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Where does SAP S/4HANA public cloud fit in two-tier ERP?

S/4HANA public cloud provides a less disruptive route to digital transformation than some options -- including the on-premises S/4 -- and smoother migration from legacy SAP.

CIOs looking to take advantage of the latest SAP S/4HANA public cloud innovations, such as machine learning and embedded analytics, but who struggle to find a balance with existing on-premises SAP systems, such as ERP Central Component, should consider a two-tier ERP approach.

In the two-tier model, the head office maintains the current SAP ERP Central Component (ECC) setup while subsidiaries, regional offices or distribution centers use S/4HANA public cloud. Data can move between the two systems via such mechanisms as APIs, SAP Process Orchestration or SAP Cloud Platform Integration (see sidebar).

Depending on the current SAP landscape of a company, here are the four possible approaches to adopting a two-tier ERP landscape that includes S/4HANA public cloud.

Integrating two-tier SAP ERP

Three tools are available for data transfer in a two-tier SAP landscape.

  • SAP Process Orchestration is on-premises middleware tool that supports application-to-application and B2B integration. It can integrate a variety of applications and supports custom-developed interface adapters.
  • SAP Cloud Platform Integration is a cloud-based middleware tool that makes cloud-based integration simple and easy to consume. It offers out-of-the-box connectivity across cloud and on-premises systems using prepackaged content and supports custom adapter SDKs.
  • APIs propagate data changes from a source system, which can be either SAP ECC or any other ERP system, to a target system -- perhaps at a subsidiary that uses S/4HANA public cloud.

1. Head office on SAP ECC, subsidiaries on S/4HANA public cloud

A company using ECC in the head office and to retire legacy ERP systems in subsidiaries can use S/4HANA public cloud as a starting point. The same approach also works well if the company needs newly acquired businesses to be on the SAP platform.

However, this approach enables only the subsidiaries to truly benefit from the advanced features of S/4HANA public cloud, such as AI. The head office won't be able to reap those benefits yet.

2. Head office on Business Suite on SAP HANA or HANA Enterprise Cloud, subsidiaries on S/4HANA public cloud

In this version of two-tier ERP, data transfer between the head office and the subsidiary can take place using the three options mentioned in the sidebar.

3. Head office on on-premises S/4HANA, subsidiaries on S/4HANA public cloud

The organization reaps a greater return from its SAP investment when the head office is using on-premises S/4HANA and the subsidiaries are using S/4HANA public cloud. The full-functionality, on-premises S/4HANA at the head office offers more customization than the cloud version, which can drive enhanced business processes, while subsidiaries benefit from the leaner versions of innovative technologies and only use the features that benefit them.

One consideration with this two-tier approach is the differing maintenance and upgrade schedules of on-premises S/4HANA, which happens on an as-needed basis that is controlled by the company, versus the quarterly upgrades that SAP pushes out for S/4HANA public cloud.

4. Head office on S/4HANA private cloud or HANA Enterprise Cloud, subsidiaries on S/4HANA public cloud

In this two-tier ERP model, with the head office on S/4HANA private cloud or even HANA Enterprise Cloud and subsidiaries on S/4HANA public cloud, there is real potential for transformation across the entire organization. The head office can also fully outsource infrastructure management to stay focused on optimizing the business. Further, the head office also gets access to per-user pricing and instant access to innovations via quarterly updates.

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