How Accurate is the Messaging on the SAP S/4HANA On Premises Roadmap?

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Executive Summary

We analyze S/4HANA’s regarding the S/4HANA roadmap.
SAP has greatly misled customers and prospects regarding the maturity of S/4HANA.

Video Introduction: S/4HANA Roadmap

Text Introduction (Skip if You Watched the Video)

SAP has been releasing strange information about the S/4HANA roadmap since S/4HANA was first released. Because there is so much marketing hyperbole in the information that SAP releases, it can be confusing about S/4HANA. SAP’s marketing goes on about simplified data models, 100% Fiori user interface, guided configuration, reimangined business processes, shrinking the database footprint, eliminating batch processing, and many other exaggerated promises. You will learn about how much of what SAP says about S/4HANA is true.

Our References for This Article

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Notice of Lack of Financial Bias: We have no financial ties to SAP or any other entity mentioned in this article.

This is published by a research entity, not some lowbrow entity that is part of the SAP ecosystem.
Second, no one paid for this article to be written, and it is not pretending to inform you while being rigged to sell you software or consulting services. Unlike nearly every other article you will find from Google on this topic, it has had no input from any company's marketing or sales department. As you are reading this article, consider how rare this is. The vast majority of information on the Internet on SAP is provided by SAP, which is filled with false claims and sleazy consulting companies and SAP consultants who will tell any lie for personal benefit. Furthermore, SAP pays off all IT analysts -- who have the same concern for accuracy as SAP. Not one of these entities will disclose their pro-SAP financial bias to their readers.

What is S/4HANA?

S/4HANA is the first major upgrade to what was R/3.

..aka ECC (Enterprise Core Component)
..aka Business All in One
aka All in One…

This article will focus on making sense of the statements made about S/4HANA by SAP.

This should be of value to people because the messaging on S/4HANA is confusing and requires translation and validation. You will learn about our analysis of SAP’s projections with S/4HANA.

Understanding The Language of Selling and SAP Run Simple

Before we get into the evaluation of SAP’s slides on S/4HANA. What should be contemplated is that S/4HANA marketing documents are not necessarily designed to be true but to sell S/4HANA.

That is why much of the S/4HANA material will seem strange to an experienced implementer.

SAP has teams of people who go around trying to pump up SAP partners on HANA, who, in turn, relay the message to their prospects. This group never implements software; they are compensated on how well they can convince people of this or that future. So their material tends to be quite divorced from reality, and it is the same material that will find its way to SAP’s website or the conference circuit.

So with that background, let us get on with the analysis of the SAP S/4HANA slides.

S/4HANA Slide Analysis

SAP R/3 has been renamed over the years to ECC and then to SAP ERP (which never took) and then to Business All in One.

None of these names meant anything regarding referring to something new in the application; they were marketing terminological changes.
R/3 has stabilized some years ago, which means that it has seen little functionality enhancement since that time, with most of the development focused on non-ERP applications. This brings up the topic of the support paid to SAP for a stable application, which will be the subject of a future article.

Initial Slide Benefits

This SAP S/4HANA Roadmap slide states the following benefits:

Simplified Data Model: I moved this response to a separate article titled Does S/4 HANA have a Simplified Data Model?
Completely Fiori: Fiori is the new SAP user interface. However, Fiori is not a replacement for the SAPGUI, now or in the future. I covered this in detail in the article What is Actually in the Fiori Box? Interestingly, I was recently speaking with a custom UI vendor. They told me that SAP has started backing off the “completely Fiori” proposal to say that Fiori will be complementary to the SAPGUI. I have not seen the newest SAP messaging here, but I look forward to reviewing it when it comes to me.
Guided configuration: I cropped this screenshot above too much when I took it, but the statement to the right in the slide above is “guided configuration.” I can’t tell you how many times over the years I have heard about guided configuration. I have never seen one of these guided configuration toolkits/etc.. work. SAP has been trying to sell RDS or Rapid Deployment Solutions as a guided configuration, and the RDSs are not this at all. It should be remembered the IMG, which ships with the previous ERP version of SAP ERP, was also supposed to be a guided configuration as well, but it never was. S/4HANA may have a few helpful screens, but it most assuredly won’t be a guided configuration.
Reimagined Business Models: It is improbable that business models will be “reimagined,” instead, what companies should look for is if S/4HANA can be made to work. They need first to check when the actual overall suite will be released. These are many changes SAP is making, and they are having problems making them, which is why S/4HANA Enterprise Management (i.e., the full suite) is late.
Reimagined Business Processes: The same thing, SAP is not offering new application functionality in S/4HANA. S/4HANA is about an infrastructure upgrade (with a tiny UI improvement for the areas that can use Fiori). The business functionality is roughly the same as in ECC. SAP showed some sexy stuff in what was S/4HANA Simple Finance (now just S/4 HANA Finance), but given that it is now apparent that these are only a limited number of Fiori apps, it is hard to validate how much of this is completed.
No More Batch — All Processes in Real Time: S/4HANA is an ERP system, which means it’s a transaction processing system. Some processing is performed in batch, such as MRP and closing the quarter for financial reconciliation, but this is a straightforward processing type. The batch processing is a small part of ERP processing already. Most processing in ECC/Business All in One is transactions and is already processed immediately or in real-time.
Reimagined Business Decisions: Hmmm…this one seems to propose massive differences in reporting for S/4HANA. S/4HANA will be much faster. However, the idea of reporting would be so much better also depends upon the reporting application. HANA has several tools, such as HANA Live Browser, but this is not S/4HANA. All of these tools are too new and unproven to make big statements about them.

Process Time Slide Benefits

One slide shows the reduction in time for processing. However, it overestimates the time that the transaction processing system takes.

Yes, S/4HANA will faster, but companies currently don’t have a real problem with closing. I performed the research to be able to make this statement with confidence. It’s nice to have, but SAP is overemphasizing the benefits here.

This slide is similar in that it focuses on the speed of the system. Again, it focuses on the two most processing-intensive processing within ERP: financial closing, reporting, and MRP.

This particular slide is misleading and confusing. Neither SAP TM (Transportation Management) nor Ariba runs on HANA. I can’t tell if that slide is trying to say that they do or that S/4 integrates with other SAP applications. S/4HANA does not run on HANA yet because the vast majority of S/4HANA is not yet released.

The slide also includes all the trendy terms, like the Internet of Things and Big Data — and one I had never heard of before, called Omni-Channel. Omni-Channel only means to offer a sales experience across multiple retail channels — such as online, offline, etc..

This has nothing to do with SAP as SAP has no product that does this — and these three things tell the executive that “we do the new sexy.” It’s a subliminal messaging that “we get it.”

Shrinking the DB?

A big message about S/4HANA has been getting lean. So SAP has a few good slides on this that explain how this works. The first slide shows database aggregates and indices in the database.

One of the benefits of columnar databases is that they require less aggregation and indices. The blue is the aggregates and indices that are still necessary with HANA. SAP states it was able to shrink the size of the data that S/4HANA takes up.

However, it also needs to be stressed that you will pay a lot more per GB when using anything on HANA, so these changes won’t translate to cost savings.

SAP proposes that transactions are currently pushed throughout the system. SAP recommends that data will now be pulled.

Why is this true? Is information currently pushed in R/3/ECC? This is the first time I have heard of this.

S/4HANA Options

There is a lot of talk about all the options available for S/4HANA. However, S/4HANA in the cloud is quite expensive. And being able to put an ERP system in the cloud, or any other application for that matter, should not be considered a big deal.

I happen to find most of SAP’s material on the cloud more confusing than anything.

I have spent so much time on sales proposals where the topic of either on-premise or cloud is discussed, and it always seems to break toward on-premise. Also, except for purchased applications like SuccessFactors or Ariba, most of the SAP purchases are still being sold on-premise.

SAP on Roadmap Specifics

“More recently, SAP released three new SAP S/4HANA “1603” cloud editions that provide industry-focused capabilities for marketing, professional services and more general enterprise ERP needs. In fact, the vendor is producing new updates for both cloud and on-premises SAP S/4HANA editions every quarter — so the answers to the question of functional completeness for S/4HANA are effectively changing every three months.”

As Uwe states, 1603 is the cloud edition of S/4 HANA. So 1603 contains focused industry capabilities for marketing and professional services.

So that would seem to imply that 1151 does not have these capabilities. It would make sense that professional services firms would be a better fit for 1603 – although overall, S/4 HANA is overkill for a professional services firm. All a professional services firm needs is a finance module with professional services functions, which can be attained far more economically from Intacct of FinancialForce. Most companies that implement S/4 will only implement it so they can resell that experience in consulting. But this brings up an unrelated question as to whether the cloud and on-premises editions are no longer the same set of functionalities.

S/4HANA Enterprise Management

SAP, through Uwe, is telling customers its S/4HANA Enterprise Management, which is the full suite, is ready to go. Notice at the end of the quotation, it contradicts itself, stating that the functional completeness of the S/4HANA Roadmap changes every three months.

So is S/4 complete? What are we to learn from the S/4HANA Roadmap information?

Or, on the other hand, is it becoming more complete every three months? It cannot be both. Let us see…I now have to check Wikipedia as SAP is using the term in a new and unprecedented way.

SAP is primarily using the term “complete” to mean “incomplete.” S/4 HANA is perfect, but it will become more and more complete every three months. Did you get that? Ok, good, we can move on to more classic Uwe quotes.

Now, this next quote is not related to the readiness of S/4, but it gives some more background as to where Uwe lives. It is from the same article.

“In S/4HANA, we are connecting classical ERP processes with new processes of the digital economy,” Grigoleit said. “For example, if we are talking about asset management as a classical ERP process, then we are making a connection to information networks so that you’re not entering data on your own — you’re getting the data out of the network automatically, connecting it to the asset management and location services.”

How Reliable is Uwe Grigoleit as a Source of Information?

Ok, so we can see from this quotation that Uwe likes to spin a good yarn.

You see, the issue is that a quotation can be repeated that is taken from a high-level SAP business development resource like Uwe or Bill McDermott. But without the context, these types of spokespeople from SAP live in a permanent fantasy-land and take huge numbers of meetings, but don’t themselves touch or test software.

With a heavy dose of stock options pushing them towards unprecedented (in fact, they do have precedent, but I decided to adopt SAP’s hyperbolic way of making statements for this sentence) levels of optimism, it is understandable that so much unreliable information like this is generated. I would like it if they were more honest and said something like…

“S/4 HANA is going to help me make $5,000,000 off of my stock options!”

Now that at least would be true.

The S/4HANA Roadmap and Agile Development

SAP has missed its deadline on the rest of the S/4 suite versus the S/4HANA Roadmap, and it was now scrambling to get functionality released as soon as possible.

Agile has its benefits, and I use Agile on projects, but I don’t use the term Agile to cover up for lack of planning. What is entirely apparent is that S/4 HANA was announced far too early and that the S/4HANA Roadmap was inaccurate from the beginning. All along, SAP misrepresented the S/4HANA Roadmap and made it appear that they were much further along on S/4HANA than they were.

This is not Agile. This is marketing getting too far ahead of development and living too comfortably on Fantasy Island, and then putting development on the grill to deliver too quickly. It has been well-known for some time that making the types of changes to S/4 that SAP talked about making would result in many millions of lines of code being rewritten. The obvious conclusion is that SAP did not allocate enough time to allow for this to happen or organize their internal teams appropriately to accomplish this task in their predicted timelines.

Oracle Fusion (Agile) Development Revisited

Interestingly, SAP is doing with S/4 has a precedent in the not too distant past and within a company that SAP does not like. That is right. What SAP is doing with the S/4HANA Roadmap is very similar to what was done with Oracle Fusion.

Oracle Fusion development went to Agile development, but the Fusion development just never seemed to end. Fusion was the subject of non-stop marketing on Oracle, and Fusion never seemed to reach a point of finality. By 2016, everyone was burned out on hearing about Fusion has had very little market acceptance.

There is another similarity between Fusion and S/4 HANA. Like Fusion, the migration effort is enormous. See the following quotation from a comment on a Fusion article:

“Oracle is in a tough spot here because from what I understand, the move from the legacy apps onto Fusion Apps is not a straightforward “upgrade”, like you would expect from IBM, Microsoft or SAP but, rather, a complicated and expensive migration. This means when faced with the decision to move off e.g. PeopleSoft, customers are likely to evaluate Fusion vs Workday vs Successfactors (depending on use case). This is a tremendously dangerous place for Oracle to be in – none of the other ERP vendors have put themselves in this position, and SAP’s ability to upgrade from almost any version of R/3 (back to version 3.1I in 1998) to the latest version.”

The Similarity Between Fusion Problems and S/4HANA Problems?

This was written without consideration for S/4 HANA, however. Mainly S/4 HANA faces similar migration problems as Fusion as the change from ECC is so significant. This quotation was from John Appleby, the GM of Bluefin. While John Appleby notices that Fusion has an enormous migration effort, he comments on an article. But when S/4 HANA is the same migration issues, he is silent on that topic. Why? Because Bluefin implements SAP.

That is the extent of much of the information available in enterprise software. The algorithm works something like this:

If the author can make money on it, then hide the downsides.
If one cannot make money on it, then be “objective” and bring up the downsides with competitor products. It’s all very scientific, you see.

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Conclusion

Statements about the S/4HANA Roadmap have to be analyzed because much of the information in these sales slides is fanciful. SAP needs to declare what parts of the S/4HANA Roadmap are currently ready. And they are not doing this.

It is easy to view a S/4HANA Roadmap slide and let it pass you by, and I think I tended to do this for a while on S/4HANA and HANA. It is another thing to evaluate if what is written makes sense. I have worked on S/4HANA sales pursuits, and I wouldn’t say I like using these types of slides because they are inaccurate and create too high expectations.

It is no easy feat keeping up with SAP’s S/4HANA Roadmap terminology. SAP went through a period where they invested mightily in a false marketing construct — that the new applications were somehow simple.

I wrote this article because I am beginning to wonder how many people have investigated S/4 and know that outside of Finance (which also has rough areas and a big question mark with how many Fiori apps can be used). S/4 as a suite is not ready to be implemented.