Differences between SAP R/3, ECC and S/4HANA

All three products are ERP systems. But what are the differences between SAP R/3, SAP ECC and SAP S/4HANA?

What does ERP mean?

ERP stands for Enterprise Resource Planning. This involves the planning of all resources in the company (such as capital, personnel or operating resources) in line with time and demand. With ERP software, these company processes and resources can be automated, planned and controlled.

What is SAP R/3?

The three systems follow one another in time, with SAP R/3 being the oldest of the three SAP ERP systems. SAP R/3 was launched on the market in 1992. The "R" in the product name stood for "Real-time data processing" and the "3" for the three-tier structure of the system consisting of database, application server and user interface.

What is SAP ERP (SAP ECC)?

SAP R/3 was replaced in 2004 by SAP ERP, also known as SAP ECC. The current version is SAP ERP 6.0 with the SAP enhancement package 8 (2016). Like SAP R/3, SAP ECC consists of a three-tier architecture.

What is SAP S/4HANA?

The latest SAP product - marketed as SAP S/4HANA since 2015 - is based on the HANA database and therefore differs fundamentally from its predecessor versions. SAP S/4HANA is available not only as an on-premise but also as a cloud variant.

What are the similarities and differences between R/3 and SAP ERP?

The most important difference between SAP R/3 and SAP ECC is that ECC is based on Netweaver. Netweaver is a platform (or architecture) for SAP's business applications and is programmed in the SAP programming language ABAP.

Both R/3 and ECC are modular, consisting of certain basic functions ("modules"). SAP R/3 and SAP ECC are both based on relational (row-based) databases, simply put, a large number of tables in which data is stored. The data is processed transactionally, i.e. in a defined sequence one after the other.

Accordingly, a process is only complete when the total sequence of steps has been completed one after the other. Another common feature is that both products are only available as local, company-owned "on-premise" solutions.

How do SAP ERP and SAP S/4HANA differ?

SAP S/4HANA is based on the HANA database, which - unlike the exclusively row-based databases in R/3 or ECC - is also column-oriented. The in-memory database (use of main memory as data storage) accesses data both column-oriented and row-oriented. Column-oriented databases can be read more quickly and are therefore better suited for analyzing large data sets. SAP S/4HANA is therefore also referred to as a real-time ERP system.

The licensing model has also changed: Instead of calculating licenses according to the number of users, for some time now licensing has been based on the resources used (Digital Access Adoption Program). The new model differentiates between direct (human access) and indirect user access (digital access).

Another difference between SAP ECC and SAP S/4HANA: The basic functions (e.g., Finance, Manufacturing, or Supply Chain) are no longer referred to as "modules" in SAP S/4HANA, but as "Lines of Business" (LoB). Certain core functionalities of the respective LoBs are already integrated in each case - as basic equipment, so to speak; further functions require an additional license or even an additional installation and license.

"S/4" also makes a difference on the outside: The SAP Fiori user interface resembles conventional apps for consumers. Above all, it works role-based (switching between different screens is no longer necessary, among other things) and also for different end devices such as smartphones or tablets ("Any Device").

With SAP Fiori, SAP is making it much easier to use. Experienced users are able to operate the system almost without prior training.

Simplicity (the "S" in SAP S/4HANA stands for "Simple") is also a program in other respects: Because ERP systems are subject to natural growth over time (for example, through the addition of new applications), their complexity increases.

However, this also means that there are often several analogous functions for similar requirements - one could also say that certain requirements are covered several times. With SAP S/4HANA, however, the "Principle of One" now applies. There is now only one solution for each requirement in the entire S/4 system. And that also means less complexity.

SAP S/4HANA also eliminates the separation between OLTP functions (online transaction processing) and OLAP functions (online analytical processing).

The advantage for companies: Even complex analyses (e.g., for inventory monitoring in warehousing) are now possible in real time. In addition, certain applications (e.g. SAP Extended Warehouse Management) are now also directly integrated into SAP S/4HANA. Previously necessary interfaces are no longer required; redundant data can be avoided. As a result, the system landscape is significantly simpler than before.

Another significant difference is that the previous aggregation of data for postings no longer applies. Aggregation means that data is presented in summarized form, i.e. in the form of compact data packages. In this way, data could usually be processed more efficiently in the past. The problem: Each new query required a new aggregation, because each aggregated data package was specifically tailored to the one, specific query. With SAP S/4HANA, SAP is taking a new approach: instead of aggregating data in data packages, data is summed up in individual packages according to specific criteria. The advantages: more flexibility and speed in analyzing the data.