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On February 3rd 2015, SAP held a launch event at the New York Stock Exchange to announce their next-generation replacement for R/3: SAP Business Suite 4 SAP HANA, known simply as S/4HANA for short. CEO Bill McDermott, co-founder and Chairman of the Supervisory Board Hasso Plattner, and Member of the Executive Board of SAP, Products & Innovation Bernd Leukert presented what they envisage as the future of enterprise software. You can watch a replay of the event here and watch some post-event interviews in this YouTube video:

What is S/4HANA?

To put it simply, S/4HANA is SAP’s next generation of R/3 and the SAP Business Suite. It leverages new SAP user experience technology (SAP Fiori) and in-memory processing and database technology (SAP HANA), as well as introduces a new concept of guided configuration. As such, it improves simplicity, reduces processing times, and offers greater functionality than is available in R/3. The focus of S/4HANA is on Finance and ERP (CRM, SRM, SCM, PLM, and BW), with the Finance component consisting of SAP’s recently released Simple Finance application. Further functionality currently available on SAP ERP is being built out.

For more broad definitions I would recommend this great Q&A by John Appleby and for analysis and commentary I recommend these articles:

And let’s also not forget the S/4 HANA website.

S4HANA-Simplified-Landscape1.png

What’s in it for HR?

Well, in the short-term there is not a whole lot of difference. Customers will use either SAP ERP HCM or SuccessFactors Employee Central for their HR processes; they can also connect with non-SAP Core HR systems. While S/4HANA can be deployed in multiple ways (private cloud, public cloud, or on-premise), SuccessFactors can still only be deployed in a public cloud.

S/4HANA will feature a simplified HR mini-master but no HR data management features so the HR data must be replicated from whatever HR system of record the customer chooses to use (for example SAP ERP HCM or SuccessFactors Employee Central). This is similar in the way in which SAP ERP HCM and SAP ERP FICO integrate now, so for most customers it’s not really a change; it just highlights that the HR data model can more easily and natively store data from Employee Central, which makes sense given that it is the next-generation core HR system from SAP.

SAP are planning productized packaged integrations between SuccessFactors Employee Central and S/4HANA in Q1 2015 to populate the mini-master, although they have no plans at this time to provide productized integrations between SAP ERP HCM and S/4HANA. However, an open SOAP inbound interface in S/4HANA allows employee and employment data to be sent to S/4HANA from any system – including SAP ERP HCM.

Since Simple Finance is part of S/4HANA, it will leverage the packaged integrations used to integrate Employee Central and S/4HANA.

So what does this mean for HR?

HR can continue to use their existing SAP Core HR software – whether SAP ERP HCM or SuccessFactors Employee Central – but will most likely need to migrate to SuccessFactors Employee Central in order to get the benefits of productized packaged integrations. Although there is no direct migration path package (e.g. process maps, field mapping, permissions mapping, etc.) available at this time, there is a Rapid-Deployment Solution (RDS) for data migration from SAP ERP to Employee Central and SAP’s Side-by-Side deployment model is aimed at enabling customers to slowly migrate HR processes to the cloud without disrupting core HR processes or discarding significant investment in SAP ERP HCM. Additionally, some partners are able to support cloud migration efforts. SAP ERP HCM customers will be able to continue to leverage their investment in core HR when they move to S/4HANA, but the thought of building integrations that might only last 2 or 3 years might be enough for some customers to consider a move.

Since SuccessFactors plans to be available leveraging Fiori designs this year, this means that from a user experience perspective S/4HANA customers can maintain a common user interface across their business applications, whether on-premise or in the cloud. This will improve and align the user experience, which will already be enhanced for users of S/4HANA by the improved processing times of the underlying SAP HANA technology.

Unfortunately HR customers will not benefit directly from the guided configuration of S/4HANA for HR processes, although some related processes – such as timesheet, project staffing, resource management, and time confirmation on projects – will be part of S/4HANA and thus leverage the guided configuration. Employee Central users can still leverage the GUI-based Metadata Framework-based configuration that is being rolled out across Employee Central’s core object model.

What the industry thinks

I reached out to several industry experts to get their thoughts on how S/4HANA may impact HR. I spoke with David Ludlow at SAP who said:

“We look forward to continuing to support customers on their migration to the cloud – at their own pace – and to provide innovative solutions for HR and Finance, leveraging the power of HANA and the benefits of cloud. Employee Central will remain within the SuccessFactors product area and will connect with S/4HANA to help ensure each functional area can innovate quickly and independently.”

I reached out to ASUG’s HR subject matter expert SherryAnne Meyer for her take on how customers might look at leveraging S/4HANA for their HR operations. She told me:

“With SAP ERP HCM, HR was able to solve the administrative challenges of having consistent data and processes available to propel business in a global economy. S/4HANA takes the best of SAPs strong capabilities to deliver globalization and localization of HR and payroll processes and marries that to a superior user experience (with Fiori) and real time analytics (with HANA). The hope is that HR can move out of the “weeds” and into the fertile ground where decisions can be made rapidly, and predictively getting HR to truly be a strategic business partner. Moreover, SAP is delivering choice for customers – on-premise, cloud or a hybrid approach, allowing HR to move along a continuum for innovation with the latest technology as they desire. This is good stuff!”

I also spoke with Jarret Pazahanick, who explained that:

“While I applaud SAP for starting to build the next generation solution to R/3 and the frankness of founder Hasso Plattner on S/4’s importance, it is obvious that this is more a marketing message than actually solution for HCM customers at this point in time. It will be important for both SAP ERP HCM and SuccessFactors customers to keep a close eye on the roadmap as well as work internally within their organization to ensure they are aligned with the other SAP teams. From SAP’s side I will be watching to see if they can deliver on their roadmap and promises in a timely manner as well as provide customer business cases to justify an additional investment required to make the move from R/3 to S/4.”

Summary

In short, there are not a host of changes for HR customers. The focus of S/4HANA is firmly on the ERP and Financials area, with added functionality for HR coming from existing HCM solutions. A simplified data model and planned packaged integrations are going to make it easier for Employee Central customers to integrate with S/4HANA, but SAP ERP HCM customers are going to have to build their own integrations or consider a migration to SuccessFactors Employee Central.

There are still some questions about the long-term impact of S/4HANA on HR that may not be revealed for some time yet, such as whether Simple Finance will be integrated – and how easily – with Employee Central or whether SAP ERP HCM customers are going to be given more migration path support to get onto Employee Central. I don’t expect answers to come immediately – since the rest of the S/4HANA suite needs to be built out – but I do expect them to be put into a long-term roadmap in the coming months.

On an ending note, I think this quote from The specified item was not found. Geoff Scott, CEO of ASUG summarizes the situation very well.

“…This is a significant announcement for SAP and continues the vendor’s progress on both the HANA and simplification fronts. The ASUG team was in New York for the launch and heard SAP’s vision first hand.

The word vision is important to use here, because at this point there are more questions than there are answers. The vision makes sense; how we all get there as SAP customers is still a little cloudy. Rest assured answers will be forthcoming quickly, and by the time we all get to ASUG Annual Conference and Sapphire Now 2015, I am sure the fog will have mostly lifted.”

ASUG members can keep up-to-date on S/4HANA and learn more in the new ASUG S/4HANA Community. For all things SuccessFactors, check out the SAP and SuccessFactors LinkedIn group.

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34 Comments

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  1. Steve Bogner

    Thanks Luke for sharing this info – still a lot of details to be worked out, and I’m looking forward to more detailed roadmaps from SAP in the future. Curious on how – or if – Concur and Fieldglass fit into this?

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    1. Luke Marson Post author

      Thanks Steve. I’m also curious about Concur and Fieldglass. I expect Fieldglass will integrate with Employee Central (for employee data) through the packaged integrations that are due or – and maybe this is more feasible – the HR mini master in S/4HANA. I expect that it will integrate with Simple Finance (for financial postings and invoicing). Concur will no doubt integrate for the same reasons and in the same way.

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  2. TErry Eisenmenger

    To mean this says very clearly what I expected — Don’t wait to build your integrations and planned expansions in the EC world.  It will “take some time” for S4HANA to really have a solid impact.

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  3. Suresh Datti

    Thanks Luke for an excellent blog as always..to echo Jarret’s words.. “keep a close eye on the roadmap..” . I am also keen on how Exchange Innovation would tackle the tons & tons of custom code when existing ERP customers decide to ‘migrate’ to S/4..

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  4. Jörg Edinger

    Hi Luke,

    I have essential new information for the community concerning S/4Hana and HCM:

    – the board members of SAP decided this week that the today known functionality of SAP HCM also will be available in S/4 Hana

    – this means that not only a mini-master is featurered in S/4Hana

    – but also the well today known features as payroll, personnel time management etc.

    This gives customers the option to upgrade to S4/Hana without being forced to move their full HCM-installation to the cloud. Official communiation will follow next week.

    Nevertheless is SF the default HR solution for S/4Hana.

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    1. Luke Marson Post author

      Thanks for sharing Jörg.

      Personally I feel this is backwards move by SAP as S/4HANA is about innovation and SAP ERP HCM on-premise is far from innovative. It can still be integrated to the mini-master, but to put the functionality into S/4HANA disappoints me somewhat.

      Best regards,

      Luke

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      1. Jörg Edinger

        Hi Luke,

        sure. ERP HCM is not the go-forward solution from SAP. But the past decision to provide no HCM features within S4/HANA forces customers with integrated systems (HCM, FICO and other modules on one system) to go to the cloud before they can use e. g. Simple Finance or they have to run two systems (one with “old” SAP ERP HCM and one with S4/HANA for Simple Finance).

        The decision means not that the support of the “old” HCM-features is extended over 2025. But it allows customers with integrated systems to upgrade their system to S4/HANA without to be forced to move to the cloud to quickly. And this is in my point of view a good message for the customers.

        Cheers

        Jörg

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          1. Jörg Edinger

            Hi Suresh,

            no. The Roadmap from SAP is still the same: SuccessFactors is the so called default HR-Solution for S4/HANA.

            Regards

            Jörg

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        1. Luke Marson Post author

          Hi Jörg,

          They do provide a HCM feature in S/4HANA: SuccessFactors HCM suite. If a customer was to go to S/4HANA then surely it makes sense for them to go to SuccessFactors HCM suite as the S/4HANA mini-master is designed for Employee Central data. Sure they don’t want to rush, but they should just integrate it with S/4HANA instead of moving their legacy HCM functionality from on-premise into S/4HANA. It sounds like it would be better to move to SuccessFactors.

          All the best,

          Luke

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          1. Jörg Edinger

            Hi Luke,

            I try to clarify the scenario:

            – there is no “migration” from ERP HCM to S4/HANA necessary

            – the HCM-features are available within the S4/HANA-System

            – so the customers has not to move anything from ERP HCM to S4/HANA

            – it is only the change of the database from the legacy database to HANA

            – and a lot of customers have proprietary applications in use which have to be migrated to SF if they would move to the cloud. So they have to check if they can realise it with EC MDF or they have to develop this application on the HCP (based on the assumption that the functionality is not covered from SF). To deactivate functionality is for almost all customers no option.

            From my point of view it gives the customers more time to build their roadmap and to prepare the move to the cloud. No more no less. It is not planned to offer a Simple HCM in S4/HANA. SF is the default and go-forward solution for HR.

            Last but not least: Customers must have the time (especially in the HR-departments, but also in IT) and the money to make projects to move to the cloud. Now they have a little bit more time (and with a little bit more time, they found probably the money 😉 ).

            Cheers

            Jörg

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            1. Sven Ringling

              As I see it, the only thing that happened simply was, that an artificially blocked feature – using HR with simple finance – has been unlocked for customers to allow them to take one simple step at a time at their own pace.

              It simply seemed crazy to me that SAP invested a lot in HR Hybrid and side-by-side models to allow for simpler transition periods only to put a brake onto on-prem simple finance by forcing customers to undertake a major HR migration at the same time, if they want to use simple finance.

              I would expect SAP’s as well as customers’ investment to keep HR integration going after finances have been made simple much smaller than the SuccessFactors – onprem integration. Same shoud go for simple logistics.

              So, seems consistent with their strategy now (wow, when have I said that last time 😉

              I also expect to win an extra award from SAP marketing for getting “simple” into this small article 10, now 11, times 🙂

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            2. Luke Marson Post author

              Hi Jorg,

              It sounds to me that this is not really HCM in S/4HANA, but just connecting HCM to S/4HANA (which was always possible because of the S/4HANA mini-master). Or am I missing something?

              Best regards,

              Luke

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              1. Sven Ringling

                Nope. It’s full HCM but (but the old one) that can run on an S system. Until now, switching on S/4 would have switched off HCM (except for mini master). Now it will simply stay there as it is.

                Sound unspectacular, but the forced seitch-off they had so far could have been wuite limiting customers’ choices

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              2. Joerg Edinger

                Hi Luke,

                what Sven said is correct. Full HCM-features.

                As I said above: Board decision from this week. Official communication will follow next week or the week after.

                Cheers

                Jörg

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                1. Chris Paine

                  Any official announcement yet? I was hoping to see a press release at HR2015 in Nice, anyone seen anything?

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                  1. Joerg Edinger

                    Hi Chris,

                    unfortunately I’m not in Nice this year. But I talked to my colleague Sven Ringling yesterday evening (he is in Nice) and he didn’t mentioned that there was a press release or something similar to this topic.

                    Sometimes SAP needs a day or two longer 😉 .

                    Regards

                    Jörg

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      2. Chris Paine

        Have to disagree about this being a backward step… Would love to get some Hangout time to record a discussion around this  

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        1. Luke Marson Post author

          Well, I believed it to be backwards in terms of putting HCM into S/4HANA, but that isn’t what is happening. They are just enabling a connection between HCM and S/4HANA rather than using the mini-master. It’s not actually that much of a big deal.

          But would still love to do a hangout. Let me speak to Jon Reed.

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          1. Sven Ringling

            It’s not from an architecture point of view. It is for customers on a single box environment, who now don’t need a second box to move to simple finance. Single box are usually those customers, to whom that expense actually matters.

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          2. Chris Paine

            Not sure that is the case Luke – which is why we need the discussion! – see Stefan’s post below! and slide from Nice: NB option 4.

            /wp-content/uploads/2015/06/option4_728102.png

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            1. Luke Marson Post author

              I think the confusion was the original comments by Joerg was:

              – the board members of SAP decided this week that the today known functionality of SAP HCM also will be available in S/4 Hana

              And subsequent discussions were not really clear. Stefan’s post below is very clear and paints a different story to some of the interpretations that have been made on this blog.

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              1. Joerg Edinger

                I’m really sorry, if my wording caused any confusion. Maybe I should have said ‘…will be available together with S4HANA’ rather than ‘in’. As to the notion that this actual change isn’t significant: this is probably so for most large customers, but some of our customers with 1000 till 5000 employees run HR/Payroll on the same box as FICO and the old policy would have added significant cost to a switch to simple finance or another simple module – enough to possibly block that move for many years. That’s why I emphasised this change is a good move to fit the communicated SAP strategy to allow customers making the changes at their own pace.

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  5. Stefan Ehrler

    Hi folks,

    with solution marketing we are working a messaging to the market on this. To summarize the main outcome see below:

    SAP S/4HANA is the next-generation business suite. It is a new product fully built on the most advanced in-memory platform today – SAP HANA – and modern design principles with the SAP Fiori user experience (UX). SAP S/4HANA delivers massive simplifications (customer adoption, data model, user experience, decision making, business processes, and models) and innovations (Internet of Things, Big Data, business networks, and mobile-first) to help businesses run simple in the digital economy. S/4 HANA can be deployed as on-premise edition or a cloud edition. 

    The SuccessFactors HCM Suite (SuccessFactors) is the “default” HCM solution for S/4 HANA.  Customers choosing S/4 HANA as their next-generation business suite also require a next-generation HCM suite and this is the focus of SuccessFactors.  Productized integration (built and maintained by SAP) exists today so customers can connect SuccessFactors with S/4 HANA cloud edition; productized integration to connect with S/4 HANA on-premise edition is planned for 2H2015.  There are no plans to “simplify” SAP ERP HCM and future innovations will be limited, focused primarily on localization support and user experience renewal.  No changes are planned to this investment strategy.

    However, some customers using SAP ERP HCM to support their HR processes may not be able to migrate their HR processes to SuccessFactors at the same time they migrate their core business processes to S/4 HANA.  In order to minimize disruption for these customers while they implement S/4 HANA, SAP is enabling options for them to leverage SAP ERP HCM (running on-premise) and connected to S/4 HANA with productized integrations.  This enables S/4 HANA customers the ability to deploy SuccessFactors at their own pace, according to their own needs/strategies, and in a deployment manner that they have today.  These options include:

    1. Running SAP ERP HCM in a single instance co-deployed together with S/4 HANA on-premise edition
    2. Running SAP ERP HCM in a separate instance,  connected (via ALE) to S/4 HANA on-premise edition

    Productized integrations for both scenarios are planned for delivery in the second half of 2015.  Under consideration is productized integration between SAP ERP HCM and S/4 HANA cloud edition. 

    In summary:

    1. New SAP customers should implement SuccessFactors as their HCM solution for S/4 HANA.  Productized integration is available to provide a seamless experience. SuccessFactors is SAP’s “go-forward” solution for HCM and most future innovations are planned there. 
    2. S/4 HANA customers wanting next-generation HCM should implement SuccessFactors.  Productized integration is available to provide a seamless experience. SuccessFactors is SAP’s “go-forward” solution for HCM and most future innovations are planned there. 
    3. S/4 HANA customers also using SAP ERP HCM and who are not able to make the move to SuccessFactors in the near term can continue to use SAP ERP HCM, running in either a separate instance or a single instance together with S/4 HANA.  Productized Integrations are planned for delivery in November to enable both scenarios. This helps minimize disruption to customers’ HR processes during the S/4 HANA migration and enables the ability to migrate their HR processes to SuccessFactors when they are ready.
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    1. Joerg Edinger

      Hi Stefan,

      thank you very much for clarification on this topic. That’s the message a lot of customers want to hear and – in my opinion – that is the best way to demonstrate the existing customers that they can build their own roadmap to move from SAP HCM to the cloud.

      Regards

      Joerg

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    2. Chris Paine

      Thanks for the early clarification Stefan, I think this is a win for SAP customers! The roadmap for HCM remains moving to the cloud, but it is now more to customers to make that choice, and HR isn’t going to be forced to a migration project from onPremise SAP just because Finance wants to use S/4HANA, nor should Finance have to pay for HR to have a separate box.

      There remain questions of course, but I’m not sure there are answers yet!

      Cheers,

      Chris

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    3. Fernandez Ryan

      Thanks to all the great responses I have come out of the haze and now have clarity to the various paths forward that can be derived for HCM migration. As a customer thank you.

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    1. Paul Worland

      Sorry, a bit of grave digging here…..

      I take it that SF is the road map for HCM, happy days.

      However, where does Time Eval and Payroll sit in the S4 world?  Can or do they sit in the S4 box, or do customers need a separate ERP box for payroll/time eval?

      And, with mainstream support for ECC 6.0 running out in 2025, assuming the answer to above is that customers need to run payroll on an old ERP box, does that mean they are either unsupported, or need to pay extra maintenance?

       

       

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  6. Apurv Sharma

    Hi all,

    I might be too late for this blog but as its open and I need your help.

    We have S/4 HANA 1511 deployed for FI fully last year and now we plan to do HCM. As FI is all in place with a lot of customisation for multiple companies, Should we do HCM (On premise) on different clients (SID) and link it through ALE or can we do the HCM deployment on the current clients as well? If yes please advise how?

    I am not sure if am making myself clear above but please ask questions for queries.

    Sincerely,

    Apurv Sharma

    apurvsharma11@gmail.com

     

     

     

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