Transitioning to SAP S/4 HANA- Choosing a deployment Option

 

I had the opportunity to attend the just concluded SAP S/4HANA Finance Bootcamp held in Paris, France (from the 14th to the 16th November 2016). I intend to share, in a couple of blog posts, my take away, from some of the presentations held on topics of SAP S/4HANA.

 

SAP S/4HANA, what does it mean?

“SAP S/4HANA is the short form for SAP Business Suite 4 SAP HANA. It is a new product fully built on the most advanced in-memory platform today – SAP HANA – and modern design principles with the SAP Fiori user experience (UX). It is SAP’s next-generation ERP”, (SAP).

Some experts likened the shift to SAP S/4 HANA from ECC to the transition from SAP R/2 to SAP R/3.

Source: SAP

 

 

Why SAP S/4HANA

Some of the high level benefits if you are planning on moving to SAP S/4HANA are:

  1. Innovative in-memory Database- “The biggest business advantage of SAP S/4HANA is the simplicity of the database layout. This allows for higher data entry speed, unbelievable improvements in reporting and most importantly a complete flexibility in reporting using external hierarchies” (Hasso Plattner).
  2. Convergence of transaction processing and analytics in one system, translating into instant real time feasibility for better decision.
  3. New simplified architecture with the potential of translating that into lower TCO.
  4. New UI technology- Fiori role based user experience.
  5. Simplified data models, no data redundancies thanks to the Universal journal.
  6. Related to the above, elimination of aggregates with fewer tables, fixed hierarchies, and database indices.
  7. Seamless, native integration to SAP solutions

 

Deployment Options for SAP S/4HANA

So, if you are a current SAP Customer, or a potential new customer intending to implement SAP, what are the deployment options available to you?

Three deployment options for SAP S/4HANA are available to SAP Customers. They can deploy 1) on-premise, 2) on cloud, or 3) use the hybrid deployment option that combines the features of the first two deployment options.

Deployment On-Premise

If you are a current or potential SAP customer that has some unique processes, perhaps because of the way you operate, and you cannot drastically deviate from that business model drastically, then the On-premise deployment model will work best for you.

This deployment option offers maximum flexibility to Customers as it puts them in charge of their environment. Customers are in charge of all their customizations, modifications, configurations etc. as dictated by their business requirements.

Therefore, as mentioned above, SAP Customers who like to retain the uniqueness of their business model, which perhaps gives them some sort of competitive advantage will find this deployment option suitable.

Deployment on Cloud

Customers or potential customers that are adopting SAP S/4 HANA to take advantage of SAP Best Practices on offer without having to go through modifications and enhancements will find the “Cloud” deployment option suitable.

This deployment option emphasizes standardization and adoption of SAP industry Best Practices. SAP S/4 HANA Cloud edition resides on SAP owned infrastructure that is operated and maintained by SAP. With this deployment option SAP is in control.

Hybrid Deployment Option

As the name suggests, the Hybrid Deployment option combines the features of both the cloud and on-premise options. Customers who like the best of the both worlds will find this suitable.

Detail Comparison of the Deployment Options

Pricing/Licensing Model

Traditional license and maintenance model is used for the SAP S/4HANA on-premise edition. For the SAP S/4HANA cloud edition the subscription base model is used.

 The Scope of the Deployment Options

The scope for SAP S/4 HANA on premise edition is the full ERP scope. Meaning that the scope is similar in terms of coverage and functionality, as the current SAP Business Suite.

As for SAP S/4HANA cloud editions we make a distinction between public and managed cloud editions. Public cloud editions covers specific business scenarios of lines of business and industries, whilst the managed editions address a similar business scope as the one of on-premise edition.

 Application Management and Infrastructure Services

A key feature of SAP S/4HANA on-premise edition is the flexibility and the control customers have over their environment, and this is also true in the case of Infrastructure and Maintenance. The Customers have full control of deployment and maintenance using their own dedicated IT staff.

For the cloud edition SAP is responsible for the system maintenance since it is SAP that provides the system.

Speed of Innovation

Following from the principle that the customer is control in the on-premise scenario, it follows that they have full control over speed of innovation and any other activities within the system including (but not limited to) system upgrades and other system changes.

In the SAP S/4HANA cloud edition the customers participate automatically on quarterly innovation upgrades.

 Process Flexibility

The on-premise edition allows for full process flexibility which can be very important if customers are looking beyond what standardization can offer in satisfying critical business requirements. Customers are in charge of all their customizations, modifications, configurations etc. as dictated by their business requirements.

The SAP S/4HANA cloud edition emphasizes standardization and adoption of SAP industry Best Practices. Therefore the customers’ option for process flexibility is limited under the cloud option.

Management Model

Customer owns and is in charge of all upgrades for the SAP S/4HANA on premise option. In the case of SAP S/4HANA cloud option, SAP provides and is in charge of upgrades.

Innovation Cycle

The on-premise edition offers a yearly innovation cycle through innovation packages. On the other hand the “on cloud” edition offers a quarterly innovation cycle.

 

 

Source: SAP

 

Choosing a deployment option basically boils down to a customer’s preference for standardization and best practice adoption, versus preference for having control of your environment and designing and configuring it to suit unique business requirements.
Off course, you can have preference for both options, it does not have to be an either or. In that case the hybrid option be your best option.

 

 

 

 

 

 

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