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SAP HANA Business Case Realities – demystifying the SAP S/4 HANA Migration
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SUMMARY: You can’t greenlight a SAP HANA project without a business case. That means anticipating the impact of HANAin any kind of business, including non-profit organizations. To do that, a closer look at S/4 HANA migrations is in order. if you have business a business and you wanto to reach more people check the TikTok engagement for business marketing.
In part one of this piece (Pondering SAP S/4 HANA business case realities), I expressed surprise that HANA business cases don’t typically include the business benefits HANA can achieve once in place (e.g. new predictive scenarios, real-time inventory controls for startups and SMEs etc). To better understand why this is, a closer look at S/4 HANA migrations is needed.
To frame this issue, consider these views from HANA expert Kevin Reilly, who is now working closely with ASUG customers around S/4 HANA education. Prior to becoming independent, Reilly built a HANA business case as the CIO of a convenience store distribution firm. For Reilly, it makes sense to start the HANA business case from a technical/TCO angle:
You have to start from the place where you have strength. For most CIO’s, that’s aiming at the lower TCO number. If I can take my ECC environment, and all the hardware that runs it; and my CRM environment, and all the hardware that runs it; and my BW environment, and all the hardware that runs it; and migrate to one set of hardware that all three of them can run on, that’s a solid win. And you can build that into your normal hardware refresh cycle.
Once HANA is in place, Reilly advocates shifting to business-focused projects:
When the Controller says to the CFO, ‘Hey, you know, this report used to take three days. It’s now running in about 15 minutes. What did IT do?’ That’s the door to open a broader business conversation. Once you’re in HANA, you should be able to start looking at things that are related to speed. ‘What if I could close faster?’ ‘What if I could generate work orders faster?’ Those conversations always have value.
The TCO approach Reilly recommends for the initial HANA business case was not exactly the dreamy IT-business collaboration I had in mind, but in his experience, that’s the practical basis that gets these projects live. Once they are live, the predictive capabilities of HANA can be sandboxed and new scenarios tested. Winners then become add-on projects, with new business cases to support them.
Streamlining the chores of S/4 HANA migrations will help the business case
After the show, I had a phone debate with John Appleby of Bluefin Solutions to see how his views lined up. Appleby had just delivered a webinar on S/4 HANA migrations, and he posted the slides for us as well.
Appleby hates it when I do this, because it’s a gross simplification, but these are the basic migration steps to S/4 HANA for existing customers:
1. Move to ERP 6.0, Enhancement Pack 7 (if you’re not on EhP7)
2. Unicode (if not on Unicode already)
3. Move to Suite on HANA
4. Apply Exchange Extensions (similar tech to Enhancement Packs)
5. Activate S/4 HANA functionality
Appleby prefers to describe the migration this way:
1. Getting the house in order – prepping for the move, which includes housekeeping, data reduction, custom code management, and finalizing test management procedures (“housekeeping”, as Appleby defines it, can be pretty impactful: cleaning and/or removing old tables can save 100K in capex if, for example, 1TB of data is purged across multiple systems).
2. Move to Suite on HANA – in other words, move to EhP7 (which might entail a database upgrade also), then Unicode if you’re not already, then Suite on HANA migration. Appleby points out that in many cases, these three steps can be done together using the Database Migration Option of SAP HANA (DMO, reducing cost and testing overhead
3. Activate S/4 HANA – largely the activation of exchange extensions, which will affect table customizations, interfaces etc. Appleby predicts late this year there will be a way to move directly to S/4 HANA from prior SAP releases, effectively bundling steps 2 and 3.
What can be concluded from these steps?
- Clearly, the move to S/4 HANA is pretty intensive from an IT standpoint – depending on the complexity of your IT environment, your EhP and support pack level, etc. Speaking only about the move to Enhancement Pack 7, Appleby says, “This is a fairly significant upgrade and shouldn’t be underestimated.”
- Though these steps read like a technical project, business users are heavily implicatedthrough cycles of user acceptance/QA testing – one more reason why a strong test management plan must be implemented.
But I’ve taken these conclusions further:
For existing SAP customers, it’s much easier to move to S/4 HANA when:
- you’re already running a modern version of SAP ERP, and
- you have a strong test management plan in place
Therefore, SAP needs to:
- provide better test automation tools, and support/encourage third party testing solutions that many customers have found invaluable.
- get as many customers as possible onto the latest Enhancement Packs, even if it means subsidizing some of the costs of doing so. That could mean helping with test management strategy and/or building a case for modernization, whether it’s HANA, Fiori UIs, or easier web integrations.
For the most part, Appleby agreed with these conclusions. I asked him what his ideal prospect is – he reports the vast majority of Bluefin’s Suite on HANA and S/4 prospects are indeed running EhP 6 or EhP 7. That should be something of a wake-up call to SAP.
Customers on EhP 6 or EhP7 comprise a decent portion of the SAP ERP customer base, say 30 percent or so – but there’s plenty of customers not at that stage yet. If SAP wants those customers on board the HANA train, it needs to act.
Appleby points out that SAP upgrade and HANA tooling, including Solution Manager, has gotten much better (he has a slide in his deck entitled, “learn to love Solution Manager.”) However, he conceded SAP could be doing a lot more with test automation – an area where some third party solutions excel.
As he put it, “SAP’s tooling is not state of the art, and that’s a mistake. It’s workable, it moves things forward. But why haven’t they done more with test automation?”
Final conclusions (for now)
We’ve come a long way from BW on HANA as a parallel database. Running a business on the S/4 HANA platform, including HANA Cloud Platform extensions and startup applications, is a far more compelling proposition – one that will put IT and business executives in the same room, sooner or later, to rethink what IT is now capable of.
Just on the startup side alone, ASUG has now entered a partnership with the SAP Startup Forumto help in bringing more exposure to the growing number of validated HANA startup apps via the Customer Startup Network. These apps can bolster the business case with immediate industry solutions that don’t require extensive development.
But this opportunity to change the IT/business conversation will get bogged down if SAP doesn’t take further action to bolster the business case, from both a technical automation and ROI perspective:
- make it financially and technical easy for customers to get on EhP 6 or 7, as per the test automation recommendations I’ve made above.
- flesh out the S/4 HANA cloud and on-premises roadmaps, including a “business benefits” roadmap.
- help companies move beyond a TCO-focused business case by highlighting the growing number of projects that are extending into predictive and business growth scenarios.
- continue the transparent dialogue with customers/partners we saw onstage in Orlando, and that many of us experienced during the show itself.
I didn’t cover cloud scenarios for S/4 HANA here. SAP is continuing to refine how those scenarios might look, but it’s fair to say that a “managed cloud” or public cloud use case would change how the technical/ROI aspects of this are calculated. I’d welcome more content from SAP on these points. In the meantime, I refer you to Dick Hirsch’s Whiteboarding SAP S/4 HANA.
I also didn’t cover the “net new” S/4 HANA business case for new customers in this blog post, though I did interview an interesting net new at Sapphire Now, involving a customer that moved from Quickbooks to S/4 HANA. I’m not ready to comment on the “net new” aspects broadly yet, so let’s call it a wrap for now.
Disclosure: Some of the HANA business case research I did for this project came under the auspices of a client project with Bluefin Solutions. The end result, an SAP HANA business case book by John Appleby which I edited, will be released on ebook shortly. SAP paid for the bulk of my travel expenses to Sapphire Now, and is a diginomica premier partner as of this writing. Thanks go to ASUG, in particular CEO Geoff Scott, for his support of the the HANA business case projects, and for providing relevant introductions, including Kevin Reilly, quoted in this installment
Jon Reed
What is SAP S/4HANA? 13 Questions Answered
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.
– See more at: http://www.news-sap.com/what-is-sap-s4hana-13-questions-answered/#sthash.bEt0Z84N.dpuf
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