Key Functionality of SAP S/4HANA R&D

Outside the SAP S/4HANA core, SAP offers four major products in the R&D area, which complement an organization’s R&D functionality:

• SAP Enterprise Product Development
• SAP Responsible Design and Production
• SAP Enterprise Portfolio and Project Management
• SAP S/4HANA for product compliance
• SAP Enterprise Product Engineering
• SAP Product Lifecycle Management (SAP PLM)

These products may require additional licenses beyond SAP S/4HANA. In the following sections, we’ll discuss each product in turn.

SAP Enterprise Product Development

SAP Enterprise Product Development (including its product innovation management capability) is a component of SAP PLM, is powered by SAP HANA, and is available separately either in the cloud or in an on-premise version. It can be installed as a standalone product or integrated with ERP systems such as SAP S/4HANA, with SAP Portfolio and Project Management, and with other software like Jira software for product innovation management processes.

SAP Enterprise Product Development has a user-friendly user interface (UI) for desktop or mobile. Companies can use this product during idea generation and conceptualization phases across the organization. SAP Enterprise Product Development can help companies run campaigns for idea generation either globally or locally while including users. It can also help the R&D team to evaluate ideas, process those ideas, and take the process further by adding the ideas to portfolios. R&D can then develop these ideas further into projects and manage them in SAP Portfolio and Project Management or in SAP Commercial Project Management. The owner of any successful idea can also be rewarded through this tool.

The following are key features of SAP Enterprise Product Development:

• Generative AI-led campaign descriptions simplify the ideas campaign for employees and even the existing users of a product. This is enabled by an intuitive mobile client and a hands-on ideas community that can interface with any enterprise 2.0 solution pipeline (walls) of ideation and collection of ideas. A basic version is also supported through a mobile webpage.
• The use of a stage-gating process can help evaluate the most promising ideas for faster development of ideas into concepts.
• Employee or user engagement is supported by generative AI when submitters create idea descriptions and enrich or simplify the suggested texts, voting on ideas, and adding co-authors to the innovation process.
• The solution supports collaboration with various internal and external stakeholders in the innovation process.
• The solution provides supporting URLs and attachments to substantiate or complement an idea.
• The solution facilitates similarity analysis for ideas, expert finder community voting, and comments on and discussion of ideas.

In the current era, SAP Business AI capabilities are opening up new horizons for managing innovation and enabling businesses to turn data into actionable insights that drive decision-making and growth. By analyzing trends, predicting market shifts, and aligning potential ideas, SAP’s AI capabilities support enterprises in their efforts to stay ahead of the curve and identify opportunities before they become mainstream. For instance, AI-powered analytics can support business in prioritizing projects with the highest potential impact, ensuring that resources are channeled toward the most promising initiatives while many activities are taken care of by a copilot for quicker completion. Meanwhile, intelligent automation takes over routine, time-consuming tasks, allowing teams to concentrate on creativity and breakthrough ideas. With SAP business AI’s recommendation engines suggesting innovative concepts drawn from historical and market data, corporations are empowered to foster a culture of continuous improvement and agile adaptation, making innovation a natural and sustainable part of the organizational fabric.

The business value of innovation management can be derived when innovation can be institutionalized. This can improve the quality of the innovation pipeline and result in a shortening of the ideation process. An organization can also leverage experts and its subject matter expert network through the expert finder. SAP Enterprise Product Development integrates with wide a variety of customer needs (like consumption preferences and personalization) in the global era that are not only applicable to manufacturing companies (for production of classic to personalized products) but also to nonmanufacturing organizations (like utilities, transportation, and the public sector), all of which can benefit from digitalizing core business areas and innovating new, digitalized service offerings.

SAP Responsible Design and Production

The primary object of the Circular Economy initiative is to provide simple integration of SAP S/4HANA with applications for managing responsible design and production (SAP Responsible Design and Production and similar applications) by extracting product packaging data for inbound and outbound logistics at a low cost. This data will enable extended producer responsibility, transparency, and compliance reporting on product packaging like plastic tax and fees. It will also improve the productivity of fulltime equivalents (FTEs) who are in charge of extended producer responsibility (EPR) and plastic tax compliance, and it will reduce documentation costs and hence improve the revenue of the portfolio.

SAP Responsible Design and Production is SAP’s new flagship cloud product, and its aim is to help producers manage their EPR obligations and plastic taxes and drive design changes to eliminate waste as global regulations, EPR schemes, and plastic taxes continue to increase worldwide. The product has supported several consumer product manufacturers in their efforts to create compliant and efficient tax reports for business users, helping them establish and track recyclable packaging within its supply chain.

SAP Enterprise Portfolio and Project Management

SAP Enterprise Portfolio and Project Management is software (available on on-premise and in the cloud) that can be used on a standalone basis or integrated with an ERP system such as SAP S/4HANA. This product can also integrate with third-party (non-SAP) HR and financial software. It can also be used to manage the portfolios of projects created after idea evaluation and conceptualization. It has two key capabilities:

• Project logistics control: This enables suitable work breakdown and network structures to support project logistics planning and execution. This key capability supports completion of capital projects on time and within budget, improving planning accuracy and providing real-time insights with effective logistics management underpinned by simplified code and an optimized data model.
• Project financial control: This supports tracking actual versus planned costs and identifying deviations and at-risk activities or issues by defining work breakdown structures based on accurate hierarchical project accounting. It improves monitoring of progress and financial performance of projects by identifying deviations and at-risk activities or issues, and hence, it optimizes R&D expenses and on-time completion of capital projects with effective financial management.

With these capabilities, SAP Enterprise Portfolio and Project Management helps project managers achieve the following objectives:

• Align portfolios with business goals and strategies.
• Gain visibility into the entire portfolio and key performance indicators (KPIs).
• Manage portfolios, including projects, programs, and services.
• Effectively manage innovation projects using structuring, scheduling, and visualization. With SAP S/4HANA for enterprise and project management, financial plans in commercial projects can be integrated with SAP Portfolio and Project Management, and planning for resource demands in these structures can be transferred to SAP Multiresource Scheduling and thereafter prepare forecasts for such resources.
• Support different implementation models, such as Six Sigma, phase gate, critical path, and product and cycle time excellence (PACE).
• Plan and manage the own-company and cross-company demand of both financial and HR resources.
• Perform resource management.
• Track portfolio project details such as baseline, forecasted, and actual costs. This allows the project controller to assign a change request to an active financial plan for better overview and control on deviation.
• Perform a real-time what-if analysis to simulate various situations and changes. New planning sequences can be added to the forecast without altering the forecast rates for existing plan items.
• Logging of risk items, their potential impact, risk response, object references, and activities can be tracked over time with different management versions.

SAP Enterprise Portfolio and Project Management includes a few key packaged solutions, which we’ll discuss in the following sections.

Project System

Project System has been a core solution from SAP since the beginning. It seamlessly integrates with many functionalities in SAP S/4HANA, including the financial accounting and logistics needs of project-oriented processes in all capital expenditure (CapEx), operational expenditure (OpEx), and revenue project scenarios. It has features like budget control; planning and execution using work breakdown structures (WBS) and milestones; procurement; detailed planning; and scheduling and execution using network, settlements, and results analysis. Project System has been in use by engineering and construction businesses and large maintenance and asset management projects for the last few decades for the purpose of managing and executing projects.

The 2023 release introduced key features such as lean services procurement for components. This enabled simplified service planning and procurement through SAP Ariba, SAP Fieldglass, and lean service procurement using free text in SAP S/4HANA. These services can be assigned to network activities, such as planning for external nonstock materials. Some of the enhancements made in release 2023 include the following:

• The Project Cost Overview and Project Cost Line Items apps have been added to let you filter on order type.
• Joint venture accounting fields have been added in the CDS view and UI of the WBS Element Overview app.
• The Project Network OData API has been enhanced by capabilities to create, update, and delete project network activity milestones.
• Material components have been added to support the scheduling and management of plans using external project management tools.

Portfolio and Project Management

SAP Portfolio and Project Management is a solution designed to support organizations in their efforts to effectively manage their product and project portfolios. It enables enterprises to align their projects with business strategies, ensuring that resources are optimally allocated and that projects are completed on time and within budget. This table shows the key components and functionalities of SAP Portfolio and Project Management.

SAP S/4HANA release 2023 introduced the following new features:

• Periodic financial planning values stored in table ACDOCP can be imported from projects or WBS elements linked to a portfolio item. In SAP S/4HANA release 2023 FPS01, this feature was enhanced to support hierarchy processing for projects and WBS elements, and it now also includes support for importing periodic financial planning values of orders directly linked to a portfolio item.
• A new OData API for project management is available to read development project (project portfolio management) data. This API enables the reading of master data and status information for the project header and structure elements, including phases, tasks, checklists, and checklist items. It also retrieves resource management information, such as responsibilities, project role data, and staffing details.

The R&D and product development efforts of a wide range of industries can benefit from the use of SAP Portfolio and Project Management. Some of these industries are as follows:

• Automotive: An automotive company can use SAP Portfolio and Project Management to manage the development of new car models, track the progress of engineering projects, and ensure alignment with market demands and regulatory requirements.
• Food and beverage: A food and beverage company can use SAP Portfolio and Project Management to manage product innovation projects, such as developing new flavors or packaging. The company can also use it to track progress and ensure compliance with health and safety standards.
• Apparel and footwear: A fashion brand can use SAP Portfolio and Project Management to manage the design and production of new clothing lines and coordinate efforts across design, manufacturing, and marketing teams.
• Pharmaceuticals: A pharmaceutical company can use SAP Portfolio and Project Management to manage clinical trials, track research and development projects, and ensure compliance with regulatory requirements throughout the drug development process.
• Oil and gas, utilities, and construction: Oil and gas companies, utilities, and construction companies can use SAP Portfolio and Project Management to evaluate their portfolios with detailed cost versus revenue analyses before making investments in new ventures. They can also track their execution schedules, actual costs, and revenues during project execution.

SAP Commercial Project Management

SAP Commercial Project Management can be used whenever R&D services are provided to clients as a service. As a tool that can be used to analyze investment alternatives and to track project budgets, milestones, and delivery, SAP Commercial Project Management facilitates the following:

• Get real-time access to project data.
• Generate project status reports using embedded analytics.
• Accurately forecast quantity, cost, and revenue.
• Unify financial management through the project lifecycle.
• Accurately identify and track project issues.
• Manage change requests, including approvals and rejections.

Using Project Workplace, which is the central page of SAP Commercial Project Management, organizations can monitor projects end to end. This includes monitoring schedules, risks, and statuses when Project Workplace is delivered to clients as a service (for example, in initial research work and building prototypes of a new product on behalf of a client). Collaboration features like sharing documents, communications, and tasks are provided to collaborate within internal teams, suppliers, and customers for various inputs and services and to manage risk. The change management functionality is useful for project managers; it helps to track all the changes coming to projects and to manage associated risks through visualizing the impacts on different processes. It can also monitor and track project finances with various deliveries, which are enhanced by advanced analytics and reporting.

With the advent of SAP S/4HANA release 2023 FPS01, the following features are available:

• Adjustment of the report template in commercial project management, depending on the target recipient of the status and trend report
• Automatic adjustments for in-period forecasts, both monthly and fiscal, as well as period-end forecast adjustments for fiscal breakdowns in SAP Commercial Project Management

By leveraging these features, organizations in the construction, engineering, professional services, and health care industries can improve project visibility, optimize resource utilization, enhance financial control, and ensure successful commercial project deliveries.

SAP Enterprise Product Engineering

SAP Enterprise Product Engineering is a suite within SAP that supports organizations in managing the design and development of production, maintenance, and support. SAP Enterprise Product Engineering fosters collaboration across engineering, manufacturing, and operations, streamlining product development and aligning with business goals and customer needs. It offers two capabilities:

• Product development foundation: This ensures a single source of truth for product design data and facilitates the reuse of engineering data across the enterprise through increased efficiency. It integrates customer-driven innovations throughout the process, enhances quality by defining design requirements, helps maintain rigorous standards, and reduces time to market by reusing components and providing information faster.
• Variant configuration: This supports the sales, marketing, and production processes by simulating and testing wide ranges of variants of products that are offered to the customers as part of classic or personalized catalogues. It doesn’t only support customer selection but also checks estimates for manufacturing and helps in simulating prices. Hence, it supports effective utilization of resources and leads to increased revenue.

Some of the key features introduced in release 2023 are as follows:

• SAP 3D Visual Enterprise Manufacturing Planner supports the R&D team in creating and maintaining manufacturing structures from engineering structures. It does this through a visually guided planning process that includes nonvisual instances and dynamic visualizations.
• New statuses in document info records keep the customer well informed about versions and progress.

Though most industries can benefit from these features, the most significant ones are fashion and heavy industry. This is because these features offer variety, precision, and control in design.

SAP Product Lifecycle Management

In the current era in which the requirements and features of a product are determined by its customers, organizations need to use every opportunity to meet this demand by timely launching the products with the right quality and price. This is only achievable with the right controls in design review, release, and cross-functional definition. You also need tight integration with manufacturing and active collaboration with suppliers right from the inception, integrating customer service with adequate information on the product and enabling them with tracking of such products for support, return, and repair processes. SAP PLM allows companies to support all these functionalities to realize the best ideas into innovative and successful products in a timely manner with strategic objectives. Key capabilities are as follows:

• Authoring tool integration: This combines mechanical, electrical, and electronic computer-aided design (CAD) tools, synchronizing metadata and structures for a comprehensive, transparent 360-degree product view across disciplines. This results in better collaboration between the R&D team and other stakeholders (such as manufacturers and OEM suppliers), less wastage in R&D and prototyping, and hence less expensive activities.
• Handover to manufacturing: Handover to manufacturing can be performed in enhanced quality, productivity, and agility by using flexible practices and real-time engineering and manufacturing data. It speeds time-to-volume, reduces product costs, improves agility, and increases quality by eliminating errors and providing robust work instructions. It also prevents disruptions through real-time conflict and change management.
• Product change management: This streamlines change requests, enhances stakeholder involvement, and ensures consistent execution to mitigate risks. It also uses tailored change management processes, automates changes with rules, and helps users make informed decisions with change insights. It also helps users maintain a synchronized view of product changes, adhere to regulations, and secure necessary approvals.
• Design systems interoperability: This helps you use design tools and systems for the purpose of collaboration, increasing efficiency, component reuse, and error and cost reduction. Let’s consider, for example, the integration of Siemens Teamcenter with SAP S/4HANA. Here, it’s possible to conceptualize an engineering BOM (EBOM) as a version BOM, and a handover would be done in SAP 3D Visual Enterprise Manufacturing Planner to create a manufacturing BOM (MBOM). Based on the failure or modified requirement, the request from SAP S/4HANA can be sent to Teamcenter to update the BOM. Key capabilities include bidirectional integration, process-level integration for change processes, and flexible process and attribute implementation. Bidirectional integration of SAP S/4HANA and Teamcenter by Siemens is one of the key enablers in modern engineering design processes that use various CAD applications (like CATIA and Creo Parametric).
• Model-based enterprise: This extends the digital product definition beyond design engineering to the entire enterprise, using user-friendly 2D and 3D models. It transforms the model-based definition (MBD; i.e., the practice of using 3D CAD models restricted only as the primary source of product specifications in the design department) into an integrated and streamlined source of product information across all departments throughout the shifting product lifecycle; that is, it’s a true model-based enterprise (MBE). As an example, the same 3D model used in design or extensions can be used for procurement and supplier collaboration, quality inspection, manufacturing, aftermarket parts, and other downstream processes like customer service. This brings more clarity, transparency, and agility, resulting in improved quality, less rework, and improvement in revenue through flexible purchase options visualized by customers. 

The following are the features of the key capabilities in SAP PLM that can enable state-of-the-art processes for product release and lifecycle management:

• A modern document management system integrates computerized development and production systems over the internet, avoiding data redundancy, maintaining data consistency, and minimizing the effort for data maintenance. Strict control of product liability and distribution can be enforced by the system to help the organization comply with local law and quality certification (e.g., ISO 9000 to 9006).
• A common attachment service is provided as a backbone that can be flexibly used by any SAP Fiori app to attach documents in SAP S/4HANA.
• A powerful classification feature uses characteristics representing specific properties to define all types of objects, group similar objects in classes, and easily search objects with similar or identical characteristics. Most of the master data and selected transactional data is supported for classification; however, customization can be done for other objects.
• A tracking and approval mechanism changes various technical aspects of key objects in a product, such as BOMs, recipes, materials, and design documents with history.
• A powerful variant configuration option supports the offering, manufacturing, and maintenance of customizable products. This ensures smooth and accurate specification and information exchange from the customer to sales, sales to planning and engineering, and engineering to production.

Industries like automotive, aerospace and defense, industrial machinery, engineering, and construction are the key users of these capabilities in managing the complex design and development of equipment and integrating various subsystems and components into a cohesive product. Also, in industries like consumer goods and personal health care, containers, labels, and packaging are widely being designed and integrated with SAP PLM.

SAP S/4HANA for Product Compliance

This feature is primarily applicable for the industries where a chemical compliance for the products is needed according to local and global norms. It can support classifying products according to international dangerous goods regulations and creating safety data sheets and labels according to chemical regulations and requirements. With SAP S/4HANA for product compliance, customers can track and record the inventory of regulated substances in their warehouses that are purchased, imported, produced, sold, or exported.

Key features of SAP S/4HANA for product compliance are as follows:

• Dangerous goods management: This involves using integrated checks to ensure shipment compliance with regulations, automating the creation and provisioning of necessary documents, and managing information centrally. It automates classification, supports proper packaging, and ensures accurate transportation modes and routing. With this feature, R&D organizations can avoid penalties, delivery disruptions, long waiting times, and excess transportation costs due to violations of dangerous goods regulations.
• Safety data sheet and label management: This involves centrally managing substance and regulatory information, streamlining product classification, and automating the creation and distribution of safety data sheets and labels. It uses regulatory content to reduce effort and ensure compliance, and it integrates label printing and data sheet shipping into logistics processes. Accurately managed safety data sheet and labeling requirements can ensure compliance and accelerate product introduction, which supports quicker marketing of the products.
• Product marketability and compliance: This involves automatically tracking regulated substances, ensuring products meet regulations to secure marketability. It manages material information, satisfies legal and customer requirements, collects compliance data, and publicizes compliance information. It also assesses and verifies products for compliance, including registrations and quantity limits. Product marketability and compliance provides a structured process to manage product compliance checks to improve environmental safety and compliance.

SAP S/4HANA for product compliance, which is available both on-premise and in the cloud, can also support an organization in the following ways:

• It identifies the compliance purposes and regulations that need to be followed for chemical and hazardous substances.
• It determines the types of compliance information that are relevant for a compliance requirement and how the system propagates this flow of information to related transactions.
• It assesses the readiness for marketing a product in compliance with the required chemical norms globally or for a specific region.
• It integrates with sales, delivery, and shipment processes for tracking dangerous goods and declaration. The integration of dangerous goods management into sales and delivery processing will help businesses check the compliance of relevant products early in processes such as sales quotation and sales order creation. If no suitable logistic is available to transport the classified good, sales items won’t be processed further in the delivery.
• It produces safety data sheets from the master data.
• It supports compliance with various international and local requirements

SAP S/4HANA for product compliance includes the Process Requests from Logistics
and Compliance Request from Logistics SAP Fiori apps, which provide different departments with compliance information based on requests. Also, specific apps like Manage Suppliers Compliance – For Raw Materials, Supplier Compliance for Raw Material, and Marketability Assessment – Supplier Raw Material are now available to manage prospective suppliers’ requests for compliance information regarding products, monitor the status of those requests, and assess the compliance of a product purchased from a selected supplier.

An adequate number of apps are now available to check the status of product compliance. We’ll highlight a few of them that are often central to regulatory and operational effectiveness:

• Manage Basic Compliance Data - Unpackaged Products: This app offers a comprehensive view of unpackaged products and their compliance data, enabling users to search and filter by product name or group to prevent duplication. It supports compliance view creation for new products, ensuring accurate records and streamlined management.
• Manage Storage Class:  This app enables users to assess products for storage class compliance, updating safety data and releasing assessments for further processes. Key features include selecting storage data, adding notes, managing processors, and version control with historical archiving. It also tracks changes, supporting continuous compliance.
• Manage Occupational Exposure Limits: This app allows users to evaluate products and raw materials against occupational exposure compliance standards. Users can add or update regulated substances, manage assessment status, and release results for further processes, with archived history for traceability. This ensures products remain compliant with safety regulations.
• Manage Safety Data Sheets: This app supports users who want to upload and manage safety data sheets and specifications, releasing them in required languages. Key features include viewing compliance details, managing processors, and tracking assessment history through a timeline for full status transparency.

In compliance reporting, industry-specific phrases are used on safety data sheets or other documents due to commercial and legal requirements. The compliance apps used for these purposes are compatible with available phrases and translations as part of industry requirements. With the new Impact of Monitoring Lists SAP Fiori app, organizations will be able to monitor substances and analyze their impacts on sales, suppliers, and production.

With the data protection and access control in the early and detail-design phases, restricted and authorized access to design documents, parts, or product structures will improve compliance with internal and external guidelines and regulations.

Editor’s note: This post has been adapted from a section of the book SAP S/4HANA: An Introduction by Devraj Bardhan, Axel Baumgartl, Madalina Dascalescu, Mark Dudgeon, Piotr Górecki, Asidhara Lahiri, Richard Maund, Bert Meijerink, and Andrew Worsley-Tonks. They are are a multinational author team working for IBM, SAP, and Accenture. They have been working with SAP S/4HANA since its first release.