A guide to SAP’s S/4HANA: What is it?

Clouds with three giant question marks over them

SAP’s end-of-support deadline is coming. It has become the priority for every organisation running SAP software – HANA databases, ECC6, SAP payroll, etc. – to make an important decision. Will you upgrade to S/4HANA now, later, or not at all?

It’s not a decision to be made lightly. That’s why, in this series of blog posts, we’re exploring three key areas around SAP’s S/4HANA product and its deadline:

  1. What is S/4HANA?
  2. When is the S/4HANA deadline?
  3. What options do I have?

Want the full story? We’ve written a full guide on SAP S/4HANA, the deadline, and your options as an SAP customer.

What is S/4HANA?

An in-memory database…
S/4HANA is SAP’s new generation of its Business Suite, written for the existing SAP HANA platform.

…with an embedded ERP
S/4HANA is an entire system with ERP built into it. Theoretically, it provides all an organisation needs – software, applications, storage, and functionality – in one vast model.

However, SAP hasn’t released just one S/4HANA product, though it’s in the habit of marketing S/4HANA as one product.

But S/4HANA is, in fact, three separate products.

Option 1: Public Cloud

This is a Software as a Service (SaaS) product, where all customers access the software in the Cloud, upload their data, and select what feature(s) they need and when they need them.

Some important factors to consider:

  • Only a limited number of ERP features are available
  • SAP’s schedule dictates maintenance, upgrades, and patches, not yours
  • Features a limited number of languages; a potential problem for international enterprises
  • Support is only available for a limited range of industries

These restrictions can make it unsuitable for many organisations; that will, therefore, need to evaluate SAP’s larger, more expensive, S/4HANA Private Cloud (which is rather convenient for SAP).

Option 2: Private Cloud

Like the Public Cloud, SAP still manages 100% of the software, but the customer has some input on update schedules. This helps you to minimise downtime or disruption to your business.

Private Cloud will support more languages, countries, and regions, plus some modifications and customisations are allowed on the Private Cloud. The costs will increase as a result, as it becomes harder for SAP to manage.

Option 3: On-Premise

Existing SAP customers may recognise this version. It’s an on-premise ERP where you can determine your own on-premise hosting or the Cloud of your choice (as long as it supports SAP’s requirements).

On-premise does allow customisations and modifications but support costs are higher. You need to factor in any customisations you’ve made into every patch and update.

S/4HANA’s branding seems to be intentionally confusing

SAP has been predominantly pushing the Cloud-based products. After all, it would prefer its customers to be on SAP’s Cloud, not a competitor’s.

SAP’s efforts seem to have worked/backfired. People do tend to think of S/4HANA as Cloud only and are therefore concerned by problems such as migration troubles, Cloud lock-in, etc.

S/4HANA does include an on-premise edition, but this may not be a source of relief. Any organisation that wishes to upgrade but cannot justifiably afford the on-premise version, faces the same challenges as those that believe it is Cloud only.

Nucleus Research suggests that “9 out of 10 customers would not consider a future investment in S/4HANA and appear to be following a slow tapering-off strategy as they evaluate other opportunities in the market.”

Why has SAP released S/4HANA?

Existing SAP customers may question its vendor’s decision – especially when its current products are working fine. The simple answer is, SAP benefits from it:

  • Cost: It’s cheaper to run one product, and the end-of-support deadline cuts costs of supporting legacy products (whether SAP’s customers will receive any benefit from this remains to be seen).
  • Innovation: S/4HANA allows SAP to dedicate its resources to one core element. Theoretically, this is its chance to make one thing really well.
  • Independence: Some of SAP’s existing customers still host their SAP applications on Oracle or Microsoft databases, which means that part of SAP’s revenue is going to the hosts. S/4HANA will change that, as it will necessitate migrating to an SAP database, therefore increasing SAP’s income and stopping revenue streams to its competitors.

Learn more about S/4HANA

What we’ve provided here is a brief overview of what S/4HANA is (specifically clearing up the three variants of that SAP has merged together in its marketing) and why SAP has released it.

If you’d like a more detailed overview, we have published a guide detailing the full SAP S/4HANA story and what your options are as a SAP customer.

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