Material deformations and the influence of coating thickness and elastic modulus were analysed by three-dimensional finite element method (FEM) modelling on microlevel, by stress, strain, and displacement computer simulations and by experimental studies with a scratch tester. The studied tribological contact was a diamond ball sliding with increasing load on a thin titanium nitride (TiN) coating on a flat steel substrate. The ball was modelled as rigid, the coating was linearly elastic, and the steel substrate was elastic-plastic, taking into account strain hardening effects. It was shown that a thin TiN ceramic coating on a steel substrate has only a very slight effect on friction and on the plastic deformations (i.e., the groove formation) in the surface, but changes considerably the stress pattern at the surface. The stress simulations showed how a thicker hard coating on a soft substrate has a better load-carrying capacity that a thinner one. Higher tensile stresses at the coating/substrate interface increase the risk for interface cracks and delamination of the thicker coating. A stiffer hard coating on a soft substrate has a better load-carrying capacity than a more elastic one. The stiffer coating will accommodate higher tensile stresses with the same indentation depth compared to a more elastic one. The results show that much more attention should be given to optimizing the elastic properties of the coating than previously has been done. In many cases, it can be much more effective to improve the wear resistance of the coated surface by focusing on the elastic modulus of the coating than changing the coating thickness.