For the past few years, SAP has clearly stated its goals to become a cloud-first company. In a drive to realise these ambitions, SAP has acquired a number of cloud-based software companies. This has not only helped establish SAP in the Software as a Service market, but it has also seen it become a market leader in a number of product areas. But what about Enterprise Resource Planning (ERP)? Something that has been a mainstay of SAP’s offerings to clients.
Within the product suite of SAP S/4HANA, the next generation of ERP solutions from SAP, there are a number of cloud-based solutions. To date, however, the current adoption of cloud solutions within this area have not been that large. The winds of change do appear to be blowing though, as sentiment in the UKISUG is now showing that SAP’s traditional customer base is ready to embrace the cloud*. There has been dramatic change in opinion around cloud and their planned adoption of the SAP Cloud product suite. Let’s take a look at what moving to SAP S/4HANA Cloud can offer them.
Moving to S/4HANA has a perception of being expensive and a time-consuming process. Whilst it can provide significant benefits, as detailed here, the costs in time and money can be prohibitive for some clients. One of the central themes of digital transformation is speed, with the focus on becoming agile, thus enabling quick responses to commercial change, rather than system performance.
Making alterations in a highly customised ERP environment will take much longer than in a less customised one. Sometimes business critical changes within a company will demand a much quicker turn around than that which is currently achieved where a substantially modified system is in use. Moving to a simplified cloud-based tool will resolve this issue.
Changing the mindset from fit gaps to fit2standard
For those with a strong on-premise background, a key phase to an ERP deployment is the Blueprint phase which will include “fit gap” workshops. Traditionally, this is the time when the customer looks at the standard ERP offering and provides a list of “gaps” that need to be added. This could be something like new transaction codes, additional fields and modifications to the logic used within standard transactions.
Within S/4HANA Cloud, the “fit gap” is replaced with the “fit2standard” process. Rather than focusing on how the standard ERP tool can be customised to meet the customer’s requirements, the “fit2standard” looks at how the customer’s processes can work with the standard best practice design.
Become more efficient by losing flexibility and control
A bizarre statement I know, but bear with me. Historically, on-premise projects actively encourage clients to customise their ERP systems to provide them with additional flexibility and control. This leads to a more complex environment which is more difficult to support and integrate with other tools and processes. By removing some of the flexibility, the options available to the client are reduced, and as a result they will become more efficient in terms of the project effort and duration. This in turn will lead to a simpler solution which will require less effort to support in the long term.
Time is money
Most customers would welcome an approach to reduce the deployment effort, time and cost. The end to end duration of an S/4HANA Cloud deployment will be roughly 40% less than a comparative on-premise deployment. Therefore, the cost to deploy will be significantly less for a cloud deployment compared to an on-premise one. This will enable clients to drive their digital journey forward and obtain the benefits much earlier. Moreover, the simplified cloud system will enable you to respond quicker to change - accelerating your competitive advantage.
SAP S/4HANA Cloud is clearly a new product that is ready to make its mark. SAP has typically played in the on-premise market for ERP tools, however it is clear it's now able to cross over both markets. The cloud might not be suitable for all clients, however it could be a strong fit for your organisation.
Which SAP S/4HANA version are you thinking about?