This post was updated in May 5th. Scroll to the end to see the updates.
This week I was following a discussion on a social media where my friends were arguing SAP positioning against a highly-customized SAP environment.
While it may be hard to say goodbye to many years of custom-developments, there is not doubt that the SAP S/4HANA is the best opportunity to re-think the way how the new ERP will support your existing processes and how this will help getting rid of the custom-codes (or at least some of them).
The networked economy is driving business while companies are challenged every day to deliver tangible customer results in a more and more integrated end-to-end ecosystem.
A SAP S/4HANA project is full of great opportunities and it has firmly established itself as the next generation business suite to support digital businesses, helping the company to drive through the storm.
SAP S/4HANA it is not a legal successor of any SAP Business Suite Product. SAP S/4HANA is a new product
What does that means?
If you have the SAP Business Suite and you are going to implement SAP S/4HANA, you can’t look to this project as an upgrade… It has to be seen as a new implementation, even if your project’s approach is going to be a system conversion or landscape transformation.
SAP S/4HANA may not give you the full SAP vanilla flavored system when your project is finished… It may be hard to get rid of 100% or the developments and customization that you have in the ECC system today, but SAP S/4HANA will enable you to think different and you should always to consider the benefits of running SAP standard, if your company’s business model allows you to do it this way.
Think about the developments you have today and try to list the ones that differentiate your business from other companies and competitors? What are the ones that increases customer service and profitability? Evaluate if they bring true benefits and cost saving or if it is just another “nice to have” feature, that in the end it keeps your support team busy maintaining it, just because the end-user wants to have one extra button here or there. Think on the many products and features that you may have missed, things that SAP released in it’s core or products that are out there that you could evaluate and if they would replace some of the developments that you have today or not.
SAP says that: Run Simple to Run LIVE… companies should be able to react in a timely manner to economic and business changes, and if your ERP system is too complex, there is a risk that you will never be able to adapt to changes fast or not react at all.
The new digital economy is disruptive and the game rules have changed.
You must consider the potential that SAP S/4HANA has to reduce not only custom developments but also interfaces and 3rd partner applications you may have in your system, reducing the maintenance and license cost, support and other direct/indirect cost those applications may bring to the company.
The foundation of S/4HANA innovation is the revolutionary in-memory column-store based capabilities of SAP HANA, that enables both OLAP (analytical) and OLTP (transactional) data to reside in one system, allowing to analyze, report, simulate and predict in real time, LIVE and leading to smarter and quicker business decisions. The secret of success on those analysis requires that all of your processes are carefully reviewed and adhere to the best practices as much as possible, from Procurement-to-Pay all way to Order-to-Cash and etc., at the risk of looking to data on your screen that doesn’t reflect the real numbers.
Researchers shown that 90% of the company’s CIO’s are considering some kind of cloud strategy to the next 5 years…Shifting from legacy systems to cloud technology, increasing agility, scalability to support growing demands, better embedded security and reduced TCO. SAP offers S/4HANA in a SaaS mode with different flavors: HEC (HANA Enterprise Cloud), Private Cloud, Public Cloud.
Depending on the cloud strategy, the customization and developments are not possible or limited, so here is another reminder to consider running simple when you start your project, even if that is a on-premise implementation, as companies can move to Cloud at any time later.
SAP S/4HANA Cloud has been conceived to co-exist in a diverse system landscape with native integrations to other SAP solutions and open interfaces for further integrations and extensions via the SAP Cloud Platform to anything out there.
It may be difficult at the beginning. Try to think this way: think that the company was running another ERP for more than 20 years and now they took the decision to move to SAP (why it took so long, right?)… So imagine that everything that they had in the old ERP will go away… how would you handle the core business processes without the developments they had in the old ERP?
It is going to be scary at the beginning, but the pay-off will come latter… how many times you rejected the idea of implementing a new product SAP was offering because it would not “fit” on your current system highly-customized landscape?
Less developments, more standardization and best practices will allow you to consume those products in a more efficient way and those products could be the answer to the developments you had to do in the past. Take this opportunity to ask “why not?”, and push your company towards to simplification. It will set free your IT department to work on items that brings real value to the business and to be more innovative, instead of coming to the office and spending the whole day coding, repairing code or thinking what needs to be adapted in the program to accommodate an acquisition, a merge, a new tool that the company is considering to buy and etc.
SAP S/4HANA is a once in a lifetime career opportunity to many people… I know many people that are proud of their R/2 R/3 project but the fact is that comparing R/2 to R/3 move versus moving from ECC to S/4HANA has a huge difference, it’s way bigger and the S/4HANA gives you the opportunity to not only improve what you already have but totally re-imagine what is possible to your company in the next years.
“If you’re not serving the customer, your job is to be serving someone who is.” Jan Carlzon
Update: May 5th, 2017
I was told by someone who seems to be more SAP experienced than me that my words had no value without any factual evidence and that this post does not add anything to what’s been said many times before. And then she made lots of comments trying to say that what I am saying is not true and etc.
Ok… she has the right to disagree… but I will take it as an opportunity to give more elements to what I am writing in here…
First of all, the statement I made that more and more companies are adopting a cloud strategy and 90% of the CIOs are embracing it is based on the information published in the website below:
According to RightScale’s 2015 State of the Cloud report, which surveyed 930 IT professionals about their current adoption and future plans involving cloud computing, 88 percent of businesses are using public cloud technology and 63 percent are using private cloud. Eighty-two percent have a hybrid cloud strategy, up from 74 percent in 2014, a clear indication that the cloud has quickly become an essential ingredient of modern IT.
Then I want to add that, yes, I can be wrong, she can be right, but the opposite is also true… I might be right and she probably is wrong… Here is what I told her (hiding some of the things that doesn’t add anything to this post):
It might be early to make “assumptions” given the number of S/4HANA projects I have experienced or talked to someone involved so far.
Understand that people have different opinions and thinking different is fundamental approach to help companies face the challenges the market-leader companies are facing today.
Since 2000, 52% of companies in the Fortune 500 have either gone bankrupt, been acquired or ceased to exist, this number is even higher, 82%, if we look back to 1955 when the Fortune 500 started.
Why? Various reasons… most common? When they started been successful and market leader they did stop innovating.
15 years ago, an IT company needed around 5MM USD to start their business and stay in the market, today in the age of the start-up an IT company need around 5k to start. Your next company’s competitor might be open their doors today…
Companies are chased by disruption everywhere…
I have an example in a company where we started a project and during the requirements we identified around 20 developments necessary… We stressed them out pushed by the simplification idea and we ended with only one customization in that project… That’s one of the things I am inviting the person who is reading this post to think about… It took us some stressful meetings to tell to the business that their processes would need to be adapted to accommodate the SAP standard and best practices of a given process and a lot of creativity, but in the end of the day, everybody agreed that the simplification was the right path.
Will that work to every scenario? I don’t think it will.. but what would have happened if we had agreed with all the developments without stressing out the existing possibilities? We have to have the courage to be curious and try a different approach.
Those are the ones we decided to review now, pushing to the simplification model… but we have developments that we carried from R2 to R3 because we didn’t have the courage to do the same kind of analysis in the past, and today we know that a big number of those developments are not really differentiating us from our customers and competitors, but instead, this highly-customized approached has left us with a less than optimal platform to support and grow.
Do not be hampered by the “that is the way it has always been done” thought process.
Companies are working on their innovation and digital transformation strategies simplifying and standardizing processes across all business units.
If you look to the S/4HANA Customer Success Stories 2017, you will see that many of the companies were targeting simplification and simplification can be achieved in many different ways. A more simplified system with less customization and more standard layered is one of them.
I invite you to look to those customer’s stories and see what they have to say (again, it may not be applicable to everybody, but it is worth to understand and learn from the companies who already made the move)… Their objectives or motivations were most of the time around the statements below:
- Redefine traditional models, simplify business processes, and integrate people, financial, and material infrastructure
- Simplify the finance process
- Simplified processes with no latency
- Simplified and streamlined processes
- Consolidate 11, highly customized ERP systems into one stable digital core
- We took a unique approach to this implementation. First, we committed to no customizations by embracing SAP S/4HANA functionality. Second, Support for best practices that allow for limited customization and ease of integration with SAP and third-party software systems.
So, it is not just me who is saying it.. it is not an argument made from my mind… there are several companies taking advantage of a more simplified environment. The game is changing, we have to be flexible to adapt…
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I want to end this post saying that, if you think different, let me know… come to me with some constructive ideas and opinions why you think different.. I had no intention to offend anyone (which is easy to do on Social Media now a days… people get offended for too little)
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