SAP S/4HANA – The Path to Simplification
This week I was following a discussion on a social media where my friends were arguing SAP positioning against a highly-customized SAP environment.
While it may be hard to say goodbye to many years of custom-developments, there is not doubt that the SAP S/4HANA is the best opportunity to re-think the way how the new ERP will support your existing processes and how this will help getting rid of the custom-codes (or at least some of them).
The networked economy is driving business while companies are challenged every day to deliver tangible customer results in a more and more integrated end-to-end ecosystem.
A SAP S/4HANA project is full of great opportunities and it has firmly established itself as the next generation business suite to support digital businesses, helping the company to drive through the storm.
SAP S/4HANA it is not a legal successor of any SAP Business Suite Product. SAP S/4HANA is a new product
What does that means?
If you have the SAP Business Suite and you are going to implement SAP S/4HANA, you can’t look to this project as an upgrade… It has to be seen as a new implementation, even if your project’s approach is going to be a system conversion or landscape transformation.
SAP S/4HANA may not give you the full SAP vanilla flavored system when your project is finished… It may be hard to get rid of 100% or the developments and customization that you have in the ECC system today, but SAP S/4HANA will enable you to think different and you should always to consider the benefits of running SAP standard, if your company’s business model allows you to do it this way.
Think about the developments you have today and try to list the ones that differentiate your business from other companies and competitors? What are the ones that increases customer service and profitability? Evaluate if they bring true benefits and cost saving or if it is just another “nice to have” feature, that in the end it keeps your support team busy maintaining it, just because the end-user wants to have one extra button here or there. Think on the many products and features that you may have missed, things that SAP released in it’s core or products that are out there that you could evaluate and if they would replace some of the developments that you have today or not.
SAP says that: Run Simple to Run LIVE… companies should be able to react in a timely manner to economic and business changes, and if your ERP system is too complex, there is a risk that you will never be able to adapt to changes fast or not react at all.
The new digital economy is disruptive and the game rules have changed.
(image source: s4hanasap.com)
You must consider the potential that SAP S/4HANA has to reduce not only custom developments but also interfaces and 3rd partner applications you may have in your system, reducing the maintenance and license cost, support and other direct/indirect cost those applications may bring to the company.
The foundation of S/4HANA innovation is the revolutionary in-memory column-store based capabilities of SAP HANA, that enables both OLAP (analytical) and OLTP (transactional) data to reside in one system, allowing to analyze, report, simulate and predict in real time, LIVE and leading to smarter and quicker business decisions. The secret of success on those analysis requires that all of your processes are carefully reviewed and adhere to the best practices as much as possible, from Procurement-to-Pay all way to Order-to-Cash and etc., at the risk of looking to data on your screen that doesn’t reflect the real numbers.
(image source: sap.com)
Researchers shown that 90% of the company’s CIO’s are considering some kind of cloud strategy to the next 5 years *…Shifting from legacy systems to cloud technology, increasing agility, scalability to support growing demands, better embedded security and reduced TCO. SAP offers S/4HANA in a SaaS mode with different flavors: HEC (HANA Enterprise Cloud), Private Cloud, Public Cloud.
Depending on the cloud strategy, the customization and developments are not possible or limited, so here is another reminder to consider running simple when you start your project, even if that is a on-premise implementation, as companies can move to Cloud at any time later.
(image source: sap.com)
SAP S/4HANA Cloud has been conceived to co-exist in a diverse system landscape with native integrations to other SAP solutions and open interfaces for further integrations and extensions via the SAP Cloud Platform to anything out there.
It may be difficult at the beginning. Try to think this way: think that the company was running another ERP for more than 20 years and now they took the decision to move to SAP (why it took so long, right?)… So imagine that everything that they had in the old ERP will go away… how would you handle the core business processes without the developments they had in the old ERP?
It is going to be scary at the beginning, but the pay-off will come latter… how many times you rejected the idea of implementing a new product SAP was offering because it would not “fit” on your current system highly-customized landscape?
Less developments, more standardization and best practices will allow you to consume those products in a more efficient way and those products could be the answer to the developments you had to do in the past. Take this opportunity to ask “why not?”, and push your company towards to simplification. It will set free your IT department to work on items that brings real value to the business and to be more innovative, instead of coming to the office and spending the whole day coding, repairing code or thinking what needs to be adapted in the program to accommodate an acquisition, a merge, a new tool that the company is considering to buy and etc.
SAP S/4HANA is a once in a lifetime career opportunity to many people… I know many people that are proud of their R/2 <–> R/3 project but the fact is that comparing R/2 to R/3 move versus moving from ECC to S/4HANA has a huge difference, it’s way bigger and the S/4HANA gives you the opportunity to not only improve what you already have but totally re-imagine what is possible to your company in the next years.
(image source: sap.com)
“If you’re not serving the customer, your job is to be serving someone who is.” Jan Carlzon
According to RightScale’s 2015 State of the Cloud report, which surveyed 930 IT professionals about their current adoption and future plans involving cloud computing, 88 percent of businesses are using public cloud technology and 63 percent are using private cloud. Eighty-two percent have a hybrid cloud strategy, up from 74 percent in 2014, a clear indication that the cloud has quickly become an essential ingredient of modern IT.
I'm sorry but without any factual evidence ("firmly established itself", "Researchers shown" - what is the source? any proof of these statements?) or your own personal experience I'm afraid this blog adds very little to the noise already generated by SAP's own marketing department.
I don’t disagree with you at all on the point that S/4HANA implementation should be used as an opportunity to evaluate the company's business processes and need for customization.
But just like many similar SAP employee blogs, this one seems to presume that S/4HANA is the bestest ERP ever and will magically work better, faster, stronger in the customer's environment, IF ONLY they just let go of silly customizations and take advantage of all the glorious goodness that S/4HANA next generation in-memory cloud blah blah blah brings. All this - again - without providing any facts to support the statements being made. "It's got the electrolytes!"
I appreciate your enthusiasm but, unfortunately, this blog just does not add anything to what's been said many times before. Kindly review the SCN blogging guidelines and consider improving your future posts.
P.S. No credits for the pictures either, are you sure all of them are your own?
Thanks for the notes, I added the source to the post and credit to the images.
With all respect to your comment, I fell the right to presume that you have a background in development, am I right? Because this is the kind of reaction that many customers will get from consulting companies trying to justify the tons of developments the customers will have to pay to redesign all again into S/4HANA or employees that are resistant to move to other areas in IT and will continue trying to convince their business partners that is worth to go to a custom-development while changing the business process may accommodate what SAP offers in the standard one in one of their suite of products.
My point is, there are too many SAP implementations out there with unnecessary developments that with some creativity may help to get rid of one development or other...
That's the thing - you don't have to presume, you can easily see my content on SCN or even look up my LinkedIn profile. If you do some research you can find facts. And then you can form an opinion based on them. (Not sure what my occupation has to do with anything though.)
I'm not trying to justify "tons of development". I'm pointing out a lack of factual evidence in this blog that would support your opinion. E.g. you are saying "unnecessary developments". Why do you feel they are "unnecessary"? And how would S/4HANA remedy the situation specifically? Is there any example you'd like to share?
Of course, anyone is free to post their opinion on SCN. But when opinion is not supported by the facts then it's just not very convincing.
Sadly, this blog also reminds me about the situation we had few years ago when SAP got upset the customers had trouble finding use cases and business justification for HANA. Fortunately, SAP strategy improved quite a bit since then. A worthy example to follow.
Rather than address her issue, you make a circumstantial ad hominim / appeal to motive logical fallacy. Effectively “you’re a developer, so you would say that” (ref: Mandy Rice Davies, Profumo).
I’ve worked with SAP products since 1997. I cannot think of a single project where the goal has been anything other than to have the absolute minimum of customisation / custom development. Customise only where necessary, custom develop as a last resort is the rule. Companies recognise that deviation from standard has a cost. They further recognise that the Total Cost of Ownership of development is very high, and so custom development is to be avoided. (If only they’d recognise further that the TCO of development is massively influenced by the competency and skill of the developers, we wouldn’t have the mass drive to the lowest possible hourly rate for a programmer… but I digress).
From my experience (in-house, consultancies, freelance external), your contention that consultancies/stubborn developers are the cause of the proliferation of custom development is entirely without foundation. Your response reinforces my view that there is a significant portion of SAP employees who don’t really know how things work in the real world of their customer base.
Tongue in cheek footnote: it seems many marketing folk have the delusion that because they’d like something to be true, it is automatically true. Or perhaps if they say it often enough, people will believe it, and they’ll sell more product. But the former seems overly dismissive and the latter overly cynical!
I don’t understand why you have been so reactive to my post. It is okay to have a strong opinion, but it is even better to respect other’s point of view. I am wondering if you react this way with everyone in this community or in your work environent. I may be wrong; you may be wrong… Let’s see, the time (and other members of the community) will tell… It might be early to make “assumptions” given the number of S/4HANA projects I have experienced or talked to someone involved so far.
Please, understand that people have different opinions and thinking different is fundamental approach to help companies face the challenges the market-leader companies are facing today.
You probably have heard that since 2000, 52% of companies in the Fortune 500 have either gone bankrupt, been acquired or ceased to exist, this number is even higher, 82%, if we look back to 1955 when the Fortune 500 started.
Why? Various reasons… most common? When they started been successful and market leader they did stop innovating.
15 years ago, an IT company needed around 5MM USD to start their business and stay in the market, today in the age of the start-up an IT company need around 5k to start. Your next company’s competitor might be open their doors today…
Companies are chased by disruption everywhere… I have an example in the company I work for… I have a non-disclosure agreement, but if you are interested, search on google and you will know what I am talking about.
I have also another example “in-house” where we started a project and during the requirements we identified around 20 developments necessary… We stressed them out pushed by the simplification idea and we ended with only one customization in that project… That’s one of the things I am inviting the person who is reading this post to think about… It took us some stressful meetings to tell to the business that their processes would need to be adapted to accommodate the SAP standard and best practices of a given process and a lot of creativity, but in the end of the day, everybody agreed that the simplification was the right path.
Will that work to every scenario? I don’t think it will.. but what would have happened if we had agreed with all the developments without stressing out the existing possibilities? We have to have the courage to be curious and try a different approach.
Those are the ones we decided to review now, pushing to the simplification model... but we have developments that we carried from R2 to R3 because we didn't have the courage to do the same kind of analysis in the past, and today we know that a big number of those developments are not really differentiating us from our customers and competitors, but instead, this highly-customized approached has left us with a less than optimal platform to support and grow.
Do not be hampered by the “that is the way it has always been done” thought process.
Companies are working on their innovation and digital transformation strategies simplifying and standardizing processes across all business units.
If you look to the S/4HANA Customer Success Stories 2017, you will see that many of the companies were targeting simplification and simplification can be achieved in many different ways. A more simplified system with less customization and more standard layered is one of them.
I invite you to look to those customer’s stories and see what they have to say (again, it may not be applicable to everybody, but it is worth to understand and learn from the companies who already made the move)… Their objectives or motivations were most of the time around the statements below:
So, it is not just me who is saying it.. it is not an argument made from my mind… there are several companies taking advantage of a more simplified environment. The game is changing, we have to be flexible to adapt… it is my opinion… I respect yours… this is a community, be kindfull on your comments and don’t judge other people’s post… be more constructive with your comments, try to demonstrate your point of view and why you don’t agree with what I said… and then we might agree in disagree.
I didn’t read the blog (…just beeing honest!), but I read the comments so far, and I’m happy to notice that Jelena and you are having a nice and respectful discussion here.
To me, that’s a thing worth noticing and I think it’s part of what makes a community.
Thanks you both for that!
Edit: now that I read ALL of the comments, of course I also want to include Paul into my thanks for respectful and community-strengthening discussion!
I do not think anyone would argue with the following two points:-
SAP provides fantastic tools for the former. My company fully intendeds to perform such an exercise before even thinking about moving to S/4 HANA.
In regard to SAP coming up with a standard solution to Z custom code (I refuse to use the word customisation, as that implies the IMG, which is something utterly different) once again every time we upgrade I am all over the new functionality iike a rash, hunting for a new standard thing to replace one of our Z things.
We have a LOT of Z things. Since the year 2000 we have upgraded several times and I have found the following new innovations by SAP that replaced Z things we had created:-
For the former I had to implement a lot of user exits to get the thing working properly, and it still does not always work 100%, so I still run the batch job to catch the 5% of purchase orders which are not automatically created.
Sadly that has been all that I have been able to find. I wish I had found more. Maybe my companies industry is not mainstream enough. Still maybe this is a good thing, as our main competitors also run SAP and if we can do things they cannot then probably a bonus for us.
As I understand it at the time of writing S/4 HANA still does not have the full functional scope of ECC 6.0, though it probably will in a few years. Apart from HR which is not included in S/4 HANA (you have to use Success Factors which I bet is separately licenced, though if that is not case please tell me and I will be very happy).
I would like to jump to Jelenas defense here. If you look up any of her content on the SCN - and there is a lot, so easy to find - you will not find her reacting negatively to everything in sight. At this point you may be thinking "Why me then? What have I done to deserve this?"
I think the issue is - we have been here before. There was an article in the IT press about S/4 HANA and a quote from one of the SAP Board saying "customisation (sic) is out, standardisation is in". The headline of the article was "the 90's are calling - they want you back"
What we mean by that is that in the 1990's every single SAP implementation started out aiming to be 100% vanilla, and they were described as "business processing re-engineering" which meant "you must change the way you do business so as to fit the way SAP has designed the software". You say something similar in your blog above.
At this point in history the famous SAP term "best practices" was coined, which translates into English something like "a business process which can be implemented in SAP software with no customization (sic)".
So famous dd this phrase become that even now, twenty years later, when I or one of my colleagues see something in a software system (any software, not just SAP) that is brain dead stupid, or does not work at all, or is unusable we gleefully say "That must be Best Practice!"
Last time (1990-2000) we all - myself included - went gangbusters to try and change the business that had employed us and use vanilla SAP, and ended up conceding that the software was there to serve the business, not the other way around, and if things did not work out of the so called "box" then you had to make them work by hook or by crook, hence the vast mountain of Z things you see in so many companies.
So this approach - no Z things, all standard - did not work before, so why would it work now? The evil Mr.Spock with the beard would ask "Have we (SAP) become so powerful quantitatively, that we have made a qualitative change to the equation?"
I honestly don't think you have. All those statistics you quote about 90% of companies going broke because they could not adapt, I bet the 10% that survived did not do so by installing a 100% off the shelf product and crossing their fingers that the vendor is just so wonderfully good they will adapt the software for them in a way that fits that keeps their advantage over their competitors who also run SAP.
In any event, it does not matter what you or I say, time will tell the tale. I will watch with baited breath to see which big companies with lots of Z things are going to dump the majority, or indeed all of it. Are any such speaking at TECHED this year? I will go along to listen.
It also could be said that the real instruction from SAP is to get rid of all your custom ABAP code, and build it all again outside the system in another language, and communicate with S/4 HANA via APIs, an area SAP has historically been very poor at.
I am finished! I tried my best to explain my reasoning. I do have to say though, from a purely emotional point of view, your blog did seem rather like a puff piece for how absolutely wonderful S/4 HANA is, the greatest thing the universe has ever seen, just install it and all your problems will go away etc...Read the blog again yourself, or get someone in your office to read the text without saying it was written by you, ask them what they think, and try to see how someone could come to that conclusion....
Good inputs Paul! Great point of view! Good Luck on your challenges!