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If SAP’s vision of S/4 HANA becomes real with Simple Finance and Simple Logistics being the start of the rewrite of ERP then the S/4 database will become the analytics database that runs all the backoffice transactions of your business with connections to the SaaS based systems and will make real-time business a reality. While the speed of in-memory is attractive, it is the up to date high integrity data with powerful analytics tools that is the true power of S/4 HANA. The ability to understand the DNA of business, the data, and turn it into information is compelling.
Today, we spend 70% of our effort for analytics finding, moving, cleaning, transforming, and validating data to provide analytics answers. We spend vast piles of money to make it work and we are still often out of sync. No better example can be found then most financial close process which may start days or even weeks before to gather the data. So if you gather financial data from systems on 12th through the 24th of that month, you have a close based 12+ days. Worse, if anything changed, such as major sale (positive) or huge purchase (negative), your finances will be inaccurate. The close on the last day of the month is based on data that is 6 to 19 days old from a multitude of sources not synchronized.
Our current ERP ecosystem (simplified).
The multi-ledger model is great when you are running a dry goods store with paper. In the computer age, we made it faster, and easier to calculate, but we haven’t changed the process at gross level. We still take lots of “ledgers” which might be for sales such as Point of Sale systems (POS), procurement processes, credit cards, etc. and put them into another ledger we can close. The Universal Ledger, table ACDOCA (see below), in in S/4 HANA changes the process. Everything runs on that single universal ledger giving you a real time view at any point in time. The technology changes the process, not just automates the old process.
The S/4 Universal Ledger (ACDOCA) provides real-time, consolidated view of Finance.
The Line of Business (LOB) applications like CRM, PLM, SCM, SRM, and few other minor LOB applications, data and processes will fold into S/4 HANA. In addition, S/4 HANA will be designed to connect to SaaS based applications like Ariba, SuccessFactors, etc. to pull that data in as well. As S/4 HANA evolves, it will become the single source, real-time repository for all business operations and back office data moving us towards the single version of the truth we’ve been promised from day 1 of our ERP journey.
The S/4 HANA system integrating LOB applications and SaaS.
Now that all the data is in one location, database, collection, etc. you can use the analtyics capabilities of SAP HANA to analyze the data. Because your data stays where it originates, it has high integrity. The denormalized models provide for simpler view of the data. The HANA analytics tools allow you to powerfully and quickly analyze the data. The S/4 HANA database truly become single source of your internal business data. You are now operating your business on your analytics database.
There are still problems to be solved and questions to answer. I’ve been in IT for a long time, so I know everything is fixed in the next version and the tale of S/4 HANA is laid out in many versions. The functionality is being developed as we speak and it will take some to time to mature. The LOB applications are not yet pulled in. HANA itself is maturing, but does not yet have the proven track record of IBM DB2 or other databases. The S/4 to SaaS options have not evolved as fast or open as they need to become. In general, how fast can SAP pull this together and stabilize it.
About 18 months ago, I would have predicted that on-premise ERP would dissolve into world of SaaS with the remnants going to PaaS custom solutions built using DevOps. Some of ERP will go that way regardless of S/4 HANA’s ability, but S/4 HANA now becomes value add player in running your business worthy of updating to or implementing for the first time. No other solution can enable you to run so much of your transactional business on an analytics database for real answers to your information requirements.
Each company needs to ask itself, when do we need this capability? When will our competition have the capability and get in front of us? Can we gain advantage by investing in S/4 HANA. I think for many companies time to move forward will come rapidly even while the vision is playing out. At IBM, we are seeing an increased number of clients moving forward with S/4 HANA every day and helping make them successful.
- ERP – Enterprise Resource Planning
- ECC – Enterprise Central Component
- BW – Business Warehouse (SAP’s data warehouse)
- CRM – Customer Relationship Management
- PLM – Product Lifecycle Management
- SCM – Supply Chain Management (includes APO – Advanced Planning & Optimization)
- SRM – Supplier Relationship Management
- SaaS – Software-as-a-Service
- PaaS – Platform-as-a-Service
- CEC – Customer Engagement Center (CRM successor at SAP)
- HCP – HANA Cloud Patform
- HCI – HANA Cloud Integration
- SF – SAP SuccessFactors (unofficial abbreviation) (SAP’s SaaS based Human Resources application)
- GB – Gigabyte (measurement of storage, disk based in these diagrams)