UNDERSTANDING SAP S/4 HANA AND S/4 HANA CLOUD

S/4 HANA is the newest SAP solution for Enterprise Resource-Planning (ERP). HANA is the most significant update to any SAP ERP strategy or platform in over 20 years.

Some of the key advantages of S/4 HANA include:

  • In-memory based performance: which is significantly better than the classical relational databases
  • Modern user-interface: intuitive, app-like, interface based on SAP Fiori
  • Device-independent: including web browser, mobile or tablet
  • Built-in-analytics: operational transparency through analytics
  • Robust digital platform: good foundation for integrating and leveraging digital technologies like RPA (Robotic Process Automation), IoT (Internet of Things), ML (Machine Learning), AI (Artificial Intelligence), etc.
  • Core functionality: built with well-documented best practices and several years of experience
  • Support – continuous functionality enhancements by SAP

SAP S/4 HANA works exclusively with SAP’s in-memory based HANA database, where previous SAP ERP system, like ECC 6/Business Suite, could work with several database platforms. The S/4 HANA advantage is that:

  • It can be heavily optimized to get the most out of the massive speed boost
  • It can now offer real-time on-line insight into complex business KPIs via embedded analytics

S/4 is marketed as the next generation ERP solution, but is it the answer for customers who have experienced old-fashioned, non-user-friendly UI, and long deployment cycles? Our team took a closer look at the S/4 solution, read-on to learn more about our findings.

SAP S/4 HANA is available in 2 deployment options:

  • Commonly deployed as private cloud (or in-cloud) using SAP hosting or other cloud providers like AWS, Microsoft Cloud, or Google Cloud
  • Customer has total control of the system, database, upgrade and release schedules, customizations (as it was with SAP ECC)
  • Lean subscription-based SaaS solution from SAP
  • Subscription per number of users and enabled features in “Public Cloud”
  • SAP has total control of the system, database, upgrades, and release schedules
  • Web browser access with limited functionalities available
  • Full separation of different tenants/customers
  • Limited customizations in S/4Hana Cloud

Key Learnings

Best-Practice Processes

SAP supplies both S/4HANA versions with a pre-defined set of supported best-practice business scenarios. Where S/4 HANA comes with nearly full functionality that a client or consultant has seen in ECC, S/4 HANA Cloud is a lean version and offers a subset of functions with limited customization options. From a Life Sciences industry perspective, there is still functionality from classical SAP ECC that is not currently available in both S/4 HANA versions, but are expected to be on SAP’s roadmap for industry solutions. Also, other industries might miss some specifics in current versions. Industry specific S/4 HANA solutions are expected in 2021 from SAP.

Cloud First

SAP states that in future new functionalities will be first implemented in S/4 HANA Cloud offering and will be made available in the S/4 HANA version a little later. SAP has more control on the Cloud version, so it’s easier for them to deploy new functionalities. Also, S/4 HANA Cloud has a more rigid release schedule where new functionalities will be deployed every three months. This would make the Cloud version an ideal platform for an organization willing to ride the wave of innovation. But it comes with the price of constant changes introduced to the system and to the organization. With the need to comply to validation requirements, cloud version might not be the most appropriate solution in the Life-Sciences industry.

Ease-of-Use with Fiori

Today, in the hi-tech world, most users prefer doing important business activities with the click of a button, S/4 HANA comes with app-style user-friendly Fiori interface. It has an intelligent tile layout which provides an overview of all the key functions and enables the users to drive business with a click and provides the capabilities for real-time KPIs and reporting. The interface works well on tablets and mobile phone. Approving a Purchase Order from a beach (provided that internet coverage is available) is no more just a future vision but a reality. Nevertheless, based on our experience there are still some transactions that are simply exposed via the web and do not have this nice Fiori. But new tiles are added with every release. When using the Cloud version, some users with a more technical background might miss access to the backend, table access via transaction SE16 or LSMW (Legacy System Migration Workbench). Classical business users will have “export to excel” options for their reports which will require some re-adjusting if they are used to the “CTRL+Y” option to copy screen content.

Security & Authorization

SAP delivers standard roles out of the box (including reference to business process scripts). They serve the purpose and it´s fairly easy to make small tweaks. Spreadsheets for user uploads are also available. User set-up should be carefully done as without the right authorization, user cannot even see the Fiori tiles, so it gets difficult to understand if it is an authorization issue or basic configuration issue where the tiles are not visible for another reason. In S/4 HANA Cloud version more complex S&A changes might be a bit cumbersome. For example, it´s not easy to provide a “display role” to a user. The workflow capabilities are also limited and difficult to enhance. The provisioning of roles to users is rather manual but misses the manual function to update approvers.

Implementation and Validation

Both S/4 HANA versions come with a “Global Standardized Solution”. It delivers standardized processes with limited options to modify and a ready to use migration cockpit. S/4 HANA implementation cycle gets significantly shorter than the ECC implementation if the standard ‘as little customization as possible’ approach is followed. The implementation in the new Activate methodology is based on a fit-to-standard-approach and not the classical fit-gap-approach. This means that validation workshops require users to be fairly savvy with the system already or have enough guidance to help them through the workshops. With the global standard solution approach, the program requires more focus on business readiness and change management for ease of adoption. Based on our experience the standard solution processes serve the basic functionality needs but global implementation for a large complex organization might require customizations to meet the business requirements. Validation is a typical requirement in regulated industries. S/4 HANA version follows the classical validation approach. However, the validation with the Cloud version requires some special thought and preparations. It is worth considering that extensive modifications to SAP best-practice processes may significantly increase implementation times. While S/4 HANA allows more flexibility and programmatic enhancements, the Cloud version is highly standard with limited options of enhancement. For functionalities and processes not supported in S/4 HANA Cloud an external program/functionality/report could be created and integrated using the Cloud Platform.

Data Migration

SAP provides ready to use data migration cockpit, which eases some data migration processes but the overall data migration efforts should not be underestimated. The cockpit has some limitations which can be reduced significantly in the S/4 HANA solution by accessing the system back-end. In the Cloud version however sometimes manual entry of data via Fiori front-end could be the only option. Also, the Cloud version does not come with multiple test systems where data migration can be exercised. Managing and reconciling different data loads may be very time-consuming.

Testing

S/4 HANA solution comes with an integrated automated testing tool with ready to use testing scenarios. This is a great enhancement from previous versions. But as with any automated testing tool, keeping the scenarios up to date is very important and time-consuming. This becomes a blessing with the Cloud version as it helps the clients ensure the regression tests are executed within the two weeks before every quarterly release.

IS YOUR COMPANY READY FOR S/4 HANA?

The key question is – Is your company ready to start the journey towards S/4 HANA Solution?

The following illustrates a summary of the implementation options:

  • Standard process: Modifications to standard processes not endorsed but possible forcing the system to change
  • Enhancements: SAP provides a new release of the product twice yearly. The customer does not have to apply it immediately. Release changes and upgrades might be adjusted and aligned with an overall organization level plan for business changes
  • Validation: Customer is in full control of system and validation
  • Standard process: Modifications to standard processes might not be possible due to limitations forcing the organization to change ways of working
  • Enhancements: New release of the product mandatory every quarter on a predefined schedule, with two weeks period for regression testing and re-training the users
  • Validation: SAP is in control of the system, but the customer is responsible for validation

Conclusion

The reality is that SAP’s maintenance support for SAP ECC will expire by 2025. Therefore, it is critical that companies begin to think about their journey ahead and what is the right fit for their company’s size and industry.

  • Large or/and complex companies
  • Small-to-medium sized companies

This overview might significantly change once SAP releases the industrial solutions in HANA which are expected sometime in 2021. The validation aspect adds a special challenge for S/4 HANA Cloud in Life Sciences and other regulated industries.

Tenthpin provides a portfolio of services to help clients with their S/4 HANA transformation journey from conception to implementation to value realization. We combine industry and S/4 HANA experience to assist clients in an agile, value-driven and innovative manner. You will find more details here.

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Authors

Arpita Singhal - Partner, Tenthpin UK

Naresh Subramanian - Partner, Tenthpin US

Matthias Korbl - Advisor, Tenthpin Germany

Marcin Ciesielski - Advisor, Tenthpin UK

Marco Estevam - Advisor, Tenthpin US