Cloud ERP – Opportunities, Challenges & SAP’s Outreach
Noted writer and futurist, Alvin Toffler had said, “Change is the process by which the future invades our lives, and it is important to look at change not as something to fear but as an opportunity for growth.”
Change is typically a gradual and continuous process. However, for Technology Industry, it has been quite rapid & disruptive in recent times. Planning Tools for companies transitioned from MRP 1 (Material Requirements Planning 1) in 1960s/70s to MRP 2 (Manufacturing Resource Planning 2) in late 1970s/80s and then to ERP (Enterprise Resource Planning) from 1990s & onward. The scope of system kept increasing and became comprehensive enough to cover all aspects of an enterprise’s resources and operations. ERP systems could manage and integrate different functions within an organization, such as finance, human resources, supply chain management, production, and more.
Like with any other change, whenever these changes happened, there was resistance & also an opportunity within. Some organizations managed to take early advantage, and some followed eventually. With never before kind of internet speeds & stability, we are now witnessing another big switch in the world of ERP, & it is called ‘Cloud ERP’. It is an ERP system in a cloud-based environment. Cloud ERP, as the name suggests, is hosted in the cloud on remote servers maintained by third-party providers & is accessed over the internet. Cloud Computing enables use of simple devices to access near infinite resources in other locations with a simple internet connection. Cloud ERP is mostly offered as Software as a Service (SaaS) & the consumer is billed on a subscription basis for what they use.
SAP is the largest ERP vendor & it’s Cloud ERP offering is SAP S/4HANA Cloud (S/4HANA – Business Suite 4 on the SAP HANA database). Check this for a 2.5 min Overview Demo of SAP S/4HANA Cloud. SAP provides 2 distinct products that can be deployed as the Cloud ERP: SAP S/4HANA Cloud, public edition & SAP S/4HANA Cloud, private edition. With these, SAP aims at supporting customers in becoming intelligent, sustainable enterprises. An enterprise which consistently applies advanced technologies and best practices within agile, integrated business processes.
Cloud ERP is the topic of the day. There is large amount of information available on it & there are frequent updates to it as well. A quick consolidated view of available information & resources could come very handy. This Blog Post is an attempt towards it with a focus on SAP S/4HANA Cloud. Hope it helps the reader to form an informed view & build a mindset towards navigating this change.
Cloud ERP – Opportunities
Today’s world is fast paced and connected. Consumers expectations are also on rise. For industries to catch with these, they also need to adapt to better processes & technologies. It needs an ERP system which not just manages well, but is also agile enough to support new solutions & technologies faster,
helps executives to collaborate real-time from different locations & deliver results at pace & quality. The system should operate secure, 24 x 7 & at the same time needs to adapt easily to change in process, product and scale. Cloud ERP is a solution to all these. It also helps to save funds & efforts associated with maintenance of traditional on-premise ERPs. This article explains the need of Cloud ERP further. Following figure explains the Cloud ERP advantages in a nutshell.
Cloud ERP – Challenges
Cloud ERP offers a host of benefits, but also poses challenges which needs to be considered. Major concern is the fitment of existing solution in new landscape with restricted customizations. Another one is data security and privacy, as you entrust your sensitive & confidential information to a third-party provider. It needs to be ensured that the provider complies with the relevant regulations and standards, and adequate measures are in place to protect the data from breaches and cyberattacks. Additional efforts could be needed to ensure that the Cloud ERP system can seamlessly communicate and exchange data with the other applications and databases, both on-premise and in the cloud. Change management from stakeholder & staff is yet another big challenge which needs consistent efforts with adequate training and support to help them transition smoothly and effectively.
Following figure explains the Cloud ERP challenges in a nutshell.
Challenges – Pragmatic View
Before challenges, let us look at the scenario where we already have an operational Cloud ERP system. What would be the large teams of Business & Technical analysts busy doing now? Well, instead of planning & working on new developments, they would be reviewing the set of new features & functionalities rolled out in recent & upcoming releases & picking the ones suitable for their business & systems. Instead of worrying about ways to maintain old code while catering to new innovations, they would work towards adapting new solutions & building applications/integrations using the standard APIs & tools provided. No more worry about long pending upgrades, increasing infrastructure needs, slow or insecure systems. Focus is more on adapting innovations & streamlining the process better. But, before we have all this operational, we have challenges, indeed big & real ones, to overcome.
Cloud ERP adoption needs a mindset change. Not everything which was customized in an on-premise system can be achieved easily. It can be looked upon as an opportunity to review processes and re-engineer to create a Clean Core with standard code. Private Edition system can be an option in case there is large gap in fitment. Integration to other legacy applications needs to be reviewed under new landscape and if needed, effort towards building it with standard APIs and SAP Business Technology Platform (BTP) needs to be taken. Change Management with above fitment and integrations, redefining new evolved processes, changes to other systems impacted by process & training people around those could be a big task & also cost. Adequate measures to ensure the expected data security from hyperscalers is also needed. SAP has introduced a series of measures & programs to cater to these challenges. Let us review them.
Cloud ERP – SAP’s Outreach
To facilitate adoption of Cloud ERP by Customers & to help Partners in this Customer journey, SAP is working continuously to introduce new programs, initiatives & systems as discussed below.
Choosing the right ERP
SAP believes that solving today’s challenges and seizing tomorrow’s opportunities requires a complete, innovative, intelligent, and industry-ready cloud Enterprise Resource Planning (ERP) platform. In the cloud, modern ERP platforms can bring the agility and scale that are needed to succeed in an ever-changing business environment. Kindly review SAP S/4HANA Cloud Vision Paper here. SAP’s Cloud-first strategy is aligned with industry norms. It’s Cloud ERP is based on 4 pillars – Collaborative, Innovative, Networked, & Sustainable. Sustainability is needed for a better world. We need to innovate & collaborate for sustainable ways of working. For this, we must use the latest systems as innovation with older systems is more difficult.
SAP has launched various offerings & services to help its customers & partners to overcome challenges in becoming intelligent, sustainable enterprises.
Company provides 2 separate product options for deploying Cloud ERP: SAP S/4HANA Cloud, public edition & SAP S/4HANA Cloud, private edition. This can be done with any of the 2 offerings: RISE with SAP & GROW with SAP. SAP CEO Christian Klein explains the GROW with SAP offering for midsize companies here. Below figure explains it further. More details on this can be found in learning journey Exploring SAP Cloud ERP.
2-Tier ERP is about having 2 separate ERPs for separate parts of the business, say traditional SAP ERP system for Head office whereas S/4HANA Public Edition for subsidiaries or similar entities where the complexity of business operations is low and can take advantage of innovations offered. It helps ease of operations & provides fast & flexible way to innovate without hampering the complex ongoing operations. It is also suitable for customers looking for an upgrade path or planning to explore offerings in the cloud, two-tier ERP delivers them the option to keep their current ECC or SAP S/4HANA on-premises setup intact, while simultaneously deploying key functions and processes into the cloud. This white paper on Two-Tier ERP for SAP S/4HANA Cloud explains it well.
SAP eases the decision of choosing right ERP by providing analysis via Digital Discovery Assessment (DDA). DDA tool is used to assess a customer’s requirements and match them with the best SAP S/4HANA Cloud solution. This occurs in the Discover phase of the SAP Activate Methodology. Tool helps to assess the % fitment of the current functionalities offered by S/4HANA Cloud solution with business requirements. This 7 minutes video explains the Digital Discovery Assessment for SAP S/4HANA Cloud. Kindly note that access to the DDA tool is restricted to partners or SAP employees who are fully authorized for Sales or Service for SAP S/4HANA Cloud solution (public or private edition). Kindly refer the Learning journey Scoping your SAP S/4HANA Cloud Solution with the Digital Discovery Assessment for more details.
SAP’s Cloud ERP Initiatives for Partners & Customers
1. Case for Cloud
To ease the digital transformation of Customers to Cloud ERP and for Partners to help customers in their journey, SAP on October 11, 2023 announced 3 offerings:
- 2023 release of SAP S/4HANA Cloud, private edition
- Launch of new premium plus package for RISE with SAP, combining AI technology with sustainability
- A conversion and modernization program for RISE with SAP to bring together tools, expert services, and conversion incentives. Please find more details here.
RISE with SAP S/4HANA Cloud, private edition now has 3 options to choose from:
- Base Option – Offers access only to the fundamental SAP S/4HANA Cloud, private edition functionalities
- Premium – Offers additional capabilities for business process management, process automation and low-code business application development.
- New Premium Plus – Extends the capabilities of premium option by including Generative AI, sustainability and additional access to supplier networks, as well as financial enablements.
Additionally, as part of RISE with SAP, the private edition of SAP S/4HANA Cloud now follows a two-year release cycle with easy-to-consume innovations and enhancements, generally delivered every six months. Maintenance will also increase from five to seven years, giving customers more value for their investment.
Partner’s perspective and testimonials on this have been covered well in this Blog Post. In this another Blog Post, SAP’s Chief Partner Officer Karl Fahrbach explains innovation is a matter of survival now & how Partners can enable their Customers to navigate this successfully with SAP’s Cloud ERP. It also provides links to resources and webinars meant for SAP Partners. For more details, Partners can refer this page on SAP Partner Portal. The growth trajectory for Partners & suggestions for ‘Case for Cloud’ have been outlined in another post here.
2. Accelerate for GROW with SAP
Accelerate for GROW with SAP is a combination of proven services, tools and methodologies that Customers can leverage to successfully adopt Cloud ERP with predictability and speed. More details here and in this Blog Post.
3. GROW with SAP for Partners
GROW with SAP for partners will feature partners with a high level of commitment and expertise for SAP S/4HANA Cloud, public edition and SAP Business Technology Platform. More details here. FAQs on the program are here. For Terms & Conditions, refer this link.
4. Cloud Application Services (CAS)
SAP Cloud Application Services (CAS) offerings are optional and associates cost with it. CAS helps Customers run and manage the applications across SAP private cloud solutions, including hyperscaler, hybrid, and multi-cloud scenarios. It can cover SAP S/4HANA Cloud, private edition, SAP Business Technology Platform & SAP NetWeaver technology platform. It provides a wide range of services for managing business process and application logic, data layers, application security, software releases, performance, integrations, and more through a subscription. A customer can tailor the experience by selecting from the fixed-price, outcome-based packages. Refer this link for more details.
5. SAP Preferred Success
This offering provides continuous & advanced support for SAP Cloud Customers. Additionally, it can deliver an adoption strategy plan tailored to Customer’s exact business goals to help optimize the use of SAP software. The offering includes change management to help accelerate the transition to SAP S/4HANA Cloud, public & private editions. The expanded editions of SAP Preferred Success are currently available for SAP Ariba solutions, the SAP Commerce Cloud solution, the SAP SuccessFactors portfolio, and the SAP BTP portfolio. Please find more details in latest news and here. A short video explaining the offering is here.
6. Partner Learning & Support
a. TDD (Test, Demo & Development) system
For Partners to explore the SAP S/4HANA Cloud, public edition, SAP offers a TDD (Test, Demo & Development) system (License Material SKU – 8012331) under Non-Commercial Licensing (NCL). It consists of 4 Products/Systems as below:
- SAP S/4HANA Cloud – Partner Demo Customizing
- SAP S/4HANA Cloud – Partner Demo Development
- SAP Central Business Configuration – Test
- SAP Cloud ALM – Production
Apart from above 4, SAP Business Technology Platform (BTP) Global Account (GA) is also included with Work Zone & Landscape Portal entitlements. SAP BTP Cloud Identity Services (incl. IAS/IPS) are also provided via dedicated tenants (if not already there).
SAP Build Work Zone, standard edition enables organizations to create business sites that serve as a unified point of access to SAP, custom-built, and third party applications and extensions, both on the cloud and on premise. Please note that SAP Launchpad service was recently renamed to SAP Build Work Zone, standard edition. More details here. Landscape Portal for SAP S/4HANA Cloud, ABAP environment helps to manage (Partner) Namespaces. More details here.
b. Shared Demo Services
To help Partners with demos, SAP provides a demo platform called SAP Content Discovery (earlier called Partner Demo Environment, shared option). It is free and easy to access shared demo landscape, available for all qualifying partners, comprising the most relevant online and offline demo scenarios to position the Intelligent Enterprise to their customers with demos for RISE with SAP, SAP Business Technology Platform, SAP’s Industry Cloud, and more. It also provides demo scripts that can help Partner to craft a compelling Intelligent Enterprise story. For more details, refer this page on Partner Portal. This link can be used to access the demo environment. For more details on the environment, please Blog Post – SAP Content Discovery Go-Live for Partners. | SAP Blogs.
c. Learning Journeys on SAP Learning
For different relevant journeys on SAP Learning refer this link. Also note that classic ABAP certifications and training programs have been retired since July 31, 2023. Instead, new certifications based on ABAP Cloud have been introduced. Kindly refer this Blog Post for details.
d. Webcast Series
SAP conducts a Webcast Series ‘Cloud ERP Essentials’ on cloud ERP best practices, demos, and customer stories. Customers & Partners can view the list of upcoming sessions & register to them here.
e. Partner Contacts
A Partner can contact the assigned Partner Delivery Manager (PDM) from SAP for Delivery issues. For Commercial issues, Partner Business Manager (PBM) can be contacted. If contacts are not known, Partner can drop an email to this ID.
f. SAP Community Partner Groups
A Partner can also leverage different forums available at Partner Delivery Group. SAP Community Partner Groups enable partners across the globe to come together to learn, share and collaborate with other partners and SAP experts, connect and network, get the latest updates and participate in discussions, share insights and experiences, engage and follow events, and more.
Other Related Topics
1. AI Assistant – Joule
Joule is SAP’s natural-language, generative AI copilot built directly into the solutions. It is embedded throughout SAP’s cloud enterprise portfolio, delivering proactive and contextualized insights from across the breadth and depth of SAP solutions and third-party sources. It is set to transform the way business runs. More details here & in this link.
2. Generative AI
Generative AI is a form of artificial intelligence that can produce text, audio, images, or videos based on the data it is trained on. At SAP, it is integrated with extensive industry-specific data and deep process knowledge to create innovative AI capabilities for the SAP applications we use every day. It’s built-in, relevant to business, and responsible by design. More details here. A use case of Generative AI-based Development with Joule can be seen in this short video.
3. Industry Cloud
SAP’s Industry Cloud provides specialized industry-focused solutions to help Customers optimize, extend, and transform the core business processes. These cloud-based solutions integrate with SAP platforms and systems and non-SAP applications and connect business operations with industry-specific functionalities. It is part of the intelligent enterprise architecture and the technical foundation is based on SAP Business Technology Platform (SAP BTP). Refer this link for more details. Industry Cloud learning journey on SAP Learning explains further details. For brief overview, kindly this Blog Post – What Is SAP’s Industry Cloud? There are solutions for various industries; few sample ones have been briefly explained in below vidoes.
- SAP’s Industry Cloud Solutions for Retail | Predictive Planning and Inventory Orchestration
- SAP’s Industry Cloud Solutions for Industrial Manufacturing| Agile Logistics Operations
- SAP’s Industry Cloud Solutions for Automotive | Future Business Models
- SAP’s Industry Cloud Solutions for Clinical R&D | Intelligent Clinical Supply Management
4. Help Links