The S4 Debate – Bread On The Table

Why does SAP S4 HANA matter?  

The global and local economies are still battling with the effect of the COVID-19 pandemic, what has stood out is the resilience of the global supply chain to keep families fed and the lights on, large employers using SAP have been able at breakneck speed to change their entire operating model to help support consumers and equally importantly ensure their staff remain safe and still employed, essentially SAP has helped keep bread on the table for all of us.

Most of the Fortune 1,000 and a considerable number of tier 2 originations run SAP. Many of them run the older ECC version which is now coming up to 15 years old (mid-life!!), so Chief Financial Officers (CFOS) and (CIOS) have a difficult choice to make, stick on ECC or twist to S4. 

Stick or Twist – priorities, survival and self-funding benefits cases

International Data Corporation (IDC) noted in October 2020 that the current trend is for organisations to focus on business resilience and targeted investment to innovate Earnings Before Interest, Taxes, Depreciation, and Amortization (EBIDTA) and liquidity, we also see from SAP’s latest investor bulletin that S4 take up has dipped.

CFOS will want to see a benefit case with limited capital investment over a short period of time providing immediate liquidity impact, so a lengthy 9 month + rainbow coloured migration they come in various shades, Green, Brown, Blue but most end up RED……  

During the worst of the pandemic, we saw organizations go for easy to deploy SAP cloud-enabling plug and play solutions which bolt on to any flavour of SAP ERP (don’t forget the S4 early adopters wished they hadn’t as they need to migrate to the new version as well, ouch…)

Some great examples of quick sap cloud plug and play

  • SAP upscale commerce Omnichannel in 7 days
  • SAP Commerce Cloud
  • SAP Cash Management
  • SAP drop shipment (two-tier)
Still life in the old dog

CFO’s and CIO’s now get the counter-narrative that you don’t need to move to S4 HANA to benefit from Industry 4.0 connected intelligence, in fact, the reality is startling:

  • ECC will be supported until 2027, extended support to 2030 and analysts believe this will push out to 2035 (S4 in its own right does not reduce TCO).
  • All of the best of SAP’s Industry 4.0 wizardry can be deployed agnostically around the ECC digital core. Artificial intelligence, machine learning predictive, Robotic Process Automation, UX, analytics, two-tier ERP, big data etc……. (this is where the real benefits sit)
  • You can move your existing SAP estate to a hyperscaler platform easily with no business disruption, reducing TCO and also enabling the client to benefit from an alternative catalogue of cognitive pay as you go plug and play services (SAP and their big partners are about to go to war).
  • For me the most important reason to wait for SAP and their partners will have to invest in an automated technical ECC to S4 migration using machine learning and RPA, a press the button and go scenario, let’s face it most of the tools out there promising a smooth migration are pre-sales marketing hype that never delivers to promise.

So what’s the answer?

If I were a CIO with no immediate need to migrate to S4 I’d wait until 2025 and focus on the agnostic connected intelligence that will add real value to the operating model, focus on Kaizen and maybe look at bi-modal to kick start the s4 journey.  

Written by Alisdair Bach

Has Coronavirus further impacted the business case for implementing SAP S/4HANA?

If you haven’t seen the video chat with Alisdair Bach as part of out SAPchat series watch the full video here


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