The business case for S/4HANA Cloud

Tuesday, April 18, 2017

The first thing you need to understand about S/4HANA and S/4HANA Cloud is that the technological base is a game changer for ERP. But like a lot of game changers, making the business case for S/4HANA Cloud – the what’s in it for me – can get lost in the explanations of the technology and the capabilities. In this post, we are going to try to break down why S/4HANA Cloud is one of the biggest competitive advantages a mid-sized organization can invest in.

The technology – a 50,000 ft. view

If you’ve done any reading about S/4HANA Cloud, you’ve seen the term “in-memory computing”. And, if you are like most folks, that term probably made you scratch your head. HANA is an in-memory column store database. To explain it in layman’s terms, it means that applications and data are all held within the active memory of the S/4HANA server. And this changes everything.

In-memory computing. Why is it important?

Here are the top three reasons why the S/4HANA framework (the technology on which S/4HANA Cloud is based) is a revolution rather than an evolution in ERP.

• Firstly, systems for transactional processing (called OLTP in legacy systems) and for analytics (called OLAP in legacy systems) are merged. Meaning that S/4HANA provides real-time data that is immediately available for analytics to turn into actionable intelligence.
• The second major leap forward is processing time. With S/4HANA, when we say real time, we mean real time. Complex analyses of huge data sets (that are updating live) can be done in seconds rather than hours or days.
• Finally, this new architecture is a very powerful application server that provides sophisticated analytical and predictive tools, as well as the ability to add applications (with transactional and analytical functionality) directly onto the core.

To summarize: S/4HANA makes real-time analysis a reality; it accelerates your ability to see, analyze, and respond to changing business conditions; it provides a shared digital core that you can add to over time. If you want to read about this, you can check out my colleague Leonardo de Araujo’s post here: https://beyond-qa.purecobalt.com/the-business-value-of-hana-for-new-sap-customers.

The business case for S/4HANA Cloud

So, we’ve distilled the strengths of S/4HANA down to a few key, easy-to-understand arguments. But how is S/4HANA Cloud different from S/4HANA and how can you know if the cloud solution is right for your organization?

There are four key components to the business case for S/4HANA Cloud.

• The cloud solution has all the power of S/4HANA. Thanks to in-memory computing, you have the ability to analyze, report, simulate and predict in real time, and to make smarter and quicker business decisions supported by digital assistants and machine learning.
• It is a better fit for organizations that are new to ERP because deployment is faster and easier due to standard feature sets. That, in turn, decreases time to value.
• The SaaS model means all IT requirements are managed by SAP. All updates and innovations are delivered automatically every quarter without any headaches. No infrastructure overhead. No data centers to manage. No IT meltdowns. No security worries.
• The cloud solution provides cutting-edge ERP that is tailor-made for small and mid-sized enterprises. The focus, for now, is on marketing, professional services, finance and core ERP areas.

S/4HANA Cloud harnesses the power of S/4HANA while simplifying uptake vs. the on-premises version and eliminating internal IT requirements. It will help your business become more agile and improve productivity. It will also promote cross-functional transparency and drive overall simplification and optimization of your business processes. Without wanting to oversimplify, that is the business case for S/4HANA Cloud, and we think it’s a pretty compelling value proposition.

S/4HANA Cloud gaining traction

When S/4HANA and S/4HANA Cloud were rolled out, the initial reaction of SAP clients was interest, combined with some questions. What was the licensing going to be like? How would it affect ROI? Will the integration curve be steep? But as 2016 drew to a close, S/4HANA adoption nearly doubled versus 2015, and in the 4th quarter alone, SAP signed up 1,300 new S/4HANA customers, including Nike and Ameco Beijing. Also, subscriptions for S/4HANA Cloud, which had been lagging, picked up significantly in 2016, growing 31% (Source: ZDNet, Feb 9, 2017).

Much of this increase is down to the hard work SAP and its partners have put in communicating S/4HANA Cloud’s complex and layered value proposition. The simple truth is that transformative technologies often take the longest to be widely adopted. After all, incremental change is so much easier to accept because it doesn’t rock the boat. We think that trend is going to continue upward. With a larger installed base, soon we’ll be able to benchmark KPIs and share metrics to quantify the arguments in our business case. If you are interested in trying S/4HANA Cloud yourself to see the transformative power of this technology, SAP is offering a free trial. You can click on the graphic below to sign up.

About the Author

Recognized for his thought leadership in the area of S/4HANA On Premises, 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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