How to Get Clear on S/4 HANA Terminology

ByPrimary Researcher

Executive Summary

  • SAP has introduced a lot of terminology around S/4HANA, much of it confusing to SAP customers.
  • We analyst this terminology in this article.

Video Introduction: How to Get Clear on S/4 HANA Terminology

Text Introduction (Skip if You Watched the Video)

The first introduction of S/4 HANA by SAP was quite confusing, and there has been another change since this first introduction. IT media entities have not pointed this out because they are not paying attention. Secondly, they can’t call out SAP on inconsistencies as they rely on SAP for advertising revenues. We will explain what SAP has said about Simple Logistics, the reason for the naming of S/4HANA, and other areas of SAP’s messaging. You will learn what appears to be a moving target in SAP’s naming and strategy with its new ERP system.

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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. 

Breaking Down the S/4 HANA Name

S/4 is the new ERP system. According to Hasso Plattner, the overall naming convention is strange and confusing all by itself, but this is the reason for its naming…according to Hasso Plattner.

  • The “S” is supposed to stand for simple.
  • “4” is what would follow “3” as in R/3. So this would translate to “Simple 4rth major incarnation of the SAP ERP system.”
  • HANA is the database
  • S/4 is the ERP system, and HANA is the database it is running on. Thus “S/4 HANA.”

Why Put the Database as Part of the Name of the Application?

This is the first time that SAP has offered an application and then named the database within the name. S/4 only runs on HANA (for now). However, it is either very uncommon or possibly unprecedented for any software vendor to declare the application’s database as part of the name.

This would be like if Oracle only allowed JD Edwards EnterpriseOne ERP system to run on Oracle, they would name it:

“JD Edwards EnterpriseOne Oracle 12C.”

SAP is naming things way because it emphasizes how vital HANA is to the new ERP system. I will explain how this strategy is about to fall apart in a future article, but I will stick to this article’s naming discussion.

For some time, the only part of S/4 HANA you could buy (i.e., that was released) was the finance area. It was referred to as “S/4 Simple Finance.” This is the first time that SAP released a module of the ERP system all by itself. All previous versions of SAP’s ERP system included the big four or SD, MM, PP & FI/CO. This integrated feature was SAP’s significant advantage when it came to the scene in the 1980s and was its main differentiator for many years.

S/4 Simple Finance represented the new version of the FI/CO module or financial and controlling in the ERP system.

With all the hype around S/4 Simple Finance, it has gone rather unobserved how strange it is for a vendor to bring out a single module of an ERP system all by itself. I have been scratching my head for over a year trying to figure out who would invest in an ERP system module without getting the rest of it to connect to. With what I will explain, S/4 Simple Finance is now stranded due to development issues at SAP with the remainder of the S/4 suite.

Simple Simple Simple!

At SAP conferences, SAP and partners drove the concept of simple into the dirt. Each partner seemed to have worked into their catchphrase. For a while, there everything was “simple,” and a lot of people who had never worked with the software, or had but had forgotten how it worked, were running around saying how simple everything was going to be. In his book SAP Nation, Vinnie Mirchandani does a thorough job of covering the history of SAP’s use of the term simple or proposing they will simplify going back to the 1990s.

I have worked in SAP since 1997, and I don’t recall anything in SAP to be simple. SAP may be the standard. It may be robust, but it is not simple. I have noticed a strong correlation between people who propose SAP’s new simplicity and how far away they are from SAP applications, and, i.e., how little they know. And of course, it’s much easier to believe something complex is simple — if you don’t have to do the work yourself to configure or setup said system.

Secondly, there was always a problem using the term “simple” as part of a product name that SAP marketing never picked up on. The word “simple” is a superlative adjective, and adjectives don’t make sense as part of application names. And after a while, it makes more sense to drop the adjective as it only becomes redundant. This would be like calling a system “handsome” or “fantastic.” Let us apply this to another application, say the SAS Forecast Server, which would become the:

“SAS Outstanding Forecast Server”

See…it just does not work.

Where Oh, Where is Simple Logistics?

SAP has a bit of a problem that is not often discussed, but SAP has been telling companies to jump on board with S/4 Simple Finance because S/4 Simple Logistics(which it would connect to) was coming right around the bend. Simple Logistics was the rest of the S/4 suite.

I was told by several people that I needed to jump on board with Simple Finance because it would make everything so simple, and it was, of course, SAP’s direction. I researched this, reviewing statements around HANA’s proposed simplified data model and the supposedly simplified user interface in Fiori, and found these proposals to be incorrect. I covered this in two articles:

The problem is that SAP has very significantly missed its release date on Simple Logistics.

Making so many changes at once to S/4 was always risky with the timeline that SAP put out there. And now it is evident that SAP bit off more than they could chew.

Luckily, because so few companies implemented S/4, this will have little impact. Some German companies have implemented S/4 Simple Finance, but almost no companies outside of Germany. So for the vast majority of businesses, there will not be any impact. So it is a good thing that these companies passed on S/4 Simple Finance.

The Plot Thickens for S/4 HANA’s Name

As development has been doing its work, SAP marketing silently went through a change to the new ERP functionality’s overall naming. As I predicted, the “simple” adjective is now gone. And S/4 HANA “overall” is now called S/4 HANA Enterprise Management.

SAP S/4 HANA Enterprise Management now includes:

  • S/4 HANA Finance (not “Simple Finance,” mind you. Apparently, finance is complicated once again!)
  • S/4 HANA Human Resources (Success Factors) (I saw no mention of Old SAP HR, so that module has likely and thankfully been removed)
  • SAP S/4 HANA Sourcing & Procurement (Ariba) (I saw no mention of SRM or SAP’s pre-Ariba supplier product)
  • SAP S/4 HANA Supply Chain (Production, Inventory & Warehousing) (Old PP, MM & WM)
  • SAP S/4 HANA Manufacturing (Manufacturing Operations & Quality Management) (Old PP & QM)
  • SAP S/4 HANA Sales (Order and Contract Management)

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Conclusion

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

While little covered, SAP has a bumpy ride trying to redo and introduce its new ERP system. Marketing is going through multiple name changes before the overall new ERP system is even ready to purchase. SAP’s problems with its S/4 HANA overall deadlines are a problem because SAP put so much of its credibility on the line that it would be able to bring out the rest of the S/4 HANA suite, and it raises the question of when the real release date of the suite will be. And then, how much after the publication date will the application be ready for actual implementation.

At this point, it seems that S/4 Simple Finance was rolled out far too early. I was part of a sales team that was proposing S/4 Simple Finance just last year. Good thing that the companies we pitched this to did not purchase this as it is likely that a full functional S/4 ERP system (with all the standard modules released) is even now some time away.