Digital Disruption & SAP S4HANA: Journey so far and the way ahead
As I write, this is no more a buzz and we are standing at the dawn of the digital disruption. The impact of the digital technologies can be seen around in our personal lives too. How we communicate, engage and interact with one another. Convergence of technologies like social media, mobility, analytics, cloud computing, business networks and embedded devices are leading the way.
This is not the first time there is disruption, Right from, the Industrial economy to information economy changes in 1940-1980, in 1980 onwards we saw, satellite systems for different business functions like, order management, inventory management, manufacturing, finance started integrating and gave rise to evolution of ERP suites, after 2000 industry started sighting changes in the business models because of the rapid expansion of the internet. And when now things have become digital, there exists opportunities to design and integrate these digital assets, which were earlier not designed to work together and produce business benefits. Technological innovations further paving the way for digitalization and leading to an era of digital transformation and, is now poised to create a spectrum of the opportunities to create new business models. But unlike previous disruption, this time it is rapid and demands the response from the organizations also similar in nature, to remain in the game.
Envisaging the fact of upcoming tsunami of digital, SAP Introduced SAP S/4HANA Finance in 2014 and a completely new enterprise suite SAP S/4HANA Enterprise Management with a digital core in Nov 2015, in order to create a digitalization friendly platform. SAP’s roadmap for the ECC suggests that support to ECC will cease to exist in 2025 and no significant changes expected in future ehps. Since the launch of S4HANA, about 4200+ customers either adopted or in the process of adopting S4HANA against the estimate of 50000+ by 2025. Out of the 4200 a good number is of the customers who are first time implementing SAP, thus the number of customers who actually embraced S4HANA away from ECC is less. It is to be noted, many organizations were still transforming or had completed their transformation with SAP ECC and other peripheral SAP applications in recent times only.
But reasons for the initial slow adoption of SAP S/4HANA could be many – why to adopt, how to get there, availability of skill, product maturity, Business case, budget… and many more questions are there in client’s mind. Research suggests that when it comes to innovation adoption, there can be four categories of the companies. Market Leaders, who actively go for the change and prefer to drive it. They look technology as enabler in the disruption. They accept failure as part of the process and move on. Fast followers react based on the success of the market leaders and the result of their experiments. But contrary to the market leaders, they do not want to fail and apply lessons learned from the market leaders to their roadmaps. Cautious adopters, as name suggests, take more measured approach spend time in studying and instead of transformational, they adopt approach of incremental innovations. Laggards procrastinate the adoption and wait for the trends to move beyond. They constitute 50% of the marketplace. Whereas fist three category constitute 5, 15 & 30% respectively. SAP S/4HANA adoption may also fit in the theory. In my experience too clients who were not showing any interest in S4HANA last year, are now serious to discover and explore it for a business case.
Another dimension, do majority of the companies aware of, why they need SAP S4HANA? or it is just that date of year of ‘2025’ which is making them to go for it. Clients are exploring and also getting education about the various transition paths to S/4, difference of features between ECC and S/4HANA, timelines and cost of implementation/conversion. They are looking S/4HANA as an upgrade from ECC, however current situation demands different approach. I think, if companies do the same things after adopting S4HANA, which they were doing with ECC, that is not transformation. Merely replacing ECC by S/4HANA will not add as much business value and unleash the benefits of the digital core. The current trends suggest, with digital transformation, companies have to get into the transformation mindset and have to create new business models along with the new products and services. Companies have to align with innovation scope, explore options in design thinking workshops and come out with a roadmap for a digital journey. Here SIs, SAP with S4HANA will help companies to reinvent their business models.
It is widely expected that, we are well in the disruption and the norm is, disrupt or will be disrupted. There is no denial that ERP is the DNA for every company and thus adoption to S/4HANA becomes crucial for every organization. Studies shows that average age of the companies have decreased. Companies have to reinvent themselves to stay in the business. What is going well now may not work in future. The definition of “end” is going to change when we talk about end to end. Companies have to look SAP S/4HANA as a platform to start their digital transformation journey and have to focus on B2B2C instead of B2C.