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S/4HANA: What Does It Mean for SAP GTS and Value Creation in Foreign Trade?

Foreign trade is an important factor to consider when developing a system strategy for switching to a new digital solution platform. When dealing with S/4HANA, it is never too early to analyze your foreign trade processes and adjust your system accordingly.

The days of SAP R/3 are numbered and the future belongs to S/4HANA. However, user companies often lack information or are unsure about the foreign trade functionalities delivered with S/4. One thing is clear: The new SAP standard features a new user interface and a new range of functions. Therefore, foreign trade is an important factor to keep in mind when developing a system strategy for switching to S/4HANA. When dealing with S/4, it is essential to analyze your foreign trade processes and adjust your system accordingly.

The initial situation is this. In R/3, functionalities such as preferential duty processing, export control, and INTRASTAT reporting are provided in the SD-FT foreign trade module. Although no new developments have taken place in this module for a long time, there are many SAP user companies that – partly supported by legacy add-ons – still rely on this standard. SAP Global Trade Services (GTS) has existed in parallel to this for many years as an internationally proven foreign trade platform for companies.

 

Familiar Functionalities Are No Longer Available

With SAP S4/HANA for international trade (SAP’s new foreign trade module), familiar functionalities are no longer available and only some of them are delivered again in a new form. The functionalities currently available are classification, INTRASTAT handling, export control at country and product level, and – with additional licensing via the S/4HANA Cloud – person-related export control (sanctioned party list screening). At present there is no solution for the areas in customs management, i.e. electronic communication with national customs authorities and preferential duty management.

Many user companies lack information or are unsure about which specific foreign trade functionalities are delivered with S/4HANA.
Thomas Marx
Consulting Director

Consequently, S/4HANA does not yet offer SAP users the full range of foreign trade functions provided by SAP R/3. Furthermore, customer modifications are not easy to migrate due to the technical redesign of the system.

 

Transition to SAP S/4HANA

So, what can you do if preparations for the transition to S/4HANA are already in full swing? How do you deal with questions related to the date of implementation and the range of foreign trade solutions offered? In my opinion, the following three points are key:

  1. Initial situation: Every company should be able to recognize itself in one of the following four scenarios:
    a. SAP Global Trade Services (SAP GTS) is already in use
    b. Foreign trade is managed primarily using the SD-FT module in SAP R/3
    c. Foreign trade is managed using SD-FT in SAP R/3 with add-on solutions
    d. Foreign trade processes are not mapped in an SAP solution
  2. Requirements and business case: An analysis of the required and existing foreign trade processes is essential. Do you require electronic customs communication or preferential duty management? For which processes? Do you need to consider foreign trade processes from a purely German perspective or do you need to focus on other countries as well (e.g. U.S. re-export)? What are the volumetrics (the volume of master and transaction data that is relevant for foreign trade)? Does a 1:1 system relationship exist? In other words, will the foreign trade processes be mapped in only one system? A business case calculation that also considers licensing costs, interface administration, future viability, and rollout security can help you decide.
  3. Transition scenario: It is also vital to consider the type of S/4HANA transformation approach being contemplated. Do you intend to keep the existing processes in SAP R/3 (brownfield approach) or use the migration to redesign your processes (greenfield approach)? Or will you opt for the middle course with a selective migration? This is especially important for international logistics processes (repairs, returns, subcontracting, etc.).

If you are planning to transition to S/4HANA in the next three years, a careful assessment of your foreign trade processes within the framework of an S/4 preliminary study can help you move forward and give you an idea of what the next steps will involve.

SAP S/4HANA for international trade is new and will initially only be of interest to companies with manageable import/export volumes. If we also take internationalization into account, it offers a limited range of solutions compared to SAP GTS.

SAP GTS, on the other hand, is a mature product that lays the foundation for strategic alignment of foreign trade within your company. In addition, a company-wide user community of foreign trade specialists is established. A system built on this type of foundation enables you to create real value in your international trade in goods and document it in an audit-compliant manner.

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