Countering the Myths about S/4HANA Finance Cloud

Tuesday, April 25, 2017

S/4HANA Finance Cloud was one of the first SAP Public Cloud services to launch back in 2015. And although uptake of the new service has picked up in 2016, it’s still early days. Finance leaders across many industries are just starting to grapple with the opportunities and costs of moving to the Cloud. But there are still persistent myths about Finance in the Cloud holding back the discussion. A while back, I read an interesting research paper by leading ERP analyst Ray Wang at Constellation Research called Behind the innovations in SAP S/4HANA Finance Cloud. As Ray puts it, “As finance leaders venture into the Cloud for innovation and renewal of mission-critical financial management applications, they must shatter myths about security, customization, and regulatory compliance.”

S/4HANA Finance Cloud and Cloud-Based ERP – Three Myths

Ray sets out three main myths about Cloud-based finance ERP that are holding CFOs back from pulling the trigger. The first big fear that CFOs expressed is data loss/security. The second is the tension between standardization vs. customization. The third is the fear that ERP providers won’t keep up with arcane regulatory requirements in their industry. Other factors such as overall licensing cost (understanding the new model and its impacts) as well as fears about the complexity and cost of the implementation/roll-out process also play a role. But I think Ray has it right for those three main factors. Let’s take a look at each of these myths and the realities that will help overcome those objections.

The myth of the insecure Cloud

Until recently, suggesting to any CFO, CIO or CTO to put the organization’s sensitive data outside its own technical infrastructure would have been met with skepticism. The perception is changing slowly, but the Finance function is among the slowest to accept the Cloud. As Ray points out in his paper, “No CFO wants to have a failed quarterly closing on his or her watch”. Nor do they want to be the source of a damaging data breach.

But the truth behind the myth is that the Cloud is different. In many, even most cases, Cloud providers offer a more secure environment than a corporate IT infrastructure. Cloud vendors (and SAP in particular) have made massive investments and brought in top talent and technologies to harden their Cloud infrastructures. In Ray’s research paper he cites that over 60% of mission-critical data will be accessed via the Cloud by 2020.

Myth 1: The Cloud is insecure – untrue!

The myth of one-size-fits-all

Many CFOs have also been scared off by the notion that public Cloud SaaS applications can’t be customized. In this scenario, organizations would have to re-engineer their processes to make them work with the software.

In the case of S/4HANA Finance Cloud that certainly isn’t the case. There may be some challenges as in any ERP implementation. But the platform provides in-depth, flexible configuration capabilities that will allow organizations to tailor it to their needs. While part of the advantage of SAP’s Cloud offering is a standardized feature-set and automatic upgrades, it definitely is not one-size-fits-all.

Myth 2: No customization in the Cloud – untrue!

The myth of non-compliance

CFOs have been leery to put their trust in Cloud platforms. They worry those platforms won’t stay up-to-date with the latest regulatory requirements for their country or industry-specific regulations (eg. SOX in the US). They have preferred to be able to make regulatory adjustments in-house. But according to Ray, cloud vendors have demonstrated that in most cases they can react more quickly and completely to regulatory changes than individual enterprises.

Myth 3: Cloud ERP won’t stay current with regulatory change – untrue!

Objections and answers – the myths about S/4HANA Finance Cloud

In the ’90s and early 2000s, the finance function was often the driver of the move towards ERP. But in the Cloud era, finance has often been the most conservative sector when looking at Cloud adoption. Why has Finance resisted? Because of the perceived risk vs. reward. If the current system works why rock the boat? In his research paper, Ray Wang debunks the three biggest myths holding CFOs back (you can download Ray’s paper here).  With these major objections countered we can focus on the facts about S/4HANA Cloud Finance. And shift the conversation to how this technology can transform your organization into a digital enterprise.

In my last couple of blog posts in this series, I’ve spent quite a bit of time focusing on value drivers and benefits of moving to S/4HANA Cloud. If you are interested you can find those posts here.

The best way to truly see and understand the value of S/4HANA Cloud is to try it, with your own data! SAP is offering a free trial. You can click on the graphic below to sign up.

About the author

Joël Kieffer – Recognized for his thought-leadership in the area of S/4HANA On Premise, S/4HANA Cloud Edition and SAP Innovation solutions, Joël is a results-driven, highly energetic and passionate professional with over 25 years of combined solution and sales support experience in SAP Business Suite solutions (ERP, CRM, PLM, SCM). Find Joël on LinkedIn

 

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