SAP S/4 HANA: Weighing up the evidence by Liam Donnelly

Liam Donnelly joined Ben Cowan and Jean-Pierre Green, Partners within the Business Transformation & Technology Practice at Eton Bridge Partners, at their CIO roundtable to discuss Liam’s recently published book “Crossroads”. The topic certainly generated food for thought and a very lively discussion which Liam has summarised below.

The key topic of the discussion was the necessity or otherwise of migrating to S/4 HANA, leaving behind the legacy versions of R/3, ECC6 or Business Suite 7. Take-up of S/4 may not be as high as SAP has projected. Some users will stick with ECC6 and have the additional option switch to usage of “best-of-breed” functionality in packages like Salesforce.com®, Workday®, Qlik®, Coupa® whilst adopting the emergent and inexpensive third-party SaaS integration platforms like BlueSkyx®, and data synchronisation and quality management tools like Maextro®.  Both UK products were recently demonstrated at the SAP UK user group meeting in Birmingham.

The challenges relating to the poor quality of corporate master data were reviewed through a recent study by Harvard Business Review, suggesting that only 3% of companies’ master data meets basic standards. Curiously, SAP never offered customisation of field level data validation rules or field templates etc. in standard R/3 from the beginning, and the MDM/MDG tools possess no native embedded workflows to support out-of-the-box granular field-level authorisation process. Without such capability, it is challenging to maintain global centralised control of master data rules without sacrificing loss of crucial local input for master data relating to local logistics processes and to logistics spatial data in components like Warehousing.

The world of apps is opening quickly, and another development has been the release of the UI5 Slipstream products from SAP. These allow apps to be developed in hours, and wholly without the need for ABAP on-premise or ABAP Cloud developers. This SAP technology is not only new, but remarkably it is also free! (Further details are available on request).

One area not discussed in detail within the session related to the question of whether new SAP users implementing now should always aim to adopt S/4 in preference the legacy Business Suite product. In general terms the answer will conditionally be yes, but not necessarily for all businesses. Not all industry solutions are currently available in S/4 HANA. Collaborative projects to develop specialist applications for IS-Oil are well under way but unfinished; while reincarnated IS-Utilities has barely started. Furthermore, not all standard R/3 functionality is necessarily being migrated to S/4: questions about areas like CATS remain uncertain. SAP has published a thousand-page guide on the status of migration of such applications for S/4 HANA build 1809. “No functional equivalent” appears 11 times in that document, while “not available” appears some 300 times, sometimes suffixed with “yet” and sometimes with “anymore”. At best this may be an inconvenient for some, and potentially a showstopper for others, so it’s worth checking first.

Some users I have talked to consider the BS7 APO replacement in S/4 as functionally inferior. Feedback on any topic like this would be most helpful.

However its strategy is positioned currently, it is unlikely that SAP can afford to alienate its ECC / Business Suite user base, or simply watch it defect to third party maintenance providers; so there is likely to be some reconsideration of the current 2025 cut-off for the SAP legacy products. This will offer comfort for organisations with stable SAP environments maybe on R/3 4.6 or 4.7 platforms, and reluctant to commit to the high capital cost of complete reinstallation. Worryingly for SAP, such users will be attracted to the prospect of reducing their SAP recurrent maintenance cost by 60% and are likely to make the switch to third-party maintenance. As things stand, that would have a detrimental impact on SAP’s year-end bottom line. The impact will of user defection probably be most visible after 2019-20.

Going forward, participants are most welcome to submit questions arising from materials discussed on the day, or about more general topics relating to future SAP usage, and these can be publicly aired (or escalated to SAP) for general dissemination and consumption.

Please feel free to contact me here with any questions or topics relating to this blog.