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Understanding the Case for SAP S/4HANA Cloud

by Rizal Ahmed, Chief Research Officer, SAPinsider and Heather Black, Senior Editor, SAPinsider

February 11, 2019

For many organizations, the path to modernization is paved by the cloud. The cloud offers a host of benefits, including rapid implementation, flexibility, scalability, lower maintenance costs, easier regulatory compliance, and access to technologies such as the Internet of Things. With SAP S/4HANA Cloud, SAP customers can take advantage of these benefits in their own organization through a cloud-based ERP business suite that enables digital, integrated processes across the business landscape.

As with other cloud-based solutions, SAP S/4HANA Cloud has quicker innovation cycles than on-premise solutions, with updates delivered every three months rather than on a yearly basis, bringing new functionality to businesses much faster than is typical with traditional, on-premise updates. The latest release, SAP S/4HANA Cloud 1902, arrived on Monday, February 4th, along with several new features to help businesses run better, including a new inventory KPI analysis app for monitoring inventory flow and ensuring accuracy, an intelligent situation-handling functionality that alerts specific users about business-critical situations, and a new advanced financial closing feature that enables you to define, monitor, and speed the entire financial closing process.

In addition, as of SAP S/4HANA 1902, SAP Cloud ALM, which is SAP’s cloud-based tool for application lifecycle management, provides an implementation portal for SAP S/4HANA Cloud that offers organizations increased guidance for implementing SAP S/4HANA Cloud. “The tool uses the SAP Activate methodology and significantly simplifies your journey to the cloud by providing guided to-do lists with all implementation tasks,” says Sven Denecken, Senior Vice President of SAP S/4HANA Cloud Product Management and Co-Innovation at SAP.

With enhanced implementation support, compelling new features arriving on a continuous basis — the next release, SAP S/4HANA Cloud 1905, is due to arrive in May 2019 — and the convenience of a cloud-based solution that can be up and running quickly, SAP S/4HANA Cloud continues to become a compelling choice for businesses seeking to make the move to cloud-based ERP. Once you do make the decision to move forward, you have new considerations to take into account, and one of the most important is that you are highly unlikely to be implementing SAP S/4HANA Cloud in a vacuum — you almost certainly already have an existing system landscape in place with other SAP and non-SAP solutions both on-premise and in the cloud. So how do you handle this integration?

There are three main integration options available to you:

  • Use preconfigured, end-to-end integration scenarios provided by SAP for rapid deployment, available via SAP Best Practices Explorer.

  • Adapt the predefined content delivered with the SAP-provided integration scenarios to tailor them to your requirements.

  • Create a custom-defined integration to meet your unique integration needs, such as integrations with third-party systems or custom-built solutions, using APIs available from SAP API Business Hub to implement the integration.

What Does This Mean for SAPinsiders?

Here are some things to think about as you consider these integration options and your move to SAP S/4HANA Cloud in general:

  • The right integration choice for you depends on your organization’s requirements, in particular whether or not you need to make any customer-specific adjustments to support your required integrations, and if you do, how extensive these adjustments need to be. Carefully consider your needs as you build your implementation strategy — the less you need to tailor the integration, the faster and easier the implementation will be. Sven Denecken and Janusz Smilek take an in-depth look at the three integration options listed above, and how to choose the right approach based on your particular needs, in their article “Paving the Way to SAP S/4HANA Cloud.”

  • Explore the two-tier model to see if it makes sense for you, where core ERP functions that require stability remain on premise while line-of-business functions that benefit from optimal agility are deployed in the cloud. In talking to SAP and customers, we are finding that most businesses who are considering this are planning for their corporate HQ to remain on premise with some of their distributed business units and divisions in the cloud.

  • Your level of customization will also affect your decision about moving to SAP S/4HANA Cloud. Many legacy SAP ECC customers currently have a significant amount of custom ABAP code and custom configuration in place that will need to be adapted due to the new table structures within SAP HANA. You can still develop custom SAP HANA-focused applications using SAP Cloud Platform, but any public cloud infrastructure is not meant for massive customization.

  • Most SAP customers have already made a significant investment in an already-existing on-premise system, which can make it challenging to make a case for moving to SAP S/4HANA Cloud. In addition, for some organizations, their highly customized processes are key competitive differentiators, and moving to a public cloud-based solution means moving to standardized processes. And, of course, change is hard, no matter what kind of change it is, and some businesses just don’t feel ready to make the leap. While moving to the cloud may not be the right move for some, or may not be the right move right now, these challenges are not insurmountable for those who have made the decision to make the leap.

  • It is also helpful to gauge where your peers are at with their own SAP S/4HANA Cloud adoption as you think about what will work best for your business. You will be able to learn more about how other organizations are approaching SAP S/4HANA Cloud in the upcoming SAPinsider state-of-the-market report on SAP S/4HANA migrations.

Rizal Ahmed can be reached at rizal.ahmed@wispubs.com. Heather Black can be reached at heather.black@wispubs.com. Follow us on Twitter at @SAPinsider.


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