S4/HANA: What does SAP’s next generation ERP mean for customers?
SAP’s latest generation of the ERP S4/HANA – a SaaS model that promises to run on Hana and “on the fly” by removing satellite systems – is a bold move that changes the way firms’ core systems will operate.
Announcing the launch at the New York Stock Exchange (NYSE) this week, SAP co-founder Hasso Plattner described how S/4Hana would eliminate 40 percent of the SAP IT load, which comes with the data exchange between systems like CRM and ERP, by running applications on one system.
A centralised, streamlined business suite would be hugely beneficial for firms who are encountering a huge number of transactions as online sales and the ‘Internet of Things’ takes off, he added.
Analyst house Pierre Audoin Consultants said: “While the SAP landscape has become more and more complex due to the various new components the vendor has added over time, it is SAP’s intention to reduce this complexity with S/4 HANA. With this, SAP delivers on its promise to provide an integrated system.
This includes a fundamental reduction of the data complexity. Plattner claims that a reduction of 1:10 just by getting rid of aggregates and redundancies has been possible.
“In this new system layout, satellite applications do not need their own instance, which furthermore decreases the data volume,” he says.
“It also means that only a single database is needed: SAP HANA. As a matter of fact, applications and database will grow together and there will be no distinction between application and database layer.”
While the announcement may signify the death of the IT stack, and presents impressive capabilities ahead of its competitors, customers will have to wait and hear about pricing models and incentives to move.
Product and innovation lead at SAP Bernd Leukert tempted business users with a showcase of its speedy data analysis tool during the launch. With an intuitive Fiori interface, the SAP Simple Finance application analysed data for the last eight financial quarters of a hypothetical enterprise –245 million lines of items – for profits and losses in its China division, within seconds.
While the ERP will be the obvious choice for businesses already using cloud – the suite integrates with SAP’s acquisitions like Ariba, SuccessFactors and Concur – Plattner said that on-premise customers would not be left behind. Similarly to cloud vendor Salesforce.com, SAP will configure its cloud products so they can be used on-premise if a customer is not ready to make the leap.
SAP has been largely criticised for its interface in the past. It developed Fiori, an easy-to-use graphical user interface (GUI) to help users get to grips with the software, but proceeded to charge long-term maintenance license fee-payers for the product. Last year CEO Bill McDermott announced it would be free for current customers, to the satisfaction the vendor’s user group communities worldwide, and now it will be welcomed as a standard feature on this next generation of ERP Central Component (ECC).
Plattner said that employee training was the main reason it had been slow to move to the new GUI, adding that some firms in China would have to train hundreds of thousands of employees who were used to the original look and feel of SAP.
He said that these types of customers will benefit from a ‘parallel rollout’ which will introduce the new software and ease users into the interface on an incremental basis.
How to migrate ‘simply’?
The UK and Ireland SAP User Group said the further development of SAP’s long-term strategy was “good news for customers” and a logical progression. But the user group’s chairman, Philip Adams, added:”For existing customers, the migration path to S/4HANA will be important; they will need the time and resources to be comfortable with the business case (and potential disruption) before migrating to S/4HANA. With SAP extending maintenance for ECC 6.0 until 2025, there is time for customers to plan their move and carefully assess the migration options.
“We will of course be working closely with SAP to ensure that our members have the information and support they need in order to make an informed decision.”
During the launch, SAP claimed that sprawling infrastructures will be easily shifted to the new S/4HANA systems without disruption, but was not explicit on how. The impact that a consolidation of satellite systems will have on the cost of the system was also unclear.
While Leuckert insisted that the age of poring over complicated maps of IT architecture is over with this new product, Pierre Audoin Consultants questioned whether customers will still suffer a disruptive migration.
The firm said in a statement: “Although Bernd Leuckert said in a sub-sentence that the time of blueprints was over, it is not clear how customers can shift their complex systems to the new S/4 HANA system without disruption…. what impact does the migration have on existing IT infrastructure and services contracts, such as outsourcing?…Will there really be a free choice of databases?
“After a big announcement there are always millions of questions and concerns. And SAP’s announcement was a big one. In the following month, if not years, they will have to give the answers to those questions