Why are people talking about SAP S/4HANA? There are a number of reasons why SAP S/4HANA is being discussed currently:
SAP’s most significant new product in years
It is SAP’s latest product, and a major technical and functional re-architecture. It uses SAP’s own HANA database (as opposed to the previous versions of SAP, which ran on a range of databases selected based on client preference). The business applications in SAP are being gradually rewritten to make them more efficient and take advantage of the new technical base. This results in data being stored in new table structures, and the provision of new or reengineered transactions to enhance the business processing capabilities and user efficiency. The result is a more efficient database, reduced storage requirements and faster transaction throughputs.
Businesses are becoming more digitally connected with customers, suppliers and their employees
Digital transformation and the internet of things (IoT) are major trends that many predict will dominate the next decade of technology-enabled industry transformation. SAP’s HANA-based product roadmap enables these trends better than previous SAP products and arguably better than any other ERP vendor. This is due mainly to the ability of HANA to handle much larger datasets and provide real-time analysis.
All new SAP projects and initiatives should consider SAP S/4HANA
It is gaining traction, new customers are generally being compelled to use it and the existing installed base is being encouraged to adopt it. However, existing SAP products will continue to be usable for many years to come, but after 2025 may require special and more expensive support arrangements.
A full SaaS version is available, and other cloud options are also possible
Whilst still available on premises and customizable, SAP S/4HANA is also available as a SaaS product, and customers not requiring complex configuration and customization may find the cloud editions attractive. The cloud version has been designed to be faster and cheaper to install by allowing easier configuration and maintenance of common business scenarios; however, customers requiring extensive customization and configuration are likely to find it too restrictive.
Interaction with other cloud products in a digital ecosystem
Whether using S/4HANA on premises or in the cloud, SAP has made interacting with other cloud applications and creating new applications combining elements of S/4HANA with functionality available in other cloud-enabled systems or hosted solutions much easier.
These are the key business benefits of SAP S/4HANA by process area:
| Business constraints in existing SAP ERP | Business benefits from running S/4HANA | Other options | |
| Financials and cost management | Period closing takes many days, and a lot of the finance department time. Profitability analysis — Held in aggregated tables with long run times for results, or requires BW extracts and reports. Often requires significant manual reconciliation effort, measured in multiple FTEs. | Faster processing times to enable fast close and real-time reporting. New financial document structure stores all the information required as one record. Extended ‘Account based COPA’ reduces the need for ‘Costing based COPA’. Faster processing times allow profitability reporting to be real time, with no need for reconciliation. Business warehouse no longer required to resolve performance constraints. | Upgrading to HANA will also speed up processing times. Traditional COPA tables still work in S/4HANA, and reports will be faster than before; however, most SAP customers use COPA as a staging area to BW. |
| Sales and revenue management | Available to promise (ATP) not accurate and not able to consider other stock locations. Reacting to real-time data regarding consumption/usage of products. | Flexible ATP logic across multiple business locations, and release and reallocation of stock based on business priorities. Data from point of sale (POS), business partners systems, social media or devices connected via the internet of things (IOT) can be collected and processed in real time, driving sales decisions such as pricing/promotions or allocation of stock. | SAP APO has similar functionality, but requires additional set up. Standalone applications built on HANA. |
| Inventory management and stock levels | Inventory levels of raw materials. Finished goods inventories. | Real-time stock updates, and ability to rerun MRP to adjust production and direct raw materials to the priority usage. Real-time stock visibility, and ability to run back-order rescheduling and stock reassignment processes much faster can optimize the use of stock, enabling better service levels and/or lower coverage. | SAP APO SAP APO |
| Warehousing and logistics | ECC WM functionality too basic for complex finished goods warehouses. Lack of simple logistics transactions on mobile devices, RF-enabled transactions are limited and the infrastructure expensive. Time-critical business processes exposed to system performance risks. | SAP extended WM functionality will be available in the core SAP S/4 product. All key transactions can now be simplified and delivered via mobile devices. No need to restrict other processes or system users from using performance-intensive processes/calculations. | SAP EWM as a standalone. WM can be run on a separate instance; however, this complicates the technical solution and increases hardware costs. |
| Production and manufacturing | Daily/batch MRP runs do not allow for dynamic replanning or reprioritization. Data feeds from machines and process flows are used to predict and avoid issues. | MRP can be run at any time and results are fast, enabling planner to evaluate the impact of changing circumstances real time. SAP can now collect and analyze large volumes of data from machines or other devices. This can be used to proactively create maintenance orders, etc. | SAP APO |