October 3, 2019

SAP Customers: Why Should You Migrate to S/4HANA?

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The deadline is set. It’s non-negotiable. The support of your current SAP (ECC6) ERP system is going to end in 2025. This means that it will not receive any new updates past this moment and it’ll not benefit from any further innovations made by SAP. The lack of innovation in one of the core systems of your business is a dangerous scenario. Therefore, it is now the best time to act upon migration to SAP S/4HANA in the cloud.

Maybe you still don’t feel the pressure, but ask yourself this – is it the best strategy to wait until the last possible moment? Don’t you prefer to make your next move on your own terms and based on careful planning instead driven by the fear of the closing deadline? I bet the answer is “Yes, I prefer the careful planning and a strategic migration to SAP S/4HANA”.

businessman playing chess, making careful move

“Tactics is knowing what to do when there is something to do; strategy is knowing what to do when there is nothing to do.”, Savielly Tartakower, Chess Grandmaster.

And the thing is that your migration to S/4HANA is not just a redundant update meant to fix some bugs and bring additional colorful themes to your Enterprise Resource Planning (ERP) software. This is not the right way to think about it. SAP S/4HANA is an intelligent ERP system that will transform your business processes. For the better.

“As organizations continue to look for intelligent solutions to optimize and innovate business processes, we are committed to offering our customers a leading ERP system, which enables companies to address current challenges and future opportunities with flexibility, speed, and insight.”

Jan Gilg | Senior Vice President and Head of SAP S/4HANA Development | SAP

The migration to SAP S/4HANA brings a lot of positive changes – better user experience, reduced total cost of ownership, improved performance, etc. Also, S/4HANA is more secure and easier to maintain platform that will become an important part of your plans for the digital transformation of your business.

Now, let me go through the positive changes that SAP S/4HANA will bring to your business.

1)  Vastly Improve Your Performance

SAP S/4HANA (short form “SAP Business Suite 4 SAP HANA”) is the fourth version of SAP Business Suite (successor of SAP R/3). But there is a key difference – it is built on top of the SAP HANA in-memory database. In-memory means that all the data is well-structured, and it is stored in columns instead of rows.

This way it’s quicker to save, retrieve and process the information. And this marks the big business change from an ERP system that passively records data toward an intelligent system that can support the user’s decisions with real-time data analysis.

businessman sitting and analyzing statistics on a tablet

Real-time data. Everywhere.

Let me emphasize this – with SAP S/4HANA you can make decisions based on a real-time data analysis. In an everyday scenario, it means that some of the processes that previously needed minutes now take seconds.

Reporting capabilities

SAP S/4HANA utilizes your data more efficiently and uses extensive and consistent data models for more flexible and powerful reporting.

With SAP S/4HANA you will improve the performance management process through real-time reporting and visualizations. It means you’ll be able to get insights faster so you can understand better your business and turn them into data-driven decisions.

Specific reporting tools, like SAP Analytics Cloud, will give you more freedom to visualize with out-of-the-box components, share information, plan and predict.

visualization of a laptop and monitoring, showing the interface of sap s/4hana

SAP S/4HANA. Visualization: SAP

Besides, with SAP S/4HANA Embedded Analytics (next-generation analytics capabilities) the system users perform real-time analytics using large transaction data. Massive quantities of data can be processed on the fly.

Specifics of SAP S/4HANA Analytics:

  • Real-time.
  • Lightweight modeling and consumption.
  • Extensible.
  • Uniform.
  • The basis for multiple embedded use cases.
  • Model reuse in analytical applications.

Transactions and Hybrid Transaction/Analytical Processing (HTAP)

Another benefit from SAP HANA in-memory database software is the ability of S/4HANA to run high-speed transactions alongside the advanced analytics. The results, as mentioned, is up-to-date and highly accurate responses. And the data that you need is always one click away.

I’m obligated to also cone the term HTAP. It stands for Hybrid Transaction/ Analytical Processing and according to some is “the future of business applications”.

What difference does it make? Well, for a long time, it was considered that operational and analytics systems must be kept separate, to prevent analytic workloads from disrupting operational processing. With the introduction of the in-memory database and HTAP, this is no more the case.

According to Gartner, with HTAP:

  • Data doesn’t have to move from operational databases to data warehouses.
  • Transactional data is available for analytics when created.
  • Drill-down from analytic aggregates always points to fresh HTAP application data.
  • You cut the need for multiple copies of the same data.

The results are greater situation awareness and improved business agility.

In a nutshell, the migration to SAP S/4HANA brings performance improvement due to:

  • Analytics on live transaction data from any source.
  • Real-time insights based on your data.
  • Instant response time for better user experience.

blue and white chart showing the rise of sap s/4hana users

Quarterly number of SAP S/4HANA subscribers worldwide is constantly on the rise, from 2014 to 2019, Statista

2)  Enhanced User Experience with SAP S/4HANA

S/4HANA is not only a more powerful tool than its predecessors ever were, but it has a simplified user interface. It’s designed to leverage the new Fiori UX (user experience) for SAP software and applications.

“HANA is attached to everything we have”

Bill McDermott | CEO | SAP

Fiori is a web-based interface that replaces the old SAP GUI, although at the moment you can keep using both of them. It’s created and optimized based on the feedback of the SAP users.

When the company decided to make research among the users, it found that most of them use the SAP GUI to access applications. The most popular and frequently used applications were renewed and were placed at the foundation of the Fiori UX. Among them are different self-servicing, financial, HR and manufacturing applications. Currently, there are more than 11 000 applications for Fiori. You can find applications for different industries and with different functions. The portfolio is constantly expanding thanks to SAP partners that are producing third-party applications for Fiori. All the Fiori based applications give you a personalized, responsive, role-based and easy to use interface.

It’s interesting to know that SAP GUI has hundreds of thousands of screens with different functions. This is too complicated for the users, it can slow down the work process and it is harder for new employees to understand your processes. Now with Fiori, the user can access and completes all the needed operations from a single Home screen without jumping from one application to another. It’s not only quicker, but it’s also a lot easier to learn.

Watch this video to get familiar with the differences between both interfaces.

Fiori, which means “flower” in Italian, is based on HTML5 and its interface is much more intuitive than SAP GUI. This can noticeably improve productivity. Because of its web-based nature, all the apps and data can be easily accessed via mobile devices – the interface is easily scalable to smartphones, tablets, laptops, and almost any screen. Therefore, the users can access important information from the manufacturing warehouse, form the office or even during a business trip. Easy, fast, agile – you can start a task or a process from your laptop and finish it on your smartphone. The experience is consistent and consumer-grade.

UX improvements through:

  • Simplification. Not all the users need all the options of the applications (opposite to GUI). Fiori reduces their number, so the users see a cleaner interface with relevant features only and focus on what matters.
  • UX optimization. The simplification of the interface results in higher customer satisfaction and less confusion with the applications.
  • Access from different devices. The coherent user interface even on mobile devices and remote access to all the data. Access the information that you need – wherever, whenever.
  • Role-based information. SAP Fiori provides advanced user management features.

And never to underestimate the value that a good UX brings to your business:

  • Gain productivity and Data Quality.
  • Save from training costs.
  • A decrease in change requests and user errors.
  • Increase in user satisfaction, customer loyalty, and solution adoption.

3)  Reduced Total Cost of Ownership

When creating the new ERP system, SAP had another important idea – it had to be easier to use and capable of handling a large quantity of data (hence the improved performance and data analysis). Therefore, the available deployment models are on-premise, cloud and hybrid. If you ask SAP, the best option is cloud deployment. I would say – it depends on your business and your business needs.

blue and green visualization of the features of cloud and on premise versions of sap s/4hana

In S/4HANA Cloud, SAP provides and manages almost everything for the customer. Source: SAP

Although there are a lot of strong arguments for the cloud implementation of S/4HANA. Among them are elasticity, flexibility and the reduced total cost of ownership (TCO) because you don’t have to invest in hardware and its maintenance.

Key benefits of cloud implementation of SAP S/4HANA:

  • Innovations. The latest innovations and features are released for the cloud version of SAP S/4HANA. The implementation of machine learning and AI tools, for example, can be quickly leveraged by your business through the cloud.
  • Flexibility. The cloud deployment is a scalable cost-effective solution.
  • Faster implementation. The cloud deployment takes considerably less time than the on-premise version of SAP S/4HANA.
  • Access. Have all the information remotely without complex technical configurations.
  • Security. The cloud version is in a highly secured hosting environment.
  • Maintenance. There is no additional maintenance cost compared to the on-premise deployment where you need more hardware.
  • IT optimization. It doesn’t require investment in internal IT support and thus reduces the expenses on IT staff.
  • Cost-saving. According to SAP, you can lower your TCO with up to 30%
  • Scalability. You can increase or decrease the number of users that are using the platform.
  • Automation. Your system receives automatically all the necessary updates and patches without the need of your team. Instead, your team can focus on more important tasks.

Maybe there is a reason that you haven’t started your migration process yet. Maybe you are not ready for the full migration. I understand that. It’s important to know that there is no need to migrate your whole system landscape.

SAP S/4HANA is a flexible solution and you should invest in features that your business can take full advantage of. You can always keep expanding on a later stage of your business transformation.

4)  Key SAP S/4HANA Features

Finance

It helps you evaluate, manage and make better decisions, based on real-time analysis of the information. Based on our clients, who have already migrated to SAP S/4HANA, the reporting processes became 30% faster. Among other benefits is the increase in process transparency, efficiency, and control.

Supply Chain

It provides more accurate commitment dates, it has integrated transportation management and optimizes inventory levels and processes. SAP S/4HANA allows supply chain organizations to advance warehousing capabilities without the need for a separate standalone solution and complex middleware.

Manufacturing

It helps you improve production planning, supports complex assembly process and it can boost the quality of your production while lowering the costs by nurturing the collaboration between R&D and manufacturing teams with relevant data.

two monitors showing the interface of the manufacturing feature of sap s/4hana with a visualization of a metal element

Optimize manufacturing production scheduling and constraints management. Source: SAP

R&D and Engineering

SAP S/4HANA helps your business accelerate the research and development of new products and services. This is possible because of the different components of this intelligent ERP platform. To name just a few there is SAP Innovation Management solution, SAP HANA business data platform for live tracking of financial project KPIs, Role-based SAP Fiori for quick access to accurate information about project progress, and so on. By working smartly with SAP S/4HANA, R&D and engineering teams speed up time-to-market, optimize R&D expenses and increase the total number of creative ideas.

Sales

With SAP S/4HANA you’ll be spending a lot less time on administrative tasks so you can focus on products, services, and customers. After the migration to SAP S/4HANA, you can expect a streamlining of the process – marketing, sales, commerce, services, and billing. As another positive outcome, your company will reduce sales-related costs and inventory-related costs due to real-time and contextual analytics.

Professional Services

With the automation of many of your business process with SAP S/4HANA you can use the freed-up time to improve customer services. An example of this is Centria, which expanded its service offerings after the implementation of the platform. This led to a 40% average time reduction for the processes across the business and real-time reporting. Before that, the latter usually needed around 2 days to generate.

Procurement

With SAP S/4HANA your business can rely on real-time embedded analytics with live integration, live calculation of KPIs, dynamic supplier evaluation, monitoring of purchase spend, the ability of business users to view draft invoices coming from Ariba Network and much more. The results for procurement after the migration to S/4HANA include increasing sourcing savings, improve supplier compliance, fewer days in inventory, etc.

5)  SAP S/4HANA in the Cloud: All the New Features

The cloud implementation of SAP S/4HANA brings you fast and easy access to the new features of the ERP system.

This means to rely on an ERP system that is constantly evolving and becoming smarter, easier to use, and more powerful. And I’m not joking. Because your ERP will not be constrained form the limitation of your on-premise hardware and the platform is in the control of SAP, your S/4HANA won’t stop evolving.

“Migrating to S/4HANA is gradually becoming a topic with higher importance to SAP users. It is surely the right move to get ready for the future challenges and opportunities before the official support for SAP ERP is cut in 2025. Each new release of S/4HANA includes functionality, connectivity, and reporting improvements.

Major functionalities that till recently required separate installations are already included in S/4HANA – e.g. Extended Warehouse Management, Transportation Management, Detailed Planning and Scheduling, and others. This trend is only planned to get stronger, which can lead to significant savings, landscape optimizations and depending on the business case can even turn into a competitive advantage.”

Rosen Peychev | SAP Logistics Team Lead | ScaleFocus

Here are just a few of the newest features that the SAP S/4HANA users can facilitate:

  • Functions based on machine learning and predictive analysis. This way you can make predictions on all the data that you feed to your ERP system.
  • Future integration of the blockchain technology and support for Internet of Things devices.
  • A smart assistant that handles the repetitive tasks. With CoPilot you can focus on more complicated tasks with a bigger impact on your business.

This is the smart assistant in action.

Source: SAP

Stepping away from the more futuristic features, here are the latest features added to S/4HANA Cloud with the newest update 1908 from August this year:

  • Usage-based billing
  • Improved management of cost rates
  • Better ways to manage staff resources
  • Predictive manufacturing resource planning (MRP)
  • Intelligent Robotic Process Automation

According to Forbes, by 2020 60-70% of all software, services and technology spending will be cloud-based. It is not hard to imagine why there is a growth in the adoption of cloud-based services. SAP S/4HANA is a clear example of all the benefits that its cloud version brings to the business.

6)  SAP S/4HANA is Easier to Maintain

This one is short but very important. Those are the three main reasons why it’s easier to maintain the cloud version of SAP S/4HANA:

  • Usually, your cloud subscription fee includes help desk support.
  • All the updates are handled from SAP so you can always be sure that you are using the latest stable version.
  • SAP updates S/4HANA every quarter and as you learned from the previous argument for the migration – you can immediately facilitate the newest features.

7)  Enhanced Security

Did you think that I will miss one of the most important questions for your business – the security of your data? Especially, when we talked so much about collecting, processing and analyzing data? It may sound as a surprise that a cloud-based system can be more secure than the version installed on-premise, but there are some strong arguments to be made here.

Here they are:

  • Security 24/7. Even if there is just a sign of an attempted security breach or malicious attack, the ERP provider has a well-developed protocol for dealing with a security threat.
  • They must keep it secure. Yes, this argument may sound vague, but think about it – for any ERP vendor to be successful it must prove that it is stable and can handle your needs. SAP is founded in 1972 and it has 24.7 billion USD revenue for 2018.
  • Data is remotely accessed. You don’t download it on local laptops and other devices. This way if a device is lost, you don’t put all the company’s sensitive data on risk.
  • Remote maintenance. The network management is handled by an expert, automated patching of bugs, enhanced monitoring, latest and best encryption standards.
  • The security of the hardware itself is in the hands of the provider and you don’t have to delegate any employees or budget for its maintenance.
  • Newest updates. If you are using an on-premise version of SAP S/4HANA you will have to handle the updates of the system. Sometimes a delayed update can leave a crack in your ERP platform’s security. For example, in 2017 the reason behind the biggest malware attack in history was a vulnerability in older versions of Windows. WannaCry infected more than 230,000 in over 150 countries within a day. With the cloud-based version, SAP is keeping the system always up-to-date.
  • Powerful tools. The cloud version of S/4HANA is giving you access to tools built to handle the security of your system. They help your IT team identify weaknesses in your network, provide suggestions on how to improve your security, and more.

Of course, it will be naive to think that you can’t have a well-prepared security team on the premise, expansive tools, and monitoring systems, but this will add a hefty sum to the overall cost of your system maintenance.

SAP Cloud Platform Security keeps you safe. Source: SAP

Time to Migrate to SAP S/4HANA

SAP keeps adding features and perfecting it. This can give you the wrong impression that you have to wait until S/4HANA is complete before starting the migration. It is a dangerous assumption though. As you saw, nowadays the system has a lot more features that help you gain a competitive edge.

In April 2019 SAP conducted a survey of 300 of its clients. Some of the key findings are that:

  • 54% are planning on deploying SAP S/4HANA within 3 years.
  • 43% are consolidating several ERP instances to one SAP S/4HANA.
  • 33% will do a system conversion from ECC to keep current data, configuration, and customizations.
  • 23% will do a completely new implementation.
  • 77% are using SAP partners to digitally transform, plan out the integrations, business process mapping, change management and deployment.

ScaleFocus is among these SAP partners that have successfully implemented SAP S/4HANA to drive competitive advantage.

SAP S/4HANA Migration Success Story #1: Tempodem Ltd

Tempodem Ltd is the first private factory, engaged in the production of corrugated cardboard in Bulgaria. It was established more than 20 years ago.

The operation of a factory can be hard and time-consuming, leading to mistakes and workflow with the need for optimization. At the same time, Tempodem Ltd. felt that it’s time for expanding the product portfolio, and the market reach. This wouldn’t be possible with legacy systems and without the optimization of the process. The company needed to focus on the products.

The solution was a migration to SAP S/4HANA – the first one in Bulgaria. Our team helped with the implementation of the intelligent ERP platform across Product Planning, Finance and controlling, Material management, Sales and distribution, and Quality Management.

Achievements

  • Access to all data in real-time.
  • Building data-driven strategic decisions.
  • Analyzing information at every level.

Migration to SAP S/4HANA: Brownfield or Greenfield Approach?

Now for the migration methods. If the last time you checked was two years ago, maybe you still think that you have to start all over again and implement S/4HANA from scratch. This is still an option (the Greenfield approach) but it can be time and cost consuming, and it may lead to changing a lot of processes and even establishing new ones.

So, to ease the business SAP introduced the Brownfield approach to S/4HANA implementation. It lets you use the new intelligent ERP for some of your systems while you keep using the rest of the SAP ECC as previously. This way you can migrate only the systems from which you’ll receive improved reporting or important real-time information.

scheme of the two typical approaches to sap s/4hana adoption - greenfield and brownfield

Brownfield and Greenfield. Two approaches. Source: SAP

Which one will be best for your business? From the migration of which system your business and its processes will benefit the most? What is the proper way for you to do it? All those questions are logical, and the answers will come only after a good planning phase and building a solid roadmap.

 

SAP S/4HANA Migration Success Story #2: Ariete Group

Ariete Group is a warehousing-focused company that covers a wide variety of services such as production, warehouse management, complex logistics, transport, expedition, and outsourced purchase. They offer a broad range of logistical solutions for customers with complex requirements. The company needed an integrated and easy-to-use automated solution.

photo of a warehouse with a truck that is being loaded

Optimizing the information flow can have an enormous impact on warehouse management.

The SAP S/4HANA implementation was not just an improvement on the most important systems, but also a strategic step towards bringing Ariete’s business to the next level throughout a technological advancement.

SAP S/4HANA features implemented

  • Production Planning.
  • Materials Management.
  • Quality Issue Management.
  • Sales and Distribution.
  • Finance and Controlling.
  • Warehouse Management.

Achievements

  • Future-proof and scalable solution that enables further future automation and optimization.
  • Real-time transparent information flow, which enables informed and accurate decision making.
  • Enabling traceability of results down to a single transaction level.
  • Reduction of the operational expenses and improvement of warehouse and production processes through automation.
  • Enablement of the end customer.
  • Unification of business processes.
  • Reduction of the “Human error” factor.
  • Single-point-of-truth for all data.

s4hana-migration-interface

SAP S/4HANA will bring the digital transformation to your business. Thus, opening new opportunities.

Conclusion: The migration to SAP S/4HANA will bring your business:

  • Improved performance. Because of the real-time reports and analytics, you can make better planning, execution, and reporting. Thus, improving the performance of business-critical
  • Agility. You’ll be able to process large amounts of data in real-time so you can make informed decisions as quickly as possible. And most importantly – decisions based on hard data.
  • Simplified workflow. This is possible because of the user-friendly SAP Fiori interface which your users can start using right away – without or with minimal training. It’s that easy. Not only that, but you’ll be able to access your data from any device and the user interface will be adapted for it.
  • Reduced expenses. Your expenses will be reduced with the single SAP S/4HANA database platform. All the data is collected in a single source combining analytical and transactional operations, which saves hardware, operational and time costs. Besides, you can implement only the modules that you need with the convenience of a SaaS subscription. Because S/4HANA can be deployed on-premise and on-cloud (private such as IBM Cloud, Google, Microsoft Azure, or Amazon Web Services), choosing the latter means that you can leave the expensive in-house infrastructure in the past.
  • Modern features and technologies. S/4HANA is always evolving and all the newest and SAP’s most innovative technologies will be optimized for it. This means a system that is easier to maintain and enhance security.

Remember that no matter which approach is most suitable for your business (Greenfield or Brownfield), SAP S/4HANA will bring the digital transformation to your business. This transformation will introduce new values and functions to your processes. As a trusted SAP partner, ScaleFocus has the rare experience and know-how to help you open the door to SAP S/4HANA. We can ensure that your implementation will go as planned so you won’t lose your focus.

 

Author: Nadezhda Myashkova | Director Service Delivery