What is side-by-side extensibility, and when is it the right architectural choice?

Side-by-side extensibility means building custom functionality as an entirely separate application running on SAP BTP, integrating with the S/4HANA core purely through released APIs and events rather than living inside the core system itself. It's the right choice when logic is complex enough to warrant independent development/release cycles, needs to scale independently of the core, or needs to integrate heavily with non-SAP systems.

flowchart TD
    A[Requirement assessment] --> B{Complex, independently-scaling, or cross-system logic?}
    B -->|Yes| C[Side-by-side on BTP]
    B -->|No, simple and core-coupled| D[In-app extensibility instead]

It's specifically the wrong choice for simple, tightly core-coupled logic where the overhead of standing up and maintaining a separate application, deployment pipeline, and integration layer isn't justified by the complexity of what's actually being built — over-applying side-by-side to trivial extensions is a common architectural over-engineering mistake.