2025 – THE NEW MILESTONE TO DECIDE IF S/4HANA IS THE RIGHT WAY FORWARD

“But then again, you better run if you know what’s good for you”

You Better Run - by Rowan Hanlon

In March 2016, I wrote an article “2020 – The Year to decide if S/4HANA is the Right Way Forward”. 

Click on the following link to the March 2016 article:

Now, four years later, in May 2020, its time to review what I have written and revise the recommendations based on recent developments as well as current business environment due to the deadly pandemic sweeping across the world.

In 2016, my suggestions then was to delay decision on S/4HANA till 2020 based on the following premises which WERE VALID:

i)                Lack of CRITICAL MASS of ECC customers that have migrated to S/4HANA

ii)              Lack of EXPERIENCED S/4HANA consultants with in-depth knowledge with large scale deployment

iii)             Incomplete Functionality compared with Business Suite

iv)             Lack of Tools for ease of migration

v)              Locked-in to HANA-DB even for Business Suite customers with Simple Finance add-on with NO WAY OUT

vi)             Ample time to Migrate as the end of support was then supposed to be 2025

So, since March 2016, what developments have happened, and what impact do these have? Well, over the past 4 years, we have seen the followings:

a)    SAP released ERP 6 EHP 8

In fact there were quite a few article and documents on all the new features and LOTS OF INNOVATIONS with EHP8 on SAP websites. However these were mostly downplayed, or not mentioned at all, to many SAP customers as the sales personnel were more interested in hitting their sales targets, as upgrades to EHP8 were not considered license sale. However there were really good improvements in this Enhancement Pack 8, including things like Netweaver 7.5, Java 8, etc….. which consisted of many enhancements to ERP6 on all platforms without a need to be on HANA DB.

Delta Scope – SAP Enhancement Package 8 for SAP ERP 6.0

https://d.dam.sap.com/a/POyyr/EhP8_SP10_Delta_Scope_FINAL.pdf

blogs - Delta Scope - SAP Enhancement Package 8 for SAP ERP 6.0

https://blogs.sap.com/2016/04/13/relased-in-the-first-quarter-2016-enhancement-package-8-what-is-new/

Why EHP 8 is Different

 https://blogs.sap.com/2016/06/30/why-ehp-8-is-different/

b)    Oracle Database 12.2, 18c, and 19c were certified for SAP ERP over the same period

Since getting Oracle Database 12.1 (especially the In-Memory option) certified for SAP in 2015, Oracle have been working hard to ensure SAP customers running on Oracle database continued to be provided with the latest technology available to enhance their operations. So certification of these latest releases of databases and relevant options were hastened. And the maintenance for Oracle DB 19c is till 2026. And newer versions of Oracle Database with significant enhancements are expected every year.

c)    Oracle Exadata have evolved and developed several generations from the X5 generation to X6, X7, X8, and now the latest X8M

Oracle have also painstakingly gone through the SAP certification process for ALL these Exadata generations for the benefits of our mutual customers so that they can have access to the latest technology and the extreme performance for their SAP ERP that we brought into the market.

Exadata X8M with SAP Netweaver

https://www.sap.com/documents/2019/10/94f97fc1-6c7d-0010-87a3-c30de2ffd8ff.html

d)    Oracle Cloud Infrastructure and Oracle Exadata Cloud Service were also certified for SAP customers over the period

SAP customers now have the option to run SAP on Oracle DB on Oracle Cloud Infrastructure in addition to on premise deployments. Customers also have the choice to deploy additional options such as In-memory, Advanced Compression, Advanced Security, as well as Real Application Cluster on Oracle Cloud Infrastructure. Oracle Exadata Cloud Service enabled customers to turn CAPEX for Exadata purchase to OPEX subscription service in the cloud to run their SAP system with the same level of extreme performance expected of an Exadata Database Machine.

SAP NetWeaver Application on Oracle Exadata Cloud Service

https://www.sap.com/documents/2020/04/5ca170cf-8f7d-0010-87a3-c30de2ffd8ff.html

SAP Netweaver Application on Oracle Cloud Infrastructure

https://www.sap.com/documents/2018/06/eab0396a-0c7d-0010-87a3-c30de2ffd8ff.html

e)    SAP SE announced the extension for support for SAP Business Suite till at least 2030

Extended Innovation Commitment for SAP S/4HANA Clarity and Choice on SAP Business Suite 7

https://support.sap.com/en/release-upgrade-maintenance/maintenance-information/maintenance-strategy/s4hana-business-suite7.html

SAP ECC policy change may offer a further 15 years of support

https://www.computerweekly.com/news/252477999/SAP-ECC-policy-change-may-offer-a-further-15-years-of-support

This changed the entire rationale and dynamics for making a decision on migrating to S/4HANA by 2020. There is NO LONGER a hurry to migrate to S/4HANA due to end of maintenance of Business Suite originally expected to be in 2025. 

f)     SAP SE continued on their acquisitions to extend their product offerings such as Qualtrics and others

From an almost “silo” integrated application during R/3 days, now SAP provides a full range of complementary products, either on premise or as a cloud service. Products now include Concur, Ariba, SuccessFactors, Hybris, BusinessObjects, and most recently Qualtrics. Some products are more successful than others. BUT ONE THING IN COMMON WAS THAT NONE OF THE ABOVE PRODUCTS LISTED REQUIRED THE USE OF S/4HANA AS A PRE-REQUISITE. PERIOD.

One could simply tell the sales person that he/she just wanted to purchase licensing for Concur, Hybris and/or SuccessFactors, but NOT S/4HANA, and the sales person would gladly take your purchase order. AND ALL THESE SAP PRODUCTS CONTINUE TO PROVIDE INNOVATIONS AND NEW FEATURES REGULARLY TO SAP CUSTOMERS INDEPENDENT OF WHETHER S/4HANA HAVE BEEN DEPLOYED OR NOT.

Review of the Reasons in the March 2016 article

So in view of the above developments, let’s review the 2016 article and whether these reasons are still applicable:

i)                Lack of CRITICAL MASS of ECC customers that have migrated to S/4HANA

Based on the latest 2020 survey results by the German SAP User Group (DSAG), only 10% of the surveyed members were using S/4HANA in January 2020. What the survey did not show was whether these 10% have TOTALLY SWITCHED to S/4HANA or only having some business divisions using S/4HANA (i.e. still running ECC in most other areas). As quite a few of the largest SAP customers that I have been in constant contact with, do have more than 200 SAP systems running in the organization across the world, it would be unlikely that they could SWITCH ALL over to S/4HANA in a short time (if at all possible) without impact to their mission critical operations.

DSAG Survey 2020 - Is your company planning to migrate to S/4HANA?

https://www.dsag.de/sites/default/files/03_plans_s4hana.jpg

A further 9% planned to implement S/4HANA by this year but with pandemic-induced lockdowns across the world for many weeks (months?), this percentage is expected to be much lower than 9%.

As for those who are planning to move to S/4HANA within the next 3 years, it is very likely that these projects will have to be pushed MUCH FURTHER behind as many companies are now facing existential crises such that re-implementing their working ECC systems are not a priority at all. I have written a separate article on this:

So the “LACK OF CRITICAL MASS” is still as valid today in May 2020 just as in 2016. It remains to be seen if the 50% mark can even be achieved by 2025.

VERDICT: 100% Still Applicable

ii)              Lack of EXPERIENCED S/4HANA consultants with in-depth knowledge with large scale deployment

This point is slightly more interesting. This is because with the with the “green field” implementations for mainly nett new customers or total re-implementation of existing ECC customers, there are now a pool of consultants who are considered “experienced”. But greenfield implementations are inherently a lot simpler and easier as there would be few restrictions on the way the systems need to be configured, no existing ABAP to modify, and business processes are being re-engineered. And most success stories being publicized were mainly small to medium sized implementation.

However, the survey by DSAG showed that “39 percent favor a gradual implementation approach (Brownfield)”.  These are more complex implementations as business processes are expected not to be changed much, and thousands of custom ABAP may need to be modified due to the complete change in the data dictionary.

In view of these, the “LACK OF EXPERIENCED S/4HANA CONSULTANTS” should be still considered partially true at 50%. 

The DIFFICULT PART for the customers would be to BE ABLE TO DIFFERENTIATE AND SELECT THE RIGHT IMPLEMENTATION PARTNERS, as we know from experience that the implementation costs for ERP is up to 70% of the total project costs.

VERDICT: 50% Still Applicable

iii)             Incomplete Functionality compared with Business Suite

The latest S/4HANA 1909 seemed to have tons of new functionality not previously available. SAP have been investing in getting more stuffed into S/4HANA over the past few years. So this is probably not a point of importance unless you are running integrated SAP HR in your ECC system because HCM solution in S/4HANA is NOT EXPECTED UNTIL 2022. So hold on to your horses and wait to see what would be delivered in 2022 may be a more prudent choice.

Product Note: SAP HCM On-Premise Option for SAP S/4HANA

https://news.sap.com/2018/01/hcm-on-premise-s4hana/

SAP Human Capital Management for SAP S/4HANA, on-premise edition – Updates: Available in 2022 with a technical co-deployment in SAP S/4HANA

https://blogs.sap.com/2019/09/25/sap-human-capital-management-for-sap-s4hana-on-premise-edition-updates-available-in-2022-with-a-technical-co-deployment-in-sap-s4hana/

And those who have gone ahead with 15xx, 16xx, and maybe even 17xx deployments would be kicking themselves seeing so much more good stuff in 19xx which they would be able to use if they have delayed their implementation till 2020 as per my previous article.

So I would rate this as still partially true due to the lack of HCM functionality.

VERDICT: 50% Still Applicable

iv)             Lack of Tools for ease of migration

Over the past few years, SAP have released various tools such as S/4HANA Readiness Check, SAP Business Scenario Recommendations for SAP S/4HANA, and SAP Transformation Navigator, to help to ease the migration from ECC to S/4HANA. However, custom ABAPs will still need lots of effort to migrate due to the very different data model in S/4HANA.

In view of these developments, I would classify this as a partial concern.

VERDICT: 25% Still Applicable

v)              Lock-in to HANA-DB especially for Business Suite customers with Simple Finance add-on with NO WAY OUT

Unfortunately, this LOCK-IN is still very much alive.

You STILL cannot use SAP DMO tool to migrate OUT OF HANA DB. This can be reviewed in the SAP note 2840346. 

You can use DMO to move across almost ALL OTHER DATABASES (except mainframe DB2 and i-series DB2). So the one-way ticket is still there for those who decided to move their ECC systems on anyDB to ECC on HANA DB. And those who implemented Simple Finance on their ECC system would have found that they ended up in “no man’s land”, neither ended up as a S/4HANA system nor a pure ECC 6.0 system.

So this concern is still very much valid in 2020.

VERDICT: 100% Still Applicable

vi)             Ample time to Migrate as the end of support was then supposed to be 2025

This is an easy one.  THE END OF MAINTENANCE DATE HAVE BEEN MOVED TO 2030.

So there is STILL AMPLE TIME TO START PLANNING TO MIGRATE in 2025. So this is STILL A VALID REASON in to delay decision on S/4HANA to 2025.

 VERDICT: 100% Still Applicable

Summary and Conclusions

Most of the reasons for delaying decision till 2020 on S/4HANA which I recommended in March 2016 are still very valid today in May 2020. There is still more than sufficient time to make a decision in 2025. In the meantime, you can easily enhance the performance of your existing SAP ECC system by simply deploying it on Exadata technology on premise or in the cloud (with no ABAP changes needed!).

Keep your options open and there may be even more good things coming your way.

Who knows, perhaps “EHP 9” may be a reasonable expectation by customers still paying good maintenance money for their ECC systems. 

AND NEVER GIVE UP ON YOUR DEMAND FOR S/4 AnyDB, AS SAP HAVE SHOWN TO BE GIVING IN TO CUSTOMERS’ DEMANDS, JUST LIKE THE EXTENSION OF MAINTENANCE DATE FOR BUSINESS SUITE TILL 2030.

MOST OF ALL, REMEMBER TO CONTINUE OPERATING YOUR SAP SYSTEMS RUNNING ON ORACLE DB WITH MAINTENANCE FROM SAP AND NOT FROM SOME OTHER DUBIOUS 3RD PARTY SUPPORT, BECAUSE WHEN YOU CONTINUE MAINTENANCE WITH SAP, YOU GET TOP CLASS SUPPORT FROM BOTH SAP AND ORACLE. THIS CO-OPERATIVE RELATIONSHIP HAVE BEEN IN EXISTENCE SINCE 1992 AND HAVE SERVED ALL OUR MUTUAL CUSTOMERS WELL OVER THE PAST 28 YEARS.

Do you Run Better or do you Better Run? :)