When moving to SAP S/4HANA, large enterprises need to consider which implementation approach to select, such as phased or big bang. Many large and global enterprises opt for a phased implementation approach to maintain business continuity, while minimising risk and complexity.
This approach results in a transition phase where some entities will have moved to SAP S/4HANA, while some continue to operate in SAP ECC.
The purpose of this article is to explore the key integration considerations between SAP S/4HANA and SAP ECC during this transition phase. Managing this integration early on and with the right team is critical to avoid disruption to operations. This is especially important for enterprises with many intercompany processes.
The need for integration between SAP ECC and SAP S/4HANA
During the transition phase it is likely one or more entities will have moved to SAP S/4HANA while others remain in SAP ECC. In this phase, any transactions previously carried out between these entities fully in SAP ECC via SAP standard intercompany flows would no longer be feasible in standard.
Think of any scenarios where products are replenished from one internal plant to another internal plant, or any intercompany end-customer orders. For organisations with minimal transactions of this nature, manual processes might work. However, organisations processing thousands of such transactions annually cannot rely on manual approaches without creating significant workload and operational risks for business teams.
In these cases, developing an integration between ECC and S/4HANA is essential in ensuring the migration to S/4HANA is smooth.
Technical Integration Approach Use Case
SAP Intermediate Documentation (IDoc) functionality can be used to integrate an organisation’s ECC and S/4HANA systems. IDocs allow the standardised exchange of business documents between SAP systems, transforming heavy manual workload into automated, error-reduced document creation. Two basic IDoc types can be used to address multiple intercompany scenarios: • ORDERS05 IDoc: handles the transmission of sales and purchase orders. In the context of intercompany transactions, it facilitates both replenishment and sales order requests from one SAP system to another. • INVOIC01 IDoc: manages invoicing documents, representing billing data flowing back from the supplying entity to the buying entity.
These two IDoc types enable the below intercompany flows to be carried out between SAP ECC and SAP S/4HANA:
- Replenishment Between Internal Plants: When inventory needs to be replenished from one internal plant to another on a different SAP system, the ORDERS05 IDoc carries the intercompany purchase order details from the purchasing plant’s system to the supplying plant’s system. Delivery and intercompany invoicing follow, and the INVOIC01 IDoc sends the billing data back to the purchasing plant’s systems to complete the flow.
- End-Customer Sales: For direct sales to end customers where order entry is in one system and fulfilment and invoicing is handled in the other system, the ORDERS05 and INVOIC01 IDocs ensure that orders and invoices are transferred across systems.
Example intercompany scenario where SAP ECC is purchasing and SAP S/4HANA is supplying:
To address system-specific business rules such as ship-to regions, incoterms, G/L account mapping and post-codes differences, enhancements may be required. Opting for table-driven enhancements enables dynamic configuration of logic without hard coding, ensuring flexibility and easier maintenance.
Key considerations for integration between SAP ECC and SAP S/4HANA
• Dual system process flows: Flows previously handled within one system, will now be across two systems. By adopting an interface, this requires correct management of these IDocs, including who is responsible for resolving IDoc failures and escalation management. • Master data differences: Differences in master data between the two systems requires a thorough analysis of what data gets passed between the two systems, and if required robust mapping frameworks to avoid IDoc failures. • Tax differences: If the S/4HANA implementation includes improvement or changes in tax management and calculation, this can cause issues in posting the invoices cross-system. For instance, improvement in tax management in S/4HANA might result in more granular tax code and tax calculations compared to ECC. Careful consideration should be placed in how the tax codes are mapped from one system to another to ensure the invoices are posted correctly. • Cross-functional alignment: End-to-end business flows should be cross-stream aligned and signed off. This includes high-level design such as 1) which information is business critical and is required in both systems and 2) hand-offs between teams within the process. It also includes function-specific design such as how pricing is calculated and transferred across systems, required information for tax calculations and how to map G/Ls across systems. • User hand-offs: The correct users which will own specific parts of a process and how they hand-off information across systems, should be identified. Since flows will be between two systems, it is important to ensure that data has flown correctly to avoid any fulfilment delays. • Change management: Business process flows will slightly differ in the new integrated set-up – for instance, replenishment scenarios previously managed solely via a purchase order in one system, might require sales orders to allow the integration to work. There is significant change management involved and requires understanding who will own which part of the business flows, and ensuring the teams receive the right training to autonomously manage these new flows. • Configuration and data ownership: New transaction scenarios will require changes in the configurations, table entries and data mapping logic, for instance, new order types or item categories, maintenance of additional purchasing info records or source lists, and clear ownership should be in place for this. • Reporting: Reporting across the systems becomes more complex as business documents are fragmented across systems. The correct logic should be considered to ensure the business documents are captured in reports.
The Importance of a Dedicated Integration Team
Having a dedicated project team running alongside the project to manage the integration is one of the key drivers of success. This team should be cross-functional, with representatives across process areas and modules.
This dedicated team would be responsible for:
• Coordinating with business process owners to design and validate all the business process flows and scenarios, requirements and integration logic
• Managing all the cutover tasks required for the integration
• Ensuring thorough testing of integration flows during all System Integration Testing (SIT) cycles and User Acceptance Testing (UAT)
• Managing issue resolution and escalation for integration errors
• Planning and delivering targeted training to business and support teams at appropriate stages
Conclusion
In phased S/4HANA implementation approaches, integrating SAP ECC and SAP S/4HANA systems allows significant workload reduction for business users and more seamless business operations between the various entities of an organisation.
While the transition phase is temporary, it can sometimes take months or years before all entities are onboarded to S/4HANA. This makes integration crucial in saving thousands of hours of manual effort.
Success depends on early integration design, cross-functionals stakeholder validation, thorough testing and a dedicated team to oversee the entire process.
How Deloitte can help
Deloitte has comprehensive SAP expertise across SAP ECC and SAP S/4HANA, alongside a proven track record in managing complex phased S/4HANA migrations and delivering global support.
Success is achieved through close collaboration with clients to develop integration strategies tailored to their unique business and technical environments. We have dedicated teams specialising in architecture and integrations, enabling us to deliver high-quality, end-to-end solutions and provide comprehensive support from design through to testing, training and post go-live optimisation.