Is SAP’s S/4 Hana Strategy Still Up to Date?

A successful corporate strategy usually encompasses three to a maximum of five years in which it will be operationally executed. Due to the dynamic market environment, IT strategies have to be implemented in an even shorter time span. SAP might have missed the memo, though.

S/4 and SAP’s cloud are celebrating their seventh anniversary, so many customers are asking about SAP’s strategy and what will happen next. Since the unveiling of S/4 by Bill McDermott and Hasso Plattner, there has been a generational shift on an executive level, but not in SAP’s S/4 strategy. This might be because actually implementing that strategy is more complex than CEO Christian Klein initially thought. SAP might have chosen the wrong technological approach to the strategic transformation.

The three main variations for technological transformation—transition, brownfield and greenfield—are way too complex and take too long. SAP has been working on tools to facilitate the switch, but they have either been discarded along the way or changed completely. SAP also pivoted between different strategies, mostly due to customer demand, for example away from a “Cloud Only” approach and towards a more hybrid concept. This makes it seem as though SAP doesn’t have a clear, central strategy for the transformation.

System integration of all software modules has always been an integral part of SAP’s success. With the many strategic acquisitions over the past few years, SAP stopped focusing on the integration in one central core system for a while. After his predecessor had left the company, Christian Klein acknowledged the problem and got to work fixing it. This has cost SAP money and, most importantly, time—time it doesn’t have.

Most small to midsized SAP customers will be able to technologically transform to a hybrid S/4 landscape until SAP’s deadline in 2027 or (with extended support) in 2030. Large SAP customers, however, are a different story. A purely technological transition, even with a lot of SAP systems, interfaces, and custom code, in five years might be feasible – but only if those companies set priorities, especially concerning core business processes.

SAP is trying to convince customers of its S/4 Hana strategy, but the time to keep trying is long over. The S/4 Hana strategy should already be well on its way to be completed in a few years’ time. However, that isn’t the case, which means customers are running the risk of transitioning to antiquated technology.