In the fast-paced, shifting sands of today’s business environments, companies are leaning on SAP S/4HANA to be more than an ERP – it’s also meant to power a digital-transformation strategic solution. SAP offers solid-standard processes, yet no one-size-fits-all. To operate competitively, businesses often require add-ons that align SAP’s capabilities with the edge of their various business functions and industry processes.

But there’s a catch: not all extensions are created equal. The decision between SAP In-App vs Side-by-Side extensibility can be the difference in having a stable, viable S/4HANA deployment or not. CIOs, IT directors, and SAP transformation owners should be aware of the differences between these approaches so that their SAP extensions bring innovation with less technical debt.

SAP In-App vs Side-by-Side is a critical decision for your S/4HANA system. This guide offers a side-by-side comparison, as well as advice and best practices in choosing the correct extension strategy for your S/4HANA system.

Why Extensibility Matters in S/4HANA

Extensibility is having the flexibility to customize or extend SAP systems for new business content without compromising standard core functionality. It guarantees that SAP will scale with your company and the upgrades will be robust.

Without a clear extensibility strategy:

• Add-ons can introduce tech debt, making future upgrades more complex.
• Stiff systems can impede progress even when innovations come along.
• Integration challenges rise when it comes to SAP modules and non-SAP systems.

Let’s explore two main extension paradigms of SAP: in-app and side-by-side. It is important to know what differentiates the two for making more informed, long-term decisions.

SAP Side-by-Side Extensibility: Overview

Parallel extensibility builds its extensions on S/4HANA on SAP Business Technology Platform (BTP) in most cases. These extensions then interface to S/4HANA through APIs, events, or services, resulting in more complex and innovative cross-system applications.

Advantages of Side-by-Side Extensibility

• Upgrade Safe – You never touch the core system.
• Flexibility & Innovation – Great for third-party systems, AI apps, or industry vertical solutions.
• Scalability: Future business needs are catered to by third-party add-ons while retaining the S/4HANA core.

Limitations of Side-by-Side Extensibility

Longer Dev Cycle – Longer at planning, integration, and testing.

Complex Integration – Needs APIs, middleware, and monitoring to seamlessly communicate.

More Expensive Up Front – Investment in SAP BTP, dev resources, and governance needed.

Example Use Case:

Global manufacturer develops predictive maintenance app on SAP BTP. The app collects IoT data, predicts machinery breakdowns, and triggers S/4HANA processes without changing the core. For more insights read our Blog on SAP BTP Extension Suite

In-App vs Side-by-Side: Critical Drivers for Your S/4HANA Decision

Factor	In-App Extensibility	Side-by-Side Extensibility
Complexity of Requirement	Small enhancements, minor workflows	Complex apps, multi-system integrations
Upgrade Safety	Moderate risk if heavily customized	High; core system untouched
Time-to-Implement	Fast	Longer due to external development
Innovation Potential	Limited	High; supports AI, ML, IoT
Maintenance	Lower for small changes, higher if heavily customized	Autonomous, easier to manage at scale
Cost	Lower upfront	Higher upfront investment

What is the Right Way to Choose an Extension Strategy

Start from a Business Strategy – Make decisions based on business-driving factors, not just technical prerequisites.

Concentrate on an upgrade-safe Path – Limit your customization in S/4HANA core so you’re not carrying long-term risk.

Apply SAP BTP for Innovation – When to use side-by-side, which is AI/advanced functionality/cross-system workflow.

In-App & Side-by-Side Working in Tandem

Hybrid Approach:

• Use in-app extensions for minor, low-risk improvements.
• Use side-by-side extensions for advanced, complex, or forward-looking solutions.

Example:
A logistics company adds custom fields on delivery orders in-app but builds a side-by-side analytics application on SAP BTP for routing and predictive demand planning.

SAP Extensibility Success: An Executive Checklist

• Evaluate both technical and business implications for all extensions
• Assess the upgrade risk of in-app customizations
• Explore alternate designs through side-by-side development
• Record all changes and connections for governance and audit
• Define KPIs to monitor adoption, performance, and ROI

Conclusion

Overall, deciding on SAP in-app vs side-by-side extensibility isn’t just a technical choice – it’s strategic.

• In-app extensions: Best for small, low-risk improvements.
• Side-by-side extensions: Enable innovation, integration, and expansion while preserving core system stability.

Your extension strategy is about more than code; it’s about business agility, innovation, and future-proofing your SAP landscape.

FAQs

Q: What’s the primary difference between an in-app extension and a side-by-side extension 

A: An in app extensions are running within S/4HANA, while side-by-side extensions are external apps leveraging APIs or services to communicate with S/4HANA.

Q: Which is better for upgrades?

A: This is an upgradable side-by-side extensibility – your core remains unchanged. In-your-soul in-app changes make the upgrade difficult.

Q. Can I use in-app and side-by-side extensions?

A: Yes. Hybrid Solution: Make small in-app enhancements and side-by-side, large innovations.

Q: What are the possibilities of using side-by-side extensions with SAP BTP?

A: With SAP Business Technology Platform, you get a.Agility and control with APIs, integration tools, and analytics for external applications that are flexible and scalable.

Q: Who decides extension policy?

A: It’s a joint effort of CIOs, owners of SAP transformation, enterprise architects, and leaders of business process – all working together to strike the right balance between strategic vision on one side, and business needs and technical constraints on the other.

Resources

Side by Side Extension on SAP

SAP S/4HANA Extensibility Overview