Extending S/4HANA is not about what is possible — it is about what should live inside the core and what should not. SAP offers two officially supported extension models: In-App and Side-by-Side.

Understanding the difference is critical for keeping the core clean, surviving upgrades, and avoiding long-term architectural debt.

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In-App Extension (Embedded)

In-App extensions are built inside S/4HANA using SAP-provided extensibility mechanisms. They enhance standard behavior without modifying SAP core objects.

• Runs within the S/4HANA system
• Uses Custom Fields, CDS Views, BAdIs, and Key User Extensibility
• Upgrade-safe and tightly coupled to SAP processes
• Best suited for small, SAP-centric enhancements

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Side-by-Side Extension (External)

Side-by-Side extensions are built outside S/4HANA, typically on SAP Business Technology Platform (BTP), and communicate with SAP through APIs or events.

• Runs independently from S/4HANA
• Uses APIs, OData services, and event-driven integration
• Has its own lifecycle and scaling model
• Ideal for complex logic, integrations, and innovation

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A Simple Decision Example

If a Sales Order requires approval when its value exceeds a fixed threshold, the logic belongs inside the core as an In-App extension.

If approval depends on external credit agencies, AI-based risk scoring, or cross-system data, the logic belongs outside the core as a Side-by-Side extension.

The rule of thumb:
Simple, SAP-owned logic stays In-App. Complex, evolving logic moves Side-by-Side.