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Co-author: Supply Chain – chandrashekhar.tipre

Welcome to the Two-Tier ERP innovation updates with SAP S/4HANA Cloud 2108 Release.

With SAP’s Two-Tier ERP approach, you get the benefits of the software as a service (SaaS) model of SAP S/4HANA Cloud. SAP’s Two-Tier ERP deployment gives an opportunity to standardize the end-to-end business processes with seamless integration across multiple tiers. With every release of SAP S/4HANA Cloud, we introduce new scenario innovations with scope items, pre-packaged content, accelerators in Best Practice Explorer. This time we bring some interesting scenario innovations in Finance & Supply chain with intelligent technologies like machine learning.

Intercompany Reconciliation Automation

Let’s start with the intelligent machine learning scenario for Intercompany Reconciliation Automation.

You can automate the intercompany financial document matching and reconciliation process in your Two-Tier ERP landscape by using the machine learning technology in SAP BTP and the advanced intercompany matching and reconciliation solution in SAP S/4HANA Cloud or on premise system.

Let’s see a business use case where Tier2 which can be any subsidiary company on an external system, sends the Intercompany posting documents to Tier1 which is a headquarter running on SAP S/4 HANA Cloud through file upload or API or via Central Finance solution. Within Tier1, the intercompany documents will be first matched by predefined rules, and the remaining unmatched documents can be sent to the intelligent intercompany reconciliation service(ICR) on SAP BTP which will do the line item matching and reason code assignment and will send these matched documents proposal back to Tier1.

What are the Business Benefits?

Save time, save efforts & save operation cost by automating the labor-intensive matching work. Increase the matching accuracy and transparency among the headquarter & subsidiary companies. Speed up the month end closing process, group consolidation & reporting, streamline local closing to corporate closing. Learn more about this intelligent machine learning scenario here.

Group Reporting Planning

Next scenario we see Group Reporting Planning with Two-Tier ERP.

Continuing with the business use case, Tier1, the headquarter company running on SAP S/4HANA Cloud or on premise can get intercompany documents from Tier2, the subsidiary company running on any external system. The headquarter will then do the consolidation & group reporting, and the actual data can then be sent to SAP Analytics Cloud for planning future periods.

Group reporting planning enables you to plan your profit and loss and balance sheet based on the group reporting dimensions, such as the Consolidation Unit, Functional area, Financial Statement Item and Partner Consolidation Units in SAP Analytics Cloud. Planning administrators can pre-populate planning screens based on past actual data.

Group reporting planning is based on the SAP S/4HANA data model and is fully integrated with it. Master data and transaction data from SAP S/4HANA Cloud & on-premise systems can be loaded into SAP Analytics Cloud.  This complete integration is part of the content delivery and is available out of the box.

Predictive MRP with Scheduling Agreement Integration

This Two-Tier scenario covers the process of medium-term planning with predictive MRP. We see a Business Use case where the headquarters running on SAP S/4HANA on premise manufactures final assembly and subsidiary running on SAP S/4HANA Cloud supplies key subassembly as part of the final product.

Headquarter and subsidiary can share details of targets and constraints for quantity per period bucket through collaborative planning. Headquarter initiates planning process through predictive MRP.  Constraint quantity received from the subsidiary for the subassembly is considered at the headquarters to arrive at the final plan to manufacture the final product.

On the execution side of the plan, the finalized plan released for the subassembly with an active version forms demand for the MRP planning process to generate FRC based schedule lines and subsequently JIT schedule lines against purchasing scheduling agreement. These schedule lines are shared with the Subsidiary to update the sales scheduling agreement through integration between SAP S/4HANA on premise and SAP S/4HANA Cloud. The FRC based schedule lines received at the subsidiary are used for planning resources such as materials and capacities. and the JIT based schedule lines initiated at the headquarter and received at the subsidiary are call out instructions for creation of delivery to fulfil the schedules. Curious to know more, click here.

These were the scenario innovation highlights for Two-Tier ERP with SAP S/4HANA Cloud 2108 release.


Scope items

Scope items activation required for the new Two-Tier ERP scenarios detailed above are as below -

Intercompany Reconciliation Automation - 4LG, 40Y

Group Reporting Planning - 5PU

Predictive MRP with Scheduling Agreement Integration - 4B5, 3NR


Two-Tier ERP Accelerators can be downloaded from Best Practice Explorer as shown in below screenshot.

Whitelisted APIs

Apart from the above scenario highlights, you can find several APIs to facilitate Two-Tier ERP deployment here.

Two Tier ERP Microlearning

You can learn more about our innovation scenarios with detailed videos and demos with our new Two-Tier ERP Microlearning channel.

Do stay tuned with the latest release updates, stay safe and stay healthy.


For more information, check out the following links:

  • Early Release Webinar Series here

  • SAP S/4HANA Cloud release info here

  • Latest SAP S/4HANA Cloud Release Blogs here and previous release highlights here

  • Blog post series for Hybrid Cloud here

  • Inside SAP S/4HANA Podcast here

  • Microlearnings for SAP S/4HANA here

  • Product videos on our SAP S/4HANA Cloud and SAP S/4HANA YouTube playlist

  • Best practices for SAP S/4HANA Cloud here

  • SAP S/4HANA Cloud User Community: register here