SAP Cloud First

An SAP system change involves more than just an ERP version update

The SAP community is far behind the schedule set by SAP. Why? SAP meant well with Hana and S/4 from the beginning, but communicated poorly. A cloud-based Hana database and ERP represent a new paradigm for business organizational structures and processes. The transition from the traditional SAP Business Suite (ECC 6.0) to the new SAP Business Suite (S/4 Hana) is not widely recognized as a standard release change.

Many aspects must be evaluated for a successful SAP system change. A new architecture must be set up and orchestrated. Although the IT trend is cloud computing, there is still little knowledge about how to use it successfully in terms of licensing. SAP is right about "cloud first," but the legacy of the SAP community weighs heavily.

The new ERP generation is changing not only the operating model but also business processes. End-to-end processes are being used more and more in companies' organizational and operational structures. What appears logical from an IT perspective must also be adopted and administered by the organization. This has resulted in the topics of training and copywriting taking on a completely new and much more important role in conversion.

SAP ERP is not Windows 11

The transition to Windows 11, and its requirements for future PC hardware, poses a challenge. Nevertheless, this "release change" is merely an expensive, technical process. An ERP conversion and digital transformation, on the other hand, affects all aspects: organization, business management, technology, ERP, and cloud licenses.

Microsoft is also trending towards the cloud. It's quite possible that Windows 12 will only be available in the cloud. Many years ago, Adobe adopted the motto "cloud only" for its program suite. This means that there is only one subscription model for Photoshop, InDesign, and so on.

Due to numerous reports from the SAP community, SAP has avoided taking the radical "cloud only" approach and still offers on-prem ERP licenses. However, these licenses are becoming increasingly expensive. Discounts and credits on old licenses are becoming the exception. There is much to discuss and debate regarding these compulsory measures. The fact is that, with cloud computing, SAP is merely following a general IT trend largely determined by hyperscalers.

"Cloud only" versus "cloud first"

Cloud technology is here to stay. While SAP's transition to the cloud is an uncomfortable and challenging process for many customers, this technology is the next logical step in ERP. Many ERP investments will likely need to be written off to experience the benefits of a cloud-based system.

However, cloud systems offer the enormous advantages of agility and flexibility. Cloud computing also frees you from old ERP constraints. It's easier to build a composable ERP in the cloud than in your own data center. Open interfaces, cloud services, open-source platforms such as SAP BTP and SAP BDC, and more give ERP users completely new possibilities. Composing an ERP from SAP, Salesforce, Workday, and ServiceNow is manageable in the cloud. Although the cloud transformation will likely remain challenging for a few more years, the path from "cloud first" to "cloud only" has been mapped out at SAP, and the advantages of a composable ERP are clear.