With articles throughout 2022 that featured ASUG members still considering, yet-to-begin, amid, wrapping up, or at some other point along their SAP S/4HANA journeys, ASUG wanted to tap SAP leadership for platform perspectives as the year was ending, and 2023 loomed largely.
In a recent interview, Eric van Rossum, Chief Marketing and Solutions Officer, SAP Cloud ERP, talked about progress and opportunities over the year, what he hears from customers about their challenges and needs, and what's on the SAP S/4HANA Cloud horizon.
This is an edited version of the full interview.
Question: Looking back, what can you catalog as the major achievements and milestones for SAP S/4HANA Cloud® in 2022?
Answer: S/4HANA adoption is robust—with more than 20,000 customers and growing—across both existing and net-new ERP customers coming into the SAP family.
On top of that is RISE with SAP, enabling customers to get on the cloud journey with S/4HANA Cloud. We're coming up on the two-year anniversary of RISE with SAP in January 2023, and already, nearly 2,500 customers are running. Over 100 SAP partner data centers around the globe have selected RISE with SAP to transform their business processes and IT landscapes.
So, the momentum for SAP S/4HANA Cloud is continuing to grow, as is the transformation journey we're delivering for customers with RISE with SAP.
Q: When you talk to and hear from customers, what do you hear about the business and technology challenges that SAP S/4HANA Cloud helps them tackle today?
A: I like that you said "business challenges" because, ultimately, it's about business outcomes, and technology should be an enabler of a customer's desired business outcomes. When we're talking about a move, for example, from SAP ECC to SAP S/4HANA Cloud, that technology transformation must be driven by some value aligned to those outcomes.
We articulate the value of S/4HANA Cloud by putting it in terms of the three areas arguably most important to every business today: top line, bottom line, and the green line.
On the top line, SAP S/4HANA Cloud supports new business models and enables shifts into new markets. Industry lines are blurring and giving you an example, one of the biggest things we see is our customers moving to subscription- and usage-based models. That impacts the basic quote-to-cash process because you're no longer just selling a physical product. You might be selling a service or subscription to complement the product, the actual pricing, based on some usage or consumption metric.
Regarding the bottom line, we discuss how S/4HANA Cloud can help you take costs out of business. This is primarily about leveraging proven business processes for your industry. But this is also where we discuss process automation opportunities with SAP Signavio. Signavio can help customers identify opportunities where human intervention can be automated or where there are breaks in a process, together with the low code-no code capabilities of SAP Build, which was announced at TechEd, building RPA bots to take cost out.
Sustainability has become a business imperative, so customers need to have a handle on their green line. SAP has long been the de facto system of record for finance, and we want to be the system of record for sustainability as well. With S/4HANA Cloud, customers can adapt operations and processes to reduce emissions and waste consistently, reducing environmental impact, as well as proactively manage regulatory requirements with company-wide controls and in-depth reporting.
Q: Can you look back and say there are some pieces of unfinished business with SAP S/4HANA Cloud?
A: There is always unfinished business! But one thing comes to mind. I've been with SAP for 23 years and started as a consultant. At that time, you would go to a customer with a blank sheet of paper and ask, "What do you want?" Then you would work for two years and implement it and never want to touch that SAP system again until you upgrade seven years down the road.
Our unfinished business is continuing to help customers understand how the cloud has changed this dynamic by continuing to help them understand and adopt a cloud mindset regarding ERP.
Now, cloud mindset. That's a bit vague. To make it more concrete, I see it as boiling down to a few key shifts in thinking. The "blank sheet of paper" approach I mentioned, which we had in the past, has flipped. We're no longer looking to ERP to be everything and anything. Instead, we're taking a fit-to-standard approach where ERP runs your industry-standard, end-to-end processes. Then, if you need added capabilities, you leverage a platform like SAP Business Technology Platform to create the custom apps and extensions you need. This allows you to keep your core ERP clean and standardized.
Cloud is also a journey, not a destination. Another catchy tagline, but it's a fundamental mindset shift we want customers to understand. With ERP projects in the past, you'd bake everything you need into a big, monolithic ERP system—and then avoid touching it as much as possible. That's "destination" thinking. Once it's implemented, you've arrived, and unless you want to mess with the code and customize, your capabilities are fixed.
Cloud ERP, on the other hand, positions you to take advantage of the latest innovations from SAP as soon as they're released. In that sense, it's an ongoing journey of refining your processes and capabilities to meet the needs of whatever the current business environment is throwing at you.
It's a new way of thinking about ERP, and it's a primary reason why we launched RISE with SAP: to meet our customers wherever they are on their ERP journey and help them shift to the cloud. No other ERP provider has an offering like RISE with SAP, and that's why I'm pleased to see that it continues to resonate with customers.
Q: We wanted to understand, from your perspective, what made the difference in S/4HANA Cloud growth and awareness among the North American customer base in 2022?
A: The growth in North America shows we're making significant inroads with driving awareness for both S/4HANA Cloud and RISE with SAP, but we can always do a better job. In particular, we could be clearer in articulating how these two fit together. That's one thing I've heard from customers: there's been some confusion about that.
So, to anchor us, I want to talk about how S/4HANA Cloud fits within RISE with SAP. RISE with SAP is a comprehensive solution of products and services from SAP and our partners to drive business transformation. The heart of RISE, the core product, is SAP S/4HANA Cloud. There is no RISE without S/4HANA Cloud. But RISE also has other components, including SAP Business Technology Platform (BTP) and SAP Signavio. This trio of S/4HANA Cloud, BTP, and Signavio is critical, especially for existing SAP customers. Let me explain why.
Anytime you talk about ERP transformation, it starts with business processes. This is particularly important for existing SAP customers who want to move to cloud ERP but don't want to give up their IP and investments in their existing ERP system. How do they decide what to retain and where to leverage a standard process? This is where SAP Signavio adds incredible value. Signavio allows customers to compare their existing processes to industry standard processes to accurately assess the feasibility of moving to standard. With this view, customers can also identify process inefficiencies and opportunities to replace manual work with automation.
This then plays nicely into the capabilities of BTP. Once you understand your current business processes and how they stack up against the industry standard, you can make informed decisions about the functionality you want to keep in ERP and what you want to move to BTP.
Q: As you reflected on 2022, is there one element, one milestone, or one achievement that you're most proud of?
A: I would come back to RISE with SAP. I'm proud of not only the incredible adoption we've seen, which is nice of course, but also the RISE with SAP solution itself: all the products and services we've put together in a single offering to help customers transform their businesses for the cloud.
The tagline for RISE with SAP is "Driving business innovation together." To us at SAP, that's not an empty promise. Successful cloud transformation is a guided journey, and we're excited to partner with customers and see them succeed.
Q: Let's talk about S/4HANA Cloud and RISE with SAP in 2023… Any additions, enhancements, or evolutions?
A: That builds nicely on your last question. The core components of RISE with SAP will not change, but we're constantly looking to optimize the solution to ensure we're giving customers the products and services they need for successful cloud transformation.
Q: With SAP S/4HANA Cloud, what have been the strongest industries with adoption, and are those industries that you will continue to focus on? Are there additional industries that are growth targets for 2023?
A: Good question. One of our strengths at SAP is our Industries solutions and the teams that support them. This means that we can meet customers' needs in all industries and is reflected in the adoption of S/4HANA. No other company can meet such a wide range of customer needs when it comes to ERP. Moving into 2023, we will continue to invest in our Industries' strategy so that our solutions will evolve with the industries that they support.
Q: Are there any unique characteristics or anomalies across the North American customer base that you find extremely interesting and remarkable?
A: 60 percent of the cloud ERP market sits in North America. For me, it starts and ends with North America. That's also where we see our most significant competition. So, I would almost say it's at the forefront of cloud ERP—from an adoption perspective and driving requirements for cloud ERP.
Q: Anything else you want to mention directly to the ASUG audience?
A: One other thing. We recently attended the Gartner Symposium events in Europe and North America and spoke about the future of ERP. One of the things we touched on is that SAP is 50 years old. That's a long time for a technology firm to be around.
Over the years, ERP has been declared 'dead' or not 'sexy.' But I think today—coming off the pandemic with unrest in the geopolitical environment; what's happening with Ukraine; pressing cybersecurity; supply chain issues; and so on—ERP is more relevant than ever.
Inflation and working capital management and how you manage that; cybersecurity within an ERP system; the resilience supply chain—all of it has elevated ERP as a boardroom topic.
Going into 2023, that's going to continue. ERP is as relevant or more relevant than ever, but how we look at ERP has changed. The significant change is what we call modular ERP, which is something I've been pointing towards in the preceding questions without using the word modular.
In the old days, ERP was a monolithic system with end-to-end processes and wall-to-wall SAP, all built into one system. It wasn't easy to manage that. I think the difference today and going forward is that the demands and requirements of the business environment are suited to a modular ERP architecture, where your core ERP relies on standard industry processes. You leverage a platform like BTP to add modular pieces to tailor and extend core ERP functionality and enable an open system where you can plug in other applications from SAP or anyone else. If you look at where we are today and where we're going politically and economically, moving from monolithic to modular ERP is very important.