This is the second part following A journey into “The in-memory revolution by Hasso Plattner and Bernd Leukert”
Part 1 – The in-memory revolution
Part 2 – S/4 HANA, the agile ERP
CIO- So I now understand how HANA would accelerate and simplify reporting on my ERP. But what about my business processes? And crucially, how can you offer improvements without disrupting my business.
Me – The key is to replace physical aggregates tables by corresponding HANA SQL views with identical layout and the same name. We perfectly realize that there is a tremendous business value captured in your existing system configuration and application data. SAP keeps both intact while moving forward from any traditional DB to HANA. No data is lost, and all configuration and process customizations remain.
However, the re-architecting of the data model allows us to rewrite transactions leveraging the calculation engines of HANA.
Additionally, new programs are added that supersede existing functionalities, but they come in parallel. Same for the UI. The SAP GUI remains available. Both kinds of UI will coexist for a couple of years to be non-disruptive.
The goal is non-disruptive innovation by the mean of disruptive technology.
CIO- So you’re not replacing everything? You’re more like enhancing, building on the existing core?
Me- In a sense, yes. The final product is Janus-like: it keeps 2 personalities, both the old and the new, in one single system. But S/4 HANA solves problems previously unsolvable, while still carrying existing parameterization.
Not all previous configurations are staying. Some mandatory changes apply, such as new General Ledger in FI and the end of infosystem in logistics, for example.
Complex and heavy business processes like MRP and CO-PA were completely rewritten to take full advantage of the new data model, delivering tremendous performance improvements: improvement by factor greater than 10 for MRP. What was previously running as a batch job can become a transaction.
CIO- This is really alluring, but how those changes will help me tackle one of my biggest challenges: adapting swiftly my ERP to never ending changes in my corporate structure and reporting lines?
Me- This is again the HANA views that are allowing this. Now we can apply any change at any time, not only to the current year, but also previous years. What was preventing IT from quickly making such changes was the complicated aggregate tables structures accumulated across the years. Remember that now, we only keep data at the lowest level in the fact table. Quickly changing the analysis grid becomes nimble. With simpler systems we can adapt to external changes more easily: hence more agility.
CIO- And what about my TCO? New sophisticated hardware such as this will add to my TCO. Am I not running the risk to lose on one end what I’m gaining on the other?
Me- It is true that HANA hardware is more expensive than commodity servers, but the key here is simplification. All systems can be integrated now, eliminating enormous data transfers between subsystems. The reintegration of ECC, CRM, SRM together and the integrated reporting and analytics allows to get rid of redundant data structure. Hence, you will be able to retire many servers with their maintenance attached. Overall data footprint will go down. Finally, less complexity implies more stability.
Let’s go over all the benefits: less data footprint; simpler data model; less demand for database administration; up to 4 times higher data entry speed.
More specifically, if you compare ERP on traditional DB vs simplified ERP on HANA:
- Database updates nearly eliminated
- Number of database inserts reduced by factor 5
- Number of database range selects increased by factor 2-4
- Number of database single reads reduced by factor 5
All those quantitative gains translate into qualitative benefits for the end users.
As we’ve already seen with MRP, batches become transactions. After many years of stagnation, a new era of transparency and insights can begin.
CIO- I admit this is a nice picture to be able to reduce the number of servers in my datacenter. But you must be aware that more and more of your competitor are providing business services on the cloud, thus completely eliminating this discussion around data center provisioning and server maintenance. I haven’t heard you talking about any such offer just yet.
Me- You’re right, I was more thinking with respect to your existing SAP on premise footprint. But you’ll be happy to learn that in parallel, SAP is proposing its new S/4 HANA ERP on the cloud as well.
For its cloud S/4 HANA edition, SAP has reduced business objects to around 30% of original ones, dropped old UIs and all the transactions based on the old data model. The cloud edition only offers the new code, but does not need to keep the old structures.
CIO- Makes sense. Keeping the old structures will only appeal to migrating customers, such as us. New cloud deployment should only leverage the new applications.
Me- Precisely. S/4 HANA Cloud Edition also offers a simplified customization. And the cloud will see all the new features first. But then they will also be delivered on premise.
CIO- What about customizations? You perfectly know that most customers have customized your standard offering.
Me- About customization, nothing changes on premise of course. However, you rightly point out that customization won’t be possible for a public cloud offering. But do not worry; we know your processes can differ from standard. What we offer is extension. 2 kinds of extensions available: in-app and side by side.
In-app extension leverages the APIs delivered by SAP. Side by side extension can be deployed on the cloud in the HANA Cloud Platform (HCP)
CIO – HANA Cloud Platform?
Me- SAP HANA Cloud Platform is a Platform-as-a-service (PaaS ) that businesses, ISVs, startups and developers can use to create, test and deploy cloud applications built on HANA. The platform includes application services, databases and infrastructure. You would build your business extension on HCP and run it there.
Would you consider shifting to the cloud?
CIO- It’s fairly premature for us at this point, but very exciting to discover and understand those new possibilities.
Me- Yes, HANA really is changing everything.
CIO – Speaking of which, as you stated yourself, HANA can now resolve enterprise problem unattainable before. I assume you have some examples?
Me – Of course, the first generation of HANA projects have mainly been the migration of existing Business Suites and/or BW datawarehouses to HANA. As we’ve seen, this brings all sorts of benefits, but this is onlythe beginning of leveraging the HANA platform. As a matter of fact, the potential of HANA is such that it’s sometimes difficult for customers to imagine all the benefits and competitive advantages they could obtain from it.
And this is what we will discover in:
Part 3 – Applying HANA to resolve real-world issues