Is SAP’s next-generation ERP ready for prime time?

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By Julien DelvatPrincipal Consultant SAP S4HANA, Bluefin Solutions.

All CIOs face the same key decision: when is the right time to invest in enterprise technology? Too early, and the project might suffer from buggy or missing functions, holes in integration, and “undocumented” features. Too late, and the organization will lose the all important competitive advantage from the upgraded system.

In the Entreprise Resource Planning (ERP) world, organizations tend to rely on incremental improvements rather than major implementations. The SAP ecosystem is no stranger to this situation. However, this strategy is no longer applicable due to the recent introduction of S/4HANA, the software giant’s innovative ERP. By 2025, organizations relying on older versions of SAP’s ERP will have to choose between continuing without vendor support, converting to the new release (which isn’t a simple upgrade), or switching to another vendor.

Our S/4HANA Center of Excellence has spent most of last year interacting with CIOs and their teams to define their digital transformation strategies. One key question we kept hearing was: “is S/4HANA ready for prime time?”. With over 5,400 customers having deployed the disruptive software [1], the market has definitely passed the “Early Adopters” phase. But has it crossed the chasm to the “Early Majority” yet?

Product scope: almost there

Introduced in 2014, the initial version of SAP’s redesign focused on Finance. It’s only from release 1610, available since October 2016, that the benefits of the new in-memory database were extended to other areas like Logistics and Materials Management.

In addition, progress has been made on features of complimentary cloud applications like SuccessFactors (Human Capital Management), Ariba (Procurement), and SAP Hybris (Commerce) and the integration to other applications is greatly facilitated with the new SAP Cloud Platform.

Another area of customers’ concern was the adaptation of Industry Solutions. These packaged add-ons developed by SAP were rich in features and best practices, considered crucial to some verticals like Public Sector, or Aerospace and Defence. There, the line is harder to draw as some modules are now integrated into the core. The timing of the missing features is regularly communicated in the S/4HANA roadmaps. [2]

Most customers we’ve met view the 1610 release as being close to functional completeness. However, some areas like Industry Solutions still need further investigation to validate its fit to your organization’s unique requirements.

Overall, the latest release of S/4HANA is ready for “prime time”, with the exception of the above-mentioned Industry Solutions, All organizations are unique and their readiness for digital transformation depends on their specific environment, architecture, and timing.

Infrastructure: additional choice in the cloud

Changing technology is also the time to rethink deployment options. Over the last decade, cloud technology has made enormous progress in terms of reliability and costs. It also offers a host of benefits, when compared to on-premise solutions, such as greater agility, lower maintenance costs and quicker implementations. Thus, organizations are now evaluating “cloud first” or at least include it in the options to consider.

In the SAP ecosystem, S/4HANA can be deployed as Platform-as-a-Service delivered by SAP, Amazon Web Services, Microsoft Azure, and more recently, Google Cloud Platform. Specialized providers like Virtustream also support private and public setup. In addition to these, S/4HANA is also available as Software-as-a-Service with the Public Cloud edition. This architecture is favored by smaller organizations or subsidiaries of large organizations.

In short, the new platform has become an industry standard that has a whole ecosystem supporting organizations’ infrastructure needs.

Solving the business’s pain

The timing of enterprise technology investments is a hard decision, not only for CIOs, but also for the rest of the business. What can tip the balance and become the deciding factor is an organization’s need to fix a broken, mission critical process, with a rapid response, complete solution. This is no different for the ERP world.

Some of our most recent customers who have started on their S/4HANA journey all had very different pain points to solve, but have found a resolution in SAP’s latest ERP software:

  • An FDA regulated company is timing their conversion to S/4HANA with the renewal of their hardware to reduce TCO and avoid the expensive cost of multiple testing cycles;
  • A high-tech manufacturer focused on design engineering and supply chain services sees the possibilities S/4HANA opens up to them; enabling them to adapt their enterprise platform to meet the needs of their changing business model;
  • A consumer-product organization has leveraged the recent acquisition of a subsidiary to develop an S/4HANA template to be rolled out to the larger organization in a later phase;
  • A young mining company selected S/4HANA on a cloud platform to support their high-growth development plans.

For these companies, the business challenges were large enough to justify a move to S/4HANA. However, this isn’t going to be the case for everyone, which is why Bluefin developed an individualized approach to the S/4HANA journey to help your organization build a unique strategy taking into account the implementation type, its timing, and the right approach. You can benefit from these insights by requesting a free discovery workshop for your organization. To find out more, visit www.bluefinsolutions.com.

Sources:
[1] SAP Announces Preliminary Fourth Quarter and Full Year 2016 Results

http://news.sap.com/sap-announces-preliminary-fourth-quarter-and-full-year-2016-results/

[2] SAP Solution and Product Road Maps

http://www.sap.com/roadmaps