Cracking the Code for Two Tiered ERP

Ever since the advent of ERP software, large multi-tiered enterprises have been in search of the cost savings and overall process improvement that would come from unification of business systems. For several reasons, this search has become their Holy Grail. Some of the major obstacles have been:

  • Varied Business Processes: Individual business units or subsidiaries often have work flows that do not match up with the rest of the company, requiring independent ERP configurations
  • Varied Master Data: Customer names, product codes, and much more can differ across (and even within) business units, making consolidation a challenge and integration almost impossible
  • Varied Business Models: Companies have often needed to have separately configured instances or even separate ERP solutions to meet unique functional requirements
  • Subsidiaries Too Small: Often the size of a subsidiary or separately operating strategic business unit is too small to justify the enterprise class needs of the parent or other related business units

SAP, with the advent of S/4HANA Cloud and S/4HANA, has provided a guide for this search, allowing the previously unheard of to become reality. S/4HANA is a full, enterprise class ERP – the latest version of the business software that has made SAP the gold standard. S/4HANA Cloud is a pre-configured version of S/4HANA, utilizing the same codebase. The pairing of these two solutions in a two-tiered ERP model, addresses each of the issues previously preventing ERP standardization:

  • Chicken then Egg: Often in dealing with varied business processes, companies get stuck trying to decide if processes should be standardized and then the ERP implemented or vice-versa. With S/4HANA Cloud, business processes are already defined based on SAP Best Practices, garnered over years of ERP experience across every industry and every business size. Companies that adopt S/4HANA Cloud, by definition, adopt these best practices, creating a standardization across business units. In the same way, Master Data must follow the same structure, driving consistency through the data migration in the implementation.
  • Reach Beyond Bounds: For business units or subsidiaries that don’t need a full scale ERP but still need non-traditional functionality that is not in S/4HANA Cloud, side-by-side extensions can be built on the SAP Cloud Platform that provide the same look and feel and don’t create maintenance nightmares because they don’t impact the ability to upgrade.
  • Size Doesn’t Matter: For large enterprises with extensive customization and functionality requirements, S/4HANA will fill the bill. For small to mid-size business units or subsidiaries, S/4HANA Cloud will provide the necessary functionality from an enterprise class solution on an affordable and manageable Software as a Service basis. The two systems then have built in integration to allow for interoperability.

Everything that sounds too good to be true usually is and the devil is always in the details. Those clichés noted, the combination of SAP’s S/4HANA and S/4HANA Cloud to create a two-tiered ERP provides a clear vision and roadmap to consolidate ERP platforms and business processes.

For more information on S/4HANA Cloud, please feel free to contact