self-Services
This requirement is about a system that allows end users to set up and launch
applications and services in a cloud computing environment without the direct
intervention of an IT organization or a service provider. Self-provisioning by users
is applicable in public, private, and hybrid cloud scenarios. Examples for self-
services are resetting passwords, changing personal details, or creating incident
messages. End users want to be able to spin up compute resources on demand for
almost any type of workload. This eliminates the need for IT administrators to
provision and manage compute resources in the traditional manner. Also, cloud
environment is a closed ecosystem in which access is very limited and should be
restricted to few use cases and parameters which a key user is supposed to manage.

Embedded/Online Support
In many companies the Lines of Business (LoB) are leading the discussions with
specific insight to move into a cloud solution. With cloud software, technical support
is handled by the provider, hence LoBs can reallocate their limited resources to
growing their business. Applications need to be designed to support nontechnical
users. Thus, this requirement relates to enabling applications for business users
without technical skills, intuitive design, high user grade experience, and self-
explanatory. The application should provide an in-place capability to interact with
the provider regarding technical issues or inconsistencies with the software. Further-
more, the application should collect essential context information to avoid unneces-
sary interactions with the support to clarify basic questions. For most of the incidents
causing alerts, automated mitigations are in place. This requires the ability of the
system or system component to gather information about its environment at any
given time and adapt behaviors accordingly. Contextual computing, also known as
context-aware computing, employs software and hardware to automatically collect
and analyze data in order to guide responses.

Resilience
Applications should be designed to gracefully handle latency, inadequate response
times, and service unavailability of downstream systems. The applications should be
error tolerant and resilient to temporary problems, such as latency (time out, no
activity, network slowdowns), peaks, outages, asynchronous interface call
interruptions. Unavailability of application leads to unsatisfied users. For
ERP Qualities Expected By Consumers 287

business-critical applications, any outage can even lead to financial losses or poten-
tially lost sales. Enterprise applications are implemented in a distributed manner
which can lead to multiple risks, such as network communication issue, lost mes-
sage, long running requests, or even an outage of dependent systems. Resilience
mitigates these critical situations. The goal is to achieve a reliable system made from
unreliable components.

Innovation

Continuous and Fast Innovation

This requirement is about frequent delivery of new features, short release cycle, fast
adoption of innovations, and short lead time. Every day, technology progresses
further. Traditional IT processes are a poor match for today’s speed. The success
of the cloud and Software as a Service model reflects the users’ demand for fast
innovations. Computing is now driven by business needs that can be adapted with
frequent software adjustments in any week or even through the space of a day. But
today’s business environment requires more than just speed, though. Innovation—
the ability to develop new offerings, evaluate their potential market adoption, and
then roll out the successful ones—is equally important. In this case, too, cloud
computing is a far better fit than the traditional on-premise approach. Because
cloud services are instantly available, it is simple to try out a new offering.
Companies can get user feedback quickly, rather than waiting months for something
to be tested in the market.

Customer Involvement
This quality focuses on early involvement, customer and stakeholder engagement,
online feedback, embedded participation to ideation process, design thinking, agile
development, innovation platform. Producing meaningful and usable software that
meets the end users’ needs is the goal of every stakeholder. With cloud computing
the opportunity to influence software development decisions and adopt new
innovations early on is much higher. Hosting the software, monitoring the activities,
and sharing resources makes it easy to open for immediate feedback. Cloud services
are shared by many and hence each inconsistency or misbehavior of the system has
immediate impact on all consumers.

Standardization

Best Practices
Standard features should be available and should satisfy the customers’ need from
start to end. Predelivered best practice content, business processes, standard code
lists shall be provided. Industry- and country-specific business best practices, legal
compliance shall be supported out-of-the-box. The application should be compliant
288 17 ERP Product Qualities: Customer View

with standards and legal requirements. Customers want to reduce effort on standard
LoB processes and focus on core competencies and differentiating tasks.

Consistency
Customer expects harmonized user experience, business processes, data integration,
domain model alignments across all services since they don’t want to consider all the
technical background. Thus, approaches like principle of one are expected and not
having for example multiple frameworks for solving the same problem.

Web/Internet Standards
The requirement is about state-of-the-art Internet standards, such as routing (no IP),
caching, web protocols for application exits, stateless architecture, browser support,
device support, web tools, business payment standards. Enterprise applications store
and access data over the Internet. Especially in the SaaS model, providers install and
operate applications while users consume the software via web interfaces. For this
customer expects that all kind of web standards are met.

Flexibility

Scoping
Scoping is the process of selecting the required scenarios, business processes, and
functionalities by the customer in a controlled way. ERP systems are very rich in
functionality which brings new challenges in discovery and implementation. To
address these challenges, advanced techniques are provided to assist customers in
choosing appropriate services. Especially, in a consumption-based commercial
model it is important to enable only those services that are requested.

Customization
This quality refers to configuration options, branding tool, and theme designer.
Many organizations need to support similar processes. However, despite these
similarities, there is also the need to allow for local variations and adaption to
customers’ needs. Therefore, solution must be provided to configure applications
individually while sharing commonalities.

Personalization
This is about the capability for local settings and favorites handling. Users may
become more demanding when receiving/consuming such services as they are
exposed to a wide range of applications. Personalization is important in business
applications, just as it is in web and/or mobile applications.

UI Adoption/Branding
UI adoption describes the process of adopting user interfaces or other assets that are
delivered by the ERP provider out-of-the-box. Branding is the activity of connecting
ERP Qualities Expected By Consumers 289

applications with a particular color or layout in order to make users handle them
easier. Capabilities for UI adoption and branding must be provided.

Extensibility

End-to-End Extensibility
This quality focuses on the ability of extending standard services and processes in all
layers (table extension to UI field extension), as well as the extensibility of
corresponding APIs. Thus, vertical extensions of processes or services are enabled.
Partners extending core services may need an additional extension layer for their
customers. Each extension should be independent of any other extension and safe
from upgrades and updates.

Industry Verticalization
This quality allows enhancing the core functionality with industry-specific solutions
(vertical market).
Industry customers are challenging ERP vendors when it comes to industry
specifics. One size-fits-all software is starting to give way for more modular
verticalized approaches. A clear trend has emerged in recent years aimed at replacing
horizontal solutions with more customized solutions geared at specific industries
from Healthcare to Retail. Furthermore, while in the past there was a clear assign-
ment of a customer business to an industry solution, today’s companies are investing
in multiple industry businesses such as Oil & Retail, Manufacturing, and Utilities.

Integration

This quality covers anchor points, integration platform, integration out-of-the-box

and communication arrangements. Traditionally data and process integration has
been an exclusive task of IT specialists to connect systems with each other. As part
of this exercise, the tools used to build integration solutions are complex and often
require a programming background. In addition, they require a steep learning curve
and are costly to maintain. However, today business users or so-called citizen
integrators require integration out-of-the-box or want to accomplish the same tasks
easily with integration tools. Furthermore, robustness of public APIs in terms of
nonincompatible changes are required. Since applications that consume APIs are
sensitive to changes, APIs also imply a contract. The contract provides some level of
assurance that, over time, the API will change in a compatible manner so that the
consuming application won’t break.

Openness to Standards
This requirement is about providing public APIs, API management, open cloud
development environment and extension platform, and support for standard pro-
gramming languages (JAVA, JS etc.). Customers and partners want an extension
290 17 ERP Product Qualities: Customer View

infrastructure for integration, portability, interoperability, and innovation. They

would also like the possibility to combine services from different providers. To
allow other solutions to integrate, the application should expose public APIs over
standard web interfaces, for example, REST. There should be documentation listing
all APIs and explaining their usage.

Conclusion

Ultimately, the goal of ERP providers is to create value for its customers. Therefore,
the customer satisfaction regarding the usage of ERP systems plays an important
role. Customers are happy when their expectations of a product or service have been
met or exceeded. The individual quality characteristics of an ERP system are
therefore founded on the wishes and requirements of the customers. These
characteristics determine the quality and business success of the vendors and
customers. Overtime customer needs change. As a result, the quality characteristics
must also be adjusted and integrated by the respective providers.
ERP Product Qualities: Provider View
18

This chapter describes ERP product qualities which are expected from provider and
are ensured by the SAP S/4HANA architecture. Covered qualities are operational
efficiency, infrastructure, operations and monitoring, agility, and commercialization.
The qualities are clustered and explained one by one.

ERP Qualities Expected by Provider

Enterprise Resource Planning (ERP) systems are considered as management infor-

mation systems that streamline a company’s business processes. Providing ERP
software that meets the functional requirements of a company with an acceptable
quality level is challenging. Cloud computing can help to resolve some of these
challenges. Cloud providers not only build applications, but also run them under the
software-as-a-service paradigm. Customers can just consume the software as a
service by simply using a browser. Thus, IT departments on customer side no longer
has to deploy and operate the ERP system. The provider of cloud services is the
owner of the IT Environment. The primary task is to provide the services as declared
in the contract. In addition, it’s of utmost importance to provision and operate the
services in an effective and efficient manner. The whole business in the cloud is
driven by the goal of achieving a low TCO while delivering continuous innovations.
This is an ongoing process as the request for new functionalities and system
requirements is permanently changing. A platform is always designed for the current
usages and needs. Additional features, different usages, upcoming technologies, the
need to cover new businesses and markets, these are all points that require an
environment both technical and organizational that is capable of continuous adapta-
tion and refactoring of the IT and services. Thus, customers have a clear expectation
regarding provider of ERP systems. Figure 18.1 summarizes the most relevant
requirements regarding provider of ERP systems. Very important to outline is that
in case of private cloud deployed ERP systems, the customer takes the role of the

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 291
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_18
292 18 ERP Product Qualities: Provider View

Cloud Infrastructure Operational Efficiency Operations & Monitoring Agility

Cloud Operations Software Lifecycle Operation Tools Agile Software

Design Automation Infrastructure Monitoring Cloud Extensibility
Data Center Resource Sharing Platform
Application Management
Management Ecosystem Support
Content Lifecycle Service Monitoring
Infrastructure Management
Independent Product Usage Analysis
Simplification
Provisioning Tools Customer Activity
Scalability Tracking/Turn-Out
Global Scale Management
Elasticity
Dev-Ops Organization Cloud KPIs Commercialization
Test Automation
Continuous TCO Cloud License Models
Improvements
Partner License Model
Customer Loyalty
Program

Fig. 18.1 ERP qualities expected from provider

provider and is in charge for operations. Those are explained in detail in the next
sections.

Cloud Infrastructure

Cloud Operations Design

Cloud Computing is a large-scale distributed computing paradigm that is driven by
economies of scale, in which a pool of abstracted, virtualized, dynamically scalable,
managed computing power, storage, platforms, and services are provided on demand
to external customers over the Internet. Enterprises, service providers, and other
organizations are all migrating to virtual data centers, or cloud architectures, includ-
ing the new software-defined data center, as a result of the well-documented benefits
of agility, efficiency, and cost control provided by technologies such as virtualization
and cloud computing. However, the adoption of these new architectures calls into
question traditional management tools and processes for ensuring the data center’s
effective operation. The need to improve data center operations is leading to the new
concept of the cloud operations center. Thus, IT system needs to be designed to
support SaaS qualities and decision on platform and architecture is required.

Data Center Management

Traditionally, data center strategies focused on keeping applications running,
providing sustained and controlled growth, and doing so in a secure and fault-
tolerant manner. Today, not only the typical location, power, tax, outsourcing, and
employment base, decisions come into play, but new factors including cloud
operations, green environmental initiatives, and legal requirements. Legal
requirements must also be considered, such as the Chinese Cybersecurity Act or
ERP Qualities Expected by Provider 293

the European GDPR, which restrict data access to certain areas. Although most ERP
systems have limited influence on the network between the customer’s web browser
and the cloud, data centers should be always selected according to an intelligent
algorithm to minimize latency effects. Additional aspects of this quality are data
center infrastructure, computing and noncomputing processes, and outsourcing
strategy.

Infrastructure Independent
Cloud development and hosting environments should be independent of the infra-
structure or platform. Application and data portability are a fundamental goal for
cloud computing. Cloud infrastructures and platforms shall support business
applications regardless of style, age, ownership, and location. It shall be possible
to move to another cloud infrastructure or platform provider with minimal risk, short
delays, and no loss of data. Regardless of how, when, or where they were
implemented, applications should work with a standard set of underlying services.
Virtualization and containerization are fundamental technologies that power cloud
computing. The software tools separate computing environments from physical
infrastructures so that multiple operating systems can be processed. Furthermore, it
also allows to be independent of the underlaying infrastructure.

Provisioning Tools
Cloud provisioning is an important aspect of the cloud computing model that
describes how a customer obtains cloud services and resources from a cloud
provider. The cloud provisioning process can be carried out in one of three ways.
Advanced provisioning, dynamic provisioning, and user self-provisioning are the
three models. With advanced provisioning, the customer enters into a formal service
contract with the cloud provider. The provider then prepares and delivers the agreed-
upon resources or services to the customer. The customer is charged a one-time fee
or is billed on a monthly basis. Dynamic provisioning allows cloud resources to be
deployed in a flexible manner to meet a customer’s fluctuating demands. Typically,
deployments scale up to accommodate spikes in usage and scale down when demand
decreases. The customer is charged based on the number of times the customer uses
the service (pay-per-use). The customer purchases resources from the cloud provider
via a web interface or portal with user self-provisioning, also known as cloud self-
service. Additional aspects for this quality are tools and services to provision
software on given infrastructure, app center offering, feature and content activation.

Global Scale
Companies looking to expand the global scale of their businesses are increasingly
turning to the cloud. In order to minimize latency, instances need to be offered close
to the access points. However, sometimes regional or DNS failures must be consid-
ered, hence it should be possible to quickly set up a new instance build. The benefits
of cloud computing services include the ability to scale globally on a given infra-
structure or across data centers. Thus, services need to scale on given infrastructure
and data center should be distributed to decrease latency. Additional aspects for this
294 18 ERP Product Qualities: Provider View

quality are load balancing, no assumed IP addresses, geographic redundancy, no

special nodes, automatic cluster join.

DevOps Organization
DevOps is a set of cultural philosophies, practices, and tools that improve an
organization’s ability to deliver applications and services at high velocity by
evolving and improving products at a faster rate than traditional software develop-
ment and infrastructure management processes. Development and operations teams
are no longer separated in a DevOps model. Development and operations should be
either combined in a single organization or closely coordinated to ensure close
alignment. This speed enables businesses to better serve their customers and com-
pete in the market. Software starts to create value once it is successfully used by end
users. Therefore, software providers must ensure a high flow of work from the idea
to the development and use of new versions. Teams should focus on small set of
functionalities and release them as soon as possible to get feedback.

Operational Efficiency

Software Lifecycle Automation

In the classical on-premise world, the customer has the flexibility to apply updates in
a self-defined time frame. Cloud computing offers the possibility for faster
innovation cycles by releasing patches or new features more often, sometimes
even multiple times per day because the provider operates the software and can
update the software at any time. This requires a high automation of the update
process, especially because an essential part of the update is to make sure beforehand
that the new code fulfills the required quality level. When delivering frequently that
is only possible with a high degree of automation. Software lifecycle processes have
to be a nonevent from an effort and cost perspective. Continuous service delivery
needs to be performed without manual operation task. Software lifecycle automation
system is required to ensure high degree of automation everywhere, for example a
build pipeline, to support upgrades, patches and migrations, independent of
connected underlaying products.

Resource Sharing
Resources sharing leads to significant economic efficiencies. It allows development
teams to write code once, implement features in one codebase without duplication,
and serve multiple customers. By sharing a single codebase, cloud apps and data can
be patched and updated much faster. A cloud provider may choose between multiple
levels of resource sharing ranging from sharing same hardware using virtual
machines to sharing the same process through clever programming. For this com-
puting architecture is required that allows providers to share computing resources in
a public or private cloud.
ERP Qualities Expected by Provider 295

Content Lifecycle Management

The configuration data must be separated from the application data and system data.
However, coding and content should use similar processes and infrastructures.
Moving from support for initial activation to a complete product lifecycle, including
introduction, maintenance, extension, upgrade, and possibly retirement, is a funda-
mental change that requires rethinking basic principles of configuration delivery. In
cloud computing it is key to make business configuration as seamless and smooth as
possible for development, partner development, cloud operations, and customers.
The fast and simple setup of customer systems is only possible based on high-quality
content and a high degree of automation. As there are no consultants who can
intervene and have the knowledge to compensate defects, all standard content
needs to be useable out of the box.

Simplification
The IT industry as a whole is forced to think Simplicity. IT departments want to shift
their focus from the day-to-day demands of managing technology and concentrate
on delivering the innovation that technology makes possible. Businesses want to
reduce the complexity of their current network and data center and capitalize on the
flexibility and efficiency the cloud offers. For cloud providers simplification is a
prerequisite for operating an efficient cloud environment. Additional aspects of this
quality are reduced complexity of data models, principle of one, standard tools,
harmonization, intuitive user experience, and low data footprint. Companies typi-
cally have created a large amount of custom code that enhances and partially
replaces or even modifies the ERP software. This leads to a scattered IT landscape
with an ERP system that is difficult to upgrade to the next release. The massive
adjustments to the standard software have therefore locked the companies and
prevent them from taking the next step toward digital transformation. Now, in the
digital era, standardization is needed, and even though companies try to avoid
individualization wherever possible, they still demand a high degree of flexibility.
This includes reducing complexity through standardization and simplification of
business processes. ERP applications of digital time require the delivery of
preconfigured packages that enable fast implementations.

Scalability
Applications need to scale horizontally by adding more instances of a service (scale
out) or vertically by adding virtual CPUs or memory to existing instances (scale up).
Traditionally, businesses were tied to physical constraints, such as hard-drive space
and memory, all of which impeded scalability. The classic IT systems were
optimized for the current situation and the customer needs. In the cloud there can
be only one setup. With cloud computing, these constraints are replaced by an
infrastructure that can scale up or down (typically up) and adapt in harmony with
a business’s needs. A scalable system is one in which the workload that the system
can process grows in proportion to the number of resources provided to it, that is, its
capacity scales with available resources. Additional aspects of this quality are
296 18 ERP Product Qualities: Provider View

auto-scaling, economy of scale, or capacity on-demand without significant service

degradation.

Elasticity
This is about the ability to provide the same level of service regardless of current
load. For this the system needs to adapt to actual workload changes dynamically and
consider high frequency, peaks, low activity, and no activity. The platform/infra-
structure itself shall support the on-demand and elastic nature of the cloud approach
(automated elasticity), to be closely aligned as it expands and contracts with the
actual demand, thereby increasing overall utilization and reducing cost. Elasticity is
also important in Cloud environment where the resources are paid per usage.
Elasticity usually requires a scalable system; otherwise, the additional resources
have little effect. Elasticity is the ability to dynamically adjust the resources needed
to deal with loads, adding more resources as the load increases and shrinking as
demand decreases and unnecessary resources are removed. Thus, if the load
increases, more resources need to be added to keep the unused capacity as small
as possible while if demand decreases, resources must be constrained to keep the
wasted capacity as small as possible. To avoid the effects of unexpected peaks,
scaling must be as close to actual demand as possible, while keeping wasted capacity
as small as possible.

Test Automation
Automated tests make use of specialized software to execute tests which are
specified as code. In contrast to manual testing, alle test steps are automated. The
tests are stored together with the application code. The tests usually consist of three
phases: The test environment is built up, one or multiple actions are triggered, and
finally the actual outcome is compared to the expected one. Everything can be run
locally or fully automated in a build pipeline. Software should be tested before
releasing it to customers. This is true for both, for newly added features as well as for
existing ones. Verifying functional correctness is important for the consumer satis-
faction. Executing these tests manually is a repetitive, error-prone, and expensive
task. Especially, when delivering software frequently, as common in the cloud, it
might not be possible to execute all tests manually multiple times a day. Further-
more, the humans could likely miss a test step. Lastly, this repetitive task will
consume a lot of human resources and thus it is likely cheaper to automate the
execution of the tests. Regression testing is a type of software test aimed at finding
new software errors or regressions in existing functional and nonfunctional parts of a
system after new development, patches, or configuration changes. The developer is
responsible for writing tests for implemented features. There are multiple types of
tests and for each type different tools exist: Unit tests refer to the idea if testing single
small units, such as classes. Dependencies are usually mocked so that only the unit
under test is asset. Unit tests are the type of tests for which the greatest number of
tests should exist. Integration tests refer to testing the integration of multiple modules
and even dependencies. End-to-end simulates the typical user flow by using the full
application end-to-end.
ERP Qualities Expected by Provider 297

Continuous TCO Improvements

New technologies, improved operations techniques, and changing business require a
continuous improvement process in Cloud operations in order to keep the agility,
flexibility, scalability, efficiency, and low TCO. As the IT infrastructures behind the
cloud services are invisible for the customers, changes and migrations must be
hidden without interrupting the current operations. At the same time this is also an
opportunity to continuously adapt and improve the system. Infrastructure,
operations, and development should be continuously revised to keep a low TCO.
There is no final end state.

Operations and Monitoring

Operation Tools
Continuous Integration, Continuous Delivery, and Continuous Deployment (CI/DI)
is a collection of techniques, processes, and tools to improve software development
and delivery. CI/DI follows continuous integration and continues the feedback cycle
in software development and delivery. In the CI/CD pipeline, the code is tested
automatically to find any bugs early. Once validated, the code is automatically
uploaded to a repository. The CD process includes merging code changes,
in-depth testing, code releases, and providing production-ready builds of the soft-
ware. The aim of CD is always to have a code base that is as up to date as possible.
Therefore, it is important to integrate continuous integration with continuous deliv-
ery in the CI/CD pipeline. The essence of CD is to ensure that new code can be rolled
out with minimal effort. Thus, operations tools are required to support the CI/CD
processing. Furthermore, tools are necessary for managing costs, usage, and ulti-
mately optimize the cloud. Additional aspects of this quality are logging, auditing,
and exception handling.

Infrastructure Monitoring
There is nothing inherent in cloud implementation architectures that makes a cloud
100% reliable. The fact is, running a hugely scalable, automated, efficient service is a
lot of work. There are lots of moving pieces and sometimes things go wrong. Hence,
a tool is needed to keep the whole infrastructure continuously monitored. Such tools
must monitor the system availability, outages, or connectivity problems. Continuous
feedback from operations on how to improve operability is required.

Application Management
Software development and delivery in the cloud is different to the traditional world.
In the cloud, new developed code is shipped to all customers (almost) at once, hence
it has immediate impact on all instances. Furthermore, the changed behavior/new
features may have to be released in different time frames or geolocation. Therefore,
not only the resource locations must be known to the application, but the application
must also know which instance of the resources to use based on factors like
298 18 ERP Product Qualities: Provider View

geolocation, and which it should not be using perhaps due to eventual-consistency

jobs not being completed yet. Thus, adopted concepts are required for cloud
application deployment, upgrades, new features activation (e.g., toggling), and
software performance. This includes also restart and recovery of asynchronous
interfaces. Moreover, the application must work using minimal resources while
still delivering the level of service required in any given situation.

Service Monitoring
Observability is important to get an overview about the active services and to be able
to immediately react on failures or inconsistencies. With multitenant solutions,
debugging in production is hard and the real state of the application is in flux.
Thus, it is necessary that applications write comprehensive log information not just
to fulfil product standards (e.g., audit logs) but to easily analyze application failure
states ex-post. In addition, traceability between services as well as services and the
end users (e.g., based on correlation IDs) is an absolute necessity. Furthermore,
applications should be easily monitorable at runtime to detect nonapplication failures
such as slow networks or unresponsive downstream systems. Every service should
be monitored in order to check its performance and allow for corrective actions in
case of failure. Service Level Agreement (SLA) is usually employed to serve as a
bilateral contract between two parties to specify the requirements, quality of service,
responsibilities, and obligations. SLA can contain a variety of service performance
metrics with corresponding Service Level Objectives (SLO). Therefore, the values
of associated metrics must be measured which are defined in the SLA at the usage
stage to monitor whether the specified service level objectives are achieved or not.
Furthermore, service and resource usage must be metered and monitored on an
as-needed basis to support a dynamic scale feature.

Product Usage Analysis

Provider needs to understand if the innovations that are delivered, have an impact on
customer side and if the investment efforts are justified. Analysis and evaluation of
this usage data enable product and portfolio decision-makers to better define the
footprint in the market and to continuously improve product functionalities. By
being able to focus on the right use scenarios/products, development capacity can
be focused to the areas with higher relevance and benefit for the customers.
Enriching product scorecards with high level usage metrics is required. Feature
flags are in place to experiment and validate functionality with some customers
before they are generally deployed.

Customer Activity Tracking/Turn-Out Management

The objective is to identify different customer usage behavior, to reduce activities,
and to provide reminder options. Furthermore, telemetry is needed for monitoring a
consumption-based commercialization (pay-per-use). The service/resource usage
has to be metered, based on which the bill can then be calculated. Additional aspects
of this quality are contract management, entitlement, feature/service control
according to license and contract, and turn-out-management.
ERP Qualities Expected by Provider 299

Cloud KPIs
Key performance indicators (KPIs) are selected key figures from reports that have
been restricted by certain selections and for which reference and target values as well
as threshold values can be defined. KPIs are often used to measure a certain measure
of progress toward a goal or objective. The KPI value is often compared to a
reference number to determine what is an improvement. Although cloud services
abstract away and automate much of the underlying IT infrastructure, users still need
an objective way to measure service performance and the effect it has on their
business. To perform this kind of measurement, users need to define cloud perfor-
mance metrics. Cloud KPI reporting and predictive analytics provide SaaS teams
with an automated solution for consolidating cross-business data, developing accu-
rate SaaS metrics, and providing insight. KPIs are required to track and optimize
deployment, show operating status, service consumption, and activities. Additional
aspects of this quality are built-In metrics, monitoring, and visualization capabilities
like dashboards.

Agility

Agile Software
Monolithic architecture represents the architecture that consists of coarse-grained
services and components that depend on each other. Monolithic deployment of a
system represents a single point of failure, if the application fails for some reason, the
whole set of services fails too. In conditions where monolithic architecture becomes
a significant barrier to achieving business competitiveness and enabling scalability,
flexibility, and other requirements such as fast development, short time to market,
and large team collaboration. Agility is well supported by Microservices.
Microservices are an emerging architectural design pattern that brings agility and
scalability to enterprise applications. A key enabler to implementing microservices is
the cloud. However, scalability and agility are not the only qualities that are expected
from ERP systems. For example, high process consistency, compliance, and exten-
sibility are qualities that are better to achieve with a monolithic approach.

Cloud Extensibility Platform

As long as the cloud code line follows the code density and standardization
paradigms it is key to keep the core stable. Hence, own platform is needed to provide
options for extending the cloud services and business processes and to unlock
solution flexibility and innovation. Such an extensibility platform is required for
implementing huge new modules while in-app extensibility can be used to enhance
the core. In-app extensibility means that the extensions are implemented within the
core application using predefined extension points. Both the kernel and the extension
run on the same server and use the same database instance.
300 18 ERP Product Qualities: Provider View

Ecosystem Support
While the core is highly standardized and needs to be kept stable, there is a need to
fill white spaces and accelerate the innovation speed in the cloud by collaborating
with partners. Today there are product and technology players, a highly collaborative
and complexly orchestrated community. The result is a win-win situation for all
involved parties, and a one-stop shop for customers, backed by a single service level
agreement (SLA) and a single point of support. The trend of partner ecosystem in
cloud computing has rendered obsolete the long-used concept of complete vertical
integration coming from one organization. Thus, it is requested to allow partners to
extend and operate services and solutions. For this lifecycle management
dependencies, partner programming model, organizational setup, partner access,
and authorization concept must be considered.

Commercialization

Cloud License Models

When people talk about cloud applications, they are talking about Software as a
Service (SaaS). However, there are three main types of cloud service models:
Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a
Service (IaaS). Due to the Cloud, customers begin to expect the ability to pay month-
to-month and cancel at any time if they were not satisfied with the solution. These
expectations led to the recurring types of licensing models. Monthly and annual
subscription licenses are now standard in the Cloud. Technical advancements have
enabled vendors to accurately track usage of their software and services, paving the
way for a new type of license called Pay-As-You-Go. This means the customer pays
only for the consumed solution. The usage can be measured in many ways, for
example, service consumption, online time, size of database, number of used APIs or
queries. Pay-by-Instance Licenses is the final type of license which applies more to
Cloud services such as IaaS and PaaS. In addition to the on-premise to cloud
transition, there is a conversion in the network licensing technology itself away
from node-locked toward pooled. This transition is required because new virtualized
and cloud/SaaS network service delivery models necessitate more flexible and
responsive licensing technologies that allow entitlements to be quickly repurposed
and reused. In this scenario, the customer pays for each server or server instance that
the vendor spins up. Try-Before-You-Buy programs are ideal for introducing addi-
tional features to new and existing customers. It also helps to differentiate the SaaS
model, improve the value of the software, and provide more predictable cash flows.
License mobility, or moving licenses for applications and operating systems from
one virtual environment to another, is also part of cloud licensing management.

Partner License Model

In cloud world computing resources, network and software are given as metered
services. Based on the services provided, three types of service models are defined in
Conclusion 301

the cloud: Software as a Service (SaaS), Infrastructure as a Service (IaaS), and

Platform as a Service (PaaS). Usually month-to-month and annual subscription
licenses are standard approach in the Cloud. For partner extensions require new
OEM or VAR license agreements for cloud services including partner use rights for
Cloud services, compliance obligations, service level agreements. OEM stands for
original equipment manufacturer and is used by a company that takes components
from other vendors to build a new product which then sold under its own brand. A
VAR (value-added reseller) purchases a product from a manufacturer, adds value to
that product somehow (e.g., adding a service), and then resells the product under its
own brand. A VAR agreement defines the legal contract for that process.

Customer Loyalty Program

Cloud service providers get firsthand information about not only what their
customers buy, but also which applications are actively used, by which user type,
when and how long. Being able to view customer data via a cloud will help leverage
the loyalty program to maximize up-sells and cross-sells. Cloud-based loyalty
programs allow providers to find out what their customers want and are a great
way to keep customers coming back (renewal). Beside customer retention programs,
also internal user engagement programs shall be offered.

Conclusion

ERP software must meet specific software qualities. These are divided into two:
customer and provider category. This chapter focused on the qualities that are
expected from ERP providers for the cloud deployment. The qualities were clustered
into cloud infrastructure, operational efficiency, operations and monitoring, agility
and commercialization. The aim of those qualities is to reduce the TCO while
delivering continuous innovation. Thus, there are conflicting goals which have to
be balanced out accordingly. Important to outline is that in case of private cloud
deployment, the customer takes over the role and obligations of the provider.
In-Memory Persistency
19

This chapter focuses on in-memory database system SAP HANA, which is used to
store application data of SAP S/4HANA. Particularly benefits, architecture, under-
lying in-memory concepts, platform capabilities, and the application types of
in-memory database systems are explained.

Business Requirement

In the past years there has been a revolution in data management systems due to
in-memory technology. The main reason for this is that the prices per megabyte of
main memory have fallen tremendously while the ability of parallel processing
increased dramatically due to multicore processors. For example, the price for
1 MB of main memory in 2010 was 0.01 USD, which has decreased enormously
compared to the price in 1960, which had been more than 1,000,000 USD. The idea
behind in-memory database systems is to keep the complete dataset permanently in
the main memory, enabling faster access to the data. Figure 19.1 represents a
memory hierarchy in the form of a pyramid. It illustrated the slower the storage
medium, the lower its cost and the greater its latency. So, when accessing data on a
hard disk level, there are four layers between the accessed hard disk and the registers
of the CPU, which takes a lot of time. For example, reading 1 MB of data from main
memory takes 250.000 ns compared to 30.000.000 ns for hard disk.
During the last 30 years the performance of CPUs has developed enormously.
This happened due to the high number of transistors built into CPUs and increased
clock speeds. Due to the efficient production processes CPUs have become much
cheaper.
Since the invention of the first multicore processor IBM POWER4 the CPU
development industry has changed so that it is no longer focused on increasing
clock rates but on growing the number of cores in CPUs. For example, while in 2001
the maximum number of cores was restricted to around 10 in 2016 already 1000+
cores were possible. Multicore processors help with in-memory data management

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 303
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_19
304 19 In-Memory Persistency

Fig. 19.1 Storage hierarchy

Lower Price / Higher Latency

Higher Performance
CPU
Registers

CPU Caches

Main Memory

Flash

Hard Disk

due to parallel processing on logical database partitioning. The application data

stored in the database system is partitioned into individual subsets of data that are
independent of each other. Those subsets of data are assigned to different CPU cores
to allow parallel processing and increasing performance. Due to high performance of
in-memory database systems capabilities like analytics, planning, predictions, or
simulation can be performed on transactional data resulting from ERP business
processes. Consequently, those capabilities add value to the business processes
and allow rethinking them from scratch. That is the reason for having SAP HANA
as the underlying in-memory database system for SAP S/4HANA.

Solution Capability

SAP HANA is a data management platform on which SAP S/4HANA is based

on. The core of this data management platform is the SAP HANA database, an
in-memory database management system which makes full use of the capabilities of
current hardware to increase application performance, to reduce cost of ownership,
and to enable new scenarios and applications that were not possible before. The SAP
HANA database is a hybrid database management system that combines several
paradigms in one system. It includes a full relational database management system
where individual tables can be stored column-based or row-based in memory, and
column-based on disk. It supports SQL, transactional isolation, and recovery and
high availability. These capabilities are extended with for example analytics, text
analysis and search, geo-spatial, time series, streaming and spatial processing. SAP
HANA can combine and analyze all kinds of data within the same database
management system which a core capability required by modern business
applications. This enables developers to create new kinds of applications and it
reduces complexity and cost, as no separate systems are required for analytical
processing, searching, spatial data operations, graph data processing, or for planning
and simulations.
Solution Capability 305

In-Memory Concepts

The SAP HANA database is built for high performance applications. It makes full
use of the main memory and processing power provided by modern hardware. All
relevant data is kept in main memory, so all read operations can run in main memory.
SAP HANA is also designed to make full use of multicore CPUs by parallelization
of execution. Research showed that with in-memory column-based data stores
performance improvements up to a factor of 1000 are possible in certain scenarios.
With high performance for both read and write operations, the SAP HANA database
supports transactional as well as analytical use cases. SAP HANA systems can be
distributed across multiple servers to achieve good scalability in terms of both data
volume and concurrent requests. Figure 19.2 summarizes the main concepts of
in-memory database systems like SAP HANA.
In the past database management systems were designed for optimizing perfor-
mance on hardware with limited main memory and with slow disk I/O as the main
bottleneck. The focus was on improving disk access, for example the number of disk
pages that were read into main memory was reduced when processing a query.
Today’s computer architectures have changed. With multicore processors, parallel
processing is possible with accelerated interaction between processor cores. Very
large main memory configurations are now commercially available and affordable.
Server setups with hundreds of cores and several terabytes of main memory are a
reality. Modern computer architectures create new possibilities but also new
challenges. With all relevant data in memory, disk access is no longer a limiting
factor for performance. As the number of cores increased, CPUs are enabled to
process by far more data per time window. That means the performance bottleneck is
now between the CPU cache and main memory.

Row and Column Store

From conceptual point of view, a database table is based on a two-dimensional data
structure consisting of cells which are organized in rows and columns. However,

Hardware Technology Concepts Software Technology Concepts

Row and Column Store

CPU
Multi-core architecture

Massive parallel scaling with Compression

many servers
Partitioning
64 bit memory address space
Dramatic decline in No aggregate tables
price/performance for memory

Insert-only on delta

Fig. 19.2 In-memory concepts of SAP HANA

306 19 In-Memory Persistency

Table Row Store Column Store

US US
Country Product Sales
Row1 Alpha US
Country
US Alpha 3000 3000 JP

US Beta 1250 US UK
Row2 Beta Alpha
JP Alpha 700
1250 Beta
UK Alpha 450 Product
JP Alpha
Row3 Alpha Alpha
700 3000
UK 1250
Sales
Row4 Alpha 700
450 450

Fig. 19.3 Table representation in row- and column-based storage

memory is structured as a linear sequence. For storing a table in linear memory, there
are two options available as illustrated in Fig. 19.3. A row store stores a sequence of
data records that contain the fields of one row. This is different in a column store
where the data of a column is saved in successive memory locations.
SAP HANA supports two types of tables that store data either column- or
row-wise. An existing table can be altered from columnar to row-based storage
and vice versa.
Column-based tables are applied if

• On single or few columns, the calculations are executed

• Based on values of a few columns, the table is searched
• The table has a big number of columns
• Columnar operations (e.g., aggregate or scan) are necessary and the table has a
big number of rows
• The majority of the columns consists of only some distinct values compared to the
number of rows so that high compression rates can be realized

Row-based tables are applied if

• Only one single record must be processed at one time, for example many updates
or selects of single records
• The complete record must be accessed by the application
• Compress rate is low as the columns encompass mainly distinct values
• Fast searching or aggregation is not needed
• The number of rows is low, for example, configuration tables

To ensure fast searching, ad-hoc reporting, on the fly aggregations, and to profit

from compression, transaction data is usually stored in column tables. Master data is
Solution Capability 307

typically also put in the column store. Master data is frequently searched and often
has columns with few distinct values. Master data is frequently joined with transac-
tional data for analytical queries and aggregations. In SAP HANA this is most
efficiently done using the analytical processing capabilities of the column store.
The row store is used, for example, for metadata, for application server system
tables, and for configuration data. In addition, application developers may decide to
put business data in the row store if the criteria given above are matched.

Compression
The goal to keep all relevant data in main memory can be realized compressing the
data. Due to columnar storage highly compression rates can be achieved without the
need to apply sophisticated algorithms. There is data fragmentation by design as
each column contains records with identical data type so that standard compression
procedures like length encoding or cluster encoding can be easily applied. This is
particularly efficient for SAP S/4HANA as most columns encompassing few distinct
entries compared to the number of rows. Examples for this circumstance are country
codes or foreign keys. Due to this degree of redundancy an effective compression is
facilitated for column data. In contrast row-based storage contains data of different
columns which results in lower data fragmentation and corresponding compression
rates. Typically, with column-orientation compression factor of 5–10 can be realized
compared to traditional row storage database systems. However, this is not always
possible, depending on the characteristics of the data. Column-based storage is
especially efficient for storing columns that contain only one distinct value. Such a
column can be stored by just a few metadata and the single value. As mentioned,
column-oriented data is stored closely together in blocks one after the other. Thus,
there is no need to apply complex algorithms to locate the data first, then know the
type of data and then compress the data. Thus, the data can be compressed at once
and without complex algorithms, which results in a huge reduction of data size.

Partitioning
Furthermore, column storage facilitates parallel execution based on multiple proces-
sor cores. One advantage of the column-based approach is that data in a column store
is already vertically partitioned by definition. That means operations on different
columns can easily be processed in parallel.
If multiple columns are searched or aggregated, each of these operations can be
assigned to a different processor core. Furthermore, operations on a single column
can be parallelized by breaking it into many portions, each of which is processed by a
different processing core, as shown in Fig. 19.4. Operations on single columns (e.g.,
searching or aggregations) can be performed as loops through an array stored in
memory regions with columnar data organization. This process has a high spatial
locality and makes good use of the CPU caches. The same operation is slower with
row-oriented storage because data from the same column is distributed across
memory and the CPU is slowed by CPU cache misses. Assuming that a row-based
table is used to aggregate the sum of all sales amounts. Data transfer from main
memory to CPU cache is always done in fixed-size blocks called cache lines, for
308 19 In-Memory Persistency

Data
Table 1 Table 2 Table 3 Table ..
Table 1 Year A Year A …
Year A

Table 2 e1
Table Table 2 Table 3 Table ..
Yearr B Year B Year B …

Table 3 e1
Table Table 2 Table 3 Table ..
… … … …

Fig. 19.4 Using partitioning to further leverage parallelism

example, 64 bytes. With row-based data organization, each cache line may contain
only one sales value (stored in 4 bytes), while the remaining bytes are used for the
data record’s other fields. Each value required for the aggregation necessitates a new
access to main memory. This shows that with row-based data organization, the
operation is going to be slowed by cache misses, causing the CPU to wait until the
required data is available. Because all sales values are saved in sequential memory
with column-oriented storage, the cache line contains 16 values that are all
demanded for the operation. Furthermore, because columns are stored in contiguous
memory, memory controllers can use data prefetching to reduce the number of cache
misses even further. As previously stated, columnar data organization enables highly
efficient data compression. This not only saves memory but also improves perfor-
mance. Data that has been compressed can be loaded into the CPU cache more
quickly. As the data transfer between memory and CPU cache is the limiting factor,
the performance increase outweighs the supplementary computing time required for
decompression. If the operator is aware of the compression, it accelerates operations
like scans and aggregations. Given a good compression rate, computing the sum of
the values in a column will be much faster if the column is length encoded and many
additions of the same value can be replaced by a single multiplication.

No Aggregate Tables
Materialized aggregates are used to improve read performance in traditional business
applications. Additional tables are defined by the application developers in which the
application stores the results of aggregates (such as sums) computed on other tables
redundantly. Materialized aggregates are computed and stored at predetermined
intervals or after each write operation on the aggregated data. Instead of computing
the materialized aggregates each time, read operations simply access them. With
scanning speeds of several megabytes per millisecond per CPU core, the SAP
Solution Capability 309

HANA in-memory column store enables high-performance calculation of aggregates

on large amounts of data on the fly. This eliminates the need for materialized
aggregates in many cases. Financial applications, for instance, can compute totals
and balances from the accounting documents when they are queried, instead of
maintaining them as materialized values. There are several advantages to eliminating
materialized aggregates. It simplifies data model and aggregation logic, which makes
development and maintenance more efficient, it allows for a higher level of concur-
rency because write operations do not require exclusive locks for updating
aggregated values, and it guarantees that aggregated values are always up to date,
whereas materialized aggregates are sometimes only updated at predetermined
intervals. In many cases, columnar storage eliminates the need for additional index
structures. Storing data in columns already works as if each column had its own
built-in index: The in-memory column store’s column scanning speed and compres-
sion mechanisms already enable very high-performance read operations. Usually it
is not required to have additional index structures. Eliminating indexes reduces
memory size, can improve write performance, and reduces development efforts.
However, this does not mean that indexes are not used at all in SAP HANA. Primary
key fields always have an index and it is possible to create additional indexes, if
required. In addition, full text indexes are used to support full-text search.

Insert-Only on Delta
SAP HANA supports history tables which allow queries on historical data which are
also known as time-based queries. Applications may use this feature for example for
time-based reporting and analysis. Existing records are not physically overwritten by
write operations on history tables. Instead, write operations always insert new
versions of the data record into the database. Current data refer to the most recent
versions in history tables. All other versions of the same data object contain histori-
cal data. Each row in a history table has timestamp-like system attributes that
indicate the time period when the record version in this row was the current one.
Historical data is typically read by the execution of a query against a historical view
of the database (SELECT ... AS OF time). Alternatively, you can put a database
session in history mode, so that all subsequent queries are processed against the
historical view. In literature, data with time-based validity or visibility is known as
temporal data. SQL:2011 covers support for temporal data, based on assigning time
periods to table rows. The standard distinguishes two levels of temporal data
support, which can be characterized as system-versioned and as application-
managed. For temporal data versioned by the system, the timestamps are automati-
cally entered and specify the transaction time when the data was current. New
versions are automatically created by the system during updates. The history tables
in SAP HANA correspond to system-versioned temporary data in SQL.
The SQL:2011 concept of application time periods is different. Here the time period
indicates the period of validity on application level. For instance, the planned
assignment of an employee to a new department can be written to the database
today, with a validity period that starts 3 weeks in the future. In this case two
versions of the same employee record would exist, which are both current with
310 19 In-Memory Persistency

respect to the transaction time but have different application-level validity

periods. SQL:2011 includes several extensions for using application-level validity
periods in SQL statements.

Database Architecture

Traditional databases of online transaction processing systems don’t make use of

current hardware efficiently. It was depicted already in 1999 that with a memory
resident traditional database management system, the CPU loses half of the execu-
tion time, for example in waiting until the data is loaded from memory into the CPU
cache. A high-performance data management system for modern hardware must
have the following characteristics:

• In-memory database: The data must be kept in main memory, so read operations
can be executed without disk I/O. Disk storage is still needed to make changes
durable.
• Cache aware memory organization, optimization, and execution: By design the
number of CPU cache misses must be minimized and CPU stalls have to be
avoided. One implementation option is to use column-based storage in memory.
Search or operations which are applied on one column, are typically implemented
as loops on data stored in contiguous memory arrays. This leads to high spatial
locality of data and instructions, so the operations can be executed completely in
the CPU cache without costly random memory accesses.
• Parallel execution support: In recent years CPUs did not become faster by
increasing clock rates. Instead the number of processor cores was increased.
Software must make use of multicore processors by allowing parallel execution
and with architectures that scale well with the number of cores. For data manage-
ment systems this means that it must be possible to partition data in sections for
which the calculations can be executed in parallel. To ensure scalability, sequen-
tial processing—for example enforced by locking—must be avoided wherever
possible.

The main building blocks of SAP HANA are depicted in Fig. 19.5. The servers
for SAP HANA are certified by SAP. As mentioned before, SAP HANA is aware of
the new hardware technologies and makes explicit use of advanced architecture
elements—for example location of data in the different types of CPU caches.
Because of this, it is important to ensure that only CPUs of the latest technology
and types are used. In addition, for the overall processing a defined ratio of memory
size to CPUs is important. Overall, with the certification approach SAP eliminates all
potential issues of not-suitable hardware, this area of potential risks and issues is
eliminated. At the same time, the SAP certification is open. With the advanced
capabilities of SAP HANA in the area of parallelization and clustering it is possible
to build high-end systems using commodity hardware. So, for high-end business
systems it is no longer needed to purchase the expensive high-end Unix servers. SAP
Solution Capability 311

SAP HANA

Open SQL SQL Script MDX Other

Processing Engines

OLTP OLAP Predictive Text Spatial Rules Graph

Parallel execution

Relational Stores
Object
Graph
Row based Columnar Store

HANA Hardware

Transaction Unstructured Location Machine

Data Data Data Data

Fig. 19.5 SAP HANA architecture

HANA uses the commodity components to build a platform providing ultimate

performance, scalability, and state-of-the-art high-availability and disaster recovery
functions.
Now, let’s move to the database layer. On the database layer, the already
explained capabilities for row-based, column store, and parallel execution are
implemented. The SAP HANA architecture is based on a parallel usage of
completely independent services/processes. These processes have no
interdependencies as SAP HANA uses a so-called shared nothing approach. With
this approach scaling is possible very efficiently compared to traditional databases.
The most important component in the layer is the index server. The index server
comprises the in-memory data stores and the required engines for processing the
data. The name server owns the information about the topology of an SAP HANA
system. In a distributed system, the name server has the information about where the
components are running, and which data is located on which server. In a system with
multiple database containers, the name server has the information about existing
database containers and it hosts the system database. In addition to providing
database services, SAP HANA also provides the possibility to run code directly in
the platform. There are so-called engines shipped by SAP. The principle is to run
data-intensive operations close to the data. Before SAP HANA, typically
calculations are done on the application server level. Sometimes this means that
312 19 In-Memory Persistency

large amounts of data need to be transferred to the application server, where the
analysis and calculation take place. And often, in the end a very small results set is
generated. With SAP HANA, calculations which are data intensive are executed
directly in the SAP HANA platform where the data resides. This dramatically
reduces data movement and boosts performance. In this case SAP HANA returns
only the result sets to the application server. There exists already a number of such
SAP HANA engines including text analysis, predictive analytics, planning or
OLAP. It also is possible to create custom code and push it down into the SAP
HANA platform. SAP S/4HANA applications are a combination of business logic
on the application server level and reuse engines as well as code-fragments executed
directly in the SAP HANA platform. SAP HANA provides a broad range of open
standard interfaces for applications. Starting from Open SQL or ODATA/JDBC/
ODBC/JSON for data access there are interfaces for. Net connections, for the Java
world, and for the Web world. This means that SAP HANA is not only a platform for
SAP applications. It is easy to bring any type of third party or custom applications to
SAP HANA. These applications benefit right away from the SAP HANA
capabilities and over time, they can be optimized to leverage HANA even more,
for example, by pushing down code to the platform.

Real-Time Analytics

The biggest advantage of the in-memory database SAP HANA is its capability of
combining both online transactional (OLTP) and online analytical processing
(OLAP) in the same system. Thus, the redundancies of analytical data are avoided,
and real-time analytics provided. This approach is called hybrid paradigm, which
allows to analyze data efficiently in the same database, so that there is no need any
more to separate between systems, which has the disadvantage of using more
processing power, time, and costs. This integration of both OLTP and OLAP in
one server allows us to develop applications capable of providing fast and innovative
solutions to business processes in enterprises. Figure 19.6 illustrates the difference
between the traditional analytics and the hybrid transaction/analytics processing
(HTAP) paradigm.

Separated Transactions + Analysis + Acceleration One atomic copy of data fo

processes Transactions + Analysis

SAP HANA
ETL ETL Cache (DRAM)

Transact Analyze Accelerate

y 3 copies of data in different data models y Eliminate unnecessary complexity and latency
y Inherent data latency y Less hardware to manage
y Poor innovation leading to wastage y Accelerate through innovation and simplification

Fig. 19.6 Traditional analytics versus in-memory analytics

Solution Capability 313

The traditional separation of OLTP and OLAP systems results in a complex,

expensive, and maintenance-intensive analytics processing. OLAP systems are filled
with the relevant data by extraction, transformation, and load (ETL) processes from
OLTP systems. ETL processes are fault-prone and expensive to develop and operate.
Extracting the data from an OLTP system creates a considerable load on the OLTP
system which negatively impacts the performance of the transactional processes. The
transformation of the data must ensure consistent results, especially when merging
data from different sources. Usually the data loaded in the OLAP systems is already
no more up to date as they might be already updated in the OLTP source. Thus, the
analytics result is accordingly inaccurate. There are specific analytics use cases
where the response time of the OLAP systems is not sufficient. Therefore, the data
for such scenarios must be replicated based on ETL processes to accelerators to
achieve the demanded analytical performance. Thus, the application data is copied
three times which causes increased hardware and software costs. In addition, the data
is not up to data which results in poor analytical conclusions. These challenges can
be resolved by using SAP HANA to combine OLTP and OLAP. This reduces the
effort for creating ETL processes, and allows analytics based on real time. In
addition, the underlying analytical data is no longer aggregated, which enables a
detailed and seamless drill-down, for example. SAP S/4HANA makes use of the
hybrid transaction/analytics processing (HTAP) to incorporate systematically ana-
lytical capabilities in business processes.

Application Development

The SAP HANA database provides several programming and modeling options for
executing application logic close to the data. This is required to make full use of the
parallelization and optimization capabilities of SAP HANA and to reduce the
amount of data that needs to be transported between the database and the application
server. SAP HANA supports, for example, procedures, user-defined scalar
functions, table-valued functions, and calculation views, which extend the standard
view concept of SQL. SAP HANA comes with several libraries and built-in
functions, for example for currency conversion, financial math, and predictive
analytics. Let’s have a closer look at why it is easier and faster to develop new
applications on SAP HANA. First of all, SAP HANA’s hybrid transactional analyti-
cal processing capabilities allow to create a new class of applications that deliver
intelligence inside a business process. Furthermore, these applications can perform
complex workloads at in-memory speed and deliver sub-second responses to users
no matter where they are and what device they use. To further improve performance,
the SAP HANA platform can be used to benefit from rapid inter-process communi-
cation and avoid transferring data between a database and an application server over
an independent network. SAP HANA support for open standards and APIs and
protocols, together with the ability to use programming language of choice allows to
leverage existing skills. Specifically, SAP HANA provides a variety of standard
application development languages for client-side, server-side, and algorithms
314 19 In-Memory Persistency

development. For client-side development any language that works with standard
interfaces can be chosen, such as JDBC (Java Database Connectivity), ODBC (Open
Database Connectivity), and RESTful Web services. For server-side development
SQLScript, JavaScript, or C++ can be leveraged. Furthermore, multidimensional
query expressions are facilitated, for example, ODBO (OLE DB for OLAP) or MDX
(multidimensional expressions). Developers benefit from built-in tools and
integrations to implement, perform version-control, bundles, transport, and install
applications through the entire lifecycle management. With SAP HANA support for
CDS and OData, it is easier to extend existing SAP application and to incorporate
cloud microservices easily. SAP HANA comes with a wealth of packaged
components that can be reused to improve both developer productivity and app
performance, for example, AFL, PAL, or AFM. These components are optimized to
run inside the database and automatically deliver superior performance. Application
function library (AFL) delivers ready-to-use procedures that can be called directly
from SQLScript. All AFL functions run close to the data inside the SAP HANA
database, for improved application performance. Predictive analytics library (PAL)
contains over 100+ algorithms that allow to embed data mining and predictive
scenarios into applications. Application function modeler (AFM) is a graphical
editor in SAP HANA studio that helps connecting to PAL and use visualization
and drag-and-drop capabilities to decrease development effort. Algorithms and
business logic can be leveraged using either C++ or R script. Figure 19.7 depicts
the possible application architecture using SAP HANA.
SAP HANA allows to use the runtime environment that better suites the
applications needs. If developers are extending SAP applications, they can use native
constructs (e.g., CDS views) and data models and the full ABAP environment—on
premise and in the cloud. This approach has been chosen for the implementation of
SAP S/4HANA. If developers are developing in Java or in a. Net environment they
can leverage any third-party application server and via standard interfaces (e.g.,
ODBC, JDBS). Developers can also use the SAP HANA application server and
benefit from inter-process communications and avoid data swapping.

SAP S/4HANA, C/4HANA, app Custom Applications Native Custom Applications

extensions …

SAP NetWeaver
Application Server – ABAP Application Server
Core Data Services (CDS) (J2EE, .NET, etc.)

Application Development

SAP HANA SAP HANA SAP HANA

Fig. 19.7 Possible application architecture

Conclusion 315

Conclusion

SAP HANA is the underlying database system for SAP S/4HANA. This is an
in-memory and column-based database management system. The in-memory tech-
nology is enabled due to price erosion of RAM and the increase of CPU cores. Thus,
application data can be kept in memory for fast execution of database operations.
Due column-orientation, partitioning, and compressing are improved which result in
additional performance boost. Consequently, analytical processing is also reinforced
which facilitates combining analytical and transactional data. Therefore, real-time
analytical capabilities are incorporated into SAP S/4HANA transactional
applications. This is a dramatical innovation compared to the traditional paradigm
where transactional data must be replicated to data warehouses for analytics. Hence,
hardware, software, and operations costs are reduced and more accurate analytics for
decision-making is provided.
Virtual Data Model
20

This chapter focuses on the virtual data model (VDM), which is a semantical layer to
access application data of SAP S/4HANA. Thus, the cryptical and complex data
model is encapsulated and exposed in an understandable and reusable way for
application developers and various frameworks. VDM consists of Core Data Service
(CDS) views. Business data, which is stored in abstract database tables, gets exposed
in a business-oriented way. This allows easier understanding and consumption of
needed business data. End users can access needed data by using released CDS
views. They can define custom views that are built on top of existing views delivered
by SAP. With VDM, an understandable, comprehensive, and executable data model
is exposed, ready to be consumed in analytical and transactional applications and
external interfaces.

Business Requirement

The data model of ERP systems is historically grown and covers ten thousands of
tables with complex network of relationships and cryptical field names. Thus, the
data model is hard to explore and consume by developers, customers, and partners.
Due to this circumstance the implementation of business processes results in high
efforts and demands very specialized knowledge. To resolve this challenge a
corresponding semantical layer is required on top of the data model in order to
hide the complexity and allow a human-understandable and efficient access to the
business data. Today even end users expect to query needed data by themselves, like
in a self-service Business Intelligence system. However, this is tough to achieve in
ERP systems due to data model hurdles in terms of finding data, providing adequate
Query-Response times, and understanding the structures. Designing a virtual data
model solves these issues and gives also end users access to data they need.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 317
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_20
318 20 Virtual Data Model

Solution Capability

The virtual data model (VDM) represents the semantic data model of a business
application in SAP S/4HANA. The goal is to simplify the complexity and provide
business data in a way that eases its understanding and consumption for developers
and end users. It abstracts data from the underlying database tables and exposes it
based on business semantics. In order to ensure this, two requirements have to be
fulfilled:

• Database views need to support more than SQL. Things like, for example, look up
the last record, pivot the data, split data to process it differently, and data quality
checks cannot be done in a single SQL query.
• The views need to return the data in sub seconds. The system will not be used if a
good performance is not given.

SAP customers and partners can develop on released VDM views. VDM
represents the data model and source for transactional and analytical applications
and external interfaces. Benefits of VDM are a business-oriented, understandable
and semantically rich, reusable, and stable data model.

Core Data Services (CDS)

The virtual data model is implemented by using Core Data Services (CDS). CDS
helps developers to create semantically rich data models. It uses and extends SQL
and allows to define and consume these data models in applications. The productiv-
ity, consumability, performance, and interoperability get improved. CDS is a family
of domain-specific languages and services for defining and consuming such seman-
tically enriched data models:

• Data Definition Language (DDL) for defining semantically rich domain data
models and retrieve them. It extends native SQL means for higher productivity.
• Query Language (QL) for consuming CDS entities via platform embedded SQL.
It is used to read data.
• Data Control Language (DCL) defines authorizations for CDS views and
controls the access to data. It integrates with classic authorization concepts.
• Data Manipulation Language (DML) is used to write data.

CDS data models are defined and consumed on database level rather than on
application level. CDS offers capabilities beyond traditional data modeling tools.
They support SQL-compliant definition of views so that developers can use SQL
features, such as JOIN, UNION, and WHERE clause. Relations between views can
be modeled as associations. Aliases can be used to rename tables with an
understandable name. CDS views also support the use of annotations to define
metadata. For example, an annotation can define that a field with type DateTime
Solution Capability 319

AS ABAP
Application Server

ABAP Managed
Standard ABAP
CDS Views Stored Procedure
Transport (CTS)
(AMDP)

deploy deploy

SAP HANA
Database

SQL Views Stored Procedures

Fig. 20.1 Top-down approach

contains the time when the data was created or last updated. Other CDS capabilities
used in VDM are parameters, view extends, easy exposure as OData services, and
anchor for behavior definitions. Annotations of the virtual data model allow
classifying CDS entities in terms of their admissible reuse options and provisioned
content. This classification is used only for SAP internal structuring and interpreta-
tion of the CDS entities. It is envisioned to be interpreted for instance by view
browsers and other capability which is based on the virtual data model. Re-leasing
CDS entities for customers and partners is controlled by an additional dedicated
internal classification of the entities.
CDS is fully integrated into ABAP, the proprietary programming language of
SAP. It is embedded in ABAP SQL, which results in easier-to-understand SQL
statements. CDS views are also integrated with the ABAP data dictionary (DDIC).
The ABAP DDIC contains all metadata about the data in the SAP system including
different views. Existing ABAP authorizations can be used, and the ABAP transport
system is used. Figure 20.1 shows the connection of the ABAP Application Server
and the SAP S/4HANA database when using the recommended top-down approach.
Developers can work in their ABAP environment and still use the power of SAP
S/4HANA.
The top-down approach uses the Code Pushdown technique. Code Pushdown
means that calculations are performed on the database system instead of the applica-
tion server. It only pushes down calculations for which it makes sense. For example,
to determine the amount of all positions of invoices, an aggregation function (here:
SUM()) could be used on the database instead of calculating the sum in a loop on the
application server. This results in a fast retrieval of data and a better performance and
response time of the application itself. The classic SAP ERP supported various
database systems for which a corresponding data access abstraction was required.
Therefore, business data was first transferred from database to the application server,
looped for relevant records, and finally processed. Thus, usually more data was
exchanged between database and application server as necessary. Furthermore, data
intensive operations were executed on the application server instead of on the
320 20 Virtual Data Model

@VDM.viewType: #BASIC
Metadata as
define view I_SalesDocument as select from vbak Annotation
left outer to one join vbkd on vbak.vbeln = vbkd.vbeln
and vbkd.posnr = '000000‘…
association[0..1] to I_SalesOrganization View Definition
as _SalesOrganization on $projection.SalesOrganization = based on SQL
_SalesOrganization.SalesOrganization
_SalesOrganization.CompanyCode, Association
@Semantics.amount.currencyCode: 'TransactionCurrency' between Views
vbak.netwr as TotalNetAmount,
@Semantics.currencyCode: true Amount with
@EndUserText.label: 'Document Currency' Currency
vbak.waerk as TransactionCurrency,

SELECT \_SALESORGANIZATION-COMPANYCODE AS SOCC … UI Label

FROM I_SALESDOCUMENT …

Fig. 20.2 Example for CDS view

database to achieve better performance. As SAP S/4HANA supports only SAP

HANA as database, dramatic optimization could be realized. For each CDS view
defined on ABAP level a corresponding SQL view on SAP HANA is generated. All
SQL statements applied on the CDS views are pushed down to the SQL view and
executed on the database level for optimal performance. For example, while autho-
rization checks were accomplished in the past on the application server, with SAP
S/4HANA they are pushed down to the database system by automatically enhancing
the SQL statements with an WHERE clause. In-between several ten thousands of
CDS views are available in SAP S/4HANA as all business processes are using VDM
to access application data. Consequently, the performance of all those business
processes have been improved systematically as all data access is pushed down to
SAP HANA. CDS views can be defined with SQL statements but they can also be
coded with SQLScript. ABAP Managed Stored Procedures (AMDP) are used for
this. AMDPs are just ABAP classes containing SQLScript code instead of ABAP.
During runtime the SQLScript coding is pushed down to SAP HANA for optimal
performance. Whenever the logic of the CDS view is too complex to be expressed by
SQL statements, the scripted approach is applied. From consumption point of view
there is no difference between CDS views based on SQL or SQLScript.
CDS views are the most important CDS entity type. There are released CDS
views ready for reuse in VDM. Customers can also define custom CDS views. For
example, they can be used as the data source in ABAP select statements. Figure 20.2
provides an example for a CDS view concerning sales documents.

Authorizations for CDS Views

CDS views which expose sensitive or data privacy and protect relevant data must be
secured. The access to CDS views can be restricted and is expressed by roles. A
repository named DCL Source defines CDS roles. A CDS role is applied to one or
more CDS views. Access conditions are defined with the key word WHERE and
function as a filter for the corresponding CDS view. The access restrictions are
Solution Capability 321

automatically applied to direct ABAP SQL selects on their protected CDS views. If a
single CDS view has multiple rules, the access restrictions are combined by a logical
OR by default. It can also be explicitly defined as replacing DLCs or as using
combination mode AND. This means that the results of querying a CDS view can
be restricted by using DCL so that only users with a corresponding role can read the
returned data. It is important to note that CDS access control only works if a program
accesses directly the protected CDS view.

Stability Contracts for CDS Views

CDS views are the basis for defining a semantically rich VDM and exposing all
business data of the SAP S/4HANA database in an understandable way. They are
used for different purposes, for example, providing an interface between applications
and add-ons in the same stack and for remote systems and applications. Customers
can use released CDS views provided by SAP to create their own custom views. To
fulfill these functions reliably, CDS views have to find a balance between two
properties:

• Flexibility: CDS views have to offer a certain degree of flexibility for further
development.
• Stability: Semantic and technical features should be kept sufficiently stable so that
CDS views do not need to be adjusted after each upgrade.

Released CDS views for SAP S/4HANA view model provide a stable basis for
customer extension scenarios, for example, creating custom views or analytical
queries. They must support specific stability criteria to ensure that custom built
objects are not affected when the SAP S/4HANA system is upgraded. SAP has
introduced three stability contracts to ensure that released CDS views fulfill their
tasks reliably. Each contract applies to different consumption scenarios of CDS
views.

Key User Field Extensibility Contract (C0)

The contract for key user field extensibility ensures that changes to a CDS view do
not break the anchors of field extensions. Key users can add a custom field using the
Custom Fields and Logic app. Consumer can use extension fields like regular fields.
Only CDS views that SAP has defined as extensible are available for field extension
in the app. The anchors of the extension are elements that are kept stable for key user
field extensibility. C0 is not expressed via the API state of a CDS view. Instead, it is
defined by publishing a CDS view in the extensibility registry.

System Internal Contract (C1)

CDS views can be released either for system internal use or for remote API use. The
majority of released CDS views follow the stability contract C1 for internal use. The
contract’s goal is to ensure sufficient stability so that custom CDS views still work
322 20 Virtual Data Model

after an upgrade to the next software version, for example, from SAP S/4HANA
1809 to SAP S/4HANA 1909. Only SAP views released for C1 contract are
available in key user tools for customer extensions. Such CDS views have the
following properties:

• CDS views released for system internal use start with the prefix I_ (interface
views) or C_ (consumption views). Not all these interface and consumption views
follow the C1 contract.
• Field length extension is allowed and must be tolerated by consumers.
• They are available in several key user tools, for example, Custom CDS Views,
Custom Fields, and Logic and Custom Business Objects.

Main stability criteria for C1-released CDS views are:

• No deletion of fields
• No renaming of fields
• Restricted changes of data typing of fields
• Semantic stability of view processing and fields
• Stability of selected view annotations relevant for data processing

Remote API Contract (C2)

Some CDS views need to be accessed by remote APIs. External services, such as
OData, make this remote access possible. SAP releases such CDS views for the C2
contract. The views are not available in key user tools. Field length extension is not
possible. This keeps more elements stable than the contract C1 for internal use. The
main use case of remote API views is that they perform basic database functions
(updating, retrieving, deleting) in scenarios in which applications interact with an
external client. After release of such a view incompatible changes are forbidden. If
necessary new view versions must be created and released.

Naming Conventions of VDM

The VDM is based on a set of common naming rules. Following rules guarantee
consistent and self-explanatory names:

• Names should be precise and uniquely identify a subject. For example, a sale
order document should be named SalesOrder and not ID or Order.
• Names capture the business semantics of a subject.
• Different subjects must have different names. If two fields use the same name it
implies that their underlying value lists match.
• Names are generated from English terms in camel case notation with an uppercase
first letter. Underscores are used in predefined cases only. Abbreviations should
be avoided if possible. They can be used to stay within a given character limit. For
example, Query can be abbreviated as Qry.
Solution Capability 323

These naming rules apply to all CDS entities and their parts, for example, field
names, associations, parameters, or CDS views. The basic pattern for VDM View
Names is . VDM prefixes represent the
VDM view type which are described in the next section. Examples are for an
interface view, for a consumption view, and for remote API views. The
semantic name describes the business semantics of a single record returned by the
view. Suffixes are optional. Example VDM view names are or
for interface views and or
for consumption views.

Structure of the Virtual Data Model

VDM views follow a layered approach and are organized in a hierarchical structure.
Upper layers select from and define associations to the same or lower layers. Lower
layers cannot select from or define associations to upper layers. VDM views are
assigned to layers by using a special CDS annotation @VDM.viewType. Figure 20.3
shows the stack of VDM views. There are two layers, the Interface View Layer
including Composite and Basic Views and the Consumption View Layer including
Consumption and External API Views. The interface view layer provides views to
reuse. Consumption and external API views are based on the lower layers and built
for a given purpose. The following paragraphs describe different views of VDM.

Basic Views
Basic views are the lowest level of the VDM view stack and placed on top of the
database tables. They are the only views that access the database tables directly what
makes them the most important component of the VDM. Basic views have the
following main purposes:

All types of consumers

Purpose-built for apps

VDM Consumption Views C_* VDM External API Views A_* and APIs

Convenience and
VDM Composite Interface Views I_* special views for reuse

VDM Basic Interface Views I_* Basic VDM for reuse

Application Data (Tables) Cryptic, invisible

Fig. 20.3 Stack of VDM views

324 20 Virtual Data Model

• All other views are based on them. Basic views serve as reusable building blocks
for other nonbasic VDM views. This means that other views do not need to
directly select from the database tables.
• Nontransparent, hard to understand names of table fields in the database layer are
renamed in terms of business semantics. The result are more transparent and
understandable field names.
• Basic views facilitate an abstraction from the database tables to semantically
higher layers.

Composite Views
Composite views provide further functionality on top of the basic views. Primarily
they serve as reusable building blocks for other views. They can also be defined to
support a specific consumption domain. For example, analytical cube views can be
defined, which consolidate data sources for usage in multiple analytical queries.

Transactional Views
Transactional views are special composite views. They define the data model of a
business object and support defining its transactional processing-related aspects.
Transactional views can have elements that support the transactional processing
logic, for example, additional fields that preserve user input temporarily. The views
are only used in the context of transactional processing.

Consumption Views
Regular basic views are defined independent of a specific use case so that they
support any use case. On the other hand, consumption views are intentionally
designed for a given purpose. They are expected to be directly used in a specific
consumption scenario. For example, a consumption view can provide exactly the
data and metadata needed for a specific user interface element.

Restricted Reuse Views

The described basic and composite views are part of the interface layer with the I_
prefix by default, which means they can be used by any SAP application. They can
also be used by SAP customers and partners once they are released. Sometimes
development teams define basic and composite views that are meant to be used only
in their own applications. In such cases a restricted reuse view with the R_ prefix is
defined. Such views cannot be used by other development teams from other
applications. Examples are transactional processing-enabled views, which expose
internal functions and operations of a business object.

Remote API Views

Remote API views can be consumed external and represent the functionality of a
single business object model. The system internal VDM model, which can evolve
over time, gets decoupled from its external consumers. A stable interface is
established. To allow the use of the remote API views, OData services are defined.
Solution Capability 325

The OData services get published and are ready to be consumed by remote
applications.

Consumption Scenarios

The most used consumption scenarios supported by CDS entities are analytics, SAP
Fiori UI applications, enterprise search, and remote APIs. The following figures
show two typical VDM view stacks for analytical and transactional processing-
enabled applications. Use case specific views are defined on top of reusable basic
and composite views. The data model and functionality get adapted to the individual
application needs.

Analytical Applications
Analytical applications are based on cube views and a network of associated views.
They are used to monitor and analyze data. On top of the VDM stack in Fig. 20.4 are
one or more analytical query views, which project the envisioned functionality from
its underlying cube view. The cube view is associated to dimension views in the
interface layer. These dimension views are associated to other dimension and text
views within their own layer. The basic views select data from database tables. The
analytical query views are not executed on the database but on selections from the
cube.

Transactional Applications
Transactional processing-enabled applications represent a second consumption sce-
nario. The model in Fig. 20.5 is based on transactional views. The transactional

Specialized Views for Analytics

Selects from
Query View
Associations
C_...Query

Cube View
I_...Cube

Basic/Composite View
I_...

Database Table

Fig. 20.4 View hierarchy for analytics

326 20 Virtual Data Model

Specialized Views for Transactional Processing

Selects from
Consumption View
C_...TP
Associations
Composition Association

Object View
I_/R_...TP

Basic/Composite View
I_/R_...

Database Table

Fig. 20.5 View hierarchy for transactional processing

views are related through compositional associations and establish an entire business
object. The consumption view pictures relevant functionality and expands the data
model with annotations to render the UI application built on the view. The lower
layers of the VDM stack select data from the database tables and provide them to
higher layers. It is recommended to develop transactional applications by using the
ABAP RESTful Application Programming Model.

Conclusion

The introduction of VDM allows end users to query the needed data in ERP systems
by themselves. It has the character of a self-service business intelligence scenario.
VDM exposes data from database tables in a business-oriented way to ease its
understanding and consumption. It consists of CDS views. CDS views are based
on Open SQL. The semantically enriched data model makes the model easier to
understand. By given naming conventions it is declarative in nature and remarkably
close to conceptual thinking. Another main advantage of VDM is the reusability.
Once built and released, VDMs can be consumed by many different applications.
Since the CDS views exist on the application layer, existing ABAP security can be
used to protect CDS views. As coding is pushed down to the database server,
calculations can be executed close to data. Thus, the response time and the perfor-
mance of applications are improved. VDM provides a data model for applications,
that is business-oriented, understandable, reusable, stable, and executed on the
database. It uses well-known business terminology, documents relationships
between entities, and enriches the entities with additional business semantics for
better understanding.
Transactional Programming Model
21

This chapter focuses on the transaction programming model of SAP S/4HANA,

which enables the implementation of business applications. Particularly data
modeling and behavior, business services provisioning, service consumption, and
business object runtime types are explained. Transactions are a key component of
every ERP system and are the foundation for implementing business processes.

Business Requirement

Every system, which stores information, needs to manage how data is accessed.
Especially systems which handle many concurrent actions are at risk of data
corruption if the same data is accessed by multiple users or systems concurrently.
ERP systems experience heavy and frequent data modification from many users
simultaneously. Write operations can overwrite each other and thus corrupt data.
This is especially problematic if more than one dataset is modified; hence invalid
relations between different datasets can be caused. To prevent such corruption
scenarios and protect data integrity, transactions are introduced. Besides system
events, like system failures or power outages, a write operation can fail in a couple
of scenarios:

• Dirty Reads: A dataset is read, while another user or system writes to the very
same dataset. If the read happens after the dataset is modified but the write
operation fails, the dataset is left in an invalid state and cannot be reverted. As
soon as the operation needs to write the previously read data, the invalid state is
again saved. There is no way for the system to revert the malicious write, and the
database remains in a faulty state.
• Non-repeatable Read: Another problem can occur if an operation needs to read
the same dataset multiple times in its execution time. If another operation writes
in between the read operations, the following reads access the modified data even
though the unmodified data is expected. This leads to undefined behavior and

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 327
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_21
328 21 Transactional Programming Model

may produce inconsistent data as well as hard-to-reproduce errors during

development.
• Phantom Reads: The problem describes a scenario like the non-repeatable read.
In this case, data aggregation is performed on multiple datasets. The first time the
data is loaded all entities are returned. If another operation adds or deletes a
dataset, the aggregation may be invalid. If the same request is repeated, some
entries might be missing or may be appearing for the first time. In ERP systems,
this may also be very important, as analytics are often based on such aggregations
and new datasets are added frequently.

Therefore, a robust approach for managing concurrent database access is needed,

to prevent all kinds of problems and to ensure database integrity as well as database
validity. One possible and the most used method is the use of transactions. The
programming model for transactional applications must consider and resolve those
anomalies. Furthermore, it must ensure an efficient and enterprise ready for
implementing business applications from database design to developing the business
logic and the user interfaces.

Solution Capability

Within the scope of computer science, a transaction describes operations, which are
inherently small. Therefore, every process consists of several atomic steps. As these
transactions cannot be divided, they may succeed or fail as a complete work unit. In
no circumstance can a transaction be only partially completed.Transactions are
primarily used in database systems to ensure that the saved data are always in a
valid state, as partial writes to the database are impossible. If an invalid write is
detected, the whole transaction needs to be aborted and may be retried at a later
stage. Transactions adhere to the four pillars of the ACID principle:

• Atomicity: All changes which are introduced into a dataset by a transaction are
atomic. Either all changes happen at once or none happen at all. Changes can be
arbitrary operations working with the dataset, meaning all operations which read,
process, modify, or write data.
• Consistency: The database is always in a consistent state. Every transaction starts
from a consistent database. After the transaction is processed, the database is
again in a consistent state. In case an error occurs, the stored database contents are
not changed, in order not to violate any integrity constraint.
• Isolation: The transactions’ execution is undetermined, and the transactions may
be executed in parallel. Every transaction’s execution is isolated from other
transactions. Every transaction sees only the database at the start of this transac-
tion as well as its own changes.
• Durability: If a transaction is successfully executed and the database is again in a
consistent state, the changes are permanently persisted. Even in the event of a
power outage or a system crash, the changes remain saved.
Solution Capability 329

Even though transactions have benefits like allowing multiple users to access and
modify data at once, there are some drawbacks, too. Primarily the setup and
management costs of a transaction system can take a hefty toll on development
and computational resources. As described by Jim Gray and Andreas Reuter, “a
transaction processing system provide tools to ease or automate application pro-
gramming, execution and administration of complex, distributed applications” with
“a database representing some real-world state” (Jim Gray 1999, S. 10).
S/4HANA aims to ease implementation of such functionalities as well as acceler-
ate development progress. As such S/4HANA incorporates a transaction model as
part of the RESTful programming model (RAP). The programming model follows
the ACID principle (SAP Help Portal 2021). The next chapter takes a closer look at
the technicalities of S/4HANA’s transactional programming model.

RESTful Programming Model

SAP S/4HANA is based on an architecture designed to support and rely on

transactions and builds on top of them. All business logic and interfaces are
intertwined with the transactional programming model through the ABAP RESTful
programming or RAP for short. With changing requirements and technology
changes the programming models of the ABAP application server have changed
over time. Figure 21.1 shows a historical overview over the programming models.
With these iterations, the way how data integrity is handled also changed.

Classic Programming Model

The initial programming model was the classic ABAP programming model, which
was used in releases 7.5 and earlier. Developers created a basic data model. Data
integrity was ensured by foreign key definitions, which referenced other parts of
data. With NetWeaver 7.4 a major change was introduced: The Core Data Services
(CDS). CDS views and the relations between them could be defined through the data
model. However, CDS views were read-only, and the resulting developing abilities
were limited. Transactional operations could not be used.

ABAP Platform ≤ 7.5 ABAP Platform ≥ 7.5 ABAP Platform ≥ 1808

CLASSIC ABAP PROGRAMMING MODEL ABAP RESTful

ABAP PROGRAMMING FOR SAP FIORI PROGRAMMING MODEL

SEGW / @OData
Business Service
Referenced Data Source
Best practice freestyle
ABAP programming
Core Data CDS-based Core Data Behavior Definition
Services (CDS) BOPF Services & Implementation

Fig. 21.1 Historical evolution of transactional programming model

330 21 Transactional Programming Model

ABAB Programming Model for SAP Fiori

With the release 7.5 and newer versions, the new ABAP programming model is
available. For the first time, the model supports transactional applications. Special
annotations can define connections between the CDS and Business Object
Processing Framework (BOPF), which internally enable support for transaction-
oriented behavior. Additional validations and actions could be implemented in
ABAP. CDS views can be implemented through the SAP Gateway services and
can be exposed as OData services. However, as both the CDS and the BOPF are
model-frameworks, additional development efforts were needed, as both required to
be maintained at the same time. Additionally, the frameworks acted very differently
in terms of developer experience and error handling, further complicating the
development of transactional applications.

ABAP RESTful Programming Model

With the release 1808 of the ABAP environment, the new RESTful programming
model is introduced. The programming model aims to solve the previously men-
tioned problems. The RAP model uses the CDS views, and transactional services can
be added through the behavior definitions. The logic which defines the data model as
well as the behavior is exposed as business services and can be used by different
applications and services like SAP Fiori.
Since the introduction of this programming model, it serves as the basis of SAP
S/4HANA. Goal of this model is to separate the architecture in several layers. For
example, the user interface is separated from the application logic, which itself is
separated from the database. Figure 21.2 shows an overview of these layers.
First, a business object is defined through the already mentioned CDS views and
its behavior. The data model is specified by entities and their structure. CDS entities,
which define business object nodes, are referred to as transactional views. Addition-
ally, relations can be expressed through compositions and associations to allow

SERVICE SAP Fiori UI Web API

CONSUMPTION Consume OData UI services Consume OData Web APIs

SERVICE BINDING - Bind to protocol version and scenario

SERVICE DEFINITION - Define scope to be exposed

BUSINESS
SERVICES
BUSINESS OBJECT PROJECTION
PROVISIONING
CDS: Projection views

BDEF: Behavior projection

ABAP: Behavior implementation

BUSINESS OBJECTS
BU QUERIES
DATA MODELING & CDS: Data modeling
BEHAVIOR
BDEF: Behavior definition CDS: Data modeling

ABAP: Behavior implementation

Fig. 21.2 RESTful programming model

Solution Capability 331

transactional access. The behavior definition represents the transactional behavior by

declaring all operations, which are accessible through the business object. Such
operations cover create, update, delete actions, as well as other application-specific
actions. The behavior definition also defines locking, authorization, feature control
for declared operations, and ETag handling for HTTP consumption. ETags or entity
tags are part of the HTTP protocol and help to determine changes of a resource, for
example, in caching scenarios to minimize redundant data transfer. On top of this
layer, business object projections and services can be defined, which are used by
SAP Fiori and remote applications. The next chapter goes into detail on how the
RESTful programming model and how the transaction programming model are used
to guarantee data integrity.

Transaction Model

The transaction model as part of the virtual data model (VDM) serves as a founda-
tion for all processes supported by SAP S/4HANA. All operations, which work with
data, are handled through the online transaction processing (OLTP) and the transac-
tion programming model. Goal of these approaches is the transparent handling of
transactions without interruptions and without disturbing the user experience. In
SAP S/4HANA a transaction defines changes between multiple states. Transactions
have a buffer and a two-phase lifecycle, in which the phases or logical units of work
(LUW) are managed through the ABAP runtime. The transactional buffer stores the
current state and all modifications (Fig. 21.3).

Fig. 21.3 Transaction

lifecycle
INTERACTION SAVE
PHASE SEQUENCE

finalize

check_before_save
MODIFY

adjust_numbers
READ

LOCK

save

Transactional
buffer

SAP HANA

BUSINESS OBJECT RUNTIME

332 21 Transactional Programming Model

The lifecycle is split up into two phases, each having a special purpose. These
phases are:

• Interaction Phase: The information contained within at least one entity of one or
more business objects is modified. This phase can be invoked through a user or a
service through OData APIs.
• Save Phase: The changed business objects are processed to achieve a durable,
persisted state within the database. As a result, further application logic is
executed to validate and ensure that data consistency is checked before the
changes are finally committed to the database.

Internally, the phases are again subdivided into subphases which are controlled
by the runtime. The runtime follows a sequence for processing all entities which
make up the transaction.

The Interaction Phase

The interaction phase marks the beginning of an operation. As soon as the user opens
a view, the interaction phase starts. The phase follows a set of structured steps, which
are executed one after the other and are controlled by the runtime. Only if the
previous step is finished successfully, the next step is started. In case there is an
error, the whole save operation is aborted and no data is modified. As the name
implies, the interaction phase is the last opportunity in which data can be modified by
an application before it is written to the underlying database and persisted. Fig-
ure 21.4 illustrates these steps and their execution order.

Authorization Checks
The runtime checks if the modifying user has the necessary roles and permissions to
be allowed to access this data or these operations. An example for these checks is the
comparison of the role of the current user with the roles defined by the Data Control
Language (DCL) of the current view.

Feature Control
The feature control oversees which operations (create, update, delete, actions,
functions) are enabled for a given business object. During this step, the runtime
checks if the data and the invoked actions are enabled. For this, static feature controls
are checked, which define if an operation or field is available in general. For
example, internal operations might not be allowed to be accessed by other actions,

Authorization Lock Application- Provider

checks instance specific checks invocation

Feature ETag Application-

control validation specific
transformations

Fig. 21.4 Interaction phases

Solution Capability 333

and fields are read-only. Global feature control defines if an operation is enabled or
disabled independently of instances. Instance feature control, on the other hand,
define accessibility by the instances itself.

Lock Instance
The entity is locked to prevent further, possibly conflicting, writes. Entities can be
defined as master or dependent. In this case, even if a depending entity is accessed,
the master entity locks the whole composition.

ETag Validation
This step checks if the ETag matches the currently stored ETag. The ETag or entity
tag is part of the HTTP protocol and serves to determine if a resource was modified.
As such, this step is only executed if the operation was invoked through an HTTP
request. If data was modified in the meantime, the entity tag is changed and incoming
ETag does not match anymore. In this case, a save cannot be performed automati-
cally, and the data must be merged.

Application-Specific Checks
Every application can add additional checks. For example, an application can
provide additional authorization checks or additional logic checks.

Application-Specific Transformations and Augmentations

If all previous steps could be completed successfully, additional data transformations
and augmentations can be applied. This step is only executed for projections.

Provider Invocation
Finally, as the last step before the data can be saved, the provider can be invoked.
The provider can execute different actions depending on its implementation and its
type. These operations can include further checks, like authorization on a given
instance or if instance feature control allows access to the instance action. Further-
more, the provider can invoke further actions, validations, and determinations.

The Save Phase

If all data modifications are concluded, the transaction can be finalized. For this, a
commit is executed. The save phase consists of five steps following a save sequence,
which focuses on saving the changed data as well as checking the data for validity.
Each step is executed by the RAP runtime. Like the interaction phase, per step every
entity is processed, before the next step can be started. Only if a precious step is
succeeded, the next step can be started. Otherwise, the transaction aborts to protect
database integrity (Fig. 21.5).

Fig. 21.5 The save sequence Check

Draw
Finalize before Save CleanUp
Numbers
save
334 21 Transactional Programming Model

Finalize
The save phase starts with the finalize step. In this step, every entity is executing
validations and determinations. Application-specific logic can be executed to further
enhance the validation. Target of this step is to process an entity to reach its final
state, which can be stored in the database.

Check Before Save

The check before save step validates the consistency. It checks if the final state can
be stored in the database. The finalize and this check before save steps have a special
behavior if an error is detected. If the save was not invoked through an HTTP request
but though the user interface, the save is rejected, and the user is returned to the
interaction phase. This enables the user to correct invalid inputs before invoking the
save once again.

Draw Numbers
Draw numbers adjust the numbering of entities, especially if gapless numbers or
rather late numberings are enabled. This is necessary because of legal reasons.

Save
The save step oversees writing to the underlying database.

Cleanup
If all entity could be saved, the transaction is nearly complete. In the last cleanup
step, the internal state is cleaned. This contains resetting internal states, as well as
clearing the transactional buffer, which contained the now saved entities.
Thus, the consistency is checked multiple times spanning all phases of the
transaction lifecycle. It is important to point out what happens in case the save
phase detects an inconsistent state. In case of such an event, SAP S/4HANA prevents
write operations as part of the save phase, hence ensuring the database is always
consistent. Instead, the transaction returns to the interaction phase, thereby allowing
changes to be made. If a transaction originates from a machine request instead of a
user input, the request is considered faulty and the request is rejected. Even if there is
an incident, after data is written to the database, consistency is not compromised. In
this case a transaction rollback is issued, thus restoring a valid database state.

Application Development

Development on the SAP S/4HANA platform can take place in different forms,
which differ significantly. In general, development can take the form of two
approaches: A green field and a brown field approach.

Green Field
Green field or managed deployments signify the optimal usage experience with the
platform. These are characterized by a fresh start. New implementations can use all
Solution Capability 335

functionalities to an optimal extent. One of these features is the managed provider.

Managed providers can take over many of the steps involved in saving and checking
data. Standard CRUD (Create, Read, Update, Delete) operations work out of the
box, without developer intervention, thus accelerating development. If at any point
additional business object-specific functionality or business logic is needed, the
default implementation can be changed to support such cases.

Brown Field
Brown field or unmanaged deployments on the other hand are use cases, in which
some parts already exist. This is typically the case when migrating from older
versions. Unmanaged providers need to implement all the steps of the interaction
phase, as well as in the save phase. To support the use of preexisting code and enable
backward- compatibility, adapters are introduced. These adapters can be used to
integrate these functionalities into the new runtime. Therefore, in unmanaged
deployments, the developers are currently still in charge of the business object
runtime and the CRUD operations.
Figure 21.6 shows the order of implementation. The starting point is the data
model which is defined by the CDS. Next, the developer adds behavior, either by
manually adding the required operations in an unmanaged provider or using
validations offered by a managed environment. At that point, the lock object and
authority object are available for use, for example, in the interaction phase of a
transaction. Additionally, the now existing functionality can be tested by creating
unit and integration tests. As the next step, the corresponding projections for both the
data model and the behavior are added. The service definition is supplemented to
specify which entities will be exposed, and finally the service binding is created. This
also defines the necessary roles, which will be validated at the start of the interaction
phase.
It is also important to point out that the development is accelerated as ABAP
already implements many validators, which are ready to use. Especially in managed
environments, validators can be implemented by writing only a small number of
lines in a declarative way. The environment can then generate all the necessary
implementations on its own.

Example
In this section an example is explained to demonstrate how these models are used.
This example contains code snippets of an application which models travel plans.
The main parts, which change with the new programming model, are the CDS
behavior definition as well as the CDS behavior projection. In this example a simple
service is defined:

This service exposes a projection of a travel entity:

 336

DEFINE ROLES
Role
SERVICE
BINDING PREVIEW

BIND TO SCENARIO
AND PROTOCOL

SERVICE
AUNIT DEFINITION
Scenario and integration test
DEFINE SCOPE

ADD
BEHAVIOR
AUNIT
Unit test
DATA MODEL BEHAVIOR
PROJECTION PROJECTION

PROJECT ELEMENTS AND ENRICH PROJECT BEHAVIOR

21

ADD IMPLEMENT
BEHAVIOR BEHAVIOR
Authority object CDS role
QUERY
DATA ACCESS CDS BASED CDS BEHAVIOR
CONTROL DATA MODEL DEFINITION ABAP CODE

AUTHORITY-CHECK
APPLICATION DATA
DATABASE TABLES
Lock object

Fig. 21.6 Relations and development order

Transactional Programming Model
Solution Capability 337

The projection follows an interface view:

With these basics, the next step is to create the missing CDS behavior definition.
This example uses managed approach (greenfield). Other properties, which are
specified, are the name of the class, the behavior name, which database to write to,
and the locking behavior. The lock is engaged on the master if any changes are made.

If a developer wants to add operations, the developer can declare which operation
the behavior shall have. In this scenario, the operations create, update, and delete are
specified.

To add the missing projection and to be able to use these operations in OData
services as well as the user interface, a new projection is created for the view entity:
338 21 Transactional Programming Model

Like the behavior definition, operations can be made available simply be

declaring them.
As part of the transaction lifecycle, additional validations, actions, feature control,
and other features are checked. These can be added in a very similar way. Again, it is
declared which validations and actions are included in the behavior definition.

Here a validation is declared on the fields Begin_Date and End_Date, which are
executed when the underlying object is saved. Additionally, an action is defined to
be able to set the begin date.
The underlying implementation of these actions and validations needs to be
defined in the ABAP language. As these are very application specific and are
standard ABAP source code, the implementation of these validations is not
explained further. Important is however that validations can be added by simply
declaring it on the behavior definition, and the execution of these validations is
automatically managed by the runtime.
Like the CRUD operations, the newly created action can then be exposed through
the behavior projection:

Thus, SAP S/4HANA makes it extremely easy to integrate the described models
in a declarative way. This eases development efforts, increases development pro-
ductivity, and ensures harmonization of the applications.
Conclusion 339

Conclusion

In this chapter the ABAP RESTful programming model and its incorporated trans-
actional programming model were explained. First, the challenges were described
which can occur in ERP systems, especially through concurrent write operations. As
a method to prevent data corruption, transactions were explained. For better under-
standing a transaction, the use case of transactions and how they help to ensure that a
database is always in a valid state were depicted. With ABAP 7.51 a partially new
and improved programming model was introduced. This chapter focused on the SAP
S/4HANA system and how it uses transactions throughout its data management to
ensure data is never in a corrupt or invalid state. For this purpose, it was described
how the system enforces data integrity through different methods, like the two-phase
lifecycle and special steps in the save sequence, which checks if data is ready to be
saved without interference. Finally, it was explored how developers can use the
transactional programming model in their software solutions. For this, the managed
and unmanaged approaches for implementing providers were explained, and the
differences between the diverse kinds of providers were highlighted. The managed
implementation was finally used in an example demonstrating the use in a real-world
application.
Analytics
22

This chapter explains embedded analytics concepts and tools of SAP S/4HANA.
Due to the usage of in-memory database technology online transactional and analyt-
ical operations are combined and allow native integration of analytics into the
transactional applications. Additionally, the use case and solution approach for
data warehousing are explained.

Business Requirement

An ERP solution collects data with each business transaction. This data, over time,
becomes a valuable asset that can be used for decision support, business planning, or
simulation. Furthermore, the collected data can be used to automate business
processes that were previously carried out through manual interaction steps. With
embedded analytics actual transactional data can be used for real-time reporting,
planning, and simulation without the delay caused by replicating the data into data
lakes. In the context of ERP systems, the analytics use cases can be grouped into the
following clusters:

• Operational reporting: The operational use cases support day-to-day business

decisions. Operational reporting is about enabling the business to perform their
daily work by providing detailed and real-time information on business pro-
cesses. The use case focuses on collecting transactional data in order to enhance
operational efficiencies. Operational reporting covers all business processes
within a company (e.g., financial, material management, sales, or purchase) and
is subject to constant additions, updates, and deletions. Operational reports are
consumed by people with accountability for improving operations. These persons
offer task-oriented line-item information on individual business processes at the
very granular level of detail needed for operational management. The reports
usually rely on data from one business application like a single ERP deployment,
which is covering North America financial processes. Reports cover a shorter

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 341
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_22
342 22 Analytics

time frame in comparison to other use cases. Examples for operation reporting are
list of open orders, material on stock, and education cost in a profit center.
• Tactical reporting: Tactical analytics is run by business professionals with little
or no technical experience. They want to use analytical applications to drill down
and drill through multidimensional objects and rely on architects to build com-
monly used data objects for their work. This use case could require combining
data from multiple operational systems or store attributes that are not persisted in
the operational ERP system as they are not needed for online processing. The use
case includes historical data and structures, prepares and consolidates the data for
multidimensional usage. In short, these reports put operational data into a busi-
ness context for business users. It also may require complex data analysis or even
predictive analytics including past trends. Tactical analytics aims for monitoring
and responding rapidly to a variety of short-term circumstances and don’t have a
necessity for real-time data. The reported data is stable over a certain time frame
so that results are consistent across reports from a variety of perspectives for the
analysis duration. Examples for tactical reporting are days sales outstanding
(DSO), working capital management (WCM), and liquidity forecasting.
• Strategic reporting: Strategic analytics mainly serves the management, who
demands pre-consolidated and deeper structured and aggregated data as it is
already delivered for tactical reporting. Very often there is no need for detailed
information except when a root-cause analysis is required. Strategic reporting
summarizes and structures business KPIs to support strategy decisions. It always
includes a historic view and is dealing with longer time periods and combines
data throughout the whole company to provide a holistic overview over the
company’s situation. Examples for strategic reporting are productivity by
manufacturing unit and market share development for different product lines.

In addition, planning and simulation functionality must be supported for all the
three explained use case types as well. There is an operational, tactical, and strategic
plan within a company’s planning cycle. Planning and simulation addresses the need
to foresee the future of a business. It does not deal with actual business transactions,
but it predicts the transactions of the future. The basic requirement for business
planning is to create plan data either manually or automatically. Planners have to
develop the information and understand the objectives of the corporation and the
overall business environment to make sure the business plan developed is achievable
and will move the company toward a successful result. Plans from different areas are
interrelated very much, for example, a sales plan provides the basis for a production
plan. Due to this dependency the creation of the plans for different areas typically
follows a strict schedule in the company. As a consequence, support for steering and
monitoring the whole planning process across the different planning areas is needed.
Reacting to changes in the context of a business plan requires rapid generation of
results, quick re-planning and re-budgeting, coordinated and swift implementation
of the new budget across highly complex organizations. The plan data has to be
separated from the actual data; however, for analytical processing it has to be
accessible just like actual data, especially to allow actual-plan comparisons easily.
Solution Capability 343

One of the most important operations in planning is distribution. This operation is

used to distribute values from a coarse aggregation level down to a detailed aggre-
gation level, for example, distribute planned sales revenue for Europe down to
countries. The aim of software products in this area is to improve planning, consoli-
dation and simulation frequency, accuracy, and effectiveness in order to reduce
planning-cycle times and costs.

Solution Capability

Transactions performed by users in a system are processed by Online Transaction

Processing (OLTP) engines. Thus, availability and performance of OLTP are key
success factors for ERP systems. Typically, not large data volumes are processed but
high number of transactions. Online Analytical Processing (OLAP) is a term used in
the context of performing analytical operations. OLAP focuses on the analysis of
data resulting from OLTP processes. For example, the data is aggregated, filtered, or
KPIs are calculated for drawing insights and taking decisions. Conversely, this
means that very large volumes of data are processed including historical data.
Hence, the requirements for OLAP applications fundamentally differ from OLTP
scenarios. Extract, Transfer and Load (ETL) is a process used to load data from one
or more OLTP data sources into an OLAP target system. The data is extracted from
the various data sources, transformed into the correct format, and loaded into the
target data sources. As depicted in Fig. 22.1 in traditional analytics process, data
must first go through a certain process in order to be analyzed in a meaningful way.
In the first step data resulting from transactions are processed and stored using
OLTP. After the data has been processed by an ETL solution, the data is prepared
for OLAP so that analytics can be performed. This traditional analytics processing is
inefficient and ineffective. The data must be replicated multiple times, which causes
high hardware and processing costs. Furthermore, due to latency caused by the ETL
process, the data for analytics are usually outdated as there might be updates or new
records available in the source system. Analytics based on outdated information can
result into incorrect conclusions which can cause additional costs for companies.
The analytics approach of SAP S/4HANA resolves these problems. SAP
S/4HANA is based on the in-memory database SAP HANA and combines OLTP
and OLAP in one system. As shown in Fig. 22.2, unnecessary replications are
avoided as OLTP and OLAP sharing the same online database. Thus, the data for
analytics is always up to date so that real-time and accurate reporting is ensured. This

Transactions OLTP ELT OLAP Analytics

010101010
101010101
010101010

Fig. 22.1 Traditional analytics process

344 22 Analytics

Fig. 22.2 In-memory based Transactions OLAP + OLTP Analytics

analytics process
010101010
101010101
010101010

is a breaking through innovation and allows specially to incorporate analytics

capabilities directly into transactional processes.

Analytics Architecture

In this section the solution architecture for implementing operational, tactical, and
strategic analytics use cases is explained. The architecture is based on the following
key business objectives:

• Reduced total cost of ownership: With SAP HANA in-memory data management
concepts, the required analytical capabilities are directly incorporated into the
operational systems. SAP S/4HANA becomes less complex and easier to main-
tain, resulting in less hardware maintenance and IT resource requirements.
• Innovative applications: SAP HANA combines high-volume transactions with
analytics in the operational system. Planning, forecasting, pricing optimization,
and other processes can be dramatically improved and supported with new
applications in SAP S/4HANA that were not possible in the classic SAP ERP.
• Better and faster decisions: SAP S/4HANA’s in-memory technology allows
quick and easy access to information that decision makers need, providing them
with new ways to look at the business. Simulation, what-if analyses, and planning
can be performed interactively on operational data. Relevant information is
instantly accessible, and the reliance on IT resources is reduced. Collaboration
within and across organizations is simplified and fostered. This leads to a much
more dynamic management style where problems can be dealt with as they
happen.

Figure 22.3 summarizes the analytics architecture of SAP S/4HANA. The more
data is processed during a single operation, the closer it should be executed to the
database. Set-based processing operations like aggregations should be executed in
the database, while single record operations should be part of the next layer. Thus,
for analytics in SAP S/4HANA the pushdown paradigm to SAP HANA is used
systematically. Hence, performance intensive operations are executed close to the
data which results to an optimum throughput.
Very often the core data model is defined numerous times for different purposes
only because minor metadata must be added. For example, technology solutions for
integration, user interfaces, analytics, or transactions require unnecessarily their own
data models. This increases total cost of development (TCD) as the same content
Solution Capability 345

SAP S/4HANA Data Warehouse (e.g. SAP BW/4HANA)

Embedded Analytics Side-by-Side Analytics

consume
Analytical Analytical
Analytic Engine analytics Analytic Engine
Application Capability

Virtual Data Model Extract, Load & Transform

replicate
Application Data data Data Lake

Fig. 22.3 Overview analytics architecture

must be provided several times. ‘Due to the incompatible meta models’, cross topics
must be resolved multiple times, e.g. UI integration, extensibility, or authorization.
This results in high TCO and encounters consumption of solutions by customers.
Therefore, with the virtual data model (VDM), the core data model is defined once
and reused in different contexts by specific enhancements. This simplifies the
analytics architecture for SAP S/4HANA, avoids redundant data modeling, and
allows solving cross topics uniformly. Operational reporting and partly also the
tactical reporting can be implemented based on the embedded analytics of SAP
S/4HANA, while for strategic reporting data warehousing is required (see Fig. 22.3).
Especially for strategic reporting historical and cross-system data is necessary,
which is usually stored in data warehouse solutions like SAP BW/4HANA. In
essence, for embedded analytics the virtual data model is used to access the applica-
tion data, process them with Analytic Engine and expose so analytics capabilities for
integration into business applications. There is no need of data replication. The data
is always up to date and ensures real-time analytics. Furthermore, analytics features
can be built into transactional processes natively. This means to provide analytics to
the right person, at the right time, and at the right place. For the side-by-side
analytics, application data must be replicated to the data warehouse solutions
based on ETL processes and made available for analytics. The reporting features
must be integrated into SAP S/4HANA applications with remote APIs or with
generic Business Intelligence (BI) clients. As far as possible open standards are
used, and proprietary technologies are avoided. Open standards lower total costs and
increase returns on investment by providing interoperability, vendor neutrality,
efficient use of existing resources, lower and manageable risk, robustness and
durability, and increased available skills. In the context of SAP S/4HANA analytics
SQL, ODATA, INA, and MDX are the main open standards that are considered
regarding access of data or integration into design/runtime tools.
346 22 Analytics

Embedded Analytics

As already mentioned, embedded analytics aims to solve the operational and partly
the tactical reporting use cases. As shown in Fig. 22.4 embedded analytics is based
on the virtual data model (VDM) and the Analytic Engine. Reporting capabilities are
incorporated into transactional applications allowing improved decision-making. In
the past there was a rather strict separation between operational analytics and tactical
and strategic analytics, which was about process optimization in an ex post
facto mode: The business processes of the past are analyzed in a consolidated
way, and the result of this analysis is fed back into the business processes (e.g.,
via planning and target setting), closing the loop. While these processes are still
useful, the embedded analytics with SAP Fiori demands to overcome this separation
on the level of tasks and activities of a particular user. Insight-to-Action involves a
paradigm shift: Instead of gathering insight in the context of a specific business
transaction or process, the insight is provided first in a summarizing and highly
meaningful way. From this insight the end user decides which actions to take and
takes them immediately in a seamless manner. This working model allows to
respond to unplanned or systematic changes in the business and to appropriately
(re-)prioritize tasks instead of working on a queue of business transactions. In order
to achieve this goal, KPIs, analysis results, and analytical applications are offered to
the end user in a very convenient way (e.g., on the home page, sometimes even
involving active updates pushed to the UI), and the possible actions are provided as
links or via a context menu, similar to contextual insight. So, Insight-to-Action
implies per definition a seamless UI navigation from analytics to the relevant
business transactions, and it typically has to be real time in order to show the effect
of an action instantly.
The analytics model is founded on VDM and completely modeled in Core Data
Service (CDS) views. The architecture leverages both SAP HANA and the Analytic

Multi- Smart
SAP Fiori
Analytical List Overview Query
dimensional Business
Pages Pages Browser
Reports KPIs
Analytical

Analytical
Queries

Queries
Service

Service

Service
Odata

Odata

Odata

SAP AS ABAP

Query &
Cube CDS Dimension Analytic
Hierarchie
View CDS View Engine
CDS View
SAP HANA

Fig. 22.4 Embedded analytics

Solution Capability 347

@Analytics.query:true Classifies
@VDM.viewType: #CONSUMPTION Analytical Query
define view ZC_SalesOrderItemQuery
with parameters Default for Display
@Consumption.defaultValue: 'USD' Currency Variable
P_DisplayCurrency : VDM_V_DISPLAY_CURRENCY
as select from I_SalesOrderItemCube(P_DisplayCurrency: $parameters.P_DisplayCurrency) {
@Semantics.currencyCode: true
Amount with
DisplayCurrency,
Currency
@Semantics.amount.currencyCode: 'DisplayCurrency'
NetAmountInDisplayCurrency,
@AnalyticsDetails.query.axis: #ROWS Initial UI Layout
@AnalyticsDetails.query.display: #TEXT
Material,
@AnalyticsDetails.query.formula: 'NetAmountInDisplayCurrency / ItemNetWeight‚
@EndUserText.label: 'Average Net Amount Per Weight'
0 as AvgNetAmountInDCPerWeight
} Calculation on
Aggregated Values

Fig. 22.5 Example for CDS query view

Engine. Embedded analytics enables multidimensional analysis with advanced

functionality, for example, variables, restricted measures, formula aggregation,
exception aggregation, and hierarchies. The reporting capability are exposed via
InA and OData protocols for consumption. The embedded analytics consists of three
layers. The lowest layer contains the database itself, which is in this case SAP
HANA. The application data is stored in tables and exposed via the predefined
CDS views of the virtual data model. The well-known analytics artifacts like cubs,
dimensions, hierarchies, and queries are modeled as CDS views and processed with
Analytic Engine of the SAP Application Server ABAP respectively the OLAP
functionality of SAP HANA. Figure 22.5 illustrates an example for CDS query
view. To display analytics results in the frontend there are various options available,
for example, dashboards or analytics pages which are partially explained in the next
section.

Reporting Frameworks

There are several frontend solutions for displaying analytics results but also for
browsing CDS queries available in SAP S/4HANA. Those can be used in the context
of embedded and side-by-side analytics. Some of the main frameworks are exem-
plary explained in this section.

Multidimensional Reports
Users can examinate analytics in different ways. One option to analyze the data is
multidimensional reports. This approach allows to slice and dice, sort, and filter the
data. Drill down and drill across are supported. With multidimensional reports
swapping rows and columns are facilitated. Charts and tables can be displayed in
personalized views. Finally, the navigation to other SAP Fiori applications is
possible (Fig. 22.6).
 348
22

Fig. 22.6 Multidimensional reporting

Analytics
Solution Capability 349

Smart Business KPIs

This framework enables the provisioning of key performance indicator (KPI). In the
SAP Fiori launchpad quantitative information is offered for KPIs. Thus, the end user
can react immediately if a KPI drifts to unplanned direction. Clicking on the KPI
tiles drill-down to various details is supplemented by selecting dimensions. Such
KPI details can be personalized and saved as new SAP Fiori tiles for regular use. KPI
details are the default navigation target of KPI tiles. However, this behavior can be
reconfigured so that SAP Analysis Path Framework or other SAP Fiori Apps are
reflected. Analysis Path Framework (APF) is a tool to easily build and enhance
interactive analytical Fiori applications. APF-based applications facilitate business
users to dig into data recursively by building up analysis paths covering a sequence
of analysis steps. Selections made within a step of an analysis path take effect in all
subsequent analysis steps (Fig. 22.7).

Fig. 22.7 Smart business KPIs with drill-down to KPI details

350 22 Analytics

Analytical List Pages

The two analysis options in the previous sections are designed to generate individual
key figures for a specific use case. The Analytical List Page is used when only the
overview is needed and not the detailed information. For example, an employee can
display all open receivables that have not yet been assigned to a processor. Analyti-
cal List Pages Visual provides filters to focus on the most important areas. The user
can switch between complex, visual, facet filters. Personalized chart areas are offered
for quick overview and drill-down. Additionally, details area for operational details
are supported. Navigation is facilitated to other Fiori applications that are semanti-
cally linked to the data. Personalized views can be configured. Analytical List Pages
are ideal for insight-to-action scenarios (Fig. 22.8).

Overview Pages
With Overview Pages the most important information can be presented at a glance
instead of opening many different transactions. They combine analytical and trans-
actional information and enable built-in analytics. More detailed information can be
provided by clicking on the cards. Each card basically represents a business transac-
tion where analytical data is the starting point of the end user’s investigations,
followed with concrete transactional activities. The entire page can be fully
personalized. For example, it is possible to hide individual tiles or maps. Further-
more, the navigation to other Fiori applications that are semantically linked to the
data are supported (Fig. 22.9).

Query Browser
The Query Browser is an SAP Fiori application that can be used to quickly and easily
search for, browse, and tag the analytical queries. The Query Browser shows all the
authorized analytical queries and customer queries to which the user has access. The
queries can either be executed directly or be opened in Design Studio. The second
option provides more functionality, for example, additional configuration options for
dimensions, rows, or columns. For searching queries, information regarding views,
tables, view descriptions, view column names, annotations, or tags is used. Those
search options can be combined with each other. Filter options allow to sort or filter
the views. The sorting of queries is founded on the CDS view names and the
underlying application components in the system. The filtering of the queries is
built on the user tags and the corresponding application component. The list of
application components is illustrated as a hierarchy (Fig. 22.10).

Analytical SAP Fiori Apps

There are predefined analytical SAP Fiori applications that can be consumed
directly. Those applications are implemented based on SAP Fiori floorplans and
UI5 controls. These are individual and use case-specific analytical applications.
Typically, this approach is applied for developing highly specific use cases where
the already explained generic frameworks are not sufficient. Therefore, break-out
solutions are required to fulfill the sophisticated functionality demanded for the
scenario (Fig. 22.11).
 Solution Capability

Fig. 22.8 Analytical list page

351
 352
22
Analytics

Fig. 22.9 Overview business page

Solution Capability 353

Fig. 22.10 Query browser/custom analytical queries

 354
22

Fig. 22.11 Analytical Fiori App

Analytics
Data Warehousing 355

Data Warehousing

The operational analytics represents the majority of the analytical use cases and can
be well handled based on embedded analytics. Partially, this is also the case for
tactical reporting. However, as soon as historical data is required for analytics, a data
warehouse solution is necessary. This is because usually in operational database of
SAP S/4HANA the historical data for a restricted period are stored but definitely not
for several years. Keeping historical data for long periods in the operational database
would result in high volume of data. Thus, very soon hardware limitations would be
achieved. Furthermore, negative performance drawbacks are expected as for each
database operation, huge data volumes would need to be processed. For strategic
reporting also cross-system analytics must be considered, which is also not in the
focus of embedded analytics. Hence, for strategic and partially for tactical reporting
often data warehouse solutions like SAP BW/4HANA are used as they enable
historical and cross-system analytics. Figure 22.12 illustrates the architecture of
SAP BW/4HANA. SAP BW/4HANA provides a complete view of business to
satisfy the diverse needs of end users, IT professionals, and senior management. It
combines business warehouse infrastructure, a comprehensive set of tools, planning
and simulation functionality, and data-warehousing capability. This solution
consolidates data across the enterprise and provides standardized data model for
analytics. For this common semantics is defined, data values are harmonized, and a

Business User Tools

SAP Analytics 3rd Party Data

& Planning Analytics Intelligence

Developer SAP BW/4HANA Application

Tools
Analytical M
Manager Workspaces
SAP
BW/4HANA Metadata
Modelling repository
Open Hub
Tools
Data Warehousing
Ware
ODP

SAP HANA Platform Archive

SAP HANA ODP
Calc SAP IQ/
Modelling AFL DB SDI SDA HADOOP
Tools Eng
SAP
File
Sources Sources

3rd
Non-
Party Hadoop
SAP
ETL

Fig. 22.12 SAP BW/4HANA architecture

356 22 Analytics

single version of truth is established. While SAP BW/4HANA provides a single,

comprehensive source of current and historical information, it keeps a copy of source
data to ensure independency of source.
SAP BW/4HANA gains significant performance gain through pushdown of
operations/calculations to SAP HANA. The OLAP Engine performs complex
query calculations, for example, exception aggregation. Planning functions (e.g.,
disaggregation) and data management (e.g., transformation logic) are also pushed
down for optimal performance. The modeling tools are based on Eclipse so that a
unified and single user interface is provided for all development tasks. Following
SAP Fiori design patterns, single point of entry for all administration tasks is offered
with the Web Cockpit. Thus, a unified user experience is ensured. Additionally, own
applications and groups can be included which consider user context and
authorizations. SAP BW/4HANA simplifies data integration by offering compre-
hensive access to external systems. The number of source system types are reduced
from 10 to 4 to improve TCO. Real-time replication of data is supported with SAP
HANA SDI or SAP ODP-SLT. Furthermore, the data can be accessed virtually so
that replicas can be avoided. For loading data optimized processing in SAP HANA is
available. On the way from the source system to SAP BW4/HANA data is
transformed into a unified format and cleansed. The data-warehousing component
is responsible for data replication, transformation, and storage on the SAP
BW4/HANA server. Data is stored in relational tables generated from the data
models. The data models are stored in the Meta Data Repository. To cover archiving
and data aging data might as well be stored in a near-line storage system. The
Analytical Manager is responsible for reading and processing the data, which
includes aggregation and calculation. Moreover, this also contains a planning engine
which enables the write back of changed data. Various front-end tools like Analysis
Office, Design Studio, and the Enterprise Performance Management (EPM) client
allow the end user to access and analyze the data. The core data model comprises
InfoProvider and InfoObjects. The main building blocks of the data model are the
InfoObjects, which are divided into key figures (numbers or measures, e.g., revenue,
quantity sold), characteristics (evaluation groups such as company code, product,
customer group), and units (currencies and units of measure). Characteristics are
very similar to business objects and therefore might have a link to a business object
located. The InfoObjects only exist in a global scope—i.e., their properties are
shared among all objects that are composed out of InfoObjects like InfoProvider
and InfoSources. The most important entity is the InfoProvider, which is an abstrac-
tion for an object containing analytical data. The InfoProvider is one of the following
concrete entities:

• DataStore Object is central persistence object in SAP BW/4HANA. It is used for

reporting and determination of delta information.
• Characteristic refers to master data with their attributes and text descriptions.
• CompositeProvider represents a union or join of several InfoProvider.
• Open ODS View enables the user to define data models for objects like database
tables, database views, or SAP BW/HANA DataSources for direct access. These
Conclusion 357

data models allow flexible integration of external data without the need to create
InfoObjects. An Open ODS view can be a characteristic.

All front-end tools are based on queries which are always defined on exactly one
InfoProvider. The query and the query view define a view (often a subset/projection)
of the data available in the InfoProvider. In addition, some visual properties are
defined as well, for example, which InfoObjects appear in the columns/rows or if
hierarchies are used for the visualization. Based on one or more queries/query views
applications are then build either for the web (Web-based front end) or MS Office
(Office-based front end). Moreover, it is also possible to embed a query view in
analytical Web Dynpro pattern. In the Data Warehouse layer modeling is used to
transform and merge data from various sources into the InfoProvider. The inbound
layer is always modeled as a DataSource. Data is then mapped into one or more
physical InfoProvider via transformations. Since the warehouse might be modeled
containing various levels of detail, it is also possible to model transformations
between InfoProviders (e.g., from one DataStore Object into another DataStore
Object). DataStore Objects are candidates for an information lifecycle management.
They could optionally own a data archiving process which defines a partitioning
schema for the data relocation to an archiving object (for offline usage only), a near-
line Object (enabled for direct query access), or the combination of both (Fig. 22.13).
In addition to the static data model there are more entities for modeling the
dynamic behavior of the SAP BW/4HANA system. The most important object is
the process chain, which controls the scheduling and execution of several process
types. Some very prominent process types are data transfer processes (DTP),
InfoProvider administration (delete data, . . .), and execute a planning sequence.
SAP BW/4HANA business content is one of biggest differentiators. A simple
business content example is invoice and payment trends over time, or order delivery
performance analysis. Building and maintaining complex analytical models across
finance, procurement, human resources, supply chain, which source the right data
from the right fields and then map them to data structures for analytics is really hard
and time-consuming. SAP BW/4HANA provides analytics content which can be
used out of the box.

Conclusion

Key use cases for analytics are operational, tactical, and strategic reporting. They
cover demands for users performing their daily work to senior managers taking
strategic decisions for the company. For the implementation of these use cases
embedded analytics and data warehouse technics are applied. Embedded analytics
is based on SAP S/4HANA’s platform. In-memory concepts of SAP HANA are used
to combine analytics and transactional processing. Thus, built-in analytics is
facilitated in terms of offering analytics capability to the right person, at the right
place, and at the right time. While operational and partially tactical reporting are well
covered with embedded analytics, for historical and cross-system reporting data
358 22 Analytics

Fig. 22.13 SAP BW/4HANA—data flow modeling

warehousing is required. With SAP BW4/HANA as data warehouse solution data

from across the enterprise and beyond can be integrated, and then transformed into
practical, timely information to drive sound decision-making, targeted action, and
solid business results. This product is also founded on SAP HANA and makes
intensive use of in-memory computing and pushdown approach.
Search
23

This chapter focuses on enterprise search architecture and framework of SAP

S/4HANA. Particularly different search types like in-app search and value help,
search models and connectors, configuration, and managing of search models are
explained.
The pushdown of search requests to SAP HANA is also briefly described as this
impacts the response time of search engine.

Business Requirement

Especially in big and versatile ERP software it is important to ensure effective

navigation and therefore good user experience. One way to provide effective navi-
gation is to provide a powerful search. In the case of ERP systems, users should be
able to get a quick overview of business objects. Also, this search feature should help
them to navigate business objects across the entire enterprise network. Free-text
search shall be provided to the users for specifying search requests. The search
results shall be listed according to their relevance ranking. Best suited results must be
itemized on the top of the list. In the context of ERP solutions, the search capabilities
must be restricted to the authorization permissions of users, for example, only those
sales orders shall be listed in the result list of the search query for which the user have
the authorizations. In addition to this cross-application search capabilities, also
in-app search features are required. Thus, within a business application and the
underlying restricted business context, searching for entities shall be supported.
Typically, ERP user interfaces contain code lists from which users must select the
relevant codes. Search shall facilitate value helps for searching such code lists and
simplifying the experience for the users.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 359
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_23
360 23 Search

Solution Capability

The search functionality is an integral part of SAP S/4HANA. There are three types
of it, each targeting different application requirements. The first type, Enterprise
Search, offers a free-text search for all instances of effectively any business object
types. Furthermore, it offers this free-text search for SAP Fiori apps, which are
available in SAP S/4HANA. It is important to point out that the search scope for each
user is of course limited to only those objects and applications which are assigned to
the user’s roles. This Enterprise Search is accessible through the search field at the
top of the page in the SAP Fiori launchpad. Enterprise search enables business users
to get a quick overview of business objects and helps to navigate these business
objects across the entire enterprise network, which is exactly what was required. It
features facets, where users can narrow down the search result set and where users
can select multiple filters which can be applied along certain discrete attributes of the
overall data collection. Additionally, it gives a brief statistical overview of how data
is distributed across the result set. Finally, all this information can be shown as a list,
bar graph, or pie chart. Figure 23.1 illustrates the results of searching for Products in
SAP S/4HANA using Enterprise Search.
The Enterprise Search also features fuzzy search. This provides search results
based on similar search strings and helps in case of typing errors. Furthermore, the
fuzziness threshold can be changed according to the user’s needs. In addition, it
features type ahead. It shows a suggestion list when the user enters a minimum
number of characters and therefore improves the search experience.
Besides the Enterprise Search, which provides cross-application search, SAP
S/4HANA features the In-App Search, where the user can search within a specific
application. This search is integrated into a single SAP Fiori app and offers context-
specific fuzzy search capabilities. It can be found through special search fields in the
SAP Fiori list apps. If features value help dialogs and type-ahead input controls.
Also, SAP S/4HANA provides a Value Help Search, which is used to offer input
help for fields within the application. Finally, different roles can be assigned to
different users so that the search results can be altered based on these assigned roles.

Search Architecture

The general search architecture has SAP HANA as the lowest layer. SAP HANA
consists of two major blocks, where one is the actual database and the other is the
XS-Engine, which acts as the application server. On top of SAP HANA, there is the
ABAP-stack, which also acts as an application server. The very top layer is the client
that consumes all the services. Here the client is likely to be a browser but might also
be Microsoft Excel. The entire search architecture is based on the virtual data model
(VDM), an overview of which is depicted in Fig. 23.2.
The enterprise search framework can be divided into two parts, one implemented
in SAP HANA and the other implemented in the ABAP platform. The SAP HANA
Enterprise Search Framework provides the core enterprise search capabilities
 Solution Capability

Fig. 23.1 Enterprise Search in SAP S/4HANA

361
362 23 Search

SAP Fiori Launchpad

Design Tools
Enterprise Search
SAP Fiori Apps Manage Search Fine-Tune Define Search
SAP Fiori App
Models Ranking Behavior

ABAP Enterprise
Virtual Data Model Enterprise Search Search Framework
Transaconal
based on CDS Models based on
Processing (SADL)
Views CDS Views ES Connectors

ABAP Applicaon Server

SAP HANA SAP HANA

Contains Enterprise Search
SQL Views Full Text Index Tables
Funconality Framework

SAP HANA

Fig. 23.2 Search architecture in SAP S/4HANA

through a set of database procedures. The second part of the enterprise search
framework is the ABAP platform. The enterprise search in ABAP exposes its search
via an ABAP-API and via a InA-service. Here InA (Information Access) is a
proprietary protocol which comprises all features required by search and analytics.
While the InA-service is used by the Fiori search exclusively, all ABAP applications
are based on the API. Moreover, the ABAP Enterprise Search Framework is
responsible for the integration with the Search SAP Fiori app and on the other it is
responsible for processing enterprise search Core Data Services (CDS) models.
Also, the service adaption definition language (SADL) framework is the infrastruc-
ture for the model-based processing of OData services in this ABAP platform. This
is controlled by special annotations of the @Search domain, which are directly in the
VDM consumption views. These Enterprise search CDS models are special CDS
views which are annotated with @Enterprise-Search.enabled: true. Technically, the
enterprise search models are not VDM views and can be created without the previous
mentioned VDM rules. In SAP S/4HANA however, they are normally built on top of
the VDM basic layer and therefore share the same business models with other VDM
entities. Several sets of runtime metadata called enterprise search connectors are
generated by the framework during the activation of an enterprise search CDS
model. During runtime, these connectors are the main artifacts controlling the
Solution Capability 363

execution of the enterprise search queries. In the client part there are libraries for
Firefly and sInA (simplified InA). Here Firefly focusses on the analytical scenarios
and provides platform independence. sInA focusses on search. Nevertheless, Firefly
can handle search requests and sInA can manage analytical requests, too. Both
libraries communicate via InA with the server.

Search Models and Search Connectors

The enterprise search is based on predefined Search Models. A Search Model

contains all information that is required in order to execute a successful search.
Some of this information are listed here:

• Request Fields defines in which columns the search term could be found
• Freestyle Search Request Fields specifies which columns should be considered
in a freestyle search
• Relevance of Freestyle Search Request Fields defines how relevant a hit is in
each column
• Facetted Search Request Fields specifies which columns are relevant to a
facetted search
• Advanced Search Request Fields define which columns should be enabled for
advanced search
• Auto Completion Request fields decides which columns should use the auto
completion feature
• Response fields defines which columns should be part of the search result
• Title Response fields specifies which columns are relevant to the title of a
search hit
• Authorization Checks defines which authorizations are required to access
which data
• Boosts decides which hits should be boosted or promoted
• Field Semantics specifies based on the semantics which appropriate search
configuration is used

Search Connectors are required to execute a search. These Search Connectors are
based on the Search Models and without the connectors there is no search possible.
Just Search Models are not enough. A Search Model is a Design Time construct, it is
well-considered developed by a domain expert, where as a Search Constructor is a
Run Time construct which is created and activated by an administrator. Additionally,
a Search Model is independent of the concrete system, it can be created in one
system and then shipped to another system. A Search Connector is bound to a
concrete system and it cannot be shipped or transported into another. An overview
of this relationship is depicted in Fig. 23.3.
These types of Search Models and Connectors represent the Classical Search
Models and Connectors. Classical Search Models can be created using the Modeler
for Search and Analytics (ESH_MODELER). Based on the Classical Search Models
364 23 Search

Fig. 23.3 Relationship

SAP
between search model and
search connector
acvates
Search Model Search Conncetor

deliver
X

acvates
Search Model Search Connector

Customer

the Classical Search Connectors can be created. These can be created using the
Connector Administration Cockpit (ESH_COCKPIT) or via an Enterprise Search
Task List (SAP_ESH_CREATE_INDEX_SC). It is important to point out that
Classical Search Models and Connectors have been relevant in the past, and now
CDS-based Search Models and CDS-based Search Connectors are being used in
SAP S/4HANA Cloud. Classical Search Models are still used in SAP S/4HANA On
Premise. CDS-based Search Models are the future direction, and it is planned to use
them exclusively in both the Cloud and On Premise.
Like mentioned before CDS-based Search Models are just ordinary ABAP CDS
views with some special annotations (e.g., @Enterprise-Search.enabled: true).
Currently, there are three ways to create a CDS-based Search Model. First, these
models can be created with the Enterprise Search Model Migration Assistant. It is a
semi-automatic conversion of classical Search Models and is part of the Enterprise
Search. Second, these models can be maintained with the Create Search Model
UI. Here the user is guided through the creation of a CDS-based Search Model.
Finally, they can be created with the ABAP Development Tools (ADT), which is a
standard tool for the creation of ordinary CDS views. But due to contains limitations,
the usage is not recommended. CDS-based Search Connectors are created automati-
cally when a CDS Search view is activated. No Enterprise Search Task List (like
SAP_ESH_CREATE_ INDEX_SC) or Connector Administration Cockpit
(ESH_COCKPIT) is required.

Managing Search Models

SAP S/4HANA provides multiple apps to manage and adjust single search models in
order to meet the specific requirements of each organization and customer. The most
important apps for that are covered in this section. With the Display Search Models
Solution Capability 365

app the user receives an overview of the models that are available in the system.
Additionally, their status and the authorization are also displayed for each model.
Here the user can also activate and deactivate the models (Fig. 23.4).
The Manage Search Models app offers plenty of functionalities for adjusting
single models. Here, the user can, for example, change the appearance of fields in the
search results. Also, the user can edit the weighting factors of the fields for rankings
and exclude fields from the search scope. The following two features might be of
special interest for the users. First, there is the possibility of inclusion of custom
fields. The custom field extensibility of the search models works in a standardized
way, when using the Custom Fields key user extensibility tool. Nonetheless,

Fig. 23.4 Display and manage search models

366 23 Search

adjustment of the search settings on these fields is only possible using the enterprise
search modeler. Second there is the option to customize the search models. A key
user can customize the fields of the model which are used for search requests and
their appearance in the enterprise search UI. Furthermore, search-related settings of a
model and rankings of the fields can be changed. As mentioned above it is possible
to adjust rankings, which allows users to assign custom ranking factors to the models
or to fine-tune the factors defined by the developer of the model. For example, users
can boost the relevance of newly created objects or objects created in a particular
region. In order to make these changes SAP S/4HANA features a special Fine-Tune
Ranking application (see Fig. 23.5). With this application it is also possible to
monitor the influence of these factors in real time.

Annotations of Search Models

Here, CDS means in the first place SQL, that is, the core-SQL in its DDL- and
DML-flavors as supported by every DBMS relevant to SAP. This SQL is enhanced
by annotations of an SQL statement, some keywords which can be resolved to core-
SQL and some additional artifacts. With CDS as SAP HANA language, the search
configuration is formulated as close as possible to the InA-search model. Also, the
Enterprise Search ABAP-configuration can and shall be mapped to this format. So, a
CDS-based Search Model is just an ordinary ABAP CDS View with some special
annotations. These special annotations can modify the search behavior and can be
classified into the following categories:

• Basic/General Annotations
• Annotations related to Request Fields
• Annotations related to Response Fields
• Annotations related to Field Groups
• Annotations related to Descriptions
• Annotations related to Navigation
• Annotations related to Time and Language Dependency
• Annotations related to Full Text Indexes and Search Options
• Annotations related to Ranking and Boosting

With these annotations it is very easy to build a CDS-based Search Model; the
annotations just need to be added to the given CDS View. Here, not every view is
necessarily a search view. Annotating @Search at any view is reasonable because
this is leveraged by SADL, oData, and Smart Controls in UI5. Annotating any view
with @EnterpriseSearch is not reasonable, because the views must be highly
denormalized. It might happen that a view representing the object structure is
being ruined this way. Therefore, there will always be a separate, dedicated search
view on top of the actual object view. CDS also has defined inheritance rules when
stacking them. Search views do fully participate in this mechanism. Annotations on
view level are never inherited, while annotations on element level are always
Solution Capability 367

Fig. 23.5 Fine-tune search ranking

368 23 Search

inherited. Inheritance ca be switched off completely by the annotation @Metadata.

ignorePropagatedAnnotations.
Also, views can be enhanced, adding to their elements. Besides, Meta Data
Extensions (MDE) can be defined which do not alter the view structurally but do
only modify the annotation of domains released for this mechanism. For a view to be
enhanced by MDE, it needs to carry to view-level annotation @Metadata.
allowExtensions. Additionally, CDS-checks include Enterprise Search validations.
Errors from these validations are displayed as warnings. The core-activation with the
generation of the Data Dictionary (DDIC) view must succeed, no matter whether
appendixes like Enterprise Search issue errors. There are several levels of validation:

• On activation in ADT, a subset (performance-induced) of checks is carried out on

the current document (view, view-enhancement, MDX). Errors are reported as
warnings. In case of an error, no search connector will be generated.
• If none of them fails, the actual Enterprise Search activation is triggered. Here, the
complete definitions across the whole view stack are considered and checked
fully. Any error detected here results in an abortion of the activation. No search
connector will be created.
• If no error is detected, a search connector is generated. Mind that the errors up to
now are not reported in the Enterprise Search Cockpit since no connector is
available for them.
• The system carries out some meaningful searches on the new connector. If any of
them fails, the connector goes to status Error while preparing. The job log shown
in the Enterprise Search Cockpit displays all information. The reason for chang-
ing the status is to take the connector out of the search scope, because otherwise
each search in “all” would result in errors.
• On individual request or when releasing a transport request, ABAP Test Cockpit
(ATC) checks are carried out. They comprise the full range of validations.
• On importing a CDS-search view in a system, Enterprise Search triggers the
activation. Any validation error is reported in the transport import log.

An example with a Student CDS View can be found below. It is assumed that a
small CDS View already exists for students. When the annotations are added like
below it will be a CDS-based Search Model.
Solution Capability 369

With @Search.searchable: true it is stated that this is relevant to search

scenarios. With @EnterpriseSearch.enabled: true a Search Connector is requested,
and with @UI.headerInfo.typeNamePlural the name in the dropdown menu is
defined. @ObjectModel.semanticKey defines the key from the search perspective
while @UI.headerInfo.title defines the title response field. @EndUserText.label and
@UI.identification define the Response Fields which are displayed on the first and
second positions. Finally, @Search.defaultSearchElement and @Search.ranking set
the Freestyle Search Request Field to high relevance.

Configuration of Default Search Scope

In-application search is a built-in functionality and does not need any special
configuration in order to work. The enterprise search however offers plenty of
possibilities to adjust its behavior to specific demands. The enterprise search queries
of each user are executed on the set of the enterprise search models. Of course, this
only applies to the search models the user is authorized for. This set of models is
called search scope. This search scope can further be restricted to a specific search
model with a dropdown list which can be found near the search input field. There are
two entries in this list which have a special meaning. All means that the full set of the
models are available for the user. Apps on the other hand restricts the search only to
SAP Fiori apps that a user has access to.
But by far the most powerful features of the enterprise search become clear when
the user is searching within the all scope. If the user types a search term, a partial
search term, an ID, or a combination of words, the user automatically gets an
overview of fitting business objects and applications in the systems. These results
are ranked according to the relevance of the user. Because of that, most of the SAP
370 23 Search

S/4HANA users and customers are using the enterprise search as an entry point into
the system. However, searching through the entire system has its downsides in terms
of resource consumption. This is especially the case in the previously mentioned
entry point scenario, where users are often interested in finding a specific application
but often spend unnecessary computing resources by searching in all search models.
Moreover, users search models included by the all scope instead of restricting the
search scope only to the applications (with apps) they want to find. Due to this
problem there are enterprise search-specific settings in SAP Fiori launchpad for
controlling the default scope of the enterprise search. There are two options. One
option makes all applications the default options instead of applications; here the
user must explicitly select all if this is required to use. The other option is to
completely remove the all scope from the enterprise search; here it is only possible
for users to search in specific models like apps.

Personalization

Like already mentioned, the enterprise search returns the search results ranked
according to the relevance for the user. When the enterprise search framework has
the permission to collect and analyze data about the user behavior within the search
scenarios, the relevance calculation can be dramatically improved. However, by
default, the data collection is configured as an opt-in option. To allow the collection
of data each user can go in the SAP Fiori launchpad settings and activate
it. Additionally, the system administrator can change the default settings to opt out
using the Configure Personalized Search app. If this is the case each user is still able
to turn off the data collection. It is highly recommended by SAP that the collection of
user data is enabled in order to get more accurate search results. It is important to
point out that no data is transferred to SAP (Fig. 23.6).

Fig. 23.6 Configuration of personalized search

Conclusion 371

Conclusion

This chapter provided an overview of the Enterprise Search in SAP S/4HANA. First,
all search types were presented and compared. After this introduction, the document
focused on the Enterprise Search, which is the most important search type for the
user. For a general understanding, the search architecture was presented, and a brief
explanation of Search Models and Connectors was provided. In the last part how a
user can manage and configure these Search Models was explained, so that the
search can be more effective and relevant for the user.
Artificial Intelligence
24

This chapter focuses on artificial intelligence (AI) to allow algorithms learning from
data instead of being explicitly programmed by human beings based on rules. Thus,
intelligence is infused into business processes, and the automation level is increased
in SAP S/4HANA toward an autonomous ERP. In order to provide a deeper
understanding of the topic, the basic concepts of this technology are being explained
in the first part. In the following section the focus is on how artificial intelligence
adds value to business processes in general, as well as the history of automation in
different industries is briefly analyzed. Finally, the implementation of artificial
intelligence in SAP S/4HANA is explained.

Business Requirement

There were and there always will be changes in the industries and the way how
people work. It all began in the late eighteenth century, as the industrial revolution
started in England. The manufacturing processes of the textile industry slowly
started to be replaced by mechanical machines. Those machines kept rapidly
improving and expanding to other industry sectors, especially after the start of the
exploitation of coal as a new source of energy. This led to massive economical and
productivity growths in the industrialized countries. Later in the 1960s, the effi-
ciency was once more improved by implementing the first automation of repeating
industry processes. In the late 1990s, the business processes themselves started to
become the subject of the ongoing digitalization and automation. At the turn of the
millennium it became clear: the future of every business lies in their usage of
information technology, especially of the predictive artificial intelligence. The
most innovative players have the chance of gaining massive advantages over their
competitors by adopting these new technologies in their value chains early. Nowa-
days it is assumed that around 70% of all companies integrate or at least think about
integrating artificial intelligence technology in their business processes, in order to
boost the productivity of their workers or even fully automate them. As a logical

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 373
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_24
374 24 Artificial Intelligence

consequence, the market for artificial intelligence application for enterprise keeps
constantly growing.
The term artificial intelligence is hard to define properly. One of the reasons for
that is that the term intelligence itself is a not very well defined one. Intelligence is a
characteristic that humans assign to themselves and other living beings. Intelligence
describes the ability to learn, understand, and think in a logical way about things.
Based on that, artificial intelligence is the discipline that tries to research and develop
on building intelligent computer systems and programs. A system can be called
intelligent when it is able to accomplish any task that would otherwise require the
usage of human intelligence. Artificial intelligence is an umbrella term that covers
many different areas and subdisciplines.

What Is Machine Learning?

Machine learning is a subdiscipline of the artificial intelligence focused on develop-

ing applications and systems that learn from given data and constantly improve
without them being explicitly instructed to do so. These solutions are using self-
learning algorithms that can be automatically fitted to a given dataset using their
statistical properties, in order to make predictions or decisions based on new
unknown data. The first step in developing such a solution is to choose and prepare
the datasets, according to the use case. The second step is to choose and train an
algorithm in order to find the best configuration and create a model. The last step is
using the created model to make predictions on new data. The more the model is
used, the better its accuracy gets, as it is gathering bigger amounts of data.

Types of Machine Learning

The machine learning methods can be divided into three different categories. In
order to choose the right method, the use case and the provided data should be
analyzed.

Supervised Learning
The supervised learning method is used when the provided datasets contain already
known labels that can be determined by the system. This is one of the most used
methods, as it is one of the easiest methods to comprehend and evaluate. In order to
train such a model, the provided dataset must be split into training and test data. The
best algorithm configuration is found using the training data. The quality of the
created model can be evaluated by predicting on the test data and subsequently
comparing the result to the given labels from the dataset. Figure 24.1 shows the
process of creating and using a supervised learning model. The biggest bottleneck of
this machine learning method is the gathering of data. Good labeled datasets can be
very expensive to produce. Furthermore, supervised learning models undergo the
Business Requirement 375

TRAINING EVALUATION
Training data (labeled) Test data (labeled)

Feature Label Feature Label

Comparison

Training Predicon
Predicted
Algorithm Modell
label

Model USAGE
New data(unlabeled) Predicon
Predicted
Feature Modell
label

Fig. 24.1 Process of training, evaluating, and using a supervised learning model

risk of overfitting to their dataset, which means that the model is perfectly fitted to its
training data but can still not make good predictions on new data.

Unsupervised Learning
Unsupervised learning is used when the provided dataset is unknown and unlabeled.
With the help of this method a data scientist can gather relevant information about
these unprocessed datasets. This method works by analyzing the statistical properties
of the data, using different types of algorithms and configurations. The analysis
process is called clustering and has the scope of finding hidden information in the
data that cannot be directly seen by humans. The problem of this method is that the
results can be hard to comprehend. They can also not be evaluated, as the provided
datasets do not contain any labels. In fact, there is no right or wrong in the
unsupervised machine learning. Each output can show some new properties of the
dataset. The most important part of this process is to choose and interpret the results
according to the use case. In order to achieve a meaningful clustering, the data
scientist needs to have some basic knowledge of the use case. The results of such a
clustering can be used as labels for the future development of a supervised learning
model. Figure 24.2 shows the ideal outcome of a clustering process.

Raw data (unlabeled) Output

CLUSTER 1

Model
CLUSTER 2

CLUSTER 3

Algorithm Configuraon

Fig. 24.2 Process of creating an unsupervised learning model

376 24 Artificial Intelligence

Reinforcement Learning
Reinforcement learning means training a model to make decisions, based on experi-
ence gathered in a controlled environment. The machine faces a game-like situation,
where it needs to try different approaches for solving a problem and choose the best
of them, based on the feedback given by the environment. The base of a reinforced
learning system is its reward policy that can be seen as a set of rules for the game.
The designer of the system needs to define these rules, so that the machine can
understand the feedback as reward or penalty. The machine then uses trial and error
heuristics to maximize its reward function, as shown in Fig. 24.3. The big challenge
of the reinforcement learning is building the controlled environment. For simple
tasks like playing chess this can be easily done, but this gets very complex with more
advanced tasks, such as autonomous driving.

Solution Capability

Using the AI-enabled features of SAP S/4HANA allows enterprises to gain different
advantages on multiple levels. SAP S/4HANA helps organizations from different
industries to achieve higher business agility, to meet the rising expectations of the
modern consumer, as well as to deliver new products while managing their resources
efficiently.

Key Pillars for Intelligence

Figure 24.4 shows the four key areas of innovation that SAP S/4HANA uses, in
order to increase the intelligence of an enterprise.
There are different intelligent technologies that are being offered from SAP in
their portfolio as shown in Fig. 24.4. The Conversational AI is a digital assistant that
helps to complete tasks more quickly. The assistant is context sensitive and is able to
recognize different relevant business objects in the applications the user is currently
working with. New objects can be added and created, as well as referenced to an
existing object by simply talking to the Conversational AI. The assistant can be used
on either mobile or desktop devices and can be as well integrated on external
channels and platforms, making for a truly seamless digital assistant experience.

Fig. 24.3 Process of training

a reinforcement learning
Environment
model

Acon State Reward

Agent
Solution Capability 377

Digital Age User Intelligence New Business End-to-end Analytics

Experience Technologies Models & Real-time Steering
Digital assistance and Artificial intelligence, situation Rapidly design and Context aware, real-time,
natural language handling conversational UI, execute new business predictive insights so you
conversations for increased Internet of Things and models and digital can make faster and better
productivity, user satisfaction, roboticprocess automation services, based on advanced
eliminate more than half decisions and adjustments,
and proactiveness of manual tasks end-to-end processes

Fig. 24.4 SAP S/4HANA’s key pillars for intelligence

Some of the features of the Conversational AI are natural language processing,

contextual chats, creation and editing of business objects, as well as cross-
application access. Robotic process automation (RPA) is a technology that uses
software bots to execute different tasks, like interacting with user interfaces or
making API calls. The SAP S/4HANA robotic process automation goes one step
further and enables the inclusion of machine learning into existing tasks. There are
two different types of bots: unattended and attended. The unattended bots work fully
automated, without requiring the intervention of humans. They can work along with
other applications. The attended bots are completing partially automated tasks,
mostly supporting a human worker. The SAP S/4HANA robotic process automation
solution consists of three components: studio, factory, and desktop agent. These
components guide the user through the process of developing, debugging, and
monitoring each of the bots, in order to deliver bots that are suitable to every
business need. A business process is not always running smoothly from start to
finish, even though it was planned throughout its course. The Situation Handling
technology tries to recognize such unexpected situations and finds the issues in the
business processes. When using this technology, analytics data is constantly col-
lected in the background. This enables a true understanding of each business process
and more efficient problem recognition, by integrating machine learning
technologies in the process. The goal of the Situation Handling process is to detect
an issue before it causes any further trouble or costs. If something unexpected
happens, the right group of users receives a notification via e-mail or the SAP
Fiori launchpad. The users can act immediately and prevent the problem from
happening. The Situation Handling offers continuous improvement processes, for
both human supported and automated business processes and can boost productivity
in the long term. SAP S/4HANA offers an own implementation of different Machine
Learning algorithms that suit the most needs of enterprise customers. The goal is to
achieve a better performance, by optimizing the algorithms and the availability of the
data by using the faster in-memory database. The SAP S/4HANA Machine Learning
includes various features, covering the entire spectrum of the technology, from
consuming intelligent services through training own machine learning models to
deploying and using them in a productive manner. The main use cases covered by
basic machine learning algorithms are rankings, categorizations, and predictions,
378 24 Artificial Intelligence

and can be easily implemented without needing to allocate too much memory and
CPU time. More complex tasks, like image recognition, sentiment analysis, and
natural language processing, require the use of deep learning algorithms based on
neural networks. These models require more GPU power, so they are managed by
the SAP Business Technology Platform (SAP BTP), in order to avoid that the
transactional processes in the SAP S/4HANA system suffer from resources-intensive
machine learning jobs. Finally, the Internet of Things (IoT) defines a network of
physical objects that are equipped with sensors for measuring data from their
environment and transmit it. SAP S/4HANA helps to transform this raw data into
valuable information for the business processes.

What Makes Business Processes Intelligent?

As already mentioned even after a millennium of research and debate, there is no

standard definition for intelligence. Generations of scientists have developed and
scrutinized various intelligence models for areas ranging from mathematics, linguis-
tics, and technology to music and human emotions, but none of them are generally
accepted. So how to design an intelligent ERP, SAP S/4HANA, without knowing
what being intelligent really means in the context of ERP? To resolve this the term is
made measurable by defining different automation levels—similar to how a psy-
chologist calculates human IQ values. By using this operationalization method,
making SAP S/4HANA intelligent does not become the goal. Instead, it’s the vehicle
for turning automation into autonomy to improve the total cost of ownership and
return on investment, and to optimize the business processes. The higher the level of
automation of a business process or a system, the higher the intelligence level. The
approach to automation is based on the implicit understanding that automation is
more than adopting a single tool. Instead, it’s a combination of intelligent concepts
and technologies that enable businesses to move ahead of their competition with
differentiation. At the heart of this model is SAP S/4HANA, operating as the central
system for organizational processes across the business. But first, automation levels
must be defined based on a clear understanding of the typical structure of every
business process across four dimensions: data acquisition, information analytics,
decision-making, and action-making.
The automation level of each dimension is measured within a range between
1 (low) and 5 (high), as shown in Fig. 24.5a. By determining the automation level of
each dimension for a given business process or a system, the overall level of business
automation can be detected. With this approach, the current and target level of
intelligence for SAP S/4HANA can be determined. Then, an execution plan for
making business processes more intelligent can be defined for each dimension:

Dimension #1: Data Acquisition

The process of entering data into SAP S/4HANA is often completed using devices
such as a keyboard, scanner, disk, or speech to text. The automation of this
dimension ranges, from low to high:
Solution Capability 379

Fig. 24.5 (a) Four a

dimensions of process PROCESS VIEW
automation, (b) categorization
Data Acquisition
of techniques based on Automation level
automation level 5

2
Intelligence level of
a business process*

Information Analysis
Automation level
Action Making
1

Automation level
5 4 3 2 1 1 2 3 4 5

5
Automation level
Decision Making

b
TECHNOLOGY VIEW
all levels inside SAP S/4HANA
Data Acquisition
Automation level
5

2
Information Analysis
Automation level
Action Making

1
Automation level

5 4 3 2 1 1 2 3 4 5
Manual
1

2
Rule-Based

4
Self-Learning
5
Automation level
Decision Making
380 24 Artificial Intelligence

1. Manual entry by the user

2. Manual entry and data integration
3. Data integration and manual entry exceptional
4. Conversational artificial intelligence and data integration
5. AI-based data extraction integration—for example, the transformation of a PDF
document into structured data and entered by a robotic bot

Dimension #2: Information Analysis

Automating information analysis requires an increasingly systematic approach to
studying and interpreting data into meaningful findings, based on a scale of (from
low to high):

1. Descriptive, detailing what happened in the past

2. Diagnostic, explaining why a particular event occurred
3. Predictive, forecasting what will happen next
4. Prescriptive, recommending next steps
5. Cognitive, automating self-learning analysis of past, current, and future events

Dimension #3: Decision-Making

Selecting a logical choice from available options requires a clear view of the impacts
of each option. The following qualities could be used to determine the level of
automation (from low to high):

1. Manual decision-making
2. Consumption of system events and changes
3. Relevant information generated by the business system
4. Technology enablement of active evaluation and decision recommendations
5. Autonomous decision-making with traceability and auditability

Dimension #4: Action Execution

The automation of enforcing instructions to achieve a specific goal follows a line of
qualities for action execution (from low to high):

1. Manual action taking

2. Consumption of system events and changes
3. Relevant information generated by the business system
4. Technology enablement of active evaluation and recommendations of potential
actions
5. Autonomous execution of actions with traceability and auditability

From manufacturing planning to contract consumption, SAP S/4HANA is

designed to empower employees to spend more of their time taking action, instead
of digging for information. The approach to intelligent automation enables the
intelligent ERP to shed light on critical challenges and exceptions that most
businesses miss and recommend actions that resolve or minimize the impact of
Solution Capability 381

such events. Consider the impact of this tactic on sales performance management.
Creating a sales plan that lays out revenue goals and maps out the steps to meet those
targets is traditionally a highly manual process that relies on analyzing historical data
to forecast revenue. However, machine learning can significantly improve the
process by predicting the forecast in terms of how sales could develop in the future
and projecting how resources should be leveraged. This one update to the sales
planning experience decreases the manual effort needed, while providing better
insights to boost actual sales volume. To make a business process more intelligent,
the current level of automation is first determined. This step is the foundation from
where the target level can be derived by solution managers based on business needs.
Various concepts and technologies can then be applied to achieve the specified
intelligence level for the predefined dimensions. Technologies can be categorized to
realize different levels of automation as shown in Fig. 24.5b. At the most basic level,
business processes can be run manually without any kind of automation. Then over
time, varied, rules-based techniques can be applied to increase the level of automa-
tion in respect to growing intelligence. For example, ABAP reporting can automati-
cally perform input and process validations and display error messages with
resolution instructions to the user. It can also trigger a workflow for individual
tasks and decisions from one step to another until a predefined process is complete.
An insight-to-action analytics scenario can also be applied, starting with a key
performance indicator tile notifying the user about drifting trends. This capability
enables users to perform root-cause analysis, execute corrective actions, and gain the
necessary data to resolve and recommend amended actions.
Whenever it comes to achieving the highest level of automation (Level 5), rules-
based approaches are no longer sufficient; they must be extended to self-learning
techniques. This tactic helps make sense of raw data and discover hidden insights
and relationships by learning from data, rather than programming explicit rules.
Potential use cases include deep learning for image recognition, conversational
artificial intelligence for natural language processing, and intelligent bots or
applications based on machine learning models that support autonomous decision-
making and action. Therefore, the focus of the next section is on machine learning,
particularly as the techniques require new conceptual considerations.

Machine Learning Architecture

Depending on the requirements of a specific AI use case corresponding machine

learning implementation approach must be selected. On the one hand, there is the
embedded machine learning, running in the SAP S/4HANA backend. On the other
hand, there is the side-by-side machine learning that uses the SAP Business Tech-
nology Platform (SAP BTP). Figure 24.6 illustrates the SAP S/4HANA machine
learning architectures. Simple use cases like trending and forecasting require also
common algorithms for their implementation, for example, regression, classification,
or time series analysis. For the training of such kind of algorithms very limited data,
CPU, and memory are needed. Thus, these categories of ML scenarios can be
382 24 Artificial Intelligence

Intelligent Fiori /
Conversaonal AI

SAP S/4HANA SAP Business Technology Plaorm

ML
ML Applicaon Consumpon Specific ML Service Generic ML Services

Training / Data Deep

SAP HANA ML Monitor /
Inference Science Learning /
Operate
Serving Tools GPU

Application Data Integraon

Data Object & Table Store
for Model Training

Fig. 24.6 The SAP S/4HANA machine learning architecture

implemented within the SAP S/4HANA platform based on the embedded machine
learning approach. SAP HANA as the underlying database of SAP S/4HANA
provides around 100+ machine learning algorithms which can be used in this
context. Anyhow the application data is already stored in SAP HANA. Thus, for a
specific machine learning question the adequate algorithms can be trained with those
application data and exposed for inference. Hence, the machine learning capability
can be deeply integrated into the business processes and user interfaces. What the
relevant algorithm and the required training data are is in the focus of the data
science exploration, which is the initial phase before the implementation of a
machine learning application can start.
However, there are also more complex machine learning scenarios, for example,
image recognition or natural language processing. These kinds of scenarios usually
require more advanced algorithms like neuronal network and deep learning. This
category of self-learning algorithms demands high data, GPU, and huge memory
volume for training. To avoid system resources drawbacks for the transactional
processes in SAP S/4HANA, these types of scenarios are scaled out to SAP Business
Technology Platform. Here corresponding scalable and distributed infrastructure for
training and inference is provided. Furthermore, advanced data science tools, deep
leaning environment, GPU hardware, and reusable ML business services are offered.
Thus, for a specific machine learning scenario, the necessary application data is
replicated to SAP Business Technology Platform, the model is trained, and an
endpoint for inference is facilitated. Remotely this endpoint is called by the SAP
S/4HANA application in order to incorporate the machine learning feature into the
business processes or the user interfaces. In addition to advanced algorithms and
high demand of resources, external data is a third decision criterion for implementing
a scenario based on side-by-side machine learning.
Solution Capability 383

Embedded Machine Learning

The embedded machine learning is based on CDS views and uses the capabilities
provided by the SAP S/4HANA system. The used algorithms can be processing
intensive due to the high volumes of data, but their performance increases when the
algorithms are processed close to the application data. SAP S/4HANA offers the
predictive analytics library (PAL) and the automated predictive library (APL) that
can be used for different statistical and data mining problems. The provided
functions can be called from the SAP HANA database procedures, written in
SQLScript. The data needed can be obtained from SQL views generated for the
ABAP CDS views. The trained models are integrated into business processing by
wrapping them with CDS views that are based on ABAP classes. These views can be
combined with other CDS views and be presented to the consumers. Providing the
machine learning services in this way efficiently reuses lots of already implemented
concepts for CDS views like the authorization, extensibility, and the UI integration,
making for a very simple yet efficient system architecture. The information gathered
by the model is shown to the right user at the right moment and in the right place,
making it a suitable solution for most of the SAP S/4HANA customers. Figure 24.7
illustrates the described process of embedded machine learning.

Side-by-Side Machine Learning

The side-by-side machine learning concept makes use of SAP Business Technology
Platform for storing and managing the model data, even though the training data can

Fig. 24.7 Embedded SAP S/4HANA

machine learning

Intelligent Scenario LM
ML Applicaon
(ISLM)

CDS View / AMDP Class for

CDS View
ML

SAP HANA ML Library:

SQL View
PAL/APL

ML
Applicaon Table Model

SAP HANA
384 24 Artificial Intelligence

be extracted from SAP S/4HANA as well. In this way, more complex and
performance-intensive models can be trained and used, without impacting the
performance of the other SAP S/4HANA components. The processing of the
application data is based on a pipeline engine, which offers the possibility of
graphical programming for creating new scenarios, without needing to write actual
code. This engine orchestrates a complex flow of data via multiple pipelines and is
based on a scalable Kubernetes environment. For more advanced users, like data
scientists, there is the possibility of data exploring and feature engineering using
state-of-the-art technologies like Jupyter Notebook and Python. The SAP Business
Technology Platform delivers the provided GPU infrastructure for training and
managing the complex deep learning models. For implementing side-by-side
machine learning use cases, each application must define its own scenarios and
pipelines. The SAP Business Technology Platform then organizes each use case by
artifacts. An artifact contains everything needed for the required implementation of a
use case. They consist of multiple pipelines, implementing the training and inference
processes. These pipelines can be run as either sequential or parallel tasks. The
provided results can either be directly used in SAP S/4HANA applications or be
served as a REST API service, allowing them to be integrated in multiple business
processes. Figure 24.8 shows a graphical representation of the concept of the
pipeline engine.

Exemplary Application
The machine learning applications in SAP S/4HANA are following the explained
embedded and side-by-side programming model. For illustration one example
application is briefly described in this section. The SAP Predict Arrival of Stock in
Transit is based on the embedded machine learning architecture and predicts deliv-
ery delays. For companies issuing and receiving good from and to their plants, it is
important to track the status of the materials in transit in order to take action in case
of problems. The SAP Predict Arrival of Stock in Transit application gives an
overview of the open shipments allowing the business user to take action. With
machine learning the application predicts shipment dates for each goods movement

SAP S/4HANA SAP Business Technology Plaorm

register

consume ML Logic consume

ML Applicaon ML Scenario
ABAP Class

extract
Applicaon training data Trained
CDS Extractor Training Logic Inference Logic
Data Model

Intelligent Intelligent
Scenario LM train,deploy, ML Library
Scenario
execute,
monitor

Fig. 24.8 Side-by-side machine learning

Solution Capability 385

to allow users to react timely in case of delivery delays. Key features of the
applications are:

• Predicting the arrival date of a shipment and classifying the status into different
classes.
• Defining the predictive models, training and running the scenarios.
• Pre-built set of KPIs allows for robust analytics on SAP S/4HANA data with drill-
down functionality.
• Early and efficient visibility for stock transport orders.
• Integration capabilities with SAP S/4HANA to gain real-time insights in produce
scenarios with predictive analytics (Fig. 24.9).

Thus, machine learning optimizes and automates the business process of tracking
stocks in transit. Overall, more reliable planning and scheduling of goods in transit
processes are facilized. Enhanced usability for the businesses visualizing with
predictions is provided and improves user satisfaction.

Lifecycle Management

An intelligent scenario refers to an ABAP representation of one machine learning

business use case and runs through a specific lifecycle, from its planning to its final
usage. The SAP Intelligent Scenario Lifecycle Management (ISLM) is a framework
that helps a user to operate on different machine learning scenarios. It can be seen as
a self-service multipurpose tool to be used for standardized implementation and
operations of machine learning use cases. The Intelligent Scenario Lifecycle Man-
agement framework can be used in combination with both the embedded and side-
by-side machine learning architectures. This framework includes the two SAP Fiori
applications Intelligent Scenarios and Intelligent Scenario Management. Those two
components include multiple functionalities like creating, displaying, training,
deploying, and activating machine learning models. One of the operative advantages
of this framework is that it offers a single access point for developers and
administrators, allowing them to create and manage existing scenarios for the
business. Furthermore, it proposes one standardized and comprehensive process
for managing every given scenario. A big technical advantage consists in the
framework’s flexibility and orchestrating capabilities. The Intelligent Scenario
Lifecycle Management can handle both combinations of machine learning
architectures running in on premise or cloud environments (Fig. 24.10).

Creating Intelligent Scenario

Creating a new scenario requires some prerequisites. First of all, in order to create a
new scenario, the specific Analytics Specialist permission role is needed. While
creating an embedded machine learning scenario, it is important that the validity of
the use case has been checked and that there is sufficient data in the training dataset.
While using the side-by-side approach, the developer needs to make sure that the
 386
24

Fig. 24.9 SAP predict arrival of stock in transit with predicted delay date column
Artificial Intelligence
Solution Capability 387

Fig. 24.10 Intelligent scenarios and intelligent scenario management

right ABAP package is installed on the system. The developer also needs to check if
the ABAP class containing the machine learning logic is implementing the
IF_ISLM_INTELLIGENT_SCENARIO interface correctly. After all prerequisites
are processed, the procedure is very simple. Creating a new scenario is done by
opening the Intelligent Scenario App on the Fiori launchpad and selecting the create
button. A series of dialog boxes will guide the developer through the process, asking
for any needed input, like name, description, and further configuration.
388 24 Artificial Intelligence

Managing Intelligent Scenario

Managing a specific machine learning scenario is done by opening the Intelligent
Scenario Management application on the Fiori launchpad. The homepage of the
application reveals a list of all the available scenarios that can be worked with. In
order to appear on this list, a scenario needs to be made public by its creator or an
authorized person. For finding a specific scenario appropriate filtering can be
performed by type or creation date or searching for a keyword. After selecting a
scenario, a list with its different versions is shown. Each version can be individually
trained, deployed, activated, or deactivated. For each of these actions there is a
specific workflow, which is not going to be discussed here. One of the most
important advantages of the SAP Intelligent Scenario Management is that each of
its workflows can be executed exclusively by interacting with the application’s
graphical interface, so that no specific programming knowledge is required.

Conclusion

As explained in this chapter, using the AI-enabled services in either their embedded
or their side-by-side flavor can provide real added value to a business by improving
existing processes and actively increasing the grade of automation in the company.
SAP S/4HANA has lots of features with multiple customization possibilities, so that
most of the use cases are being covered by default and require no complex program-
ming skills to implement. If those standard features are not enough, the different
integrated artificial intelligence libraries of SAP S/4HANA offer an out-of-the-box
experience that suits every programmer’s and data scientist’s needs, allowing vast
project implementations.
Internet of Things
25

The Internet of Things (IoT) defines a network of physical objects that have the
capability to collect and exchange data through the network. These objects are
equipped with embedded sensors that measure data from their environment and
transmitters that enable the connection to the cloud platform. IoT based on SAP
S/4HANA helps the user to transform the raw data collected by different object into
valuable information for the business. That information helps improving the trans-
parency and efficiency of different processes, like supply chain, production, or
customer satisfaction. They can also help reduce maintenance costs, by constantly
monitoring the devices and early recognition of problems. Thus, the foundation for
Industry 4.0 is built. The SAP S/4HANA platform assists the customer and provides
a comprehensive solution, covering IoT processes, from connecting the devices
through data ingestion over to data transportation, storage, and interpretation.

Business Requirement

Manufacturing companies must increase productivity, produce individualized and

high-quality products, mitigate the constantly changing environment, and meet the
varying customer demand. For many companies Industry 4.0 is the response for
turning those challenges into opportunities. Industry 4.0 respectively the industrial
Internet of Things (IoT) refers to industrial transformation using new digital tech-
nology which allows gathering and analyzing data across machines and business
systems, ensuring efficient processes to produce high-quality goods cheaper.
Enablers for this are technology innovations like the IoT, edge and cloud computing,
artificial intelligence, sensors, and robots. Thus, Industry 4.0 radically changes
production across discrete and process industries toward autonomous
manufacturing. Human work in production will be transformed with workers getting
tailored information based on smart devices. Software solutions in production will
be transformed from transactional execution to data-driven business process.
Sensors, devices, machines, and ERP software will be connected.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 389
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_25
390 25 Internet of Things

Application modules will be distributed between cloud and edge. Edge comput-
ing makes it possible to process application modules at the production site to enable
reliability and avoid latency of business functions. Due to high level of connected-
ness, consequently the solution architecture must be secure, interoperable, portable,
open, modular, affordable, and extensible. Often organizations consider Industry 4.0
as a manufacturing-, factory-, or distribution-center-focused approach. This is valid
but not the whole story. Companies get the most out of Industry 4.0 by embracing it
holistically across their entire organization. ERP systems like SAP S/4HANA have
the potential to unlock the value of Industry 4.0, combining the intelligent
manufacturing with end-to-end business processes across the supply chain. Industry
4.0 requires an industry-specific approach as challenges vary and there is no
one-size-fits-all solution. The next figure shows the main themes of Industry 4.0
and provides also use case examples (SAP Industry 4.0 Strategy, 2021).
Industry 4.0 is based on four themes providing distinct value to the business.
Intelligent products are manufactured and configured to fulfill customers’
requirements. Intelligent assets are assigned dynamically to all processes. Intelligent
factories are driven by data and machine learning for increasing the level of
autonomous processing and delivering highly configurable products at scale.
Empowered people are enabled for efficient decision-making and action execution
due to availability of all the tools and information they need to do their best work.
The digital twin is the common thread for Industry 4.0. The main idea is to provide a
digital representation of a specific asset or system characteristics as they are
designed, manufactured, and operated. This results in huge value as all information
are maintained and updated consistently, for example, operating manuals, diagrams,
service instructions and records, performance records, and failure modes. Thus,
near-real-time processing across the network is enabled, and manual tasks are
eliminated. With these data, organizations can implement capabilities that provide
prediction for future states upon historical data, adopting the behavior or perfor-
mance KPIs by changing variables, and performing what-is simulations by adjusting
variables before instructing the physical system.
Those Industry 4.0 themes from Fig. 25.1 are implemented based on SAP
S/4HANA modules like R&D/Engineering, Manufacturing, Supply Chain, Asset
Management, and Environmental Health & Safety. Some solution capabilities of
those SAP S/4HANA modules and their platform layering are illustrated in
Fig. 25.2. From conceptual point of view IoT in terms of integrating sensor data
into business processes is the new aspect from the SAP S/4HANA perspective. Thus,
this is explained in the next sections.

Solution Capability

In this section the concepts for implementing IoT applications are explained. For this
IoT applications, scenarios and architecture are depicted.
Solution Capability 391

Int elligent product Int elligent asset

• Handing over information from • OEM-agnostic equipment onboarding

engineering to manufacturing and connecting to business processes
• Understanding the business and business networks
impact of engineering changes • Prescriptive maintenance and condition
monitoring leveraging the digital twin

Empowered people Int elligent fact ory

• Ad hoc decision support to manage e • Agile manufacturing to deliver

e
unforeseen events close to real time individualized products (lot size 1)
• Worker protection – days without • Transparent production and logistic
incident operations with automated production
supply and execution (including work
in process)
• Intelligent, data-driven quality control

Fig. 25.1 Industry 4.0 themes and use case examples

Internet of Things Applications

Before coming to IoT applications, the basic terms should be clarified. In (ISO IEC
JTC 1 IoT, 2015) the following definition for Internet of Things is given:

An infrastructure of interconnected objects, people, systems and information resources

together with intelligent services to allow them to process information of the physical and
the virtual world and react.

Based on this, an IoT application can be described as software that provides

intelligent services and algorithms, usually in combination with user interfaces for
processing information coming from the interconnected objects, people, systems,
and information resources for supporting organizations and human beings in solving
a relevant business problem. It is typically based on technology components that
provide generic capabilities to the application. Thus, an IoT application comprises
many technical artifacts and interacts with a lot of different software components.
Because of this, it is not always immediately apparent what actually belongs to one
application. The granularity of an IoT application is defined by the perception of the
customer: It is a set of services, user interfaces, and software components addressing
one specific business problem and for which customers basically have the choice of
using this bundle as a whole or not at all. Individual users however may only work
with parts of the application.
 392

Business Supply chain Logistics business Asset intelligence Partner apps

… …
5 net works networks network network Open APIs

SAP
S
SA P S/
S 4HANA® A Transportation,
Ent erprise and Product lifecycle Integrated (quality management, Intelligent asset logistics, and Partner
Pa
P rtner apps
4 supply chain management business planning production planning, management warehouse Open APIs
service, and sales)

Indust ry 4.0 Inventory Manufacturing Maintenance Environment, Partner apps

Quality operations
3 operations operations operations health, and safety Open APIs
operat ions

Firewall
Secure Cloud Edge Communication

Indust ry 4.0
3 Inventory
Inve
v ntory operations Manufacturing operations Quality operations Maintenance operations Environment, health, and safety Partner
Pa
P rtner apps Open APIs
operat ions
Manufacturing and process engineering
Indust ry 4.0
2 monit oring Edge – highly available, local, and occasionally connected execution; low latency; policy service; business object synchronization; and software lifecycle

Sensing and
1 IoT device connectivity Partner connectivity PLC SCADA
cont rol
Fac
F
Factt ory/ plant
25

Machines, devices, sensors, tools, shelfs, kanban

0 Physical t hings boxes, workers, forklifts, tags, automated guided
vehicles,
vehicles and so on

Fig. 25.2 Solution capabilities for Industry 4.0

Internet of Things
Solution Capability 393

Internet of Things Scenarios

Due to the generic nature of things and the growing technical possibilities, the
domains addressed by IoT applications are very diverse—which is the reason for
the enormous potential of IoT. Examples for IoT scenarios are:

• Monitor sensor data for machines, detect and predict possible damage so that
parts can be replaced before failure.
• Manage moving assets (e.g., forklifts, cars) by tracking their location, state of
operation, etc.
• Optimize inbound and internal traffic for logistics hubs, for example, ports,
plants, production sites.
• Gain end-to-end visibility across the entire production process which is part of
Industry 4.0.
• Access the quality of machined parts during production which is also part of
Industry 4.0.
• Increase safety of critical processes by monitoring vital parameters of humans, for
example, pulse in combination with other sensor data like acceleration.

Data Processing Scheme of IoT Applications

Most of IoT applications are based on the following processing of data (see
Fig. 25.3):

1. Sensors that are part of or attached to a thing, for example, vehicle, machine,
something wearable. The emitted data represent measurements of some physical
parameter, for example, force, energy, speed, acceleration, frequency.
2. The sensor data are transferred to the IoT solution (i.e., the system on which the
application is running) in a raw format that is defined by the manufacturer of the
sensors or the components used for preprocessing the data. This information is
stored as is on the IoT application system. In addition, information related to
relevant events, for example, diagnostic trouble codes, key-on/key-off for
vehicles, outages, detected issues, is also sent to the IoT solution.
3. By processing the sensor data, information in a domain specific format is derived
and also stored on the IoT application system. In most cases, this derived data will
be time series. The processing of sensor data is usually done in several steps, in
which the content is parsed, and faulty information is corrected or taken out. Also,
additional values may be computed like means based on a moving average and
stored again as time series. Covering this process is a key capability of most IoT
applications and often referred to as data ingestion. In some cases, SAP will not
have access to the specification of the raw data format or to the data itself and
hence depend on software from third party, for example, the manufacturer of the
sensor or control unit creating/processing the data, for initially processing it.
 394

2
sensor data in vendor-
thing 1
specific raw format

3
derived data in domain 1. sensors data is transferred to the IoT application
specific format
e.g. time series 2. this raw data is received and stored
business 3. sensor data is processed and derived data/time
5 6
solution
series produced
4
events, forecasts and 4. on top of time series, aggregated data is created for
aggregated data for analytics etc.
analytics etc.
5. in some cases, the IoT application will automatically
send information back to the thing for influencing its
transactional business data B behavior
6. process steps are triggered in a business solution
master data A
A. master data is used for describing things, people,
organizations (business partner) etc.
metadata & configuration
B. transactional business data can be combined with
25

aggregated data for analytics

Physical World IoT Solution World of Business

Fig. 25.3 Typical data processing of an IoT solution

Internet of Things
Solution Capability 395

4. Automated processing of, for example, time series leads to business-relevant

information. This can be the detection of critical events, forecasts for the future,
the prediction of upcoming values, and in most cases aggregated data with focus
on analytics. Machine learning or mathematical models are often leveraged here.
The goal is to give business users the most relevant information in a highly
condensed form that they need for understanding if and what action is required.
5. In some cases, the IoT application will automatically send back information to the
thing, for example, for influencing its behavior.
6. Based on the detected events, processes may be triggered on a business system
like SAP S/4HANA that the IoT solution is integrated with. Additionally, other
information, such as aggregated data may be transferred into the business system.

In all these steps, metadata may be used by algorithms for the interpretation of
data from the various sources. Likewise, configuration data can be used for
controlling the behavior of the algorithms involved in the data processing.
Descriptions of things, devices, and sensors, for example, model or type information,
can be subsumed under master data. Also, information on customers falls under this
category. Transactional business data may be combined with time series and/or
aggregated data in order to bring in the related perspective, for example, costs.
Both the required master data (A) and transactional data (B) are often coming from
business solutions like SAP S/4HANA, at least in parts. Master data specifically may
have to be enriched on the IoT application system for covering all of the IoT-specific
aspects. It is very well possible that some of the processing happens near to the
things, for example, in a so-called edge component, and that other steps are
performed in a central component. It depends on the specific use cases and the
amount of data that can be transferred to a central component to what extent
processing in decentral components is required. The next figure outlines the various
processing steps and data involved.

Architecture of IoT Applications

Things are connected to the platform via the device connectivity component as
shown in Fig. 25.4. It receives all the sensor data and hands it over to the message
broker. Components consuming this incoming data are connected to message broker
based on a publish-and-subscribe model. Most of the processing of sensor data is
based on steps that operate on micro-batches that a streaming framework collects
from the message broker. The latency for these steps can go down to around 1 s. For
use cases in which faster response time is required, real-time processing steps can be
connected to the message broker for one-at-a-time stream processing (Marz &
Warren, 2015). In most cases, these steps raise events that are consumed by
application services and forwarded to specific applications. Only in rare cases,
real-time processing should lead to updates of aggregates because this increases
the complexity of the consistent merging of these results with the outcome of micro-
batch processing. If necessary, the timespan for streaming batches can be set to a
396 25 Internet of Things

IoT Application

Raw & Derived

Data, Aggregates

Sensor Data Processing

Sensor

Messaging
Actuator
SAP S/4HANA
IoT Solution
Thing Edge Component 1

Edge Component 2
Thing

Edge Component n
Thing

Edge Core

Fig. 25.4 Basic architecture for IoT solutions

longer period (e.g., 3 min), for which the term micro-batches may be misleading.
However, the micro-batch processing of sensor data covers the following tasks:

1. All sensor data is stored as raw data (i.e., master datasets) directly.
2. Sets of derived data and time series are created or updated.
3. Aggregated information is updated.

The serving layer leverages different storage technologies for keeping aggregates,
derived data/time series, and raw data. However, there should be one data processing
and query layer that provides uniform access to all of these storage technologies of
the serving layer. Users have access to analytics for inspecting aggregated informa-
tion. The application services provide the foundation for all of the IoT applications.
Both the server-side functionality of IoT applications and the application services are
implemented as microservices hosted on a dedicated runtime environment.
In many cases, sensor data cannot be sent to a central IoT system directly. For
instance, in production environments, computer numerical control (CNC) machines
are usually not connected to the Internet but are rather part of a local area network
(LAN) on the shop floor. Often, these machines don’t support http(s) as communi-
cation protocol. For this reason, it is often required to use gateways that bridge
between protocols and provide a secure connection between the components in the
Solution Capability 397

local network and the Internet. But this is not the only motive for having additional
computing power at the edge (i.e., near the things). As mentioned previously, in
many cases the volume of data that the complete set of sensors emit is too high or
produced at a too high frequency for transferring it all to the central IoT system.
Likewise, the feasible timespan for responding to critical events may be so short and
require local action that a full roundtrip via the central system is not an option. In
such scenarios, significant processing needs to be done on edge components for
covering the following tasks:

(a) Filtering out the subset of data that should be transferred to the central IoT
system (core)
(b) Detecting critical situations that require (local) action

Local action may also mean that the edge component sends back information to
the thing, for instance commands to actuators that are part of a vehicle or machine.
An actuator operates in the reverse direction of a sensor. It takes an electrical input
and turns it into physical action. An electric motor is an example for an actuator. For
performing the tasks described above, storing at least parts of the sensor data will be
required locally. To what extent historical data can be kept in edge components
depends to the system size and technology components that are feasible here.
The device connectivity component is the communication endpoint for all
connected devices on the side of the IoT solution. It needs to securely identify
each device, relate all incoming messages to one sensor as well as thing and via that
also to a customer and tenant. This is required, because the subsequent processing
steps are carried out within this context. All received messages are augmented with
metadata and then handed over to the message broker. For ensuring secure data
transmission between the devices and the IoT solution, which is the main task of
device connectivity, the support of existing and evolving standards is crucial.
Standards eliminate vendor-specific aspects and thus help simplifying the
communication-related components. Most standards also define a solid approach
for security. In this regard, one of the most relevant standards is the Unified
Architecture by the OPC Foundation (OPC UA). Closely related to device connec-
tivity is the management of devices. This provides the functionality which includes
the automated software management (e.g., centralized software deployment for
devices) for some of the devices and edge components.
Data ingestion refers to the incorporation and initial processing of new raw data
for updating derived data and aggregates. As each type of sensor requires a specific
treatment during data ingestion, the implementation needs to be extremely flexible
and utilizes configuration data, so that it can be adapted without having customers to
provide specific code. The complete processing must be based on small functional
building blocks that customers can easily rearrange whenever necessary. For making
this possible, it is required to provide a framework that allows users composing
complex data processing flows out of elementary algorithmic steps that are then
executed sequentially on each batch coming from the respective type of sensor.
Processing results, for example, time series, are stored in the serving layer.
398 25 Internet of Things

Intermediate outcomes of an elementary step are the input for the next step in the
execution chain. The concept of defining a sensor-type-specific combination of
processing steps and executing those on top of batches that are produced by a
streaming framework is subsumed under the term ingestion pipeline. The sensor
type in combination with configuration data influences the specific behavior of each
ingestion step as well as the sequence of the steps as part of the ingestion pipeline. A
special case of an ingestion step is the direct storing of incoming messages as
raw data.

Exemplary IoT Application

For illustration of an IoT application in this section SAP Predictive Assets Insights is
explained, which is part of SAP S/4HANA Asset Management. This solution is used
by reliability professionals to assess, predict, and optimize the health of their assets.
The application syndicates operational technology data (sensor data) and informa-
tion technology data (maintenance data) to create digital insights for industrial
assets. Today, maintenance and reliability experts have to automate operations and
streamline maintenance and service processes. With SAP Predictive Assets Insights
customers can predict equipment degradation and malfunction through advanced
analytics, the Internet of Things (IoT), machine learning, and engineering physics-
based models to deliver decision support. With advanced analytics reliability
professionals can quickly determine top failure modes, understand leading indicators
and thresholds, and capture equipment fingerprints. Real-time engineering
simulations generate insights from virtual sensors based on multi-physics engineer-
ing simulation based on live IoT sensors and virtual sensors (Fig. 25.5).
Extensible machine learning (ML) predictive models are applied to determine
failure probabilities and detect anomalies. IoT and ML help to monitor the health of
equipment using an advanced alerting rules engine based on real-time sensor data,
vibrations thresholds, and signals from machine learning and virtual sensors. The
SAP Predictive Assets Insights extracts topics from the historical text data in the
SAP Enterprise Asset Management notifications (i.e., long description texts from
breakdown notifications) and matches these topics to the standard failure modes
from ISO standards (e.g., ISO 14224) or from FMEA (Failure Mode Effect Analy-
sis). The system also provides an optional step where the expert users such as
reliability engineers can double-check the machine learning matching and provide
feedback. With this feedback, the system then continuously assigns all notifications
to specific failure mode. Based on these assignments, the system calculates metrics
such as MTTF (Mean Time to Failure), MTTR (Mean Time to Repair), and MTBF
(Mean Time between Failures) by different failure modes using the actual dates in
the notifications as well as the keywords by failure modes to give insights on the
frequencies as well as potential causes of these failure modes. Leading indicators are
the indicators from sensor readings such as temperature or pressure whose specific
conditions (e.g., temperature >90  F and pressure <50 PSI) are correlated to
breakdowns of an equipment or equipment model. Identifying these specific leading
Solution Capability 399

Fig. 25.5 SAP Predictive Assets Insights—equipment overview and details

indicators and conditions based on ML systematically can help customers determine

condition-based maintenance rules quickly without pre-built models or data science
resources. Dataset preparation capabilities allow to prepare data for machine
learning, for example, aggregation periods, new features, null values. The creation
of new datasets or the copying of existing datasets is also enabled. Tools to
configure, train, and score models are provided. The solution facilitates to deploy
custom algorithms into or perform machine learning outside of system in tool/
language of choice. Finally, the simulation of virtual sensors is supported. A virtual
sensor is a device that can be placed at a specific location on the product that
provides a continuous reading of physical state at this location. Virtual sensors are
required because of physical restrictions, unmeasurable quantities, lifecycle costs,
and sensor calibration (Fig. 25.6).
400 25 Internet of Things

Fig. 25.6 SAP Predictive Assets Insights—analytics and monitoring

Conclusion

The Internet of Things (IoT) fuses the digital world and the physical world by
bringing together different concepts and technical component. This is possible as
everyday objects and machines have sensors that can communicate with each other
over the Internet, making new models possible for business processes, collaboration,
miniaturization of devices, and mobile communications. Thus, IoT connects people,
processes, data, and machines to one another. The IoT facilitates new applications,
businesses, and concepts such as Smart Grid, Industry 4.0, Connected Cities,
Connected Homes, and Connected Cars. This network can be either online in the
cloud or on premise.
Process Integration
26

Software applications and especially ERP solutions live in an interconnected world.

The ability to integrate ERP into business processes encompassing multiple software
applications, including those belonging to different organizations, is one of the
fundamental requirements. This chapter focuses on process integration concepts
and frameworks of SAP S/4HANA. Particularly, the use cases for process integra-
tion, the mediated and point-to-point connectivity types, API technologies like
OData and REST, discovery and usage of APIs, monitoring and error handling are
explained.

Business Requirement

Integration is becoming a key element for the digital transformation of organizations.

There are various integration domains and scenarios that are encountered for
integrating heterogeneous components and systems. Likewise, the systems to be
linked typically speak different communication protocols and store their data in
different formats and structures. The scope of integration is steadily expanding, with
the introduction of cloud, mobile, and IoT scenarios to customer landscapes, and
customers are urged to scale up their integration architecture to be able to effectively
address these new areas of integration and exploit the wealth of opportunities these
areas present. With the increasing demand for cloud technology and the
accompanying introduction of innovations into it, customers are increasingly
extending and integrating their existing on-premise applications into the cloud.
Consequently, the expectation for customers that are already using cloud solutions
is that SAP’s on-premise and cloud solutions will provide integration with each other
as well as non-SAP applications. The same, of course, applies to integration between
business partners and enterprise networks, between enterprises and government
agencies, and user-centric applications such as mobile apps with applications in
the cloud or on premise to ensure an omnichannel user experience. To satisfy such
growing integration requirements, customers and partners need a cloud integration

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 401
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_26
402 26 Process Integration

platform with consistency and flexibility covering process, data, user, and
IoT-related integration scenarios. This kind of platform is likely to reduce imple-
mentation effort, enhance control and compatibility, and lead to greater robustness,
especially as upgrades are carried out.
There are two primary use cases for process integration:

• Application-to-application (A2A) integration: The integration of systems within

an enterprise so that applications from different vendors can seamlessly connect
to each other and support internal company processes. Integration is supported by
exchange of messages and uses open standards for interoperability.
• Business-to-business (B2B) integration: The integration of systems across
boundaries of an enterprise to enable cross-company processes. Such integrations
must be in conformance with widely used industry standards like Odette and
EDIFACT (electronic data interchange for administration, commerce, and
transport).

Robust, reliable, and scalable communication is the backbone for remote cou-
pling of processes. A well-known pattern that supports this is asynchronous message
exchange. It decouples communication partners by eliminating the needs of a 100%
simultaneous availability of involved parties and allows error handling at the places
where the error occurs and could be handled best. In each involved platform a local
process integration solution is required. It includes functional components for
addressing, monitoring and error handling, data transformation (structural, value,
and key mapping), integration configuration, web service runtime, and file exchange.
The objective of end-to-end message monitoring is to ensure the connection between
technical and business monitoring in order to allow a user to see the complete picture
containing all involved information. All parts whatever they address—either techni-
cal, application-specific, or business process-related monitoring—shall store the
monitoring information in the local system and expose relevant monitor information
across systems. In asynchronous communication, there is no direct response so that
the error monitoring and handling responsibility moves from the sender side to the
receiver side. This concept is named Forward Error Handling (FEH). In order to
execute an effective end-to-end error analysis, the error monitoring must be well
integrated with other monitoring tools such as technical message monitoring or
application monitoring. The error handling step must be user-role focused, so that
the errors can be effectively solved by the right person responsible. The qualities of
service (QoS) are set of characteristics like guaranteed delivery, duplicate detection,
and delivery in right order, which define the behavior of communication. The
sending application is primarily responsible for handling these characteristics, but
in mediated communication the integration middleware handles QoS on sender’s
behalf. For example, during asynchronous message delivery if the receiver is not
available to receive the message then integration middleware retries the message
transmission to ensure guaranteed delivery. As shown in Fig. 26.1 there are various
levels of integration starting with user interface to data integration. However, the
objective of this chapter is on process integration only.
Solution Capability 403

UI Integraon
One Fiori Launchpad | UI Extensibility

User Integraon
User Provisioning | Authencaon (SSO) | Authorizaon

Target System
SAP S/4HANA

Rules & Workflow Integraon

Biz Rules | Workflow

Process Integraon
API Discovery & Test | Authencaon | Principle Propagaon

Events Integraon
Catalog | Messaging | Noficaon

Data Integraon
View Replicaon

Fig. 26.1 Multiple levels of integration

Solution Capability

Enterprise architects defining the integration strategy in their company’s system

landscape usually try to find the best way to provide integration guidance across
multiple teams, projects, and system integrators. For them it is important to look for
the most suitable integration technology to approach new integration domains. The
goal of the SAP S/4HANA integration strategy is to increase the straightforwardness
of integration between SAP applications by aligning their processes and related data
models, including the publication of APIs. The target is to simplify new integration
solutions, especially for line-of-business (LoB) cloud integration scenarios, and to
further deepen integration between SAP applications over time.

Communication Patterns

Two different patterns can be used to integrate processes as depicted in Fig. 26.2.
The first is point-to-point and the second is mediated communication.

SAP S/4HANA
point-to-

Business
point SAP or 3rd Party
API System A
Logic
mediated

Middleware
Applicaon Monitoring & SAP or 3rd Party
SAP Process SAP Cloud
Data Error Handling System B
Orchestraon Integraon

Fig. 26.2 Process integration patterns

404 26 Process Integration

Point-to-Point Integration
In point-to-point integration, different applications are connected directly to each
other thereby enabling them to exchange data. The integration logic defines how to
connect applications to each other. The logic is hardwired within each connected
application at its endpoints. In point-to-point integration the connected applications
can have their own data model, own databases, and this offers more flexibility than
database integration. The interconnectivity among the applications having different
data models is achieved by providing custom interfaces and custom mapping for
each application that is connected. ERP systems like SAP S/4HANA are founded on
functional rich technology platforms which typically support various API
technologies for the type of communication. SAP S/4HANA offers for this connec-
tivity option the direct connectivity, which is a go-to connectivity type, easy to set up
used for SAP out-of-the-box solutions, as well as the SAP Cloud Connector, which
is relevant only for SAP S/4HANA Cloud integration with SAP applications on
premise and is secured by a lightweight VPN connection. The benefit of the point-to-
point communication is low total cost of development (TCD) due to its simplicity
and the reduced total cost of ownership (TCO) as no additional solutions are
required. However, there are also limitations for the type of communication. If
many applications are connected to each other, then the collection of such custom
interfaces and custom mappings results in an unstructured, complex, and tangled
integration landscape. Moreover, the complexity of such a landscape increases when
either an existing application is upgraded with a newer version or altogether a new
application is added to the landscape. Multiple mappings are developed to the same
interface, and it is difficult to scale up such integration. Another additional problem
in point-to-point integration is that any change required for connectivity to endpoints
is difficult to manage and is error prone as the integration logic is distributed among
the connected systems. Easy and effective change can be achieved when different
systems are connected to a centralized connectivity solution rather than having direct
connection. This enables creation of centralized integration logic. Mediated integra-
tion provides solutions to the problems of point-to-point integration. Moreover, this
approach can very easily get out of hand as the number of connections increases to
the square of the number of systems. Thus, monitoring and error handling can be
complex.

Mediated Integration
In mediated integration, different systems are connected to the integration
middleware. The integration middleware handles the integration logic and mediates
the exchange of data between communicating peers. This eliminates the problem of
distributed integration logic. An additional advantage of brokered integration is
availability of connectivity endpoint details and interfaces at one central repository.
This provides better control of change in connectivity requirements. Mediated
integration provides more manageable, scalable integration landscape as any addi-
tional application can be connected to the integration middleware without affecting
the existing integrations. By linking the systems via a central instance, all
Solution Capability 405

integration-relevant information is readily accessible in a central point. In addition,

unlike the point-to-point approach, the number and layout of the connections
remains manageable. For this connectivity option SAP offers the SAP Cloud
Integration, which is the preferred process integration cloud-based middleware,
available with prepackaged integration content (iFlows), and has extensibility
options. In this regard, the SAP Business Technology platform is operated by
SAP, and monitoring is carried out by the customer. Furthermore, SAP offers the
SAP Process Orchestration, which is primarily an on-premise integration landscape,
but can also be used for on-premise to cloud. This solution is completely operated by
the customer. The drawback of the mediated communication is the increased TCO as
additional middleware solution must be implemented and operated. For integration
typically mapping between the source and target API must be provided. Thus, in
case of the mediated connectivity such kind of content must be developed and
deployed on the middleware product. Aspects like lifecycle management, extensi-
bility, performance, or security become so more complex to solve as on additional
technology stack is in place. The implementation of an application must not increase
landscape complexity due to pure technical restrictions. This would be the case if the
application programming model for integration relied on the presence of a
middleware hub. On the other hand, a point-to-point programming model always
allows customer to use a communication hub for scale-out and centralized adminis-
tration. Therefore, the point-to-point communication shall be enabled by default.
Support of easy-to-use mediated integration must be established by providing
integration content from each application. For SAP S/4HANA provides numerous
APIs which can be used for point-to-point and mediated integration. Those APIs and
the underlying protocols are explained in the next section.

Application Programming Interfaces

Different kinds of Application Programming Interfaces (APIs) can be used to

connect SAP S/4HANA with other SAP products, SAP Business Technology
Platform, and third-party systems. The message delivery mode of APIs like synchro-
nous delivery and asynchronous delivery defines the behavior of sender and receiver
during message exchange:

• Synchronous delivery mode: In synchronous delivery mode, the sender sends a

request message to receiver and expects an immediate response message from the
receiver. The synchronous delivery mode is used when immediate continuation of
further activities of sender is dependent on the processing of request message by
the receiver. For example, a production planning process is dependent on delivery
status of ordered raw material. So, the production planning queries the shipment
status synchronously.
• Asynchronous delivery mode: In asynchronous delivery mode the sender does
not wait for a response message from the receiver immediately on sending a
request message. The asynchronous delivery mode is used when the processing of
406 26 Process Integration

message by the receiver can be decoupled from the sender. This decoupling
allows the sender to continue immediately before having to wait for a response.
For example, the supplier sends a notification of advance shipment to customer.
The supplier can continue with the processing of next order without waiting for
any response from the customer.

As illustrated in Fig. 26.3 there are different choreographies of single interaction

between the communicating peers in the context of SAP S/4HANA.
Request-Confirmation is used for bidirectional communication. In this choreog-
raphy, the sending application sends a request message to the receiving application.
The receiving application performs the requested business action and returns
a confirmation message to the sending application. Notification choreography is a
unidirectional asynchronous communication. Here, the sending application sends a
notification message to the receiving application. The notification message leads to
data changes in receiving application. In contrast to Request-Confirmation, the
receiving application sends no response to the sending application. Query-Response
is a basic data provisioning pattern. In this pattern the requesting application requests
some data from the provider application in read-only form, specified by a query. The
provider application provides the data as response. Query-Response pattern can be
either synchronous or asynchronous. Information choreography is another data
provisioning pattern where sending application informs the receiving application
about some changes. The difference to the notification pattern is that the information
message is typically sent to a list of subscribed receivers, and the receivers are free to
take immediate action upon the information received. In the following sections the
different API types of SAP S/4HANA are described.

OData Services
OData (Open Data Protocol) is based on the OASIS standard that defines a set of best
practices for building and consuming RESTful APIs. Therefore, it is designed to
provide the standard CRUD access via HTTP(s). OData APIs are resource-oriented
APIs that can be used to query and modify data models with entities that are linked
by navigational relationships. OData enables the focus when creating RESTful APIs
almost exclusively on the business logic by relieving the work of approaches for
defining status codes or response headers. The OData services offered in SAP
S/4HANA are currently only synchronous services in which the result of the opera-
tion is returned immediately in the body of the HTTP response. However, SAP is
working on the option that asynchronous OData services can also be used in the
future. OData is the preferred protocol for the use with custom UX, SAP Fiori, or
SAP BTP applications.

SOAP Services
SOAP (Simple Object Access Protocol) is a network protocol for exchanging
information in distributed environments that is based on XML to represent data
and on Internet protocols to transmit the messages. Web Services Description
Language (WSDL) is uses as a description language for SOAP-based interfaces
 Solution Capability

Request- Query-
Noficaon Information
Confirmation Response

Sender
Sender Sender Sender
(Requestor)
Request Noficaon Query Informaon

Confirmaon Response

Receiver
Receiver Receiver Receiver Receiver
(Provider)
Operate on
Operate on Operate on Read only data
data data (optional)
Business Business
Business data Business data Business data
data data

Fig. 26.3 API choreographies

407
408 26 Process Integration

and specifies the operations, as well the schemas for input and output data. SOAP
services can be defined in the ABAP environment in the Enterprise Services
Repository or in the backend repository of the ABAP application server. In case of
custom services, there is also the option to generate SOAP services from existing
ABAP function groups and BAPIs. The SOAP services offered in SAP S/4HANA
are normally used for asynchronous, reliable communication, with messages that are
typically one way, or don’t need an immediate response. It’s also possible to use
synchronous SOAP services; however, they are only used in exceptional cases.

Remote Function Call

Remote Function Call (RFC) is the standard SAP interface for the communication
among SAP systems and is utilized for the communication across applications of
different systems in the SAP environment. This entails connections within SAP
systems as well as those linking SAP systems to non-SAP systems. RFC is the
traditional mechanism for remote communication which can also be performed over
WebSocket instead of calling the remote-enabled ABAP function module. There are
many differing kinds of RFCs, each having different characteristics and being used
for a particular purpose. However, the most important are the synchronous, transac-
tional (asynchronous) and queued (also asynchronous) RFCs.

BAPIs
Business Application Programming Interfaces (BAPIs) are a standardized program-
ming interface for SAP business objects that are listed in the Business Object
Repository (BOR) and are used for carrying out specific business tasks. Technically,
BAPIs are implemented as RFCs and are typically called as synchronous RFCs.
BAPIs have standard business interfaces allowing external applications to gain
access to SAP processes, functions, and data. Client programs employing BAPIs
to access SAP business objects can be part of the same SAP system, an external
system, an HTTP gateway, or another SAP system.

IDoc
An Intermediate Document (IDoc) is a central standard SAP document format for
asynchronous message exchange between SAP and non-SAP application. IDocs
standardize the exchanged data independent of the used data transfer method. The
transfer of IDocs is possible via transactional RFCs, via HTTP using an XML
encoding, or via SOAP over HTTP. The IDoc interface is composed of the data
structure definition as well as processing logic for this data structure. Additionally,
exception handling can be defined in SAP Business Workflows with IDocs with no
need for the data to already be present as SAP application documents.

SAP S/4HANA API Strategy

The current SAP Strategy is to focus on SOAP and OData APIs for new develop-
ment. However, the traditional interfaces like RFC, BAPI, and IDoc are also
supported in SAP S/4HANA. OData services will replace BAPIs for synchronous
operations on resources, and SOAP services will replace IDocs for asynchronous
Solution Capability 409

messages. This strategy is already applied for SAP S/4HANA Cloud. Therefore, it is
not planned to implement new BAPIs, RFCs, and IDocs for the cloud. However, to
allow SAP customers to leverage existing and implemented integration scenarios,
SAP released a controlled set of scenarios with traditional interface technologies
(IDoc, BAPI, RFC) for SAP S/4HANA Cloud. In these scenarios, the SAP Cloud
Connector enables RFC communication between cloud and on-premise systems in
both directions.

SAP API Business Hub

The public APIs and several other types of content, like CDS views, are published in
SAP’s public directory SAP API Business Hub. Consequently, APIs that are not
public are not listed here. In the context of SAP S/4HANA integration technology,
that means that all listed APIs in the SAP API Business Hub have a compatibility
contract and can’t be changed or removed at any time. Additionally, it’s possible for
developers to experience the APIs via an API sandbox. To be able to consume the
APIs from the SAP Business Hub the developers have to use the Communication
Management and create Communication Scenarios and Communication
Arrangements (Fig. 26.4).

SAP Application Interface Framework

SAP Application Interface Framework is a powerful framework for interface imple-

mentation, monitoring, error handling, and processing in ABAP-based systems. SAP
provides the necessary interface configurations in the SAP Application Interface
Framework for all asynchronous APIs in SAP S/4HANA Cloud. Therefore, these
APIs are already integrated in the SAP Application Interface Framework for error
handling and monitoring. For SAP S/4HANA On Premise this is only the case for a
limited amount of applications. However, it’s possible to configure those interfaces
to be monitored, and developers can implement their own interfaces. The implemen-
tation of the interfaces is mainly done through customizing menus. Because different
interface technologies come with different tools for monitoring and error handling,
they might be hard to understand as a non-technology expert. SAP Application
Interface Framework simplifies this process and provides uniform monitoring,
alerting, and error handling. The interface components can be reused (e.g., checks
or mappings), independently implemented, and tested. Furthermore, it supports
variants of interfaces (e.g., exceptions), which can be tested independently as well.
SOAP service, IDoc, and RFC are the supported technologies for asynchronous
incoming and outbound calls. As an additional interface technology for outbound
calls is OData supported. For synchronous OData calls, only error monitoring is
provided.

Process Flow with the SAP Application Interface Framework

Figure 26.5 shows the conceptual architecture of SAP Application Interface Frame-
work. Incoming calls are processed by the corresponding integration interface
 410
26

Fig. 26.4 SAP API Business Hub—https://api.sap.com

Process Integration
 SAP S/4HANA or SAP Business Suite

Standard Applications Alert Management

Solution Capability

Application Log

SAP Functions Custom Functions Data Security / Authorizations

SAP Application Interface Framework

Interface Customizing
Monitoring & Error Handling
(e.g., data validation, value mapping,
(Forward Error Correction)
actions, variants, etc.)
Integration
Developer Business
User
API Layer (e.g., IDoc, Proxy, BDoc, Web Services, files, etc.)

Application Layer
Integration Layer
SAP Cloud Platform SAP Process
…
Integration Orchestration

Cloud On-Premise Cloud On-Premise

B2B / B2G B2B / B2G
Applications Applications Applications Applications

Fig. 26.5 SAP Application Interface Framework—architecture

411
412 26 Process Integration

runtime of the ABAP application server. The first step is that the interface runtime
registers the call with the monitoring component of the framework, provided that the
SAP Application Interface Framework is configured to be used for a particular
interface runtime. Thereby the framework is notified of the call and is able to
show it in the monitoring application. Next, the interface runtime invokes the actual
application-specific request processing, and the application processes the request and
records progress and errors in the application log. On completion or failure of the
processing, control is returned to the interface runtime. In the event of error
occurrences, the interface runtime logs the error information in its log. Afterward
the interface runtime again calls the SAP Application Interface Framework to inform
it about the status of the call. Subsequently the framework updates the status in its
internal monitoring data and in the case of an error writes additional log messages.
Additional configurations of the monitoring to trigger alerts to notify the user about
errors are also possible. The users are able to read the details about errors and see the
status of the call. Users can try to resolve error occurrences on the business level by,
for example, filling missing data. The asynchronous messages and their payloads are
stored in a user-friendly way in queues, so they can be edited and then be written
back into the interface runtime. After solving the problem, the SAP Application
Interface Framework notifies the runtime to reprocess the queued message. The
process for outbound requests and messages is the same as the one described for
inbound messages. THE SAP Application Interface Framework monitoring is
notified prior to and after the sending of messages and requests. Then in case of
errors, users can attempt to fix the problem and initiate the reprocessing of the
message or request. Besides the monitoring and error-handling capabilities of the
SAP Application Interface Framework, it is possible to intercept the processing of
request and messages. Again, this can be specified for each interface runtime. As
seen in Fig. 26.6 the interface runtime doesn’t directly call the application-specific
request processing but the request processing of the SAP Application Interface
Framework instead. This allows the framework to perform checks and mappings
based on the interface-specific configuration (e.g., value mapping). Identically, for
outbound calls, the interface runtime invokes SAP Application Interface Framework
processing before sending the request so that mappings and checks can be applied.
The mapped request is returned by the SAP Application Interface Framework, which
is subsequently sent by the interface runtime.

Integration Middleware

In addition to integrating SAP S/4HANA applications based on direct communica-

tion between them via aligned APIs, there are instances where dedicated integration
middleware is preferred to mediate communication. The use of integration
middleware is particularly useful when, for example, third-party products are to be
integrated or messages are to be forwarded to different receiving systems.
 Solution Capability

Fig. 26.6 SAP Application Interface Framework—message monitoring

413
414 26 Process Integration

SAP Cloud Integration Service

The integration middleware SAP recommends for the cloud is the SAP Cloud
Integration Service, which is available as part of the SAP Business Technology
Platform. This is a multi-tenant service running on SAP Business Technology
Platform which can be utilized for cloud-to-cloud integration as well as cloud and
on-premise application integration. Messages coming from senders are processed by
SAP Cloud Integration Service and relayed to receivers. Both senders and receivers
are connected by adapters that implement the communication protocols the senders
use. The incoming data from the sender’s external protocol is converted to an
internal message format by the sender adapter. This message format can then be
used for further processing. The final outgoing messages are then converted by a
receiver adapter from the internal format to the receiver’s protocol. Besides the
already offered adapters by SAP Cloud Integration Service for various protocols like
SOAP, OData, HTTP/REST, it is possible to integrate a variety of third-party APIs
with the Open Connectors capability in SAP Cloud Integration Suite. Thus, access is
provided in a common way with standardized authentication, error handling, pagi-
nation, and data structures for third-party APIs from many cloud services. The
routing and processing of messages is described by integration flows, which are
also known as iFlows and are executed by the SAP Cloud Integration Service
processing runtime. The description of iFlows encompasses the way messages are
processed by senders and distributed to recipients and are visually modeled by
means of the BPMN (Business Process Model and Notation) standard. For this
purpose, design tools are integrated into the web-based user interface of SAP
Cloud Integration Service. Predefined integration content from SAP is published
on SAP API Business Hub and available for use in the customer tenant in the web
user interface of SAP Cloud Integration Service. In other scenarios the offered
integration content from SAP can be utilized as starting point for setting up a custom
integration with SAP Cloud Integration Service.

SAP Process Orchestration

For on-premise deployment SAP recommends the integration middleware SAP
Process Orchestration technology. SAP Process Orchestration has support for dif-
ferent installation options. Advanced Adapter Engine Extended is supporting con-
nectivity via adapters for different protocols, routing of messages on the basis of
routing rules, and mapping of message structures and values. For modeling and
configuring integration content it also contains the Enterprise Services Repository
and the Integration Directory. SAP Process Orchestration is an offering including an
advanced adapter engine extended along with SAP Business Rules Management
component and SAP Business Process Management software. Implementing appli-
cation integration is distinguished in three distinct phases—the design time, the
configuration time, and the runtime execution. The design time involves modeling
the communication between applications at an abstract level—irrespective of the
details of a particular system landscape. Later during configuration time, the com-
munication model is adapted to run in specific system landscape. For example, the
Solution Capability 415

same model can be used irrespective of the physical environment of the IT systems
involved. Finally, the runtime executes the configured communication model. SAP
Process Orchestration architecture is composed of separate components that handle
the integration tasks involved in each of these phases:

• Design time: Enterprise services repository (ES repository)

• Configuration time: Integration directory
• Runtime: Advanced adapter engine and integration engine

An integration expert uses ES repository to define and manage communication

models. SAP also delivers predefined content for SAP S/4HANA within ES reposi-
tory to enable out-of-the-box application integration for customers. SAP partners
and customers can also extend and create new content in ES repository. The
communication between applications is represented as a message. This could be,
for example, a quotation or a sales order. Each message has a structure defined by the
communication peers. The structure is represented as a message type in the ES
repository. Applications participate in integration as either sender of messages or
receiver of messages. The IT system landscape of a customer is not static. The
existing IT systems are replaced or upgraded due to changing business requirements
or relocated to a different network. For example, scaling up the performance of an
order processing application may require upgrading the hardware of the IT system.
Such changes may result in changes to the customer’s existing configured commu-
nication. SAP Process Orchestration shields the existing configuration by
differentiating between a technical system and a business system. A technical system
is the physical server or individual operating system installation. A business system
represents a communicating peer in communication. During configuration time, the
integration directory refers to the business systems as communicating peer and not to
the technical systems. This enables performing changes in technical systems like
change of server address without affecting the configuration. The system landscape
directory (SLD) offers a repository to define technical and business systems. Inte-
gration engine and advanced adapter engine use SLD information during message
processing. Integration engine has the primary function of mediating the exchange of
messages between communicating applications using the integration content from
the ES repository and configuration objects from integration directory. The integra-
tion engine executes several services to process the incoming message. These
services use configuration objects like receiver determination and interface determi-
nation and integration content like mapping objects. The services are called pipeline
services, and they are executed in an appropriate sequence referred to as the pipeline
(Fig. 26.7).
416 26 Process Integration

Fig. 26.7 SAP Process Orchestration—monitoring and message mapping

Conclusion 417

Conclusion

Process integration supports the chaining of business processes between two or more
applications—a business process in one application initiates a supporting business
process in another application. In contrast to master data synchronization, process
integration does not typically require an initial load. It will not be appropriate
anymore to speak of a source and destination. Examples of process integration
include a service procurement process in SAP S/4HANA that initiates a contingent
workforce process in SAP Ariba. SAP S/4HANA supports the point-to-point and
mediated process integration. Furthermore, SAP S/4HANA provides thousands of
APIs ensuring synchronous and asynchronous communication. For APIs different
techniques and protocols are facilitated, for example, OData, SOAP, or RFC.
Standardization for implementation and operations of APIs are enabled with SAP
Application Interface Framework. For mediated integration SAP Cloud Integration
Service and SAP Process Orchestration are provided as central middleware.
Data Integration
27

This chapter focuses on data integration concepts and frameworks of SAP

S/4HANA. Particularly, the use cases for data integration, the data push and pull
patterns, data replication framework, CDS-based data extraction, data transforma-
tion to data warehouse systems are explained.

Business Requirement

Application data is typically categorized as transactional data describing a single

business event, or as master data, which is referenced in multiple business events.
Data integration supports the synchronization of transactional and master data that is
owned by source system but is also needed in the target system to enable analytics,
machine learning, or the implementation of business processes. This includes both
the initial load of the data from the source to the destination and the management of
any changes that occur after this initial load. Examples include the synchronization
of employee data between SAP S/4HANA and SAP Cloud for Customer. Usually,
scheduled transfer of data from the source to the destination application is required,
although near-real-time transfer might also be supported for delta changes. Bulk data
transfers are demanded, although transfer of a single object may also be supported
for near-real-time delta synchronization. Matching, mapping, or transformation of
the data is needed before it is stored in the destination application due to differences
in data models. Key requirements for data integration are:

• The data extraction solution shall support initial load: Initial load is the first step
when an external application requires mass data from SAP S/4HANA. During an
initial load a larger portion of instances is initially replicated from a source to a
target at once. For this usually packing is required so that the data can be
transmitted portion wise.
• The data extraction solution shall support delta load: If the overall size of a data
source (# of rows x width of row) is small, then the data consumer can track

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 419
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_27
420 27 Data Integration

changes of the data source by a full reload of the source. However, this is only
indicated for configuration data sources (e.g., code lists or similar) which are
rarely changed. For other sources that regularly change (e.g., tables for transac-
tional data) this approach is in general not feasible. To replicate such data sources,
a delta handling is required that accomplishes the initial load by replication
changes only the changes which occurred since the last data replication.
• The data extraction solution shall support resynchronization: Long-running col-
laboration, and data extraction is not an exception to this, tends to run out of sync.
This means that the data source contains different data than the replicate, but the
synchronization process does not show an error. Reasons for this are among
others: Lost updates in the synchronization process, deletion at the receiver side,
source objects falling out of scope if source object filters are used. Therefore, a
resynchronization of the replicated data must be supported, either via complete
reload of the data or via comparing and resolving the differences between source
and receiver. The second approach requires more complexity, but for large data
volumes a complete reload might not be feasible.

Further requirements concerning data integration are key/value mapping, trans-

formation operations, staging area, data consistency, authorization and data privacy,
extensibility and performance, monitoring, and error handling.

Solution Capability

Data integration means that SAP S/4HANA’s data is transferred by a generic

mechanism for various purposes like analytics, machine learning, or implementing
transactional applications. Data integration itself does not trigger any business
process steps. Different orchestration patterns and technologies for data integration
are provided which are explained in this section.

Orchestration Patterns

In a consumer-driven data replication, the data consumer selects the data sources of
a data provider which the consumer needs. The underlying technology then
replicates the data of the various sources to the data consumer and fulfills the chosen
qualities. From a business perspective, the data provider does not know who requests
the data and for which purpose. A contrast to this is a provider-driven data replica-
tion. Here, the data provider knows the purpose of the data replication, defines the
qualities, and is responsible to fulfill them. Master data replication from SAP
S/4HANA to other applications is a typical representative of such kind of
provider-driven data replication. Technically data integration can be implemented
based on different patterns. The key data integration patterns in the context of SAP
S/4HANA are illustrated in Fig. 27.1. There are two main approaches to replicate
data from the source to the target system. With Push Data method, the source system
 Solution Capability

Push Data Pull Data Feed & Query Brokered

feed
Source Source R Source Central
System Target System System Target System System Target System Source System Target System
Hub
push pull
R
query

Business Data Business Data Business Data Business Data Business Data Business Data Business Data Business Data
original replica original replica original replica original replica

Fig. 27.1 Data integration patterns

421
422 27 Data Integration

sends all relevant data or changes via APIs to the target system. The source system as
data provider monitors the data, and if it detects any changes, it sends the changed
values to the target system as data receiver. The receiver acts passively and waits for
new values. In SAP S/4HANA the Data Replication Framework (DRF) is based on
push model.
In comparison to that, data pull runs at regular intervals, to pull the relevant data
from the source system. A specific logic identifies changes in the source system and
pulls it out and transfers it to the target system. In SAP S/4HANA the CDS Data
Extraction is based on data pull. The pull model is usually implemented with a
specific protocol, for example, for initial handshake and package wise transfer of
data. Thus, the target system must also implement this protocol which results in
closer coupling and additional development efforts. Furthermore, the source system
must open a port so that the target system can recurrently pull data. For the setup of
SAP S/4HANA systems this is a security risk which requires additional safeguard
measures. Furthermore, the performance of the transactional processes in SAP
S/4HANA could suffer, in case many target systems and high number of data
sources are involved. The push model decouples source and target system very
well. However, the data transfer responsibility is shift mainly to the source system.
The push and pull method can be also combined as, for example, into the Feed and
Query model. In this pattern, changes (such as employee ID, name, and e-mail
address) are pushed from the source to the destination application initially as
notification. If required, an additional, optional change feed may also exist, which
provides a corresponding full object representation. These minimal attributes are
referred to as feed in the above diagram. The destination retrieves additional data to
update its local replica of the application data according to the notification. If
required, a query can be also used, for example, to continue the business execution
or to display to the end user in user interfaces. While the recommended approach is
to retrieve additional data from the application layer using APIs, data integration
tools may also be used to implement the transfer of application data from an API to a
local schema. When data is being replicated, the initial load of the data can be
performed by pulling the data from the source system. To minimize the data
transferred after the initial load, only changed data should be transferred. An
appropriate protocol mechanism (such as OData delta token) facilitates this. The
Brokered Pattern is applied for applications that require advanced data transforma-
tion options, which are not available as built-in functions within SAP S/4HANA’s
data provisioning. Data consolidation, governance, and quality are also main reasons
for implementing the brokered pattern based on a central hub. SAP Master Data
Governance is an example for this pattern. The central hub usually supports push and
pull capabilities.

Technologies Classification

Data integration technologies can be classified by organizational level and persis-

tence handling. The organizational level considers if technologies are data-centric or
Solution Capability 423

application-centric. The more application logic and code can or must be deployed
into a given technology to form a solution, the more application-centric it is. If, on
the other hand, data structures and data storage aspects dominate the data integration
setup, then a technology is rated as data-centric. The following levels exist:

• Manual Integration/Common User Interface: Users operate with all the relevant
information accessing all the source systems or web page interfaces. No unified
view of the data exists.
• Application-Centric/Orchestrated Integration: Integration logic moves from
applications to a middleware or central hub layer. Although the integration
logic is not developed in the applications, there is still the requirement for the
applications to partially contribute into the data integration.
• Data-Centric Integration: Integration is accomplished by employing data-oriented
technologies. These comprise message brokers like KAFKA, RabbitMQ, Solace.
Another important group is replication, for example, SAP HANA SDI, SAP LT
Replication Server, SAP Replication Server, and Mobilink.
• Virtual Integration or Uniform Data Access: This approach doesn’t require data
replication for the source systems. It defines a set of views to provide and access
remotely the unified view to the customer. The data is not moved but remotely/
virtually accessed during runtime.
• Physical Data Integration or Common Data Storage: A distinct system saves a
copy of the data from the source systems to store and manage it independently of
the original system. Technologies following the Extract-Transform-Load (ETL)
paradigm are part of this level.

For persistence the data integration can be separated into copying (movement,
replication) and non-copying (federation) paradigms. The following cases can be
distinguished:

• Non-copying: No copy of data is made. Every query is evaluated against live data.
Only the result of the query evaluation is sent back to the originator.
• Transitory copy: Message brokers usually store data in the payload part of a
message temporarily to guarantee the requested quality of service. In replication
technologies, the changed data is kept in shadow copies or stable devices.
• Copying: Data is copied and stored in another logical structure. This can happen
inside the very same database, for example, in data marts.
• Moving: In contrast to copying, moving implies that the original data is deleted in
the originating system after successfully completing the copy operation.

As a result, the following data integration technology groups are identified:

Application to Application, Orchestration, Stream Processing, Message Broker,
Replication, Offline and occasionally connected, Virtualization, Extract-Trans-
form-Load, Migrations and Conversions.
424 27 Data Integration

Data Replication Framework

The SAP Data Replication Framework (DRF) as a local business object changes
event processor which decides about the replication of the specific business object
instances to one or more target system. It is used for data integration on business
level and is a solution for data push pattern. Local change events are registered and
connected to the corresponding outbound interfaces. It is used to define a replication
model and check the filter conditions. The application informs the DRF about all
changes in business objects. The DRF always sends complete business object
instance via the given outbound. It is the event trigger for application data distribu-
tion with SAP Master Data Integration service.
Figure 27.2 shows the architecture of DRF after a business object change event in
SAP S/4HANA. Customers can manage the whole data replication process to the
specific target system in terms of which business objects shall be replicated through
which interface and when. Using the Execute Data Replication (DRFOUT) option
the whole data replication can be controlled, including initial data replication, delta
data replication, or data replication on a one-off basis. The DRF is used for applica-
tion integration on business level. As mentioned, customers can manage the data
replication—decide which business objects are sent to which target system through
which interface and to what time—using a push mechanism. Applications need to
provide outbound interfaces like SOAP web service interfaces or ALE IDOC
interfaces to use DRF. In the design phase the application connects their interfaces
to DRF; afterward during the configuration phase the replication model can be
created. The whole framework is completed by the key mapping framework and
the value mapping framework, so it supports non-harmonized identifiers and code
lists. The DRF offers several features. First of all, it is possible to connect all relevant
data exchange technologies (Web Services, ALE, RFC, File transfer) and all relevant
transfer modes (initial, delta, manual, direct) to the DRF. A powerful data filtering
enables the customer to select objects by using configurable parameters, to reuse
filters across business objects, and to use special system filter to avoid outdated
copies in the target system. The DRF supports delta analysis and offers tracking and

SAP S/4HANA Target System

Business Applicaon Data Replicaon Framework

Outbound Replicaon
Interface Monitoring
Trigger
BO Change
Event
Outbound Processing
push
Business Logic Filtering Delta Mng. data
Inbound Interface
R

Business Object
Business Replicaon (replica)
DRF Logs
Object Model

Fig. 27.2 SAP Data Replication Framework—architecture

Solution Capability 425

monitoring capabilities (own logging, SAP standard tools for monitoring, core
components for end-to-end monitoring). The pre-delivered SAP content can be
extended by the customer, and it enables mass data. Outbound interface class
depicted in Fig. 27.2 must implement the ABAP interface IF_DRF_OUTBOUND.
The methods of this interface are listed in the table below. The most important
method is SEND_MESSAGE, which pushes data from SAP S/4HANA to the target
system.

Interface method Description

INITIALIZE Initialize method of the outbound implementation
ANALYZE_CHANGES_ Change analysis by ALE change pointers
BY_CHG_POINTER
ANALYZE_CHANGES_ BY_MDG_CP Change analysis by MDG change pointers
MAP_DATA2MESSAGE Map internal data to the message structure
SEND_MESSAGE Send processed message
ENRICH_FILTER_ CRITERIA Enrich filter criteria
ANALYZE_CHANGES_ BY_OTHERS Change analysis by other parameters than change
pointers
ANALYZE_CHANGES_ BY_MDG_CP Change analysis by MDG change pointers
BUILD_PARALLEL_ PACKAGE Build parallel package for message processing
READ_COMPLETE_DATA Read complete data
APPLY_NODE_INST_ FILTER_MULTI Apply node instance filter on multiple relevant
objects
APPLY_NODE_INST_ Apply node instance filter on single relevant object
FILTER_SINGLE
FINALIZE Finalize method for outbound implementation

Before starting with the replication as precondition DRF must be customized

which includes:

1. Configuration of the data replication

2. Definition of filter criteria (for the use of external data replication filters)
3. Definition of the necessary authorizations

The customization of replication model defines which data shall be sent. This
allows to specify which outbound implementations and filter objects shall be applied
from the range of available services. These customizing activities are independent of
the message target application. Together with the subordinate view maintenance,
DRF supplies table entries that can be used as existing elements in the application
configuration. In addition, corresponding classes for filter objects, filters, and service
implementations are assigned to the delivered entries.
426 27 Data Integration

CDS-Based Data Extraction

The Virtual Data Model (VDM) is an executable, structured model of a HANA

database view that provides direct access to the data of the business application in
SAP S/4HANA at runtime. All existing tables can be transformed into an
understandable, comprehensive, and executable data model that exposes all the
business data. The VDM consists of CDS views. Core Data Services (CDS) are
used to create persistent and semantically rich data models. Those data models can
be consumed on database server and support conceptual modeling and relationship
definitions, built-in functions, and extensions. CDS is an enhancement of SQL that
can be used to define semantically rich database tables or views and user-defined
types in the database. CDS views are managed by the data dictionary of the ABAP
platform and executed in the database system. Those views are used in ABAP
SELECT statements as the data source and only return data that the active user is
authorized to access.
The CDS-based data extraction is a technical option for SAP S/4HANA
On-Premise and Cloud concerning data integration. It replicates data from SAP
S/4HANA into target systems like SAP BW4/HANA, SAP Data Intelligence, or
third-party solutions. The CDS Data extraction is based on the data pull pattern. For
different data integration scenarios, CDS provides several channels for a general data
extraction model. Delta extraction can be performed using data extraction and delta
element annotations of CDS views. To define these annotations, a delete element or a
pseudo delete field, like a timestamp, is required. Figure 27.3 shows coarse architec-
ture and an example for CDS-based data extraction.
Typically, CDS views are projections on database tables—the connection
between view, table, table elements, and table key fields is modeled and can be
reused by the underlying extraction framework. The SQL views generated during
activation of the ABAP CDS views are used to read the access the data for
extraction. The approach supports full and delta extraction from SAP S/4HANA
with the following different API protocols:

• Operational data provider (ODP) offers the data extraction with the corresponding
APIs and extraction queues. SAP BW4/HANA is using the method for replication
of application data for data warehousing.
• Cloud Data Integration (CDI) is based on open standards and supports data
extraction through OData services. This method can be used by arbitrary target
system which implements the CDI protocol.
• ABAP CDS Reader Operator replicates the application data into SAP Data
Intelligence and extracts afterward the data from the ABAP pipeline engine in
the SAP S/4HANA system.

To enable CDS views for data extraction respective annotations must be

specified. The key annotations are listed and explained below:
 3rd Party with CDS SAP BW on HANA SAP Data SAP Data SAP HANA
Target System Client & BW/4HANA Intelligence Warehouse Cloud OP/Cloud
Solution Capability

ABAP CDI
SOAP
API Pipeline
(RFC) (WebRFC) (oData)

Extraction Runtime
(ODP/ODQ, CDC, Reconstruction)

SAP S/4HANA CDS Extraction View

Data Integration Model

Internal CDS View Model

Table
SAP S/4HANA

Fig. 27.3 CDS-based data extraction—architecture and example

427
428 27 Data Integration

Fig. 27.3 (continued)

Solution Capability 429

annotation Analytics {
dataExtraction : {
enabled : boolean default true;
delta : {
byElement : {
name : RefToElement;
@MetadataExtension.usageAllowed : true
maxDelayInSeconds : Integer default 1800;
detectDeletedRecords: boolean default true;
MetadataExtension.usageAllowed : true ignoreDeletionAfterDays :
Integer;
};
changeDataCapture : {
nodes : array of {
role : String(20) enum {MAIN; COMPOSITION;
LEFT_OUTER_JOIN; INNER_JOIN;};
// only one of the next 3 annotation may be used
association : associationRef;
entity : entityRef;
table : String(30);
// only used if association is not specified
viewElement : array of elementRef;
// only used if association is not specified
logElement : array of elementRef;
filter : array of {
element : elementRef;
type : String(10) enum { EQ; NOT_EQ; GT; GE;
LT; LE; BETWEEN;} default EQ;
value : String(45);
highValue : String(45);
};
};
};
};
};

• dataExtraction.enabled—Via this indicator the application developer can mark

those entities that are suitable for data replication (e.g., for mass data it is
necessary to provide delta capabilities). This capability is usually lost on the
level of consumption views where joins, procedures, and aggregations blur the
relation to the primary data. It is expected that an application will deliberately
design a set of data provisioning views, which are suitable for consistent and
redundant-free replication.
• dataExtraction.delta.byElement—The application developer can enable the
generic delta extraction by this annotation.
• dataExtraction.delta.byElement.name—This is the element that should be used
for filtering during generic delta extraction. This element can either be a date
(ABAP type DATS) or a UTC timestamp.
• dataExtraction.delta.byElement.maxDelayInSeconds—There is always a time
delay between taking a UTC timestamp and the database commit. The annotation
defines the maximum delay in seconds. The standard value is 1800 s.
• dataExtraction.delta.byElement.detectDeletedRecords—By applying this annota-
tion the system is going to remember all key combinations of the view that were
extracted in delta mode. If a key combination doesn’t exist in the view any more
this is going to automatically generate a delete image in the extracted data.
430 27 Data Integration

• dataExtraction.delta.byElement.ignoreDeletionAfterDays—This annotation
makes sense only together with dataExtraction.delta.byElement.
detectDeletedRecords. The extraction will ignore deleted records if they are
older than the specified number of days. The main objective is archiving. Exam-
ple: If records are planned to be archived after 2 years then this value shall be less
than 700. In this case, the deletion in the database tables will be ignored if the
record is only less than 700 days.
• dataExtraction.delta.changeDataCapture.nodes—This annotation defines the list
of tables that should be logged. Details regarding the attributes of this annotation
are @Analytics.dataExtraction.delta.changeDataCapture.nodes List of tables that
should be logged
– .role Possible values:
#MAIN The key of the extraction view corresponds exactly to the key of
the logging table.
#COMPOSITION There is a node with role #MAIN, and the key of the
logging table is part of the key of the extraction view.
#LEFT_OUTER_JOIN There is a left outer join but not all requirements of
role #COMPOSITION are met.
#INNER_JOIN There is an inner join to another table. Entries might
disappear in the extraction view due to updates on the fields of the join
condition.
– .association Name of the association to the CDS projection on the table to be
logged.
– .entity Name of the CDS projection view on the table to be logged.
– .table Name of the table to be logged.
– .viewElement View elements of the equal join condition between the actual
CDS view and the CDS projection view or the logging table.
– .logElement Elements or fields in the logging table of CDS projection view of
the equal join condition. Both arrays, viewElement and logElement, must
contain the same number of elements. Additionally, the array logElement
must contain exactly all key elements of the logging table without the client
element.
– .filter Filter on logging table:
.element Name of the element in the logging table or view
.type Possible values are: #EQ, #NOT_EQ, #GT, #GE, #LT, #LE,
#BETWEEN
.value The filter value
.highValue Only used in combination with type #BETWEEN

The delta handling for CDS-based data extraction is implemented based on

change data capture as depicted in Fig. 27.4. This approach uses database triggers
which are created for all database tables related to extraction views.
Those triggers are implemented by the change data capture engine and depend on
the timestamp field to detect what has changed since a given point of time. The
 CDS Layer

CDS Interface R
View DDL SQL View
(annotated) Select / Calculate
Data

Read Data

Applicaon
Solution Capability

Table 1 Table N-1 Table N

Capture Insert/ Capture Insert/ Capture Insert/

Update/ Delete Update/ Delete Update/ Delete

Trigger Trigger Trigger

Table 1 Table N-1 Table N

Record Key of Record Key of Record Key of

Changed Data Changed Data Changed Data
Delete
Recordings
Logging Logging Logging
CDS Subscriber Table 1 Table N-1 Table N
Read
Registry Recordings
Master Logging Table

Read
CDS Table Subscribers Recording Insert Read Pointer

CDC Engine
Mapping Observer Recordings Logging Logging Logging
Table 1 TableN-1 Table N
Delete
Recordings Generic Delta
Subscriber Logging Table
Recording Reader
Control
Put registered Read Subscriber
Subscribers
Delta Queue
Remove
Subscriber
R

Call Delta Reader

431

Fig. 27.4 Change data capture

432 27 Data Integration

corresponding change information is written into the change data logging tables. For
this feature the CDS extraction views must be annotated accordingly. The change
data capture framework provides information about the specific mappings between
tables and views and can even do it automatically for simple cases. In regular periods
of time the change data job is executed, and the logging tables are being filled. The
change data capture engine uses them to determine if there were changes and what
has been changed. Now the CDS writes the extracted data to the queues off the ODP
framework.

Data Warehouse Replication

Replicating application data from SAP S/4HANA to data warehouse solutions is

also very common use case. Figure 27.5 summarizes the key methods to extract data
from SAP S/4HANA to SAP BW/4HANA in the context of cross-system analytics

Classic Extraction CDS View Extraction Table Replication

SAP BW/4HANA SAP BW/4HANA SAP BW/4HANA

Info direct Info direct Info direct

Providers processing Providers processing Providers processing

advanced advanced advanced

DSO DSO DSO

DTP DTP DTP

(scheduled) (scheduled) (scheduled)

ODP DataSource ODP DataSource ODP DataSource

rfc
ODQ
rfc rfc
SLT

rfc
ODQ ODQ

ABAP
Extractor Table
View*

SAP S/4HANA

Fig. 27.5 Data extraction options for data warehousing

Solution Capability 433

and historical reporting. SAP BW/4HANA supports direct access or a full data
extraction and a delta extraction, including delta records. SAP BW/4HANA uses
the ABAP CDS as a source. Based on the CDS view corresponding DataSource in
the SAP BW/4HANA system is created. By using Operational Data Provisioning
(ODP) source template, the CDS view is utilized to automatically fill the DataSource
input fields. After saving and activating the DataSource, a Dataflow is created. The
Dataflow contains the source system object and the DataSource itself. After creating
a new persistent object with all fields of the DataSource, the object is copied to the
new advanced Data Store Object (aDSO). Now the aDSO can be transformed using
the SAP BW/4HANA techniques. There are options for the extraction of delta and
full load. After choosing these options the aDSO can be executed to extract the data
from SAP S/4HANA to SAP BW/4HANA.
In SAP ERP there are extractors provided for replicating application data to SAP
BW. The majority of those classic extractors can also be used in SAP S/4HANA on
premise. Due to simplification of the data model in SAP S/4HANA, some of the
classic extractors have been deprecated. An additional data extraction method is the
replication based on data base triggers using SAP Landscape Transformation Repli-
cation Server (SLT). A trigger copies modified rows to shadow tables or remote
locations (e.g., for delta loading). The materialization is performed independently of
the original transaction. While this reduces overhead, databases can get out of sync,
which can lead to all sorts of problems for the information consumer. SAP Land-
scape Transformation Replication Server is based on this technique. In contrast to
database triggers without transactions, triggers with transactions perform the materi-
alization within the transaction. Because transactions are a well-proven method for
guaranteeing the integrity of data modifications, this approach increases reliability of
trigger-driven database replication. Of course, the cost of this increased integrity is
reflected in decreased application performance caused by transactional overhead.

Master Data Governance

Master Data Governance (MDG) is also part of SAP S/4HANA and enables data
replication based on the already explained Data Replication Framework (DRF).
MDG supports in keeping master data consistent even in complex system landscapes
that are distributed across various locations. MDG facilitates to adjust master data
quickly to reflect legal changes, track changes, and respond flexibly to new
requirements and to business transactions such as takeovers of other companies.
MDG, central governance enables central ownership of master data in line with a
company’s business rules and processes. MDG provides domain-specific, out-of-
the-box applications as well as a framework for custom-defined master data. MDG
allows change request-based processing of master data with integrated workflow,
staging, approval, activation, and distribution. MDG ensures to be deployed as a
distinct hub system or co-deployed with SAP S/4HANA. Independent of the
deployment option, MDG can use SAP and company-specific business logic to
create master data for usage in an enterprise’s business processes. Furthermore,
434 27 Data Integration

MDG consolidation offers functionalities to load master data from different sources,
to standardize the master data, and to detect duplicates. For each match group,
consolidation determines the best record from the duplicates in that group. These
can be used in dedicated analytical or business scenarios. MDG combines consoli-
dation and central governance to support various master data management scenarios,
for example, initial load of master data as a starting point for central governance,
consolidation of master data after mergers and acquisitions. With mass processing
MDG facilitates to update multiple master data records at a time. To update records,
the fields and records must be selected which have to be changed. The system then
offers statistics on the updated fields and validates the data for business transaction
use before activating the changes. MDG, data quality management applies rules to
master data to determine errors and to trigger corrective measures. Rule mining
allows to use machine learning for data analysis and for the creation of data quality
rules from mined rules.

Master Data Integration Service

The Master Data Integration Service exchanges and synchronizes master data
objects among business services. It creates and stores the data in their local persis-
tence and distributes the master data objects and ongoing updates. It validates the
incoming data on a basic level, writes all accepted changes to a log, and uses CDS
view-specified master data models. When master data is created or changed in an
application, this supplication calls the asynchronous change request API of the
Master Data Integration Service. The customer can set different filters to influence
what master data they want to get. The Master Data Integration Service supports the
daily work of the employee and master data objects of the cost center.

Conclusion

Data integration transfers SAP S/4HANA application to target systems based on

generic mechanism for different use cases, for example, analytics, machine learning,
or implementing transactional applications. For data integration various patterns
exist which are often also combined. SAP S/4HANA supports in this context pulling
of data with CDS-based data extraction and pushing of data with Data Replication
Framework (DRF). CDS views can be enabled for data extraction by adding specific
annotation to them, for example, dataExtraction.enabled ¼ true for full upload. DRF
scenarios follow standardized class interface implementation for collecting and
sending the application data. Initial load and delta handling are ensured by SAP
S/4HANA data extraction technology.
In-App Extensibility
28

This chapter focuses on in-app extensibility concepts and frameworks which allow
customers and partners to enhance the functionality of SAP S/4HANA. Particularly,
adding database files and objects, extending application logic, creating forms/e-mail
templates, exposing data, creating custom analytics, and the adoption of user
interfaces are explained.

Business Requirement

Extensibility is the adaptation of standard software by partners, customers, or SAP,

including the related integration into system landscapes, with the goal to add
functionality for individual- or industry-specific needs. For customers, the most
important use cases are Content Adaptability (UI, forms, analytics, documentation,
individual terminology), Structure Extensibility (field extensibility, node extensibil-
ity), Business Logic Extensibility (new objects, business rules, application scripting,
arbitrary complex extensions through coding), and Process Extensibility
(workflows, process steps, integration). Figure 28.1 depicts the key use cases for
the in-app extensibility.
Extensibility plays an important role in the context of business applications such
as SAP S/4HANA or ERP systems in general. The software is supposed to be
dynamically adjustable to the present businesses needs and the future ones too.
Another benefit of extensibility is that software can be even more function rich,
because add-ons could target a very specific or unique problem without bloating the
core-software. It is important to distinguish at least two roles within the extensibility
process: the line-of-business (LOB) expert and the developer (or sufficiently skilled
IT expert). Extension projects are triggered and driven by business experts. There-
fore, it is essential to incorporate them by providing suitable, non-technical extensi-
bility tools. Still, certain tasks will require the involvement of the IT expert/
developer. Key requirements concerning extensibility are:

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 435
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_28
436 28 In-App Extensibility

Adopt/new
user interface

Create custom
analycs

Expose data
Core-Applicat ion
Prepared for In-App Extensibility
Create forms/
email templates

Add applicaon
logic

Add database
fields/objects

Fig. 28.1 In-app extensibility use cases

• Ensure Stability After Upgrades: Customers’ and partners’ extension must con-
tinue to work after patches and upgrades, without any manual or automated after-
import activities.
• Enable Multilayer Extensibility: Multilayer extensions shall be supported in
terms of allowing customer extensions on top of industry extensions.
• Avoid changing SAP delivered artifacts: Modification of SAP standard objects
can be overwritten after updates and upgrades. Furthermore, using modified
functionalities cut off customers from new innovations provided with updates
and upgrades.

Solution Capability

In-app extensibility refers to extensions which can be implemented using predefined

enhancement point within the core application. The core as well as extensions run on
the same infrastructure allowing them to share the same database instance. The key
difference is that the extension in nonintrusive, which means that there is no need to
modify the core-software. Imagine extensions sitting on top of the core application,
like a VM sits on top of an operating system as illustrated in Fig. 28.2 (Saueressig
et al., 2021b).

Stability

Although extensibility offers a rich feature set and flexibility (even for
non-developers), it also needs to meet certain stability criteria. Extensions therefore
Solution Capability 437

SAP S/4HANA Cloud SAP S/4HANA on-premise

In-App Key-User
In-App Key-User Extension
Extensions
Traditional Extensions

Public Extension Model

Public Extension Model
CDS Views BAdl API

Modification
(not recommended)

SAP Artifacts SAP Artifacts

(not released) (not released))

Fig. 28.2 Extensibility mechanisms

need to be future-proof, simple to maintain, and easy to operate. It’s even more
important for software as a service product, because of the limited abilities users
have. In order to achieve these qualities, the development must be based on reliable
interfaces, simplicity, and decoupling. For interfaces to be reliable they need to be
technically and semantically stable across releases. Simplicity is achieved by
providing tools which are easy to use by the end user. Loosely coupled software
needs to be able to be updated without changing custom code, extensions aren’t
allowed to block any main software updates, logically and technically SAP
S/4HANA core and extensions are separated, custom extensions have to access
SAP S/4HANA through publicly released APIs only, and modifications of the
core code aren’t just not allowed, but not even possible.

Reliable Interfaces
To ensure the reliability of programming interfaces, like APIs, code enhancement
points, or VDM views, they need to be kept stable across releases. To achieve that,
only a few software artifacts are exposed to be extended, called, or referenced. In
SAP S/4HANA only released artifacts are viable for use or extension. Other objects
are hidden or visible for information purposes. Although useful for stability, only the
new cloud version of SAP S/4HANA relies on that practice. The classic on-premise
version allows for further modification, which could result in future compatibility
issues, if used incorrectly. As shown in Fig. 28.2 reliability is at risk in on-premise
systems, because extensions which aren’t implemented through the public extension
model could break after an update or modifications of SAP S/4HANA core.

Simplicity
Simplicity under SAP S/4HANA is achieved by generating technical objects, such as
OData services, SAP Fiori UIs, custom code, view extensions and associations, and
438 28 In-App Extensibility

database changes, by tools rather than requiring further interactions from users,
which leads to easy usability. The extensibility tools for the key user follow a no-
or low-code approach.

Loose Coupling
In SAP S/4HANA loose coupling is provided for custom artifacts created with key
user tools. To realize above-mentioned requirements, SAP S/4HANA and the
custom extensions are coexisting in a stable runtime. Lifecycle on the other hand
is separated to protect the SAP objects and allow future compatible development.
In the next sections different mechanisms of in-app extensibility of SAP
S/4HANA are explained.

Field Extensibility

Field extensibility describes the ability to add custom attributes to data within
applications. An example would be a remuneration statement with added lines for
company specifics. In SAP S/4HANA key user in-app extensibility uses SAP objects
to describe extensible applications. Those objects are used to describe structures of
SAP S/4HANA applications. To be extensible and available in key user extensibility
tools a given business object must be marked as such by an SAP developer through a
business context which points to that particular business object note. The business
context is also used to describe what is allowed to be extended in that note type.
Custom field extension refers to the capability of adding customer-specific fields
to a business context of an application in a one-to-one relation or adding SAP fields
that are available in tables and structures of the application. This approach is based
on extension includes as illustrated in Fig. 28.3. An extension include is an almost
empty include with a dummy field due to data dictionary (DDIC) restrictions. It is
shipped by SAP as an anchor point for enhancements. The include is part of all
necessary structures, for example, database, API structures, or service
implementations. All enhancement fields are part of DDIC appends, which are a
modification-free DDIC extensibility approach. The extension includes are the basis

SAP Structure

FIELD1

FIELD2

extension fields are

.INCLUDE INCL_EXAMPLE appended here INCL_EXAMPLE

… DUMMY_FIELD …

Fig. 28.3 Extension includes

Solution Capability 439

kation
Applikation Custo
Custom
EXT Authoring
terface)
(User Interface) Field UI
R R

PI
API Custom Field Backen
Backend
EXT
(Lokal, Remote)
Runtime Generat
Generator
R

CDS View E t ibilit Registry

Extensibility R i t
EXT
(Data Access)

Extens. Cust Field

Application
EXT Registry Metadata
Table

Fig. 28.4 Customer field extensibility

for the custom field extension which must explicitly be prepared by the application
as shown in Fig. 28.4. In this context database tables and DDIC structures must be
incorporated as extension includes to provide a stable anchor point for DDIC
appends. Custom fields will be then added via DDIC appends. ABAP code in the
application must generically transfer extension fields between structures/internal
tables via move correspondingly.
Extensible CDS views for training data must provide as so-called extension
include association to an extension include view. This is a CDS view on the database
table containing only the key fields and later the custom fields from the extension
include. The extension include view acts as a stable anchor point for CDS view
extensions and makes the extension fields accessible on extensible CDS views via
the extension include association. Custom fields will be added to the extension
include view as soon as they are added to the persistency. The extensible CDS
views will be extended when selected in the where used dialog of the Custom Field
UI as not all consumers are able to traverse the extension include association to
access the custom fields. The concept of field extensibility facilitates user to create
new own fields or extend the usage of existing fields. For example, as shown in
Fig. 28.5 on the user interface level the user is enabled for the following actions:

• Hide fields in a form, table, filter, hide groups, areas

• Add field to UI from field repository
• Rename labels of groups or fields
• Move field or groups, create new groups
• Combine fields into one line, split combined fields
• Define new filter and table variants
 440

Fig. 28.5 UI adoption based on field extensibility

28
In-App Extensibility
Solution Capability 441

Integration and Data Source

Integration extensibility is important to allow customers and partners to connect SAP

S/4HANA with other SAP or non-SAP systems like eCommerce solutions. It is
essential in order to build highly specialized systems and custom solutions. SAP
S/4HANA’s integration extensibility allows for adding custom fields into standard
APIs and exposing data through custom APIs as described in the last section. The
data source extensibility can be used to create, edit, and delete data source extensions
in order to enable the usage of existing fields in pre-delivered data sources. The data
source extension feature enables the key user to enhance UIs, form data providers
and reports by standard fields that the application did not provide there. The
additional fields are read only. Write access is not supported.

Custom Business Logic

Custom business logic is enabled by the before-mentioned extensibility mechanism

and aims to adopt software behavior. SAP S/4HANA offers a custom business logic
tool which enables users to create their own calculations and algorithms, and validate
certain SAP fields under their own criteria in which they can use several attributes,
states, and/or external resources (Fig. 28.6). Technically the custom business logic
extension is enabled via Business Add-Ins (BAdIs) which are object-orientated
enhancement points. The key feature of Business Add-Ins is that they enable users
to change the functionalities of well-defined business functions without making
changes to the source code. Business Add-Ins aren’t even limited to SAP
S/4HANA development, which makes them versatile to use. They can be also
integrated into customer application, which enables them to be customized by
other customer applications. In case of SAP S/4HANA On Premise the ABAP
tools like ABAP Eclipse can be utilized to implement Business Add-Ins. Thus,
sophisticated development concerning Business Add-Ins can be leveraged. In the
case of SAP S/4HANA Cloud, the implementation ability is restricted in order to
avoid destabilization of the transactional processes due to incorrect or inefficient
coding. Thus, only whitelisted ABAP statements are allowed, and no write
operations are permitted. Nevertheless, customers can create own enhancement
implementations by using ABAP for key users. They are able to implement their
custom logic, test it, for example, with predefined test variants, and create filter
conditions to define when an enhancement implementation is executed. Further-
more, customers can publish enhancement implementations to their test system, edit
enhancement implementations that have already been published, and also delete
enhancement implementations (Fig. 28.7).
442 28 In-App Extensibility

Fig. 28.6 Data source extension

Custom Business Objects

With custom business objects key users are enabled to manage data needed in
extensions or process logic, which can work intendedly of the contexts defined by
SAP S/4HANA. These objects give the need for new corresponding tables in the
database. Much like in object-orientated programming languages, custom business
objects can have a hierarchy with parent and child nodes, for example, for a
marketing scenario own database tables are used. Furthermore, custom business
objects can make use of user-generated, created, and updated OData services. Users
 Solution Capability

Fig. 28.7 Implementing custom business logic

443
444 28 In-App Extensibility

also can copy already published custom business objects, generate UIs based on
custom business objects, publish business objects, and edit published business
objects. Furthermore, they are allowed to create subnodes for one business object,
create custom logic on node level, reset business objects to their last published
version, and even delete custom business objects that aren’t in production yet. For
custom business objects no instance-based authorization is provided and also no read
access logging is supported. In addition, custom business object cannot be marked as
relevant for data protection and privacy. Therefore, they cannot be blocked or
deleted (Fig. 28.8).

Custom CDS Views

Custom Core Data Services (CDS) views build the foundation to create, read,
update, and delete (CRUD) operations, OData services, and SAP Fiori applications.
They are used to extend data models, custom analytics, and consuming data in
custom logic. In the corresponding custom CDS views key user tool, users are able
to build own CDS views based on publicly available CDS views for SAP S/4HANA.
Furthermore, it is possible to join several CDS views, perform calculations and
aggregations. The underlying concept for extensible CDS views is extension include
associations to an extension include view. This is a CDS view on the database table
containing only the key fields and later the custom fields from the extension include.
The extension include view acts as a stable anchor point for CDS view extensions
and makes the extension fields accessible on extensible CDS views via the extension
include association. Custom fields will be added to the extension include view as
soon as they are added to the persistency. The following example illustrates the
extension of CDS views:

// SAP-defined View:
namespace sap.orgmgmt;

view EmployeesView as SELECT from Employee

{
ID, name,
salary, // returns nested structure
address, // returns the association as itself
{ // resolves :1 association and creates a structured type
manager,
name as orgunitName,
} as orgunit
}

// Extension of SAP-defined View by customer “acme”:

namespace acme.orgmgmt;

@EndUserText.label: ‘Extended Employee View’ //adds a new label to the view

extend view sap.orgmgmt::EmployeesView
{
// A new customer-defined field is added:
acmeFlags,
// the SAP-defined element “name” is extended with a new label text:
@EndUserText.label: ‘Name of Employee’
extend name,
// SAP-defined structure “orgunit” is extended by the SAP-defined field “costcenter”:
extend orgunit { costcenter }
}
 Solution Capability

Fig. 28.8 Custom business object

445
446 28 In-App Extensibility

The extend view statement leads on the one hand to the enrichment of the
runtime object of the base artifact sap.orgmgmt::EmployeesView with the
extension elements. On the other hand it leads to the creation of the name acme.
orgmgmt::EmployeesView, which acts both as the name of the extension
artifact and as an alias for the extended view allowing access to the base artifact
together with all the extensions. This alias is equivalent to the effect of the following
statement: view acme.orgmgmt::EmployeesView as alias to sap.
orgmgmt::EmployeesView. The key user tool also supports exposing custom
CDS view as read OData service for external usage. Another way to make use of
Custom Core Data Services views is for the custom analytical queries which allows
users to search and create new queries. The key user tool facilitates adding or
removing custom fields in new queries. Additionally, it supports the creation of
restricted measures, hierarchies, calculated measures, and user input filters. Custom
CDS views can be leveraged as a data source on top of pre-delivered queries.
Custom CDS view allow users to implement external APIs which are exposed
with the OData protocol. The analytical scenarios make use out of cube or dimension
CDS views. The View Browser gives a list of available CDS views and enables users
to search and browse for views, view types, tables, and fields. The View Browser is
accessible as the business role SAP_BR_ANALYTICS_ SPECIALST and is usually
the starting point for custom CDS views (Fig. 28.9).

Custom Reusable Elements

Custom Reusable Elements are specified for custom code reuse. They enable users to
modularize and structure custom code using methods organized in custom libraries.
The most important features of Custom Reusable Elements are creation of new
custom libraries and adding methods to libraries. Furthermore, adding details to
those methods, testing of custom code, and saving/publishing custom code and
methods are supported. Additionally, Custom Reusable Elements supports custom
code lists which are reused in multiple custom business objects. A code list consists
of code values and their corresponding value descriptions—for example,
[‘31.12.2020’, ‘Date’]. Caution is advised when transporting a code list, because
they can’t be modified in any way afterward. The code value descriptions can also be
translated. Another important aspect is the template approach which lets users’
package and export extensions with the Export Extensibility Template App and
import them elsewhere using the Import Extensibility Template App. This approach
increases productivity with which users are able to develop certain extensions
(Fig. 28.10).

Extensibility Cockpit and Inventory

The Extensibility Cockpit is comparable with a single point of contact. It shows

users available in-app extensibility options of SAP S/4HANA Cloud at one place.
 Solution Capability

Fig. 28.9 Custom CDS views

447
 448
28

Fig. 28.10 Custom Reusable Elements

In-App Extensibility
Solution Capability 449

Extendable objects can be displayed for selected business contexts. Furthermore,

key users can list implemented extensions belonging to specific business context
objects. They can also find links to objects and extensions like custom fields, APIs,
and Core Data Services views. Extensibility Cockpit facilitates filtering on solution
scopes, scope items, or business contexts. It adopts the appearance of a result list by
sorting, grouping, and recording data. Furthermore, it allows to extend a search to
extensible objects and choose the extensible objects that shall be included in a
search. The Extensibility Inventory gives an overview of extensibility items and
displays associations or dependencies between them. Furthermore, it shows how
importing or exporting extensibility items affects other extensibility items. By
clicking on an extension item, users can view additional information about it: The
header, which contains the name, type, date of last change of an extension and the
user who performed it, and information whether the item has been deleted, imported,
and/or exported. Uses covers information about used extensions items by a given
extension item. Used by works in a similar fashion, but it shows which extension
items use the extension item in question. Change History gives a list of all changes
made to a given extension item. The Task Category shows information about which
category a given task is associated to. It can belong to deprecation, security,
functionality, performance, stability, or error category. Finally, Task Priority
shows information of whether an extension item is of low, medium, or high priority,
depending on the urgency with which the item needs to be reworked. Furthermore,
searching for names and descriptions of related extensible objects is supported.
Information about the availability of a structural or logic enhancement for a business
context is provided. Additionally, navigation to the SAP Best Practices Explorer for
details about a scope item is enabled (Fig. 28.11).

Lifecycle Management

One aspect of lifecycle management is transporting extensions into different systems

while remaining stable under mentioned criteria, whether it’s a quality system to test
or the production system. In the cloud variant of SAP S/4HANA the key user creates
extensions in the test and configuration tenant, which afterward are transported to the
production tenant. The Adaption Transport Organizer (ATO) is able to automatically
perform this process without needing any administrative input while keeping the
system stable. Another aspect of lifecycle management is the handling of SAP
S/4HANA updates. It’s demanded that all extensibility capabilities offered to
customers must continue to work after an SAP software update without manual
work, which makes updates independent of adaptions by the customer. For the
on-premise deployment of SAP S/4HANA users need to manage updates through
classical transport tools. Transport management can be used to export software
collections, while being independent of system upgrades. Extended objects can be
added in a software collection in quality system. To add dependent objects to a
software collection, they can be provisioned accordingly. Once exported through the
quality system, the software collection is imported into the productive system.
 450
28

Fig. 28.11 Extensibility Inventory

In-App Extensibility
Conclusion 451

Furthermore, users have the option to merge different software collections into one
software collection. Development objects are tracible, so the order of processed
nodes and custom business objects are transparent. Furthermore, users are enabled to
trace BAdl implementations or methods. Also, tracible are the values of input,
output, changing parameters of validations, determinations, actions, and duration
of execution. All those aspects are covered with the Custom Logic Tracing. To
protect certain objects or functionalities, access to them can be restricted by
associating them to catalogs through roles and authorizations. This is available for
Custom Business Objects, Custom UI, and Custom Analytical Queries. To maintain
roles and catalogs Identity and Access management applications can be used.

Conclusion

In-app extensibility is about extending the functional scope of SAP S/4HANA by

relying on predefined methods and tools. In contrast to modifications customer’s
extensibility is safeguarded and continues to work after updates and upgrades. SAP
S/4HANA offers a wide range of techniques to enhance the systems functionality
from database tables to business logic and user interfaces, all while remaining stable
under the criteria reliable interfaces, simplicity, and loose coupling. Key extensibil-
ity approaches were explained, for example, field extensibility, customer business
logic and objects, customer CDS views. Furthermore, the lifecycle management
requirements and solutions for extensibility were depicted.
Side-by-Side Extensibility
29

This chapter focuses on side-by-side extensibility concepts and frameworks which

allow customers and partners to develop decoupled software modules for SAP
S/4HANA. Particularly, developing dependent extensions and implementing own
custom/partner applications are explained. The general structure of the SAP Busi-
ness Technology Platform is described and illustrated with an example
implementation.

Business Requirement

Every customer has additional use cases for enhancing the functionality of their ERP
implementation. With extensibility for every specific use case an expert or even
people without technical know-how can develop their own enhancements. These
must be applicable for the cloud and on-premise ERP solutions. ERP systems are
patched and upgraded based on a fixed schedule to remove security vulnerabilities,
fix bugs, and improve experience by adding valuable new features. Thus,
innovations are also delivered with patches and upgrades. However, this can take
long and still may not meet the specific customer requirements so that extensibility
mechanism must be always available. There are two types of extensibilities provided
for SAP S/4HANA. The first one is in-app extensibility and the second one is called
side-by-side extensibility. The in-app extensibility realizes an easy implementation
for business requirements by key users. The key users don’t have to be technical
experts to implement simple extensions on their SAP S/4HANA system. The in-app
extensibility comes with web-based extensibility tools for simplified lifecycle man-
agement. The side-by-side extensibility aims on technical experts using SAP Busi-
ness Technology Platform (BTP) capabilities to extend SAP S/4HANA. By
consuming SAP Business Technology Platform features applications can benefit
from scalable technologies, for example, machine learning, analytics, or Internet of
Things. These services can be accessed and modularly implemented on nearly all
cloud-native programming languages. Side-by-side extensions are decoupled from

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 453
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_29
454 29 Side-by-Side Extensibility

Fig. 29.1 Side-by-side Refresh & mobilize

extensibility use cases user experience

Cloud native
for B2C & B2B
SAP Business
Process
Technology Plat f orm innovation
Side-by-Side Extensibility
Data Marts
& Analytics

Data Science
& Intelligence

IoT & Big data

SAP S/4HANA and run as a side car to it. Thus, extensions that cannot be
implemented using in-app extensibility are developed based on side-by-side exten-
sibility. Huge software components representing new business processes which are
not covered by SAP S/4HANA are an example where the side-by-side approach
shall be applied. Figure 29.1 summarizes key use cases for the side-by-side
extensibility.
Developers can build and test new user interfaces or mobile applications and may
use cloud services to integrate external (non-SAP) users through social media or
other channels. Technical experts are able to simplify enterprise processes and
workflows by accessing application logic through APIs. Furthermore, developers
can integrate their software with SAP Business Technology Platform applications
and third-party solutions. It is possible for applications to trigger predefined events,
like processes starting automatically or reporting functionalities if any sensor data
reaches a certain limit. Customers can also build new standalone apps for their
Internet of Things (IoT) infrastructure. This kind of application is independent and
does not need additional services from SAP S/4HANA. Events or services can be
triggered using APIs. The modularity enables highly scalable system infrastructures,
which are independent of the SAP S/4HANA product lifecycle. Services can be
activated or deactivated according to the customers’ requirements. Developers can
implement, test, deploy, and extend their applications with the SAP Web IDE, which
runs on SAP Business Technology Platform. Side-by-side extensions also support
hybrid scenarios in terms of implementing applications across the SAP S/4HANA
On-Premise and Cloud systems.
Solution Capability 455

Solution Capability

The technical foundation for side-by-side extensibility is SAP Business Technology

Platform, which is a platform-as-a-service (PaaS). It is used to develop and integrate
new applications or to extend existing applications through several extensions.
Applications created within the SAP Business Technology Platform are available
in the mentioned cloud computing environment which is managed by SAP. The
platform contains many capabilities, for example, services focusing on security, data
and storage, or analytics. With Java-based Software Development Kits (SDKs), the
development of cloud-native applications is enabled. Customers can use SDKs to
build their own application and cover their specific requirements. SAP partners can
develop applications to sell them on the app store.

SAP Business Technology Platform

The SAP Business Technology Platform (BTP) is the foundation for side-by-side
extensibility. Developers of applications and service providers build on SAP BTP as
the single, unifying platform that provides the foundation of our cloud offerings to
build, integrate, and extend. Over time, all capabilities in the intelligent suite will be
consumable through this common platform, especially those that provide a benefit
across products. To facilitate this, SAP BTP consists of three main parts, from an
architectural perspective, as shown in Fig. 29.2: application plane, data plane, and
foundational plane.

Plane Services
From an architectural perspective the application plane provides the client-facing
entry point to the intelligent suite. The focus here is to achieve a harmonized
approach to exposing the business domain model, business domain services, and
flexible business processes. Consistent building blocks like user interface
components, experience components (e.g., one-inbox), a central entry point, a
marketplace, SAP Graph, and the underlying SAP One Domain Model all lead to
a consistent user experience for a perceived homogeneous product suite. By being a
centralized entry point, it also allows us to rethink our customer experience. This
plane also enables a standardized approach to customization and extension. From an
architectural perspective the data plane provides semantic and consistent access to all
enterprise data across SAP systems/services, manifesting core principles of enter-
prise data management in the cloud. It combines SAP’s entire portfolio of data-
related cloud services into a single logical plane to provide, integrate, derive, and
analyze data to enhance the value for the customer. It contains data management
solutions, like managed SAP HANA services, SAP Analytics, SAP Data Intelli-
gence, and SAP Master Data Integration. Data management technologies are mainly
consumed by applications as managed services. Therefore, the data plane
implements cloud qualities including elasticity, high availability, and cost efficiency
to achieve the needed acceptance by applications. From an architectural perspective
456 29 Side-by-Side Extensibility

SAP Business Technology Platform

Cross Topics, e.g. Security, Lifecycle Management, Extensibility

Application Plane Data Plane

Business Machine
Application Experience Learning & AI
Domain Model
Cockpit Services
& Services
Data
Management &
Analytics
Integration
SAP Graph Marketplace
Suite
Data
Governance &
Compliance

Foundation Plane

Business Integration
Technical Re-
Process Kernel Services Foundation
use Services
Services

Service
Runtime Container & Development
Foundation &
Environments Kubernetes Services
Mesh

Fig. 29.2 SAP Business Technology Platform—functional architecture

the foundational plane establishes a common baseline of reusable services, as well as

an open approach to grow an organic ecosystem of services. This plane includes the
Kernel Services (identity service, audit log, event bus, subscription management,
data privacy, and more), but also technical reuse services that drive synergies across
the platform. The core of the foundational plane is a service management infrastruc-
ture, combined with a secure mesh for cross-service trusted communication. We
strive for uniformity of the services with guardrails on API-based and event-based
integration, but also UI integration. We expect service providers to offer cloud-
native SLAs for their service, meaning committing to both measurable KPIs and a
superior consumption experience (time-to-value) and successfully fulfilled quality
criteria.

Development Services
Development services support the developer from SAP and its ecosystem. Providing
solutions for developers who range from professional cloud-native developers to
casual or citizen developers, this includes programming paradigms (ABAP in the
Solution Capability 457

cloud, CAP, RAP, etc.), SDKs, and a variety of development tools. Developers must
target high availability, elasticity and scalability, pay-per-use consumption and trial,
operability of services, etc. To avoid reinventing the wheel, best practices and
patterns embodied in the development services result in higher development pro-
ductivity, while aiming to remain flexible to break out where needed. SAP BTP also
provides three distinct yet open programming model layers that define tool sets for
different developer personas based on different needs and skills: A flexible cloud-
native model with full control, a high-level coding model that offers conveniences
for common business application development tasks, and a low/no-code model for
citizen developer that features graphical extension, configuration, and customization
capabilities. These layers complement each other and allow the combination of tools,
such as the progression from low code to pro code. For the side-by-side extensibility
the SAP BTP SDK, SAP Cloud SDK, and SAP S/4HANA APIs are the key building
blocks. The SAP BTP SDK allows developers to create generic extensions with
taking advantage of SAP backend datasets held in the SAP BTP system. Example
use cases are expense reporting applications, business process workflow
applications, or inventory management applications. The SAP Cloud SDK is
based on the SAP BTP SDK and provides additional knowledge on the SAP
S/4HANA processes and objects to build faster side-by-side extensions. It is a tool
set for developers, which helps interacting with SAP S/4HANA when building
cloud-native extension applications. It consists of various libraries (Java, JavaScript,
ABAP) to support different types of programming languages. The SAP Cloud SDK
provides predefined templates for specific projects to accelerate the development of
extensions. The SAP S/4HANA APIs enable interactions between multiple software
applications. It is available for both SAP S/4HANA Cloud and On Premise. SAP
S/4HANA is used by developers to connect their enterprise with other resources. As
a digital core it contains all applications offering programming interfaces for
interaction.

Application Development

For side-by-side extensibility customers can develop applications or extensions for

specific use cases. These applications are technically decoupled from SAP
S/4HANA and integrated with APIs. Different domains must be considered in this
context, for example, integration of UIs, users, processes, events, and data. The side-
by-side extension programming model is comparable to an independent
microservice consuming various contents from SAP S/4HANA. A custom-made
application mainly consists of three layers: the UI layer, the application layer, and
the database layer. The UI layer shows a well-designed interface of specific business
processes to the user. The application layer covers the business logic and connects to
SAP S/4HANA with APIs. The database layer contains the application data which is
exclusive for the extension. Dependent extensions and customer applications can be
implemented based on this approach as illustrated in Fig. 29.3.
458 29 Side-by-Side Extensibility

UI UI UI UI

Logic Logic Logic Logic

Database Database DB

Dependent Extension Custom Application

Fig. 29.3 Application development types

Development of Dependent Extensions

Technical experts develop dependent SAP BTP extensions if specific business
process steps must be adapted. This adaption may result in a custom-designed user
interface or in renewed business logics. A dependent extension consumes already
existing assets of SAP S/4HANA as well as artifacts created based on in-app
extensibility, for example, new OData service, new logic, or new data persistency.
With the SAP Fiori launchpad it is possible to integrate the custom-built side-by-side
extension as a new tile in the launchpad. The SAP Fiori launchpad is a landing page
for all SAP Fiori applications as well as for classic UIs like SAP GUI. There are
many use cases for dependent extensions. For example, customers can create proxy
applications to secure the SAP S/4HANA system from the Internet. It is also possible
to develop preprocessing and postprocessing applications. These can be helpful if
data must be collected before a business process can be started in the SAP S/4HANA
system or if the business process needs to trigger specific events based on the outputs
of completed process steps.

Development of Custom Applications

Custom applications are running side by side on SAP BTP and are typically self-
contained. They are used to provide new UIs for business processes, to deploy new
business logics and also to create a new data persistency on SAP BTP. With Core
Data Service (CDS) views application data can be replicated from SAP S/4HANA to
SAP BTP. Events from SAP S/4HANA could also be consumed. The custom
application could require new in-app extensions like new OData service or new
logic and data. Just like the dependent extension, this application needs the SAP
Fiori launchpad to integrate itself as a new tile in the SAP Fiori launchpad. There are
many use cases for custom applications. They can be completely new to simplify a
difficult business process, or they can substitute already existing business processes
or single steps of these. In addition, businesses can build analytic applications. This
is useful when connecting multiple data sources to one analytical database. Side-by-
side custom applications are standalone apps.
Solution Capability 459

Fig. 29.4 Changing sales order in SAP S/4HANA and displaying sales order in SAP BTP

Development Example

The use case of the example application is about triggering an event when sales
orders are updated in SAP S/4HANA and displaying the changes in the SAP BTP
extension application as illustrated in Fig. 29.4. The user can update, for example,
the Inco. Location1 field of a sales order from San Jose to San Francisco. Thus, a
change event is triggered in SAP S/4HANA. The example extension on SAP BTP
shall receive the change event and notify all responsible employees about the update
of the sales order. The extension application shall show the modified items in a
sortable list as illustrated in Fig. 29.4. By clicking on an element, full details of the
sales order shall be provided to the user of the extension.

Project Setup and Structure

To retrieve all object details from SAP S/4HANA Cloud and to view it in the SAP
BTP application, the event trigger is used. The event can be by the API
SalesOrderChanged, which can also be renamed. On top there is an SAP Fiori
user interface as frontend. The application can be developed by using the SAP
Business Application Studio. This framework contains template files for specific
application types. The business system must be registered to connect the example
extension with the respective accounts. The extension application requires instances
for several services: SAP S/4HANA Cloud Extensibility and Messaging Events
services. To access API endpoints, developers must request their own secret API
keys on the SAP API Business Hub. To find the correct API key for this project, it is
460 29 Side-by-Side Extensibility

recommended to search for Sales Order API on the SAP API Business Hub. This
API must connect with the SAP S/4HANA Cloud Extensibility service instance
Sales Order Integration. Developers must choose a suitable runtime for their project.
In this example it is the SAP Cloud Foundry. As development framework this project
uses the SAP Cloud Application Programming (CAP) model, which includes
languages, libraries, and tools for building enterprise apps. The SAP Business
Application Studio allows developers to create applications through application
wizards, which use predefined templates to easily create a new project. The devel-
oper must configure some general elements like the name of the application,
language, API key connections, or destination paths for local testing purposes. By
default, the connection is set up to a so-called sandbox, which is a secured testing
environment container.
Any project created with the SAP Business Application Studio has a predefined
file structure including all required files, methods, and settings for the app to run.
Figure 29.5 shows the general project structure as displayed in the SAP Business
Application Studio. The project example-extension-app contains multiple directories
and files. These files contain important information about connection and database
configurations, the installed packages, and their versions. Furthermore, security
restrictions, file paths, and dependencies are covered. Developers can follow this
project structure to get a general overview of the project itself, and they can add,
remove, or modify files. The project structure depends on the chosen template,
which means that not every file shown in Fig. 29.5 is generated in every template

Fig. 29.5 General project

structure PROJECTS

example-extension-app
app
db
srv
.env
.gitignore
.yo-rc.json
em.json
mta.yaml
package.json
README.md
test.http
xs-security.json
Solution Capability 461

the SAP Business Application Studio offers. The README.md file contains a
Getting Started Guide for a quick project overview. The most important files and
directories will be described in the next sections.

Root Directories
The following root directories have to be considered:

• Directory: app—The app directory contains content for UI frontends, mainly for
the SAP Fiori UI. For example, this directory contains key HTML files with
general frontend structures of the project website.
• Directory: db—This directory contains database definitions and files for
configuring the data model and other native models for the SAP HANA Cloud.
• Directory: srv—The srv directory contains business logics and files for
connecting with external services, so applications can access data from these. It
also contains the service-catalog.cds file with its entities. CDS files are design-
time source files and contain definitions of the objects which the technical experts
have to create in the SAP HANA catalog. In the following source code, you can
see the sales order entity, which is available through using the API (Fig. 29.6).

For accessing data through APIs, there are script files, for example, the catalog-
service.js file, which handle (database) connections, actions, and which can trigger
specific events, like triggering a notification when a Sales Order element gets
changed (see the following source code) (Fig. 29.7).

Fig. 29.6 Source code for

srv/catalog-service.cds srv/catalog-service.cds

...
@readonly
entity SalesOrders
@(restrict: [{ to: ‘Viewer’ }])
as protection on
API_SALES_ORDER_SRV.A_SalesOrder {
SalesOrder,
SalesOrganization,
DistributionChannel,
SoldToParty,
IncotermsLocation1,
TotalNetAmount,
TransactionCurrency
};

entity SalesOrdersLog
@(restrict: [{ to: ‘Viewer’ }])
as select * from db.SalesOrdersLog
;
...
462 29 Side-by-Side Extensibility

srv/catalog-service.js

...

this.on(‘READ’, SalesOrders, async (req) => {

try {
const tx = s4hcso.transaction(req);
return await tx.send({
query: req.query,
headers: {
‘Application-Interface-Key’: process.env.ApplicationInterfaceKey,
‘APIKey’: process.env.APIKey
}
})
}
catch (err) {
req.reject(err);
}
});

...

Fig. 29.7 Source code for srv/catalog-service.js

Root Files
The following root files have to be considered:

• File: .env—This file is important for local development purposes. Developers can
put sensible data like secret API keys in there, and if they publish or upload their
project, this file will get excluded as the definitions of file exclusions are stored in
the .gitignore file.
• File: em.json—The em.json file is an enterprise messaging file in JSON format. It
contains the configuration for how the enterprise messaging instance is set up.
• File: mta.yaml—This file describes the project structure and relationships. It
defines all the different services and modules that are being used, how they
communicate with each other, and how they will work together. An example of
the HTML5 module is shown in Fig. 29.8.
• File: package.json—The package.json contains project metadata and configura-
tion elements for different modules and services, for example, authentication or
messaging services. An excerpt can be viewed in the source code of Fig. 29.9.
• File: test.http—This file contains useful statements and requests for quick local
testing purposes. As the example in Fig. 29.10 illustrates, the file contains
predefined requests for different use cases with standard authentication functions.
Authentication contains multiple roles and rules, the standard role (called Joe) has
minimum permissions, for example, only to read data.
• File: xs-security.json—Concerning the user authentication, the xs-security.json
file is crucial as it defines different scopes of user authentication models which
can be declared and used as templates. Figure 29.11 shows a corresponding
example.
Solution Capability 463

Fig. 29.8 Source code for

mta.yaml mta.yaml

...

# HTML5 APP REPOSITORY APP HTML5 MODULE

- name: example-extension-app-html5
type: html5
path: app/resources/html5
builder-parameters:
builder: custom
commands:
- npm run build
supported-platforms: []

...

Fig. 29.9 Source code for

package.json package.json

{
“name”: “example-extension-app”,
“version”: “0.0.1”,
“description”: “Example Application”,
“dependencies”: {
“@sap/cds”: “^4”,
“@sap/audit-logging”: “^3”,
“@sap/hana-client”: “^2”,
“@sap/xb-msg-amqp-v100”: “^0.9.48”,
“@sap/xsenv”: “^3”,
“@sap/xssec”: “^3”,
“passport”: “^0.4.1”,

“cf-nodejs-logging-support”: “^6”,
“express”: “^4”
},

...

Decision Matrix

Customers using SAP BTP for side-by-side extensibility must not take care of
update routines anymore. The extensions are decoupled of SAP S/4HANA core
with APIs and can be updated technically independently. Conversely, more flexibil-
ity is provided regarding lifecycle management. This advantage is not given for
closely coupled extensions which usually should be better implemented on the SAP
S/4HANA platform. SAP BTP is a platform-as-a-service offering which means that
the lifecycle and operations of the platforms are managed by SAP. Thus, customers
can consume the technology without being responsible for updates and upgrade
tasks. Typically, SAP BTP has only one current version which gets updated every
3 months so that all needed libraries are updated regularly. SAP is responsible for the
464 29 Side-by-Side Extensibility

test.http

...

Send Request
GET http://localhost:4004/catalog/Sales
Authorization: Basic joe:

#-----

Send Request
POST http://localhost:4004/catalog/Sales(1)/CatalogService.boost
Authorization: Basic joe:
Content-Type: application/json

...

Fig. 29.10 Source code for test.http

Fig. 29.11 Source code for

security.json xs-security.json

{
“xsappname”: “example-extension-app”,
“tenant-mode”: “dedicated”,
“scopes”: [
...
{
“name”: “$XSAPPNAME.Admin”,
“description”: “Administrator”
}
],
“role-templates”: [
...
{
“name”: “Admin”,
“description”: “Administrator”,
“scope-references”: [
“$XSAPPNAME.Admin”
]
}
],
...

operations of SAP BTP but also for continuous availability. Such kind of obligations
are defined in a service level agreement (SLA). Therefore, customers must not care
about critical errors, and SAP Support team must resolve issues. With the side-by-
side extensibility, customers can build, test, and integrate their own applications and
extensions. By using templates or predefined code snippets, technical experts can
build business applications based on best practices efficiently. Git can be integrated
as a software for version management. Developers can work together on their project
Solution Capability 465

Extensibility Pattern SAP S/4HANA (In-App) SAP BTP (Side- by-Side)

Adapt existing Fiori UI J F

Create a custom user interface J F
Create a custom forms/ email template J F
Create a custom query J F
Add custom business logic J F
Create custom fields J F
Create custom business objects J F
Develop dependent extension F J
Develop your own custom application F J
Consume existing 3rd party apps F J
User Interface Integration J J
User Integration J J
Rules & Workflow J J
Events Integration J J
Process Integration J J
Data Replication J J

Fig. 29.12 Decision matrix

without any restrictions, because using SAP BTP every developer is able to own
their instance. Being not restricted in development simplifies building extensions, for
example, if a project has multiple branches, they can be easily merged. The total cost
of development (TCD) can be reduced by taking advantage of SAP BTP and its SAP
S/4HANA Cloud SDK. Developers and technical experts can use very time-saving
features like third-party extensions to build their application. Less time in develop-
ment means reduced costs, and with its simplified processes, also the effort to
develop an application is decreased. The decision to use SAP BTP does not only
have advantages but also drawbacks. The first disadvantage is its pricing. Customers
must pay the platform-as-a-service licenses per user. The subscription relates to a
fixed period of time; typically the period is 1–3 years long. Code snippets of
on-premise systems cannot be copied and pasted right into SAP BTP. The code
must be adapted to the platform; otherwise there will be syntax errors. It is not so
easy for ABAP developers to reuse their previously backward compatible code and
projects. However, this might be changed with embedded ABAP in future. As
indicated in the table below, important to outline is that side-by-side approach
shall be used for loosely decoupled and self-contained huge solution components;
otherwise the in-app extensibility should be applied (Fig. 29.12).
In-app extensibility helps to enrich the core of functionalities, focuses on
company-owned business documents, and offers variants of standard processes
and business logics. The side-by-side extensibility is based on SAP BTP as well as
third-party applications. Technical experts can integrate their dependent/custom
applications to SAP S/4HANA. Developers can extend business core processes by
triggering events before and after a certain process. It is also possible to develop
custom standalone applications, which do not need any other services to run
properly. These can be used, for example, in the Internet of Things (IoT).
Digitalizing of business and sourcing out local resources to the cloud is an important
466 29 Side-by-Side Extensibility

trend. Customers mainly want new solutions, new software for their specific use
cases; they don’t want new software systems which act like those they already have.
If a business changes, easily cloud customers can react to new market trends.

Conclusion

The side-by-side extensibility adds value to business processes. It simplifies exten-

sion and application development and reduces the costs of development by taking
advantage of the SAP S/4HANA Cloud SDK. Technical experts can reuse assets as
well as third-party extensions offered by SAP BTP, which is a platform-as-a-service.
SAP BTP consists of application, data, and foundation plane. It enables the imple-
mentation of dependent extensions and custom applications. These are technically
decoupled from SAP S/4HANA. Customers can access their data from everywhere
and from any device as long as they have Internet access to securely connect to SAP
BTP. However, in addition to the advantages, certain disadvantages should not be
neglected. Using the platform-as-a-service can be expensive for small businesses and
requires also additional developer know-how. Key decision criteria for applying
side-by-side extensibility are to aim for implementing a huge self-contained software
solution which is loosely decoupled from SAP S/4HANA.
User Experience
30

This chapter focuses on the user experience concepts and frameworks of SAP
S/4HANA. Particularly, user interface design paradigm for consistent, integrated,
and intelligent business applications is explained. Additionally, the architecture and
development tools for user experience are depicted. First, the theoretical foundations
of user experience are considered. From these the most important rules are derived
that should be considered when developing user interfaces.

Business Requirements

People often think of user experience (UX) as something emotional rather than
rational, making it difficult to create a business case for investing in good user
experience. But in fact good user experience does have a monetary value, on top of
the clear human value of making people happier. For example, a good user experi-
ence helps improve productivity, since people can get more done with system—
ideally not just because they are more efficient, but also because they are more
effective, because the system guides them with intelligence to what needs their
attention most. Another important aspect is data quality: incorrectly entered data
costs a lot later on in the process, so ensuring good data quality right from the
beginning with a good user experience saves all these later data corrections. Easy-to-
use software hardly needs any training, so significant training costs can be saved and
subsequent support desk costs. If end users are included in the implementation, and it
is ensured that the user experience suits their needs up front, the number of change
requests from users requesting new or different features is decreased—changes to a
deployed UI are more expensive than changes made beforehand. Also, user errors
will be reduced—decreasing costs due to poor data quality and also support desk
costs. On top of these quantifiable benefits, a good user experience brings clear
human value benefits too—which are particularly important these days, when
companies vie to attract the best talent, who want to work with cool modern tools
rather than unattractive ones. A good user experience results in higher user

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 467
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_30
468 30 User Experience

satisfaction, allows inclusion of all employees, also those with disabilities, by

supporting accessibility, and also helps ensure that people within the company
actually use the software, rather than, for example, keeping data separate on their
desktops as long as possible. If the applications are used by customers, then of course
a good user experience will help build and increase customer loyalty. Finally, as an
IT department, providing business units with software with a good user experience
will help strengthen the relationship with them, since IT is providing software that
their teams enjoy using.

Term Definitions

ISO 9241 is the fundamental series of standards of the International Organization for
Standardization, which includes both the terms and the concepts regarding usability
and user experience. This standard is used to derive the concept of human-centered
quality, which plays a central role in the definitions of usability and user experience.
The quality of a product or service is one of the key sales factors and is mostly
divided into technical and human-centered quality. The human-centered quality is
defined in the German version of the ISO 9241 standard—DIN EN ISO 9241-220 as
the degree of fulfillment of the following dimensions in an interactive system:
Usability, user experience, accessibility, and avoidance of harm from use. Many
factors impact the human-centered quality, such as understanding of the involved
target groups or the precise definition of objective criteria for measuring and
evaluating user experience. Usability is a characteristic of interactive systems and
describes the extent to which specific users can interact with the system effectively,
efficiently, and satisfactorily. Effectiveness refers to the accuracy and completeness
with which the target groups achieve their goals. An example of effectiveness in an
ERP system is that a business user can maintain the goods correctly in the Ware-
house Management. Efficiency, on the other hand, is based on the cost-benefit
principle and attempts to achieve maximum output with minimum effort. Looking
at the previous example, this means that the business user can process the orders
using the ERP system with minimal effort, in the shortest possible time, without
additional financial or material resources. The last aspect of usability is the satisfac-
tion of the user groups. It deals with the physical, cognitive, and emotional reactions
of the target groups that arise during or as a result of using the system. In particular, it
addresses the needs and expectations of users and measures the extent to which they
have met. Applied to the example, the business user’s satisfaction would be high if
the maintenance process is completed without error messages, delays, or other
disruptive factors. The tasks relating to usability and their improvement can be
derived from the explained aspects. On the one hand, a usability engineer needs to
know its users, their tasks, and their application context. On the other hand, the
usability engineer must use this knowledge to adapt the functional scope of the
system to the target group and thereby develop the processes and procedures from
the user’s perspective. The user experience (UX) includes a user’s perceptions and
reactions resulting from the use and/or expected use of an interactive system. In this
Business Requirements 469

Stakeholder Interacon
Research Design
Informaon
Design
User
Research
Industrial
Design
Usability
Service
Design

Human
Visual
Factors
Design

Content
Management Branding

Innovaon

Fig. 30.1 User experience spaces

sense, UX is an extension of the objective concept of usability with a subjective

dimension that reflects the user’s view of the product. This includes both
the expectations of the users and their experiences after the actual interaction with
the system. The CPUX-F curriculum, which is based on ISO standard 9241, clarified
the difference between usability and user experience. User expectations describe all
personal perceptions prior to actual use, while satisfaction is generated from
experiences during or after use. On the other hand, the user experience of an
interactive system is divided into three areas that are interdependent and complement
each other, namely design, research and optimization, and communication as
illustrated in Fig. 30.1 (Robier, 2016).
In addition to usability and UX, accessibility is considered as a human-centered
quality. This aspect is important for development as additional requirements must be
taken into account. The ERP system must operate effectively, efficiently, and
satisfactorily also for restricted groups. As a result of one or more physical
impairments (e.g., auditory or visual), the ERP system should offer, for example,
different font sizes or color settings or various sound volumes.
470 30 User Experience

Relevance of UX

In recent years, the user experience has become increasingly important to the
company’s success because it influences many internal and external factors. These
can be both monetary and emotional. The monetary aspects encompass all
dimensions of the magical triangle of project management—both the direct costs
and the time and quality that have an immediate impact on costs. The next table
summarizes the impact of good user experience.

Time Costs Quality Emotional

• Productivity " • Design and redesign/ • Data quality " • Usability "
• Onboard time # development costs # • Traffic " • User and customer
• Development • Requests for change # • Service error # satisfaction "
time# • Support costs # • Learnability " • Inclusion "
• Maintenance costs # • Customer retention "
• Teaching expenses # • Resistance to software #
• Documentation costs# (user acceptance ")
• System trust "
• Customer
recommendations "

A good user experience is based on human-centered quality and is thus fully

aligned with users’ workflows and needs, which leads to an immediate increase in
workplace productivity by avoiding unnecessary clicks, hints, or error messages.
During the definition of the requirements, the possible sources of error are identified
in the best case and eliminated by the design, which results directly into the reduction
of the operating errors. In addition, these standardized process flows improve data
quality and traffic by collecting data faster and more accurately. The accompanying
documentation during the requirement analysis and during the development of the
UI can reduce documentation and development costs as well as the maintenance and
support costs and change requests. A consistent design significantly shortens the
time required to learn the software, making it easier to use and thus saves teaching
expenses (training, working time, documents) for companies, but also reduces the
development time and savings of design and redesign costs because proven
components are used. The emotional effects of a good user experience are built on
the monetary ones. If the user experience is good, the user experience increases,
which increases both user and customer satisfaction, leading to better customer
retention in the long term. Another aspect is that trust in the system increases over
time and reduces internal company resistance to the software, as major changes do
not take place. User experience enhances inclusion—this does not marginalize or
prevent system users from working. All of these factors lead to positive feedback and
increasing customer recommendations that are essential for the success of the
company. There are computational formulas provided that enterprises can use to
calculate the savings and profits through user experience. In general, the savings
from user experience consist of three dimensions (Robier, 2016):
Solution Capability 471

1. Cost due to error ¼ (number of errors)  (Ø development time)  (employee

costs)  (number of employees)
2. Development and maintenance costs ¼ (number of changes)  (Ø hours/change)
 (developer wage)  (4 if too late)
3. Costs resulting from increased productivity ¼ (time saving)  (employee costs)
 (number of employees)

As a result, the user experience has a high potential for savings, especially in
applications such as the ERP systems, because they are used by many user groups
and consists of thousands of transactions with respective user interfaces.

Solution Capability

The user experience concept of SAP is called SAP Fiori and is applied to all SAP
software products with the aim of enabling the user to work easily and efficiently.
Started in 2013 as a collection of applications with a new design, SAP Fiori has
grown over time into an entire design system, which now includes a wide range of
role-based features on multiple and different user devices. As an interface to the
dimensions—people, economy, and technology—SAP Fiori aims to reduce unnec-
essary complexity and thus sets the modern standard for optimal user experience in
SAP S/4HANA. Over the last 10 years SAP S/4HANA development has increas-
ingly brought people, that is, the end users, into the equation. SAP has established a
user-centered, design-driven development approach, where so-called design gates
have to be passed to ensure that the necessary end-user research has been done and
that the application design follows the SAP Fiori design guidelines. User centricity
means being inclusive and taking care of all users, also those with disabilities. SAP
Fiori is the single point where business and technology come together to best support
users, helping them get their work done more easily.

SAP Fiori Design System

The goal of SAP Fiori is to ensure a uniform and qualitative user experience across
all systems, thus differentiating their products from the competition. To achieve this
coherence, the design system is based on certain core principles and values that are
derived directly from the company’s objectives and code and, on the other hand,
from best practices that ensure the quality of the development processes. Practices
conclude aspects like ensuring that user research is done, personas are defined, and
guidelines are applied. The SAP Fiori design system allows us to provide the SAP
Fiori user experience for a wide variety of technologies as shown in Fig. 30.2.
SAP Fiori aims to reduce software complexity based on five design principles:

1. Role based: The design or system development is based on specific roles within
the company, such as business employees or accountants. This principle can be
472 30 User Experience

Design System

Values
Principles Role-based Adaptive Simple Coherent Delightful
Practices Designed for Adapts to multiple Includes only Provides one fluid, Makes an
you, your needs, use cases and what is intuitive experience emotional
and scenarios necessary connection
how you work
Design Languages
• Look & Feel
• Controls & Floorplans Web Native Mobile Conversational
• Common Functions
• Guidelines & Stencils

Technologies

SAPUI5 iOS Android Other Technologies

Fig. 30.2 SAP Fiori design system

seen as a deepening of the human-centered quality described above, because the

design is realized specifically for the workflows of a clearly defined target group
which is defined here based on responsibility as role. Thus, role based means that
the roles are considered which business users have, such as Accounts Receivables
accountant, or Internal Sales representative, and the applications are designed for
people in these roles.
2. Adaptive: Based on this principle, the applications that run on different devices
such as notebook, tablet, or smartphone deliver the same user experience across
multiple scenarios and use cases for the end user. This requires that they not only
fulfill the requirement that they are responsive, but also allow teams to simplify
the applications for mobile devices. Thus, adaptive means that applications can be
used on different form factors such as desktop, tablet, or mobile phone. But
adaptive goes beyond pure technical responsiveness, that is, ensuring that the
same UI will run on mobile as well as desktop, by also allowing teams to build
dedicated versions of desktop apps for mobile use cases.
3. Simple: This aspect can best be explained using the 2/20/200 s principle,
according to which a user can recognize the status (situation) within 2 s, either
good or bad. In about 20 s, the user should be able to identify the causes for this
result, and in 200 s, the user should be able to see the exact reasons behind this in
the form of detailed information. The screen should therefore always be minimal-
ist, ordered, and contain only the most important information, but also serve as a
fast access point for detailed information. Simple is easily said but difficult to do:
Avoiding clutter on the screen, keeping only the important information in focus,
having progressive disclosure to give users access to details as they need them.
4. Coherent: It is in human nature to get used to products and behaviors quickly. For
this reason, users must always feel familiar with the system when operating the
system. This can be achieved by avoiding repetition (consistent) and no gaps or
illogical jumps (coherent) during use of different apps. Thus, coherent means that
users of many applications feel that they all belong to the same family, that is,
they behave consistently, and they feel coherent.
Solution Capability 473

5. Delightful: The use of the software must be fun for the user to be able to build a
positive emotional relationship with it. Non-functional aspects such as nice
animations can help here, as an example of pure UI aspects which have nothing
to do with features and functions for supporting the business. Thus, delightful
means that users enjoy using the UIs, that they have a positive emotional
connection to the software.

The SAP Fiori design system includes design languages for dedicated
technologies: Web, native mobile, and conversational. Each design language
specifies the look and feel, controls and floorplans, and common functions, and
includes guidelines and stencils for designers and developers. SAP Fiori can be built
using many technologies, with SAPUI5 being SAP’s reference HTML5 web tech-
nology. There are two native mobile design languages: one for iOS and the other for
Android. Existing products which have been built with other technologies cannot
simply throw their UI technologies away and rebuild everything with UI5, so also
other technologies are supported in providing an SAP Fiori user experience. Tools
and reusable web components are provided to help development teams enabling a
uniform user experience across all SAP S/4HANA applications.

SAP Fiori Design

SAP Fiori has evolved and improved continuously since 2013. With SAP Fiori 2.0 in
2016, a simple Web-based application for support cases became an application for
the core functions in the company. In the following, SAP Fiori for iOS and Android
was introduced, and since 2019, SAP Fiori 3.0 offers the comprehensive whole and
is based on three properties—consistency, intelligence, and integration.

Consistency
Consistency means that the UI across all products is harmonized and unified by
certain rules. These rules define the holistic design of the products, such as colors,
themes, fonts, icons, layout (light and dark mode), as well as terms and settings. The
aim is to provide the user with a continuously identical look and feel when
interacting with the different SAP S/4HANA applications. SAP Fiori tries to solve
the different semantics and design in the past, for example, in the shell header bar by
unifying and optimizing the shell. This provides a comprehensive navigation option
that enables the user to navigate anywhere and search across all applications using
the search bar. Consistency is always worth keeping to a high level because it
reduces errors, accelerates the speed at which users work, and therefore improves
motivation in the workplace. The SAP Fiori Elements play an important role here
because it enables to design recurring UI patterns such as lists or evaluations in a
uniform way as shown in Fig. 30.3. SAP Fiori compresses everything that is relevant
for a specific role using the Spaces and Overview Pages, whereby the various
sections and tiles enable a minimized overview of the many functions.
474 30 User Experience

List Report

Object Page

Fig. 30.3 SAP Fiori Elements

Solution Capability 475

Overview Page

Analytical List Page

Fig. 30.3 (continued)

476 30 User Experience

Flexible Column Layout

Fig. 30.3 (continued)

Intelligence
The intelligence of a system means that the system independently analyzes data and,
on the basis of machine learning (ML) and artificial intelligence (AI), generates and
displays recommendations and tips for the user over time. The goal here is to
optimally guide the user and focus the attention on the highest priority tasks, for
example, by notifications. SAP Fiori offers not only these notifications, but a wide
range of other AI design patterns such as explanations, matching, rankings,
recommendations, ideas, and actions for dealing with the given situation but also
predictions and forecasts that facilitate the user’s workflow. Figure 30.4 shows how
intelligence works at SAP in the area of procurement. The overviews by main topics
and the multiple information blocks established in SAP Fiori are intended to provide
up-to-date and helpful information and suggestions for solving problems—which are
compiled using AI and scoring models. Here, in the role of a Procurement Manager,
it can be seen at a glance that the off-contract spend is quite high, that there are still
overdue purchase order items given, and that the spend variance in procurement is
quite high. To understand these facts, the user can choose the selected tile and then
view the detailed information about the specific block.
If the Procurement Manager wants to know why the off-contract spend is so high
and which materials are causing this, the person can navigate to the Monitor
Materials Without Purchase Contracts view as illustrated in Fig. 30.5. At the top
of the page a graph is showing which materials already have a vendor contract (green
Solution Capability 477

Fig. 30.4 Applied intelligence for the Procurement Manager

Fig. 30.5 AI-based recommendation for the Procurement Manager

bubbles). The bubbles in orange are the materials that have not been suggested by the
system, the ones in blue are the ones that are recommended by SAP S/4HANA based
on AI. The reasoning behind the recommendation is explained by the axes—on the
X-axis the total gross amount spent on the necessary materials are displayed—here
the user can see that the relevance increases as the gross amount grows. This makes
perfect sense from the cost minimization perspective of a Procurement Manager.
However, the SAP Fiori suggestions are not just based on the axes, but on additional
factors that are displayed when a particular item is selected (see the central window
in the figure below). These are listed in detail in the ranking lists and explained
descriptively so that the user can get a sense of whether the suggestions actually fit or
not.
Not only suggested solutions are offered, but also feedback on them, with the goal
of being able to automatically evaluate the prediction of the methods and, in the next
step, take that into account in the UI and adjust the influencing factors for the
recommendations and explain them better afterward. Thus, the ranked lists include
the basic and most important activities and remind what the user should do next.
478 30 User Experience

These ranked lists not only increase the intelligence and predictive power of the
interface, but also the speed of processing the user’s tasks, because the user can just
take the suggestions and continue to process them. At the same time, all the
information for all the subsequent steps is stored and entered, so that the user should
not make unnecessary entries and can complete the tasks more efficiently without
distractions and loss of time. All of this creates an intelligent interface that makes it
easier for the user to work and thus builds an even stronger relationship of trust with
the system.

Integration
The SAP Fiori launchpad is the first point of contact and central access for all SAP
applications. It allows access to the data of multiple applications. The launchpad
depends on the role of the user and provides real-time information on all devices
related to his or her workflow. They can personalize them by moving, deleting, or
adding different tiles. Therefore, the SAP Fiori launchpad can be seen as the personal
task area as a collection of to-dos with their priorities and access to all relevant
activities in one place. Figure 30.6 shows the SAP Fiori launchpad and its elements.
The shell header and footer areas include icons and buttons for users to execute
various actions, like search, a home page, SAP Jam interactions, and app navigation.
There are two layout options to present the apps in the user’s main working area. The
classic home page displays application tiles and links which are arranged in groups.
Spaces are used to integrate numerous related pages. The pages show related
applications. Pages and spaces can be customized by the administrator and
configured to suit the requirements of the users. There are user actions menu
which allows access to user-related information and actions as well as
personalization, profile settings, an interaction history, and the option to contact
support, or give end user feedback. SAP Fiori launchpad is proactive and notifies
users about important business tasks and requests that need their timely action or
knowledge. The controls of SAPUI5 and the adaptive design of applications

Anchor/Tab navigation for Color coded notifications

direct access to groups alert users to any overdue,
new, or immediate actions

Edit mode for instant Search across and

personalization of groups within apps to get
and tiles immediate answers

Launch SAPUI5, Web Collaborate with other

Dynpro ABAP, SAP GUI for users and your digital
HTML, Web Client UIs and assistant for quick results
arbitrary URLs

Link lists provide access to a Dynamic charts to

large number of apps provide high-level, real-
time overview

Group tiles for personalized

content organization

Fig. 30.6 SAP Fiori launchpad

Solution Capability 479

facilitate the launchpad to run on multiple devices. The launchpad and its tiles take
care about the resolution, image size, and scripting on the fly, as users switch
between devices, allowing them to work how and where they want. Users can
change the visual appearance of the launchpad by selecting standard themes, like
SAP Quartz Light and Dark, SAP Belize, SAP Belize Deep, High-Contrast Black,
and High-Contrast White. But also customer-specific themes can be created based on
the SAP-delivered themes. The launchpad provides cross-app and in-app navigation,
and enhances search capabilities and key user adaptation without the need of code. It
is possible to integrate the launchpad with other UI clients, for example, SAP
Business Client, SAP Enterprise Portal, SAP Fiori client, and Web browsers. For
example, the launchpad can be run embedded in the SAP Business Client, which
enables to call transactions in SAP GUI for Windows and then gain additional
features compared to those provided with SAP GUI for HTML. The functional
scope of the SAP Fiori launchpad can be extended with custom features using APIs,
like adding new elements to the user interface. Furthermore, launchpad services can
be consumed in SAPUI5 applications, for example, to develop navigation across
applications.

Architecture and Development

In this section the SAP Fiori architecture is discussed in more detail. As illustrated in
Fig. 30.7, the architecture can be roughly divided into three parts—back end, front
end, and Web browser. The SAP Fiori front-end server acts as a Web server for all
ABAP-based systems and contains the UI components (SAP Fiori launchpad, SAP
Fiori apps, SAP Fiori Elements, and SAPUI5), the UI data (the roles and personal
settings in the SAP Fiori launchpad), and the SAP Gateway (OData services).

Web
SAP Fiori Launchpad
Browser
SAP Fiori Native
apps SAP Fiori Android iOS mobile Clients
Elements
apps
HTML5 + JavaScript SAPUI5
SAP BTP Technologies
Mobile Services
OData,
HTTP Cloud Connector

SAP Web Dispatcher

UI components UI data SAP Gateway

SAP Fiori SAP Fiori launchpad SAP Fiori
front-end SAP Fiori apps launchpad
SAP Fiori elements roles, OData services
server
SAPUI5 personalization

SAP back end SAP Gateway

(SAP S/4HANA or SAP Business Suite) enablement

Fig. 30.7 SAP Fiori architecture

480 30 User Experience

Therefore, the complete UI logic is defined here with the aim of achieving better
scalability.
In the Web browser, the SAP Fiori apps and SAP Fiori launchpad are built using
the HTML5 and JavaScript-based frameworks SAP Fiori Elements and SAPUI5. As
soon as the user starts SAP Fiori launchpad in the browser, all required components
and libraries are loaded from the SAP Fiori front-end server. The authorizations of
the users are also considered by the front-end server, and the correct screens and
role-dependent and personalized function are loaded. For additional security when
communicating between the Web browser and the front-end server, the SAP Web
Dispatcher is placed as an entry point for access. The OData services are the interface
to the SAP back end that are provided by the SAP Gateway. The front-end server is
depicted here as an add-on to the back-end system, which is the recommended
deployment option for SAP S/4HANA. However, it can also be run as a standalone
web server for SAP Fiori. In both cases, the SAP back-end system has a small
enablement component for managing the communication with SAP Gateway. To use
the mobile devices or to serve applications, this architecture is enhanced with the
SAP Business Technology Platform (BTP) services for the mobile devices, which is
securely reached via the cloud connector and works for both Android and iOS. The
next step is to look at the architecture from the point of view of a developer and in
particular to show the developer tools. This aspect is shown in Fig. 30.8.
SAP Business Application Studio is the new generation of SAP Web Integrated
Development Environment (IDE). It facilitates the development process of SAP
Fiori applications by supporting the complete development lifecycle through the

Web Native
SAP Fiori Launchpad Android iOS mobile
Browser apps Clients
SAP Fiori Android Developer XCode
Studio
Elements Technologies
SAP BTP
SAPUI5
Mobile Services Development tools
SAP Conversational AI SAP Fiori tools Mobile development kit
(SAP Web IDE)
Bot building platform
SAP Business Application Studio

OData services
RAP1 / CAP2
SAP back end CDS Views3

1 For SAP S/4HANA: RAP: ABAP RESTful Programming Model

2 For SAP BTP: CAP: Cloud Application Programming Model
3 For both: CDS: Core Data Services (with SAP HANA)

Fig. 30.8 SAP Fiori Development Tools

Solution Capability 481

integrated SAP Fiori Elements and also running on the SAP Business Technology
Platform (BTP). For mobile app development, an additional plug-in Extension for
SAP Business Application Studio—SAP BTP Mobile Services—is offered. The
advantage of SAP BTP Mobile Services for developers is that they only need to
code once and can develop apps for both iOS and Android operating systems at the
same time. Nevertheless, there are also monolithic solutions for mobile develop-
ment—the SAP Fiori SDKs for Android and Android Developer Studio and XCode
for iOS. SAP provides not only front-end developer tools, but also those for the back
end, and tries to use the developer’s programming flow for tasks such as reading or
writing data to the back end. These include the RAP (RESTful Programming
Model), CAP (Cloud Application Model), and CDS views. The CDS views can be
used to model the application data that is stored in SAP HANA. The RAP and CAP,
on the other hand, help developers create new services for OData and thus create
SAP Fiori applications faster. The final step to an optimal UX is made by SAP
Conversional AI technology, which includes the bot building tool for developers.
This makes it easy to develop chatbots and other features with voice control. This
technology is further developed by SAP CoPilot skills, which harmonizes the UX
across all bots and usage platforms. These tools have a very important role in
integrating modern enterprise assistants like Apple Siri, Microsoft Cortana, Amazon
Alexa, and Google Assistant in the future.

SAP Fiori in SAP S/4HANA

For SAP S/4HANA all applications and transactions used are accessed via the SAP
Fiori launchpad. The innovations of SAP S/4HANA come via SAP Fiori
applications—so customers remaining on SAP GUI only would have a drawback.
Also, selectively implementing individual SAP Fiori applications breaks the user
experience and results in high implementation costs. By leveraging the SAP Fiori
launchpad, all users can profit from SAP Fiori, including those users who still end up
doing a lot of their work in the classic UIs such as SAP GUI and Web Dynpro. For
the transition to SAP Fiori, SAP is not simply taking the old transactions and
rebuilding them with new technology. Instead, user research is done to understand
how people work these days and leveraging the new possibilities of SAP Fiori to
build innovative new user interactions. SAP Fiori applications provide a new way of
working and are the only way to profit from many innovations in SAP S/4HANA. Of
course, SAP cannot replace over 100,000 transactions with SAP Fiori in a year or
two, so these new SAP Fiori applications are supplemented with classic UIs as
shown in Fig. 30.9. Nevertheless, over time the number of SAP Fiori apps available
to customers is increasing.
SAP Fiori launchpad gives each user only those apps relevant to the roles
assigned to them. Different roles have a different set of applications assigned—
with some applications being used for multiple roles. The SAP Fiori launchpad
provides the single-entry point for each user to access all their applications, as well
as the shell services such as search and personalization. Finally, the SAP Fiori
482 30 User Experience

Business roles

search, personalization, collaboration… Single entry point offering

SAP Fiori launchpad
shell services

SAP Fiori apps New way of working & innovations

only available in SAP Fiori apps

Classic UIs
SAP GUI transactions
Supplemented with classic UIs
Web Dynpro apps
Web Client UIs
SAP Fiori launchpad content
defines role-specific navigation networks

Fig. 30.9 SAP Fiori in SAP S/4HANA

launchpad content defines the role-specific navigation networks. This is very helpful
and something which SAP S/4HANA provides out of the box via the so-called SAP
Fiori launchpad content. Domain-specific information and actions are provided to
the user. Thus, users quickly get an overview of what needs their attention with
overview pages, list reports, and work lists, and can trigger quick actions or drill
down to the next level of detail. Key and differentiating use cases are reimagined
with the SAP Fiori user experience. All classic applications have the SAP Fiori
visual theme. As already mentioned, SAP Fiori is how business users access SAP
S/4HANA innovations. That means that customers who want to make the most of
these innovations may need to activate 100s and in some cases 1000s of SAP Fiori
applications and classic UIs. The recommended way to approach SAP Fiori activa-
tion of the SAP S/4HANA system is to identify the business roles that are relevant to
customer’s business in the SAP Fiori applications reference library (www.sap.com/
fiori-apps-library). This information can be found on all the standard SAP Fiori
launchpad content delivered by SAP. In the next step, the relevant SAP Business
roles using the Rapid SAP Fiori activation task lists are activated. This is the quickest
way to get started, as they allow to enable all associated applications and generate a
role and a test user per role in just one step. Hence, the standard business roles can be
explored by experiencing them as a business user in the sandbox system. This will
help customer’s business experts gain a good understanding of how these roles work,
such as what insights are provided and how a user navigates between SAP Fiori
applications and classic UIs to complete their day-to-day work. Once there is clear
idea of which business roles, which applications, and which app-to-app navigations
is required to run in the system, the customer can start adjusting the SAP Fiori
launchpad content. For a fast way to copy and customize the SAP business roles,
customers can take advantage of the SAP Fiori launchpad content manager tool.
Conclusion 483

Conclusion

SAP Fiori is no longer just a concept, but a tool that has grown to meet the needs of
users. With its variety of elements, it delivers an optimal user experience across all
SAP products and thus also across all SAP S/4HANA applications. User experience
has become significantly more important in recent years because companies no
longer see it as a pure design function, but also as an economic benefit that promises
long-term competitive advantages and high employee and customer satisfaction. For
this reason, the continuous development and improvement of the user experience are
indispensable. SAP Fiori makes this feasible through its innovative approaches and
its architecture, which optimizes and simplifies the workflow of both the developer
and the user.
Identity and Access Management
31

This chapter focuses on identity and access management concepts and frameworks
of SAP S/4HANA. Particularly, secure access, managing users and permissions,
identity authentication and provisioning service, business roles and catalogs,
restrictions, and authorization objects are explained.

Business Requirement

Identity and access management (IAM) defines users’ identities, manages what they
can and cannot do, and provides compliance audits and reports based on this
information. An IAM software solution should be able to create and manage user
accounts, roles, and access rights for individual users in an organization to support
these tasks. The solution typically includes user provisioning, password manage-
ment, policy management, and identity repositories. As more businesses migrate to
the cloud, their IT landscapes become more heterogeneous and diverse, frequently
resulting in coexisting cloud and on-premise software systems—so-called hybrid
environments. However, whether customers are dealing with cloud or hybrid
environments, the requirements for identity and access management remain the
same. Customers want to spend as little time as possible integrating systems while
also providing their users with a seamless single-sign-on experience across systems
and ensuring that system and data access is secure. IAM manages the interaction
between different users with different roles, and the systems that comprise a
company’s IT landscape. System integration is considered successful when user
interaction is smooth. Ideally, all systems in the IT landscape will behave as one
from the user’s perspective, which means that users will not have to authenticate
themselves repeatedly when system boundaries are crossed. Security and compli-
ance are also critical aspects of IAM. A solid IAM solution must ensure that legal
requirements are met and company policies are followed. Furthermore, IAM must
ensure that user authorizations are handled correctly so that users with specific roles
can access only the services to which they are authorized. The same is true for data:

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 485
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_31
486 31 Identity and Access Management

Aut hent icat ion

Relat ionship
Provisioning Aut horizat ion
begins

Relat ionship
changes

Identity Lifecycle

Deprovisioning Compliance
Relat ionship
ends

Privacy policy
and consent
management

Fig. 31.1 Identity lifecycle

IAM must ensure that the right people have access to the right data. Figure 31.1
depicts an example of the identity management lifecycle, which includes all relevant
administrative processes. Assume a company is considered that has a hybrid system
landscape with systems both on premise and in the cloud. When a user and an
enterprise form a relationship, the cycle begins. A user can be an employee, a
partner, or a customer (or consumer). First, a user account is created in the
company’s central user store. The user data is distributed to all systems that are
relevant to this user via provisioning. The user’s role is an important factor in
determining the subsequent processes and checks that apply. Aside from providing
users with an appropriate account, the system may also provide users with a
framework in which they can personalize services. Language settings and date and
time formats are two common examples. Furthermore, the system may initiate
workflows for business stakeholders to review and either approve or reject proposed
changes to user profiles or access rights. During a person’s relationship with the
company, their role and tasks may change, for example, after a promotion or when
responsibilities change. When this occurs, the person’s user accounts must be
updated to reflect the change. For example, new user accounts may be required,
existing ones may need to be deactivated, or authorizations may need to be changed.
The authentication step validates the user’s identity and determines their role. The
application system where the user needs to work sends the authentication request to
Business Requirement 487

the identity provider system for this purpose. The latter then authenticates the user to
the application assuming that the user is known to the identity provider. When this
occurs, the application system is able to carry out the user’s logon. In the authoriza-
tion step, access rights are established and constantly monitored. Once a user has
been authenticated within one system, authorization specifies which applications the
user is permitted to start and use in that system, as well as the specific data the user is
permitted to access within an application. In addition, the system handles procedures
for treating, processing, and accessing private information in this step. At this point,
the system performs controls to detect and respond to attempted security breaches. In
order to reduce administrative overhead, self-services are established. Users, for
example, can reset their passwords using self-service. Governance, risk, and compli-
ance are critical components of the identity lifecycle. Compliance is the process of
conforming to the requirements defined by laws, regulations, and policies. Segrega-
tion of duties, on the other hand, is a common case in governance. Certain
combinations of activities within a system must not be performed by the same
individual. For example, the same person should not be able to create and approve
the same invoice. The use of personal data is becoming an increasingly important
aspect of the identity lifecycle. A company’s privacy policy specifies how private
and personal information about its customers is handled. Users can confirm the
personal information they are willing to allow the company to access and use based
on predefined conditions using consent management. In this context, it is worth
noting that the GDPR went into effect in May 2018. The GDPR, which replaces the
Data Protection Directive 95/46/EC, aims to harmonize data privacy laws through-
out Europe. Citizens will have more control over their personal data as data protec-
tion rules become stronger and more uniform. Businesses all over the world will
benefit from having a single set of rules for operating in the EU. This regulation
applies to parties who do business with an EU resident or deal with their personal
data when goods or services are offered to them. It also applies to monitoring
individuals’ behavior within the EU. As illustrated in Fig. 31.1, when the user-
enterprise relationship ends, the deprovisioning step occurs, in which the IAM
system removes user access to applications and systems. Self-services are not
depicted as part of the identity lifecycle in Fig. 31.1. Self-services are actions that
users can perform on their own. A user, for example, can apply for new user accounts
and authorization assignments; administrators and key users can configure their
company’s corporate branding. Thus, with Identity Management, IAM provides a
solution for the provisioning and deprovisioning of identity for subjects. Only with
the help of identity, other layers like authentication can operate properly. The second
task of IAM is Access Management, which acts as a layer for providing authentica-
tion, authorization, and policy enforcement.
488 31 Identity and Access Management

Solution Capability

After a brief introduction of the IAM use cases a further look is taken into the
technical aspects of IAM focusing on the necessary services, concepts, and
applications in the context of SAP S/4HANA.

IAM Services

The simplest implementation of IAM needs three services to operate which are
explained in this section. Identity and access management services, also known as
IAM services, comprise SAP BTP Identity Authentication and SAP BTP Identity
Provisioning. This label is commonly used to refer to the combination of identity
authentication and identity provisioning services.

Identity Management Service

Another major task of IAM is to provide identity to users. It manages the whole
lifecycle of an identity in an enterprise. If someone is starting at a company, an
identity gets created. Later on, it may get updated, if the roles or the person changes,
and if the employee is leaving the company the identity gets deprovisioned. It should
be as easy as it gets to ensure a complete identity cycle, because the identity itself
enables a user to get access to sensitive resources. The SAP BTP Identity Provision-
ing service offers secure identity lifecycle management as a service, including
provisioning and deprovisioning of identity and authorization. The following
features are supported:

• Automatic creation and management of user accounts

• Administration of policy-based authorizations
• Capability to work with on-premise user stores as sources, such as the SAP
Application Server for ABAP
• Capability to work with cloud user stores as sources, such as SAP SuccessFactors
• Compatibility with the SAP BTP Identity Authentication and the SAP BTP
Integration service

These features enable customers to set up faster and more efficient user
onboarding and offboarding administration. SAP BTP Identity Provisioning enables
the centralized management of corporate identities in the cloud. It can also automate
the provisioning of existing on-premise identities to cloud applications.

Authentication Service
The main quest of authentication is to answer the question of identity. IAM does not
enforce a specific method to solve this problem. There are many possibilities,
starting with a simple authentication via username and password or requiring
multi-factor authentication or going as far as biometric authentication. This method
is chosen by the developer of an authentication service, for example, based on the
Solution Capability 489

sensitivity of the underlying information. SAP BTP Identity Authentication is a

product that provides authentication, single sign-on (SSO), user management, and
on-premise integration services. It also offers convenient user self-services for
employees and partners, such as registration and password reset. While SAP BTP
Identity Authentication supports consumer and customer scenarios, the identity
authentication service includes security features for protecting application access,
the ability to define risk-based authentication rules, two-factor authentication, and
delegated authentication to on-premise user stores and other identity providers. SAP
BTP Identity Authentication is a central authentication service that is tightly
integrated with SAP S/4HANA as well as non-SAP solutions. The following are
the key features:

• Authentication for cloud and on-premise service provider applications that is

secure (SAP and third party)
• Single-sign-on access from any device, at any time (Web and desktop SSO)
• Twitter, LinkedIn, Facebook, and Google social login
• Two-factor authentication using one-time passwords and password policies at the
service provider application level
• Application of risk-based authentication to service provider applications, user
group assignment, and Internet protocol ranges
• Self-services, such as self-registration and password reset, as well as the creation
of custom privacy policies and terms of service at the application level

Authorization Management Service

It deals with the question of what can be accessed by a user. With the help of
authorization policies, access to resources can be granted only if the user is entitled
to view them. From an implementation point of view one of the main challenges is to
provide a dynamic system which is extensible enough to ensure future use cases can
be realized too. Additionally, the complexity of the system should be low enough so
that custom policies can be implemented as well. So, policies build the foundation of
granting access to resources with the IAM method. The ABAP authorization concept
guards against unauthorized access to applications and services. A business user’s
authorizations determine which actions they can perform and which data they can
access. In the ABAP authorization concept, authorizations are instances of authori-
zation objects that are combined in an authorization profile that is associated with a
role. The authorization profiles are assigned to business users through the associated
roles, which are maintained using the role maintenance transaction PFCG. An
authorization object is a collection of up to ten authorization fields. An authorization
field can represent data as attributes of a business object or activities like reading or
changing. During runtime, an authorization check is successful if one or more
authorizations for an authorization object assigned to the business user match the
required combination of authorization field values for this authorization object. An
authorization object, for example, has a sales organization authorization field and a
sales region authorization field. If a business user has one authorization for this
authorization object for the combination of sales organization 100 and sales region
490 31 Identity and Access Management

1000 and another for the combination of sales organization 200 and sales region
2000, this business user will have access to line items in sales organization 100 for
sales region 1000 but not for any other sales organizations, such as 2000, during
runtime. The business user in cost center 200 will only have access to line items for
cost element 2000 and not to any other cost element.

IAM Implementation

The implementation inside SAP S/4HANA is relatively straightforward and is

described in the following paragraphs. First of all, further details are provided
concerning the authentication service implementation for SAP S/4HANA. This
service is not directly integrated into the SAP S/4HANA Cloud tenant but provided
by the authentication service of the SAP BTP itself. So, business users asking for
authentication are signed in and verified against the SAP BTP authentication service
and are then signed into the SAP S/4HANA Cloud system via Single-Sign On (SSO)
using the Security Assertion Markup Language (SAML). SAML is an open standard
and XML-based markup language to exchange authentication data and security
assertions between the SAML service provider or application (in this case the SAP
S/4HANA system) and the SAML identity provider (here the identity authentication
service). As described earlier IAM does not enforce any specific implementation for
identity provision and leaves the concrete implementation open for any system that
aims to integrate IAM. In case of SAP S/4HANA this flexibility is forwarded to the
end user. The customer gets the flexibility to configure specific password policies in
the identity authentication service. A business user which shall have access to the
SAP S/4HANA system must be created in SAP S/4HANA and registered in the user
store provided by the identity authentication service. To provide an easy solution to
customers for creating users and testing the correct functionality there are multiple
helpers. At first there are two identity authentication service providers for a cus-
tomer, one for productive use and the other for testing. This enables the customer to
further test and integrate the desired behavior before influencing a production
environment. Furthermore, numerous tools and integrations are provided to supply
multiple (initial) users to the system. There are several communication scenarios to
automatically replicate users from an external identity management system. The next
required service from IAM is an authorization service. This service implements one
of the core functionalities of IAM. This rather complex functionality shall be broken
down into the following aspects:

1. Policy enforcement through business catalogs

2. SAP Fiori integration
3. Business role propagation

To start with the first bullet point, the following paragraph provides insights on
how policy enforcement is implemented in SAP S/4HANA.
Solution Capability 491

Fig. 31.2 Structure of Business catalog

has many
Restriction type
has many
Restriction field
business catalogs
has one

Authorization field

Policy Enforcement Through Business Catalogs

To ensure a secure environment SAP provides business catalogs to its customers.
The key task of a business catalog is to group applications and restriction types to
define instance-based restrictions that belong together based on a business process or
as a part of it. These business catalogs are regularly reviewed by ISAE 3000 audits to
ensure no segregation of duty conflicts is present. Now the basic building blocks of a
business catalog should be discussed. Afterward a big picture is generated out of
these blocks (Fig. 31.2).
In the above figure the structure and the building blocks of a business catalog are
depicted. To explain the relations, the authorization field is described first. The
authorization field represents a low-level item in the ABAP authorization concept.
To summarize, an authorization field determines which actions a business user is
allowed to perform and which data the person is permitted to access. The authoriza-
tion fields are internally grouped into authorization objects. These authorization
objects are checked during runtime. A check is successful if a combination of one
or more authorizations in an authorization object assigned to the business user meets
the required combination of authorization field values for this authorization object.
The exact propagation is discussed in a later paragraph. Restriction fields mask the
low-level authorization fields as an authorization object for which restriction values
can be defined by the customer. As restriction fields represent a core part of the
policy enforcement, these fields are predefined by SAP and the customer cannot
define their own fields. Restriction fields can afterward be combined into restriction
types. Restriction types enable the business user to define instance-based
restrictions. The main task of instance-based restrictions is to define which data
records a user with a certain role is allowed to maintain. As for the restriction fields,
the maintenance of customer individual restriction types is not supported. One or
more restriction types can be assigned to a business catalog as described above.
These concepts provide a solid basis for the implementation of an authorization
service as described in the IAM standard. To provide a better UX to the customer
SAP has built additional abstractions inside the authorization concept of SAP
S/4HANA. With business role templates SAP has made a predefined set of common
personas present in the customer’s business. These presets enable the customer to
quickly create customer-editable business roles, which can further be customized by
the business user. With the abstraction of the underlying details the customer can
focus on providing the right access to resources to business users, depending on their
role inside the business. Business roles also work as an aggregation of one or more
business catalogs. The business roles not only control the policies for the user,
enforced with the help of restrictions, but also define which application are visible
492 31 Identity and Access Management

Business Role has many has many has many

Business Catalog Restriction Type Restriction Field
Template
has one
has one
Authorization
Field
has many
Business Role

Fig. 31.3 Authorization overview

Business Role has many has many has many

Business catalog Restriction type Restriction field
Template

has one
has one
Authorization
field
has many
Business Role

has one
or none
Master Busines
Role Business User

Fig. 31.4 Master roles in combination with business roles

to the user on the SAP Fiori launchpad. A customer is not forced to use the
predefined SAP business role templates to create business roles. They can also be
created by assigning one or more business catalogs manually to a new business role
or starting with a clone of an existing business role. When using more than one
business catalog, especially more than one restriction, a merging strategy is used to
combine all restrictions available in the business catalogs. The concrete restriction
values can also be maintained inside of a business role. To summarize a business role
represents the main interface between the low-level policy enforcement tools and the
customer. Therefore, it is a key part of IAM’s authorization service working based
on a zero-trust principle. The described relations are also visualized in Fig. 31.3.
To further enable ease of use, a concept named master business roles is provided
in SAP S/4HANA. An existing business role can be marked as a master business
role, which then enables the customer to derive other concrete business roles from
the master role. The derived roles inherit all business catalogs and lock the defined
restriction values in place. But the customer is free to add more restrictions to the
derived role afterward (Fig. 31.4).

SAP Fiori Integration

As an extension to the above concepts, policies inside SAP S/4HANA are also
enforced in SAP Fiori Pages & Spaces. So, business roles not only define access
Solution Capability 493

has many has one Launchpad

Business Role Business Catalog
Business Catalog

has many

Business User Launchpad Tile

has many

has one has one

Launchpad Space Launchpad Page Page Section
has many

Fig. 31.5 Launchpad integration to authorization concept

restrictions, but also define how the UI is built for the specific business user. To
enable this feature, every business catalog has its corresponding launchpad business
catalog. This catalog describes which applications are visible to the business user,
based on the assigned business catalogs. This feature improves the security level
even further. This means, even if a user can somehow gain knowledge about the
presence of other application, user’s request is revoked by the server. To ensure
interoperability between business catalogs and launchpad business catalogs the
launchpad catalogs cannot be customized by the customer and come predefined by
SAP. The SAP Fiori launchpad consists of page sections and launchpad tiles.
Launchpad tiles are grouped into the above-mentioned launchpad business catalogs.
Tiles belong to a page section on the launchpad, which can be further combined into
a full launchpad page. A constructed launchpad page is then abstracted into a
launchpad space. Each space has one or more corresponding business roles assigned.
The above concept ensures that for every given business role, there is exactly one
launchpad space, which represents the UI presented to the business user. To mini-
mize the effort for the customer, SAP has corresponding launchpad spaces
preconfigured for every business role template (Fig. 31.5).

Business Role Propagation

The last point aims to answer the question how business roles are propagated and
translated into the corresponding SAP PFCG roles. As explained earlier, with
simplification in mind, SAP provides abstraction layers on top of the low-level
ABAP authorization concept. To efficiently and generally apply policy enforcement
the ABAP authorization methods are used under the hood. The predelivery business
roles from SAP, which provide the basis for the customer’s own business roles, are
equipped with their corresponding business catalogs. These business catalogs have
SAP-defined PFCG roles for each business role. PFCG roles are not directly used by
a business user, but instead generated out of the higher-level abstractions like
business roles and their corresponding catalogs. Some of the authorizations are
494 31 Identity and Access Management

defined as fixed values. This means, the authorization values for the authorization
object cannot be changed by the IAM administrator. To keep the simplicity high,
these fixed values are not visible to the administrator at all. The core activities which
define access to resources are called categories. SAP uses three main categories:

1. Read access groups all activities that do not change the object.
2. Write access groups all activities that perform change operations on an object.
This includes, for example, creation, change, and deletion.
3. Value help groups’ activities that are checked during value help functions.

With these fine-grained authorizations, every business object can have a field-
level access control, which ensures a great segregation of duty.
The last major service defined in the IAM standard is the identity service. Its main
task is to provide identity to user and manage the whole lifecycle of any subject
regarding changes. For this task many services are in place which allow the
management of business user individual business roles, as well as their
corresponding business catalogs. There is also a central part deeply integrated into
SAP S/4HANA, for example, if a new function or feature is present in the applica-
tion suite, new business catalogs are provided out of the box, to ensure the policy
enforcement in the authorization service is possible. There are many more lifecycle
changes controlled by SAP:

• Changes to restriction types

• Changes to authorization default values
• Adding new applications to business catalogs
• Removal of applications from business catalogs
• Splitting/restructuring of business catalogs

To ensure a smoother migration process for each of these lifecycle changes, new
or edited business catalogs are shipped, but switched off a release before they get
activated, so that business user can assign the updated catalogs to all necessary users
before the usage of the new catalogs is enforced. This process is even more
simplified with the usage of business role templates, which described earlier are
provided by SAP. These get automatically managed and updated as needed, so that
the business users always have the correct authorizations. This covers the lifecycle
management regarding the dynamic business environment. Another task is to pro-
vide a solution to user lifecycle management. For this task the IAM administrator is
controlling which users can access which resources. The IAM administrator controls
the assigned roles to a business user and can assign new ones if the lifecycle of the
business users identity changes in a way that new processes or applications must be
accessed by this user. There are also multiple user types present inside SAP
S/4HANA, which can perform different tasks:
Solution Capability 495

• There are business users which are the core of the user management. They can
also be seen as real employees of the customer. They need to get explicit access
from the IAM administrator.
• Administration and business configuration users are customer-specific users in
the tenant. They are created as part of the tenant-provisioning process. Adminis-
tration users own the authorization to create business users. The business config-
uration user is needed in the quality tenant only and is used for the configuration
of the business processes.
• Communication users are only used for inbound communications in customer-
managed communication scenarios. A communication user is assigned to a
communication system.
• Printing users are the last available category of users. They are needed for the
connection between the SAP BTP Print Manager and the printing queue web
access service.

IAM Applications

To sum up the topic identity and access management in SAP S/4HANA some of the
respective applications are briefly described.
As shown in Fig. 31.6, there are six applications specifically built to give easy
control to the customer regarding the management of their users and their mainte-
nance. In the following paragraph the objective of the key applications is shortly
described and their connection to the concepts explained previously is outlined.
Maintain Business Users application gives an overview of all business users which
have access to the customers of the SAP S/4HANA system. Additionally, the
business catalogs which are assigned to the business users are displayed. This
enables the Administrator the easy visualization of which catalogs are assigned to
which user. Also, the general maintenance of a business user is possible. Maintain
Business Roles application provides an overview about all business roles present in
the system. Here the administrator can monitor, filter, and manage all business roles.

Fig. 31.6 IAM applications inside SAP S/4HANA

496 31 Identity and Access Management

The administrator is also able to see the assigned business catalogs. Additionally,
new business roles can be created from scratch or with the use of business role
templates to further simplify the creation of production-ready business roles. The
management of restriction types can also be accessed within this application. The
same features and functionalities provided for business users regarding the Display
Business Users application are also implemented for the technical users present in
SAP S/4HANA based on the Display Technical Users application. This includes, for
example, locking and unlocking print or communication users, change username and
password. The IAM Information System is designed to get insights into the usage
and the interconnectivity between all aspects related to IAM in SAP S/4HANA. By
applying filters, the customer can see which business roles are used by which user
and can dig even further to display which concrete restrictions are applied. With the
help of this application every authorization for every user can be visualized and IAM
problem quickly be identified. The Business Catalogs application enriches the user
experience with the introduction of management features to business catalogs.
Within this application deprecated catalogs can be identified and migrated to their
successors. Also, there are informative descriptions to every business catalog to
further clarify their purpose. The Business Role Templates application brings the
management of business role templates to life. Here, the customer can define their
own, as well as review existing role templates.
This app provides a quick overview of critical issues affecting your business users
and business roles. You can, for example, see if any business users are locked or if
they have too many business roles assigned to them. The relevant data is displayed in
detailed charts, allowing you to see the necessary figures at a glance. The IAM Key
Figures application displays information like the number of business users who have
been assigned to business roles, the month of the business user’s most recent logon,
the number of business users who are locked and unlocked, the business users’
credibility, or the number of business roles with unrestricted access.
The Display Authorization Trace application enables an authorization trace for a
business user. This allows to determine whether any authorizations are missing or
insufficient. Key features are, for example, activation or deactivation of traces,
displaying the results of authorization checks, including previously assigned
authorizations and failed checks. Because a maximum of 10,000 datasets are possi-
ble, it is recommended to take this into account when defining the selection criteria,
particularly the date range. If an authorization check yielded a filtered status, it can
be investigated which business roles expose the affected restriction type. One
possible solution is that the checked business user is not assigned to the required
business role or that the demanded value has not yet been maintained (Fig. 31.7).

Conclusion

With an ever-growing usage of cloud-based services the need to provide a secure and
controlled environment is steadily increasing. The huge variety of available
on-premise and cloud resources demand a high flexibility to a framework which
Conclusion 497

IAM Information System

IAM Key Figures

Fig. 31.7 IAM Information System and IAM Key Figures

aims to provide a unified layer of access control. Not only can IAM be used to
provide granular control to resources available in the cloud, like IaaS or PaaS
products, but its concepts can also be translated to provide security in SaaS solutions.
Especially for highly flexible products like SAP S/4HANA with a big variety of use
cases, it is crucial to have a security framework in place which is flexible enough to
ensure users only get access to resources they are authorized to use. Also, products
like SAP S/4HANA are working with sensitive information so the argument above
weighs even stronger. IAM can be considered as a technique that provides an
adequate level of protection to resources and data through rules and policies which
are enforced on users via various techniques such as enforcing login password,
498 31 Identity and Access Management

assigning privileges to the users, and provisioning user accounts. So IAM decides
who has access to what resources. Another task which evolves out of identity
management is the responsibility to maintain the identity cycle, which includes
creation, maintenance, updates, and deletion of identities.
Data Protection and Privacy
32

Data protection and privacy are important factors which need to be considered when
working with personal data. There are different regulations which define relevant
terms and set rules which need to be enforced. One of these regulations is the
General Data Protection Regulation (GDPR). SAP S/4HANA Cloud and On Prem-
ise offer tools like the Information Lifecycle Management (ILM), Information
Retrieval Framework (IRF), Read Access Logging (RAL), Change Management,
and Consent Management, which take care of meeting the given requirements by
following a holistic approach and handling data protection and privacy using a
central solution. This chapter focuses on data protection and privacy concepts and
frameworks of SAP S/4HANA. Particularly, general data protection regulation
(GDPR) requirements, lifecycle of personal data, information retrieval framework,
and read access logging are explained.

Business Requirement

The topics of data-sharing norms and personal data protection have evolved over the
last years driven by the development of information technology. The first law which
focused on these topics is considered to be first introduced in 1970 in the German
federal state of Hessen. This law focused on regulating data-sharing within Germany
and didn’t address international data transfers. This resulted in data being processed
and stored in other geographical locations and therefore jurisdictions where
regulations were not that strict. Regulators needed to find a solution to this issue,
and restrictions on international data transfer needed to be introduced. Afterward,
one goal was to harmonize meaningful data protection across jurisdictions to enable
the removal of transfer restrictions across national borders. The first two data
protection frameworks were the Organization for Economic Co-operation and
Development Privacy Guidelines (OECD) in 1980 and the Council of Europe
Convention for the protection of individuals with regard to automatic processing
of personal data in 1981, which is also known as Convention 108. Those regulations

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 499
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_32
500 32 Data Protection and Privacy

allow transferring data to other participating states and even prohibit some
restrictions on transfer for reasons of privacy between participating states. A newer
approach on regulating data-sharing and data protection has been introduced by the
European Union’s Data Protection Directive in 1995, which led to the introduction
of its successor in 2016: The General Data Protection Regulation went into effect on
May 25, 2018. The topic of data protection and privacy has been around for decades
and gained in importance over the last years. Regulations like the General Data
Protection Regulation (GDPR) and Organization for Economic Co-operation and
Development Privacy Guidelines (OECD) have a great impact on how personal data
is handled and stored and SAP as a software provider needs to help their customers
meet all given requirements with their products. There are two aspects which need to
be taken care of when working with personal data. First it is important to ensure the
data protection aspect and second companies need to meet all requirements in regard
to the data privacy aspect. Data protection is about protecting information against
unauthorized access through computing environments. For example, it is important
to make sure that unauthorized users don’t have the possibility to read or edit data. In
the worst-case data could be lost, deleted, or abused, which could lead to further
consequences. The information security officer is responsible for making sure that all
requirements in this area are met. Data privacy is about protecting individuals with
regard to the processing of personal data. Neglecting this topic could lead to the
infringement of personal rights, which has high monetary penalties as a conse-
quence. The data privacy officer is responsible for making sure that all requirements
in this area are met. To meet the data protection and privacy requirements, technical
and organizational measures (TOMs) need to be implemented. They ensure a level of
security appropriate to the described risks.

General Data Protection Regulation

As already mentioned, the GDPR has been introduced in 2016 by the European
Union as a successor of the first approach by the European Union’s Data Protection
Directive in 1995. The GDPR went into effect on May 25, 2018. Technically there
were no major changes compared to the 1995s approach, but the GDPR has
increased fines to up to 4% of the annual turnover of the company, which led to
many companies caring a lot more about aligning to the given regulations. The
highest given fine as of April 2020 was nearly 205 million euros. The GDPR is an
approach which requires that any transfer to a country outside of the European Union
needs to be made in accordance with a transfer justification. This transfer justifica-
tion has to be approved in advance by the European Commission.

Personal Data
The GDPR introduces different definitions and principles. Personal data, for exam-
ple, is defined as data relating to an identified or identifiable natural person (“data
subject”) who can be identified, directly or indirectly, in particular by reference to an
identifier [...] or to one or more factors specific to that natural person’s physical,
Business Requirement 501

physiological, genetic, mental, economic, cultural, or social identity. Therefore,

personal data describes all data which identifies a person directly or can lead to a
person being identified indirectly. Examples of information which identifies the
person directly are:

• Names
• Postal addresses
• Telephone numbers
• e-Mail addresses

And in addition, examples of information which identifies the person

indirectly are:

• Bank account numbers

• IP addresses
• MAC addresses
• Membership numbers
• License-plate numbers

An example of personal data in SAP S/4HANA is data related to the SAP

Business Partner objects like its name, BP-ID, or address. Additionally, contracts
which are made by the Business Partner use personal data like delivery addresses,
billing addresses, bank account details, or contract numbers. All this personal data
needs to be protected properly.

Principles
To improve data privacy standards, the GDPR defines a few principles for
processing data in alignment with the GDPR. Those are:

• Lawfulness, fairness, and transparency

• Limitation of purpose
• Data minimization
• Accuracy
• Storage limitation
• Integrity and confidentiality

As a result, it is forbidden to process personal data if there is no proven and

justifiable reason to do so. The purpose of processing data needs to be documented at
any stage of processing. This baseline applies to complete sets of personal data and
business partner records, but also to single pieces of data. Justifiable requirements to
process personal data are met if:

• The data subject has provided consent

• The processing is required for the performance of a contract
• The processing is required to fulfill legal obligations
502 32 Data Protection and Privacy

• The processing is required in the public interest

• The processing is required to safeguard a vital interest
• The processing is based on a legitimate interest

Consent is defined as any freely given, specific, informed, and unambiguous

indication of the data subject’s wishes by which he or she signifies agreement to the
processing of personal data relating to him or her by a statement or by a clear
affirmative action. Data processing is required for the performance of a contract
when it is necessary or when there is an intention to enter into a contract. Examples
for legal obligations could be tax reporting, income tax reporting, or reporting for
social insurance in ERP software. Public interest is given when processing is
necessary for the performance of a task carried out in the public interest or in the
exercise of official authority. The processing should have a basis in Union or
Member State law. Vital interest describes situations where data processing is
essential for the life of the data subject or that of another natural person. Legitimate
interests are fundamental rights and freedoms of the data subject.

Rights of the Data Subject

The GDPR defines a set of rights that can be enforced by the natural person (data
subject). These include the following rights:
The data subject needs to be informed about how which data is processed and
stored, with which purpose, and how long, prior to the process of processing. Data
protection has been relevant in the design of products at SAP for very long and
therefore, as already mentioned in the introduction, there are different relevant
features for data protection which help the customer being compliant with GDPR
in SAP S/4HANA. Those features are a central solution to data privacy challenges
which reduce the effort that needs to put into conception for all SAP S/4HANA
applications. The prior information-right is addressed by the information retrieval
framework (IRF) in SAP S/4HANA, which will be introduced in one of the
following chapters. Furthermore, the GDPR prescribes that the data subject has the
right to request information on the data undergoing processing, which is also
addressed by the IRF. Additionally, the data subject has the right to request deletion
of personal data. Data has to be deleted when all retention periods have passed or
blocked as soon as the primary purpose has passed, and the residence time has
elapsed. The lifecycle of personal data in SAP S/4HANA must address this issue.
Moreover, the personal data has to be accurate, kept up to date and be corrected
(latest after request). This needs to be ensured within the applications. The data
subject has the rights to restrict processing in certain cases and that automated
decisions can become subject to manual interference, which also needs to be ensured
within the applications. Last but not least the data subject has the right to request the
stored, related personal data in a structured, commonly used, and machine-readable
format. This process is again supported by the IRF.
Solution Capability 503

California Consumer Privacy Act

The California Consumer Privacy Act (CCPA) is a law similar to the GDPR, which
was implemented by the State of California Department of Justice in 2018. It gives
consumers more control over the personal information collected about them by
businesses. The law secures privacy rights for California consumers. These rights
include but are not limited to:

• The right to know what personal information a company collects about them and
how it is used and shared
• The right to have personal information collected about them deleted (with limited
restrictions)
• The right to opt out of having their personal information sold
• The right to be treated fairly (non-discrimination) when pursuing their CCPA
rights

Solution Capability

To align with the previously described data protection regulations (like the GDPR or
the CCPA) SAP S/4HANA offers mandatory features which support meeting those
requirements. For example, SAP S4/HANA offers features like

• Relevant security safeguards (as part of the technical organizational measures)

• Support for fulfilling data subject requests
• The ability to segregate personal data using organizational attributes
• Personal data deletion capabilities
• Inbuilt auditing capabilities
• Advanced authorization concepts

Additionally, SAP S/4HANA offers the following embedded data privacy tools
which are intended to help the customer to meet all requirements. SAP is using a
holistic approach by offering different generic tools like the Information Retrieval
Framework (IRF), Information Lifecycle Management (ILM), and Read Access
Logging (RAL) in SAP S/4HANA, which support the customer in meeting all
data privacy and protection requirements. Those features and tools lead to security
being integrated deeply into the company processes. They are described in detail in
the next sections.

Information Lifecycle Management

Enterprises require a comprehensive information lifecycle management (ILM) strat-

egy to keep up with the speed and complexities of data today. Furthermore, efforts to
protect consumer identity have resulted in an increase in legal requirements. Various
504 32 Data Protection and Privacy

regulations, including the Sarbanes-Oxley Act, the Health Insurance Portability and
Accountability Act (HIPAA), the California Consumer Privacy Act (CCPA), and the
General Data Protection Regulation (GDPR), monitor and regulate data around the
world. Additionally, there is an increasing need to manage aging systems, which
consume ongoing storage, administration, and maintenance costs. These systems
pose a legal risk because the data they contain must be accessible, for example, to tax
auditors. Data accessibility becomes unpredictable as knowledge of old systems
fades and old hardware is removed. Information management and retention have
become so critical that an effective ILM strategy is now an essential component of an
enterprise’s overall strategy for dealing with the challenges of cost, compliance, and
risk. Personal data, for example, must be deleted when it no longer serves a valid
business purpose, according to privacy regulations. SAP has created an ILM
approach that addresses the complex information management requirements of
organizations. Policy, processes, practices, and tools are developed and used to
align the business value of information with the most appropriate and cost-effective
IT infrastructure—from creation to destruction of information. SAP provides a
comprehensive and automated approach to ILM to assist in adapting to constantly
changing regulations. SAP’s ILM approach addresses various business scenarios,
use cases, and challenges. In standalone ILM retention warehouses, the SAP Infor-
mation Lifecycle Management (SAP ILM) component manages the data lifecycle of
both live application systems and legacy data:

• Retention Management: SAP ILM tools and technologies support the entire
information lifecycle, from creation to retention to destruction. These functions
allow to enter various rules and policies that reflect various criteria, such as where
data is stored, how long data is retained, and when data can and must be
destroyed. These policies, which are typically based on external legal
requirements or internal service-level agreements, can apply to both structured
and unstructured data stored on various media types. The data is automatically
archived into the appropriate storage area and given an expiration date based on
the rules the customer created. Storage integration that is ILM-aware means that
storage systems understand and can act on the stored data based on the rules
customer defined. SAP ILM provides automated discovery functionality as well
as legal and compliance-level information management. When the expiration date
is reached at the end of the lifecycle, a destruction function permanently destroys
the archived data.
• System Decommissioning: SAP ILM provides a comprehensive approach to
shutting down legacy systems and bringing data from both SAP and non-SAP
software into a centralized ILM retention warehouse. By decommissioning no-
longer-used applications, customers simplify their overall system landscape and
lower long-term administration and maintenance costs. SAP ILM provides a
comprehensive approach to decommissioning legacy systems and consolidating
the data into a significantly compressed retention warehouse. Native SAP soft-
ware system integration, as well as data storage and loading capabilities, shortens
implementation timelines. In addition, SAP ILM provides on-demand data access
Solution Capability 505

Fig. 32.1 SAP ILM data destruction and archiving objects

and reporting options, allowing to view historical data even after the original
system has been shut down (Fig. 32.1).

The lifecycle of personal data in compliance with the GDPR consists of three
phases: processing, blocking, and deletion. In the first phase, personal data is
processed based on the primary purpose, for example, as long as a contract needs
to be fulfilled. As soon as this purpose no longer applies, the information can still be
stored during the so-called blocking phase. During this phase the data needs to be
blocked and access is granted only to authorized personnel. This means that data can
be restored, for example, in case there are issues with the underlying contract or
service. After a limited retention period, the data needs to be deleted without residue.
506 32 Data Protection and Privacy

Fig. 32.2 Lifecycle of

personal data Processing Blocking phase Deletion

End of purpose End of retention period

The described lifecycle of personal data is illustrated in the following figure

(Fig. 32.2):
The ILM tool manages and automates these retention processes and is considered
as a complex part of data lifecycle management. It offers the SAP Fiori applications
which can be used to configure the tool, for example, by defining deletion rules.

Information Retrieval Framework

Data subjects have the right to obtain information about the processing of their
personal data, including the reason (purpose) for the processing. The Information
Retrieval Framework (IRF) is a tool in SAP S/4HANA which allows the user to
automatically search for and retrieve all personal data of a specified data subject. It
understands the connections between data from different tables and objects and
retrieves all connections and personal data. The merchant uses the SAP Fiori
application which collects all relevant data for a business partner. The search results
are displayed in a comprehensive, structured, and easy-to-read list. The following
applications are available through SAP IRF:

• Start Data Collection: This app facilitates to automate the retrieval of all personal
data for a specific business partner. This app can be used to initiate a cross-
application search for all personal data associated with a specific data subject. The
selection criteria that can be used to narrow down the search are, for example,
type of data subject ID (business partner), ID of the data subject (business partner
number), the language of the data subject, the reason for which the data was
gathered and processed. Customer can also select from a list of previously defined
profiles to configure the collection, display, and download of personal data.
• Process Data Collection Results: This app allows to view and download the
search results of the data collection process initiated by the Start Data Collection
app. The application displays a structured, easy-to-read list of all personal data
related to the specified business partner, subdivided by the purposes for which the
data was processed. Furthermore, customers can use personalized profiles to tailor
data collection to their specific needs, such as what data is displayed in the search
results view. The data can be downloaded in various file formats to make it
available to data subjects. This app can be used to view a list of all data collection
requests that have been created with the Start Data Collection application, to sort
and/or filter the data collection requests, to display all personal data (e.g., name,
address, date of birth, employment, or creditworthiness data) of the specified
business partner, organized by the purposes for which the data was collected and
Solution Capability 507

processed. Furthermore, personalization profiles can be used to tailor data collec-

tion to customer-specific requirements. Profiles enable customers to save
customized settings that affect the collection, display, and download of personal
data. Change documents are written for each change in the search results display.
• Application Log for Information Retrieval: This app helps to search for and view
application logs created during data model creation and/or data collection. Fur-
thermore, the application allows to analyze log entries by obtaining more infor-
mation about the logs and their messages. The application displays all logs
generated during a data collection run with sub-object DTINF COLLECTION.
For log entries additional information are provided, such as the start/end date of
the collection process or the tables from which data was retrieved. The application
also shows all logs generated by the DTINF GENERATE sub-object during data
model generation.

Use cases of the IRF are tasks which are required to align with the data subjects’
rights. For example, it is used to serve the data subject with information on personal
data undergoing processing and the underlying purpose and retention policies. In
addition, the IRF offers features which are used in other contexts (Fig. 32.3).

Read Access Logging

RAL is a tool which logs all read operations when personal data is accessed. It helps
to clarify situations in case of abuse and makes sure that actors who might have
access to data in the system, but weren’t supposed to access this data, can be made
responsible for possible consequences. RAL is frequently required to comply with
legal regulations or public standards, such as data protection and privacy, for
example, in banking or healthcare applications. Data protection and privacy are
concerned with safeguarding and restricting access to personal information. Data
protection and privacy laws in some countries even require that access to certain
personal data be reported. Companies and government agencies may also want to
monitor access to classified or sensitive data for their own reasons. If no trace or log
is kept on who accesses data, it is difficult to hunt down the person responsible for
any data leaks to the outside world. This information is provided by RAL. Read-only
Access Logging is always based on a logging purpose that is freely defined
according to an organization’s needs (e.g., data protection and privacy). This logging
purpose is then assigned as an attribute to each log entry, allowing log data to be
classified and organized based on the logging purpose. Various archiving rules or
reporting, for example, can be created based on logging purposes. Thus, the RAL
framework can be used to comply with legal or other regulations, detect fraud or data
theft, conduct audits, or for any other internal purpose. The RAL configuration is
read when an application is launched. It indicates whether and to what extent the
current function module, operation, or UI element is log relevant. Log entries can be
organized based on their semantics. Predefined configurations may exist in SAP
applications. However, in order to meet the legal requirements of organizations, the
508 32 Data Protection and Privacy

SAP IRF Application Log with different Filtering

Fig. 32.3 SAP IRF application log with different filtering

customer’s key user is usually adapting them to company’s needs. RAL can be used
to monitor and log access to personal data. The information provided may include,
for example, which business users accessed personal data from business partners and
when they did so. SAP provides default configurations that assign log domains
dedicated fields. A log domain is a category that groups data fields that are semanti-
cally identical or related. All fields displayed on the UI that are related to these
domains are logged. The domain is shown in the log. In the RAL Configuration
application, customers can activate or deactivate the available RAL configurations,
as well as make changes. Customers should think carefully about which information
is important to log. If a broad range of information is logged, customers will end up
with a large amount of data that will be more difficult to process than if more specific
logging is configured. Because they are only identifiable with this additional per-
sonal data, these log domains are logged with fields related to business partner (BP),
Solution Capability 509

customer (CUSTOMER), supplier (VENDOR), legal entity (LEGAL ENTITY),

employee (EMPLOYEE), or student (STUDENT). TRADE_UNION data, for
example, requires information about the EMPLOYEE. If necessary, log conditions
are used to limit data logging (in technical terms, these fields are considered as
conditions). For example, customs could configure RAL to log an employee-related
field in a specific transaction only if the employee’s religion is displayed. Access to
this field is not logged if it is only visible on a tab that does not display the
employee’s religion.
By default, RAL is turned off. Customer can enable it in the RAL Configuration
application’s relevant section. With the Monitor application created logs can be
displayed (Fig. 32.4).

Change Documents

Change documents is used for tracking all attribute changes to objects which have
this feature enabled. For example, the date, time, old value, new value, initiator, and
more parameters are logged. The tool offers various SAP Fiori application which can
be used to view changes made to different objects. Many business objects are
frequently changed. It is frequently useful, if not required, to be able to trace the
changes made. If the changes are logged, customers can always find out what was
changed, when it was changed, and how it was changed. This can assist in analyzing
errors. Change documents are used to support auditing, for example, in financial
accounting. A change document records modification to a business object. The
document is created independently of any changes to the database.

Consent Management

Consent Management is a tool in SAP S/4HANA which helps managing consents of

data subjects. It provides the SAP Fiori application which allows the user to import
consents using a json file, enable the user to search and display consents, and view
logs of previous import jobs. Any personal data collected or processed must be
linked to a specific, predefined purpose, such as the performance of a contract or the
fulfillment of a legal obligation. If customers need to obtain consent from the data
subject before using their personal information, this consent data can be saved in the
SAP system as consent records. Furthermore, the solution assists in handling consent
data in accordance with applicable data protection regulations. It manages consent
data retention, controls access to consent data, and aids in the blocking or deletion of
master data. Consent administration allows to search for and view stored consent
records, as well as import consent data from a file or through web services. Consent
administration enables the following functions:

• Manage Consents: This application allows to search for and display consent
records that have been previously imported from a file. The system provides a
510 32 Data Protection and Privacy

Fig. 32.4 SAP RAL Metadata Extension Editor and Custom Metadata Extension

detailed list of consent information, such as the purpose for processing personal
data, the responsible data controller, or third parties who may be involved.
• Import Consents from File: Customers can use this app to import consent data
from a file. In order to do so, the data must be in JSON format.
The application allows selecting the appropriate level from the application log
detail level dropdown list to specify the amount of detail customers want to log
during the import process. Furthermore, by using the external reference ID field,
Solution Capability 511

Fig. 32.5 SAP Consent Management—Manage Consents and Consent Details

own log ID can be created. This feature allows to easily search for and identify the
logs relevant to customers when analyzing the import log in the Analyze Consent
Import Logs application.
• Analyze Consent Import Logs: This application facilitates to search for and view
the import logs generated during the consent record import process. Furthermore,
the application allows to analyze log entries by obtaining more information about
the logs and their messages. The tool enables viewing a list of all import logs that
match the criteria you specified and narrowing down to the list of import logs
(Fig. 32.5).
512 32 Data Protection and Privacy

Security and DPP Safeguards (TOM)

As already mentioned earlier, technical and organizational measures (TOMs) need to

be implemented to meet the data protection and data privacy requirements. SAP
S/4HANA provides the TOMs described in this chapter.
Authentication describes standard authentication capabilities which enable sys-
tem access based on personal authentication. For example, the SAP S/4HANA
Cloud uses the Identity Authentication service of the SAP Business Technology
Platform. Authorizations describe standard authorization concepts fine-tuned based
on proper data separation. They define which data can be accessed and with which
permissions. The SAP S/4HANA On Premise makes use of the existing ABAP
authorization concept, and SAP S/4HANA uses role-based authorizations. Data
Separation describes that personal data which has been collected for a specific
purpose needs to be separated from personal data collected for other purposes.
Changes to personal data need to be documented. SAP S/4HANA offers change
logging capabilities like the previously introduced Change Documents tool.
Encryptions ensure that personal data is not accessible by unauthorized parties
during transit and at rest. Availability Control makes sure that personal data is
available. This is achieved by implementing procedures like backup, disaster recov-
ery, and business continuity. Examples for availability control measures are backups
of SAP S/4HANA Cloud tenants. The transmission of personal data needs to be
secure. The Transmission Control measures are guidance on how personal data
should be transmitted to ensure a secure transmission of data. In SAP S/4HANA
concepts like encrypted communication and using the Unified Connectivity (UCON)
Framework come in place. The Job Control measure is about ensuring that the data
processor is following the data controller’s instructions and guidelines. It consists of
some technical aspects but also organizational and contractual aspects. SAP
S/4HANA Cloud fulfills several certifications, and SAP S/4HANA On Premise
provides a range of audit functionality in regard to this measure. When
pseudonymizing data, it is changed in a way that the data subject is not identifiable
without using separately kept information. SAP S/4HANA offers procedures such as
test data pseudonymization to apply pseudonymization. Disclosure Control is about
logging all access operations to personal data. In SAP S/4HANA the previously
described Read Access Logging (RAL) provides functionality to log all access
operations. The goal of Physical Access Control is to prevent unauthorized persons
from gaining access to data processing systems. In SAP S/4HANA On Premise the
corresponding IT department and for SAP S/4HANA Cloud SAP as the operator
need to ensure physical access control. For example, physical access control can be
enforced by using access cards or by hiring a doorman.
Conclusion 513

Conclusion

Data protection and privacy are very important factors which need to be considered
when working with personal data and come with different regulations which need to
be met. SAP S/4HANA Cloud and On Premise offer different tools like the ILM,
IRF, RAL, Change Management, and Consent Management, which handle data
protection and privacy as a central component. As a result, the effort for
conceptualizing new applications is minimized, and customers are able to be com-
pliant with data protection and privacy laws. The chapter gave also an overview of
the history of different data privacy regulations, described up-to-date data regulation
laws, and showed how SAP supports their customers in meeting all requirements.
Secure Development and Operations
33

This chapter focuses on secure development and operations concepts and

frameworks of SAP S/4HANA. Particularly, secure software development lifecycle
with secure programming, threat modeling, code scans, and vulnerability
assessments are explained. Additionally, secure landscape architecture and
operations technics are depicted.

Business Requirement

Running a secure system landscape necessitates more than just secure software—
system setup and system operation are critical components of a secure system
landscape that provides a high level of protection against attacks and allows detec-
tion of such attacks to prevent downtime. IT Services and Operations Management
(ITSOM) tools are important for security because they collect all necessary informa-
tion about a system landscape, provide alerting mechanisms, and aid in the distribu-
tion of security patches to all systems that require them. Running and maintaining
secure landscapes necessitates a plan. And with the growing need to collaborate with
customers, partners, and employees at any time and from any location, a strategy that
makes things easier to use and manage is required. A strategy necessitates a plan—
an overall plan and thus a central controlling instance that executes—or at the very
least keeps the plan up to date for everyone to refer to. If fighting a lot of small battles
against vulnerabilities in a new setup, customers might win one or two, but they will
lose in the end. Consider firefighters, public security, or even flood scenarios: all of
the well-intended individual action, all of the uncoordinated help from motivated
citizens may be useful on the spot, but it will never be able to keep an entire
infrastructure or social system safe over time, let alone rebuild it. As a result, a
central office must coordinate all measures and activities in order to provide them as
efficiently as possible, at the right time, and in the right place. Thus, such a
headquarters in IT landscapes in the form of a central solution for IT Services and
Operations Management (ITSOM) is required—particularly in the SAP landscapes,

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 515
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_33
516 33 Secure Development and Operations

Fig. 33.1 Three phases for

ensuring security Secure Secure Secure
Build Setup Operations

IT Services and Operations Management

which are in many ways analogous to the real-world social systems and
infrastructures from the preceding analogies. Aside from distributing goods or data
and services, one of the concerns in such complex systems is always the system’s
security. Moreover, as with real-world systems, large areas of security are really
aspects of monitoring and alerting, software lifecycle, and software logistics. As a
result, security is frequently about knowing what is going on and understanding the
landscape and its processes, which allows customers to identify issues and fix them
quickly and with as much automation as possible. There are numerous ways to
approach and subdivide the vast subject of software, system, and landscape security.
First, secure software must be built, then secure systems and system landscapes in
which this software runs must be set up, and finally, these landscapes must be kept
secure in operations mode. Within these three main phases, the emphasis is on the
aspects where IT Services and Operations Management (ITSOM) tools make a
significant contribution to securing system landscapes (Fig. 33.1).
Obviously, security for software systems begins with what developers do. They
are the ones who deliver code that is more or less secure. They are in charge of
delivering security fixes as well as preparing interfaces for secure communications,
monitoring, and alerting. Developers must answer questions like, Is the code well
protected against manipulations and/or injections? Are interfaces designed to be
secure? Where are the credentials hardcoded? Have the proper monitoring interfaces,
alerting methods have been implemented? The first steps in operating a secure
environment are to set up secure systems, system interactions, and thus system
landscapes. Many tasks that must be performed only once during setup reoccur, on
a regular or continuous basis, during the operations phase to ensure security, which
is managed by an ITSOM solution. Setup is a critical phase because missing security
is often invisible, especially in a new system landscape. If the configuration is not
actively checked, security flaws are usually discovered during operations—often
after some damage has already been done. Powerful ITSOM tools become mission-
critical during the operations phase. This is true for many operations tasks, many of
which play critical roles in maintaining the security of the operated landscape. What
good is a secure configuration if changes to it go undetected? What is the point of
obtaining security fixes if customers don’t know where to apply them or how to
assess their potential consequences? These are recurring tasks for IT Services and
Operations Management (ITSOM)—the central management of information
indicating potential vulnerabilities and attacks, as well as the coordination and
routing of the corresponding fixes and defensive measures. Timing is a critical factor
in security because the time between the occurrence of a new threat or vulnerability
and its resolution defines the likelihood of damage. As a result, the ease and speed
Solution Capability 517

with which security issues can be fixed is critical, and the security of a system
landscape rises directly proportionally to the speed with which fixes can be deployed
across the entire landscape. This speed of fixing is affected by a number of factors,
some of which are as follows:

• The landscape’s homogeneity

• Completeness and consistency of landscape information
• Fixing method consistency
• Completeness and quality of information about landscape changes

Time is, of course, a critical factor on the business side of the equation. Security
breaches and service outages can cost businesses millions of dollars in revenue.
Preventative network and system security management and disaster recovery can
help organizations avoid these losses and distinguish between profitability and
non-profitability today. These effects are, of course, amplified by today’s trend
toward the cloud, which combines cloud and on-premise landscapes and provides
an increasing number of solutions for remote and mobile access. Because many of
the mechanisms are also applicable in these scenarios, they are not differentiated
between these deployment options.

Solution Capability

SAP provides a Secure Operations Map that covers the three above-mentioned
phases and serves as a reference to match the capabilities of ITSOM tools to the
requirements for a secure system (Fig. 33.2).
The definition of IT Services and Operations Management (ITSOM) tools covers
the tasks of the three phases: IT Services and Operations Management (ITSOM)
tools are any products or services that aid in the monitoring of an IT landscape and
all of its services, as well as the detection of any abnormal behavior. Any products

Security Emergency
Security Compliance Audit Cloud Security
Governance Concept

Users & Authentication & Security Review

Secure Operation Support Security
Authorizations Single Sign-On & Monitoring

Communication
Secure Setup Secure Configuration Data Security
Security

Secure Code Security Maintenance of SAP Code Custom Code Security

Operating System &

Infrastructure Security Network Security Frontend Security
Database Security

Fig. 33.2 Security map for development and operations

518 33 Secure Development and Operations

that improve control over the IT infrastructure (asset management, change manage-
ment, configuration management), processes (job scheduling, workflow manage-
ment), and service workflows are also acceptable (service and support desk, service-
level management, business service management). On the tool side, SAP Solution
Manager and SAP Application Lifecyle Management (ALM) are well-known offer-
ing in the ITSOM segment. In terms of security, it is accompanied by a suite of
services provided by the SAP service and support organization, which are frequently
controlled.

Secure Software Development

SAP has implemented a secure software development lifecycle (SDL) for software
development projects, providing a framework for training, tools, and processes
which can be also used by customers and partners. Because security is critical for
anyone who uses SAP S/4HANA, and services for running critical business pro-
cesses as well as storing and processing sensitive data, securely developed software
is a requirement for secure operations. Following the secure SDL framework is a
requirement for all the SAP S/4HANA product teams, for both on premise and
cloud. This section provides an overview of secure SDL with a focus on the
provisioning phases of a software product as defined in the ISO/IEC 27034-1
standard. Preparation, development, outsourcing, acquisition, and transition to
operations are all covered by the standard. In the operational phases, when the
software is deployed and used, the standard also covers activities such as software
maintenance, extensions, and security response. In this sense, secure SDL
encompasses the processes that describe how software is developed and maintained.
Security is a primary concern for any global company, and as such, businesses
expect solid and secure products and cloud offerings on which they can rely. As a
result, SAP S/4HANA considers security throughout the software development
lifecycle as shown in Fig. 33.3. To master this complex topic, the secure SDL
consists of a well-chosen combination of methodologies, guidelines, processes,
and tools. SAP is constantly improving those guidelines and tools as technology
advances and the environment and threat landscape evolve. These activities are
heavily embedded in the idea-to-market process framework as well as other corpo-
rate processes such as HR, product support, and cloud operations.

Security Training
Security is a cultural and organizational issue in which all employees must be aware
of and embrace security requirements. As a result, security awareness and regular
role-specific trainings are required for all roles involved in the development and
maintenance of our software products. This includes knowledge and awareness of
threats, common vulnerabilities, and attack patterns for product managers and
development support roles. Knowing how to apply threat modeling and risk assess-
ment methods assists all roles involved in deriving and deciding on application
security needs, as well as planning corresponding requirements and application
 Solution Capability

Preparation Development Transition Utilization

Risk Plan Security Secure Security Security Security

Training
Identification Measures Development Testing Validation Response

ƒ Appropriate training ƒ Threat Modeling ƒ Plan security features ƒ Secure programming ƒ Manual testing ƒ Independent security ƒ Incident Management
ƒ Security ƒ Product Standard ƒ Plan data protection ƒ Static code scans ƒ Dynamic testing assessment
awareness Assessment and privacy (DPP) ƒ OSS Vulnerability ƒ Hacking Simulation ƒ Independent data
ƒ Secure ƒ Data Protection features scans (HASI) / Penetration protection and privacy
programming Compliance Evaluation ƒ Plan security and DPP ƒ Unit tests test assessment
ƒ Threat modelling ƒ Secure Operations tests ƒ Code review ƒ External security ƒ Pass SAP
ƒ Security testing Architecture ƒ Plan incident response assessment Security Validation
Requirements (SOAR) (three stars report or
ƒ Data protection
Compliance better)
and privacy
Declaration
ƒ Security
expert curriculum

Fig. 33.3 Secure software development lifecycle (SDL)

519
520 33 Secure Development and Operations

security controls. Security training for architects and developers teaches them how to
design secure software and write secure code. Security test methods and tools are
taught to developers and quality assurance engineers. Furthermore, dedicated train-
ing curriculum are required as well as other learning opportunities for developing the
role of security expert, such as security information sessions and local security
summits. Participants in these training opportunities acquire or expand the subject-
matter knowledge and skills required to become security advocates and support their
teams during product planning, creation, and operation.

Risk Identification
SAP follows a risk-based approach to achieve security within economic constraints,
taking into account the time and cost of product provisioning and operations. This
risk-based approach enables targeted security investments that address all identified
risks within the context of SAP S/4HANA. Product teams conduct a security risk
assessment at the start of each new software development cycle to identify and
analyze risks and rate their criticality. The security activities that are planned and
carried out are based on the outcomes and decisions of the risk assessment. Product
teams must first identify and classify the assets managed by the product as a
prerequisite for the security risk assessment. These assets can be various types of
data, but they can also be the availability of business processes as described by
application specifications. Deep expertise is required to identify security risks from
potential threats, assess these risks, and make informed decisions about how to treat
each risk. Product teams at SAP S/4HANA benefit from using corresponding
methodologies that have evolved over time within the company, with threat
modeling being the most effective. Three modeling variants of risk assessment
methodologies are used by developers. The first variant is threat modeling at the
product level. It applies threat modeling to a broader product scope and architecture
that includes a variety of parts and components, including self-developed, open-
source, outsourced, and acquired components. It is an in-depth approach that
provides a quick overview of the main threats applicable to the product and the
risks associated with these threats. Scenario-based threat modeling is the second type
of threat modeling. It is more similar to the well-known threat-modeling approach,
and product teams use it for in-depth analysis of a specific product’s components and
supported scenarios. In cases where new planned features necessitate deeper inves-
tigation, the in-depth threat modeling of selected critical scenarios can be an
outcome of the in-depth threat modeling approach. Furthermore, it can be used in
the development of small applications or products with limited scope. The third
variant, known as fast-track threat modeling, can be applied as a delta threat
modeling approach. It can be used when applications use a well-defined architecture
that has already been threat modeled, or when a new product version needs to be
evaluated to see if an existing threat model from a previous version still applies. Fast-
track threat modeling is based on a questionnaire that determines whether prior threat
models’ assumptions and dependencies are still valid. Following the completion of
security risk assessments, a product team is tasked with determining which risks will
be mitigated and managed further. This occurs during the phase of security planning.
Solution Capability 521

Security risk assessments are a required task for SAP S/4HANA that adhere to the
risk-based secure SDL, regardless of the supported deployment models.

Plan Security Measures

In addition to risk assessments, product teams must conduct a data protection
compliance evaluation (DPCE) in order to properly plan features and controls that
comply with legal requirements such as the EU General Data Protection Regulation.
DPCE, in contrast to the risk-based approach to secure software development, has a
dedicated compliance focus and requires strict adherence to regulatory requirements
such as data deletion or consent management. However, ensuring effective personal
data protection through the use of adequate application security controls is a topic of
security risk management. The product team is asked to derive the security and
privacy requirements applicable to the product based on the results of the risk
assessment and the DPCE. The team should define a suitable security control for
each applicable requirement, which includes a security activity, a verification mea-
surement, and the time to apply it (see Fig. 33.4). The security plan for the product
should include all applicable security controls that the product team decides to
implement.
Security controls are classified into two types. To begin, security functions are
those that the product team implements to enforce security within the software or
that are used by an underlying application platform. Here are some examples:

• Access control is enforced through authentication and authorization functions.

• Encryption of data in transit and at rest.
• Message authentication code and integrity protection.
• Protection against click-jacking, request forgery, and secure session management.
• Data access and security events are logged.

Another set of potential security controls is defined by how a product team

decides to prevent product vulnerabilities and achieve secure functions. For

Application Security
specifications risks

0..k
derive from
pplication context
Application 0..m

Business context Security

requirements

Regulatory
egulatory context 0..m
implement and verify
0..n

Technology
echnology context Security Security
controls
contro
r ls plan

Threats

Fig. 33.4 Threats, risks, requirements, and controls

522 33 Secure Development and Operations

example, it is critical to address faulty input validation, corrupted memory errors,

improperly encoded output, and gaps that allow privilege escalation. One or more
verification measures are included in each security control. Verification measures
could include:

• Architecture and code reviews, which help to ensure that the product team has
placed and correctly implemented security controls.
• Static-code analysis, which can identify paths in the code where non-validated
input can output, be injected into code or inappropriate database queries, or cause
memory corruptions.
• Dynamic security testing, which can reveal unprotected access paths, indirect
object references, or unexpected error situations that lead to privilege escalation.
• Penetration tests, which can confirm the expected security status or reveal new
attack vectors.

SAP’s Product Standard Security contains a supporting library of security

requirements and security controls for product teams to use. This library contains a
set of security requirements that can be used by product teams to help them mitigate
security risks. Furthermore, it provides guidance on appropriate solutions and
verification methods. The library, which has been accumulated and maintained
over time, not only builds on SAP’s experience as a provider of enterprise
on-premise and cloud applications, but also incorporates content from valuable
third-party and public sources like OWASP, SANS or CWE. Developing and
maintaining a security plan is a requirement for all SAP standard software product
teams. Furthermore, product teams are expected to have processes and plans in place
to handle security vulnerabilities reported by third parties as soon as a product
version is released.

Secure Development
Product teams design and implement a product’s specified functionality and non-
functional qualities during the development phase. SAP’s Product Standard Security
includes secure design principles such as fail securely in the event of an error, secure
by default, never assume trust, least privilege, and check authorization close to the
resource. The SAP S/4HANA product development teams are encouraged to use
secure programming techniques, libraries, and tools that aid in the prevention of
security flaws during implementation. The goal is to implement secure functions
throughout the product, including application and security functions. It is critical that
functions perform their intended functions and do not contain vulnerabilities that can
be exploited. During this phase, the product team implements security controls
outlined in the product’s security plan, such as those built into the software.
Developers also conduct design reviews, code reviews, additional threat modeling,
and static-code analysis. The development team must adhere to the security plan,
which includes plans for open-source, outsourced, and acquired components.
Solution Capability 523

Security Testing
Product development teams perform a number of security scans as part of secure
SDL, as described in the following sections:

• Static-Code Scans: The secure SDL methodology expects product teams to

perform additional verifications of the implemented security controls through
security testing, in accordance with the security test plan developed as part of
the product’s security plan. The secure SDL framework specifies a security
testing approach that intelligently combines static and dynamic testing methods
and tools. Static application security testing (SAST) tools are available and
optimized for SAP’s most popular programming languages. Development should,
if possible, integrate these tools directly into the tool environment and use them
on a daily basis. If this is not possible, the project team will run static-code
analyzers on a daily or weekly basis and feed the results back to the developers for
immediate audit and analysis during the development phase. The runs allow
audited results to be carried over to subsequent source-code scans automatically.
Static analysis is typically performed in an automated manner, allowing
developers to process large amounts of code and potentially find many issues
with specific classes. The use of static-code scan tools on SAP developed code, as
well as auditing tool findings, is a required control in secure SDL that is
independent of the identified risks.
• Open-Source Known Vulnerability Scans: As part of secure SDL, product devel-
opment teams are required to scan their used open-source components for known
vulnerabilities on a regular basis and to mitigate findings, such as patching to a
secure version. The use of open-source known vulnerability scan tools on open-
source components used by SAP, as well as auditing of the results, is the required
control in secure SDL.
• Dynamic Static-Code Scans: Furthermore, as part of their risk-based security
plan, project teams can plan and execute dynamic application security testing
(DAST). Corresponding tools assist developers and quality engineers in
dynamically traversing individual parts and scenarios supported by the product,
observing actual application behavior, and potentially identifying additional
security flaws. These tools are especially useful for testing the interaction and
integration of components written in different languages or for incorporating
components that are available only as binaries.

Security Validation
Product security validation ensures that SAP S/4HANA can withstand the rigors of
real-world deployment. The security validation team works independently of the
development and product-provisioning teams and serves as a governance instance
for SAP’s secure SDL. Security validation verifies that development teams have
completed all mandatory tasks in SAP’s secure SDL and runs its own security tests.
The number and scope of these tests vary according to the importance and potential
impact of security flaws in the product on customers. The scope of testing can vary
524 33 Secure Development and Operations

from a simple process review to several days of active validation and penetration
testing. The secure SDL requires all products developed within SAP’s innovation
cycle to go through the security validation process as a mandatory step.

Security Response
When developing secure products, preventing security vulnerabilities has the highest
priority. Even the best security-assurance measures in place during development,
however, cannot guarantee the complete absence of flaws or defects, especially when
it comes to threats or insights discovered after a product has been released. As a
result, SAP has a critical security response process. Following the release of a
product or service—or any extension or modification to either—the product team
must be prepared to receive vulnerability reports during use. In such a case, SAP
must have contacts and the necessary technical skills on hand immediately to triage
and investigate vulnerability reports and either confirm or reject the vulnerability.
SAP is requested to provide timely security corrections to sanitize the issue based on
the severity based on the internal target for a confirmed vulnerability. SAP’s product
security response team contributes to the high-quality mitigation of security
vulnerabilities in shipped SAP software. This includes the following:

• Overseeing the responsible disclosure of vulnerabilities in SAP software reported

by third-party sources such as security researchers and hackers
• Organizing the monthly security patch day
• Crisis management for issues such as SAP software breaches

Customers, partners, researchers, and others can submit vulnerability reports via
SAP’s online support tools or PGP-encrypted e-mail.

Secure Operations

It is not enough to have secure code to run a secure system. After deploying
software, system configuration is critical to establishing a secure system from the
start. Some security issues arise during the setup phase, when system components
are deployed but not used and not checked. Secure configuration also includes the
definition of security standards for systems against which subsequent changes can be
validated. The ongoing business of operations is the primary focus of SAP Solution
Manager and SAP ALM, and it is therefore critical to secure operations. Those
solutions provide assistance to operators in all of their primary task areas. They offer
an overview of the system landscape and its status, manage and monitor release and
patch levels, and compare configuration changes to the compliant and secure
baseline configuration defined by compliance activities and established during
setup. Users and authorizations, authentication, and single sign-on (SSO) are typi-
cally handled with SAP Identity Management. However, SAP Solution Manager and
SAP ALM support configuration validation, for example, data from the configura-
tion and change database (CCDB) can be used to run queries like “all users with SAP
Solution Capability 525

ALL access on a regular basis to monitor and verify compliance with SAP
recommendations and corporate policies.

Secure Configuration
Based on information gathered in SAP Solution Manager and SAP Application
Lifecycle Management (ALM), a set of services is provided to ensure secure
configuration during initial system setup. Early Watch Alert (EWA) and the more
detailed Security Optimization Service (SOS) compare customer settings
(configurations and authorizations) with SAP-recommended standards. Based on
the findings, a customer-specific security baseline that takes into account customer-
specific conditions and security regulations can be developed. Any changes made
during operations can then be monitored using configuration validation, ensuring
that no unwelcome change goes unnoticed. In addition to regular monitoring,
customers should run the complete SOS and/or EWA reports on a regular basis to
ensure landscape compliance, as not only systems but also the threat landscape
around the systems evolve and SAP recommendations may emerge over time. SAP
Solution Manager and SAP ALM can monitor changes and configurations for
interfaces in the same way that it does for changes and configurations, and they
can assist in assessing the proper configurations for network communications with
configuration validation in conjunction with support. It does not, however, play a
role in traditional network security issues. SAP Cyber Defense & Response Center
focuses also on SAP S/4HANA. Thus, all security events and incidents are logged
and monitored, as well as security-critical events and incidents are mitigated accord-
ingly. This monitoring is available 24 hours a day, 7 days a week, with an end-to-end
security incident handling service in place. It is also possible to manually identify
and analyze sophisticated attacks. This is mostly performed in case of complex
attacks in order to identify the attacker and prevent future attacks, or to detect similar
attacks faster and take appropriate security precautions to be better protected.
Furthermore, SAP provides a process for customers to report security incidents.

Monitoring and Support

Support Security defines the policies for support personnel, secure support
connections to customer systems, and support user roles, accounts, and
authorizations. SAP ALM can assist in enforcing these policies through the
mechanisms described in users and authorizations, authentication, and single sign-
on (SSO). In light of the growing demand for data protection, this policy enforce-
ment adds an additional layer of security and confidentiality to the system landscape.
Customers’ primary focus is on the ongoing process of reviewing and monitoring
security. It is also a mission-critical area for SAP Solution Manager and SAP ALM,
as they facilitate collaboration between the Operations Control Center (OCC) and
the Innovation Control Center (ICC) on the customer side and the Mission Control
Center (MCC) on the SAP side. The SAP Solution Manager and SAP ALM can be
used as a central instance for all monitoring and alerting information within the
customer’s operations center, and—in an ideal setup—certain cases should be
defined in which incoming alerts directly and automatically trigger the MCC at
526 33 Secure Development and Operations

SAP. Again, the information in the CCDB that will alert to any unexpected configu-
ration changes in the landscape is mostly security relevant. These changes are
detected and alerted by the SAP Solution Manager extension Enterprise Threat
Detection. Periodic checks of the landscape against the configuration validation
data confirm whether systems still adhere to the baseline configuration defined and
implemented during the setup phase. This SAP Solution Manager and SAP ALM
feature aid in maintaining a high level of security during productive system
operations. Based on continuous monitoring, a single indication can already reveal
a potential intrusion in progress, giving the administrator the opportunity to activate
countermeasures. SAP Solution Manager and SAP ALM also handle problems and
incidents and provide context-sensitive recommended actions (guided procedures)
for these cases. As a result, those solutions play an important role in the security
concept.

Landscape Architecture
To ensure secure operation of a platform such as SAP S/4HANA, SAP has consid-
ered a technically robust security architecture that divides the data and concerns and
is legally capable at all times. On the other hand, SAP also uses a separation between
the network and the customer and builds a layer in between to avoid vulnerability.
Furthermore, SAP also uses many tests, hacking simulations, and scans to ensure
security. Additionally, backup and recovery mechanisms are considered. Multi-
tenancy architecture allows customers to share hardware without violating data
protection and data privacy. Customer isolation takes place at application level
using security groups, whereby each customer can be part of only one security
group. Client isolation is incorporated in SAP HANA at database level. With these
security groups, it is possible to establish communication between quality assurance
system (Q instance) and production system (P instance). SAP can gain access to data
and the system only by an administrator and multi-factor authentication. This
prevents the use of hacked administration accounts and safeguards the data and the
system. This is also used to run central lifecycle management tools to protect and
maintain the cloud. However, the information from monitoring, incidents, and health
checks is automatically considered into the SAP network to protect the systems and
maintain them proactively if required. Customer access to cloud applications using
the Internet is one of the most critical security challenges. The SAP S/4HANA Cloud
applications can be consumed using HTTPS from anywhere, whereby customers
have access via a central load balancer and Web Dispatcher. There are two
interfaces: the UI interface, where the end user can work with the system via a UI,
and an API interface, whereby this is used for system-to-system communication. The
Web Dispatcher controls the message traffic in order to avoid, for example,
distributed denial of service (DDoS) attacks. To ensure the security of applications
and infrastructure, they must also be checked continuously. This involves
performing various security tests such as penetration tests or hacking simulations
on critical components.
Solution Capability 527

Data Center Security

Since SAP’s S/4HANA is also a cloud product, the security of the data centers
around the globe must be ensured at all times. There are five important areas that are
covered in this context: Physical security, network security, backup and recovery,
compliance and confidentiality, and integrity. Physical security refers to the protec-
tion of servers, computers, and media from physical threats posed by third parties or
natural disasters. This includes monitoring in and around the data center using
surveillance cameras, motion sensors, and infrared sensors, among other things.
Those utilities should display and log prohibited data center access so that security
personnel can take appropriate countermeasures. Additionally, this also necessitates
that the data center be constantly monitored and protected by security personnel. To
prevent unauthorized access, also biometric sensors or access card readers can be
used. The power supply must always be available so that the application services can
be available, and no data is lost. If the power supply is interrupted, this must be
mitigated by generators. Other physical threats include natural hazards such as
flooding, fire, extreme heat, and cold. Countermeasures are, for example, reinforcing
the data center’s facade, installing ventilation and water sprinklers, and monitoring
the temperature in the data center. Because the computers can be accessed from
anywhere in the world, the connections must be monitored and managed as well.
SAP uses data encryption in the transport layer (256 bits) to provide this security,
makes use of several firewalls to protect the internal network from attacks, and
deploys reverse proxy farms to obfuscate network tropology, and network
operations are monitored all the time. When a system fails, backups are required
to recover lost data. SAP performs a daily backup in which all data is saved. This
also includes log file backups, which are replicated every 2 hours. If a data center
completely collapses due to a fire, for example, backups can be obtained from
another data center as SAP stores backups in several geographically separate data
centers. Point-in-time recoveries are also provided. Backups, on the other hand, have
a retention time of 4 weeks for production systems and 2 weeks for non-production
systems. SAP allows to identify business transactions and track them down to their
underlying source documents. In SAP S/4HANA, for example, it is not possible to
delete posting-relevant data, but financial data can be changed of course. All changes
to this data, however, are logged and the history is saved. Users often have access to
more data and functions in applications than they require. This is a major security
issue because users can have no access to sensitive data and functions. SAP has role-
based access for this, which means that a user can consume only the functions and
data that are permitted by the role. Thus, users’ access to application features are
limited to only what they require to for their tasks. User activities can also be
monitored in order to detect unusual behavior and react appropriately in critical
cases. The customer also has complete ownership of the data and can, for example,
extract its customer data or gain access to it via read-only authorizations after the
contract has expired. Customer data can be deleted only with the customer’s
permission. Through proactive, automated system monitoring, SAP S/4HANA can
ensure data integrity and availability.
528 33 Secure Development and Operations

Conclusion

SAP strives to protect data and services as much as possible with the SAP S/4HANA
security concept. On the one hand, SAP protects third-party data, data from within
the company, and data from SAP itself. It will also make every effort to ensure that
the cloud and its services are always in use. However, the greatest risk is posed by
the employees and end users themselves, and no software is completely secure. SAP
Solution Manager and SAP ALM serve as the focal point for a wide range of tasks
and activities at the heart of managing a highly complex SAP S/4HANA system
landscape. Those solutions are the tools of choice for defining, implementing, and
maintaining a secure system landscape. The security of system landscapes is one of
the aspects that such central management tools ensure. Overall, those operations’
solutions are potent ITSOM tool.
Globalization and Localization
34

This chapter focuses on globalization and localization concepts and frameworks of

SAP S/4HANA to enable country-specific regulations, languages, currencies,
calendars, and time zones. Particularly, advanced compliance reporting, document
compliance, and localization toolkit are explained.

Business Requirement

Globalization refers to any activity that brings different countries’ people, cultures,
and economies closer together. In the business world, globalization aims to practices
that enable organizations to become more connected to their customers all over the
world. This includes everything from product design to marketing in different
national markets. Because of the rise of globalization, there has arguably never
been a better time to build a business into a global company. Companies looking to
expand have a plethora of options available to them, ranging from access to a global
talent pool to an increased volume of information that can be used to position a
business. Globalization primarily refers to the strategy of expanding business
beyond national borders. It includes the processes that teach about international
law as well as local regulations, how to create a multinational business environment,
and how to connect with international partners to improve chances of success. In the
past, globalization was more associated with large, complex organizations. But more
enterprises of all sizes are going global due to new markets, foreign investment
opportunities, ways to save on taxes, access to talent, gaining competitive advantage.
Last but the not least, advancement in digital technologies have enabled them to
become more global. As it becomes easier to enter new markets, there will be more
product niches to exploit—and new customers to attract. However, truly going
global necessitates extensive planning. Localizing the product is the most important
steps in this process. Thus, localization fall under the umbrella of globalization. The
process of adapting a product to a specific target market is known as localization.
Localization is the process of adapting product to local markets by making it sound

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 529
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_34
530 34 Globalization and Localization

and feel more native. It goes beyond simply translating the content. To create a
product that meets the expectations of the locals, factors such as culture, religion, and
local preferences must be considered. Localization entails customizing many
elements such as currency, time format, colors, icons, and any other aspect of
products that may appear foreign to target audience. This usually occurs after
internationalization has occurred. Whereas internationalization creates a product
that is easily adaptable to many different audiences in many different countries,
localization takes that product and makes it highly relevant to a single market.
Companies need to comply with government regulations in a timely manner or
pay hefty fines or worst stop operating in that market. Some typical compliance may
include regular tax filing with tax authorities or in some cases generating electronic
invoices that may need to be shared with the local authorities. On top, many of the
customers/prospects have heterogeneous system landscape, and there’s no single
source of truth that makes their situation more complex involving huge reconcilia-
tion efforts. Figure 34.1 illustrates some of the examples of globalization and
localization that organizations have to deal with. Enterprises need to support country
official language—not just in the software but also in documents generated from the
system shared with various authorities and partners. Taxes is another example for
localization and globalization, for example, there are over 10,000 tax jurisdictions in
the United States that have to be taken into account for the various transactions.
Statutory reporting is a further instance as companies need to file timely financial
statements and tax declarations. Thus, globalization, internationalization, and locali-
zation all have distinct characteristics. However, when expanding into emerging
markets, each of these concepts is equally important. Skipping any step could cause
to lag and prevent from developing a strong global brand.

Solution Capability

SAP S/4HANA helping organizations scale their business processes across the globe
is a key differentiator. The ability of SAP S/4HANA to be used by multinational
enterprises is referred to as globalization. Globalization consists of language support
as well as support for local regulations such as tax management. The latter is known
as localization. SAP has over 40 years of experience developing ERP software that is
used in a variety of industries and countries. As part of SAP’s i18N internationaliza-
tion standards, SAP S/4HANA supports multiple languages, currencies, calendars,
and time zones to address the global market. Because of the evolution and frequent
changes in laws and regulations across countries, as well as different business
practices around the world, product localization is critical if companies want to
succeed in the international marketplace. SAP S/4HANA supports 131 countries,
delivered more than 1500 legal changes, offers 64 local versions in 42 different
languages with specific localization and legal features for countries and regions in
the S/4HANA On Premise, and 43 local versions in SAP S/4HANA Cloud as of
now, with the plan to achieve parity of localization between the cloud and
on-premise editions within the next year. Localized business logic, such as tax
 Solution Capability

Payments Master Data Invoicing Languages Validations

Country formats used Legally required information, Country-specific invoicing Country official
off
f icial Country-specific format
form
to collect incoming and VAT numbers, ID numbers, process extensions language(s) ban
for address, IDs, bank
outgoing payment data currencies, calendar accounts

Taxes Statutory Reporting Benefits Time Data UIX

Tax codes based on conditions Financial statements, Country-specific Country-specific rules Fiori Apps
or formulas for mandatory tax tax declarations, EC sales benefits, eligibility and and formats
computation, taxation list, document numbering admissibility rules Country-specific fields
processes, exemptions and features

Fig. 34.1 Examples of areas affected by globalization/localization

531
532 34 Globalization and Localization

Product standard globalization is…

nternationalization
Internationalization + Functional
Localization
+ Languages
• Multilanguage support
• Product (User Interface)
• Code pages / Unicode • Local business best practices • Documentation and collaterals
• Time zones • Legal requirements and • Customer communication
• Multiple currencies statutory reporting
• Calendars • Business to Government
information exchange

…the foundation for globalized, localized and functioning solutions.

Fig. 34.2 SAP S/4HANA—globalization and localization buckets

calculations, and reporting capabilities are added to localized versions for applica-
tion areas such as financial accounting, asset accounting, taxation, customer/supplier
invoicing, procurement and sales, and master data validations. Localization features
are typically added on top of standard functionality and are deeply integrated into the
application logic. SAP S/4HANA supports globalization and localization through
the three buckets illustrated in Fig. 34.2.
Languages cover not just the product but also the documentation, collaterals, and
customer communication are offered in the local official language. Functional
Localization offers out-of-the-box local business best practices complying with
legal requirements and statutory reporting. Thus, business to government informa-
tion exchange is ensured wherever it is required. Internationalization enables multi-
ple language support, multicurrencies, and the ability to handle various calendars/
time zones. Key applications and frameworks for localization are exemplarily
explained in the next sections.

Global Tax Management

Managing indirect taxes such as VAT, GST, sales taxes, and use taxes, among
others, has become a common challenge for many businesses as governments
around the world have begun to implement increasingly sophisticated controls.
Governments have done this not only by auditing fiscally relevant data but also by
introducing more and more transactional obligations related to proof of delivery, by
online validation of taxpayer registration, or even by real-time submission. As a
result, companies must ensure that their enterprise management software models
fiscally relevant entities correctly, makes accurate transactional tax decisions,
submits tax information in real time, and records data in an audit-proof manner for
consistent tax reporting. Scalable solutions that provide maximum efficiency
Solution Capability 533

Global tax management A Holistic Approach to Manage Indirect Tax from a Single
Source of Truth

Tax Calculation Validation and Audit Electronic Invoicing Return Calculation and
SAP Tax Service SAP Tax Compliance SAP eDocuments, Declaration
SAP NFE (Nota Fiscal SAP Advanced
Electronica) Compliance Reporting,
SAP Tax Declaration
Framework

Analytical

Validation Declaration

Calculation E-Documents
Transactional

Fig. 34.3 SAP S/4HANA—global tax management

through automation and controls that enable global businesses to effectively manage
eventual compliance risks are required. SAP S/4HANA resolves these challenges by
offering global tax management. As finance organizations develop active engage-
ment with their business operations and navigate changes to invoicing, collecting,
paying, and reporting taxes, these solutions guide enterprises along their tax trans-
formation journey. These capabilities are tailored to the needs of tax professionals,
with an emphasis on four key areas of indirect tax management: Taxation determi-
nation, compliance with electronic documents, reporting on compliance, and tax
administration. Global tax management is a comprehensive solution for managing
indirect taxes. This act as a single source of truth is depicted in Fig. 34.3. There are
many countries that have regulations to identify any tax evasion schemes or inaccu-
rate reporting of information. Some even demand audit files with original document
information on line-item level, master data, and in some cases supportive data like
bank statements, inventories, or even production orders. This gives the authorities
almost full transparency about the taxpayers.
To help enterprises to be able to pass audit and meet all the legal compliance, SAP
S/4HANA has a complete solution covering tax calculation with SAP Tax Service,
validation and Audit through SAP Tax Compliance, creation of specific electronic
invoicing, for example, SAP eDocuments, SAP Nota Fiscal Electronica for Brazil,
and Compliance reporting with SAP Advanced Compliance Reporting and Tax
Declaration Framework. Customers can further customize many of these services
to meet their unique requirements.

Global Payments

In recent years, there has been a concerted effort to replace bank-specific formats
with standard XML formats defined by ISO 20022. Unfortunately, despite the fact
534 34 Globalization and Localization

that ISO 20022 increased standardization by defining the structure of these formats,
differences persist. For example, some countries continue to use only a portion of the
structure or expect the same information to be stored in different parts of the
structure. Payment purpose codes, for instance, are used to categorize the type of
payment (salary payments and payments for services). This information can be
stored in some countries under the heading Unstructured Remittance Information
RmtInf>Ustrd>, and in others under the heading Regulatory Reporting
RgltryRptg> or Instruction for Debtor Agent InstrForDbtrAgt>. Based on the
Common Global Implementation (CGI) initiative with country-specific changes,
SAP S/4HANA provides predefined ISO 20022 payment format templates for
each localized country. Credit transfers and direct debit formats are available.
There are also local country formats available, for example, FEBRA-BAN in Brazil
or Bacs in the United Kingdom.
Sometimes the SAP template format must be modified or a new format must be
created. Map Format Data is an extended application functionality that allows to
define or redefine structure and logic without programming. Figure 34.4 depicts the
Map Format Data functionality’s overview screen. The application allows to begin

Fig. 34.4 SAP S/4HANA—Global Payment Map Format Data

Solution Capability 535

with an existing template and restructure the format’s structure and logic. The tool
then performs consistency checks to assist in avoiding errors. It also facilitates to
download the format definition and use it in another SAP S/4HANA system. Thus,
the application enables the implementation of faster and less complicated payment
formats through improved templates and an easier tool for changing or creating new
formats.

Compliance for Reports

Global corporations and large organizations are frequently required to track time-
consuming compliance processes. Because of digitalization and a rapidly changing
economy, government laws and compliance requirements in the area of reporting,
such as VAT/GST, EU sales list, SAF-T/audit, tax withholding, and ledger reports
have evolved across countries. SAP S/4HANA for Advanced Compliance Reporting
is a global legal reporting solution that meets country-specific reporting
requirements. The Advanced Compliance Reporting consists of two applications:
Run Advanced Compliance Reports and Define Compliance Reports. SAP has
delivered over 240 reports that can be used with the Run Advanced Compliance
Reports application to meet reporting requirements all over the world. The Run
Advanced Compliance Reports application not only assists with report generation,
but also allows for manual adjustments to prepared files, notifies of upcoming due
dates, helps to view all of tasks holistically, and connects directly to government
authorities for submitting legal reports online. The Define Reports application
facilitates the implementation of reporting requirements in a country that have not
yet been localized in SAP S/4HANA. To comply with constantly changing legal
requirements, customers can either create own report or extend a standard report.
Figure 34.5 shows the general layout of the Run Advanced Compliance Reports
application, which displays a list of reports that are awaiting submission.
As shown in Fig. 34.6 the architecture of Advanced Compliance Reporting is
based on three components: Business configuration, report definition, and report.
CDS views, ABAP class methods, and analytical queries are used to consume
application data. Knowledge Provider (KPro) is used to centrally store generated
documents, and it also allows for the integration of a customer-specific document-
management system. Adobe Forms is used to generate PDF documents. The report is
prepared, generated, and electronically submitted to a government agency using
report run. Embedded analytics is integrated into the advanced compliance reporting
framework to help understand and explain the data shown in the reports, for
example, to an auditor. It allows to drill down to the data that was read to generate
the report, regardless of whether it was a line-item report (such as an audit file) or a
totals-only report. Advanced Compliance Reporting includes workflow functional-
ity, which facilitates reports to be sent for approval before being submitted to a
government agency. The report definition component of Advanced Compliance
Reporting includes the SAP Fiori application for building reports. The framework
handles the majority of the business user-related aspects out of the box, allowing the
 536
34

Fig. 34.5 SAP S/4HANA—Run Advanced Compliance Reports

Globalization and Localization
Solution Capability 537

SAP S/4HANA

Advanced Compliance Reporting

R R
Business Report
Configuration Definition
Report
Run
Reporting Report
Entity Meta Data

Application Adobe
Data KPro
Forms

Fig. 34.6 SAP Advanced Compliance Reports—architecture

application developer to concentrate on the reporting requirements. In business

configuration, a key user specifies which reports to submit, when they should be
submitted, and for which reporting entity. At runtime, reporting tasks are generated
based on this configuration, prompting the business user to generate a report.
Additional report-specific data classification and aggregation may be required for
each report, for example, the aggregation of tax line items with customer-specific tax
codes into tax boxes for VAT returns.

Compliance for Documents

Many countries require registering business documents such as invoices and deliv-
ery notes with the tax authorities before issuing them. In other countries, public
administration or digitalization bodies drive the use of electronic invoicing. SAP
Document Compliance framework supports country-specific requirements for the
exchange of electronic documents that use data from multiple applications. The
extraction of relevant data, such as invoice data, is the first step in the process, which
is triggered by a specific step in a business process, for example, the posting of the
invoice. The submission process, which transforms this data into the target country-
specific structure, is augmented by integrated cloud services that connect SAP
S/4HANA with tax authorities or other receiving entities like a central invoicing
platform or a service provider. Depending on the country, either SAP Integration
Suite or the Peppol Exchange service of SAP Document Compliance is used to send,
receive, and process relevant messages in accordance with technical requirements to
ensure the data’s confidentiality, authenticity, and integrity. The file’s formatting is
determined by criteria such as document type, provider/buyer country, tax informa-
tion, and other master data, which are defined by the solution’s configuration of a
country-specific variation. The cloud service receives a corresponding response and
538 34 Globalization and Localization

returns it to SAP S/4HANA. In many cases, the response contains information such
as an approval stamp or an official document number that must be saved in
subsequent documents, such as accounting records. The document compliance
framework’s central application is the EDocument Cockpit, as shown in Fig. 34.7.
This tool provides a unified user interface for monitoring and processing various
documents, regardless of country or business process.
SAP Document Compliance includes functions in the SAP S/4HANA backend as
well as services on the SAP Business Technology (BTP). The backend functions
read the requested business data, generate eDocuments, and process received
eDocuments. SAP Document Compliance sends and receives electronic documents
using either integration flows in the SAP BTP Integration service or services built
specifically for one document type, such as SAP Document Compliance. The
architecture of the SAP Document Compliance backend functions is depicted in
greater detail in Fig. 34.8.
The SAP S/4HANA backend contains all business logic. The Process Manager
organizes the interconnected and related steps required to create the eDocument.
Some steps are concerned with communication, while others are concerned with
internal processing, such as creating and adding attachments. The eDocument
Cockpit is used by business users to send the eDocument. Outbound messages are
routed to the communication platform via the Interface Connector. In the Inbound
Message Handler, inbound content is processed in order to be transformed into a new
eDocument or a process step of an existing document. Through the Partner Connec-
tor, e-mails can be sent. The architecture is flexible, and these components can be
used to build a variety of processes. This is accomplished by having configurations
for each of the main objects like actions, processes, and interfaces. When the source
documents are published, the corresponding eDocuments are generated and
displayed in the Cockpit. Separate process steps are used to generate electronic
messages in XML. The Interface Connector is responsible for mapping the source
data to the message. The Cockpit displays a country-specific overview of the
processes that the user is authorized to perform. A user may be authorized for
Hungarian invoice registration and invoicing for Italy, but not for Hungary transport
registration. By selecting the process, the eDocuments for that process are displayed
in detail. Process-specific actions, such as sending, are displayed upon selection.
BAdIs can be used to make specific changes to the content of eDocuments typically
XML structures. Because these changes are usually scenario specific, the available
BAdIs and their capabilities vary by scenario. There are also APIs that allow
customers to access eDocument-related data, such as extracting received XML
files for external archiving or further processing in another application. The APIs
are available in the SAP API Business Hub.

Localization Framework

Geographic boundaries are blurring as global business expands, even as regional

regulatory restrictions for businesses have become more pronounced. These trends
 Solution Capability

Fig. 34.7 Advanced Compliance Reports—architecture

539
540 34 Globalization and Localization

SAP Document Compliance

R
R Inbound R
cument
eDocument Message
Action Handler
ckpit
Cockpit Handler

Authorities
Tax
R

R
Interface
eDocument Process Manager
Connector

R
R

Processing

Partner
R
eDocument Type Partner
Connector

Fig. 34.8 SAP Document Compliance—architecture

point to the need for a comprehensive software solution that enables businesses to go
global in a seamless manner. Configuration is the foundation for localization.
Configuration examples include the factory calendar, currency, tax codes and
procedures, fiscal year and general ledger settings, all of them allow to run basic
processes in a specific country/region. However, there are additional legal
requirements in a country/region, such as statutory reporting and specific invoicing
or payment regulations. Thus, extensibility is required to complement the configura-
tion. Extensibility is required when dealing with business-specific requirements that
are not covered by a localization. Thus, configuration, functional localization, and
extensibility layers enable 360-degree localization coverage.
The SAP S/4HANA Localization Toolkit consists of specific localization
frameworks, for example, extensibility features provided by advanced compliance
reporting and payment medium workbench, a tool provided by SAP to configure and
create payment media sent by organizations to their house banks. It also provides
generic extensibility features such as CDS view, OData, business logic, and UI. The
toolkit covers these components and provides guidance on how to meet the
requirements on top of the available localization features. Figure 34.9 depicts how
the guidance spans several areas of the localization spectrum. The stack of underly-
ing tools and technologies used in creating the guidance for localization-relevant
extensibility scenarios is also visible. The guides that comprise the toolkit’s core
cover end-to-end scenarios for various localization areas. A scenario, for example,
explains how to extend a tax reporting solution, display a custom field in a translated
language, or adapt a form to meet a localization requirement. The toolkit collects
several useful links and code snippets in one location, resulting in a faster imple-
 Fixed Invoicing
Tax Assets Inventory
Reporting Valuation
Solution Capability

Account
Withholding Payables /
Tax Receivables

Deferred Accounting Payment

Tax Media

Tax
Product Payment
Tax Methods
Payment

Legal
Reporting / Language
Fiscal Closing Verticalization

General Language
Local Ledger Automatic
GAAP Translation

Localization Toolkit for SAP S/4HANA

Inbuilt Localization SAP Central Business
In-App Extensibility Side-by-Side Extensibility
Features Configuration

Fig. 34.9 Localization Toolkit for SAP S/4HANA

541
542 34 Globalization and Localization

mentation time for partners and SAP S/4HANA customers. SAP offers an interactive
community space dedicated to the localization toolkit, where partners and customers
can access a variety of guides to check relevant scenarios and highlight their
localization needs, which could be addressed through extensibility. It also serves
as a platform for SAP localization development experts to share their best practices.
Multiple language support is in the context of localization of a prominent concept
which is briefly explained in this section. In the focus of multiple language support
are labels, short texts, and long texts which are displayed in the UI in the
corresponding logon language of the user. To enable this, those language-dependent
texts are stored in the database based on a specific data model. Language-dependent
texts are saved in dedicated tables which have an identifier of the associated artifact,
language key, and the text as structure. Thus, for each language key (e.g., DE, EN)
the text is stored in the corresponding language. Those text tables are connected to
the artifact tables with respective foreign associations. This is the foundation also for
modeling CDS views and defining OData services which cover language depen-
dency. Figure 34.10 illustrates a CDS view for sales order items that exposes
material text as language-dependent attribute. The OData service on top reflects
this accordingly by using adequate properties. In SAPUI5 application, multilingual
capability are realized by maintaining the i18n*.properties files. i18n stands for
internationalization. A separate i18n*.properties file must be maintained for each
defined language. There must be also a default file which is used automatically if no
explicit translation is specified. The i18n*.properties file is structured according to
the key/value pair principle. This means that a value can be identified by specifying a
keyword. It is mandatory that the keyword is unique. The structure of the keys is the
same in all i18n* files.

Conclusion

SAP S/4HANA helping organizations scale their business processes across the globe
is a key differentiator. This section provided an overview of selected localization
capabilities that contribute to SAP S/4HANA being a global ERP system that can be
used in almost every country. The ability of SAP S/4HANA to be used by multina-
tional enterprises is referred to as globalization. Language support, as well as support
for local regulations such as tax management, is all part of globalization. The latter is
referred to as localization. Global Tax Management, Global Payments, Advanced
Compliance Reporting, and Document Compliance were explained as exemplary
applications that deal with highly country-specific issues. Allowing SAP customers
and partners to develop their own localization extensions is also important for
enabling the use of SAP S/4HANA in locations other than the 64 localized countries
 Conclusion

Text and Foreign Key Associations (Regular CDS-Views)

Language-Dependent Texts

OData Service
Property Material with attribute Property Material with attribute
sap:text=’to_Material/Material_Text’ sap:text=’Material_Text’
Property Material_Text
(automatically denormalized)

CDS View
define view I_SalesOrderItem @ObjectModel.representativeKey: @ObjectModel.dataCategory: #TEXT
as select from … 'Material' @ObjectModel.representativeKey:
association [0..1] to I_Material define view I_Material 'Material'
as _Material on as select from … define view I_MaterialText
$projection.Material = _Material.Material association [0..*] to I_MaterialText as select from …
as _Text on
{
$projection.Material = _Text.Material { key Material,
@ObjectModel.foreignKey.association:
@Semantics.language: true
'_Material'
{ key Language,
Material, @ObjectModel.text.association: '_Text' @Semantics.text: true
_Material, key Material,
MaterialName
… _Text, …
}
} }

Fig. 34.10 Multiple language support

543
544 34 Globalization and Localization

and regions. There are several tools and approaches available for this purpose, which
are summarized under the Localization Toolkit umbrella. This toolkit was also
discussed in this chapter.
Scalability and Performance
35

This chapter focuses on scalability and performance concepts and frameworks of

SAP S/4HANA to ensure running the system with appropriated size and response
time. Particularly, system sizing and clean-up, minimizing data footprint, scale up,
and scale out are explained.

Business Requirement

It is particularly important for companies to be able to rely on the processes mapped

in their ERP system. In times of digitalization, more and more processes are being
digitalized or partially digitalized and mapped in ERP systems from various vendors.
In order to be able to consistently deliver the services of a company in the same
quality, companies are dependent on the availability and performance of high-
quality processes. This requirement therefore also affects the IT systems which are
implementing and controlling those processes. Key objective of ERP systems,
besides providing the required functionalities, must be to ensure that systems of
any size can perform the work in a reasonable response time. To fulfill this goal,
the four pillars depicted in Fig. 35.1 have been identified:
Regardless of whether a legacy ERP is migrated to SAP S/4HANA or SAP
S/4HANA is a company’s first ERP system and is built on a greenfield site, SAP
S/4HANA must be optimally planned. This includes all resources from storage to
computing power and other issues such as hosting and tariff options. The answers to
these questions are summarized under the keyword sizing. Too few resources usually
means that the system will perform poorly. A system that is too large eats up money
unnecessarily and pollutes the environment through higher power consumption
without generating any added value for the company or the society. Clean-up covers
various activities related to the lifecycle of data and storage media. Examples include
housekeeping jobs, which can also be found in operating systems such as Windows
or Linux. These are routine activities whose goal is to maintain the performance of
an IT system. These include defragmenting file systems, deleting temporary data,

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 545
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_35
546 35 Scalability and Performance

Size System Clean-up System Minimize Network Traffic Scale Hardware

Fig. 35.1 Pillars of scalability and performance

and much more. Another example is the archiving of data that is no longer required.
Another important issue takes place in the network. The use of cloud systems or
other distributed systems that are not operated within an intranet increases the data
throughput that must be transported through the public LAN or WAN lines from the
actual server to the user. Since the public Internet lines are not the responsibility of
individual software service providers, no optimizations can be made here. Neverthe-
less, to prevent problems in this area, there are some methods for reducing the
network traffic of a system. These include avoiding sending data that is not required
or separating historical and current data, which is usually required more frequently.
Last but not least, the hardware used also plays a major role. It can be assumed that
the performance requirements of a system will change over time. Since computing
power is relatively expensive, there is a legitimate interest in keeping the costs of
hardware as low as possible and wasting few resources. Accordingly, it is important
to develop a system that can dynamically handle changing loads, and in addition to
adding and removing hardware components such as CPUs or RAM, it also allows
other scaling measures. Well-known service management frameworks, such as ITIL
published and maintained by Axelos, also deal with these topics. For example, the
practice called Service Capacity and Performance Management in ITIL V4 is
responsible for ensuring that the services offered are available with sufficient
capacity and that a balance is struck between a safety reserve and uneconomical
excess capacity. A distinction is made between the following three disciplines
(Axelos, 2019):

• Business Capacity Management (demands, trends, predictions)

• Service Capacity Management (workload management, monitoring)
• Component Capacity Management (resource and performance management)

Solution Capability

SAP S/4HANA performance is dependent on performance-optimized programming,

adequate hardware sizing, and equitable resource sharing. The SAP S/4HANA
Cloud offering is carbon-neutral thanks to the green cloud. In this section the use
cases and solution approaches for sizing, scalability, and performance are explained.
Solution Capability 547

System Sizing

System sizing basically means the translation of business requirements into hard-
ware requirements. It concludes both the business throughput, the user concurrency
requirements, and technological aspects. This means that the number of users using
the various application components and the data load they put on the network must
be considered. Theoretically, SAP S/4HANA could be deployed on a smartphone.
However, the performance would leave much to be desired, especially for multiple
users. The goal of most organizations is to minimize investment in inputs as well as
operating costs while achieving the maximum throughput of their production
systems, which optimally is also matched to customer demand. Sizing in general is
an iterative process and is usually performed early in the project. There are existing
sizing models for the product functionality with a reasonable number of input
parameters and assumptions. There are specific size guidance for each SAP applica-
tion. With those sizing procedures customers are getting help to determine the
resources required by an application within their business context. In this case,
relevant resources are the following:

• CPU
• Memory
• Data growth on disk
• Disk I/O
• Frontend network

In general, two approaches can be considered. These are sizing by user and sizing
by throughput. Sizing by user is a linear approach which basically makes sizing very
easy because the memory SAP S/4HANA needs is driven by user context, and users
in generally are relatively easy to determine. However, it becomes more challenging
when considering the determination of load patterns, the definition of a user, and the
fact of sizing database growth by users. The basic advantages of sizing by through-
put are the scenario- and transaction-driven view and the fact that sizing is based on
actual business objects and scenarios. It distinguishes between peak and average
sizing. Challenging is rather obtaining the right figures.
There are multiple techniques for Sizing an SAP System. Basically, a distinction
can be made between those in which a system is built from the ground up (greenfield
sizing) and those projects in which existing systems are enhanced with more
functionality or for more users (brownfield sizing). The second category also
includes migrations from older ERP systems to SAP S/4HANA.

Greenfield Sizing
Greenfield sizing is generally used in the context of new projects or implementations
without or with inly little experience with SAP software. Within greenfield sizing,
the following two methods can be considered. One is the hardware budget sizing
method and the other is the advanced sizing method. In the following, the basic
concepts as well as advantages and disadvantages are briefly described:
548 35 Scalability and Performance

• Hardware Budget Sizing: This method is especially recommended for smaller

companies and projects due to its ease of use. In this method, the selection of
suitable hardware resources is mapped and supported by an algorithm. This
algorithm contains assumptions and probabilities for different constellations
and scenarios, taking identified risks into account.
• Advanced Sizing: This is a procedure for medium to large companies. Here, the
size and the required hardware resources are worked out based on the estimated
throughput of the new system. Questionnaires and formulas are used to collect the
required data. At the same time, standard tools and guidelines are used. The focus
of this method is always on the core business processes.

Brownfield Sizing
This approach refers to all projects that are not implemented on a greenfield site
without framework conditions and dependencies. These include system upgrades for
a higher number of users or shorter response times, the expansion of the system with
additional functions, or the migration to an ERP system of a newer generation.
Projects like these can exist for companies of all sizes and industries. In addition to
the already known methods such as formulas and questionnaires, the data of the
system monitoring and other statistics of existing SAP systems are also taken into
consideration. The goal is always to increase the load or the function of an existing
system. There are different approaches, depending on the stage of a solution’s
lifecycle. They can be one of the following:

• Re-sizing: Customer wants to add further users who will do the same as the
current productive ones.
• Delta Sizing: Customer is live with SAP S/4HANA and wants to add additional
functionality like EWM.
• Upgrade Sizing: Customer plans to upgrade to the latest SAP S/4HANA release.
• Migration Sizing: Customer wants to migrate from R/3 to SAP S/4HANA.

Quick Sizer is a tool based on the SAP Application Performance Standard

(SAPS), which helps sizing the hardware of SAP systems. SAPS is a hardware-
independent measurement method derived from the Sales and Distribution bench-
mark where 100 SAPS is defined as 2000 fully business processed order line items
per hour. After completing this stage of the project, the hardware requirements are
defined. The hardware itself can now be selected to meet the established
requirements. There is no commitment to specific manufacturers or technologies,
as SAP S/4HANA is platform independent and can therefore be operated on all
systems. This enables companies to embed their new SAP S/4HANA system in their
existing technology stack and therefore requires no additional knowledge and
training when it comes to questions regarding the operation of the application. The
SAP Quick Sizer tool is available online since 1996 and can be used free of charge.
As of 2016 on average, around 35,000 new projects are carried out with the tool
every year. There’s a special SAP S/4HANA Cloud sizer available. Also included in
the scope are sizing options for the following systems which can be calculated based
Solution Capability 549

on users and/or throughput: SAP S/4HANA, SAP HANA Standalone, SAP

BW/4HANA, SAP Key applications. The tool uses structured questionnaires and
can be used as input for greenfield sizing projects or as a check before Go live.
Contact lists to hardware distributors and vendors are also provided. Quick Sizer
calculates memory, CPU, disk, and I/O resources based on the described framework
conditions.

Expert Sizing
Very large and complex projects, where, for example, several products and
components are considered in one project, require the help of further tools and
experts in the field of sizing. In this case, deeper and more far-reaching analyses
are considered in addition to the results of a tool-supported sizing. There are no
standard tools to perform expert sizing, but there is a wide range of possibilities for
such additional analyses. Further handouts are provided, user-specific calculations
are made, customer coding is analyzed, and sizing hints tailored to the customer are
provided.

System Scalability

The scalability of a system is becoming increasingly important, especially in ongo-

ing operation over a longer period of time. For most applications, the number of
users and the volume of transactions can be expected to change over time. An IT
system must also be able to cope with these changing parameters and handle
workload fluctuations as well as load peaks. Within a certain time frame, increased
demand can be buffered easily and quickly by using additional hardware. Too few
hardware resources are usually associated with higher response times and, in
extreme cases, lead to overload or even system failure. Since hardware is expensive,
it is not attractive for companies to operate too many hardware components if there is
no sufficient demand for them. However, hardware alone does not make an applica-
tion scalable. At some time, a point is reached where no new hardware components
such as additional CPU or hard disks can be installed. Even methods like virtualizing
the CPU cores do not offer any performance gains beyond a certain point. For this
reason, the application itself must also take some aspects into account in order to
work efficiently and scale as well as possible. The following example shows how big
the effects of supposedly small changes can be. Let us assume that through optimi-
zation measures the duration of a transaction can be reduced by 1 s. This means a
saving of about 10 Joules per transaction. The absolute number is initially very small
and leads to the conclusion that this optimization has hardly brought any advantages.
However, if it is assumed that 1.5 million users carry out 20 transactions per day and
that this is done on a total of 230 working days per year, this seemingly small
optimization amounts to an electricity saving of 19 MWh at the end of the year. That
is as much energy as 6000 two-person households consume in a year. The following
four KPIs have been defined around S/4HANA that have an impact on scalability:
550 35 Scalability and Performance

• CPU time of business transactions or tasks is measured to determine the number

of processors required.
• Disk size and disk I/O are measured to determine the rate of database table growth
and the file system footprint. This includes the number of insert operations for the
database and write operations for files.
• Memory is measured in different ways depending on the type of application. For
some applications, it’s sufficient to measure the user session context, while for
others it’s necessary to also measure application-specific buffers and shared
spaces and temporary allocations by stateless requests, among other factors.
• Network load measurements refer to the number of roundtrips for each dialog step
and the number of bytes sent and received for each roundtrip. The measurements
are used to determine the network bandwidth requirements.

To put it simply, it can be said that an ERP system is memory critical and that the
focus here is primarily on memory. With analytics, however, it is the other way
around. Here, the focus is usually on computing power and thus on the CPU. Since
SAP S/4HANA combines analytical and transactional processing, both memory and
computing capacity are relevant for these systems.

Scale Up
This approach is the easiest way to increase the utilization of a system. If there is an
increased demand, hardware can simply be upgraded in the data center. This can be
done, for example, by installing more CPUs or hard disks. The increased computing
power in this way can be sufficient to satisfy the increased demand without having to
accept a drop in performance. Since hardware components are usually kept in stock
to a certain extent anyway in order to be able to replace defective hardware devices,
the hardware already in stock can usually be used to expand the computing or
storage performance within a very short time. For SAP S/4HANA projects, it is
generally recommended to start the project with a single-node SAP HANA database
(a node is an installation of an SAP HANA Index Server, a host is a physical
machine with one or more deployed SAP HANA Index Server). This allows a better
understanding of the workload and the growth of the data volume over time. With
this method, currently 3500 CPU cores and up to 96 TB of main memory can be
achieved for SAP HANA, since SAP Application Server for ABAP does not impose
any limitations. When the system exceeds the available database capacity, the
project should start scaling out. This approach can also be applied to all IT projects
in general. Scale Up before Scale Out.

Scale Out
At some point, the scale-up tactic reaches a point where a server simply cannot be
upgraded any further because all slots are already occupied and the best hardware on
the market is already installed. Then, at the latest, a different tactic must be applied.
Then scalability can be guaranteed only by a suitable IT architecture. In contrast to
vertical scaling (scale up), there are no limits to horizontal scaling from the hardware
Solution Capability 551

point of view. However, the application design must be scale-out aware. Reaching
hardware capacity limit with this pattern can cause one of the following options:

• Grow server sizes

(a) Increase the number of nodes
(b) Scale-up hardware
(c) Optimize sizing extrapolations during operations
• Add new servers
(a) Increase the number of servers
(b) Distribute tables across nodes

The SAP HANA database is currently available in a variety of host sizes ranging
from 64 GB to more than 24 TB of physical RAM. It also supports virtualization
with a variety of hypervisors or Infrastructure as a Service (IaaS) by multiple cloud
partners can be used. In general, SAP HANA allows to distribute one database
stretched across multiple physical hosts and provides a shared-nothing architecture
with distributed database processing. This offers the following advantages:

• Support the need for very large databases

• Large volume handling beyond the limits of individual hosts
• Optimized workload distribution, using CPU of all multiple hosts
• Advantages regarding hardware cost and scalability

Figure 35.2 shows an example of the structure of an application with two

application servers that access three SAP HANA databases.
Sharing data from an application across multiple databases must be explicitly
supported by an application. This is the case for SAP S/4HANA. Since cross joins
across multiple databases are very time-consuming and cost-intensive, the distribu-
tion of tables and data within the databases should therefore be planned and
optimized. This is done, among others, by the SAP HANA Client Library and, on
the other hand, by the developers who add new tables to a system. In practice, there
are hardly any customers who need more than four fully equipped SAP HANA
databases to work optimally with their SAP S/4HANA system.

System Performance

The performance of a system can also be viewed from both a technical and a user-
centric perspective. Per definition response time is the time between when the user
starts an interaction and when the application screen is ready for the next interaction.
On the user side, the behavior shown in Fig. 35.3 can be observed with increasing
response time. In the IT industry, sub-second response times are standard and are
also in line with the perceived performance studies conducted by our usability team.
What might be new is that the expected response time varies with the perceived
complexity of a task. In the same way, the user behavior varies if the user’s response
552 35 Scalability and Performance

Application Server Application Server

SAP HANA SAP HANA

Client Library Client Library

SAP HANA Database

Fig. 35.2 The SAP HANA Scale Out

Smooth effects on input elements

Engaged user-system dialog breaks down
User’s focus starts to wander, system
perceived as slow

User loses focus and Users becomes

turns to other tasks annoyed

0.1 sec 1 sec 3 sec 10 sec 15 sec

Task Level

Fig. 35.3 Perceived performance

time expectations are not met. This is simpler than it may sound and worth looking at
in more detail. First of all, users make assumptions about the complexity of each of
their requests. Based on these assumptions, the users grant the computer system a
corresponding amount of time to process their request. The time users allow for the
system depends strongly on their perception of the complexity of the task. So, how
can the complexity of tasks be described? The tasks most frequently handled by
business systems can be divided roughly into three categories: acknowledging user
input, presenting the results of a simple task, and presenting the results of a complex
task.
Solution Capability 553

A user input acknowledgment gives the user visual or acoustical feedback that the
input has been received. Let’s take a numeric input field as an example: when the
user changes the focus or presses the enter key after typing in a value, the system
checks the syntax of the input value and either produces an error indication or
reformats the input value to the standard number format. Next, what is a
simple task? A simple task is, for example, adding a new line item to a sales order
or advancing to the next step in the wizard for a business process. Finally, complex
tasks are navigations to another work center or the initial login to the system. In order
to improve the performance of an application, there are a number of potential
improvements that can be made. On the one hand, performance optimizations can
be achieved through better hardware. However, since this point has already been
discussed sufficiently in the section of sizing, it will not be taken up again at this
point.

Performance-Optimized Programming
The first aspect to make the performance of a system as optimal as possible is the
programming. Different methods for implementation can be found under the key-
word Performance-Optimized Programming. In the context of network and data, the
following relevant KPIs can be defined:

• Number of network roundtrips per user interaction step: The roundtrip time
depends on the amount of network hops, which is basically the number of
intermediate devices through which data must pass between source and destina-
tion and on the other hand latency that is the time from the source sending a
packet to the destination receiving it. When data is sent over wide area networks
(WAN) or global area networks (GAN), latency accounts for the largest share of
roundtrip time. In the end, the conclusion is quite simple: The more roundtrips,
the worse the application response time.
• Transferred data volume per user interaction step: Measures basically the data
transferred between user interface front end and application server. The less data
is transported over a network, the faster the transfer is handled and the faster the
user can perform the next interaction with the user interface.

Figure 35.4 shows the decisive advantage of local area networks (LAN) over
wide area networks (WAN):
Therefore, the following design principles are set for SAP product engineering:

• An application triggers a minimal number of sequential roundtrips and transfers

only necessary data to the front end. The conclusion is obvious: the more
roundtrips, the higher the impact of the network performance and the worse the
application’s end-to-end response time.
• An application transfers no more than 10–20 kB of data per user interaction step.
• Major strategies to optimize network performance include compression and front-
end caching; both are implemented in and are part of standard SAP software.
554 35 Scalability and Performance

Local Area Network (LAN)

Frontend Frontend Frontend time

Backend Backend

Wide Area Network (WAN)

Frontend Frontend time

Network Network

Backend

Fig. 35.4 LAN and WAN roundtrip

For caching and buffering SAP S/4HANA uses content delivery networks. The
most important libraries of the frontend built with SAPUI5 are delivered via a
Content Delivery Network (CDN). Further static resources are delivered by SAP
S/4HANA Cloud Data Center. Both pieces of information are stored in the user’s
browser cache, so they are local and do not have to be shipped with every request.
This saves a lot of data throughput so that the available bandwidth is used exclu-
sively for dynamic resources such as business data, which is never cached in the
front end. This approach decouples the dependency of the processing time on the
amount of data to a certain extent. The design principle of nonerratic performance
implies that there is a minimal underlying dependency on the amount of data or data
constellation for the response time of an application. For example, if a month-end
close is performed, the processing time essentially depends on the amount of data
being processed. If a month-end close for October is performed which is a fixed
amount of processed data, the processing time should remain constant and be
independent of the amount of persisted data.
Another very important aspect concerning performance-optimized programming
is the database. Very often, poor performance is caused by databases which are the
bottleneck that needs to be widened. To remedy this situation, other factors must be
considered in addition to the selection of the database technology. A first measure,
for example, is the creation of replicas. A replica is the copy of a database or
document that is updated at regular intervals and thus kept in sync. There is a
database for all write operations, also called primary. All these actions are then
transferred to the replicas. This has advantages for the availability, because if a
primary node fails, a replica simply becomes the new primary node. On the other
hand, it also has the advantage that read queries, which make up the largest
proportion in an ERP system, can be executed on all nodes, regardless of whether
Solution Capability 555

they are primary or replica. This distribution of the load leads to considerable
increases in performance. Another measure is the multi-temperature storage. Here,
different storage technologies are used depending on the type of data. For example,
most frequently used data is stored on particularly fast cache memories so that it can
be processed and sent within a very short time. Since this type of memory is very
expensive, not all information can be stored on it. For this reason, other types of
storage are used, and decisions are made, for example, on the basis of the criticality
and access frequency of the data as to where it is stored.
Another important factor that must be considered in the context of performance-
optimized programming is the issue of the system footprint, especially the memory
footprint. As already mentioned, possibility to reduce this is to swap application data
from the cache to cheaper, less powerful memories. The efficient distribution of data
across databases and tables also reduces the footprint of an application. However, the
handling of old data is particularly relevant in the first place. In an ERP system,
massive amounts of data accumulate over time. A system would therefore have to be
able to scale massively without any further action. However, this is associated with
enormous costs, which may not be offset by any added value. A distinction is made
between the different types and states of data as depicted in Fig. 35.5.
As illustrated in Fig. 35.5, the data can be at different ages and goes through a
lifecycle. The individual stages of the lifecycle have different effects on relevance
and availability. For example, data that is in the Legal Hold section tends to be
accessed infrequently. Accordingly, it does not have to be stored in a high-
performance cache memory but can also be archived in compressed form on long-
lived, inexpensive, and somewhat slower memory, since the speed of access is not an
important KPI for this. Other KPIs and measures can be derived synchronously for
other sections of the lifecycle in order to improve the storage effort and thus
indirectly also the costs and performance in order to reduce the footprint of a system.

Processes don’t …
Creation Blocking Audit Lawsuit Destruction
change data any more

Data Volume Management

Central Policy Management on Business Object level

Determine and enforce Data Retention

Compliance

Destruction or blocking of data

Legal Hold Management

System Decommissioning

Fig. 35.5 Lifecycle of application data

556 35 Scalability and Performance

In SAP S/4HANA it is ensured that old data is identified by tags/age column and thus
treated differently. These tags are not visible to normal DB users but are managed by
SAP HANA and ABAP implementations. In addition, SAP HANA allows individ-
ual columns to be transferred from main memory to other disks. This dramatically
reduces the amount of data to be kept in main memory. The loading and unloading
are partly automated by SAP HANA but can also be forced by the user. The data on
the persistency layer on disk is not touched.
Furthermore, code-pushdown is applied for performance-optimized program-
ming. In order to process data, it must be transferred between the application server
and the database via a network. As already explained in the section network and data,
this transfer is much slower than the server-internal transfer between main memory
and the various caches. Especially hard disk accesses or other mechanical steps make
this difference even more extreme. With SAP S/4HANA and its in-memory database
technology, the last point in particular no longer applies. To minimize the impact of
the network connection as a bottleneck, the ABAP programming paradigm code-
pushdown can be used. Classically, the database is accessed for data which is needed
for processing and calculations. These are then sent to the application server and
processed there. This principle is also called data to code. However, this means that
the request for data must first be sent to the database and the entire data must be sent
from the database to the application server via a network. To save bandwidth and
thus enable better performance, this principle was reversed. According to the motto
code to data, calculations are performed only locally in the database management
system. This shifts some of the load to the database server, but SAP HANA is
designed to handle this. As a result, performance-intensive business logic, such as
that found in Material Resource Planning (MRP) run, can be executed almost
entirely on the database and not in the application server. For processing and
calculations, mainly SQL views are used, which are associated with almost no
costs. In addition, access to modularized database code using stored procedures
written with SQLScript brings further performance advantages. The SAP S/4HANA
semantic layer Virtual Data Model (VDM) applies the pushdown principle in a
systematic manner. The VDM is made up of core data services (CDS) views that are
defined on an ABAP level. When CDS views are activated, SAP HANA generates
related SQL views automatically. When an SQL statement is processed on a CDS
view, it is pushed down to the SQL view and handled on the database layer. When
compared to a traditional SAP ERP application, where application data was loaded
into the application server and looped for the relevant records, improved perfor-
mance can be obtained. Finally, the drastically simplified data model comes into
play. The data structure of SAP S/4HANA has been simplified compared to the
classic SAP ERP, for example, by eliminating aggregate and index tables due to the
usage of in-memory techniques of SAP HANA.

Elasticity and Fair Resource Sharing

If SAP S/4HANA is operated by the customer, then the customer can influence the
applications capacity itself or via the contracted data center operator and determine
which applications share common infrastructure components. If a company uses
Solution Capability 557

Wasted Capacity – Load Increase Wasted Capacity – Load Decrease Unexpected peaks
Capacity Capacity Capacity

Time
Fixed Capacity
Actual Demand

Fig. 35.6 Capacity scenarios

SAP S/4HANA in the public cloud and uses infrastructure as a service, handling of
elasticity must be considered. Although the underlying techniques for elasticity
could be partially used when customers operate SAP S/4HANA by their own,
elasticity is the ability to fit the resources needed to cope with loads dynamically.
Usually, this takes place in relation to scale-out measures, so that when load
increases the hardware is scaled by adding more resources, and when demand
wanes the hardware is shrunk back and unneeded resources are removed. Figure 35.6
shows three different capacity scenarios.
Three different challenges can be identified from this figure:

• Wasted Capacity—Load Increase: When the load increases more resources need
to be added. To keep the wasted capacity as small as possible, it is required to
elastically scale by adding more resources.
• Wasted Capacity—Load Decrease: When the demand wanes, resources need to
shrink back. To keep the wasted capacity as small as possible, it is required to
elastically shrink back and remove unneeded resources.
• Unexpected Peaks: With fixed capacities unexpected peaks cannot be covered
with the existing resources. To prevent the impact of unexpected peaks it is
required to elastically scale as close as possible to the actual demand while at
the same time keep the wasted capacity as small as possible.

SAP operation uses its own developed Dynamic Capacity Management tool to
elastically adjust the hardware capacity within an SAP S/4HANA multitenancy
cluster. Two types of capacity planning are covered. Tenant capacity planning for
enlarging tenant size, reducing tenant size, and moving tenant in (onboarding).
Landscape capacity planning for moving tenant out to a different server (different
multitenancy cluster) and to determine which tenant(s) should be moved if the server
runs out of free memory so that the tenant requires more memory. The fully
automated Dynamic Capacity Management tool sets limits on the resource consump-
tion of tenant databases. On the one hand, it ensures that a tenant always has
sufficient resources available and, at the same time, prevents one tenant from
consuming too many resources and thus making the system too slow for others. In
an SAP S/4HANA Cloud productive tenant, all database statements are monitored in
558 35 Scalability and Performance

certain quotas for response time, CPU time, and memory consumption. As soon as
these are violated, they are subsequently processed by SAP development to further
optimize such instructions. Sustainability is an important factor in the operation of IT
infrastructures. Fair sharing of resources must therefore not be limited to the sharing
of available hardware capacities but should also consider ecological aspects. For
SAP S/4HANA the relevant factors for excellent performance are minimal response
time, minimal resource consumption, maximal throughput, scalability, and simple
sizing algorithms. Furthermore, consistent response time and resource consumption
are key. The following cornerstones were defined in order to bring these defined
goals into line with the sustainability targets set:

• In-memory computing rather than disk I/O

• Caches rather than CPU cycles
• Content delivery networks and code-pushdown rather than high data transfer and
a large number of roundtrips

Conclusion

In times of ever faster growing requirements and increasing user numbers, a scalable
application is of enormous importance. Especially for business-critical applications
such as ERP systems, very high demands are placed on performance, in particular
speed and expandability or scalability. A system with high response times not only
limits the effectiveness, but also demotivates the users. Due to the immense number
of potential use cases and industries that can map and integrate business processes in
ERP systems like SAP S/4HANA, the scope of the software is very large. In order to
meet the expectations of companies and users at the same time, measures must be
taken, and intelligent concepts must be realized. This chapter explained performance
and scalability of SAP S/4HANA and highlighted general problems as well as the
concepts and architectures chosen to solve them. Greenfield, brownfield, and expert
sizing approaches were described. Strategies for scale up and scale out were
depicted. Methods for performance-optimized programming were elaborated.
Lifecycle Management
36

This chapter focuses on lifecycle management concepts and frameworks of SAP

S/4HANA to support software deployment, upgrades, corrections, and
decommissioning. Particularly, zero downtime options, multitenancy, and applica-
tion lifecycle management tooling are explained.

Business Requirement

The software lifecycle encompasses all phases of a software product’s planning,

development, and use, as well as its eventual obsolescence or retirement. This
process has many variable parts, but it can frequently be divided into several
major components. This assists developers and others in comprehending how a
product is created, implemented, and used. Planning phases are present in many of
the most common stages of a software lifecycle. Professionals typically refer to
requirements gathering or analysis, which is the process by which an undeveloped
product is defined using criteria gathered. Next the product is analyzed and designed,
followed by development. The final development stages of the lifecycle involve a
product that has been released to a customer or other end user, at which point the
product vendor is frequently involved in maintenance, problem-solving, upgrading,
and other operations processes.
Figure 36.1 shows the lifecycle phases by grouping them into Development and
Operations clusters. It is important to note that software does not always progress in
a linear fashion through these stages of the software lifecycle. Rather, different parts
of a product may evolve in different ways. Within the professional IT community,
these are commonly referred to as iterations.
Software lifecycle management in ERP systems is about making the entire lifecycle
of an ERP system as smooth as possible. Particularly important here is the stability of
the transition through updates and upgrades. Organizations often underestimate the
challenges occurring in the lifecycle of an ERP system, which can lead to failures or
delays. Lifecycle management of an ERP system is an ongoing process as the solution

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 559
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_36
560 36 Lifecycle Management

ERP Lifecycle

Test Configure

Build Release Deploy Operate

Dev Ops

Code Plan Optimize Monitor

Fig. 36.1 Software lifecycle management

continues to evolve in the company. In comparison to other large software projects, the
implementation of ERP systems often involves iterations. Organizations typically run
on-premise ERP systems in a landscape of three interconnected systems: A develop-
ment system for defining business configuration and expanding the application with
custom developments, a testing system to ensure the quality and accuracy of newly
maintained configuration settings and new custom developments, and a production
system to run the organization’s actual business processes. Business configuration
settings and new developments (code changes) are transported through the system
landscape. This is slightly different for cloud ERP systems where the provider operates
the tenants. Cloud ERP systems must support a multitenant architecture that enables
the SaaS provider to share storage and computing resources among tenants. The data
of the tenant must be isolated and invisible to the other tenants. Usually, each cloud
ERP subscriber receives a test and configuration, a production set of tenants, and, in
most cases, a development set of tenants, similar to the three-system landscape track
typically set up to operate on-premise ERPs. Cloud ERPs are hosted in data centers
around the world. In general, there are two selection criteria to consider when selecting
the right data center. First legal requirements, such as Chinese cybersecurity legislation
or the European GDPR, which restrict data access to specific territories. Second
latency requirements, such as ensuring good performance which is also impacted by
the network communication to connect the customer’s web browser to the ERP
tenants. Therefore, a data center must be selected based on smart algorithms to
minimize latency effects.

Solution Capability

Most of the lifecycle management concepts are well known or covered by other
chapters, for example, development in Chap. 21, configuration in Chap. 37, or
implementation in Chap. 38. Thus, this section concentrates on new approaches
for SAP S/4HANA and therefore focuses on software maintenance, zero downtime,
Solution Capability 561

and multitenancy. Furthermore, the new available solution for application lifecycle
management (ALM) is explained, which is referred to as SAP Cloud ALM.

Software Maintenance

ERP software must be compliant with the most recent laws and regulations, provide a
new functional scope and innovative features, improve existing functionality, and, if
necessary, correct errors. For this SAP S/4HANA must be regularly maintained, which
is technically referred to as upgrade and update. While customers welcome new
features and legal compliance, they do not want disruptions in their regular business
operations. Examples of such disruptions are a request to test the customer’s specific
configuration with the updated software, a changed user interface that necessitates
retraining users, or system downtime. As a result, SAP intends to manage the software
lifecycle as smoothly as possible to avoid disrupting users. The only exception to this
no user impact paradigm is a desired functional upgrade by the customer. During a
maintenance event, SAP S/4HANA software and/or configuration is updated. If
necessary, SAP applies corrections to all SAP S/4HANA Cloud tenants as a hotfix
collection (HFC) every 2 weeks. If a single tenant fails completely due to a software
error, SAP can apply an emergency patch (EP) as needed. SAP upgrades the SAP
S/4HANA Cloud ABAP service to the next major software version every 3 months.
Subscribers to SAP S/4HANA Cloud must plan for maintenance windows during
which the tenant is unavailable. However, in order to ensure minimal business
interruption due to maintenance, concept allowing zero downtime maintenance is
provided. This approach follows the standard cloud architecture best practice known
as blue-green deployment as illustrated in Fig. 36.2. The basic idea is to create a

Blue-Green Deployment

Current release Parallel upgrade New release

Application Application Application Application

Server Server Server Server

Access Access Access Access

Schema Schema Schema Schema

Data Data Data Data

Schema Schema Schema Schema

SAP HANA SAP HANA SAP HANA

Fig. 36.2 Software maintenance based on blue-green deployment

562 36 Lifecycle Management

temporary green tenant for software updates while users continue to work in the blue
tenant. As a result, during the maintenance phase, these two tenants coexist for a
limited time. When the maintenance phase is complete, all subsequent user logins
are directed to the now-updated green tenant, and the now-outdated blue tenant is
disassembled when no user is logged in. The blue-green deployment must solve
several challenges, for example, configuring the additional green tenant with the
same data as the blue tenant while business users continue to create new data. Once
the update of the green tenant is finalized, all business transactions that occurred in
the blue tenant in the interim are imported in the green tenant. Thus, all entered data
can be preserved while the transactional processes run in the blue tenant.
To ensure this the blue and green tenants must share the same persistency.
Technically, the ABAP application servers of the blue and green tenants share the
same SAP HANA tenant database. Each tenant has its own tenant database in which
the tenant’s business data is stored. All the cluster’s tenants have access to the shared
database, which contains information such as software source code. The green tenant
is the one where software and configuration changes are made during maintenance.
As the blue and green tenants share the same persistency, the ABAP Dictionary
(DDIC) for the green tenant must be updated while protecting the blue tenant from
these changes. This is accomplished by introducing a new database schema—the
access schema. This access schema serves as a bridge between application server
coding and persistency. It conceals changes to database tables made by applications
running in the blue tenant. If the data type of a table field changes during the upgrade
process, this applied to the database’s data schema. Hence, if a blue tenant applica-
tion accesses the table, the access layer maps the data of this table field to the old,
unchanged data type for both read and write accesses. When the same application
from the green tenant accesses the table, the access layer returns data from the same
table field with the new data type.

Zero Downtime

There are various approaches developed by SAP for downtime optimization during
software maintenance. When it comes to the approaches shipped with the SAP
Software Update Manager (SUM), there are three main approaches for applying
support packages in SAP S/4HANA as shown in Fig. 36.3.
Both the standard procedure and the nZDM already offer some advantages with
regard to downtime optimization. However, only ZDO can completely avoid a
technical downtime. The technical downtime describes the time in which the system
is actually down. Business downtime, on the other hand, stands for the time during
which the system cannot be used by the users. The starting and shutdown of the
system are also included. The main advantage of nZDM is that it significantly
reduces business downtime compared to previous update approaches because
more of the downtime-relevant update phases are executed while the system is still
up and running for business users. During the uptime adjustment of table structure
including conversions based on the Record & Replay technique is carried out in
Solution Capability 563

Standard approach near-Zero Downtime Zero Downtime Option (ZDO)

Maintenance (nZDM)
ƒ Several downtime-optimizations ƒ Downtime reduction by moving ƒ All phases are running during
uptime
(e.g. shadow system operations) downtime-relevant phases to uptime
ƒ Available on request for pilot
ƒ Generally available for all ƒ Generally available for all customers customers
customers
EFFORT
DOWNTIME

Fig. 36.3 Downtime minimizing approaches

nZDM. This means that changes to the database during the uptime of the mainte-
nance process generate triggers that record the changes. The recordings are only
required for tables that are used for the shadow update/upgrade. The shadow tables
are updated using the recording after the upgrade/update phases of the uptime. The
majority of recording updates are performed during uptime. Only the delta must run
in the downtime just before the switch. The Zero Downtime Option (ZDO) must be
requested as a project and therefore cannot be used without restrictions. When
selecting different procedures, note that procedures with a lower downtime automat-
ically require a higher effort. Figure 36.4 shows that the technical downtime is
eliminated completely with the ZDO, and there is an uptime on bridge instead.
The existing system runs partially in parallel to the upgraded instance. In the case
of a normal technical downtime, the users would be logged out at a certain point in
time, whereas during an uptime on bridge, the users are moved to another instance, a
so-called bridge subsystem. This transition takes place in the background without
any disruption of the users. This bridge is a copy of the main system but contains
only the tables that are also affected by the upgrade. The ZDO procedure is divided
into five different steps which are executed sequentially. First, the database content
of SAP HANA must be migrated. SAP HANA Transport for ABAP (HTA) based on
the SAP HANA Deployment Infrastructure (HDI) allows to develop content for the
ABAP applications based on SAP HANA and transport the content (both the HDI
and ABAP objects) together using the Change and Transport System of AS ABAP.
This step migrates the native views from SAP HANA to HTA for HDI. In the second
step, the compliance to the ZDO rules is checked and ensured. For this, development
guidelines have been defined, and the SAP application developers must adhere to
these guidelines. In addition, there are Support Packages with which the latest
content for ZDO is distributed. Furthermore, known limitations of business
applications are recorded in certain SAP documents. It should also be mentioned
that third-party extensions are not supported by default. Therefore, third-party
suppliers must contact SAP. In the second phase, ABAP Test Cockpit (ATC) can
be used to perform compliance checks between ZDO policies and customer
transports. In the third step, a table classification is carried out. The user’s access
 564

1 2 3 4 5 6
Extraction Configuration Checks Preprocessing Execution Postprocessing

Technical downtime

RAMP SHUT
Standard UPTIME ON ORIGINAL INSTANCE DOWNTIME RAMP UP UPTIME
DOWN DOWN

Business downtime

Technical downtime

RAMP SHUT
nZDM UPTIME ON ORIGINAL INSTANCE DOWNTIME RAMP UP UPTIME
DOWN DOWN

Business downtime

RAMP
ZDO RESTART RAMP UP
36

UPTIME ON ORIGINAL INSTANCE UPTIME ON BRIDGE DOWN UPTIME

Business downtime

Fig. 36.4 Differences of the downtime approaches

Lifecycle Management
Solution Capability 565

to the various tables is checked. Here, the bridge mentioned above is used as a copy
of the main system. This makes it possible to hide the changes on the upgrade system
from the user of the production system. Thus, the tables are cloned so that the
upgraded system has access to one instance of the table while the production system
has access to another instance. In some cases, the cloned tables must be set to read-
only. The access rights of business users during the bridge phase must be defined.
The actual change to the tables is performed by the upgrade process, while the user
can still access an instance of the system via the bridge. The classification is
dependent on which actors process read and write operations on the table, whether
content is imported into the table, and whether the table structure is changed. The
tables can be divided into three different main classes. The first class is a shared
table. These tables are not changed during an upgrade and must therefore only grant
access to the connecting system during the upgrade process. There is a technical
security mechanism behind this, which regulates the access of the upgrade instance
to these types of tables. The second class is clone tables. These tables are changed
during an upgrade and therefore cloned so that they can write and read rights to both,
the bridge instance and the upgraded instance of a system. The third class of tables is
clone read-only tables. These are also cloned. However, the bridge instance of the
system has only read authorization here and no write access. Otherwise, issues may
occur due to this type of table, if the bridge instance is written to the table during the
upgrade. The Impact Analysis Tool can help identify these types of tables. In the
fourth step, an impact analysis is performed using the SAP Software Upgrade
Manager (SUM). The aim is to identify potential business impacts during the bridge
phase. A sandbox system is used to which the new table classifications and the table
data from the production instance of the system are transferred. In this way, at an
early stage issues are identified which may occur in the future. For this, first current
table statistics are exported from the connected system. After that, an impact analysis
with all records is performed. Finally, the results of the different data records must be
merged, evaluated, and interpreted. The fifth and final step in the ZDO process is the
actual data migration. Here, the simplification of the data model is decoupled from
the functional changes in the business applications. In addition, this step ensures
compatibility by safeguarding that the new version of an application works with the
old data model and the old version of an application works with the new data model.

Multitenancy

Multitenancy is a software architecture in which multiple tenants of a cloud service

share software resources in order to distribute the associated costs and efforts across
these tenants while still isolating each tenant from the others. All cloud services
included in SAP S/4HANA Cloud are built with a multitenancy architecture. The
SAP S/4HANA Cloud ABAP service’s multitenancy architecture reduces tenant-
specific infrastructure costs and operation efforts while providing tenant isolation on
the same level as ensured by completely separate systems. Each tenant has its own
dedicated ABAP application servers that run on its own SAP HANA tenant database
566 36 Lifecycle Management

Multitenancy

Tenant 1 Tenant 2

SAP S/4HANA SAP S/4HANA Shared

■■
Client Management

System 1 System 2 Hardware

Shared HANA HANA Multitenant

Container Container 1 Container 2 ■■
SAP HANA System

Multitenant Runtime Cluster

Fig. 36.5 Multitenancy architecture

as depicted in Fig. 36.5. Tenant databases are separate databases within a single SAP
HANA database system that contain all tenant-specific application data and config-
uration. In addition to these tenant-specific databases, each SAP HANA system has
one more database that contains ABAP system resources that are by definition
shared by all tenants, such as the ABAP source code delivered by SAP. This
means that such resources are not stored in each of the SAP HANA’s tenant
databases, but only once in the shared database. The main components of an
ABAP application stack are shared as a result, and the main components of an
SAP HANA system are shared among multiple tenants. Thus, software is shared
across all layers—on the SAP S/4HANA Cloud application layer, the SAP ABAP
application server, and the SAP HANA layer—and joint software update events are
held for all tenants on the same multitenant SAP HANA system. As each tenant has
its own ABAP application servers and tenant database, it is completely isolated from
the others. Each tenant is self-contained, so each tenant has its own database catalog,
persistence, and backups, for example. SAP HANA’s technical configuration
prevents SQL-level cross-tenant database access and ABAP runtime write access
to the shared tenant database. Only software updates and non-ABAP tools have write
access to the shared database. With a one code line approach for SAP S/4HANA
Cloud and SAP S/4HANA On Premise, the multitenancy architecture must be
designed and implemented so that no existing installation is disrupted and the
number of required changes on the application side is kept to a minimum. This is
critical for minimizing the risk of any quality regressions. Each ABAP system in the
SAP S/4HANA On-Premise system architecture is made up of a collection of ABAP
application servers that are linked to a single SAP HANA database system.
The system architecture is the same for all system types, whether development,
quality, or production. If multiple ABAP systems are running, they may share
hardware. Depending on the required SAP HANA database size, several SAP
HANA systems may run on shared hardware. Apart from the shared hardware, the
Solution Capability 567

SAP S/4HANA systems do not share any other resources. Because of the shared-
nothing software architecture, each new SAP S/4HANA system necessitates
resources for a full ABAP system as well as a full SAP HANA database.
Administrators must install, manage, and upgrade each of these systems on their
own. With each new system, costs and efforts rise in a linear fashion. Cost-wise, this
does not take advantage of any economies of scale, and in terms of effort, it quickly
becomes unmanageable as the number of systems grows to thousands or more—
which reflects the envisioned scope for SAP S/4HANA Cloud. The shared database
allows all ABAP system resources which are by definition equal and immutable to
be moved from the tenant databases into the shared database. Finally, the shared
database contains all ABAP system resources that are identical across all ABAP
systems and cannot be changed by customers in their tenants, such as the ABAP
program source code, system documentation, code page information, or the
standardized texts of error and success messages used in the SAP programs to
inform end users of a specific processing status. The memory consumption of the
tenant databases is reduced correspondingly by sharing these data in the shared
database. Another advantage is that when upgrading to a new SAP S/4HANA Cloud
release, all resources stored in the shared database only need to be upgraded once per
the SAP HANA system, rather than individually for each tenant. This eliminates the
need for tenant-specific upgrades. It is critical to note that an individual tenant cannot
change or update any tables or data in the shared database because such changes
would affect all ABAP application servers running on tenant databases in the same
SAP HANA system. All tenant-specific data, such as transactional business data,
configuration settings, or master data, as well as all types of tenant-specific
extensions, is stored in individual tenant databases rather than the shared database.

Application Lifecycle Management

For handling the application lifecycle management (ALM) SAP offers among others
SAP Cloud ALM. This tool allows to simplify the implementation and application of
cloud-based solutions for customers. The offering is aimed at small, medium-sized,
and larger customers who require a standardized cloud-based solution. As shown in
Fig. 36.6, SAP Cloud ALM consists of two subareas, Implementation and
Operation.
The Operation component of SAP Cloud ALM provides monitoring for
applications, integration, users, and business processes. The Implementation com-
ponent focuses on implementation projects and supports managing of processes,
tasks, tests, and deployments. SAP Cloud ALM is integrated to existing frameworks
based on the API hub. Business process monitoring provides transparency on end-
to-end business processes within a distributed and hybrid solution landscape. It
ensures uninterrupted business operations and improves the quality and performance
of business process execution. Furthermore, it monitors the health of processes and
detects anomalies during process execution, including drill-down into business
documents. If necessary, it directly alerts users to process disruptions and provides
568 36 Lifecycle Management

SAP Cloud ALM – Cloud-based application lifecycle management offering

Functionalities Integrates with…

Monitoring
Application Integration and Business process Business process IT service management
Operation monitoring user monitoring monitoring improvement
People enablement
Collaboration
API hub
Implementation Task management
Process Task Test Deploy Deployment tools
management management management management
Test automation
Document management

Platform services and data management

Fig. 36.6 SAP Cloud ALM—functional architecture

automated problem resolution via built-in operation flows. Business process moni-
toring delivers predefined process content, including auto-discovery of relevant
metrics that can be activated. Integration and Exception monitoring allows end-to-
end monitoring of cloud services and systems by correlating single messages to end-
to-end message flows. It helps in the monitoring of exceptions related to integration,
peer-to-peer interface support, as well as orchestrated integration. The solution
bridges the gap between business and IT during the problem-solving process by
alerting to notify responsible business and IT personnel of discovered integration-
related issues, searching for and tracking individual messages using exposed busi-
ness context attributes such as order numbers, automation of operations to trigger
operation flows context-sensitively for automated problem correction. Jobs and
automation monitoring ensures that business operations run smoothly and improves
the quality and performance of business processes by monitoring the health of job
executions and detecting anomalies during job execution, notifying both business
and IT users of disruptions and exceptions, providing information at the job execu-
tion level to allow for fact-based root cause analysis and by reducing configuration
effort through the use of historical execution data. Job and automation monitoring
will be enhanced with operation flows to trigger corrective actions such as job
restarts, as well as job and automation analytics to enable trend analysis based on
historical data. User and Performance Monitoring provides transparency into
end-user performance as well as the use of business functionality. Performance
data is collected at the front end and server levels to determine the root cause of
performance issues. The use of the SAP Passport technology enables the correlation
of performance data measured at the front end, cloud service, and/or system level.
Health monitoring visualizes the health of cloud services and systems in order to
detect disruptions or degradations in service. It allows to run application health
checks for the SAP cloud services in order to check the status of persistency, jobs,
and connectivity. The solution supports health checks for customer-built cloud
services and on-premise systems, as well as trends and usage metrics. Embedded
Conclusion 569

analytics is provided to identify the root cause of a discovered problem. Business

service management supports in the definition of customer-specific maintenance
events at the business service level. Business service is defined as a grouping of
technical services that represent business functionality. Externally communicated
maintenance, disruption, or degradation events are propagated from technical
services to business services as a result of business up/downtimes. The solution
facilitates service time definition based on service-level agreements and service
contracts on a business service level. Problem Management is divided into three
subprocesses: problem identification, problem distribution, and problem resolution.
SAP Cloud ALM is involved in all three subprocesses. Problem detection is
implemented in SAP Cloud ALM by means of the options for monitoring the various
components of the ERP system. The distribution of problems is implemented by
SAP Cloud ALM through built-in alert management and intelligent event
processing. Business automation, message management (e.g., chats, e-mails, or
social media), and root cause analysis at technical and operational level help solve
the problem. In addition, SAP Cloud ALM supports the ability for performance
monitoring. This provides transparency on how the end user actually perceives the
response time of the solution and how the business functionality is used. The
performance is measured at the front end, at the network level, in the cloud service,
and at the server level in order to identify the root cause of performance problems.
Furthermore, SAP Cloud ALM provides tools for monitoring tasks and automated
business activities. These improve the quality and performance of the execution of
business processes. This is to be achieved by monitoring the execution of tasks and
directly alerting both business and IT users when disruptions occur. Additionally,
the configuration effort is reduced by using historical data about the execution of
tasks.

Conclusion

Lifecycle management refers to all the phases of an ERP product throughout its
planning, development, installation, usage, operations, all the way through to its
eventual obsolescence or decommissioning. This chapter explained the approaches
for software maintenance, zero downtime, and multitenancy. ERP software must be
up to date with current laws and regulations, provide a new functional scope and
innovative features, improve existing functionality, and, if necessary, correct errors.
SAP S/4HANA must be maintained on a regular basis, which is technically referred
to as upgrade and update. The blue-green deployment concept is used for software
maintenance of SAP S/4HANA. For downtime optimization during the software
maintenance of SAP S/4HANA the concepts for near-Zero Downtime Maintenance
(nZDM) and Zero Downtime Option (ZDO) were described. The key idea of those
approaches is to reduce downtime by moving downtime-relevant phases to uptime.
The SAP S/4HANA Cloud multitenancy architecture was explained which allows
tenants to share resources at the database, application server, and application levels.
Multiple tenants share a single SAP HANA database system, which includes a
570 36 Lifecycle Management

shared database that stores application server and application data for all tenants in
an equal and immutable manner. Each tenant has its own tenant database within the
SAP HANA database system to keep all tenant-specific data completely isolated
from all other tenants.
Configuration
37

This chapter focuses on configuration concepts and frameworks of SAP S/4HANA

to allow customers and partners adopting the functionality by utilizing predefined
variability. Particularly, authoring of configuration content and scoping of business
configuration are explained.

Business Requirement

Configuration is the process of adopting ERP functionality based on predefined

variability by customers and partners. It has always been a core strength of ERP
products to provide a high degree of flexibility and thus a wide range of customizing
options. This enables standard definition of business software to be adjusted and
extended to meet the needs of each individual consumer. As of today, SAP
S/4HANA offers thousands of individual settings for tuning an installation to meet
the needs of a specific company. Which configuration combinations, however, are
truly semantically correct? Which combinations produce a dependable business pro-
cess? Which combinations achieve the best balance of diversification and efficiency?
SAP has been providing reference content for more than a decade, allowing SAP
customers to equip their solution with a consistent and reliable preconfiguration of all
relevant business processes and supporting functionalities. This preconfiguration
meets three important criteria:

• Rapid implementation: Preconfiguration enables to begin implementing the ERP

system with a basic, consistent set of configurations. In many business areas,
customers can start by accepting standard settings as the default and then define
custom settings in focus areas. With this combination, customers can get started
quickly with a fully functional solution and then further customize the application
later. This lowers the initial total cost of implementation (TCI) and leads to a
faster deployment and, as a result, a faster go-live.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 571
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_37
572 37 Configuration

• Approach based on best practices: ERP vendors leverage their decades of experi-
ence to present a best-of-breed solution for an enterprise’s core business pro-
cesses. Best-practice content strikes a balance between high performance, solid
flexibility, and country-specific flavors. This reference content is not rigid; it can
be adjusted and extended at various points. The reference content, on the other
hand, is a de facto standard that allows for a reliable and quick implementation.
• Compatibility across the lifecycle: The business world, and thus the reference
content, is constantly changing. The rate of innovation adoption in ERP software
is a key differentiator. New innovations must be readily available, simple to
consume, and extremely dependable in terms of quality and performance. As a
result, ERP vendors incorporate these changes into the reference content and
regularly update the affected installations. However, these updates must not
jeopardize the stability of customers’ running productive landscapes. As a result,
the reference content is enriched with lifecycle-relevant metadata to control how
changes in existing implementations must be handled during the upgrade. This
enables a secure, automated upgrade process, which is a critical quality. Changes
that are incompatible with the software’s and its content’s lifecycle are avoided.

The function of a company’s organizational unit determines a large portion of its

required business functionality. What is the unit’s purpose? Is it a sales office? Is it a
legal entity or just a division of the company? Configuration must support multiple
organizational units in a single tenant and divide them using dedicated company
codes. As a result, the configuration and corresponding content must include the
correct company code for the customizing settings to differentiate between the units.
Furthermore, the scope varies depending on the purpose of the organizational unit.
An organizational unit is typically associated with a physical installation and thus
assignment to a legal space. The legal space also has an impact on the selection of
correct configuration settings because country-specific settings that either support
legal compliance or represent regional best practices must be chosen rather than
global or general ones.

Solution Capability

As already mentioned, ERP systems like SAP S/4HANA are very rich in function-
ality that needs to be adopted according to the customer’s requirements. That is why
SAP created an application called SAP Central Business Configuration (CBC),
which enables the user to configure a system systematically by using an existing
pool of functions. This is ensured with different concepts and the two major
components: Authoring and Consumption. Thus, guided procedure is provided to
customize the entire system and get the most out of it for the customer. Unlike the
extensibility management, which is about creating new extensions, the SAP Central
Business Configuration enables a systematic implementation of the configuration
from an existing pool of functions and maintenance of the SAP S/4HANA projects.
It provides a consistent and simplified approach for customers and the SAP experts
Solution Capability 573

to scope business processes, select, and specify their solution configuration. The
SAP Central Business Configuration introduces completely new possibilities to
manage multi-product, multi-process, and self-service multi-user scenarios in one
single intuitive-to-use and business-oriented, consistent solution. The system is
already predefined and ready to use. Of course, these default settings must be tailored
to the costumer’s own needs, but customers can save so a lot of time. There are areas
in which the preconfiguration is simply not sufficient, what means that customers
must expand it. This can be done directly by the customer. It is also possible to
enable delta deployment of scope extensions, for example, if the customer
configured the system for Asia and now wants to deploy it in the United States of
America as well. Due to the immense experience and the large number of customer
project, ideal processes can be derived, which in turn are summarized in the Best
Practices for the SAP S/4HANA content. This knowledge forms the basis for the
preconfiguration. Thus, customers can access the experience of hundreds of
thousands of projects.

Components Architecture

The SAP Central Business Configuration is a standalone service that registered users
can use prior to provisioning a specific product or software package. Even before
making a product selection, customers can use the configuration tool to browse
through available business processes and fine-grained functions. The central scoping
instrument, the business adaptation catalog, is structured purely according to busi-
ness terminology and is updated whenever any of the products available introduces
new innovations or changes in existing offerings. By assigning content to catalog
entries, different products and solutions are available to realize the selected business
capabilities. Customers can select not only a single product, such as SAP S/4HANA,
but also fully integrated enterprise services from SAP and its partners’ extensive
product portfolio. The customer’s demand is to focus on selecting the business
processes that will be operated by their organization, rather than identifying required
business content. The SAP Central Business Configuration identifies and deploys the
appropriate content into the necessary software packages based on the customer’s
selections—boundary conditions, organizational structure, country footprint, and
industry focus. This also includes the necessary integration settings. When
performing self-service scoping, the SAP Central Business Configuration provides
a compelling user experience. The scoping process is much more intuitive, transpar-
ent, easy to implement, and persona driven in design. It also takes into account
potentially required authorization boundaries to ensure that not every user has the
ability to change everything at any time, but areas of responsibility are also reflected
in user profiling. As illustrated in Fig. 37.1, the SAP Central Business Configuration
consists of the Authoring and Consumption components.
Business Application Factory (BAF) provides frameworks and services which
abstract from the underlying SAP Business Technology Platform and provide
security and technology guideline compliances. Using the SAP Business
574 37 Configuration

SAP Central Business Configuration

Authoring Consumption
Business Configuration Project
Deployment Models & Structure
Deployment
Target
Target Deployment
Types Scoping Org Mgmt Deployment
Types Content Record Target
Deployment
(e.g. S/4 HANA
Target
Deployment
(e.g. Target
Cloud)SAP Fine-Tuning (Customer
Target
S/4HANA Data Dictionary (Customer
Synchronization Business Configuration Lifecycle
Instances)
(Customer
Cloud) Instances)
(Customer
Instances)
Instances)
Business Application Factory

Content Authors Customer Experts

Fig. 37.1 The SAP Central Business Configuration—component architecture

Technology Platform based abstraction layer ensures that the Business Application
Factory can be deployed on any Hyperscaler like SAP, Google Cloud Platform,
Microsoft Azure, Amazon Web Services, and Alibaba Cloud. Kubernetes is used for
this deployment. Business Configuration Lifecycle Management (BCLM) takes care
of the central configuration lifecycle, ensuring that the business configuration
performed in the central configuration system is always in a consistent state.

Authoring
The Authoring component deals with the maintenance of the configuration content.
If a system is configured according to best practices, the configuration content is
usually stored in separate tables. The basis is the Business Adaption Catalog (BAC),
a hierarchical representation of all business-driven configuration decisions relevant
for the customer. It defines the business scope of the customer’s project in a clear and
structured way. Decisions are displayed in a tree, and technical complexities are
elegantly hidden. It sums up functionality as bundles of documented, selectable units
and guides the customer through activities necessary based on their decision.
SAP-delivered content is organized centrally, so it enforces overall consistency of
delivered content. The Business Adaption Catalog consists of a hierarchy of struc-
turing elements ending with fine-grained ones. It is possible to navigate in the
catalog tree and scope through some available business capabilities. With the help
of constraints, powerful instrument within the definition of the catalog, expressions
of dependencies, and mutual exclusions of Business Adaption Catalog selection
options are allowed. If the dependencies are identified, the customer should be able
to make an informed and conscious decision for all necessary selections. The
Business Adaption Catalog does not force choices on the customer; it just supports
and secures. The basic structure includes a total of five layers, which can be divided
into business content structure definition and business content data definition, as
shown in Fig. 37.2.
A Business Area is a department within an organization, such as sales, purchas-
ing, or human resources. It’s only used to group Business Packages and not relevant
Solution Capability 575

Basic Structure of the BAC

Business
Area
Business Content
STRUCTURE Business
Definition Package

Business Topic

Business Option
Business Content
DATA
Definition
Content Objects & BC Sets

Fig. 37.2 Business Adoption Catalog (BAC)—basic structure

for the customer decisions. The next layer is the Business Package, which represents
a logically definable subarea within the costumer’s enterprise. It consists of
capabilities that are required in that subarea, for example, the Sales business area
includes a logical Contract Management (CM) subarea. Thus, the business package
contains all capabilities for CM. Business Topic defines a logically subtopic within a
subarea of the customer’s enterprise. The business topic includes all capabilities
required in that subarea. They can be grouped semantically. Business Option is the
lowest level of decision. It represents a business variant or feature for a specific
solution capability. Content Objects & BC Sets contain product-specific content
packages. Business Adaption Catalog enables building more fine-granular configu-
ration content, what leads to a much higher configuration flexibility. On the one hand
the content development efficiency can be easily increased by getting rid of redun-
dant content maintenance, for example, via templates and the mentioned layering.
On the other hand, template-based docker instances enable a fast, flexible, low-cost
setup of the SAP S/4HANA test environment. A much higher content quality is
achieved by providing a more consistent authoring environment with Business
Adaption Catalog authoring, for example, via branching. Every process of content
authoring starts with the perspective and scoping of the customers. It’s important to
know the customer’s vision and needs. Also, a scope-dependent approach is pur-
sued, and Business Adaption Catalog considers changes. Giving partners the oppor-
tunity to create their own content for customers enables the scaling of Business
Adaption Catalog. All these benefits are possible due to the back-sync process which
is used to create the content for authoring. This includes the following steps:

1. Prepare the content and establish connectivity to the SAP S/4HANA system.
2. Scope in the authoring workspace by the creation of a defined configuration data
context in SAP S/4HANA.
576 37 Configuration

3. Update the authoring JSON file with the authoring workspace ID and
staging ID.
4. Authorize the content by recording it via SPRO transaction and user-specific
capturing of Implementation Guide Customizing (IMG) maintenance.
5. Push the recorded content from SAP S/4HANA to the Central Business Config-
uration with multiple back-syncs.
6. Identify those missing Data Dictionary (DDIC) artifacts and trigger a delta
DDIC synchronization.
7. Store the content records in authoring workspace in worklist and create under-
lying temporary BC Sets.
8. Define related authoring views to be able to view a not yet abstracted BC Set
using the specified authoring view.
9. Perform abstraction (templatization) to have the ability to view an intermediate
BC Set after this abstraction.
10. Finalize the BC Set content, for example, resolving key clashes, and assign them
to business options including country/region and sector assignment.
11. Perform tests via consumption workspace and deploy to an SAP S/4HANA test
client. Correct errors either via Central Business Configuration directly or restart
the process.
12. Close the authoring project/workspace and check the content for readiness.

The E2E processes available in the SAP S/4HANA solutions are described by
business process variant groups and business process variants. Customers can
preselect elements in the Business Adaptation Catalog based on a business process
variant, giving a head start on the detailed decisions. Typically, a business process
spans multiple business areas. For example, choosing the indirect material procure-
ment business process variant would include the self-service procurement business
package in the scope, but this package has financial requirements for accounts
payable processing.

Consumption
Consumption, on the other hand, deals with the actual SAP Central Business
Configuration, that is, projects are maintained, scoping is performed, and organiza-
tional structures are defined. This content is also stored separately and can be
transported through the entire system landscape. No extensibility or configurations
are directly made in the productive system to avoid error-prone situations. That’s the
reason why the content is defined in the development system, transported to a quality
environment for testing, and if successfully validated, then transferred to the pro-
ductive system. With the help of the reuse component Business Application Factory,
standard functionalities such as authentication or correction are made available. The
consumption is based on these five key components:

• Project Experience: This component manages configuration projects. The current

focus here is on cloud applications, but the concepts are also suitable for all
on-premise solutions.
Solution Capability 577

• Scoping: This enables the definition of the objective for configuration projects. It
follows a fit-to-standard analysis and starts with providing basic information
about the company. It allows selecting and specifying countries and regions,
business processes, and solution capabilities. Thus, relevant bundles and
scenarios with predefined content can be suggested automatically. Each company
is treated individually, so the system enables to make a series of business
decisions to adjust the content and determine which of the available features
and functions shall be integrated. This whole process is guided by built-in rules to
ensure that the selected content is consistent and logical from a business and
technical point of view. Starting this process launches the Business Adoption
Catalog.
• Central Configuration: If the customer does not want or is not able to use the
standard configuration, it is possible to make even more specific settings. It also
allows to configure business processes based on the self-service configuration
user interfaces (SSCUIs) and scope- and country/region-dependent configuration
activities. For example, additional localizations can be added.
• Business Configuration Workspaces: With the help of business configuration
workspaces, several implementation projects can be managed at the same time.
Furthermore, templates can be used for future company rollouts. In this way, costs
can be saved, and a standardization can be achieved. Company rollouts can be
carried out quickly due to the parallelization of implementations and templates.
• Content: The aforementioned components are possible only through the SAP
Best Practice preconfiguration content and the Business Catalog Adoption Cata-
log. Experience from hundreds of thousands of customer projects can be lever-
aged. In addition, the SAP Central Business Configuration introduces a
completely new content structure, from scope items to business scenarios and
from building block to business operations. Furthermore, configuration efforts of
the pre-scoped workspaces can be reduced through fine-granular scoping.

Functionality and Concepts

From functional point of view SAP Central Business Configuration supports the
project setup in terms of assigning team members to projects, the scoping of the
required business scenarios, the execution of guided project activities. Furthermore,
organizational structure management is facilitated, the execution of configuration
activities is performed, and the lifecycle management is enabled including updates.
In order to provide this functionality, concepts are required which are described in
this section.
The Project Experience enables the customer to centrally manage all of their SAP
implementations (Fig. 37.3). The dashboard shows the status of the entire system
and the individual projects, whether they are still pending, in progress, or already
completed. The user has a guided access to further applications like the scoping and
a central access to SAP installations.
578 37 Configuration

Project Experience - Explore

Project Experience - Realize

Fig. 37.3 Project experience—explore and realize

Fig. 37.4 Typical

configuration process Prepare Explore Realize Deploy

The typical configuration processes work with milestones and are depicted in
Fig. 37.4.
Solution Capability 579

• Prepare: This step focuses on what is offered and what does the consumer need.
The starter project is connected to a starter system and allows to explore the
costumer’s business processes with a preselected scope and example data before
beginning the implementation project.
• Explore: The objective of this step is to define the scope und specify primary finance
settings, request SAP S/4HANA license-dependent or non-standard scenarios, set
up the organizational structure, and deploy settings to a quality system.
• Realize: In this phase, configuration activities for detail settings of the solution
process are performed, also called fine-tuning. They must be carried out, and after
finishing the release, they are transported from a quality to a productive system.
• Deploy: Current settings which need to be maintained directly in the production
system are presented in this phase. Furthermore, manual rework on configuration
activities is performed if required, and finally go-live is triggered.

The Organizational Structure Management facilitates to adapt and maintain the

company’s organizational structure and to activate the content data. It allows
enhancing the organization structure when the customers have been using an
activated solution already and would like to extend the organizational structure,
for example, to add a new plant. Key features are the graphic view, which visualizes
a scope-dependent and guided creation of organizational units and a table view that
lists all organizational units in a table. As long as non-confirmed entities are waiting
in the staging area, it is possible to change or delete them, because there is no
instantiation of the org-related Business Configuration (BC) Sets into the workspace.
All these Business Configuration Sets have a placeholder for the organizational
identification (ORG ID), which gets filled with this particular ORG ID which shall
be confirmed. After the deployment into the backend system those operations won’t
be able anymore. The Business Configuration Lifecycle Management supports the
central configuration lifecycle and ensures that the business configuration performed
in the central system is always in a consistent state. The goal is to make the content
work not only at first, but also on a continuous basis. Customers can keep the SAP
standard content as is or modify it to meet their needs. SAP Central Business
Configuration calculates which content is used, what have been adapted, and
which new content is available with each SAP update. Throughout the upgrade
process, SAP makes improvements and corrections to the currently active scope. The
SAP Central Business Configuration upgrade procedure ensures that customer’s
configuration settings are not altered. New innovations with additional scope
elements, such as business process variants or business options, are made available
for scoping and can be added after the upgrade via scope extensions. Without having
to start from scratch, customers can get all of the latest innovations as additions to the
standard content that they have adapted. As a result, an implementation project
entails more than just managing configurations, so SAP Central Business Configu-
ration is integrated with SAP Cloud ALM as part of the overall picture. SAP Central
Business Configuration and SAP Cloud ALM are complementary tools: SAP
Central Business Configuration manages configurations, while SAP Cloud ALM
manages overall processes. Scoping decisions and activity statuses are synchronized
580 37 Configuration

Fig. 37.5 Scoping and Organizational Structure Management

between the two tools as part of their planned integration, allowing to get the most
out of SAP Cloud ALM and SAP Central Business Configuration (Fig. 37.5).
SAP Central Business Configuration adheres to SAP Activate implementation
methodology and encompasses all configuration-related project phases. This tool
focuses on activities in the workstream of application design and configuration.
Initially, as part of the preparation phase, customers are given access to the SAP
Central Business Configuration tool, where they configure their project, including
naming the project lead and assembling the project team. In the starter project,
Conclusion 581

customers conduct a fit-to-standard analysis as part of the explore phase. Simulta-

neously, customers create their implementation project in which they document the
results of the fit-to-standard analysis, including the following information: Choosing
a scope and countries/regions, configuring parameters for further system
customizing, and defining the company’s organizational structure. Following the
completion of the explore phase, the settings are initially deployed. During the
realize phase, customers can modify the preconfigured settings to better suit their
business requirements. Depending on the project approach, SAP Central Business
Configuration allows to use transports to release configurations in small, iterative
steps or in larger chunks. During the deployment phase, customers perform cutover
activities such as migration of their productive data. SAP Central Business Configu-
ration assists in carrying out recurring activities, also known as current settings, to
complete the project’s go-live phase. Even after the project has gone live, customers
can still make changes to it, such as expanding its scope, adding countries and
regions, establishing new organizational units, or fine-tuning the business processes.
Based on an integrated functionality to initiate changes, this expansion is possible.
SAP Central Business Configuration also assists in adapting processes, features, and
functions delivered by each solution upgrade. Thus, SAP Activate, SAP Central
Business Configuration, and SAP Cloud ALM work in tandem.

Conclusion

Configuration is the process by which customers and partners adopt ERP function-
ality based on predefined variability. The ERP products’ ability to provide a high
degree of flexibility and thus a wide range of customizing options has always been a
core strength. This enables standard business software definitions to be adjusted and
extended to meet the needs of each individual consumer. SAP S/4HANA currently
provides thousands of individual settings for tuning an installation to meet the needs
of a specific company. Thus, SAP developed an application called SAP Central
Business Configuration, which allows users to configure a system in a systematic
manner by utilizing an existing pool of functions. This is accomplished through the
use of various concepts and the two major components: authoring and consumption.
As a result, a step-by-step procedure is provided to customize the entire system and
make the most of it for the customer.
Implementation
38

This chapter focuses on implementation concepts and frameworks of SAP

S/4HANA to assure successful implementation projects. Particularly, the activate
methodology and tooling for discovery, exploration, realization, deployment, and
running of SAP S/4HANA are explained.

Business Requirement

Traditional ERP software implementations have been built around extensive

requirements gathered in workshops, followed by detailed design activities to create
a blueprint for system implementation. This approach has resulted in systems that
are completely tailored to the needs of the business, with extensive customizations
and custom code, but are difficult to upgrade and maintain. Companies that
implement software in this manner frequently discover that due to the level of
customization in their system, implementing new capabilities can be a cumbersome
and time-consuming process, preventing the adoption of these new capabilities in a
timely manner. Furthermore, the goal of such implementation projects is to get the
organization to the go-live phase, with the expectation that the software operations
will be performed by IT or outsourced to an application management services
provider. Modern implementation methods take a completely different approach
based on maximum reuse of pre-delivered functionalities and applications, with a fit-
to-standard mindset in solution deployment. The deployment strategy should be
based on the use of agile techniques to reduce time to value and provide a working
solution to business users faster than in traditional implementations. Deploying ERP
systems is a continuous adoption journey that does not end with the first go-live but
rather continues with the ongoing adoption of new capabilities that the solution
already provides or features that are delivered in the solution’s regular upgrades.
Typically, after the initial go-live, organizations that use ERP solutions focus on the
following two tasks:

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 583
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_38
584 38 Implementation

• Maintaining solution adoption by optimizing the solution to meet business needs

on an ongoing basis.
• Adding new capabilities or expanding the solution’s geographical footprint to
serve more users across the organization.

The provisioning of best practices packages, which include preconfigured support

for business processes and provide a great jumpstart for the solution’s deployment, is
a key accelerator for deploying ERP systems. These preconfigured supported pro-
cesses are delivered in the system using a predefined chart of accounts and a
predefined set of master data (organizational units, customers, vendors, materials,
and so on). Because customers can self-enable the pre-delivered functionality, this
asset enables project acceleration in the early stages. This allows to determine the fit
of the standard solution and identify any delta requirements. The implementation
methodology should cover the entire lifecycle from discovery to realize and run.
Especially, the project team must be enabled in each phase to validate that the
solution meets the demands of business users and, if necessary, to determine any
needed configuration values and delta requirements, such as extensions, integrations,
analytics requirements, or access-level authorizations. This activity is typically
carried out by the project team in fit-to-standard workshops. The advantage of
approaching deployment in this manner is the time saved by reusing pre-delivered
process support and avoiding the expense and effort of rebuilding processes and
content in an empty system. Organizations that take this approach and commit to the
staying close to standard principle can benefit not only from time savings in initial
deployments, but also from a built solution that is ready for the activation of
continuously delivered new capabilities. This foresight is especially important in a
cloud environment, where new capabilities are released at a faster rate than in a
traditional on-premise environment.

Solution Capability

This section covers different aspects that are important within the overall SAP
S/4HANA implementation process. The SAP Activate methodology is used in
different implementation contexts, for which SAP solutions could be applied.
Many cloud solutions focus on a greenfield approach, while new on-premise
solutions are prevailed with brownfield situations, because many ERP systems are
established long-lasting implementations that will sooner or later get deprecated.
Therefore, the general SAP Activate methodology in this section is divided into two
elaborations of this general SAP implementation topic. The first part covers the SAP
Activate methodology for a greenfield SAP S/4HANA Cloud solution. The second
focuses on the SAP Activate methodology, which is being used in transitioning to an
SAP S/4HANA on-premise solution. Both approaches face different challenges,
which will get addressed. The SAP Activate methodology in these different use
cases can get enhanced and realized with SAP Cloud ALM, which is specifically
designed to support customers in adapting an SAP solution into their business.
Solution Capability 585

SAP Activate Methodology

Organizations that are just getting started with SAP S/4HANA can use the SAP
Activate methodology to map out a detailed path that will structure the transition
process. SAP Activate guides customers through the process of charting a strategy,
planning, and scoping the transition, as well as activities to assess the solution’s fit
with the needs of the organization in fit-to-standard workshops, configuration, exten-
sibility, integration, and testing, and finally production cutover and go-live. Following
this process, business users will be able to benefit from using SAP S/4HANA in their
daily business activities, and the organization will be able to continue to adopt new
SAP S/4HANA capabilities to broaden the scope of the solution. SAP Activate is a
set of three components that work together to support the SAP S/4HANA imple-
mentation: SAP Best Practices, the methodology, and the tools. The SAP Activate
methodology delivers a manual for the implementation of SAP solutions. Customers
may have different requirements regarding the adoption of an SAP solution. In
general, customer requirements can be divided into three fields: Project, Process,
and Task management. These need to be addressed and specified for specific solution
practices.
It makes a huge difference, if a company is transitioning an existing SAP ERP
into SAP S/4HANA or implementing SAP SuccessFactors into their otherwise
independent system landscape. Therefore, the general SAP Activate methodology
needs to be flexible for many distinct solutions. Nonetheless a fit-to-standard focus is
present in every solution with an SAP Activate methodology implementation pro-
cess. With the goal to fit a standard SAP solution into individual requirements of a
customer, the steps shown in Fig. 38.1 are identified for the implementation process:

• Discover: Within the first phase of an SAP implementation process, it is important

that customers come to an understanding of their individual requirements on a
standard solution. They need to explore the given benefits, which an SAP solution
offers. Therefore, key stakeholders need to be identified, which are also critical
for a successful project kick-off. The potential total solution value is dependent on
the recognition of individual stakeholder requirements. If they are not satisfied
with their individual value, they may not support the further implementation of an
upcoming project. Hence the involvement of every stakeholder group into the
discovery phase of an SAP solution should have a high priority.
• Prepare: After customers got a detailed understanding of their individual
requirements and got to terms with an SAP sales team, the prepare phase of the
implementation begins. In this phase every aspect of a specific upcoming imple-
mentation project gets planned and prepared. The aspects fall into many
categories. A project team needs to be assigned, the project plan needs to be
finalized, and development systems need to be set up.
• Explore: In the explore phase the project team performs a fit-gap analysis.
Therefore, the individual customer requirements are divided into fits and gaps.
Fits are requirements, which are covered by the based standard SAP solution. On
the other hand, gaps are requirements, which are not covered by the standard SAP
 586

Deploy SAP S/4HANA Cloud with SAP Activate

Journey Overview and Key Milestones

Qualification / Brand Guardian Finalized scope and backlog

with delta requirements
Discovery Assessment Go-Live Readiness Quarterly
Assessment Upgrade
Buy Onboard Project
Team
Go-Live Activate new
scope / add
countries

Discover Prepare Explore Realize Deploy Run

Continuous Innovation

Fit-to-
Discovery Setup and Scope and Migrate, Integrate, Onboard Users Innovate,
Standard Extend
Assessment Enablement Configure Test and Deploy Operate, Support
Analysis

System Trial System

Landscape
Starter System

Quality System
38

Production System

Initial Transport Ongoing Transports

Fig. 38.1 The SAP Activate Methodology

Implementation
Solution Capability 587

solution out of the box. Gaps need to be specifically treated in the following
realize phase. Every gap needs a detailed description and entry in the project
backlog; hence these need to be individually covered and may be even
implemented.
• Realize: The realize phase is characterized by different building and testing
activities that build an individual system environment out of a generic SAP
solution. Known fits and gaps are implemented, essentially to fulfill the
customers’ requirements in an adequate manner. Gaps need more attention in
this phase, while fits are already identified as requirements, which are covered by
default in the implementing SAP solution. These fits and gaps are implemented
incrementally over different iterations to test the handling of each requirement
thoroughly. Each iteration should bring new functionalities, to resemble the
project progress over time. The outcome of this phase is an implemented SAP
solution, which fulfills the customers’ requirements and is ready to be deployed.
• Deploy: Within this project phase, the developed customer system gets its final
touch before getting released into productional use, which is the first step of this
project phase, but prior to that some final tasks need to be addressed. The
customers’ organization needs to be onboarded and prepared for the upcoming
cutover. Therefore, planning support and training for end users is essential.
Support processes for an operational use should also be implemented in this
phase, to enable an optimal introduction of a new system as soon as possible. On
the technical side final system tests need to be conducted, while every upcoming
issue needs to be well documented.
• Run: In this final project phase, the implemented system is productively used.
Main objectives of this phase are improvements of availability and system
performance. Within this phase the defined value of the SAP solution gets
realized, so that customer satisfaction is key. Therefore, opportunities for contin-
uous learning and steady improvements should always be looked upon and
evaluated. If potential for additional value is determined, these optimizations
should get carried out.

In retrospect these different phases bring a form of consistency to every solution

implementation, thus ensuring the right fitting of a standard SAP solution into
specific customer requirements. Furthermore, the fit-to-standard focus gets carried
out on the identification of fits and gaps in the explore phase. This phase’s main
objective is to evaluate given circumstances on the technical and business sides. At
the end customers get a specifically configured SAP solution for their individual
requirements. Thus, it is critical that individual use cases within the discovery phase
have been identified. It is crucial to emphasize that the outcome of this methodology
is customer value, which gets achieved by supporting business processes in the best
manner possible. Hence, it is important that the run phase does not raise new and
unknown problems and issues, which could impede dependent business processes.
The SAP Activate methodology is divided into phases, deliverables, and tasks that
are organized hierarchically. Each deliverable and task are also assigned to a
workstream, which groups related deliverables and tasks together. The hierarchy
588 38 Implementation

organizes the deployment journey and is supplemented by accelerators, templates,

documents, web links, and other assets that help you complete the task more quickly.
SAP Activate’s modularity allows organizations and SAP partners to replace specific
sections of SAP Activate with their own processes and gates, as well as add their
own processes as needed. SAP partners, for example, frequently offer their own
flavor of program management or organizational change management (OCM) pro-
cesses to use during the deployment. SAP Activate can be used in tandem with such
procedures. If customers work in industries that have additional quality or validation
requirements, they can use SAP Activate to overlay their required deliverables and
quality gates (Q-gates) to comply with the processes and quality standards expected
in their industry. SAP strongly advises keeping the SAP Activate components
related to fit-to-standard, configuration, extensibility, integration, and technology
in the resulting methodology in order to benefit from the strength of the product and
content delivered with SAP Activate. SAP Activate’s scalability enables to scale the
approach to various project and organizational sizes. The methodology has been
used successfully in SAP S/4HANA deployments in growing organizations in one
country, as well as SAP solution deployments in multinational organizations
operating in a diverse range of businesses across a broad geographical footprint.
SAP Activate is designed to be scaled up or down based on the needs of
organizations and the product being deployed. This scalability assists in deploying
SAP S/4HANA with strict adherence to standard pre-configuration reuse to deploy
solution in weeks and provides structure for organizations deploying the solution
incrementally across a wide range of businesses.
SAP Activate takes the starting point of the customers into account and ensures
greenfield approach for new implementation and brownfield for system conversion
as illustrated in Fig. 38.2.

Greenfield Implementation

An SAP S/4HANA implementation follows the general SAP Activate methodology

in many aspects but is specified for the cloud version of an SAP S/4HANA system.
This approach depictures a greenfield situation, hence there is no need to take the
transition of a preexisting SAP ERP system into consideration (see Fig. 38.2).
Therefore, this approach can also be applied to a new implementation of an
on-premise version of SAP S/4HANA. The previously declared general SAP Acti-
vate methodology phases for this greenfield situation for an ERP system are
expanded by the following additions:
• Discover: The key activity within this phase is to deal with a trial SAP S/4HANA
system to get a fundamental understanding of its functionalities. Out of these
functionalities the customer needs to deduct his individual value propositions of
this new iteration of ERP systems. After this phase the customer needs to know
what value is provided by the SAP S/4HANA system.
• Prepare: The prepare phase is a straightforward phase for an SAP S/4HANA
system implementation. Within this phase a base system needs to be set up and
 Deploy SAP S/4HANA On-Premise with SAP Activate
Solution Capability

Journey Overview and Key Milestones

Discover Prepare Explore Realize Deploy Run

Fit/Gap Analysis with

Operate,
Experience SAP Best Practices Scope and Migrate, integrate, Onboard and
monitor,
Trial or SAP Model configure extend, test deploy
support
Company

NEW
IMPLEMENTATION

Project
Lifecycle
Solution Manager Integration

SYSTEM Technical
CONVERSION Functional Operate,
Experience Preparation Steps Integrate and Onboard and
Conversion monitor,
Trial and Test extend deploy
and Cut-Over support
Conversion

Fig. 38.2 SAP Activate for new implementation and system conversion
589
590 38 Implementation

prepared for later configuration work. Additionally, some preparation work needs
to be done within this phase for the fit-to-standard objective, which is mainly
regarding design and configuration of the to be realized application. It is worth
mentioning that data management, testing, and integration are not activities
within this phase. Just out of the fact that a greenfield situation is preset, which
does not involve any legacy ERP system with any relevant data or integration
requirements.
• Explore: This phase is used to perform the fit-to-standard objective and to analyze
the given SAP S/4HANA functionalities with already identified value
propositions. Like in the general methodology, fits and gaps can thereby be
identified, in which less gaps are desirable. Generally, many business processes
and requirements need to be aligned with the given solution functionalities.
Hence many design and developmental processes begin in this phase, as well as
building a quality system (Q-System).
• Realize: As in the general SAP Activate methodology this phase brings the
identified fits that need to be configured and gaps that need to be resolved to
fruition. The main objective of this phase is a deployable productive system
(P-System) that fulfills all customers’ requirements. Therefore, identified con-
sumer data and configurations get migrated, integrated, and tested in the prepared
Q-System. These developments will later get transported to the P-System. This
transport does not need to be carried out in a single action, but can rather be
divided into an initial, instantiating transport and following ongoing transports.
Business user can receive early access to an already partly functional P-System,
so that the project team gets further information and feedback, which could be
used to optimize the still developing P-System. Incremental iterations can carry
out further development into the P-System, so that a useable, fully developed,
configured, and deployable P-System is the final result of this phase.
• Deploy: The deploy phase is characterized by the productional go-live of the
P-System and therefore of the SAP S/4HANA System. For that the final system
tests are getting carried out, end-user trainings are getting run through, a cutover-
plan for the carry-over of data in the P-System gets planned and accomplished,
and post-live plans for end-user support gets realized, with the resulting processes
being implemented. It is essential that the values of the declared value proposition
are being realized so that the final custom-configured and implemented SAP
S/4HANA solution can deliver on its proclaimed values, and customers are
satisfied.
• Run: The run phase does not deviate from the run phase of the general SAP
Activate methodology. It must be pointed out that an ERP system supports all
business process, so that the solution performance in its run phase is critical to the
long-term success of a company. Guaranteeing system availability is also key for
delivering value as an ERP system. Furthermore, continuous improvement of
availability and the general system performance should be a topic in the run phase
of an ERP system.
Solution Capability 591

Additionally, the described incremental iterations within the realize phase could
also be applied to the adjacent phases from prepare to deploy. Therefore, it is
possible for customers to iteratively add new functionalities or expand the previously
identified project scope. Nonetheless such activities result in additional cost and
time, which need to be outweighed by the resulting value of new functionalities. This
can represent a good fallback-mechanism to add functionality after the solution went
into productional use.
In summary, customers can rely on the SAP Activate methodology to successfully
implement an SAP S/4HANA system, with a greenfield approach, which can be
iteratively expanded. Thus, this procedure does not involve any conversion of already
existing processes or data. As it has been already pointed out, such conversions
are required for customers who already implemented another ERP system. Busi-
ness processes are aligned with the long-lasting ERP systems, so that either a
standardized solution needs a magnificent degree of customizability or business
processes need to be realigned. Both endeavors are not easy to achieve; therefore,
in some use cases a brownfield approach is inevitable. The following chapter
focuses on this topic.

Brownfield Implementation

The transition of an existing and established ERP system and its corresponding
structure renders a greenfield solution virtually impossible. Some sort of technical or
business process-related legacies need to be carried over; hence a brownfield solu-
tion is required as shown in Fig. 38.2. Therefore, the following SAP Activate
methodology focuses on a rather transitional implementation of SAP S/4HANA
with its associated steps.

• Discover: This phase is like the corresponding previously described phases,

although this phase is not the first step of an SAP S/4HANA implementation.
In this step a business is already committed to a transition of their legacy ERP
system to SAP S/4HANA, which requires a general understanding of possible
benefits from this transition. The main purpose of this phase is to transform these
recognized benefits into tangible value propositions and high-level requirements.
Therefore, the individual customer business has a huge impact on specific,
received values. An SAP S/4HANA implementation should fit into a larger,
companywide digital transformation, which follows a digital transformation
strategy. How and to which extent a modern ERP solution can contribute into
this strategy should be clarified in the discovery phase.
• Prepare: Scope and goals have been declared so that a project team can be
instantiated in the prepare phase. In this phase are all kinds of preparing transfor-
mation activities. These activities start with different prototype projects that each
cover different parts of the overall transformation project to ensure its technical
and functional feasibility. These findings should be used to guide to planning and
preparation of the general transformation project. The main goal of this phase
592 38 Implementation

should be an adequate preparation and foundation for the following project

phases. Therefore, none of the, to this point, defined assumptions should be
wrong, because they would lead to costly errors in the following project phases.
• Explore: This phase’s main objective is to define and work out technical and
functional details of the resulting SAP S/4HANA solution. Integration and
configuration play a huge role within this phase, as to this point only possible
solutions have been looked upon and existing business processes and
functionalities have not been integrated into the project at least not at a detailed
level. In this phase the fit-to-standard thought gets applied, while this may be
more difficult than in related greenfield projects. Different fits and gaps are being
identified, while it must be expected that more gaps are being identified than
anticipated. Hence an on-premise SAP S/4HANA solution with a substantial
share of custom development could be required to resolve these gaps. Within
this phase a customer should get a good understanding of how the SAP S/4HANA
solution is implemented, so that it fulfills its intended tasks and delivers its
expected value.
• Realize: The realize phase is highly dependent on the outcome of the previous
phase. A high number of fits lead to more extensive configuration work, which
should be covered within the fit-to-standard focus, whereas a high degree of gaps
leads to more custom solutions and therefore code so that the project deviates
from the fit-to-standard focus. This mechanism needs to be understood and be a
focus point in the previous explore phase. Gaps could be avoided by changing
existing process or requirements. Gaps are more costly than fits because these do
not need extra work and attention. If this phase in an SAP S/4HANA implemen-
tation starts aggregating more and more problems, these could have originated in
the previous phase. Therefore, an extensive explore phase is key to minimize the
probability of unknown problems, which will show up on a later point in the
project. The realize phase should result in a nearly productional P-System, with a
special focus on the cutover-plan. In a greenfield situation there is no legacy ERP
system, which needs to be phased out. Thus, this fact needs to get special attention
within the cutover-plan.
• Deploy: The deploy phase includes the go-live event and thus the production
cutover. The developed P-System is put into productional use. This event needs to
be extensively tested, so that no foreseeable mishaps could happen. As already
described an ERP system is crucial for a business and its corresponding business
processes. This means that not only the time immediately after a cutover is
critical, but also weeks after the productional release need special attention. The
so-called hyper-care phase starts after an SAP S/4HANA system went live and is
in a useable state. Stability and availability are crucial. Hence the system needs to
be closely monitored to expose potential optimization possibilities. The deploy
phase ends together with its hyper-care phase.
• Run: All operational tasks fall within the run phase. As previously described the
SAP solution delivers its value in its run phase, which justifies the system. The
implementation project ends after the project team conducts no further improve-
ment, but the run phase carries on. The responsibility regarding the productional
Conclusion 593

system should get handed over to an operational team that maintains the solution
over its lifetime. Within this phase further improvements and innovations could
get implemented, but to a smaller extent.

SAP Activate provides project structure guidance and relies on a wide range of
tools for configuration, application lifecycle management (ALM), identity and
access management, data migration, extensibility, integration, testing, and tooling
for user learning and user assistance. SAP Cloud ALM is one of the key tools for the
SAP Activate implementation and therefore briefly depicted in the next section.

SAP Cloud ALM

An SAP Cloud ALM system can be summarized as a guiding, knowledge-rich, and

best-practice emphasizing tool, which cooperates with the SAP Activate methodol-
ogy. With SAP Cloud ALM upcoming customers can get supported in different
aspects within their implementation journey. Overall, the whole SAP Activate
methodology is represented. Therefore, SAP Cloud ALM is a crucial part in
executing an SAP implementation project if customers do not already have thorough
knowledge of the target-implemented SAP solution. Included SAP Cloud ALM
capabilities range from foundational principles, like defining and classifying future
users, project stakeholders, or system landscape, on the one hand, to Change and
Deploy best practices, on the other hand. SAP Cloud ALM covers the whole
customer journey of an SAP solution implementation, whereby problems can be
dealt with quicker and uncertainties can be minimized. Especially a fit-to-standard
focus is not a best practice anymore. It is rather an essential part of an SAP solution.
This focus is critical for an SAP S/4HANA Cloud system, but also should not be
ignored for an on-premise system. Nonetheless both approaches have a positive
surplus on a fit-to-standard focus. This results in minimizing project implementation
costs and achieving a better quality of the project outcome. Standard solutions are
easier to maintain, better to expand, and do not need technical attention if some
custom components need to be updated.
Out of these arguments, an SAP Cloud ALM should always be considered when
implementing an SAP ERP system. Figure 38.3 recaps the functionality of the SAP
Cloud ALM covering process and task support, the ability to handle tests, changes,
and deployments. Furthermore, analytics capability is provided for project tracking
and traceability. Some of the illustrated functionality is not already available with the
current SAP Cloud ALM version.

Conclusion

This chapter explained concrete use cases of the SAP Activate methodology for the
SAP S/4HANA implementations. ERP systems could get implemented as greenfield
or brownfield solutions, so that two different SAP Activate variants were described,
 594

SAP Cloud ALM for Implementation

Capabilities & Functions Map

Proj
Project
o ect Tracking &
Analytics Traceability
Overvr iew
Overview

Task Test Change &

Process
Deploy

Consumption of SAP Activate Test planning & preparation Requirements management

Requireme
Process content viewer based roadmaps

Fit-to-Standard workshop Task based on scoping & Manual testing Deployment orchestration
Deployme
execution requirements

Task assignment and Integration of test automation

Process modelling Change management
m
distribution tools*

Integration of deployment
Process documentation r
Agile support Defect management*
tools
38

Foundation Projects
Proj
o ects & Solution Landscape Users

*Planned for future releases

Fig. 38.3 SAP Cloud ALM—functional architecture

Implementation
Conclusion 595

with each being able to use an SAP Cloud ALM solution to enhance their respective
implementation. These elaborations follow different premises, a greenfield solution
is preferably used in businesses that implement their first ERP system, whereas that
is not always possible for businesses that have been using an ERP system for
decades and always have some sort of legacy carry-over into a new ERP system.
For these a brownfield solution is inevitable. Such brownfield situations rather need
a transition instead of solely an implementation. These fundamental customer
challenges of an SAP S/4HANA implementation are addressed within the different
SAP Activate methodologies shown.
Appendix
Explore the SAP S/4HANA System
39

This chapter outlines how to bring up own SAP S/4HANA trail system for exploring
its functionality and concepts. Particularly, it is explained how to deploy a
preconfigured system image on cloud platforms of Amazon, Microsoft, or Google.
Thus, the underlying hardware is in the cloud, while the system is dedicated for
personal use. Additionally, step-by-step guides for discovering SAP S/4HANA are
provided.

Introduction

In order to deepen the understanding of the functionality and concepts which were
described in the last chapter, exploring the SAP S/4HANA system is valuable.
However, the deployment and configuration of an ERP solution is challenging and
requires advanced expert knowledge. Furthermore, the provisioning of the
demanded hardware is expensive, and the maintenance of application data is a
sophisticated task. SAP Cloud Appliance Library (CAL) resolves these challenges
and offers an appliance which is a preconfigured SAP S/4HANA system image with
step-by-step tutorials.

SAP Cloud Appliance Library

SAP Cloud Appliance Library provides a quick and easy way to consume the most
recent SAP cloud solutions, such as SAP S/4HANA, SAP HANA Express Edition,
Model Company Solutions, or Industry Solutions. It’s an online library of the most
recent, preconfigured, ready-to-use SAP solutions that can be instantly deployed into
customer’s own public cloud accounts (e.g., Amazon Web Services, Microsoft
Azure, and Google Cloud Platform) to get SAP projects up and running in a short
time. A deployment of the preconfigured system image on on-premise hardware is
also supported.

# The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 599
S. Sarferaz, Compendium on Enterprise Resource Planning,
https://doi.org/10.1007/978-3-030-93856-7_39
600 39 Explore the SAP S/4HANA System

SAP S/4HANA Fully Activated Appliance

The Software Appliance Concept
Create own system instance in a
fraction of the usual setup time
SAP S/4HANA &
Software
additional components

via SAP CAL,

hosted in AWS / MS Azure / GCP

SAP Best Practices &

Configuration SAP S/4HANA, via deployment on own physical
technical settings Fully-Activated Appliance hardware

Main use cases:

Trial / Sandbox / PoC / Scoping

Open to customer, partner, SAP employee,

and public users
Sample data &
Walk-throughs
demo scenarios

Fig. 39.1 The SAP S/4HANA fully activated appliance

As shown in Fig. 39.1 SAP CAL provides in addition to a preconfigured SAP

S/4HANA also sample data and demo scenarios in the form of step-by-step tutorials.
Thus, instantly the SAP S/4HANA business processes and frameworks can be
explored. The SAP S/4HANA image consists of four single virtual machines that
are coupled automatically into one solution instance. The appliance can be
suspended and reactivated on an hourly basis. Calculator is provided to estimate
the hosting costs for the different hyperscaler. For provisioning of an SAP CAL
instance for SAP S/4HANA the following steps must be performed:

• Prerequisite: Obtain an account for Amazon AWS or Microsoft Azure or Google

Cloud Platform.
• Step 1: Start the creation of personal trial instance.
– Go to the trial landing page http://go.sap.com/cmp/oth/crm-s4hana/s4hana-on-
premise.html
– Choose Start your trial now.
• Step 2: Log on to SAP Cloud Appliance Library https://cal.sap.com/
– You will get to the home screen of the SAP Cloud Appliance Library.
– Register yourself as a new user (free of charge) for SAP CAL or log on with an
existing SAP CAL username/password.
• Step 3: Accept Terms and Conditions for the 30-day trial period.
– After you entered your user credentials and logged on you will be presented
with the Terms and Conditions. Scroll down to read.
– Choose I Accept.
– Note: The 30-day trial period starts when you accept the Terms and Conditions
and not when you create your first instance.
• Step 4: Enter your AWS/Azure/GCP account and create your personal SAP
S/4HANA system.
SAP Cloud Appliance Library 601

– In the SAP Cloud Appliance Library Instance Creation page you have to
specify your cloud provider account (see step 1).
– Click “Create a new account” (or click “existing account” if you have already
entered a cloud provider account before).
– Enter Instance Details (this will become your personal S/4HANA system).
– Define the master password for your appliance (this will be assigned to various
administrator users, e.g., SAP HANA SYSTEM user or Remote Desktop
Administrator).
– Click Create (Note: If you need static IP addresses for your system, choose
Advanced Mode).
• Step 5: Download private key for the instance (only needed for backend Linux
operating system access).
– When prompted for the private key, choose Store.
– Note: The private key is a small .PEM text file, and it is needed only in case
you want to access the Linux operating system of the trial landscape.
– The system will now be created in your AWS/Azure/GCP account. Time for
this may vary depending on provider, region, and current system load
(~1–2 hours should suffice in most cases).
– You may access the remote desktop earlier, but creation of the SAP S/4HANA
system will take longer than the remote desktop creation (so even if you can
enter the remote desktop already, the SAP S/4HANA system might not be
responding yet).
– In general, the initial clicks in the system will be slow (until caches are
pre-filled), as for all newly brought up SAP systems.
• Step 6: Instance is ready in Instances tab.
– After the deployment time your system is ready for logon.
– Clicking on the instance name lets you view the details of the instance.
– The Connect button provides direct logon access to
Remote Desktop
SAP GUI
BI launchpad
SAP NetWeaver administrator (JAVA)
– Fiori launchpad access works either via Remote Desktop or via local browser
after hosts file mapping.

As already mentioned, SAP CAL provides demo scenarios to walk the user
through a guided tour concerning the SAP S/4HANA capabilities. The user is free
to step away from these tours. However, if users investigate additional features of the
SAP S/4HANA system beyond what is provided in the demo guides, they may
discover functions or processes that are not preconfigured and, as a result, will not
provide a meaningful system response. To make those scenarios or functions work,
users must configure them using SAP standard procedures. The demo scenarios can
be found in Wolf (2021). The scope of the demo scenarios is centered on the SAP
Best Practices content for SAP S/4HANA and is supplemented by additional
602 39 Explore the SAP S/4HANA System

scenarios, which vary depending on the exact release version of the appliance. To
provide an impression of how the demo scenarios work, in the next section one
example is described (Wolf, 2021).

Exemplary Demo Scenario

This scenario describes Financial Accounting Overview transactions and serves as a

centralized, up-to-date reference for account rendering. Actual individual
transactions can be reviewed in real time, with the original documents, line items,
and transaction figures displayed at various levels. Investigate the following
transactions:

• General Ledger Overview • Cash Discount Utilization

• Journal Entries to be Verified • Days Payable Outstanding Indirect
• G/L Account Balance • Days Payables Outstanding Direct
• Quick Links • Suppliers with Debit Balances
• Tax Reconciliation Account Balance • Accounts Receivable Overview
• G/L Items Changes • AR Aging Analysis
• Days Payable Outstanding Indirect • Days Sales Outstanding
• Days Sales Outstanding • Cash Collection Tracker
• Accounts Payable Overview • Top 10 Debtors
• Payables Aging
Exemplary Demo Scenario 603

General Accounting Overview

What to Do What You Will See

Open the Fiori
Launchpad.
User: S4H_FIN,
Password: Welcome1
Set Default Value for
SAP Fiori Launchpad
User Settings
(Optional).
On the SAP Fiori
launchpad, go to User
> Settings > Default
Values.
The following input
fields are available:
Display Currency
Fin. Statement Vers.
Ledger
Company Code
Planning Category

You can enter and

save default values.

Open General Ledger

Overview.

Make the following

entries in the filter bar
and choose Go:
Display Currency: USD
Key Date: <current
date>
Planning Category:
<PLN>
604 39 Explore the SAP S/4HANA System

What to Do What You Will See

Statement Version:
<YCOA>
Ledger: <0L>
Company Code:
<1710>
To customize the
cards on the
overview page,
choose the User Icon
on your home
dashboard and
choose Manage
Cards.

Set your preferences

and choose OK.

Navigate to Journal
Entries to be Verified.
Choose the header
(or line point) of the
card to get further
information.
Exemplary Demo Scenario 605

What to Do What You Will See

Navigate to G/L
Account Balance.
Choose the header
(or line point) of the
card to get further
information.

You can change the

report by adding
additional dimensions
to it with drag and
drop option.

Navigate to Quick
Links.
Choose the links
below in the card to
get further
information:
Display G/L Account Line
Items
Manage Journal Entries
Post General Journal
Entries
Post Cash Journal Entries
Clear G/L Accounts

Navigate to Tax
Reconciliation Account
Balance.
Choose the line item
of the card to get
further information.
606 39 Explore the SAP S/4HANA System

What to Do What You Will See

Navigate to G/L Items
Changes.
Choose the header (or
line point) of the card to
get further information.

Navigate to Days Payable

Outstanding Indirect.
Choose the header (or
each item) of the card to
get further information.

Navigate to Days Sales

Outstanding.
Choose the header (or
each item) of the card to
get further information.
Exemplary Demo Scenario 607

Accounts Payable Overview

What to Do What You Will See

Open the Fiori
Launchpad.
User: S4H_FIN,
Password: Welcome1

What to Do What You Will See

Set Default Value for
SAP Fiori Launchpad
User Settings
(Optional).
On the SAP Fiori
launchpad, go to User
> Settings > Default
Values.

The following input

fields are available:
Display Currency
Fin. Statement Vers.
Ledger
Company Code
Planning Category
You can enter and
save default values.
Open Accounts
Payable Overview.

Make the following

entries on the filter
bar and choose Go:
Display Currency: USD
Company Code:
<1710>
Supplier: <any
supplier>
Country: <US>.
To customize the
cards on the
overview page,
choose the User
button on your home
dashboard and
choose Manage
Cards.
608 39 Explore the SAP S/4HANA System

What to Do What You Will See

Set your preferences
and choose OK.

Navigate to Payables
Aging.
Choose the header
(or line point) of the
card to get further
information.
The card will
navigate you to the
Aging Analysis SAP
Fiori app.

Navigate to Cash
Discount Utilization.
Choose the header
(or line point) of the
card to get further
information.
The card will
navigate you to the
Cash Discount
Utilization SAP Fiori
app.
Exemplary Demo Scenario 609

What to Do What You Will See

Navigate to Days
Payable Outstanding
Indirect.
Choose the header
(or line point) of the
card to get further
information.
The overview page
navigates you to the
target apps. The
global filter and
header (and line
point/bar item)
information is carried
over.
The card will
navigate you to the
Days Payable
Outstanding Indirect
SAP Fiori app.
Navigate to Days
Payables Outstanding
Direct.
The overview page
navigates you to the
target apps. The
global filter and
header (and line
point) information is
carried over.
The card will
navigate to the Days
Payable Outstanding
SAP Fiori app.

Navigate to Suppliers
with Debit Balances.
Choose the header
(or line point) of the
card to get further
information.
The overview page
navigates you to the
target apps. The
global filter and
header (and line
point) information is
carried over.
The card will
navigate to the
Manage Supplier Line
Items SAP Fiori app.
610 39 Explore the SAP S/4HANA System

What to Do What You Will See

Navigate to Quick
Links.
Choose Approve Bank
Payments (or My Inbox)
of the card to get further
information.
The overview page
navigates you to the
target apps.
Choose Approve Bank
Payments. The card
will navigate you to
the Approve Bank
Payments SAP Fiori
app.
Navigate to My Inbox.
Choose each item of the
card to get further
information.
Exemplary Demo Scenario 611

Accounts Receivable Overview

What to Do What You Will See

Open the Fiori
Launchpad.
User: S4H_FIN,
Password: Welcome1
Set Default Value for
SAP Fiori Launchpad
User Settings
(Optional). On the
SAP Fiori launchpad,
go to User > Settings
> Default Values

The following input

fields are available:
Display Currency
Fin. Statement Vers.
Ledger
Company Code
Planning Category

What to Do What You Will See

You can enter and
save default values.
Open Accounts
Receivable Overview.

Make the following

entries on the filter
bar and choose Go:
Display Currency: USD
Net Due Interval 1:
<30>
Net Due Interval 2:
<60>
Net Due Interval 3:
<90>
Company Code:
<1710>
If a default value is set in
the SAP Fiori launchpad
user settings, the filters
have already been
populated with the
default values.
To customize the
cards on the
overview page,
choose the User
button on your home
dashboard and
choose Manage
Cards.
612 39 Explore the SAP S/4HANA System

Set your preferences

and choose OK.

Navigate to Quick
Links.
Choose Supervise
Collections Worklist of
the card to get further
information.
The overview page
navigates you to the
target apps.
If you choose
Supervise Collections
Worklist, the card will
navigate you to the
Supervise Collections
Worklist SAP Fiori
app.
Navigate to AR Aging
Analysis.
Choose the header
(or each item) of the
card to get further
information.
The overview page
navigates you to the
target apps. The
global filter and
header (and each
item) information is
carried over. The
card will navigate you
to the Total
Receivables SAP Fiori
app.
Conclusion 613

Navigate to Days
Sales Outstanding.
Choose the header
(or each item) of the
card to get further
information.
The overview page
navigates you to the
target apps. The
global filter and
header (and each
item) information is
carried over. The
card will navigate you
to the Days Sales
Outstanding SAP
Fiori app
Navigate to Cash
Collection Tracker.
Choose the header (or
each item) of the card to
get further information.
The overview page
navigates you to the
target apps. The global
filter and header (and
each item) information is
carried over. The card will
navigate you to the Cash
Collection Tracker SAP
Fiori app

Navigate to Top 10
Debtors.
Choose the header
(or each item) of the
card to get further
information.
The overview page
navigates you to the
target apps. The
global filter and
header (and each
item) information is
carried over. The
card will navigate you
to the Total
Receivables SAP Fiori
app

Conclusion

Exploring the SAP S/4HANA system is beneficial for deepening the understanding
of the functionality and concepts described in the previous chapter. The chapter
described how to set up own SAP S/4HANA trail system to investigate its function-
ality and concepts. It is specifically explained how to deploy a preconfigured system
image on Amazon, Microsoft, or Google cloud platforms. This was achieved based
on SAP Cloud Appliance Library, which in addition to a preconfigured system also
provides step-by-step guides for exploring the SAP S/4HANA business processes
and frameworks.
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