S/4HANA Cloud (S4HC) Implementation: Key Watch-Outs For a Seasoned On-Premise Consultant

SAP Consultant

With SAP being a 46+ year old company, most of the SAP consultants are seasoned in on-premise world having deep knowledge and expertise in configuring systems, designing SAP according to business needs and following various implementation approaches. Now S/4HANA cloud version is gaining popularity and very useful in various scenarios, like professional services, affiliates of larger enterprises as two-tier implementation etc., so learning how it is different from on-premise world is useful. (Also refer blog “Critical insight into S/4HANA Cloud compared to S/4HANA On Premise” showing some differences in S/4HANA cloud vs S/4HANA on-premise.)

Let’s observe some key watch-outs in a S4HC implementation:

1. Acquire S4HC knowledge (via learning and certification)

As S/4HANA cloud implementation process has unique features compared to S/4HANA on-premise, the consultant should acquire relevant Line of Business (LoB) information and SAP Activate information in detail, e.g.:

  • For Project Manager                                 C_ACTIVATE05

  • For Sales Consultant                                 C_S4CS_1902

  • For Finance Consultant                            C_S4CFI_1902

  • For Purchasing Consultant                     C_S4CPR_1902

  • For Manufacturing Consultant             C_S4CMA_1902

the SAP Activate Methodology works for S4HC, what are the key activities in implementation, what standard SAP accelerators available for project management/ functional configuration/ business workshops/ deliverables/ testing etc. and guidelines to follow, as if you are implementing public cloud version, there are limited options available for changes compared to standard process. 

2. System Landscape

The various systems get provisioned as below in S4HC environment:

Starter System

This system is pre-configured with initially identified scope items and pre-delivered with master data and standard organizational structure. This is made available to client during prepare phase. Also, this system will not have some features, like “Test Automation Tool”, ability to define custom fields etc. not available in starter system.

Quality System

This is requested at the end of explore phase and provisioned as realize phase starts.

Production System

Production system is also requested immediately after quality system provisioning. 

Starter system will be decommissioned 30 days after the production system provisioning communication is sent by SAP to client’s IT user. So only for such 30 days, client will have three systems in S4HC landscape. Otherwise it will always have dual system landscape.

3. Scope Items Applicability

All the business processes in cloud environment are governed by scope items, where each scope item address a business process. You can find the list of scope items in below accelerator: “Availability and Dependencies of Scope Items” available in SAP Activate Roadmap in Explore phase. 

Now if you see this excel, in the “Available in Scope Bundle” (Column – H for Enterprise Management version as example), there is mention of applicability for S4HC implementation. Wherever you see the “Default Provisioning” it implies that such scope items will be activated when a system is provisioned irrespective of whether customer want to use that or not. E.g. Scope item 1K2 (Event-Based Revenue Recognition - Sell from Stock) will be provisioned as default in S4HC, even if client does not want deferred/accrued revenue postings during PGI/billing. Hence consultant must consider the impact of all such mandatory scope items also during discussion and solution finding with business. There is no option “not to active” or “to deactivate” such mandatory scope items.

4. Organizational Structure

SAP provides a default organization structure in S4HC for various countries and business should decide on what to use from standard and what to define as own. Refer accelerator “Organizational Structure Overview” and “Organizational Data Overview” 

However, note that organization element Operating Concern, controlling area and credit control area can’t be configured or even displayed by customer. SAP has defined A000 as single operating concern, single controlling area and single credit control area as default. Customer can’t use multi-controlling area setup in S4HC environment as of now. Even customer can’t modify the default ID A000.

5. Currency and Ledger Setup

Unlike S/4HANA on-premise where there is possibility to define multiple parallel ledgers and extension ledgers, S4HC can have only two ledgers (one leading and one parallel) as of now. The setup of ledger and currency is defined at the pre-set phase of quality system.

If you want to use Group Currency, then it can be specified as client currency at the time of quality system provisioning request.

Here it is also decided to what will be configured as scope bundle (i) Local GAAP, (ii) Local GAAP and IFRS or (iii) Local GAAP and USGAAP and in Ledger Setup you can decide which will be considered as leading and which will be considered as parallel ledger:


6. Fiscal Year Variant

SAP by default provide the fiscal year variant as K4 in the starter system setup and there is option to change it to pre-delivered Fiscal Year Variants while requesting for quality system provisioning. It you want to use other fiscal year variant like (4-5-4 FYV as needed in US), it can be done during leveraging phase using a pre-delivered FYV “SZ”. Apart from this from version 1902, SAP also providing option to maintain additional alternative FYV with some restrictions. Please refer accelerator “Fiscal Year Variant Implementation Guide” applicable from S4HC 1902 version. 

7. Transaction Data

Even if starter system is provisioned with master data and standard organizational structure, it does not contain any transaction data. So, while preparing for Fit-to-standard workshop, if you are looking for to display various analytical apps, then suitable transaction data needed to be created in starter system to show values in such analytical apps.

8. Configurations Changes

Currently if you are making changes in configurations by adding new entries, S4HC does not allow you to delete the entry, and thus that unwanted/junk configuration may remain there in system not being idle scenario. In S4HC 1902 version, SAP seems to be providing option to delete also in many web SSCUIs (Self Service Configuration User Interface) and such objects will be identifiable in a separate column in accelerator “Expert Configuration and SSCUI Reference”. This will help consultants to keep system clean of unwanted settings created. The deletion feature is planned to be expended in more and more SSCUIs in every release.'


In a nutshell, S4HC implementation will become a successful implementation for you if you “Embrace the Standard” and follow SAP delivered activate methodology, accelerators and processes. A simple on-premise consultant will not be able to complete S4HC project properly, unless he gains the cloud way-of-working and take care of the peculiar features of S4HC.

Author: Gaurav Agarwal

Expert Fixer with ERPfixers and SAP Certified consultant in SAP S/4HANA (On-premise as well as on cloud). More than 12 years of SAP FICO experience ranging over multiple implementation, roll out, upgrade and support projects.