SAP S4HANA – a cloudy preview from the peanut gallery

SUMMARY:

The SAP FKOM Tweetstream provided an excellent source for harvesting sentiment about S4HANA – here’s our analysis

S4HANA - logoAt the recent series of SAP Field Kick-Off Meeting (FKOM ) sales events, S4HANA was announced  as the next step in the evolution of the Business Suite on HANA.  I didn’t attend the events in person but followed / participated via Twitter. Despite its internal characteristic, the associated Twitter-stream was very active and contained a variety of interesting details.  I’d like to take a quick look at a few S4HANA-related slides (harvested from Twitter) that were presented at the events.

NoteSome might be thinking:  Dude, what are you doing? These are internal SAP slides – not meant to be shown to the public.  For me, their presence on Twitter means that they are in the public domain. My assumption is that most of these slides and the portrayed details will be presented at S4HANA’s US release on Feb. 3 in New York.  I’m just giving people a head-start to prepare their questions for this event. Others might suggest that I wait until the “US Release” event to present my analysis. Although I always tell my kids “patience is a virtue”, patience has never been one of my strengths.

A caveat: I can only base my analysis on the available / harvested slides rather than the complete presentation (with speaker’s descriptions, etc). This handicap makes analysis more difficult but also provides an excellent excuse if my analysis is incorrect. 

FKOM is largely a sales event and much of the presented hyperbole is understandably intended to “pump up” the sales teams / partners so that they can sell more products.  There are many tweets in the event Tweetstream which demonstrate the enthusiasm of event’s participants for the newly announced S4HANA offering.  Although this broader excitement is critical for the offering’s success, I’m more interested in a more specific topic – the impact of S4HANA on SAP’s broader cloud strategy.   Although S4HANA will be available both OnPremise and in the Cloud, the focus of the new offering will be “Cloud First”; thus, S4HANA has a very important role in this strategy.

Let’s take a look at the relevant slides and I’ll describe their interesting aspects:

Business Suite 4 SAP HANA (S4HANA)

Biz suite for HANA - S4HANA-1

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Much of the information on the slide was previously available in the description of s-Innovations (the name of S4HANA when it was introduced in Bernd Leukert’s keynote at the TechEd in Berlin). The emphasis on “Guided Configuration”, however, is new – this functionality is especially critical in scenarios where S4HANA is running in the Public Cloud as a SaaS offering.  Regarding the impact of such “simplified” configurations on the current SAP ecosystem, Hasso Plattner provided his apologies to SIs who might be accustomed to lucrative implementation projects with major customization work.

Simple Journey

S4 HANA - simple journey

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This slide provides the greatest detail of the underlying technology and how it will evolve over time.

  • The desire to move the Business Suite towards greater standardization is in focus.  The shift from modifications in Business Suite to S4Extensions+ S4HANA is associated with a move to the cloud (“Cloud start”). My assumption is this initial phase will probably be associated with a scenario of S4HANA based on the HANA Enterprise Cloud (HEC) – SAP’s managed / private cloud offering.
  • I’ve never seen “S4HANA Extensions” mentioned before and I’m not sure if they describe a new variety of configuration-based extension running directly in S4HANA or HANA Cloud Platform (HCP) –based extensions that have been developed for S4HANA. There are already HCP-based extensions but these are usually associated with SAP’s other SaaS applications (they are also present in the slide).
  • The most interesting aspect of the slide is on its far right side with the “Innovation Push” in which the transition from Cloud to Cloud as well as to OnPremise is depicted.   In a recent ASUG blog, Chris Kanaracus analyzed the impact of S4HANA and came to this conclusion:

Probably the biggest one comes down to money: namely, the substantial investments Business Suite customers already have in their SAP landscapes, and whether the road to S4HANA will be paved with the substantial maintenance fees they currently pay.

As evident in the slide, this aim of returning the Cloud-based innovation to OnPremise environments is especially of interest to these existing customers.   The details regarding this evolution are still outstanding but OnPremise customers can be comforted that SAP hasn’t forgotten them.

Business benefits SAP S4HANA – example Manufacturing

S4HANA - manufacturing benefits

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This slide is interesting in that in shows that S4HANA has a broad impact on a variety of offers beyond just finance (SimpleFinance) and other more traditional areas covered by ERP.

  • Logistics has often been mentioned in conjunction with sERP / s-Innovationsbut I’ve never seen manufacturing mentioned in this context.
  • It is also useful to see the generic characteristics / benefits exemplified by S4HANA being demonstrated by concrete domain-specific (in this case, manufacturing) use cases.
  • Although “manufacturing” is more generic in its focus, its presence in such S4HANA-related slides makes me curious to see how S4HANA and SAP’s Industry Cloudwill interact.

SAP Business Suite 4 on HANA – the Next Generation

S4HANA - next generation

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This slide provides an overview of the arguments that sales staff can use in their efforts to win deals.  Much of this info is present in other FKOM slides but there are still a few interesting aspects:

  • The description of S4HANA as a new license product but not a new technical product probably isn’t an ideal combination. The non-disruptive characteristic is successfully emphasized but considering that the existing Business Suite is based on a legacy architecture – the innovative character of the S4HANA solution isn’t stressed enough.
  • The focus on the “perfect enterprise” was evident in multiple FKOM slides / tweets.  I have no idea how this marketing push is connected to the idea of “simple wins”.
  • The most important aspect in this slide is the fact that S4HANA will be the default offering for new customers.
    • Since S4HANA is a Cloud First offering, new customers will be pushed automatically to a cloud deployment model.  I assume that new S4HANA customers will be pushed to the appropriate cloud model (HEC or SaaS) based on their desired level of standardization / customization.
    • If S4HANA is the default offering for new customers, then the solution must have a certain degree of maturity.  What I don’t know is whether the entire Suite will be available initially in this form. The different S4HANA modules have varying degrees of maturity  – for example, S4HANA-Finance (SimpleFinance) has been around the longest so it is probably more mature.

My take

  • The prominent role of S4HANA at FKOM demonstrates its critical importance in SAP’s future.  The recent 4Th Quarter results shows that the company’s transition to the cloud is proceeding rapidly but is still largely based on the revenue created by its SaaS acquisitions (Concur, Ariba, SuccessFactors, etc).   Much of the company’s remaining revenue is still based on its OnPremise customers / existing maintenance agreements. As mentioned above, S4HANA will be the default offering for new customers but SAP’s ability to move these existing customers to S4HANA will be a more important KPI to track in order to judge SAP’s success in transitioning to the cloud.
  • I assume that the number of new ERP customers will be limited since most of the potential larger customers for S4HANA already have an ERP system in place (most likely, Business Suite).   SMEs which are outgrowing their existing ERP solutions represent the greatest potential for net- new customers –  a different SAP offer (Business One or Business ByDesign)  is probably more appropriate than S4HANA for these prospects.

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Disclosure: SAP is a diginomica premier partner.