Not fish, not meat: SAP S/4 & Hana
Hana was a database, became a platform and is now the singular basis for S/4, the upcoming ERP from Walldorf.
This metamorphosis took place in just three years and is therefore very difficult for SAP's existing customers to digest - a challenge not only for the community, but also for analysts and for the user association DSAG.
Frank Niemann, an analyst at PAC in Munich, concludes, among other things, that SAP's existing customers see S/4 as a path to better SAP applications. They are not aware of the potential for innovation in the direction of new processes and business models.
About one in three companies plans to introduce S/4 in the next few years. Almost 40 percent of them are venturing a fresh start and want to completely rebuild their systems. Numerous companies are not yet that far along, but are considering whether and how they want to approach the topic.
Analyst Niemann specifies: Users are often not yet in a position to quantify the effort and costs that will be incurred by existing customers for these S/4 projects.
In addition, SAP customers have to purchase the new product and possibly also new hardware. Good arguments are needed to justify these investments in view of existing SAP landscapes.
From the SAP scene one hears again and again the questions about a valid roadmap: Should the changeover from ERP/ECC 6.0 and S/7 (SAP Business Suite 7) to S/4 be as dramatic as from R/2 to R/3, then the release changeover will take place over the next ten years and more.
S/4 Roadmap wanted
The ECC 6.0-S/4 release change will not work without massive support from the SAP partner community and numerous consultants. However, the number of experienced Hana consultants is still very small, even after five years of in-memory computing, and there is hardly any tangible knowledge for S/4 apart from a few completed PoC (Proof of Concepts) and evaluation workshops.
Even the S/4 Hana workshops have to be raffled off and given away, as T-Systems impressively demonstrated at CeBIT 2015 - positive feedback?
None. Thus, the DSAG user association also decided to dedicate its annual congress last October to the search for an S/4 Hana roadmap.
Association members were asked for their assessment of Hana and S/4. The results were devastating, see also E-3 November, page 20. A large part of the SAP community is looking for orientation, help and roadmaps.
SAP's educational work on Hana and S/4 is a disaster. The last hope rests on the shoulders of SAP partners and consultants. It was thus a logical step for Experton Group to conduct a Hana service provider benchmark to reflect the importance that Hana is currently experiencing.
The right strategy, the right technology platform, and a clear business case are required. Existing SAP customers need support with the introduction of Hana.
BW on Hana is o. k.
The analysts of the Experton Group have ascertained that there have only been a modest number of Hana projects on the market in recent years, mainly in the analytical, less in the transactional environment.
However, experience with Hana in analytical use (e.g. BW on Hana) has grown significantly in the meantime, and reference projects and successes are available.
Due to the focus on individual processes, as with the Simple Finance solution or the S/4 Hana solution provided in 2015, the renamed complete solution of Simple Finance, it is to be expected that a change will also be seen in transactional use.
According to Experton analysts, the service provider market in German-speaking countries is prepared for the hoped-for "run on Hana" with a range of solutions. Who has what focus here and how mature the offering actually already is was the basis of an Experton benchmark.
Hana projects are complex
The conversion to or new introduction of Hana requires a broad spectrum of solutions, starting with distribution (licensing models) and technologies (hardware, software, infrastructure), through services (strategies, analyses, business case considerations), to the actual transformation (implementation, migration, integration).
Especially the area of services with the development of customer-specific Hana strategies and the presentation of the individual benefits for the customer on the basis of reliable business cases poses a challenge for many service providers.
"The history of SAP landscapes at end users could not be more diverse, and a standardized starting point does not exist. Here it is important for providers to pick up the customer and not only recognize his individual situation, but to be able to react to it."
says Frank Schmeiler, project manager of the benchmark at Experton Group. The use of Hana is more than just a technical upgrade.
First database, then platform
PAC analysts have found that the starting point for S/4 implementation projects is often the Hana in-memory computing platform.
According to PAC, a good three-quarters of the respondents expect S/4 to lead to the introduction of a common real-time platform for transactional and analytical workflows and to improve the user experience through SAP Fiori.
However, easier and faster configuration of SAP-supported processes and a reduction in the complexity of processes and data models are also important reasons for using S/4.
It is astonishing that nearly 40 percent of those companies that are planning or discussing the use of S/4 want to make a fresh start and completely rebuild their systems.
Less surprising, however, is the fact that when it comes to operating the S/4 solution, one third each relies on in-house operation, hosting or hybrid sales - pure cloud operation, on the other hand, is only relevant in a handful of companies.
However, DSAG members have a very clear idea of the classic SAP Business Suite (S/7) as the strategic ERP backbone in the company. 70 percent give S/7 a high priority, 22 percent a medium priority.
An S/4 running in the company is strategically relevant for more than a quarter. Almost 37 percent see a medium importance. Cloud solutions, on the other hand, fall into the lower single digits.
"DSAG members have built up a great deal of expertise in the area of Business Suite and trust it to map their processes efficiently and as completely as possible, both today and in the future. Despite innovative products, the future security of the Business Suite must remain in place".
is the demand on the part of DSAG.
This means that existing SAP products must also support companies' digitization strategies and be able to be expanded or further developed to this end.
Although companies are considering S/4 and have clear goals associated with its use, many important questions remain unanswered for them. The analysts at PAC found that existing SAP customers consider the unpredictable cost of conversion (78 percent) and the lack of business cases (77 percent) to be problematic.
"Good arguments and convincing business cases are needed to justify these investments in view of the SAP landscapes already in place at companies and the ongoing costs they incur"
admits PAC analyst Frank Niemann.
Who can what?
Experton's Hana Service Provider Benchmark looks at relevant service providers in German-speaking countries that offer solutions (hardware, software, services) as part of their portfolio that can significantly support end customers in their migration to Hana.
For this purpose, the service providers were evaluated within the three categories Hana overall market, transactional systems as well as analytical systems. In order to reflect the needs of users, numerous criteria from the areas of business and strategy as well as products and services were defined and weighted for the evaluation.
The survey period for the benchmark was August to October 2015. The number of companies with solutions in the context of "Hana" has grown significantly in recent months in view of the high market potential of the topic, and the content of the providers' offerings is naturally very differentiated.
From a field of about 150 vendors, 33 vendors were evaluated whose solution offerings can be described as truly mature as well as operational and who already have both experience and references.
For the Hana service provider market review, emphasis was placed on a service offering with a specific focus on a company's overall Hana portfolio and Hana strategy.
This means, on the one hand, the combination of consulting and implementation capabilities for technological, transactional and analytical scenarios; on the other hand, the consistent embedding of the Hana offering in the company's solution portfolio and the identification of a long-term Hana strategy.
A switch to Hana, in whatever scenario, is not a pure IT project. In order to really exploit the added value, there is an urgent need for interaction between business and IT, says Experton. What is needed are providers who can cover both, business and strategy consulting as well as technical implementation.
The better ERP
IT consulting and migration services are most frequently requested for the introduction of S/4 (72 percent). In contrast, relatively few users want to invest in customer-specific SAP software developments (26 percent).
Around 80 percent expect an S/4 service partner to be able to communicate innovations in terms of IT and business and to transform business processes.
Three-quarters of SAP managers consider expertise in the area of simple finance to be crucial. Parallel to this, PAC surveyed that the majority of users (84 percent) generally assign an important, usually even a central role to their SAP systems for the upcoming digital transformation of business models.
According to PAC analyst Niemann, the respondents are somewhat indifferent about the role that S/4 will play in this process: Most SAP managers (62 percent) believe that S/4 will have to be introduced by existing SAP customers sooner or later.
For two-thirds of respondents, the most important motivation is to follow the product strategy in order to participate in SAP's future developments. However, only one in three believes that S/4 provides the basis for innovative business models!
First and foremost, S/4 is seen as a gain in terms of increased performance (90 percent). But improved user-friendliness and increased efficiency in back-end processes are also cited as added value by more than half of the respondents.
"Overall, companies today see S/4 Hana more as a path to better SAP applications. The possible innovation potential in the direction of new processes and business models is not present to them."
says Frank Niemann, Vice President for Software and SaaS Markets at PAC and author of the study.
Digital transformation
"There have always been good reasons for IT to take an active role in the digital transformation. This applies all the more to the topic of Industry 4.0 and the Internet of Things. Here, IT is the linchpin."
says Jürgen Renz, Executive Director Enterprise Solutions at Dell in Frankfurt am Main.
"Together with our partners, we create customized complete IT solutions and support companies in the implementation of S/4 Hana"
adds Renz.
For user companies, what is needed are solutions that can be used in business rather than technical products. Added value for a company's business processes must be clearly recognizable. Here, providers can also score points above all with individual solutions and genuine USPs.
Digital transformation is making inroads at member companies of the German-speaking SAP User Group (DSAG): 15 percent of respondents are actively implementing projects to digitize business processes.
Almost one in three companies is evaluating topics such as the Internet of Things and Industry 4.0. The other half of the survey participants are still reticent and do not see any need at present.
This was the result of a survey among DSAG member companies in the summer of 2015. DSAG Executive Board Chairman Marco Lenck expects a further push on this topic in the coming months:
"In many industries, it can be decisive for competition to adapt business models to the market. It is therefore important to implement business process requirements quickly, flexibly and as simply as possible."
Use and Business Cases
Experton Group has been observing the Hana market from the very beginning. Not all providers have yet consistently "jumped on the bandwagon" and offer sound Hana solutions of any kind as a fixed component in their portfolio.
There are many reasons for this, but first and foremost the uncertainty of the user companies and thus the still restrained number of projects.
In the meantime, however, it has become clear to most service providers as well as user companies that Hana is not a fad but a serious step into the future.
Within the leading providers, Itelligence placed very high in this provider assessment. Experton conducts its independent studies on the basis of a market insights methodology, with up to 50 weighted criteria each for portfolio attractiveness and competitive strength.
The evaluation criteria include the strategy and its implementation, the company's commitment, the type and scope of services up to and including training courses, and proof of the company's success through references.
Andreas Pauls, Managing Director Germany at Itelligence:
"We are pleased to have our efforts recognized by our customers by an independent analyst firm.
The SAP Hana platform can serve as an accelerator for companies on the path to digital transformation. This analysis shows: Itelligence is a trusted partner when it comes to deploying Hana."
Experton's market studies are an important aid for user companies in building their longlists and shortlists when planning new IT projects.
The study shows that users recognize the value of the Hana platform. However, it also highlights that the market is still evolving and that there are many IT service providers who are now new to Hana or whose overall offering does not yet qualify them for the group of leaders.
"Experton Group launched its first service provider benchmark for the SAP Hana platform because we see continued high demand for this new technology"
explained Frank Schmeiler, project manager of the benchmark and Research Director at Experton Group.
Conclusion: IT & Business
The challenge for providers lies above all in bridging the gap between IT and business. Hana projects are not purely IT projects, and certainly not technical release upgrades.
"Only those who manage the balancing act of combining IT know-how with process and business thinking will be successful on the Hana market in the long term"
adds Frank Schmeiler.
What DSAG members currently need in order to better weigh up the use of S/4 is concrete information about which functions the solution covers. For 72 percent of respondents, this is the most important decision criterion.
"The success of an ERP for customers will be determined by functionality. It is the key for digitization projects".
explains the DSAG chairman Marco Lenck a substantial result of the reality check.
"SAP currently does not provide enough of this information."
Furthermore, according to the DSAG survey, there is a lack of concrete statements on the business benefits, the licensing model and information on the prerequisites for companies to migrate to S/4. For these reasons, a certain reluctance and skepticism can be felt among members.
Frank Niemann is also convinced that S/4 is by no means merely an upgrade of existing SAP software, but a new product whose introduction will have an impact on both the IT infrastructure and the business processes.
"This goes hand in hand with the transformation of processes - business - and systems - technology - which in turn requires appropriate competencies on the part of the IT service provider as well as the involvement of IT and business of the SAP user company"
Niemann emphasizes in conclusion.
For the PAC study "S/4 Hana - Relevance for SAP Customers, Expectations and Obstacles", 100 SAP managers in German companies with more than 1,000 employees were surveyed. (pmf)
