Article Written By: by Andreas Schmitz
What is SAP S/4HANA? 13 Questions Answered
What’s the roadmap for SAP S/4HANA? How much does it cost? Which modules will be offered next?
Uwe Grigoleit, Global Head of Business Development Suite on SAP HANA and SAP HANA applications, answers the most pressing questions about the next-generation business suite.
1. What is the business value of SAP S/4HANA for customers? What’s the payback period? And who is likely to benefit most?
Written natively for the SAP HANA platform, SAP S/4HANA is an entirely new generation of SAP Business Suite that is characterized by simplifications, massively increased efficiency, and compelling features such as planning and simulation options in many conventional transactions.
SAP S/4HANA signals a move away from the transactional system that merely records data toward giving end users active decision support in real time that is based on data from both internal and external sources.
We are currently in the process of developing a business value calculator for SAP S/4HANA that will drill down to quantify the benefits at the level of individual solutions. In SAP Business Suite on SAP HANA, customers already have the option of calculating business cases enabled by TCO savings and optimizations. These calculations are equally valid for SAP S/4HANA. But the simplifications created by SAP S/4HANA bring other benefits too – which the business value calculator will take into account – such as the use of new user interfaces, reduced data volume, greater flexibility, and higher throughput. Finance departments, for example, will profit from more efficient shared services and accelerated financial closing.
2. How long does an SAP S/4HANA implementation take?
It’s obviously very hard to generalize, but we do have reliable empirical values to go on: 75% of customers that have migrated their existing SAP Business Suite on HANA as the first major step in moving to SAP S/4HANA have done so within six months. That’s a very good result for a migration to a new platform.
Some large enterprises are opting for greenfield projects – seeing the technological innovations as an opportunity to completely rebuild their ERP landscapes from the ground up. Brownfield projects are also an option: In this approach, the customer leaves its IT landscape intact but adopts the new technology to enrich and enhance it. Greenfield and brownfield projects naturally take longer – sometimes even several years. And migrating to SAP S/4HANA is only one part of such a project.
3. Does SAP offer programs that simplify the move to SAP S/4HANA?
Yes, and we attach great importance to providing comprehensive support for our customers in this respect. Specifically, we offer SAP Rapid Deployment solutions that enable a fast migration to the SAP HANA platform and thus also to SAP Simple Finance. These pre-defined implementation packages are delivered by SAP or by our partners and even enable fixed-price implementations in some cases.
4. How much experience do potential integration partners have?
Our integration partners are of course working with the rapid-deployment solutions to some extent. And our service partners already have broad experience of implementing SAP Business Suite on SAP HANA for our customers. In fact, over 60% of implementations are performed by partners and integration partners, not by SAP. We operate roll out programs to inform and educate our partners about all of our new solutions. And our Global Partner Organization (GPO) holds regular “enablement sessions” at which it brings partners up to speed on the new technologies and explains to them in detail how SAP S/4HANA will impact their work.
5. Which skillsets are required?
In most cases, it’s the implementation partner that handles the project, so customers don’t really need to get bogged down in the details. However, more information is available at SCN, SAP’s Community Network. Both, partners and customers can refer to.
6. Is it possible to migrate company-specific customizations?
In principle, yes. When we developed our solutions, we took particular care to ensure that they would be “backwards-compatible.” In other words, the customer can keep customizations and continue to use them after the migration. However, this does not always apply to modifications. Take the analogy of a house and imagine that the customer has not only added a balcony but has also modified the building too. In this case, the function of the house may be affected, whereas the “balconies” will be fine.
7. What are the requirements for moving to SAP S/4HANA?
The initial path is to move to SAP Business Suite on SAP HANA and then to implement packages that contain the simplifications. Currently, these come in the form of SAP Simple Finance, though SAP Simple Logistics is slated for release soon and further simplifications will follow in 2015.
8. What is a “system-driven” implementation?
We want to radically simplify the implementation of SAP S/4HANA so that customers enjoy rapid success and payback. This is particularly relevant in the cloud, of course, where customers expect to deploy a preconfigured system. SAP therefore provides “guided configuration.” This means that customers no longer define parameters in tables in the way that they are used to doing in ERP systems. Customizing is therefore no longer a manual task. Instead, all customers will need to do in the future is answer a series of questions: The system will then configure itself.
9. How “new” is the data model really?
Today, just as in the past, a conventional financial document is stored in one or two tables. However, in the past, aggregates and indexes were required to map the various views of the document. In the new architecture, these aggregates and indexes are obsolete.
Our aim has been to shrink and simplify the underlying data structures, because an in-memory database works best with wide tables. Tables that used to be nested are now compressed. Fundamental data structures that determine what a financial, material transaction, or inventory management document look like remain the same. So we have, in fact, left the document pretty much as it is, which makes it easier for the customer to move from a conventional ERP system to the new technology. A new data structure would leave the customer no option but to perform a full migration. In terms of effort, that’s comparable with implementing a new system.
From the customer perspective, the path we have chosen is simpler because it merely involves an upgrade to a new system. In a nutshell: The “old” data model was fundamentally okay. And we can achieve so much with a slightly adapted data model that we don’t see any reason to force customers into the disruptive process of switching to a completely new data model.
10. SAP Fiori is mentioned a great deal, but SAP Screen Personas doesn’t feature in the context of SAP S/4HANA. Why is that?
SAP Screen Personas doesn’t play a dominant role because, in the context of SAP S/4HANA, we regard it as a transitional technology that allows us to make the SAP GUI look like SAP Fiori in terms of its layout and haptic qualities. Users don’t necessarily see the difference.
Our strategy direction is based on SAP Fiori because this technology allows us not only to change the layout but also to switch from a functional or transactional operational model to a completely role-oriented one. Bringing all of our transactions over to the new technology is obviously a major undertaking for us. It also means effort for the customer in training users in the new technology, although we anticipate that the training effort for SAP Fiori will be low. That’s why we’re creating a transitional phase.
11. Which SAP S/4HANA applications are available right now? Is it just SAP Simple Finance? What’s the difference between the cloud and on-premise offerings?
If I implement SAP S/4HANA on premise, I’m technically implementing SAP Business Suite on SAP HANA and deploying the “exchange innovation” for SAP Simple Finance. But that’s just the first step.
SAP will continue to deliver additional exchange innovations that replace the existing SAP Business Suite code with the new SAP S/4HANA code. At the moment, the customer receives the code for the new accounting solution. We plan to ship the code for SAP Simple Logistics at the end of the year and further new code in subsequent years. By the time we reach the end of this journey, we will have incrementally switched the customer’s entire system without subjecting it to the upheaval of a big-bang migration.
The situation is different if the customer opts to deploy SAP S/4HANA in the cloud. In this case, the customer gets the entire solution at one go. We plan to release a public cloud version at the end of the first quarter of 2015 and a version for managed cloud in the second quarter.
12. What does SAP S/4HANA cost? Is there a charge for customers who already deploy SAP Business Suite?
SAP S/4HANA is a new product so it is not free of charge for SAP Business Suite users. However, we are running a license promotion until the end of the third quarter of this year. Customers who have licensed the SAP HANA platform for SAP Business Suite – that’s currently more than 2,000 – are eligible to upgrade to SAP S/4HANA licenses at no charge. We’ve already signed our first contracts with customers above and beyond our pilot projects.
13. What’s the roadmap? Which releases will appear next?
SAP S/4HANA is available today for on-premise customers. The current offering, SAP Simple Finance, gives customer a simplified finance system. The next major group of simplifications we’re addressing and planning to deliver is in logistics. These include simpler inventory management and valuation, along with simplifications in supply chain management, notably demand planning. Logistics involves some of the most complicated ERP processes of all, but this is the area in which customer demand is strongest. One of the benefits they’re looking for is higher throughput.
Once we’ve delivered both SAP Simple Finance and SAP Simple Logistics, we’ll have covered most of the functions of an ERP system. In other words, we’ll essentially have simplified processes at the core. We’re planning to simplify further elements, such as the project system, quality management, and sales and distribution functions in 2016.
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