Getting to Your Destination Faster: How SaaS ERP is Like Riding the Subway for End-to-End Processes
Join Me on a Trip Underground
Ever since I was a kid, I loved travelling by train and tube. Getting a window seat, watching either the scenery or the tunnels passing by was a great opportunity to let the mind wander. No digital gadgets, no earphones to perturb my imagination; travelling was an adventure and a gateway into a different world.
I have to admit, I once even did the iconic Indian Pacific rail journey between Perth, Adelaide, and Sydney, which is an epic transcontinental crossing between the two oceans on the East and West coasts of Australia. And I loved every single mile of this journey. Following the path of bush pioneers and legendary adventurers, crossing the beauty of the Nullarbor plain with the world´s longest straight stretch of railroad was a bucket list item for me.
Considering individual transport options, like cars, also has its own advantages. However, for simplicity, efficiency and transport capacity, a subway is really the backbone of transportation for people in large cities.
Taking this analogy of subways and cars to the different deployment options of ERP solutions, there is an interesting comparison to be made. The flexibility and individuality represented by the intricate network of streets and cars can be synonymous of a private cloud option, whilst the efficiency and communality of a subway can be that of a SaaS offering.
Keen to investigate this comparison with me?
All aboard! You are heartily welcome…
Figure 1: Public Cloud as the World’s Business Tube.
The Street Network Hosting the Individual Traffic – Your Company-Owned ERP
We are all accustomed to individual forms of transportation and enjoy the freedom it brings (if it’s within our means to afford). We have this ability to choose when and where to go, at our own pace, which is amazing for taking leisurely weekends or spontaneous trips.
This is less amazing during our daily commute to work, as this solo (unless car-pooling) form of transportation becomes less efficient and occupies our time when we could otherwise be dedicating this time to productive and value-added tasks.
This becomes even less so amazing for some when one considers the cost and effort required to run it. Sure, the car is ours. We bought it and we own it, but we are also responsible for purchasing, insuring, fueling (or charging), maintaining, and securely parking it. And when it comes to end of life – for some earlier than for others – the investments are consumed.
Ultimately, this is like owning and operating your own company’s ERP system. You individualize and run it for as long as it covers your company´s mission. The extension and customization options give you all the freedom to go wherever you want, the downside are costs and efforts to build and run it – and keep it working in the next car to come.
Figure 2: Street Map.
The Subway Network – Our SaaS ERP
A subway network takes time to build and luckily it is the solution provider’s task to deliver, not yours as a consumer. You just consume the infrastructure in a pay-per-use model. You want a ride, easy: You pay for and use it. The advantages are obvious. It transports people in large numbers along the main routes through the city. There is no need for an individual car, nor do I need to invest time and money to keep it running and instead I can invest my time for my business. The subway is a reliable and fast means of transportation, and I can easily access the subway map and ticket digitally on my mobile device (even off-line). Plus, I don’t have to worry about finding a secure parking space at my destination.
Figure 3: Underground Map.
That said, limitations are also to be acknowledged:
It runs on a fixed schedule, not necessarily always ours. Additionally, it only stops at certain stations and won’t be able to drop us off directly at our home or work. It’s also limited to traveling where tracks are laid and can’t deviate from that route unless a switch exists.
Again, many similar observations can be made about SaaS ERP. The entire solution is standardized, which means that we know exactly what we are getting (based on SAP Best Practises) before we make the purchase. Instead of ownership, we subscribe to a pay-per-use model and have access to a predefined, preconfigured fast track access to a feature rich and extensive catalogue of end-to-end business processes (that are constantly evolving).
Figure 4: SaaS ERP as Business Tube.
Just like we still need to find a way home from the train station, either by foot, electro scooter or bicycle, for that last mile solution, a similar concept applies to SaaS ERP. A proper extensibility concept is built in, which allows for last mile extension beyond the delivered scope, if needed.
How to Get Home From the Terminal Station – Your Extension Options for Last Mile (and Beyond)
Figure 5: The “Last Mile” in the Business Tube.
In the earlier days of SaaS ERP, it was tricky to get the last mile solved and a wrong understanding of extensibility was grounded in a misunderstanding of the meaning of Standardization. Standardization means a clear commitment to changing companies´ business process for the sake of a fit towards the subway map. Beyond adopting the standard, you can extend, but it needs to fulfill the life cycle compliance paradigm.
Cloud extensibility provides a standard methodology in an SAP SaaS ERP offering to close the last mile and extend the subway map, aka the solution. We offer three extensibility scenarios. Two of them are delivered embedded: in-app extensibility (which can be realized by an informed key-user – no need for in depth development knowledge) & developer extensibility. The 3rd option is a side-by-side extensibility enabled by a subscription to the SAP Business Technology Platform (SAP BTP). It allows you to connect business objects, create own logic and encapsulate & decouple the life cycle of the extension from the SaaS ERP service itself. If you are interested in a quick overview on this concept, please click here for the SAP Activate Minute video on this topic.
Intelligent ERP – Take the Fast Train Bypassing as Many Stops as Meaningful
If you want to turn your SaaS ERP into an enabler to become an Intelligent Enterprise with the help of AI, you’re on the right track! The idea is to create a “zero-touch” ERP system where routine processes can be automated without any human intervention. Think of it like having a season ticket for frequent travelers – they can breeze through all the gates without having to stop and pay attention. That’s what we want for ERP processes too.
Each company strives for hyper-individualization and mass customization of services with a consequence of much higher throughput across all corporate functions.
But Companies are challenged by this: In order to ensure profitability and drive proper decisions with the lowest possible working capital, processes like ordering or invoicing have to be processed in real time or even predicted (predictive processing) as “zero touch transactions”.
This requires ERP, Enterprise Resource Planning, to be reinvented beyond what we could have imagined in the past.
Figure 6: Business Subway incl. automation and extensibility.
In our subway example, AI represents a fast train that bypasses some stations to get large numbers of people to their destination faster during rush hour. That´s what you need to consider AI for. No touch, straight and fast. The straightforward case runs without stopping at each “regular” workflow gate. AI can help you quickly process cases that fit your standard business or identify cases that require exception handling.
Starting with a limited trust in automation, we experience that over time customers have gradually become more trusting of automation and consequently this reduces the exception handling cases to a minimum at an own pace. When manual action is required, the system alerts the appropriate user.
Ultimately, this shift in trust towards automation allows for the logic of ERP to be turned on its head.
“Instead of people chasing the work, in a modern
ERP environment the work is chasing the people”
What Does This Mean for a SaaS ERP Implementation Project?
Though from a skill perspective, a SaaS ERP project has many similarities with an implementation of a classical ERP solution, there are some significant differences, I´d like to share with you.
- Our SaaS ERP, SAP S/4HANA Cloud, public edition, provides and prioritizes the highest possible degree of standardization. It runs like a subway – for customers that look for speed and rapid innovation adoption with a high degree of standardization to quickly roll out to new businesses, new acquisitions, or new business expansion. It comes with pre-built End-2-End business processes to connect all the areas of your organization, that are activated rather than built from scratch.
- We understand that your organization is not an isolated rail network. In today’s world, your organization needs to – it must – be connected, beyond the four walls of your ‘train station’, right into that of your suppliers and customers or other internal systems you may have. SAP S/4HANA Cloud comes with extensive integration capabilities that allows for seamless connectivity between ‘subway networks’ (Please check regularly the SAP API hub to discover these integrations) or complementary solutions, such as SAP Success Factors, SAP Ariba,…and with the latest shipments it even allows you to build your own custom APIs as described here.
- Added Guidance. Sure, taking a subway is easy. You buy a ticket and get on the train. But sometimes it is not so easy – train stations can be an intricate network of corridors and escalators, sometimes you need to change trains to get to your destination: finding your way is not always evident. The same applies to an ERP project. For that, SAP has developed the SAP Activate methodology that gives very clear guidance on how to succeed throughout the entire lifecycle of an implementation, as well as beyond when you are ‘running’ and keep doing so at your best. What’s more, is that SAP Activate comes with an unparalleled library of accelerators to help you at every step of your project, thus further helping you to reduce costs as you do not have to develop them yourself – – these are your tube maps. It should also be pointed out if that if it was not evident, that opting for SAP S/4HANA Private Cloud does not mean perpetuating having to customize the system to the nth degree or at all! In fact we recommend that even with this option, you keep your core clean and SAP promotes clear golden rules to follow whilst implementing SAP S/4HANA Cloud, private option, without reneging on standardization principles of implementation using maximum cloudification.
- As previously said, with cars you have choice. To get to your destination, you can take the scenic route, the freeway, the city road…but then you also have traffic, red lights, shared lanes, accidents…The subway, to go from A to B is direct, has one line and you know at what time you will arrive. The way you approach your project is the same. Will you have a ‘Fit-to-standard’ approach as mandated by the Activate methodology and adapt or will you resist and be more in a ‘Fit-to-gap’ aka car/freeway mode? Our experience shows that customers that follow the ‘Fit-to-standard’ approach prescribed by the SAP Activate approach will benefit from fast projects and accelerate time to value realization.
- Failed implementations are mostly caused by resistance to change. As such, based on evidence, we note that the fastest implementations (i.e. time to value realization) occur when customers fully commit to a Green Field approach and commit to the standardization of their business processes, predicated on the SAP Best Practices that are baked right into SAP S/4HANA Cloud, or when their prior situation frees them from trying to replicate what they had before (or did not have). It is also imperative that this commitment to ‘Fit-to-Standard’ is repeated during the entire project, from the C-Levels and main sponsors of the project to the entire organization and project team: “this is why it is important, and this is why we are doing it”. This requires a significant shift of project priorities, as displayed in picture 6. In a classical ERP project, most of the work goes into Configuration/Technology tasks (80%), while a SaaS ERP activation requires a significant focus on Change Management to adopt Best Practices. The less established core processes a company runs, the easier the adoption happens.
- If your car is in the shop, you can’t use it and you must pay for the repairs. When the work is done, you’ll want to take it for a spin to make sure you are happy with the work done. With the subway, none of that is your concern, you know that tomorrow there will be a train to take you to work! In SAP S/4HANA Cloud, public edition it is similar, the maintenance of your system and its upgrade whether hardware or software is all taken care of by the service provider – SAP – and in the context of upgrades the solution allows even test your adopted processes for you! That’s right, customers that opt for this service can get Post Upgrade Tests (PUT) automatically performed in their system, with their data, on their behalf and full transparency is offered as the results are visible in their system.
- Upgrades. In public cloud it is a known fact that twice yearly your system will be upgraded, I.e new enhancements, features and functions will be delivered to your system, thus allowing you to super charge and extend your subway network further or connect two stations more efficiently! In addition to this, the SAP S/4HANA Public Cloud comes with an automated test tool that allows you to perform automated tests of your adopted processes yourself in an unattended fashion during the upgrade period. This offers a non-negligible time and cost saving tool, as it does not require for your employees to perform these tests themselves.
Figure 7: PCE vs SaaS ERP projects, exemplary task allocation and duration, SAP Service Delivery.
„Your first SAP S/4HANA Cloud implementation shouldn’t be underestimated to meet
your project plans, particular the change management. Even bigger and
sustainable savings comes over time with automated upgrades and innovations“
– Joerg Rudat, Delivery Manager MEE, Public Cloud ERP Services
Subway or car, it’s a question of flexibility vs standardization. A private Cloud ERP offers a tailored-to-fit cloud ERP that adapts to your organization’s unique transformation aka a car, while a public cloud ERP is the ready-to-run cloud ERP that delivers the latest industry best practices and continuous innovation aka a subway.
In closing, I hope to see you getting a ticket for a subway ride with us very soon. I look forward to hearing from you about your learnings and experiences.
Feel free to ask your questions on SAP Community here. Follow the SAP S/4HANA Cloud tag to stay up to date with the latest blog posts. Follow us via @SAP and #S4HANA. You can also follow me via Bert Schulze, on Twitter and LinkedIn.
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More Information on SAP S/4HANA Cloud, Public Edition:
- ‘Highlights of the SAP S/4HANA Cloud, Public Edition 2302 Release’ blog post here
- SAP S/4HANA Cloud, public edition release info here
- Latest SAP S/4HANA Cloud, public edition release blog posts here and previous release highlights here
- Product videos on our SAP S/4HANA Cloud, Public Edition and SAP S/4HANA YouTube playlist
- Cloud ERP Product Success Digital Enablement Wheel here
- SAP S/4HANA Cloud, Public Edition Early Release Series here
- Inside SAP S/4HANA Podcast here
- openSAP microlearnings for SAP S/4HANA here
- Best practices for SAP S/4HANA Cloud, public edition here
- SAP S/4HANA Cloud, Public Edition Community: here
- Feature Scope Description here
- What’s New here
- Help Portal Product Page here