What You Need to Know
- The next major update of SAP’s Business Suite for HANA (SAP S/4HANA), release 1511, is a broadening of supported functionality beyond financials and into areas of logistics, such as production planning and inventory management
- Gone are product names Simple Finance and Simple Logistics, in favor of the overarching SAP S/4HANA Enterprise Management, an expanding set of core SAP S/4HANA business suite functionality that links to a variety of SAP S/4HANA Lines-of-Business (LoB) applications
- On-premise and cloud are the primary deployment models; managed cloud is on offer, but more as a staging post on the way to the public cloud
The Name Game: Let’s Talk Enterprise Management
Perhaps the best way to think about SAP S/4HANA Enterprise Management is this: It’s the start of the full realization of what a Business Suite birthed on SAP HANA will really look like and be capable of.
Previously, SAP S/4HANA focused on what the financials piece of Business Suite would be like on HANA. SAP S/4HANA Enterprise Management addresses functionality beyond financials, mostly in the area that SAP internally likes to call logistics, such as inventory management and production planning, though SAP promises that there’s much more to come. Learn more about the most recent S/4HANA news and updates here.
Now that the SAP S/4HANA release covers both financials and logistics, much of the core functionality of a traditional ERP system, SAP decided to use the term Enterprise Management. The idea is that SAP S/4HANA can “span all lines of business and SAP systems—so finance, sales, service, marketing, commerce, procurement, and sourcing, manufacturing, supply chain management,” says Uwe Grigoleit, SAP’s Senior Vice President, Customer Evolution Programs.
SAP was also keen to move away from its previous “Simple” product naming because that term might imply a “simple version of finance just covering the core part of finance rather than a fully-fledged finance system that’s simplified,” Grigoleit explains.
The simplification of the data model and coding enabled by the underlying SAP HANA platform is allowing SAP to deliver a lot more functionality, he adds, such as predictive analytics for finance and for materials planning. “It really makes sense to give it a new brand,” he adds.
The Big Picture
If you look at the SAP graphic below, you’ll see the blue outlined box represents what’s in SAP S/4HANA Enterprise Management—core elements of SAP S/4HANA finance, HR, sourcing and procurement, supply chain, manufacturing, marketing and commerce, sales, service, asset management, and research and development.
Effectively, what’s going on, Grigoleit says, is the reintegrating of capabilities of products that, previously, due to the limitations and constraints of the database architecture for R/3, couldn’t be included within Business Suite. In turn, they were built out as additional complementary solutions.
“What we’re starting with SAP S/4HANA Enterprise Management, we will continue with the next releases, so more core capabilities of Supply Chain Management will be redeployed and integrated into SAP S/4HANA,” he says. The same will be true for SRM (Supplier Relationship Management), where some elements like core contract management are being integrated into SAP S/4HANA Enterprise Management.
“Our goal is to take back more of SCM, SRM, CRM, and BW into one central component to completely simplify the landscape for our customers,” Grigoleit says. “It will take some time for us to be completely done, but we’re starting to deliver re-integrations across other components.”
SAP S/4HANA will be both a loosely coupled and a hybrid suite with integrations to the SAP S/4HANA Lines-of-Business (LoB) solutions. Those include members of SAP’s on-premise and cloud product portfolio—that functionality provided by SAP Ariba, SAP Concur, SAP Fieldglass, SAP Hybris and SAP SuccessFactors, which may be available in more than one deployment or purely in the cloud (see chart below).
SAP plans to release project system, quality management and sales and distribution functionality in 2016, Grigoleit says. “We’ll continue to simplify solutions and data models and make them ready to run on HANA,” he adds. “Next, we can deliver innovations with new capabilities on those solutions.”
Cloud vs. On-Premise vs. Managed Cloud
SAP is still offering three deployment flavors for SAP S/4HANA, but the two major options are on-premise or public cloud, Grigoleit says.
“The managed cloud type of deployment with HANA Enterprise Cloud is also possible for SAP S/4HANA,” he adds. “Most of our [Business Suite] customers are on-premise and most are likely to go to the cloud. Managed cloud could be the perfect bridge technology to move with all their current complexity, processes and add-ons and then use services from SAP to reduce complexity and go back to simplicity and then be ready with their systems and processes to move into a public cloud scenario.”
As SAP announced during its Q3 2015 earnings call, the current SAP S/4HANA promotion has been extended through Dec. 31, 2015, but there are no plans to extend it further than the end of this year, Grigoleit said.
“This is the final extension for that promotion. We’d given customers nearly three quarters, but, even so, it was still not enough time for a lot of customers to take advantage of the promo, and Q4 is a classical buying quarter,” he adds. The license promotion allows customers who have licensed HANA platform for Business Suite to upgrade to SAP S/4HANA licenses at no charge.
Who Are the S/4HANA Early Adopters?
SAP S/4HANA is SAP’s fastest growing product to date, with more than 1,300 customers since its launch in February. So, just who are these early adopters?
“The nice thing about them is that we’re not seeing a lot of trends,” Grigoleit says. “They’re in roughly 80 countries and across all 26 industries we support.” Some verticals are adopting SAP S/4HANA at a faster rate than others, such as consumer products companies. Other sectors, such as financial services, which have yet to be fully impacted by digitization, are moving more slowly, SAP says.
“We’re seeing all types of organization moving to SAP S/4HANA,” he adds. “We’re finalizing a reference with a very small customer with only 30 employees. For small companies, they see the benefits of SAP S/4HANA’s predefined scenarios.” Grigoleit estimates that the vast majority, more than 70% of new SAP customers, are moving to S/4HANA and not heavily considering any other SAP option.
Partners have been crucial to SAP’s early success with SAP S/4HANA, Grigoleit says. SAP estimates there are now more than 2,000 resellers selling SAP S/4HANA, and SAP partners manage more than 80% of all SAP S/4HANA-focused projects.
“The partner network has been very important,” he says. “We’ve invested a lot of time and effort into the partner ecosystem. It’s very important for our customers, wherever they are, that they will find partners that are enabled on SAP S/4HANA.”
SAP will likely roll out additional tools to help customers make the business case for and then migrate to SAP S/4HANA to join the likes of the SAP S/4HANA SAP Business Scenario Recommendations (BSR) report and the SAP Activate implementation framework, Grigoleit says. There may be tools to analyze the old coding of customers to identify how they can optimize that coding to apply the same techniques and routines that SAP has applied in its move to SAP S/4HANA, he adds.