The changing role of ERP software
SAP R/3 has first been released in 1992. Although many features have been added since its initial release, the same data model and user interface are still in place. During the late ‘90s and early 2000s, ERP software was intended to be long-lasting and on-premise, and designed to cover both current and future business scenarios. Their implementation took a very long time and was only affordable for large organizations. They were standalone, generic, and transactional. Compared to those early days, a lot has changed in the expectations of ERP solutions. Software’s solutions are expected to be agile, industry-specific, user-friendly, and able to connect with other software seamlessly. Businesses also expect rapid time-to-value; long implementation projects are no longer supportable. Many organizations have already started their journey from a monolithic ERP application, which used to cover many of the business processes, towards a best-of-breed, hybrid architecture in which an ERP is at the core, supported by other solutions for specific line of businesses.
SAP has traditionally been an important supplier of business software with an ERP-centric offering. Since 2010, SAP has made several acquisitions to add additional functionalities and business coverages to its portfolio. Most of them were cloud-based applications, such as SAP SuccessFactors, SAP Concur, SAP Fieldglass, and SAP Ariba, among others. Although these solutions are best-of-breed for dealing with individual business tasks, their potential lies in their integration with the SAP ERP solution, which sits at the core of the enterprise. With SAP R/3, integration between the different components such as sales, logistics, and finance was an inherent aspect, as they all shared the same data dictionary, runtime version, and database. This is not the case with Cloud applications, as each one has its own data model and user interface technology. The SAP ERP system uses ABAP, while others use Java or SAP UI5. Some of these applications use SAP HANA, while others do not.
The alternative: SAP S/4HANA public Cloud
Users expect features and characteristics to be aligned between the different solutions, especially if business processes are to be covered by multiple components. They demand an intuitive user experience across all SAP solutions. Support organizations need integration and extensibility to be the same. Finally, intelligent technologies such as artificial intelligence and machine learning need access to data in a unified format from different sources. The SAP S/4HANA public Cloud is a modular cloud suite integrated with other SAP solutions using one data model and one unified user experience. These components are glued together by the SAP Business Technology Platform (SAP BTP) where data and process models come together. The SAP BTP enables the extension and integration of SAP applications, while keeping the core components close to the standard to facilitate further upgrades.
SAP ERP is going to go out of support by 2027, with extended support at an extra cost available up to 2030. Customers need to start reflecting where they want to be in five years. The days of the standalone SAP ERP are long gone. ERP software must be agile to react to changing business requirements. They need to support faster implementation of new technologies such as artificial intelligence, predication, and simulation. The focus should be on business, not on keeping the SAP system running. Organizations should choose systems that best support business processes, while considering that the workforce of the future has higher standards when it comes to user interfaces and integration. These trends define the future of ERP software. The SAP S/4HANA public Cloud includes the core components of an ERP software, such as finance, logistics, sales, service, and manufacturing and much more. At the same time, it seamlessly integrates with other SAP solutions such as SAP SuccessFactors, SAP Concur, SAP Fieldglass, and SAP Ariba among others to support business processes, for example lead-to-cash, source-to-pay, recruit-to-retire and design-to-operate. It has a harmonized look and feel, consistent security and identity management, and a coordinated lifecycle management among the different components (see Figure 1).
Figure 1: The Intelligent Enterprise: Business Applications
Public versus private cloud edition
SAP has two Cloud offerings: the SAP S/4HANA private and the public Cloud edition. Their comparison is outlined in figure 2. The big difference is that the version, data model and repository of the private edition still follow the lifecycle of the on-premise editions. It is a tailored-to-fit solution which allows customers to keep control and enables them to embrace change at their own pace. The advantage of the public edition is that it runs on industry standards and is built on best practices and continuous innovation.
Figure 2: SAP S/4HANA Cloud, public versus private edition
We believe that in all transformation projects, the public Cloud should be considered before anything else because of these advantages, especially for new customers or greenfield implementations. However, while the public Cloud edition consistently introduces more features with every release, some capabilities available in the private Cloud might not be available in the
public Cloud edition yet. These considerations are covered in the fit-to-standard workshops, an integral part of the SAP Activate Methodology recommended by SAP and used by Expertum.
Convinced of the capabilities, we follow SAP in their cloud-first strategy. We recommend customers to move away from silo thinking, in which one solution must cover all requirements, and use a standard solution that is always up-to-date with the latest technology and seamlessly integrates with the other SAP Cloud solutions. Get in touch with our team and together we will assess your needs and choose the optimal strategy for your business.
Wondering if SAP S/4HANA cloud public edition would be the right fit for you? Read more about the topic in our previous article here.