SAP S/4HANA: SAP Best Practices vs. SAP Model Company explained

The clock continues to tick for organizations who are running on SAP ECC to transition to SAP S/4HANA, as up to 50% of exiting SAP customers are still considering plans and timelines. The main reason for this waiting in the ‘Start Position’ is that the transition from SAP ECC to SAP S/4HANA is looked upon as a massive project with a huge impact on the business and inherent risks. An SAP S/4HANA transition program has a considerable impact on customers day-to-day operations, stretching their budget and resources. For the SAP Basis teams, managing dual environments – SAP ECC and building the new SAP S/4HANA platform – for an extended period can be not only a challenge, but also costly. On top on this, the individual application teams, must continuously hold themselves up to date on the new functions and features offered by SAP in SAP S/4HANA on a continuous basis. And last, but not least, Project Managers and Architects, are challenged by the enormous number of guidelines, methodologies, tools and accelerators that SAP is releasing to support the SAP S/4HANA transition journey.

One set of accelerators that is truly having a huge effect on all the three SAP specialist areas, Basis, Application and Design/architecture is the SAP Best Practices and the SAP Model Company concept. Using an accelerator like the SAP Best Practices and the SAP Model Company can reduce effort, cost and minimize interruptions to the business while transitioning to S/4HANA.

Introducing SAP Best Practices and SAP Model Company

SAP Best Practices are built and delivered by the SAP development organization which means that they are basically a part of the core SAP S/4HANA product and included in every product license – all you need to do is to activate them, and they are ready to run. The SAP Best Practices for SAP S/4HANA are tailored specifically to accelerate and simplify the adoption of SAP S/4HANA, by providing pre-configured content for core business processes. This means that we are talking about pre-configured business processes, representing a sample way of executing business processes. This is typically configuration that resides in the system, which uses the underlying functionality. All these business processes are completely and fully documented, so that a project can, at any point in time, use the configuration, use the systems that are being pre-configured with those best practices, and execute the business processes according to the documentation itself.

SAP Best Practices were already available in the SAP business suite world, and were, in previous releases, covering country versions as well as industry versions. So, to be specific, SAP was, with the SAP Business suite, offering industry best practices as part of the product license as well. That has changed with the introduction of S/4HANA, as SAP in the S/4HANA product, only delivers SAP Best Practices for country versions. The industry best practices are now developed and maintained by SAP Digital Business Services (SAP DBS) and delivered as a service offering. This means that the industry best practices, that we knew from the SAP Business Suite world, are no longer available as SAP Best Practices. They must be acquired separately as SAP Model Companies with additional consulting implementation cost, but no additional license cost – since it’s a service offering and not a product offering.

One other major difference between the SAP Best Practices and the SAP Model Company concept is that the SAP Model Companies contain not just S/4HANA features and functions, they all go beyond that, and now incorporates the use of C/4HANA, SuccessFactors, and other SAP solutions. This means that the SAP Model Companies are tailored to a specific industry and/or line of business (LoB) and utilizes the features and functions from the complete SAP Product Portfolio. On the longer horizon SAPs vision for the SAP Model Company is, as quoted by Stephan Klein, Senior Vice President and SAP Model Company lead:

“SAP Model Company is the baseline for the entire SAP product portfolio, for on-premise single tenant & multi-tenant cloud or hybrid platforms, led by industries and based on the LoB platform, fully interoperable – end-to-end”

So, the SAP Model Companies span across all SAP solutions. And we are not just talking about on-premise. We are also talking about single tenant, multi-tenant cloud, and we are even talking about hybrid scenarios, where we see transactional flows that go from on-premise into the cloud and maybe even back. We are talking about a multidimensional offering across industries and LoBs. The biggest achievement SAP made with the SAP Model Company concept, is the interoperability. In this context, Interoperability means that it is possible to combine model companies like Lego building blocks, based, of course, on clear, well-defined rules. You cannot do whatever you want, there will be limitations, however it is possible to put together these model companies into one big model company and tailor it to your needs.

The SAP Best Practices for the SAP S/4HAHA version are delivered in 42 country/region versions and 39 languages, whereas the SAP model companies are delivered within more than 30 industries and LoB’s, and only in English (and a few in German).

The SAP Model Company which, as described earlier, is delivered exclusively by SAP DBS can be delivered in two different models:

  • Standard SAP Model Company deployment
    • Selection from prebuilt standard appliance
    • Out-of-the box
    • Available in hours
  • SAP Model Company Custom edition deployment
    • Assembled to customer order based on selection of:
      • Best Practices, multinational corporations
      • Line of Businesses – several LoB Model Companies
      • Industry – only one industry MC
      • Localizations (optional)
      • Partner add-ons (optional)
      • Analytics (Cloud)
      • Available in 2-4 weeks


In order to be able to select the right model company combination, SAP offers a tool called ‘Recommender’ which can be used to explore the different SAP Model Companies: Industry and LoB’s, and the interrelationship between the different industries and LoB’s. If you want to have a hands on experience, the SAP Cloud Appliance Library (SAP CAL) offers trial access to the full version of an Industry Model Company on rented infrastructure (Azure, AWS or Google Cloud). On the SAP Store you can purchase access to an SAP hosted limited edition of a SAP Model Company.

All in all, the goal of using the proven deployment approach of SAP Best Practices and the SAP Model Companies is to:

  • Reduces cost and avoid typical implementation risks
  • Transform business processes and adopt industry best practices and innovative technologies
  • Accelerate implementation for faster time-to-value, and lower TCO
  • Adopt early and quickly and free up resources for innovation
  • Faster realization of business value


Introducing the SAP Model Company Architecture

The SAP S/4HANA system of an SAP Model Company consists of three main layers:

  1. The SAP S/4HANA product component layer
  2. The SAP Best Practices Layer
  3. The SAP Model Company Industry / LoB Layer


The SAP S/4HANA product component layer is installed using the whitelist client setup, which means that the model company clients are set up empty and are not created as a copy of the pre-delivered client 000. In areas for which there is no model company content available or included in the delivered reference solution, the configuration tables are empty. In the SAP S/4HANA product component layer, all required standard business functions, as well as additional specific industry business functions are switched on, to ensure that the product baseline fits with the line of the LoB’s and Industry SAP Model Company.

Since the SAP Model Company content is always created on top of an SAP Best Practice content baseline, the SAP Best Practices Layer will have all standard SAP best practices activated that are applicable to the core S/4HANA license. Some additional best practices required for the model company scenarios will also be activated. These additional best practice scope items might require additional licenses to run the related product in a productive environment. In the Standard SAP Model Company all SAP Best Practices scope items are activated for country version US, meaning United States, which is the baseline of the Standard SAP Model Company, and in addition to that the Germany country version will also be activated.

The SAP Model Company Layer, which is the third layer, is the actual model company content. This content is always built as compatible to SAP Best Practices on top, and provides the required configuration, master data, and integration settings for the delivered SAP Model Company; LoB’s, and Industry scenarios.

In addition to the S/4HANA system, a SAP Model Company can have additional satellite systems, which can be on-premise systems, such as CRM, or MII, , or cloud systems, such as integrated business planning, IDP, SAC for SAP Analytics Cloud, or intelligent extensions delivered through the SAP Cloud Platform.

As described earlier the SAP Model Company Custom edition deployment is always assembled to order, which allows an extension of the SAP Best Practices layer. It is possible to activate additional country versions of the SAP Best Practices in addition to the already contained US, and DE, SAP best practices. For a multinational corporation, the SAP Best Practices layer can be exchanged with the multinational corporation template, which is designed to support global enterprises and can be activated with a pre-selected country scope.


In short, the architecture varies slightly based on the chosen SAP Model Company deployment scenario: Pre-built SAP Model Company edition versus an SAP Model Company custom edition. But what are the actual differences? A pre-built SAP Model Company usually includes a single SAP Model Company and is a pre-built appliance available out of the box and containing US, and DE, SAP Best Practices baseline content. An SAP Model Company custom edition is always assembled to order. Here it is possible to either extend the SAP Best Practices baseline content with additional country versions or use a multinational corporation's template. It allows the combination of multiple LoB model company contents in the LoB layer, and on top, one industry model company content in the industry layer.

Regardless of the deployment scenario, the SAP Model Company follows the whitelist approach. This means that SAP Model Company solutions only deliver configuration related to the scenarios and scope, and do not include the full content of client 000. The SAP Model Company architecture uses a content layer approach. The architecture and interoperability concept of the SAP Model Company approach allows a combination of multiple Line-of-Business model company solutions and a single industry model company in the SAP Model Company Layer.

Want to know more?

If you would like to know more about SAP Model Company related topics like:

  • How to start up the SAP S/4HANA transition journey
  • How to Deploy SAP Model Company
  • SAP Best Practices and SAP Model Company Deliverables
  • How to Best Leverage SAP Model Company via SAP Activate
  • SAP Model Company for Multinational Corporations
  • SAP DBS and NNIT engagement model
  • Benefits of test automation in a SAP Best Practice context


please contact Kenneth Vagn Olsen, SAP Consulting Director, SAP S/4HANA Practice Lead at NNIT


Kenneth Vagn Olsen

Consulting Director, SAP Solutions