How Accurate Was Hasso Plattner on Customers Being Too Risk Adverse for SAP S/4 HANA?

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Executive Summary

Hasso Plattner makes an enormous number of inaccurate statements about S/4HANA.
How much of what Hasso Plattner said about S/4HANA was true?

Video Introduction: How Accurate Was Hasso Plattner on Customers Being Too Risk Adverse for SAP S/4 HANA?

Text Introduction (Skip if You Watched the Video)

On November 30, 2015, Hasso Plattner published How to Understand the Business Benefits of SAP S/4 HANA Better. This article shows some apparent frustration on the part of Plattner with the well-documented fact that SAP’s customers are having a problem seeing the value in SAP S/4 HANA. Let us understand each of the observations by Plattner and see how they stack up. You can first read the article by Plattner, which I have provided the link above, and then read this one as we have used what we think are the most relevant quotes. You will learn about the accuracy of Hasso Plattner’s statements.

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.

Let us begin at the end of the article.

Hasso’s Introduction

“It is sad to still hear the same arguments after all the sales success, the implementations in record time and happy productive customers. We have written books, where we describe dozens of new or improved application scenarios, specific events are taking place throughout the world and we have many success stories on our website. I just heard of a Chinese fashion manufacturer who installed SAP S/4HANA and reports a game changing improvement of the MRP2 run from more than 24 hours to under two hours. My advice for the smaller and midsize SAP Business Suite customers is to carefully watch the early adopters, soon approaching 2000, especially in related industries.” – Hasso Pattner

In the first part of the quotation, Hasso declares the sadness to hear some general arguments against HANA due to sales success. However, has HANA had sales success? No. HANA has been the most significant marketing initiative ever undertaken in the enterprise software space, however. In contrast, SAP has “sold” quite a few HANA licenses (at a debatable cost), the number of live HANA instances is tiny. I have seen HANA at literally one of my customers, and of course, it was for BW. So this success is an assumption made by Hasso that merely is untrue.

On the next topic of the case study that Hasso presents above, why is MRP taking 24 hours to run at this Chinese company?

Interpretation

Let us start by understanding that MRP is the simplest of the supply and production planning methods, and it was first designed to run on hardware from the 1970s.

Indeed, the current MRP goes further down the bill of materials than perhaps MRP runs did in the 1970s. Still, if MRP is taking 24 hours to run in any system, then either the hardware is tiny, or there is something wrong with how MRP is setup — which is strange because MRP in SAP has very few settings. If a company is taking 24 hours to run MRP, something is very wrong and needs to be evaluated. Hasso did not explain if this evaluation happened but instead stopped and declared that the solution was implementing HANA. However, implementing HANA for MRP means implementing S/4HANA — which is a major issue. This means a Chinese company, which tends not to be new technology adopters, and does not have significant IT budgets compared to the US and European companies — decided to implement HANA.

I cover MRP in the book Supply Planning with MRP, DRP, and APS Software and have extensive experience with MRP and all of the supply and production planning methods, and Hasso’s statements here do not make any sense.
Secondly, in my book Repairing your MRP System, I explain that a significant factor that holds back running MRP is that MRP is so frequently run from the ERP system — and ECC and S/4 HANA are ERP systems.

This is because ERP systems provide poor quality MRP functionality compared to applications that specialize in supply planning. For instance, if I talked about a 24 hour MRP runtime with the best breed vendors that I know of that can run MRP, they would fall laughing. We better move one, because I am starting to laugh thinking about this proposal myself.

There is something very fishy about this story of a 24 hour MRP processing run. Much more would need to be explained, but under no scenario should it take anywhere close to that amount of time to run MRP.

Hasso on The Reduction in Complexity from S/4 HANA

“For years our customers complained about the complexity of the business suite and asked for simplification. Now some fear they have to relearn a lot and that will cost time and money. The simplification of the UI is real and will save time with the first day of productive use. The business functionality of the transactions is still the same but comes in a much more efficient form.

The dramatic simplification of the data model, the fact that any field can be used as an index for selecting data and the unprecedented short response times are allowing for much faster development cycles of new applications. The deployment of extensions in SAP HANA Cloud Platform is an elegant way to enhance SAP S/4 HANA systems or to build completely new applications. SAP S/4 HANA combines the proven set of core business functionality, in many languages and for nearly all countries, with the ability to venture into completely new dimensions of applications. This capability is key when business processes are developing at an ever increasing speed and core enterprise systems cannot just be complemented by point solutions but have to also accommodate these changes. This reduction in complexity also lowers the threshold for smaller companies to switch to SAP S/4 HANA.”

Let’s look into the detail in each area brought up by Hasso.

For Years Our Customers Complained About the Business Suite (ECC) Complexity: Yes, this is true. However, most of the complaints did not have to do with what HANA is improving (primarily analytics). Many of the companies complained about complexity with the SAPGUI, or areas of functionality that did not work, or problematic help that made the feature challenging to decipher, or a long list of complicated items that make up SAP software. So Hasso seems to be mingling several issues here. However, again SAP buyers cannot expect Fiori to cover many of the ECC screens for some time. So Fiori will be used along the same old SAPGUI. Therefore, complaints will continue.
The Dramatic Simplification of the Data Model: I cover Getting Clear on S/4 HANA that it is debatable whether HANA simplifies the data model.
..The Ability to Venture into Completely New Dimensions of Applications: It’s hard to see how this is true. S/4 has a (partially) new UI. And Fiori can be customized much more easily than SAPGUI. However, it’s still a lot of work, and there is not a consensus on Fiori yet regarding whether it will stick long term. The later part of this paragraph is a fanciful sales talk, and it isn’t easy to address what Hasso is describing.

Interpretation

This quotation is mostly incorrect.

Hasso Plattner on How Disruptive is SAP S/4 HANA

“All master and transactional data will be migrated, all the business processes are still available, the new UI is easy to comprehend and most importantly the application configuration can also be carried forward. Many long term SAP customers are contributing in the design efforts of the new user interaction. By applying the principles of design thinking, end users, consultants, domain experts and developers interact till the most comprehensive solution is found. All predefined aggregate data (totals, info cubes) have been eliminated and the system offers now the highest flexibility in reporting and analysing business data.

The first step in an SAP S/4 HANA project should be the evaluation of the system without the company specific modifications and extensions but using the customer production data set. Many new features are added and may make modifications obsolete. Don’t extrapolate the amount of work and training from previous experience with ERP release changes. Once the data is carried over to SAP S/4 HANA everything will be much faster. In case of an on-premise or hosted deployment, the previous UI will still be available in order to ease the transition phase.”

The first part of this quotation is not really to be commented upon because there it is generalized. For instance, the idea that all the business processes are still available is evident, as S/4HANA directly takes ECC functionality and puts it onto HANA. But later on in the first paragraph, there is something to comment on.

All Predefined Aggregate Data (Totals, Info Cubes) Have Been Eliminated?: Yes, this is true. All of the things used on the back end in the BW now are not necessary for HANA.
Don’t Extrapolate the Amount of Work and Training from Previous Experience: Not only is Hasso’s proposal here untrue, but it will also be significantly more work, and it is indeed more risk to upgrade to S/4 HANA. S/4 HANA has a new database and a new user interface. It changes all of the enhancements that SAP customers have because the tables’ structures have changes, which means the already existing improvements must be modified. There is all manner of questions as to S/4 HANA implement ability as Simple Logistics was just very recently released. It is merely an absurd contention that S/4 will be less work to upgrade than previous versions of SAP’s ERP system.
Once the Data is Carried Over to SAP S/4 HANA Everything, Will be Much Faster?: The fact that S/4 HANA will be faster should not be blended with the amount of work and training and risk associated with implementing such a new and lightly implemented application. And analytics will be faster, but transactions will only process faster because of HANA’s hardware advantage. Columnar databases are sub-optimized for transactions, or that is most of what SAP’s ERP systems do. I cover this in detail in the article What Makes HANA So Fast?
The previous UI will Still be Available to Ease the Transition Phase: This contradicts earlier statements that the UI or Fiori will be so much easier than SAPGUI. However, potential buyers of S/4 HANA should also know that probably a more important reason that the SAPGUI will be used no matter what is because Fiori is not complete for all of the old ECC screens. This is a fact that Hasso is leaving out of his article. I cover this topic is What is Actually in the Fiori Box?

Interpretation

This quotation is mostly incorrect.

Hasso on How Complete SAP S/4 HANA Is

“One of the reasons why companies have more long-term plans for SAP S/4 HANA is the completeness of the product. To recreate the wealth of functionality of the business suite is quite a challenge, but now financials, sales and logistics are available and most of the industry specific solutions will follow soon. SAP wants to achieve a better separation between the industries in order to reduce potential conflicts between them. Every transition case from SAP ECC 6.0 to SAP S/4 HANA has to be evaluated individually but most of the installed base should be covered by now. Many clients choose to become familiar with SAP HANA by moving the business warehouse onto SAP S/4 HANA or start with completely new projects in product research or service including internet of things scenarios.”

Interpretation

This is not at all correct. Let bulletize this list because there is a lot here:

- Companies Have S/4 HANA in Long-Term Plans? I don’t think it’s established that companies have long-term plans for SAP S/4 HANA. SAP has an enormous installed base, and they have heavily pushed S/4 HANA, and there are still remarkably few clients live on S/4 HANA. There are many questions regarding its actual ability to be implemented.
- Recreate the Wealth of Functionality of the Business Suite: I don’t know why Hasso is phrasing it this way. SAP is not recreating anything – it is porting ECC functionality to a new set of tables, the columnar tables of HANA. And secondly, not all functionality in ECC is making it over to S/4HANA.
- Industry-Specific Solutions: Most of the SAP Industry Solutions are more for marketing than anything else. Once you get to implement, you will find that there is little to leverage. I have gone through this with many different industry solutions. They are primarily marketing fiddle-faddle. For example, SAP has a Repetitive Manufacturing Industry Solution. After you get through analyzing it, it makes no sense to turn it on, but you can waste a lot of time analyzing and testing it. So, whether S/4 HANA is ported to “Industry Solutions,” it’s not real.
- Converting the Installed Base to S/4 HANA: The idea that most of the installed base should be converted to S/4 HANA now, considering that there are so many implementation questions about S/4 HANA’s readiness, considering the extra cost, considering that all the previous customizations that customers have written will need to be rewritten, considering several other items are utterly delusional.
- BW: BW can be moved to HANA most easily because HANA is primarily an analytics database. BW’s implementation of HANA is quite smooth. However, HANA happens to undermine many of the functionality of BW, which can be the topic of a future post.

Hasso Plattner on How Disruptive is SAP S/4 HANA

“All master and transactional data will be migrated, all the business processes are still available, the new UI is easy to comprehend and most importantly the application configuration can also be carried forward. Many long term SAP customers are contributing in the design efforts of the new user interaction. By applying the principles of design thinking, end users, consultants, domain experts and developers interact till the most comprehensive solution is found. All predefined aggregate data (totals, info cubes) have been eliminated and the system offers now the highest flexibility in reporting and analysing business data.

The first step in an SAP S/4 HANA project should be the evaluation of the system without the company specific modifications and extensions but using the customer production data set. Many new features are added and may make modifications obsolete. Don’t extrapolate the amount of work and training from previous experience with ERP release changes. Once the data is carried over to SAP S/4 HANA everything will be much faster. In case of an on-premise or hosted deployment, the previous UI will still be available in order to ease the transition phase.”

All Predefined Aggregate Data (Totals, Info Cubes) Have Been Eliminated?: Yes, this is true. All of the things used on the back end in the BW now are not necessary for HANA.
Don’t Extrapolate the Amount of Work and Training from Previous Experience: Not only is Hasso’s proposal here untrue, but it will also entirely be significantly more work, and it is indeed more risk to upgrade to S/4 HANA. S/4 HANA has a new database and a new user interface. It changes all of the enhancements that SAP customers have because the table’s structures have changes, which means the already existing improvements must be modified. There is all manner of questions as to S/4 HANA implement ability as Simple Logistics was just very recently released. It is merely an absurd contention that S/4 will be less work to upgrade than previous versions of SAP’s ERP system.
Once the Data is Carried Over to SAP S/4 HANA Everything, Will be Much Faster?: The fact that S/4 HANA will be faster should not be blended with the amount of work and training and risk associated with implementing such a new and lightly executed application. And analytics will be faster, but transactions will only process faster because of HANA’s hardware advantage. Columnar databases are sub-optimized for transactions, or that is most of what SAP’s ERP systems do. I cover this in detail in the article What Makes HANA So Fast?
The previous UI will Still be Available to Ease the Transition Phase: This contradicts earlier statements that the UI or Fiori will be so much easier than SAPGUI. However, potential buyers of S/4 HANA should also know that probably a more important reason that the SAPGUI will be used no matter what is because Fiori is not complete for all of the old ECC screens. This is a fact that Hasso is leaving out of this article. I cover this topic is What is Actually in the Fiori Box?

Interpretation

This is a tough portion of the article from Hasso Plattner. There is lots of commingling of separate concepts and things that do not make sense.

Hasso Plattner on The New Concepts for Sales, Customer Support, Product Development

“After the simplification of the main application in sales, logistics and finance, the development of new functionality has started and will be rolled out in short release cycles. It is paramount that SAP and its community learns how to efficiently deal with shorter release cycles, without introducing any kind of instability. The reduced complexity of the data model and the removal of transactional data aggregation clearly improves robustness. The focus on the SAP HANA platform allows for better applications, because the technical advantages of SAP HANA can now be exploited without consideration for compliancy with other platforms. This is a formidable advantage and as mentioned before a strategy taken by all other providers of cloud services.”

Interpretation

Simplified Sales, Logistics, and Finance and Shorter Release Cycles: It is not clear how sales, logistics, and finance were simplified with S/4. And SAP could have developed new functionality over a decade ago for ECC but chose not to. The reason was to get more sales from non-ERP products that they could sell a new license for. So this seems to be an empty promise. SAP should learn how to deal with shorter release cycles without introducing any stability efficiently. SAP has problems even with very long release cycles without introducing functionality that is broken upon arrival. So it’s a strange thing overall for Hasso to say.
The Focus on the SAP HANA Platform Allows for Better Applications Because the Technical Advantages of SAP HANA Can Now be Exploited Without Consideration for Compliancy with Other Platforms: Why is this true? Hasso is repeatedly referring to the advantages of S/4HANA and HANA without providing any reason at all to think this is true. SAP is only one part of the picture within SAP customers, so SAP must always content with other platforms. Secondly, Hasso is speaking in such an unspecific manner that it can be difficult to confirm or disconfirm his statements. This is a perfect example because he is not even clear what he means. It isn’t easy to see why that is true. Why is being compliant with other platforms not a consideration? Nothing has changed here. Any system must be implemented with consideration of how it connects to other systems.

Curious about the reality of S/4HANA implementations? See our The S/4HANA Implementation Study for real story and details on actual S/4HANA implementations.

Conclusions

There is not much to take away from this section of the paper by Hasso Plattner. The statements are not substantiated.