SAP S/4HANA Migration Leaves Foreign Trade Functionality Gaps, Companies Warned

Companies planning to migrate from SAP R/3 to SAP S/4HANA face a critical blind spot: many familiar foreign trade functionalities won’t make the journey. With preferential duty processing missing from the new platform, businesses must reassess their international trade strategies before making the leap.

As SAP R/3 approaches end-of-life, enterprises are discovering that S/4HANA’s international trade module delivers only a fraction of the foreign trade capabilities they currently rely on. The new platform provides classification, INTRASTAT handling, and basic export controls, but notably absent is preferential duty management—capabilities that have been standard in R/3’s MM/SD module for years.

The gap is particularly acute for companies that have built their compliance workflows around R/3’s foreign trade functionalities. According to cbs Corporate Business Solutions, SAP S/4HANA for international trade currently offers no solution for customs management, leaving businesses without a native path for electronic communication with national customs authorities. While person-related control through sanctioned party list screening is available, it requires additional licensing via S/4HANA Cloud (Watch List Screening).

Industry experts emphasize that companies cannot afford to treat this as simply a technical migration. Foreign trade is an important factor to consider when developing a system strategy for switching to S/4HANA, notes Thomas Marx, Consulting Director at cbs. “It is essential to analyze your foreign trade processes and adjust your system accordingly.”

For organizations already using SAP Global Trade Services (GTS), the transition path may be clearer, as GTS continues to offer comprehensive foreign trade functionality alongside SAP S/4HANA. However, companies relying solely on SAP MM/SD in R/3—whether with or without add-on solutions—face difficult decisions about their future state architecture.

The analysis becomes even more complex for multinational operations. Companies must evaluate not only their current process requirements but also their international scope, volumetrics, and whether they need capabilities like U.S. re-export controls. According to cbs, a brownfield migration approach that preserves existing processes may conflict with the limited functionality available in S/4HANA, while a greenfield redesign could require fundamental changes to established compliance workflows.

SAP GTS emerges as the mature alternative for companies with substantial international trade operations. cbs notes that as an internationally proven platform that has evolved over many years, GTS provides the strategic foundation for comprehensive foreign trade management and establishes company-wide communities of trade compliance specialists. However, this solution requires separate licensing and introduces additional system landscape considerations.

For companies in the early stages of SAP S/4HANA planning, conducting a preliminary study focused specifically on foreign trade processes has become critical. This assessment should address key questions: Which specific functionalities are essential for compliance? What are the licensing implications of different approaches? How do volumetrics and system relationships affect the optimal architecture? Without clear answers, organizations risk discovering critical gaps only after migration commitments are made.

The timeline matters as well. cbs advises that companies planning to transition to S/4HANA within the next three years need to begin their foreign trade analysis immediately, as the decisions made now will determine whether international operations continue smoothly or face compliance disruptions and costly remediation efforts post-migration.

What This Means for SAPinsiders

Foreign trade teams need new roadmaps immediately. Technology executives must conduct comprehensive gap analyses before finalizing any SAP S/4HANA migration timeline, as the absence of preferential duty processing could halt cross-border operations. Companies should evaluate whether their transaction volumes and international complexity justify investing in SAP GTS alongside SAP S/4HANA, or if they can operate within the limited native functionality for a transitional period.

Integration architecture becomes a critical success factor. Organizations maintaining SAP MM/SD workflows should prioritize evaluation criteria including system landscape simplification, interface maintenance costs, and the total cost of ownership across a 5-7 year horizon when comparing GTS implementation against workarounds or third-party solutions. Best practices from early adopters show that companies with complex repair, return, and subcontracting workflows face the highest risk of disruption and should model these processes explicitly during migration planning.

Compliance risk requires executive-level attention now. Cross-functional teams spanning IT, trade compliance, and procurement must collaborate on business case development that quantifies the cost of potential compliance failures, customs delays, and preferential duty claim losses against technology investment options. Companies in highly regulated industries or those with significant customs volume should treat foreign trade requirements as migration showstoppers rather than post-go-live enhancements, as retrofitting capabilities after S/4HANA deployment typically costs 3-5 times more than architecting the right solution upfront.