SAP S/4HANA is no longer the new kid on the block when it comes to SAP innovations, but it’s certainly the most popular, if not the most important. SAP customers know by now that maintenance support for SAP ECC will no longer be available after 2025. And most have heard or read that globally, 10,900 customers have purchased SAP S/4HANA, but only 3,000 are live.
You’ve probably also heard that SAP S/4HANA is the pathway to an intelligent enterprise, and are asking what that means. In May, the SAP S/4HANA Cloud 1905 release introduced more than 100 out-of-the-box artificial intelligence (AI) and robotic process automation (RPA) capabilities across finance, manufacturing, sourcing and procurement, service management, professional services, enterprise portfolio and project management, sales and distribution, and product compliance. Going forward, SAP plans to release prebuilt skills and bots specifically for SAP S/4HANA Cloud on a monthly basis with the goal of helping organizations automate specific processes and improve productivity.
ASUG News sat down with Sven Denecken, SVP, head of production management and co-innovation for SAP S/4HANA and Jan Gilg, SVP and head of SAP S/4HANA to discuss the features, benefits, and road maps to SAP’s new intelligent ERP system.
ASUG News: Which features or benefits within SAP S/4HANA are you most excited about for customers?
Jan: We are rethinking business processes by leveraging intelligent technologies, which makes it really exciting. Our focus for the next couple of years will be to continue to build that intelligent technology in the product. It’s not just from a functional perspective with things like machine learning, RPA, or natural language, but also through situational frameworks for certain business events where we combine what we already know with what we learn from our customers and partners and create a framework for certain business events. For instance, if you have a cancelled order come in after the MRP run has already been scheduled, it’s going to try to fulfill a demand that’s not there anymore. So, a situational framework that could realize this and stop the MRP run would create business intelligence.
We have four-year road maps for both on-premise and cloud. We just launched a new tool at SAPPHIRE NOW and ASUG Annual Conference called Digital Road Maps, which combines all the disparate attempts to get an industry’s line of business with different formats of road maps into one digital asset. This is important because it is end-to-end process based, which enables better integration of certain assets. But it’s also value based, where we are learning from the live customers on SAP S/4HANA now and bringing that back into the road maps.
ASUG News: What’s new for SAP S/4HANA in the cloud? What would you say to potential customers who are concerned about the product maturity of the cloud version of SAP S/4HANA?
Jan: One of the key benefits of the public cloud is that we standardized business processes. So, you get much less variability in process, and you also get a shorter implementation time. We have examples where customers go live in 12 weeks. Less variability, however, means you must be willing to standardize your business processes. If you are, then this is a great product for you.
If you want to carry over all your customizations and modifications, then the public cloud isn’t the right solution. There are however other options where you can leverage infrastructure as a service and get rid of a lot of the infrastructure across private cloud deployments.
The other thing to keep in mind is that new capabilities are always available on the cloud first. We know that we do have work to do on functionality, but we are also focusing on very specific industries where we want to have a complete offering. So, for example in an industry like professional services, we don’t have a whole lot of functional gaps there anymore. But if you are in a very complex industry with very complex requirements, we are not there yet. We’re also not trying to go there now because we know that the gaps are too big. These types of industry solutions are further out on the road map.
Sven: I’ll add that the question of maturity has evolved. We’re coming from a time where the cloud discussion was about total cost of ownership to now companies having much more educated discussions about innovation and standardization. The discussion is around whether the cloud fits within your business goals. What differentiates us is that we happen to believe that the cloud doesn’t fit everywhere. SAP doesn’t force the customer on the journey, it picks them up where they are. If they want to put their system on an infrastructure as a service as a first step, that’s good. If they want to take a certain workload to the cloud with the most standardization but fast innovation, that’s also good. But you have those options.
ASUG News: Many ASUG members are still building their business cases for moving to SAP S/4HANA. What key areas of focus or potential ROI would you encourage them to include? What benefits can they expect to see first?
Sven: One very clear recipe is to start with a discussion around business goals as outlined in the SAP S/4HANA Move program. What I personally always advise is don’t look at it as technical project like we’ve done in the past. It is a business transformation for getting better outcomes. And that can be easily calculated in terms of faster analytics, better performance, scalability, standardization, and much more. SAP S/4HANA doesn’t work in isolation. It’s part of the journey to an intelligent enterprise.
Jan: Another area to focus on is the flexibility and speed SAP S/4HANA can offer when you want to change a business model. Even SAP has had to do this when we went from selling licenses to selling subscriptions and usage-based pricing. Changing a business model can turn into a year-long IT project if not longer. But SAP S/4HANA will give you much more flexibility, with a faster turnaround.
ASUG News: Are you seeing any significant pushback in terms of change management from businesses that have gone from customized to standard processes?
Sven: There are two things that we always keep in the DNA of SAP S/4HANA. Number one is the intact data definition layer. So, there’s a lot of compatibility going forward. While we’ve changed the plumbing completely underneath, we didn’t change the data definition. In instances where we did, there’s a very clear path to get there. Second, when it comes to interfaces, I think that definitely takes change management effort. That said, if you misused the body before with a lot of customization, you’ll have that pain with every innovation cycle. I think it’s a good time to tidy that up and to go to a public API interface. If you do, then you’re out of the hole that you dug yourself into.
Jan: Generally speaking, that goes back to this not just being a technical upgrade. You should look into things like master data cleanup, data in general, as well as interfaces. It’s the foundation on which then you start touching the business processes. And then you can begin to think about eliminating processes and apps you don’t need anymore.
ASUG News: What do you want ASUG members to know about SAP S/4HANA?
Sven: Look at the customers who have moved to SAP S/4HANA and have shared their experience while everaging the technology. Think about what would be possible.
Jan: SAP offers a lot of tools that can help you. Before you get started, be clear on what you want to achieve from a business perspective. Take this opportunity to make changes on the business side and do a transformation project. That’s usually the driver anyway. And then, look into the technical side of the house.
The migration tools SAP offers are getting better year after year, and we are using technology such as machine learning to make them even better. Those tools evolve and get better. I think that sometimes customers get stuck with what they heard two years ago and think they’re not ready, or this will take too long, or that this isn’t applicable to them. It’s a very different story today than it was two or three years ago.
Learn how SAP S/4HANA becomes intelligent and changes user engagement to help you reimagine your business. Register for the “SAP S/4HANA: Road Map, Overview, and Strategy for SAP S/4HANA” webcast on demand.