S/4 Prelude

S/4 conversion effects, dependencies, and transparencies

SAP has completely failed to get its bearings and to put in the necessary work educating the community on S/4. Just a year ago, SAP CEO Christian Klein reached out to the members of the DSAG (German-speaking SAP User Group) and spoke about hybrid cloud computing at the DSAG’s the annual congress in Leipzig. A year later, at the annual congress in Bremen, he said: cloud only, and any further innovations for SAP customers will take place only in the public cloud.

The SAP community is unsettled, as a new study by Basis Technologies has recently found. The company surveyed 200 SAP users, and half of them shy away from the S/4 conversion because they cannot estimate the effects of process changes. SAP customers’ situation regarding S/4 Hana can be interpreted as an educational emergency.

Around 42 percent of those surveyed by Basis Technology fear a dependency on external partners due to the necessary expansion, or rather the lack of internal expertise. The lack of knowledge on Hana and S/4 is a major challenge for many CEOs, CFOs, and CIOs. SAP's IT tools are of no help in pushing through the S/4 conversion over a weekend if the company's own employees are overwhelmed with new business processes, Fiori, and user roles.

Likewise, 42 percent said that improving S/4 process transparency and compliance handling would be helpful before and during an S/4 conversion. What is stringent and logical for SAP does not necessarily make sense for SAP customers.

S/4 licensing model

When Professor Hasso Plattner, former SAP CEO Bill McDermott, and Chief Technology Officer Bernd Leukert presented a new release to the ERP world in New York as the successor to SAP Business Suite 7, all SAP customers were convinced that the on-prem model would continue unchanged. By paying the annual software maintenance fee, customers automatically get full access rights to the new ERP version. Everyone assumed that the release change would be based on licensing, as had been the case many times since R/3.

With S/4, SAP began to reach deep into its bag of licensing tricks. It began with the sword of Damocles that was indirect use and continued with numerous engine licensing prices and special users. The SAP price list became an Excel monster with countless columns and exceptions. An SAP customer could only understand the PKL (price and conditions list) with the help of specialists and lawyers.

In the meantime, SAP licensing policy in the transition from on-prem to cloud computing has become an almost impenetrable jungle that only the best trackers can tackle. With the help of licensing experts and lawyers, however, customers can save up to 50 percent of the stipulated fees.

Cloud - yes, no, maybe

The SAP CEO talks and dreams about cloud only, but he is obviously not aware that SAP does not have a cloud system. All SAP has tried to do in the past few years has been to lift-and-shift what was originally planned as an on-prem system, Hana, and S/4. Now cloud versions of the Hana database and the S/4 ERP system exist, but compared to vendors like Salesforce, Workday, ServiceNow and many others, cloud computing has not been around very long. Running S/4 as a cloud system is an incomparable architecture. It doesn’t work, and on-prem, private, and public cloud cannot be compared to each other.

An S/4 system, as it was presented in 2015 and still exists as an on-prem application, is incomparable to a true private cloud concept. Only a few weeks ago, eight years after SAP presented S/4 presentation in New York, the company announced that the anticipated cloud version would now be functionally equal to the existing on-prem version. How is cloud only supposed to ever work with S/4?

The Basis Technologies study, which is well worth reading, writes about the key aspects of a transformation strategy. An S/4 conversion would be worth considering, said the participants, if the following key aspects were met: 56 percent call for careful timing and proper IT tools, 49 percent ask for sufficient executive support, 43 percent seek the existence of internal expertise and resources, and 37 percent ask for external partners with the right expertise. SAP has failed to develop necessary infrastructure, educational outreach, and an S/4 community over the past eight years, and now faces a disastrous conversion rate.