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Break Free from On-Premise Complexity

How a Public Cloud Environment Helps Spur Innovation in a Digital Evolution

by Darren Roos | SAPinsider, Volume 18, Issue 2

April 21, 2017

Increasing demand from customers for innovation and convenience has played a major role in moving businesses toward cloud technology, as the cloud allows organizations to be more agile and responsive to customer needs. Recognizing this trend — and the needs of its customers — SAP released SAP S/4HANA Cloud, an end-to-end ERP system purpose-built for the cloud. Learn how this public cloud offering provides you with the flexibility you need to meet your own customers’ demands. 

Customer expectations have evolved with the transition to a digital economy, with an increased demand for innovation and convenience from the goods and services that customers purchase. Sensors and connected devices enable once-static products to retain or even increase in value long after they’ve left the store. Wearables and apparel can track human physiology, enabling customers to make better-informed decisions about their health while also improving brand loyalty.

For companies that must cater to evolving customer expectations to remain competitive, customer influence is significantly enhanced. Unless these companies can identify new requirements, customers will readily move to whichever vendor can satisfy their newly found needs for on-demand products and services. A bank that doesn’t offer mobile banking will lose customers to the one that does. The same holds true for an online retailer that can’t offer expedited delivery at a lower rate than a competitor. When failure to meet evolving expectations can lead to a business shutting its doors, organizations in every industry are driven to reexamine whether their processes and business models are appropriately positioned to capture new requirements.

This growing obsession with customer satisfaction in response to a digital economy is acutely felt in the enterprise software space. While the goal is to produce solutions that help customers evolve into a digital business so that they can meet the demands of their customers, software providers must also be more attentive to how customers interact with their products.

Continued Innovation in a Public Cloud

The increasing power of customers and the need to meet their demands has helped to crystallize SAP’s cloud strategy, which is marked by the solutions and services we offer as well as a commitment to ensure that our portfolio evolves with changing customer needs.

Part of the strategy resulted in the formation of the SAP S/4HANA Cloud division in October 2016, which I was privileged to be asked to lead. This end-to-end cloud ERP business, which is targeted at large enterprises, includes development, services, product management, solution management, and sales, and one of its core principles is ensuring the success of our customers. I’ve had the honor of assembling a first-rate team — including Melissa Di Donato, Christian Pedersen, and Sal Laher — who are committed to ensuring SAP S/4HANA Cloud customers derive continuous value from their deployments. The team intuitively understands that our customers require an unprecedented level of flexibility to meet their own customers’ demands, and this mindset is reflected in everything that we do, from development to sales, services, and support.

A need for flexibility is a significant driver for moving to the cloud, and most large enterprises have established some form of a cloud footprint, even if it’s just a few software-as-a-service (SaaS) applications targeting a single process or isolated piece of the business. Innovation is another key driver for companies moving to a hosted private cloud model to run their infrastructure, freeing their IT departments to pursue more value-added activities while maintaining many of the customizations unique to their on-premise infrastructure.

As a public cloud offering that sits on a shared platform, SAP S/4HANA Cloud offers companies additional benefits beyond those realized from a hosted private cloud — benefits that help advance the pace of innovation, which is vital for enabling organizations to meet changing customer expectations. One such benefit is the quarterly releases offered by SAP S/4HANA Cloud, pushed to the customer without the added cost of an upgrade. This is in stark contrast to the annual releases offered for on-premise or hosted private cloud ERP systems. Another benefit is that SAP S/4HANA Cloud is purpose-built for the cloud and provides customers with self-service configuration capabilities, which are unavailable in an on-premise or a private hosted model despite an identical underlying architecture for SAP S/4HANA.

Harness Innovation Without an Upgrade

In the short term, upcoming SAP S/4HANA Cloud releases will include enhanced machine learning and embedded analytics functionality. As SAP S/4HANA Cloud enables customers to pull in data from a multitude of sources, this new functionality allows customers to mine a greater volume of structured and unstructured data to generate deeper insights.

While functionality for upcoming releases is still being refined, enhanced machine learning will include the ability for SAP S/4HANA Cloud customers to leverage SAP CoPilot, a digital assistant intended to lessen labor costs across the business — by automating administrative functions, for instance. Embedded analytics will help drive actionable insights without having to run a separate report to retrieve relevant data.

With the in-memory processing power of SAP HANA driving SAP S/4HANA Cloud as a next-generation, intelligent ERP system and shrinking the timeline to innovation by eliminating the need for indices, aggregates, and batch loads, companies that deploy in the public cloud can be confident that quarterly releases will include significant innovation. The traditional limitations placed on IT departments by infrequent upgrades or by the technology itself are eliminated.

Shrink the Time-to-Value Pipeline

A faster path to innovation with SAP S/4HANA Cloud can be measured by more than the frequency with which companies can leverage new functionality. Organizations can also be up and running on SAP S/4HANA Cloud in several weeks as opposed to the traditional multi-year implementation of an on-premise ERP system — and at a fraction of the cost.

In the few months since the creation of the SAP S/4HANA Cloud team, several dozen companies have transitioned from provisioning to go-live in roughly two to three months, or are somewhere along a similar timeline. This is an unprecedented time to value compared with a traditional on-premise project. One fast-casual restaurant in the US, for example, is using SAP S/4HANA Cloud to support core finance, inventory, project management, recruiting, and employee data processes. The company prizes innovation, recognizing the need for customers to be able to customize their meal to their needs, and required a flexible, scalable technology solution from an established vendor. The company also recognized that a public cloud deployment would provide the best chance to gain an edge in a highly competitive industry. This made SAP S/4HANA Cloud an ideal fit to support accelerated growth and innovation.

Growing numbers of companies are realizing that a shift to the public cloud often results in a competitive advantage. They see the tangible, real-world benefits that organizations in every industry have realized by transitioning lines of business such as human resources and customer relationship management to the public cloud, and there is a deepening recognition that equally significant benefits are available to organizations that move core financial processes and ERP systems to a public cloud deployment. 

Companies are implementing SAP S/4HANA Cloud for a variety of reasons. Some deployments serve primarily to retire antiquated on-premise systems by way of a technology refresh. Others are driven by merger and acquisition activity to quickly stand up a subsidiary or prepare for a divestment, while still others transition to SAP S/4HANA Cloud to kick off a gradual cloud migration in a hybrid model approach. In the hybrid scenario, organizations are interested in putting mission-critical and core financial processes on SAP S/4HANA Cloud for quick time to value, yet years of customizations to their on-premise systems warrant a careful and deliberate cloud transition.

Regardless of the situation, the benefits gained from an SAP S/4HANA Cloud deployment are the same: a next-generation intelligent solution purpose-built for the cloud that leverages the power of SAP HANA to enable a live, real-time business.

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Darren Roos
Darren Roos


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