SAP S/4HANA—first introduced in February 2015—is SAP’s current ERP system as well as the core of the intelligent enterprise. It’s the future state that’s already here.
SAP has released an upgrade to the on-premise edition each year since it first introduced SAP S/4HANA. Those include 1511, 1610, 1709, 1809, 1909, and most recently, 2020. Each of these releases has introduced significant additions and advances to the platform, as well as some unintended consequences. In this article, we’ll go over the six major on-premise releases, detail their most notable additions, and give you the information you need to decide which version of SAP S/4HANA is right for your enterprise.
SAP S/4HANA: Release 1511
About nine months following the introduction of SAP S/4HANA, SAP unveiled an update with release 1511. Broadly speaking, this update expanded the ERP system’s scope and capabilities and was a major first step in turning the next-generation ERP into the end-all-be-all ERP for all facets of customers’ businesses, including—but not limited to—sales, HR, and materials management.
This update was extensive and addressed a litany of user requests. By far, the two most notable aspects of release 1511 were the introduction of SAP S/4HANA Finance and the version’s new focus on supply chain and inventory management.
SAP S/4HANA Finance is a wide-ranging resource that allowed users to keep track of all financial data, oversee the closure process, and get granular insights into financial data and cash flow. The update brought major simplifications to the SAP S/4HANA materials resource planning (MRP) platform, including reducing manufacturing cycle time and streamline material flow for internal requirements. From a logistics perspective, 1511 introduced new capabilities to SAP S/4HANA including production planning and inventory management.
SAP S/4HANA: Release 1610
This next (and sizeable) on-premise update to SAP S/4HANA built upon some of the big additions featured in 1511, while also continuing to expand on the all-encompassing ERP platform, which touches multiple Lines-of-Business. SAP S/4HANA release 1610 began offering solutions specifically for the oil and gas industry, including high-performance materials inventory management along with regional inventory views and an inventory planning workbench.
Release 1610 was significant because it changed the look and function of SAP S/4HANA by running the platform on the SAP Fiori 2.0 UX. This simplified user experience allows customers to run SAP S/4HANA on their desktops, smartphones, and tablets. Most importantly, customers could personalize their SAP S/4HANA solutions and functions by downloading specific apps that apply to their job functions and maintaining a personalized view of the software on desktops.
This version of SAP S/4HANA also expanded on the finance component introduced in 1511 to include a more up-to-date view of financial data. Specifically, it introduced SAP RealSpend and SAP Financial Statement Insight components. SAP said this version provides “a single source of truth for all financial details,” covering everything from general ledger maintenance to profitability. Customers can have up to 10 parallel currencies per ledger, and the platform provides a real-time conversion for all the currencies being used.
SAP S/4HANA: Release 1709
The biggest change the 1709 release of SAP S/4HANA ushered in was an upgrade to SAP HANA 2.0, the second generation of the software company’s in-memory database platform. Across the entire board, this upgrade boosted SAP S/4HANA’s overall performance. Most importantly, every version of the software beyond 1709 now required SAP HANA 2.0 to run. SAP added machine learning capabilities to SAP S/4HANA, including several different tools and applications using the technology to project sum and figures and reduce redundancy throughout the platform. For example, the integration for cash application machine learning used historic cash flow data to help users clear payments fast.
SAP made a litany of changes to SAP S/4HANA with 1709, and further optimized the platform. For instance, it added not only fashion- and commodity-management tools, but SAP also simplified transportation management. Combining two systems into one, customers could now keep track of shipments more easily with reduced data redundancy.
SAP S/4HANA: Release 1809
A year after introducing machine learning capabilities, SAP continued improving this technology, implementing it in SAP S/4HANA with the 1809 release. SAP described this as the foundation of its intelligent enterprise, with different solutions for many LoBs featuring machine learning capabilities. These capabilities broadly eliminated redundancies, increased automation, and provided a further level of granularity to analytics and reporting.
Release 1809 built on many of the solutions for the various LoBs. As always, there was a significant update to SAP S/4HANA Finance, where machine learning now assisted with invoice reconciliation. Additions to Central Procurement increased transparency across the entire procurement system. The 1809 release of SAP S/4HANA also saw innovations in planning strategies in the retail and fashion industries, along with loan and deposit management enhancements in the banking industry.
SAP S/4HANA: Release 1909
For the third year in a row, SAP buckled down on automation and machine learning. SAP S/4HANA release 1909 went even further, ingraining these capabilities into the core of the platform. The “Digital Core,” as SAP calls it, is a new architecture that embeds automation and system intelligence to help with business practices across the entire SAP S/4HANA platform.
Version 1909 introduced innovations to many of the SAP S/4HANA key LoBs that directly use all these new automated capabilities. For example, customers in the manufacturing sector now have a predictive material and resource planning application that can reduce inventory carry costs by predicting the demand for components and materials.
The finance and sales components of SAP S/4HANA also saw significant updates. Financial users now have access to group reporting and financial planning with SAP Analytics Cloud. Users working in sales have more workflows for sales documents—for example, they can manage approvals for workflows and receive notifications related to those workflows.
SAP S/4HANA: Release 2020
Unlike the other on-premise versions before it, SAP released SAP S/4HANA 2020 right in the middle of the pandemic. Despite this complication, SAP rolled out several key innovations and updates to SAP S/4HANA in line with its road map for the solution. “We executed this release as planned,” said Jan Gilg, president of SAP S/4HANA. “We delivered on the commitments we made for ourselves and our customers.”
SAP S/4HANA 2020 is the sixth on-premise release since the solution was first introduced. Gilg believes it is also the most complete, bringing the most value to customers. “SAP S/4HANA 2020 is so far ahead compared to SAP ECC,” he said. “There is no reason for any customer to wait or postpone their migration for further developments and innovations.”
Gilg laid out several innovations included in SAP S/4HANA 2020. The solution continues to expand its financial capabilities, introducing added analytics to treasury functions in an effort to more easily track cash flow and revenue. The newest release also continues to integrate the SAP Ariba network into SAP S/4HANA, allowing buyers and sellers seamless connectivity between vital documents. When it comes to the supply chain, SAP S/4HANA 2020 has a service parts planning solution, which is the result of a co-innovation with SAP customers. On the procurement and sourcing side, the solution introduced real-time dashboards, giving customers important insights on inventory consumption, central purchasing contracts, and vital KPIs.
When to Update and Why
In a recent blog post, Johnsonville’s VP and CIO Ron Gilson noted, “SAP requires third-party certified solutions to be certified or recertified on every release of SAP S/4HANA.” So, do your due diligence and check to make sure your company is ready and that your partners are certified. This should also be the case for when you decide which release of SAP S/4HANA your company will go live on. ASUG research verified this is a challenge for those who have adopted SAP S/4HANA.
Recently, SAP announced a maintenance commitment to SAP S/4HANA until the end of 2040. Jens Bernotat stressed that, “The maintenance commitment will be fulfilled through the sequence of releases laid out in the SAP S/4HANA Release and Maintenance Strategy.”
SAP will continue to make available new functionalities and innovations with each release of SAP S/4HANA. You’ll want to take advantage of the value each update can bring to your organization. Like any technology update, new functionalities and product enhancements can be great tools to innovate and move the needle forward in meeting business goals. But also—like any other technology update—you need to be sure that your organization is ready for it.
Have you upgraded your supply chain technology stack, navigated an SAP S/4HANA migration, or solved an operational business challenge through technology or process improvements? Your peers are eager to learn from your experience at the upcoming ASUG Best Practices: SAP for Supply Chain virtual conference on May 11-12, 2021. Submit your presentation abstract for an opportunity to share your SAP journey.