SAP S/4HANA Business and IT Impact

"Why wait for S/4HANA?" Q&A Series

Published: 01/August/2018

Reading time: 22 mins

By now you know that harnessing the power of SAP S/4HANA, the intelligent ERP, is key for your enterprise. But how do you get started?

When considering the journey to SAP S/4HANA, it’s essential to understand how it will affect your business and IT operations. There’s no reason to wait for answers – you can start your research today with free, personalized tools.

Read this live chat transcript to learn about

Business scenario recommendations for SAP S/4HANA to match the transactions you use now to improvements in SAP S/4HANA
SAP Transformation Navigator tool for road map and ROI
SAP Readiness Check tool for technical steps of a system conversion

Comment From Prabhakar R: If SAP S/4HANA is marketed as a simple data model, why is the migration process so complex? Will SAP help each customer in the event of any pitfalls encountered by the customer during the process? Does the service come with any cost if the customer wants to avail itself of the SAP migration services?

Carl Dubler (SAP): Actually the technical aspects of going to SAP S/4HANA are straightforward. The challenging part is the business — standardization and customizations. As you know, SAP allows customers to completely modify the product. Some organizations decide to return to standard processes, and that takes a lot of coordination with the business. Even so, the average SAP S/4HANA project from SAP ERP Central Component (SAP ECC) is 11 months. And, of course, SAP and our partners are ready to help all the way.

Shashi Rao: Also, the data model in SAP S/4HANA is simple because of the simplified data structures and the processing that happens completely in memory to enable real-time analytics on the transactional data. But the data still needs to get into the system to leverage the benefit, either through migration or new transactions

Comment From Zach: How do I start the process of building a business case?

Carmel: Refer to these three points cited in Amr El Meleegy’s blog titled “How to Write Your First SAP S/4HANA Business Case”:

Identify your pain points
Quantify the monetary cost of your pain points
Estimate a potential improvement range from SAP S/4HANA

Comment From Paul: Does SAP or a partner have any offer to help us build a business case?

Carmel: Resources such as Webinars hosted by SAPinsider and Americas’ SAP Users’ Group, as well as SAPPHIRE NOW replays feature customers who have shared their SAP S/4HANA implementation story and quantifiable benefits.

Comment From Eaihie: I am interested on the HR Impact.

Carl Dubler (SAP): The future of HR for us is SAP SuccessFactors. So in in a way, that is where the impact is coming from. When customers ask about HR and SAP S/4HANA, they are usually wondering if they must go to SAP SuccessFactors right away, of if they can continue using SAP Human Capital Management (SAP HCM) in SAP ECC. There is a license bridge to make that happen until the customer is ready for SAP SuccessFactors.

Comment From Juan: What department should I start with? Finance?

Carmel: In my blog “Where to Start with SAP S/4HANA,” I cite four strategies that you can launch immediately that will pay off with a smoother deployment:

Prepare your business users
Prepare your data
Organize the deployment team
Determine the deployment destination

Comment From Andrew: How do you put a return-on-investment (ROI) number on SAP S/4HANA?

Shashi Rao: In some ways, the SAP S/4HANA ROI process is similar to building a traditional post-modern ERP business case. This process typically consists of four steps:

Initiation: Definition of scope, business strategy alignment, stakeholder identification
Analysis of benefits: Assessment of the current state, the project future state, key business and IT metrics impacted, data collection, quantification, and validation with key stakeholders
Analysis of costs: Total costs associated with the program or project. Licensing and subscription, implementation, training, and ongoing support costs
Development of a risk-adjusted ROI, net present value (NPV), and payback period: This is determined by development of the realization schedule and applying risk-adjustment factors in each benefits or cost section.

It is important to quantify benefits not traditionally considered in a legacy ERP business case. For example, the value of business agility (e.g., future merger and acquisition [M&A], transition services agreement (TSA) costs avoided, etc.), technology innovation (machine learning [ML], artificial intelligence [AI], robotic process automation [RPA], etc.), real-time visibility and operations (faster decision making, real-time material requirements planning [MRP], etc.)

Comment From Sean: Is SAP S/4HANA the same in the cloud as on premise?

Carl Dubler (SAP): SAP S/4HANA is consistent across all products when it comes to the code line, data model, and user experience. However, they are not the same scope. The cloud versions are for those who want to run standard business processes in exchange for faster innovation and less maintenance. The on-premise product (which can also be run in the cloud or on infrastructure as a service (IaaS) such as Azure or Amazon Web Services [AWS]) has the full scope and customization capability, but the customer is in charge of maintenance. The key thing is that you have the choice, unlike our competition where the products are completely different on-premise versus the cloud.

Comment From Prasanna Chandran: How do we narrow down if we need to choose a greenfield or brownfield SAP S/4HANA implementation? What strategies can we use to move from legacy mainframes to SAP S/4HANA? How do you manage and map the business processes in SAP S/4HANA?

Carl Dubler (SAP): System conversion (brownfield) is for customers who want to take SAP ECC 6.x to SAP S/4HANA and keep their configuration and customizations. A new implementation (greenfield) is for going to SAP S/4HANA from a non-SAP system, or for those who want to start fresh. Many SAP customers have chosen a greenfield implementation if the business wants to return to standard functionality, often as part of a consolidation effort.

Regarding mainframes, I haven’t heard that in a while. For that, look at SAP Best Practice Explorer to determine how the mainframe processes will translate to SAP S/4HANA. Then use the SAP S/4HANA migration cockpit to get the data from the mainframe to the SAP S/4HANA new implementation.

Comment From Raj: In addition to developing a business case and the business struggling to prove to their shareholders the value of moving from an SAP system that was implemented a few years ago to another SAP system, the other big question for many is the timing — for example, implementing a version now and upgrading to future versions to reap benefits of more standardization. How do we address that?

Carmel: The realization process is frequently disconnected from the original business case. You could do a post-implementation value assessment to determine the realized value of your current deployment. Moving forward, you determine your upgrade path by the deployment option you choose. Clearly, moving to a cloud-first strategy will afford you the most standardization with upgrades as part of your subscription

Shashi Rao: In addition, research shows that the very act of monitoring and measuring benefits can yield surprising results. Actual delivered benefits may occur in unexpected places, as well as what was defined in the original business case. Organizations that don’t measure benefits don’t see them.

Carmel: Hi, Raj. After looking at your question again, I also wanted to address timing. It doesn’t ever seem as if there is a good time to do a system upgrade or rollout. What we are hearing from most C-Suite customers today is that they are more concerned with agility and innovation when making these decisions. Total cost of ownership (TCO) is clearly very important, and customers see a lower TCO combined with always being on the latest and greatest ERP environment and technology as very important to being agile going forward. This is why we are seeing more and more our customers taking a cloud-first strategy.

Comment From Brian: Can we run SAP S/4HANA in the cloud and keep our customizations?

Carl Dubler (SAP): This depends on how far into the cloud you want to go. If you are going to run the SAP on-premise product in a hosted data center or on IaaS (such as Azure, AWS, or Google Cloud), then you can keep the customizations. You might need to change some things to accommodate the new SAP HANA-based data models, but overall it should not be a problem. You keep control, but you also have more responsibility for maintenance and updates.

Carl Dubler (SAP): If you are going to run in the full SAP S/4HANA cloud, which is the multitenant subscription version, that requires you to run standard business processes with customizations and extensions done in a controlled environment. So while you don’t keep total control of the maintenance, you get faster innovation and lower cost. This is pretty much industry standard for all cloud products.

Comment From Liz: Will the Business Scenario Recommendations for SAP S/4HANA Report (BSR) and SAP Readiness Check for SAP S/4HANA tools help us go to cloud?

Carl Dubler (SAP): If by cloud you mean running the SAP S/4HANA on-premise product in SAP HANA Enterprise Cloud or Iaas (Azure, AWS, Google Cloud), then yes. Business Scenario Recommendations for SAP S/4HANA Report and SAP Readiness Check for SAP S/4HANA are designed for customers doing a system conversion, which is not an option for SAP S/4HANA Cloud. In that case, you should run SAP Best Practices Explorer to see how close your system’s processes are to the standard business processes for which SAP S/4HANA Cloud was designed.

Comment From Jackson: I’ve heard that ROI is hard to prove for SAP S/4HANA? Is that true? How have other customers overcome this?

Shashi Rao: SAP S/4HANA is different from many other legacy ERP systems on the market, including SAP ERP. Customers sometimes find ROI hard to prove when just considering SAP S/4HANA for technical reasons (e.g., technical upgrade, transaction speed, etc.) and not take advantage of the simplification opportunity, enablement of new business processes, cloud characteristics (fast deployments, agility, TCO) and innovation capabilities for new generation digital businesses that come with it.

The low-hanging fruit for legacy ERP business value is already gone. For companies to drive the next wave of improvement, many are increasingly turning to the promise of new generation enablers such as AI, RPA, and ML. Indeed, technologies such as these are already pervasive in the digital world. These technologies are driving dramatic improvements in the areas of manufacturing, consumer, retail, healthcare, and many others.

We see customers achieving positive ROI and rapid payback for SAP S/4HANA when new digital value areas are considered along with traditional ERP value areas.

Comment From Jarod: What savings or benefits could I expect from running SAP S/4HANA on SAP HANA Enterprise Cloud?

Carl Dubler (SAP): With SAP HANA Enterprise Cloud or IaaS (Azure, AWS, Google Cloud), the savings are in the infrastructure needed to run SAP HANA. It is an ideal way to stay with the on-premise product to keep customizations (if that is what the business needs) yet leverage the scale of the cloud for infrastructure. The result is better security and performance.

Comment From Shaila: Is SAP Transformation Navigator a way to build a business case?

Carmel: SAP Transformation Navigator can be useful if you are an existing SAP ERP customer and want to zoom in quickly on the SAP S/4HANA enhancements that are relevant to your specific business. Click the following link for more information:

SAP Transformation Navigator (log in required)

Comment From Yoi: What are the requirements to do a system conversion from SAP ECC 6.x to SAP S/4HANA?

Carl Dubler (SAP): You can go directly from any enhancement package of SAP ECC 6.0 to SAP S/4HANA with Software Update Manager (SUM) and Database Migration Option (DMO). You must be on Unicode. I highly recommend running SAP Readiness Check for SAP S/4HANA to plan for this. Read “Start SAP S/4HANA Planning with Readiness Check” for more information.

Comment From Chris: Can we do a system conversion to SAP S/4HANA and move to the cloud at the same time?

Carl Dubler (SAP): If the cloud destination is SAP HANA Enterprise Cloud or IaaS, then yes. Going to SAP S/4HANA Cloud is done with a new implementation — SAP S/4HANA Migration Cockpit.

Comment From Pristy: How is the responsibility for maintenance and updates different if running SAP on-premise in a hosted data center or IaaS than the current responsibility for maintenance and updates running SAP ECC 6.x?

Shashi Rao: There is not much of a difference really other than the maintenance and refreshes of the infrastructure portion. The situation is different in an SaaS-based cloud ERP model where much of the application management and operational support is delivered as part of the subscription.

Comment From Erik: What are the latest capabilities of SAP S/4HANA?

Carmel: There is plenty of insightful material out there that provides detailed information on the latest capabilities of SAP S/4HANA and the business pain points they address.

Carl Dubler (SAP): I recommend that SAP customers use the Business Scenario Recommendations for SAP S/4HANA Report tool to see how SAP S/4HANA will improve the transactions they already run. You can find it at s4hana.com.

Comment From Thorfin: SAP marketing keeps talking about the intelligent enterprise? What exactly is that?

Carl Dubler (SAP): On a practical level (and as someone from marketing), it means SAP S/4HANA is using ML and other AI technologies to automate and redesign business processes. There are about a dozen of these ML processes in SAP S/4HANA already and more will be added.

Comment From Thorfin: How do you build a case for intelligent ERP?

Shashi Rao: The case for intelligent ERP is built on top of the traditional ERP business case baseline. The key is to build the case on new generation processes that are either fully automated or substantially automated with minimal manual intervention. Take, for example, finance. AI can expedite exception handling in many financial processes. When a payment is received without a corresponding purchase order (PO), significant manual effort is required to identify the right PO and whether the payment amount was correct. Intelligent systems can ingest invoices at high volume, apply natural language processing (NLP) techniques to read and assess markers that can identify the right order and invoice. Eighty percent of incoming payments can be processed this way, and the rest are flagged for human review because something doesn’t match up. This results in new value delivered to the business

Comment From Danny: Are the Business Model Canvas and Business Scenario Recommendations for SAP S/4HANA Report one and the same?

Carl Dubler (SAP): No. Business Model Canvas is part of design thinking, while Business Scenario Recommendations for SAP S/4HANA Report is a tool to match your existing transactions in SAP ECC with improvements in SAP S/4HANA. Business Model Canvas might be used if you are thinking of returning to standard processes or using best practices in an SAP S/4HANA deployment.