De-Mystifying the Cloud strategy for S/4HANA

LinkedIn Blog by Adil Zafar, Global Leader for S/4HANA Cloud at IBM

Before we dive straight in, in a previous blog, Road to Nirvana...and the choices you need to make, I have addressed various deployment options available and how customers can make an informed decision on picking the right solution, with confidence, when moving to S/4HANA, so I would encourage you to take 5 mins to refresh your memory. In this blog, I’m going to try and attempt to address a mis-conception when it comes to considering S/4HANA Public Cloud, as part of the move to S/4HANA.

So let’s begin, when looking at the perception of a cloud first strategy for S/4HANA Public Cloud. What do we understand this to be?

• Implementation approach – Greenfield only
• Limited functionality – Business configuration of standardized core ERP and select LOB processes
• Limited Industry Support
• Extensibility – via SAP Cloud Platform and using Whitelist API’s
• No control on Governance
• Speed of Innovation – Quarterly upgrades
• Fiori driven user interface
• Configuration is carried out using SSCUIs and not the IMG.
• Shared Public Cloud Infrastructure with limited deployment landscape…the list goes on.

What I’ve described above is true, but only when it comes to S/4HANA Public Cloud – Essentials Edition (ES). It’s a SaaS offering from SAP, previously known as S/4HANA Cloud – Multi-Tenant Edition (MTE). The Roadmap and Release strategy is different from other S/4HANA deployment options and ultimately restricted approach to adopting S/4HANA. A viable option, nonetheless, for those organisations who have little complexity in their business processes and can survive in what I call the ‘straightjacket’.

When I talk to clients there is an obvious misalignment of what is entailed within S/4HANA Public Cloud but when I offer to explain the nuisance there is a renewed interest. That renewed interest is in S/4HANA Public Cloud – Extended Edition (EX), previously known as S/4HANA Cloud – Single Tenant Edition (STE). The key to setting yourself free and moving towards a more flexible approach to adopting S/4HANA in the Cloud.

What is S/4HANA Public Cloud – Extended Edition (EX)?

It's a full SaaS rebadged offering from SAP, which offers the full functional SAP S/4HANA scope of core ERP and extended Line of Business (LoB) and Industry Solutions - using the same code line as the On-Premise version of S/4HANA. The application is provisioned to a single customer in a dedicated hyperscaler landscape, offering the full scope of S/4HANA with full integration capability for both Public and On-Prem Solutions.

Furthermore, SAP has introduced the 5 Golden Rules https://blogs.sap.com/2018/07/28/the-5-golden-rules-for-implementing-sap-s4hana-cloud-single-tenant-edition/, although no contractual obligation to adhere to the rules nevertheless it is strongly recommended to follow them when choosing S/4HANA Public Cloud, Extended Edition (EX). Alternatively, Partner Managed Cloud, HEC or S/4HANA Private Cloud would be more suitable.

Why choose S/4HANA Public Cloud – Extended Edition (EX)?

Here is a summary of the key characteristics:

• Full ERP functional scope for 64 country versions in 39 languages, supporting 25 industries
• Promoting Fit-to-Standard rather than Fit-to-Gap approach
• No modification to the S/4 Core.
• Use Best Practice and/or Model Company for implementing SAP Best Practice Accelerators e.g. IBM’s IMPACT Industry Solution
• Flexibility to carry out IMG configuration, z-objects etc.
• Using In-App and Side-by-Side Extensions for development
• All Integration possibilities are available, Cloud as well as On-Premise
• Customer has more control over Governance
• Relevant for New Implementations (Greenfield) & Hybrid Migration with Selective Data Transition
• Disaster Recovery is optional – typical RTO - 12 Hours, RPO - 30 Mins
• Commercial terms vary between 3-5 years.
• 1 mandatory upgrade every 2-years at a mutually agreeable time
• Subscription Model – One monthly price covers SaaS, Basis Implementation and Basis AMS, including software upgrades e.g. 1909 to 2020.
• Typically, a 3-tier landscape, however, customers can opt for additional environments at extra cost.
• Service Level Agreements are 99.5% for Productive and 95% for Non-Productive systems, customer can opt for better SLA’s but at additional cost.
• S/4HANA Public Cloud – Extended Edition (EX) is hosted in SAP HEC, AWS, Microsoft Azure, GCP and Alibaba Cloud.
• The Roadmap for S/4HANA Public Cloud – Extended Edition (EX) is identical to that of S/4HANA (On-Premise)

What is included in the Bill of Material (BOM), as standard?

SAP S/4HANA Public Cloud, Extended Edition (EX) has the following software components included as standard in its BOM, however, additional items can be added:

• SAP S/4HANA Enterprise Management
• SAP Single Sign-On
• SAP Information Lifecycle Management
• SAP NetWeaver Gateway
• SAP HANA limited runtime for Applications and BW
• SAP Cloud Connector (on customer request)
• SAP Data Services Agent (on customer request)
• SAP Solution Manager (on customer request)

 What services are included in the subscription pricing?

SAP S/4HANA Public Cloud, Extended Edition (EX) has a subscription-based pricing model which includes:

• Cloud Infrastructure (including S/4HANA Application+Database) and Managed Services (EMS),
• Proactive Application Management Services (AMS) and
• all relevant licenses (application, users, database) and the Enterprise Support for these licenses.

How can I access SAP S/4HANA Public Cloud, Extended Edition (EX)?

It can be accessed in the same way as the On-Prem version. You can use SAP GUI or Fiori Apps to access the systems.

What are the User Metrics when licensing for SAP S/4HANA Public Cloud, Extended Edition (EX)?

The pricing is based on the number of “Full Usage Equivalents” (FUE). Full User Equivalents (FUE) are individuals who are authorized to use the Cloud Service and are defined by the table below, including size of the landscape included in the subscription:

In Table 1, above, it’s showing the type of users you would need to license for, however, when calculating the number of FUE’s you have to use the subscription ratio. So, in the example above the number of Users is 795 but this equates to only 155 FUE’s.

As a result of the FUE calculation we can now look at what System Landscape is required. As shown in Table 2, below, the T-Shirt sized landscape which will apply for 155 FUE’s is XS. A System Landscape with 3-Tier Development and Production environment with 256 GB HANA Database size.

Best of both Worlds

In my view, SAP S/4HANA Public Cloud, Extended Edition (EX) provides the best solution for customers who want more extensibility flexibility and full ERP functionality but delivered through a SaaS Cloud model built on Hyper-scalers. It provides an optimal TCO with a stable S/4HANA system with reduced customization and adherence to standardization to simplify the core ERP solution without compromising on the scope and functionality.

If you would like to know more about how IBM is helping customers de-mystify the journey to the Cloud, please reach out to me at [email protected]