In the land­scape of SAP tech­nol­o­gy solu­tions, SAP S/4HANA Cloud has emerged as both a cen­ter of grav­i­ty and a trans­for­ma­tive force, reshap­ing the way orga­ni­za­tions oper­ate as they shift away from on-premis­es sys­tems and evolve into more intel­li­gent enterprises. 

This dynam­ic, scal­able cloud solu­tion rep­re­sents a par­a­digm shift in enter­prise resource plan­ning (ERP), enabling busi­ness­es to stream­line, dig­i­tize, and ampli­fy oper­a­tions in finance, pro­cure­ment, sales and ser­vice, logis­tics, man­u­fac­tur­ing, asset man­age­ment, prod­uct life­cy­cle man­age­ment, embed­ded ana­lyt­ics, and more.

ASUG recent­ly spoke with Mar­cus Homann, who works for the SAP S/4HANA strat­e­gy team at SAP, and Arpan Shah, head of SAP S/4HANA Cloud prod­uct man­age­ment at SAP. Togeth­er, Homann and Shah are two co-authors of SAP S/4HANA Cloud: An Intro­duc­tion, a new SAP Press publication. 

In con­ver­sa­tion with ASUG, Homann and Shah detailed key process­es of SAP S/4HANA Cloud, addressed com­mon mis­con­cep­tions, dis­cussed the cloud ERP system’s larg­er impact, and iden­ti­fied strate­gic con­sid­er­a­tions for busi­ness­es con­tem­plat­ing or already amid their SAP S/4HANA Cloud migra­tion jour­neys. The co-authors offered valu­able insights into core busi­ness val­ue dri­vers behind the adop­tion of SAP S/4HANA Cloud and the piv­otal role it can play in fos­ter­ing intel­li­gent enterprises. 

This inter­view was con­duct­ed joint­ly with the authors via email and has been edit­ed and con­densed.

Q: As stat­ed in the fore­word, ​“this book pro­vides an overview of SAP S/4HANA Cloud and its role in help­ing orga­ni­za­tions become intel­li­gent enter­pris­es.” Can you briefly expand on how SAP S/4HANA Cloud address­es chal­lenges rel­e­vant to the intel­li­gent enterprise? 

A: The goals of busi­ness­es haven’t changed. Com­pa­nies like to pro­vide the best prod­ucts and ser­vices, deliv­er the best cus­tomer and employ­ee expe­ri­ence, and reduce their costs and risks. What has changed is the speed of change and the lev­el of uncer­tain­ty com­pa­nies face amid grow­ing com­plex­i­ty. This is where intel­li­gent enter­pris­es have an advan­tage; they run agile, sus­tain­able, and inte­grat­ed busi­ness process­es. They also make use of advanced tech­nolo­gies like arti­fi­cial intel­li­gence (AI). 

SAP offers the intel­li­gent suite, which is an inte­grat­ed suite of cloud appli­ca­tions to deal with the var­i­ous aspects of a busi­ness, like enter­prise resource man­age­ment, human cap­i­tal man­age­ment, spend man­age­ment and cus­tomer rela­tion­ship man­age­ment. SAP S/4HANA Cloud is SAP’s cloud ERP solu­tion, which builds the core of SAP’s intel­li­gent suite. As such, SAP S/4HANA Cloud plays a crit­i­cal role in every end-to-end busi­ness process. SAP S/4HANA Cloud also applies SAP’s suite qual­i­ties to solve com­mon chal­lenges in an intel­li­gent enter­prise land­scape, like aligned domain mod­els, an intu­itive and con­sis­tent user expe­ri­ence, or embed­ded and cross-prod­uct analytics. 

Q: For those new to the SAP ecosys­tem, tell us sim­ply: what is SAP S/4HANA Cloud and how do you describe this solu­tion when first intro­duc­ing it? 

A: SAP S/4HANA Cloud is an ERP soft­ware ser­vice, used to plan and man­age the resources of a com­pa­ny — includ­ing its prod­ucts, mate­ri­als, man­u­fac­tur­ing facil­i­ties, finan­cials, and sales orders. In oth­er words: it is a pow­er­ful soft­ware ser­vice which ensures that dif­fer­ent depart­ments across a com­pa­ny can work togeth­er and have access to the same data. SAP S/4HANA being in the cloud means that the soft­ware is oper­at­ed by SAP, and cus­tomers have access to reg­u­lar updates and inno­va­tions. So, cus­tomers don’t have to buy and main­tain their own com­put­er hard­ware and software. 

Q: Can you walk our read­ers through how you struc­tured this book and the think­ing behind that? 

A: The book cov­ers the most impor­tant aspects of SAP S/4HANA Cloud. It starts by intro­duc­ing the solu­tion as the new ERP par­a­digm and illus­trates its main use cas­es and its busi­ness val­ue. There are ded­i­cat­ed chap­ters on intel­li­gent tech­nolo­gies, ana­lyt­ics, and user expe­ri­ence. The biggest chap­ter is about busi­ness capa­bil­i­ties; this gives read­ers an overview of the rich set of func­tion­al­i­ties that SAP S/4HANA Cloud offers to sup­port dif­fer­ent lines of busi­ness with­in a com­pa­ny, along with indus­try-spe­cif­ic capa­bil­i­ties. There is also a chap­ter ded­i­cat­ed to glob­al­iza­tion, to show how SAP S/4HANA Cloud sup­ports local reg­u­la­tions in dif­fer­ent coun­tries where multi­na­tion­al com­pa­nies are oper­at­ing, along with lan­guage sup­port. The chap­ters on exten­si­bil­i­ty and inte­gra­tion describe how SAP S/4HANA Cloud can be enhanced and oper­at­ed in an intel­li­gent enter­prise land­scape. Anoth­er big chap­ter is about the dif­fer­ent phas­es and tool sup­port to man­age the whole life­cy­cle of SAP S/4HANA Cloud. 

Q: As not­ed in the pref­ace, this book is for read­ers unfa­mil­iar with SAP S/4HANA Cloud and for exist­ing users look­ing for a struc­tured intro­duc­tion. What can each sub­set of this tar­get audi­ence expect to get out of your book? 

A: Our inten­tion was to write a book that remains valu­able for a longer time by stay­ing on a con­cept lev­el and not describ­ing every small­er fea­ture in detail. This is help­ful for read­ers who want to get a struc­tured intro­duc­tion and overview of SAP S/4HANA Cloud. If they want to go into details of our described con­cepts, there is fur­ther learn­ing mate­r­i­al avail­able from SAP. We also pro­vide infor­ma­tion on the most impor­tant learn­ing sources from SAP in the last book chap­ter on addi­tion­al learn­ing resources. 

Our book is also valu­able for exist­ing users. Usu­al­ly, exist­ing users have their focus and exper­tise in cer­tain aspects of SAP S/4HANA Cloud. Our book gives them the abil­i­ty to under­stand oth­er aspects of the solu­tion and to improve their under­stand­ing of how every­thing fits together. 

Q: Can you elab­o­rate on the use cas­es out­lined in this book? 

A: Instead of using abstract use cas­es, we focused on con­crete exam­ples of SAP S/4HANA Cloud cus­tomers to describe how real-world com­pa­nies are using SAP S/4HANA Cloud to cre­ate val­ue. Read­ers will find cus­tomer sto­ries demon­strat­ing how to cre­ate busi­ness val­ue with SAP S/4HANA Cloud through their abil­i­ty to react faster to chang­ing mar­ket con­di­tions, increase focus on busi­ness oper­a­tions, enable faster imple­men­ta­tions and roll­outs to sub­sidiaries, and run rein­vent­ed, dig­i­tal processes. 

Q: SAP S/4HANA Cloud has been avail­able for cus­tomers since 2017. Since the release, what has been its biggest impact on the ERP land­scape? What fac­tors have allowed it to be so transformative? 

Tra­di­tion­al ERP sys­tems were bought and oper­at­ed by cus­tomers them­selves. Addi­tion­al­ly, cus­tomers were large­ly able to mod­i­fy the soft­ware. This formed the abil­i­ty to imple­ment almost every require­ment. But it also increased com­plex­i­ty over time and cre­at­ed a big chal­lenge in upgrad­ing the ERP soft­ware. As a result, upgrade projects became cost­ly and a risky endeav­or for these companies. 

SAP S/4HANA Cloud is oper­at­ed by SAP. The soft­ware is also upgrad­ed to the newest SAP release twice a year. Cus­tomers can now focus more on their core busi­ness and less on IT oper­a­tions. SAP S/4HANA Cloud comes with a rich set of out-of-the-box stan­dard busi­ness process­es, which makes imple­men­ta­tion projects faster and less com­plex. How­ev­er, as there will be always the need to extend the solu­tion, SAP S/4HANA comes with a pow­er­ful exten­si­bil­i­ty con­cept. These fac­tors togeth­er are big levers to trans­form the IT land­scape of companies. 

Q: What have been the biggest devel­op­ments in cloud ERP trans­for­ma­tion since SAP S/4HANA Cloud was first intro­duced? How do you address those in your book? 

A: It is dif­fi­cult to select only one or two exam­ples. One we can see clear­ly is the trend of using intel­li­gent tech­nolo­gies to sup­port busi­ness process­es and deci­sion-mak­ing. The tech­nolo­gies relat­ed to this trend become bet­ter every day and can be lever­aged to auto­mate cer­tain activ­i­ties or bring spe­cif­ic busi­ness sit­u­a­tions to the atten­tion of the right user, along with rec­om­men­da­tions on how to deal with these sit­u­a­tions. The book con­tains a ded­i­cat­ed chap­ter on intel­li­gent tech­nolo­gies, where read­ers can learn about intel­li­gent tech­nolo­gies avail­able in SAP S/4HANA Cloud and what they are able to do. 

Anoth­er big devel­op­ment in cloud ERP trans­for­ma­tion has been the direc­tion towards a com­pos­able ERP archi­tec­ture. Instead of hav­ing one big ERP sys­tem in this archi­tec­ture, a small­er ERP core is sur­round­ed by cloud solu­tions for spe­cif­ic lines of busi­ness or indus­try capa­bil­i­ties. This archi­tec­ture allows users to com­pose the appli­ca­tions required to imple­ment nec­es­sary busi­ness process­es and out­comes. This con­cept and its evo­lu­tion are described in more detail in the intro­duc­to­ry chap­ter of our book. 

Q: A key sec­tion of your book address­es plan­ning the next steps for your project. What rec­om­men­da­tions can you pro­vide to cus­tomers at dif­fer­ent stages of their jour­neys? What can cus­tomers who have not start­ed their SAP S/4HANA Cloud jour­ney do to prepare? 

A: We have a com­pre­hen­sive chap­ter on life­cy­cle man­age­ment and a sec­tion on crit­i­cal suc­cess fac­tors. I’ll high­light two impor­tant aspects here. One is our rec­om­men­da­tion to fol­low the SAP Acti­vate method­ol­o­gy, which is struc­tured in six phas­es, from dis­cov­ery to run. All phas­es con­tain use­ful infor­ma­tion, check­lists, and pro­pos­als for tool sup­port. SAP Acti­vate has been enhanced over sev­er­al years and incor­po­rates best prac­tices and expe­ri­ence from many SAP S/4HANA Cloud imple­men­ta­tion projects. 

Exist­ing cus­tomers can set up a ded­i­cat­ed team to inves­ti­gate and adopt new fea­tures in prepa­ra­tion for sys­tem changes. SAP S/4HANA Cloud comes with reg­u­lar inno­va­tion cycles and release upgrades, which include new func­tion­al­i­ties and some­times also sys­tem changes, that a cus­tomer needs to pre­pare for. Doing so requires a ded­i­cat­ed team that can ana­lyze which aspects are inter­est­ing and rel­e­vant for the cus­tomer’s sys­tem, includ­ing the required prepa­ra­tion activ­i­ties before sys­tem upgrades. 

Q: Many ASUG mem­bers are cur­rent­ly con­sid­er­ing cloud trans­for­ma­tion, but that’s a longer jour­ney for some than oth­ers. What dif­fi­cul­ties do those cus­tomers run­ning on-premis­es envi­ron­ments face in mov­ing to the cloud? What advice would you give these cus­tomers work­ing to mod­ern­ize lega­cy sys­tems and move toward the cloud? 

A: We agree that the start­ing points and jour­neys cus­tomers have while mov­ing to the cloud are all dif­fer­ent. SAP is acknowl­edg­ing this by pro­vid­ing sup­port for these dif­fer­ent jour­neys. We rec­om­mend that you con­sid­er the sup­port of an SAP S/4HANA Cloud part­ner. SAP has a huge ecosys­tem of expe­ri­enced, knowl­edge­able imple­men­ta­tion part­ners for SAP S/4HANA Cloud. Lever­ag­ing their exper­tise usu­al­ly accel­er­ates the jour­ney to cloud ERP and sig­nif­i­cant­ly reduces the risk of delays or oth­er chal­lenges of imple­men­ta­tion projects. We also rec­om­mend using one of SAP’s com­mer­cial pack­ages: RISE with SAP or GROW with SAP, both of which are tai­lored pack­ages to sup­port cus­tomers’ cloud trans­for­ma­tions from dif­fer­ent start­ing points. 

Q: As read­ers think about the intel­li­gent enter­prise and its expand­ed ana­lyt­ics capa­bil­i­ties, what do they need to be aware of when under­stand­ing the full busi­ness val­ue of SAP S/4HANA Cloud? 

A: From an SAP S/4HANA Cloud point of view, we need to dis­tin­guish between embed­ded ana­lyt­ics and enter­prise ana­lyt­ics. Embed­ded ana­lyt­ics deliv­ers SAP S/4HANA Cloud-spe­cif­ic capa­bil­i­ties. These capa­bil­i­ties sup­port dif­fer­ent ana­lyt­ics use cas­es with one data­base, as well as ana­lyt­ics on the UI lev­el, and are embed­ded into busi­ness process­es. Enter­prise ana­lyt­ics refers to ana­lyt­ics on the lev­el of the intel­li­gent enter­prise, includ­ing cross-appli­ca­tion ana­lyt­ics, analy­sis of his­tor­i­cal data, or plan­ning based on self-defined data struc­tures. Enter­prise ana­lyt­ics requires ded­i­cat­ed ana­lyt­ics appli­ca­tions like SAP Ana­lyt­ics Cloud or SAP Data Ware­house Cloud. 

Q: Are there any com­mon mis­con­cep­tions about cloud ERP or cloud trans­for­ma­tion that you address and clar­i­fy with­in this book? 

A: One com­mon mis­con­cep­tion involves com­par­i­son between SAP S/4HANA Cloud and for­mer SAP on-premis­es ERP solu­tions. SAP S/4HANA Cloud is more stan­dard­ized in its core and pro­vides dif­fer­ent exten­si­bil­i­ty con­cepts than on-premis­es solu­tions. SAP doesn’t intend to rebuild all fea­tures in SAP S/4HANA Cloud to be exact­ly as they were on for­mer ver­sions of on-premis­es ERP. On the oth­er hand, cus­tomers can expect addi­tion­al busi­ness capa­bil­i­ties, rein­vent­ed busi­ness process­es with state-of-the art tech­nol­o­gy, and improved user experience. 

Anoth­er com­mon mis­con­cep­tion is that SAP S/4HANA Cloud is just the next ver­sion of SAP ERP soft­ware and that cus­tomers can deal with it as they deal with on-premis­es soft­ware. Cloud ERP suc­cess requires an inves­ti­ga­tion of exist­ing busi­ness process­es. Cus­tomers should ask them­selves if they real­ly need all process vari­ants and excep­tions or if they can sim­pli­fy and adhere to the SAP S/4HANA Cloud stan­dards. While exten­si­bil­i­ty is in place, it should be used care­ful­ly and main­ly for dif­fer­en­ti­at­ing aspects, which cre­ate com­pet­i­tive advantage. 

Q: What do you want read­ers to learn and do dif­fer­ent­ly hav­ing read this book? 

A: Our main goal was to give a struc­tured intro­duc­tion and com­pre­hen­sive overview of SAP S/4HANA Cloud, along with some rec­om­men­da­tions. We want­ed to also describe what has changed in the jour­ney from SAP on-premis­es ERP sys­tems to SAP S/4HANA Cloud, and to explain the rea­sons for and busi­ness ben­e­fits behind these changes. If read­ers under­stand the dri­ving forces behind cloud ERP trans­for­ma­tion, they are more like­ly to be open and supportive. 

Q: Do you have any part­ing thoughts for the ASUG community? 

A: We would like to thank the ASUG com­mu­ni­ty for their great col­lab­o­ra­tion over the last few years. We know that the jour­ney towards cloud ERP comes with effort and presents chal­lenges. There­fore, we are very hap­py to receive con­stant feed­back from the ASUG com­mu­ni­ty on what works well and what can be improved. This feed­back gives us insights into the cus­tomer com­mu­ni­ty that we need to con­stant­ly improve SAP S/HANA Cloud and its relat­ed offerings. 

“SAP S/4HANA Cloud: An Intro­duc­tion” is now avail­able from SAP Press. ​“SAP S/4HANA Cloud: An Intro­duc­tion” was addi­tion­al­ly co-authored by Thomas Sauer­es­sig, a mem­ber of the Exec­u­tive Board of SAP SE who leads the SAP prod­uct engi­neer­ing board area and has glob­al respon­si­bil­i­ty for all busi­ness soft­ware appli­ca­tions; Jan Gilg, pres­i­dent of SAP S/4HANA; Uwe Grigoleit, glob­al­ly respon­si­ble for end-to-end go-to-mar­ket strat­e­gy and solu­tion man­age­ment of cloud and on-premis­es SAP S/4HANA; and Almer Pod­bi­canin, head of SAP S/4HANA port­fo­lio management.