For SAP users to scale and accel­er­ate cloud migra­tion strate­gies while simul­ta­ne­ous­ly ensur­ing the suc­cess of their SAP S/4HANA imple­men­ta­tions, it is cru­cial for SAP to con­tin­u­ous­ly edu­cate and engage the entire cus­tomer ecosys­tem, equip­ping them with glob­al best prac­tices and the right exper­tise to com­plete their journeys.

As Head of S/4HANA Busi­ness and Mar­ket Devel­op­ment at SAP, focused on SAP S/4HANA Cloud, pub­lic edi­tion, Mar­cus Venth plays a key role in this on-going cus­tomer evo­lu­tion. More than two decades into his career at SAP, and with pre­vi­ous lead­er­ship roles in cloud con­sult­ing, cus­tomer engage­ment solu­tions, and S/4HANA glob­al busi­ness devel­op­ment divi­sions for SAP North Amer­i­ca, Venth says that he’s com­mit­ted to both serv­ing installed-base cus­tomers and bring­ing new cus­tomers into the SAP ecosystem.

Amid recent devel­op­ments with­in the SAP S/4HANA Cloud port­fo­lio, and with the new SAP S/4HANA release 2023 planned for Octo­ber, ASUG sat down with Venth to dis­cuss the state of the SAP cus­tomer ecosys­tem and devel­op­ments ahead.

This inter­view has been edit­ed and condensed.

ASUG: As our mem­bers weigh their future inno­va­tion paths, ques­tions remain about mak­ing the move to SAP S/4HANA. What fac­tors mat­ter? What makes a cus­tomer a bet­ter fit for SAP S/4HANA Cloud, pri­vate edi­tion, than SAP S/4HANA Cloud, pub­lic edi­tion, for example?

Mar­cus Venth: When it comes to installed base cus­tomers, we see the major­i­ty going down the path of pri­vate cloud, for the sim­ple rea­son of max­i­miz­ing their invest­ments in their cur­rent ERP solu­tion as the move to the new envi­ron­ment. Pri­vate cloud allows con­fig­u­ra­tions, cus­tomiza­tions, and his­tor­i­cal data to be car­ried over into the new envi­ron­ment, man­aged by SAP. Fur­ther, they can upgrade on their time­line. With­in pri­vate cloud, cus­tomers have a path to a clean core, while allow­ing SAP to deliv­er inno­va­tions such as AI and Sus­tain­abil­i­ty Solutions.

While we help cus­tomers deter­mine the best path for them (pub­lic or pri­vate cloud), we do see the ben­e­fits of mov­ing straight to pub­lic cloud in a few of areas. Num­ber one: there are a few indus­tries, where the mar­ket large­ly demands a pub­lic cloud ERP solu­tion regard­less of size, such as the pro­fes­sion­al ser­vice industry. 

Num­ber two: when we’re deal­ing with sub­sidiaries, divesti­tures, incu­ba­tions, and sce­nar­ios like that (com­mon­ly referred to as a two-tier ERP), we see a lot of inter­est in pub­lic cloud because they can install and imple­ment it very quick­ly. It’s stan­dard­ized, easy-to-use, eas­i­ly con­fig­ured, and meets all the needs of these small­er entities.

Final­ly, there are small and mid-sized SAP ERP cus­tomers that may be falling behind in the appli­ca­tion life­cy­cle; maybe they’re in an old­er release and are at such a point in the jour­ney that con­vert­ing to pri­vate cloud is more oner­ous than mov­ing straight to the stan­dard­iza­tion pub­lic cloud. Maybe the con­fig­u­ra­tion does­n’t meet the require­ments any­more, or they have a lot of tech­ni­cal bag­gage. In these instances, I’m con­fi­dent that these cus­tomers would ben­e­fit from and enjoy SAP S/4HANA Cloud, pub­lic edition.

When it comes to new cus­tomers, there’s obvi­ous­ly an impor­tant deci­sion that needs to be made. A lot of inno­va­tion is being deliv­ered in pub­lic cloud, and with updates every six months, we can deliv­er inno­va­tion more quick­ly. That’s very attrac­tive for many cus­tomers. In this instance, I would chal­lenge them to answer, ​“Why not pub­lic cloud?” In the ear­ly stages of engage­ment, we take new cus­tomers through the dis­cov­ery process with the [SAP Dig­i­tal Dis­cov­ery Assess­ment] DDA tool which helps us under­stand their busi­ness require­ments against what we have to offer in our Cloud ERP port­fo­lio and gives us an unbi­ased rec­om­men­da­tion whether they should go pub­lic cloud or pri­vate cloud.

ASUG: What cus­tomer exam­ples come to mind for you in con­sid­er­ing this pub­lic or pri­vate cloud inno­va­tion path?

Venth: The auto­mo­bile indus­try is in the mid­dle of a trans­for­ma­tion. Everything’s being turned upside down with elec­tri­fi­ca­tion, bat­tery tech­nol­o­gy, hydro­gen tech­nol­o­gy and con­nect­ed vehi­cles. And with that, there’s a lot of start­up activ­i­ty and inter­est from these car com­pa­nies to invest in new tech­nolo­gies. One Ger­man auto­mo­tive cus­tomer, over the past few years, has imple­ment­ed six deploy­ments of pub­lic cloud that they’ve used for acqui­si­tions and incu­ba­tions ; all of these are great exam­ples because they don’t nec­es­sar­i­ly want to impose their orig­i­nal equip­ment man­u­fac­tur­er (OEM) foot­print of a high­ly cus­tomized ERP on these small­er subsidiaries.

Anoth­er exam­ple is the sub­sidiary of a large US auto­mo­tive com­pa­ny which makes elec­tric deliv­ery vans. They want­ed to tap into the resources with­in their head­quar­ters who would have famil­iar­i­ty with SAP process­es, ter­mi­nol­o­gy and tech­nol­o­gy, but oper­ate in a sep­a­rate sys­tem that allows them to be more autonomous. They don’t like to think of them­selves as what we call two-tier ERP; they’re an inde­pen­dent SAP cus­tomer, with the sup­port of the rest of the com­pa­ny and the skillsets that the com­pa­ny brings to help them get ramped up more quickly.

On the flip side and on the small­er side, we have an estab­lished SAP cus­tomer in the min­ing parts sup­ply indus­try in Aus­tralia, with 200 employ­ees that was run­ning SAP ECC. That’s a sub­stan­tial sys­tem to be man­ag­ing on your own, in a com­pa­ny of that size. They even­tu­al­ly moved to the pub­lic cloud a few years ago, great­ly sim­pli­fy­ing their IT oper­a­tions while get­ting faster innovations

ASUG: Some of the main rea­sons we see our mem­bers move to S/4HANA are the more mod­ern capa­bil­i­ties, greater self-ser­vice, and embed­ded ana­lyt­ics — all these tools small­er com­pa­nies use. Can you talk about that moti­va­tion for pro­gress­ing to S/4HANA: find­ing a sys­tem that allows for a cer­tain amount of flex­i­bil­i­ty and that can empow­er small­er com­pa­nies while reduc­ing the com­plex­i­ty of the land­scape in which they have to operate?

Venth: Spe­cif­ic to SAP S/4HANA Cloud, pub­lic edi­tion, it can depend on who we talk to at the cus­tomer. When we talk to CIOs, they like the restric­tion of not being able to com­mit the sins of the past — mean­ing code mod­i­fi­ca­tions, or heavy cus­tomiza­tions. They like the struc­ture that a pub­lic cloud solu­tion pro­vides and also the cloud qual­i­ties — with updates on a fixed sched­ule, always being up to date. In a sense, there’s this idea of it being self-heal­ing. If one cus­tomer logs a tick­et, and we rec­og­nize there’s an issue, we fix it for every­body. At the same time, we pro­vide enough flex­i­bil­i­ty in the form of the exten­si­bil­i­ty —either side by side or in the stack — that lets them build their own IP or their own break­throughs when it makes sense, as long as they do it to build com­pet­i­tive dif­fer­en­ti­a­tion. Cus­tomers with a cloud mind­set embrace stan­dard­iza­tion, espe­cial­ly with more com­modi­tized process­es like accounts payable or accounts receiv­able . Instead, they focus on build­ing enhance­ments only in the areas where they need to build out their com­pet­i­tive differentiation.

When cus­tomers move from an ECC sys­tem to pub­lic cloud, they will adopt a more stan­dard­ized solu­tion. That’s the nature of pub­lic cloud. They’re not going to have all the same con­fig­u­ra­tion options, nor is there a tool-based migra­tion approach. We have great tools that allow us to deploy the best prac­tices pre-con­fig­u­ra­tion, but it requires the cus­tomer to fol­low a fit-to-stan­dard approach which we’ve laid out in the SAP Acti­vate methodology.

ASUG: Our mem­bers are expe­ri­enc­ing an SAP tech­nol­o­gy tal­ent gap, an absence of skilled tal­ent to oper­ate their dif­fer­ent sys­tems. How does a shift to pub­lic cloud shift close that tech tal­ent gap, or address the lack of qual­i­fied skilled IT tal­ent need­ed to oper­ate more heav­i­ly cus­tomized environments?

Venth: In the past, we might have had three dif­fer­ent ways of doing some­thing and we would have con­sul­tants who would go in and help decide which approach to use. That required a lot of knowl­edge about the dif­fer­ent options and an under­stand­ing of the pros and cons. In the pub­lic cloud, we’ve already deter­mined the one best way to do it. There’s one way and we’re deliv­er­ing the base­line con­fig­u­ra­tion with­in the appli­ca­tion. So, when you acti­vate a scope item, the foun­da­tion­al con­fig­u­ra­tion is auto­mat­i­cal­ly acti­vat­ed, and you’re only tin­ker­ing with a con­fig­u­ra­tion where you want to devi­ate from that stan­dard. Pub­lic cloud is a solu­tion that essen­tial­ly runs out of the box. This address­es some issues of the skills gap because the sys­tem set­up becomes more prescriptive.

How­ev­er, you need con­sul­tants to han­dle the orga­ni­za­tion­al change man­age­ment and the gov­er­nance that will be need­ed to fol­low the fit-to-stan­dard approach. Here, the skill set shift. What is need­ed are con­sul­tants that are usu­al­ly less tech­ni­cal, but have the busi­ness exper­tise to help cus­tomers adopt that stan­dard solu­tion and apply the right change man­age­ment across their business.

On the inno­va­tion side, there are no-code, low-code-type devel­op­ment tools that are part of the offer­ing. SAP Build Apps or Process Automa­tion allow you to build automa­tions or entire appli­ca­tions with­out any code. It’s sim­ply drag­ging and drop­ping fields and cre­at­ing some busi­ness log­ic that shows how the infor­ma­tion is going to flow.

Reports that pre­vi­ous­ly required a lot of cus­tomiza­tion to build by a devel­op­er can very eas­i­ly be built on the fly with­in the appli­ca­tion, and allow the users to fil­ter and slice-and-dice the data. This is the con­cept of the cit­i­zen devel­op­er ver­sus the true devel­op­er because the cit­i­zen devel­op­er can use those no-code, low-code apps to build out these appli­ca­tions with­out cod­ing skills.

So, all in all, between the way the tech­nol­o­gy is mov­ing from an inno­va­tion per­spec­tive cou­pled with how it is deliv­ered in the cloud, cus­tomers are becom­ing much less reliant on con­sul­tants with exten­sive and niche tech­ni­cal expertise.

ASUG: You men­tioned process automa­tion. We’ve also been hear­ing a lot about AI mod­el­ing. Can you share more about some of the mod­ern capa­bil­i­ties in S/4HANA Cloud, pub­lic edi­tion, and what’s been most appeal­ing for cus­tomers con­sid­er­ing the tran­si­tion from a stand­point of want­i­ng to embrace innovations?

Venth: When we talk about these dif­fer­ent tech­nolo­gies, the idea is that it’s not about one vs the oth­er. It’s about string­ing them togeth­er to help improve the over­all effi­cien­cy of the busi­ness process. For exam­ple, if a sit­u­a­tion requires human inter­ven­tion, we have sit­u­a­tion han­dling tech­nol­o­gy that would rec­og­nize a spe­cif­ic event or sit­u­a­tion and then draws the atten­tion of a human to inter­vene. Sec­ond­ly, we have ful­ly auto­mat­ed process­es where the machine is doing the major­i­ty of the work. Some of those capa­bil­i­ties are embed­ded with­in the appli­ca­tion itself and use machine learn­ing and oth­er such tech­nolo­gies. In oth­er cas­es, the cus­tomer plays a more active role in build­ing their own automa­tions using SAP Process Automa­tion tools.

As we look for­ward to lever­ag­ing gen­er­a­tive AI, we see sev­er­al use cas­es where it can help com­pa­nies inter­act with the out­side. It’s still ear­ly days in terms of the over­all evo­lu­tion of how gen­er­a­tive AI will be embed­ded into soft­ware appli­ca­tions. An exam­ple of its use with­in ERP is, hav­ing AI exam­ine inbound dis­pute emails where a cus­tomer is dis­put­ing an invoice. AI can parse that infor­ma­tion, rec­og­nize the tone of the email and process and cat­e­go­rize it appro­pri­ate­ly and enter it into the appli­ca­tion as a dis­pute record. It can then also auto­mat­i­cal­ly respond to the cus­tomer with a res­o­lu­tion in nat­ur­al language.

We also deploy AI to help peo­ple inter­act with the appli­ca­tion. We have a sce­nario now with ​“Just Ask” in SAP Ana­lyt­ics Cloud (AC), where a casu­al user can ask a ques­tion, such as ​“Show me the rev­enue over the last year by region,” and the sys­tem will then gen­er­ate a report. We will see con­tin­u­ous inno­va­tion how users inter­act with our appli­ca­tions and there will be more to fol­low on this soon.

ASUG: What’s your role with regard to engag­ing the SAP part­ner ecosystem?

Venth: I am a part of the solu­tion man­age­ment team for SAP Cloud ERP. We define the over­all Go-to Mar­ket and Com­mer­cial struc­ture. My team helps the sales and part­ner ecosys­tem under­stand the mes­sag­ing and the com­mer­cial terms for pub­lic cloud. We also help our part­ners and sales teams tai­lor the mes­sage accord­ing to the cus­tomer seg­ment, such as new mid-mar­ket accounts, or exist­ing installed base accounts.

Most of our time is help­ing audi­ences under­stand the val­ue of a pub­lic cloud in the con­text of their spe­cif­ic busi­ness sit­u­a­tion. In the pub­lic cloud are­na, our part­ners are also an exten­sion of SAP, so it is crit­i­cal that we work with our part­ner teams, and the part­ners them­selves to help them under­stand the val­ue propo­si­tion. We want to instill the con­fi­dence they need to invest in their own qual­i­fied part­ner pack­ages that helps make the imple­men­ta­tions predictable.

ASUG: When work­ing with cus­tomers who may not ful­ly grasp what pub­lic cloud is or the capa­bil­i­ties it can pro­vide, where do you see gaps in under­stand­ing or misconceptions?

Venth: Often, I hear two per­spec­tives. On one hand, cus­tomers may think this is only for finan­cials. They are under the mis­con­cep­tion that pub­lic cloud can’t address a much broad­er scope. We have cus­tomers in the Indus­tri­al Man­u­fac­tur­ing and High-Tech space that are run­ning end-to-end, order-to-cash, man­u­fac­tur­ing and pro­cure­ment process­es in their ERP appli­ca­tions. There is an exten­sive breadth of the capa­bil­i­ties that S/4HANA pub­lic cloud offers.

The oth­er per­spec­tive comes from cus­tomers that expect the pub­lic cloud to be the same as their on-premise ERP. They don’t under­stand­ing that pub­lic cloud is more stan­dard­ized and sim­pli­fied which enables a faster imple­men­ta­tion at low­er cost.

We want cus­tomers to appre­ci­ate the ben­e­fits of tak­ing ERP into the cloud, always being up to date with updates on a fixed sched­ule. With pub­lic cloud, we’re updat­ing every six months. Cus­tomers are buy­ing into that inno­va­tion cycle. While they don’t have to acti­vate these inno­va­tions the moment we deliv­er them, the capa­bil­i­ties are always at their fingertips.