The Intelligent Enterprise
I’m fresh back from SAPPHIRE NOW 2018 where SAP announced the Intelligent Enterprise Suite (perhaps one day to be known as IE/4HANA 😉 ), which included the following products*:-
- SAP S/4HANA (Digital Core/ERP)
- SAP Ariba (Procurement)
- SAP Concur (Travel and Expenses)
- SAP Fieldglass (Contract Workers)
- SAP SuccessFactors (Human Capital Management)
- SAP C/4HANA (Front Office – was Hybris and C4C)
- SAP Cloud Platform
The “Intelligent” bit was the fact that they are all getting Machine Learning / Artificial Intelligence added and “Enterprise” bit was that SAP will do more to deliver integration between them “out of the box” – a big complaint from the customer base.
*I’m sure it covers more products but that was what was in the keynote “Marchitecture” – for instance where is Manufacturing / Execution or Supply Chain Management ?
Why S/4HANA Cloud is the Answer
In this blog I will focus on the S/4HANA component and why I think many companies are missing the point when they talk about converting existing systems to S/4HANA when they should be planning to re-implement into S/4HANA Cloud if they want lowest TCO and maximum innovation. I covered some of this last year in my blog – SAP S/4HANA Cloud: It’s not a matter of if, but when. But I wanted to focus on the 2 main reasons that S/4HANA Cloud should be the target for existing ECC customers.
The reasons are :-
Number 1 – If you do a conversion of your existing ECC system to S/4HANA, you will be bringing your own configuration and modifications into the S/4HANA system – this means going forward these are still yours to regression test each time the system is upgraded. If you go to S/4HANA Cloud, you will implement using SAP Best Practice Scope Items and build any extensions (think modifications) on the SAP Cloud Platform (SCP) using whitelisted APIs. So, when you come to upgrades, the configuration and the code has already been pre-tested by SAP which equals much lower risk and lower TCO.
Number 2 – If you do a conversion, you will be running the on premise version of the software and will therefore get major functionality upgrades made available once per year and you will need to plan when to implement this new version. On the other hand, if you go to S/4HANA Cloud you will get new features every 3 months and SAP takes care of the upgrade process. In practice this means companies running S/4HANA Cloud get features 9 – 18 months ahead of those running their own on premise systems (even if these are under a classic HEC contract). Today those features are things like predictive analytics, machine learning and conversational UIs – what might they be by 2025? Perhaps by then we will have achieved my vision of Darkened ERP?
The above means that at some point on your S/4HANA Cloud journey you will need to do a new implementation and a data migration – the only question is when – anything else that you do will only be a pitstop along the way.
This doesn’t mean that those pitstops will not add value – but you will need to make the business aware that future investment will be required to get lowest TCO and maximum innovation.
What You Need To Do
If you simplistically breakdown that task of moving to S/4HANA Cloud into 3 parts :
- A – New Innovation : The adoption of new features / functions available in S/4HANA Cloud and decommissioning your custom code
- B – Data Migration : The migration / cleansing of data into the new formats required for S/4HANA Cloud
- C – Change Management : The change management required to get the business using new features / functions
If planned well, each pitstop should move the needle in at least one of these areas, smoothing the inevitable change curve you need to climb to Digitally Transform your ECC in to a Digital Core.
I covered some of the key pitstops you could make in this blog, which I have summarised below :
Pitstop 1 – Do nothing – This is the path to choose if you believe your current SAP ERP solutions meets your businesses demands now, for the foreseeable future and doesn’t need any hardware / software upgrading for 8 years. This doesn’t move you anywhere and you could be falling behind your competitors.
Pitstop 2 – Start tidying up – This is the path to choose if you have analysed the scope provided by S/4HANA Cloud, have decided it doesn’t currently support your scope (and SAP have confirmed this) and don’t want to learn any new skills to prepare yourself for S/4HANA Cloud. In this option, you would work through your existing on premise scope removing / cleaning data and reviewing / removing custom code. The more of this you can do the easier the final move will be. This helps mainly with B – Data Migration.
Pitstop 3 – Get some HANA / SCP Expertise – This is the path to choose if you want to tidy your system and get used to what SAP HANA can provide to you. This will smooth the eventual journey to S/4HANA Cloud and if you get some of your HANA experience in SCP you can start to understand the difference between running ERP on HANA (Suite on HANA) and using the power of all the engines that are available in native/full-use HANA plus the SCP capabilities aka Leonardo. This helps mainly with A – New Innovation and partly with C – Change Management.
Pitstop 4 – Get to S/4HANA Enterprise Management On Premise – This is the path to choose if you see features in the on-premise S/4HANA system that are not yet available via S/4HANA Cloud. To best prepare for the eventual move to S/4HANA Cloud you might want to consider starting on premise with a new S/4HANA system and trying to stay within the Best Practice Scope Items where you can. Make sure SAP know where you can’t fit into the S/4HANA Cloud Scope so they can feed this into their planning. This helps with A – New Innovation, B – Data Migration and C – Change Management.
Final Destination : Get to S/4HANA Cloud – This is the path to choose if your research shows you that S/4HANA Cloud has the scope you need now. For this you will need to migrate the data from your on premise system(s), so the cleaner/smaller this is before you start, the better.
Your Right Path
What is the right path for you, will depend upon where you are, what industry you are in, how competitive you are now and your strategic direction – all of which need to be baked into your SAP Roadmap, together with how you will create your own Intelligent Enterprise.
I will finish by saying that if S/4HANA Cloud isn’t the FINAL DESTINATION for your SAP ERP roadmap, you haven’t finished the Roadmap yet ! And if you don’t believe me ask Dr. Wieland Schreiner – that’s what I did.