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.

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