I realize it is difficult for many clients and prospects to find their way! We talk about the new SAP ERP, S/4HANA, but it doesn’t mean anything to them. Most people can’t assess the competitive advantage that the implementation of a proven solution, able to support their digital transformation, could represent.
We may be to blame for this, us specialists and publishers, if the message is received so badly! As we know the product so well, we probably use the wrong words or images to describe such a new generation ERP.
So, let’s go! I started on a “S/4HANA for Dummies” explication without claiming to know the absolute truth.
What Is S/4HANA?
Here, we have to remember two elements:
Let’s start by the second one: HANA.
First, SAP HANA (the official name) is a memory database 100 times faster and more agile than any other legacy database, like SQL or Oracle.
Data is no longer stored on hardware, but in random access memory in a real-time system. This allows us to do OnLine Analytical Processing (OLAP ) and OnLine Transaction Processing (OLTP ), which means doing analytical and transactional functions.
SAP HANA, A Database for SME?
Why would a business, especially a SME, need all this power How many times have I heard, “l agree, but this is only good for Boeing or Coca Cola, not for me, a SME!”
Here is the reason: this increased power allows for a simplified ERP and can achieve faster,in real time calculations without requiring the generation of intermediary aggregate tables. This used to be the case with traditional data. Moreover, it can show more accurate information to users, faster, for better-informed decision-making!
To give one concrete example, Material Resources Planning (MRP) , a nightmare for manufacturing businesses, becomes 95% faster with S/4HANA. Therefore, in one single click, the user can completea “what if” request without having to wait hours to get an answer.
Today, SAP HANA is a development platform for application creation or ERPs extensions. High performing and efficient, it is also available in the cloud, and is called SAP Cloud Platform (SCP).
Finally, these new capabilities delivered by SAP have led SAP to rewrite its ERP to optimize it for this database. This ERP is S/4HANA.
S/4 (what must be called S/4HANA) is thus the ERP built on SAP HANA. It has been rewritten, to free themselves from past technical limitations.
N.B.: SAP has named it S/4 referring to the previous generation which was called R/3.
In practice, S/4HANA simplifies transactions and adds new functionalities, that were previously managed beside the ERP due to technical limitations (I am referring to E-WM, Transport Management or APO-PPDS). This new generation tool offers a new way of working five times more efficient for users thanks to Fiori screens and on-board analytics.
When it comes to S/4HANA, we must mention a little bit more on SAP Fiori.
First, what is Fiori? This is a new user interface offered with S/4HANA to replace the old (and ugly) SAP GUI. Before, everyone agreed that the SAP R/3 ERP, also called ECC 6.0, was rugged, reliable, and comprehensive regarding functionalities. However, how ugly it was and unpleasant to use!
Actually, the user interface has also changed in S/4HANA. Indeed, there is no transaction code or menu bar anymore. Through this interface, we efficiently display transactional and accurate analytics information to the user. Users can then make decisions and easily navigate in the ERP.
Fiori is also an « intelligent assistant » that we call “co-pilot”. It takes advantage of Artificial Intelligence (AI) and Machine Learning, which is unique to S/4HANA. Imagine a mix of, among others, a personal assistant, social networks, and Siri, all applied to your ERP. An ERP you can engage in dialogue that analyzes situations and your past actions to make suggestions, for example.
Once that has been established, what distinguishes S/4HANA from other products on the market and why should you consider it in the first place?
In a nutshell, it is a new generation ERP which is part of a comprehensive applications portfolio that will orchestrate your digital transformation and concretely enhance your efficiency!
Based on random access memory database which offers a very high analytics capacity;
Provides a wide range of functionalities, which results from 40 years of R&D;
Offers a portfolio of comprehensive applications to support your digital transformation (CRM, marketing, e-commerce, the Internet of Things, HCM, e-procurement, etc.) “born” and integrated in the ERP S/4HANA.
I invite you to watch this video! It makes me laugh as it demonstrates with good humour what the advantages to adopt a new generation ERP are.
A Complete Solution Portfolio: A Safe Asset
I often see clients who choose their ERP only by comparing detailed functionalities. I rather recommend comparing solution portfolios.
Let me explain: a digital transformation is not limited to the choice of an ERP, which must be the technological foundation of a business transformation. This is why SAP likes to talk about “Digital Core” when referring to its S/4HANA ERP.
Let’s take Aldo, the Quebec shoe champion. Its omnichannel transformation goes through many interconnected bricks of the SAP’s portfolio: ERP, e-commerce, and much more. Aldo CEO, David Bensadoun, in fact uses terms such as “the new SAP platform implementation,” instead of ERP.
Can you imagine choosing a business solution, and figuring out two years later that you need to add a Talent Management HR system, as well as an e-commerce B2B. To avoid the multiple interfaces , make sure to select a business solution which integrates a comprehensive portfolio, and that will meet your present and future needs!
Keep in mind that in today’s world, where we talk about digital transformation and Industry 4.0, the ERP acts as a digital core and around it, all the business digital strategy’s components will be deployed.
How Much Does S/4HANA Cost?
“SAP is expensive, let’s have a look at other ERPs!”
Every day, I am fighting against these ideas. In reality, more than 75% of SAP clients are SME.
When it comes to licences or the subscription, because SAP S/4HANA also exists in a cloud version (SaaS), it is not more expensive than any other system!
And concerning the implementation, SAP and integrators, such as Createch, have developed accelerators and best practices, which enable a fast implementation and indeed, lower costs.
Thus, thinking that SAP’s admission fee is higher is simply wrong.
A Matter of Infrastructure
The only thing which really costs more is the infrastructure. As HANA runs on memory, you will then need the most recent and powerful machines. Alternatively, you can host it at AWS (Amazon Web Services), Google Cloud Platform (GCP), Azure ,or another option, to avoid spending in capital or in IT material. Even better, it is also possible to completely free yourself of “infrastructure” by choosing the S/4HANA SaaS (Software as a Service). Indeed, S/4HANA cloud offers you the advantage to deliver innovations every three months!
What really should be considered though is the return on investment (ROI), and not only the initial cost.
The benefits of S/4HANA’s adoption by SAP clients have been measured. Some performance indicators speak for themselves:
15-20% supply cost improvement;
10-12 % savings on logistic costs;
25-30 % reduction of stock levels;
Up to 10% reduction of manufacturing costs;
10-20% delivery time reliability
50% reduction of accounting closing timeframe
5-10% reduction of Days Sales Outstanding (D S O).
Apply these statistics to your business data and see the results for yourself.
Prepare the Future
You are aiming for growth and planning to embark on a digital transformation to gain a competitive advantage on your competitors? Do not only think of an ERP, but also of the publisher’s full catalogue.
The ERP must be this transformation’s foundation. It should be completed with other initiatives such as CRM, e-commerce B2B or B2C, IoT, etc.
SAP’s offer is unique. The vendor provides you with all the necessary components for a digital transformation. The whole is also organized around a last generation ERP and specifically rewritten to support the digital transformation and “naturally” embedded in the other SAP portfolio’s components.