User Exits and BADIs (Business Add-Ins) are two important concepts in SAP ABAP for enhancing standard SAP applications. They serve similar purposes but have different characteristics and use cases. Here’s a comparison of the two, including when to use each:

User Exits

Definition:
User Exits are predefined places in SAP programs where you can insert your own code without modifying the original source code. They allow you to enhance the functionality of standard SAP applications.

Characteristics:

• Function Module: User exits are often implemented as function modules.
• Limited Scope: They provide limited options for modification and are generally less flexible than BADIs.
• Single Implementation: User exits can only be implemented once, and if you need multiple enhancements, they may become cumbersome to manage.
• Legacy System: User exits are more common in older SAP versions, and some newer enhancements may not have user exits available.

When to Use:

• When you need to make minor adjustments or enhancements to the existing functionality.
• When the available user exits meet the specific enhancement needs without extensive changes.
• When working in older SAP systems that do not support BADIs.

Business Add-Ins (BADIs)

Definition:
BADIs are more advanced enhancement points that allow for greater flexibility. They are based on the Object-Oriented programming model and enable you to create enhancements that can be implemented multiple times.

Characteristics:

• Interface-Based: BADIs are defined using interfaces, which allows for more flexibility and better management of enhancements.
• Multiple Implementations: You can have multiple active implementations of the same BADI, making it easier to manage and reuse code.
• Compatibility: BADIs can be used in both new and existing SAP versions, making them a preferred option in modern SAP development.
• Active/Inactive: BADIs can be activated or deactivated independently, providing better control over your enhancements.

When to Use:

• When you need to implement complex enhancements or multiple enhancements that require the same functionality.
• When working in a newer SAP environment that supports BADIs, as they offer better design and flexibility.
• When you need to manage several implementations of the same enhancement, allowing for easier maintenance and updates.

You should use User Exits when you require simple enhancements in older SAP systems. For more complex requirements, especially in modern SAP environments, BADIs are the better choice due to their flexibility and ability to support multiple implementations. Always evaluate your specific enhancement needs and the version of SAP you are working with before making a decision.