PAC's view on SAP S/4HANA

PAC's view on SAP S/4HANA

Today, earlier than expected, SAP presented S/4 HANA, the successor to SAP ERP (ECC 6.0) in New York. Since the announcement of SAP HANA a couple of years ago, it has been clear that SAP had to rebuild the existing ERP in order to achieve the full benefits the real-time platform provides.

They finally achieved this earlier than one could have expected since this meant to change an ERP codebase of around 400 million lines of code. It’s a very bold move for SAP. It will definitely set competitors under high pressure.

SAP’s recent developments around SAP HANA, SAP Fiori and s-innovations built the basis for the new generation of the core product.

Some details

S/4 HANA is not just about a new release of the SAP Business Suite running on SAP HANA. It means that they have changed the way how the core system operates. As described by SAP, components such as Financials, CRM, SRM and PLM share a common platform. This eliminates the data transfer between components such as ERP and CRM that is needed today. Rather than having created a brand new product, SAP has renovated the existing one. In addition, cloud services such as the Ariba business network are integrated into this core system.

While the SAP landscape has become more and more complex due to the various new components the vendor has added over time, it is SAP’s intention to reduce this complexity with S/4 HANA. With this, SAP delivers on its promise to provide an integrated system.

This includes a fundamental reduction of the data complexity. Hasso Plattner claims that a reduction of 1:10 just by getting rid of aggregates and redundancies has been possible.

In this new system layout, satellite applications do not need their own instance, which furthermore decreases the data volume. It also means that only one single database is needed: SAP HANA. As a matter of fact, applications and database will grow together and there will be no distinction between application and database layer.

“S” stands for simplification in S/4 HANA and thus the new system will only have SAP Fiori as the GUI.

With S/4 HANA, SAP promises a watershed moment in the history of Enterprise IT. “This is the biggest product launch in the last 23 years and perhaps the company's history. With this sort of statement, SAP, through CEO Bill McDermott, is betting immensely on S/4 HANA. Several points stand out in the pitch:

Performance

Plattner pitched the idea of performance, improved by an order of magnitude. Unprecedented technology improvements done through in-memory enables real-time business visualization, as it happens, claims SAP.

It sounds impressive to fuse transactional and analytics capabilities in one single system – ‘system of intelligence’ as coined by SAP. With real-time business decision-making, SAP tries to sell again to the board, and again big ideas.

With that, there is excitement on the partner side, the leading global consultancies chipping in to share their thrill about the product suite launch. How quick the customers will buy in remains to be seen.

Simplicity

Simplicity is the new pitch elevated by SAP to sell the suite. However, that needs to be coupled with the branding – SAP S/4 HANA – not the most digestible branding by the board – rather reminiscent of the early days, with the “R/” editions.

SAP Simple Finance was just the first piece.

SAP proves it is ambitious and still believes in a suite in the cloud. In a way, challenging the status quo where the cloud portfolio becomes fragmented from a marketing and product perspective. Questions arise relative to the branding of stand-alone product categories, i.e. SuccessFactors, Ariba, Concur, etc.

Easy to consume

On mobile and for all lines of business. Here SAP Fiori is taking over the scene coupled with the emphasis on UX/UI. SAP admits in the past it was not good on that end, and that the new suite is going to bring a change of hearts with its customers.

SAP assures that customers will not be left behind when moving to S/4 HANA. And existing customers will carefully watch what is going to happen with present systems that are on maintenance. Last year SAP announced that SAP ERP would be supported until 2025. So the transition phase is important. And for us, there are a number of important questions to be answered:

  • Although Bernd Leuckert said in a sub-sentence that the time of blueprints was over, it is not clear how customers can shift their complex systems to the new S/4 HANA system without disruption.
  • What impact does the migration have on existing IT infrastructure and services contracts, such as outsourcing?
  • Is the SAP ecosystem ready to deliver? How does a secure migration path look like?
  • What does it mean that the time of blueprints is over? Will they be accomplished by new concepts/tools like “guided configuration” or “test your processes”?
  • What impact does the integration of satellite systems have on the pricing model?
  • Will there really be a free choice of databases?
  • Will there be different implementation models? One for S/4 HANA and one for any DB?

Anyway, after a big announcement there are always millions of questions and concerns. And SAP’s announcement was a big one. In the following month, if not years, they will have to give the answers to those questions.