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

Introduction

With many organizations planning to make the migration to SAP S/4HANA, understanding the differences and comparisons between SAP products helps IT managers and SAP architects know what to expect from the software, and what the benefits of migration to S/4HANA are.

This article will cover the basic differences and similarities between SAP ECC, SAP R/3, SAP HANA, and how they compare to SAP S/4HANA.

📚 Related: Comprehensive Guide to ERP Transformation

What is SAP R/3?

SAP R/3 launched in July 1992, and offered a number of significant changes from its predecessors. It was the first major release from SAP since SAP R/2 which was popular with organizations throughout the 80s. The main difference with SAP 3 was that it is classed as a client/server system, whereas previous SAP versions were classed as mainframe systems.

This enabled SAP R/3 to open up a whole new customer base for SAP and was a big part of the company's expansion. This is because the new architecture was more affordable and scalable, allowing one R/3 system to cover an organization's business across an entire region or the world–and was compatible with various platforms and operating systems, like Microsoft Windows.

There were various releases of this software throughout the 90s, before SAP’s ERP (ECC) was launched in 2004.

What is SAP ECC (ERP)?

SAP ECC (also referred to as SAP ERP)’s main purpose is to incorporate the key business functions of an organization all in one place. It is the successor to SAP R/3 and was built on its software.

So what is the difference between SAP ECC and SAP ERP? The reason they are referred to as such (and sometimes interchangeably) is that ERP is simply a general term that stands for Enterprise Resource Planning. ECC is the name given to SAP's ERP software bundle and stands for SAP ERP Central Component.

What is SAP ECC used for? SAP ECC is the core business product inside SAP Business Suite, and provides an integrated and updated overview of an organization’s core business processes–from financials to human resources and is used by various departments including IT and finance. SAP ECC laid the foundation for on-prem S/4HANA and cloud S/4HANA.

Differences between SAP ECC and SAP R/3

The upgrade to ERP also included the acquisition and integration of niche competitors into the SAP landscape. Another difference between SAP ECC and R3 is that R/3 is not part of the SAP Business Suite, but set the stage for ECC in 2004. Many companies still use SAP R3 vs ERP, however, others have migrated over to ERP and HANA.

What is SAP HANA?

Simply put, SAP HANA is the database type that runs the most up-to-date versions of SAP’s software–specifically SAP S/4 HANA. Prior to HANA, all SAP software was run on third-party databases such as Oracle and others, while HANA is SAP’s own in-memory platform. This enables much faster access to and analysis of data. In software development, SAP HANA is also a platform for customer-defined applications.

SAP HANA’s primary function is to store and retrieve data as requested by applications. The software can also perform advanced analytics quickly and includes ETL (extract, transform, load) capabilities.

Differences between SAP ECC and SAP HANA

The main difference between SAP ECC and SAP HANA is that ECC is the core ERP product within the SAP Business Suite, whereas HANA is a cloud-friendly, in-memory database designed to handle transactions and analytics on one system. But then, what is the difference between SAP HANA and ERP? Over time HANA has developed into the all-in-one data database which serves as a platform for enterprise resource planning (ERP) software.

What is SAP S/4HANA?

This brings us to SAP S/4HANA, which is the ERP designed to run solely on SAP HANA. It cannot run on other databases. It was launched as the fourth product generation in 2015, and users can choose between multiple deployment options, either as a cloud solution, the on-premise solution, or a combination of both.

SAP S/4HANA has completely redefined ERP systems and is arguably the most noteworthy update since SAP R/3 in 1992. The differences between SAP R/3 and SAP R4 HANA are significant given the development of the technology over the years–S/4HANA has taken what began in R3 but is designed to solve more complex problems and manage much larger amounts of data.

There have been several editions of S/4 HANA, with the latest on-premise version (S/4HANA 2021) released in October 2021. Many companies are planning the migration over to S/4HANA using SAP's Activate framework in the next couple of years in part due to SAP ending support for ECC and previous versions in 2027.

Differences between SAP HANA and SAP S/4HANA

It’s easy to be confused about SAP HANA vs S4 HANA–the two sound very similar. To put it simply, SAP HANA is the in-memory database technology that runs the SAP landscape. S4 HANA is the business suite launched as the next-generation ERP designed to run exclusively on the HANA database. The differences between HANA vs S4 HANA are that one is a database, and the other is an ERP suite that runs on said database.

Differences between SAP ECC vs S/4HANA

Conclusion

Understanding the key differences between SAP releases makes it easy to see why transformation to S/4 HANA is beneficial, and how with the right SAP migration scenario, the transition can be a smooth process.

SAP S/4HANA transformation is now less of a choice and more of a necessity. This is because SAP is planning to end all support for older versions of their product by 2027. The benefits of S/4HANA transformation are numerous; these include a better user experience, improved performance, and reduced total cost of ownership–among many others.