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SAP S/4HANA Cloud Private Edition, Service offers service contracts capabilities to model long-term service agreements with customers. This is especially important to establish price agreements under specific conditions.

When a service order is created, the customer service manager may not be aware of the right contract to be applied, up front. They are dependent on the software to an extent, to assign the right service contract. Whether a service contract is applicable or not is evaluated by the system based on customer, sales area, service organization, equipment, etc. In general, it is possible that there could be multiple contracts applicable for a given customer and sales area combination. This creates a challenge for the assignment of service contract. If the service order is being created via the app in the SAP Fiori Launchpad, then the system displays a popup with multiple applicable contracts. The user must manually select one. If it is performed via a Web API, then the service order is persisted with an error message. This forces the user to later come back to the service order and manually assign the right service contract. Thus, system forces the user to perform manual intervention.

However, there is a way to overcome this challenge. If business can model the service contracts at the level of equipment, then it is possible to enable the system to determine exactly one service contract. This way it will open the possibility of automatic assignment without any manual intervention. Similar approach is applicable even for non-serialized products or serialized materials (material + serial number) when equipment master is not available. In that case, the service contracts can be defined at the level of product IDs and serial numbers.

Here is a brief overview of the steps required to achieve such an automatic contract assignment. These steps are applicable for SAP S/4HANA Cloud Private Edition and more specifically, for SAP S/4HANA 2023.

1. Customizing settings in contract item categories:

Make the following customization settings in all contract item categories:


This would indicate to the system that any service contracts which have an empty Object list or empty Product list should be ignored during the contract determination process. The item categories in standard delivery include SCN, SCN1, SCN2, SCNA, SCNB, etc. This customizing can be performed for all these items categories.

2. Service contract determination type:

We should set the contract determination type as required. In our example, we are using the standard delivery transaction type SRVO (Service Order) for service order. This has the contract determination type = I (Only at Item Level if External System Does Not Determine).


3. Maintain the copy control customizing:

This is a prerequisite for the contract determination process. Maintain the copy control customizing for both transaction type and item category, as required. If you are using the standard transaction types and item categories, then the copy control customizing would be already available as part of the delivery customizing.

4. Modelling and definition of service contracts:

It is important that each service contract in the system is having the exact list of equipment IDs / product IDs for which it is applicable. This defines a clear and specific scope for the service contract, based on equipment IDs. 

In our example, we have the following service contracts which cover the corresponding equipment IDs.

Service contract



US Pumps annual maintenance contract TX

This is the service contract which covers the service requirements for pumps installed in Texas state


Pump 101


Pump 102


US Pumps annual maintenance CA

This is the service contract which covers the service requirements for pumps installed in California state


Pump 201


Pump 202



We could also include sub-equipment within the same contract, if they are to be covered with the same terms and conditions as the parent equipment.

5. Mutually exclusive service contracts:

Next, it should be ensured that there is no overlap in scope between any two service contracts. A given equipment ID / product ID within a particular sales area, should appear in exactly one service contract only.

6. Create Service Order:

Once we create a service order, and enter the equipment ID, then the service contract gets assigned immediately and automatically. The user also gets a confirmation message related to the contract assignment as shown below.



This kind of setup would be of immense value to the customer service manager. In summary, if the business allows for such modelling of contracts, then it possible to enable unique contract determination for every service requirement, and thus also enable automatic contract assignment, without any user intervention.