S/4HANA: It’s not R/3, and it’s not 1992 either (part II)

(Bloggers note: I was informed yesterday that the proper spelling for SAP’s new suite is S/4HANA. I was also told that a large tech manufacturer with a propensity for suing over IP issues owns a trademark for S4. I just checked my budget for protracted lawsuits and decided to go with S/4. Don’t tell Edward Snowden, he’ll drop me from his Xmas list like a hot potato.)

 

So, smooth sailing for S/4HANA?– Not likely, certainly nothing like the good old days when R/3 was the biggest and the baddest modern, client/server, enterprise software product on the market, marauding through the global economy like a rum-soaked buccaneer.

But if SAP has to create its own tailwind, there’s a few things it can do to fill its sails a bit. Some of this should have been mentioned at the launch, other aspects need to be developed quickly – but all are in the realm of the possible, as well as, IMO, the extremely necessary.

The S/4 HANA Sandbox: SAP chose to forget to mention, not that they weren’t told to, that SAP can load a copy of a customer’s ECC 6.0 production system into the S/4HANA cloud and let the customer run their existing system on S/4HANA in a “try before you buy” mode. This is the best way to overcome the pointless marketing hype about S/4HANA speeds and feeds, not to mention promises of how Fiori changes everything, and just let the software do the talking. I think every customer thinking about S/4HANA should demand this, and should demand it at no charge.

SAP’s risk is pretty much nothing, and everything, with the Sandbox. If reality meets or, dare they hope, exceeds the hype, the deal is done. When and how much still needs to be negotiated, but the why S/4HANA question will be settled. It’s also a great way for SAP to highlight the value-add of its cloud-services capabilities: platform-based cloud services are going to be one of the ways in which all the platform/enterprise software vendors compete, and SAP is going to have to fight it out with Microsoft and the services it’s bundling in Azure, as well as what native-cloud vendors are already doing by default. And if the Sandbox doesn’t make a customer desperate for some S/4HANA, then, well, SAP is toast. (Hey, don’t just take my word for it, Chairman Plattner thinks so too.)

Take care of the DB Migration ROI problem: Okay, maybe not take care of it. But one of the big mistakes SAP can make is to wait until customers reach a contract end-of-life situation, particularly with their DBMS and associated hardware and data center services, before SAP tries to influence the customer’s decision to switch to S/4HANA. Maybe SAP could get a couple thousand new customers a year by just waiting, but that’s assuming that all the other platform/enterprise software competitors will just let these customers roll over to SAP. They won’t, and SAP should assume that by the time the contracts are up for renewal it’s too late.

Instead, SAP should be hard at work making the case for why it’s worthwhile to consider switching now: are there hard and soft cost savings to consider even if it means walking away from a strategic database contract and paying the penalty? Even if there are no real cost-savings, and I’m not expecting there would be in every case, putting some numbers on the table about the value of switching now versus waiting for an Oracle or IBM contract to expire allows SAP to play offense, instead of playing defense. It may be that many companies will be willing to eat some of the cost of running the clock down on their existing contracts if SAP can show them how much better life and business will be with S/4HANA – and that means real numbers, not just platitudes like “100 times” improvements in this, and “250% improvement” in that.

Show the way: The other thing I wish SAP would have done last week is talk explicitly about how customers can get there from here. A roadmap would have been nice, and based on what they were talking about at TechEd Berlin last year, there’s something to say about when the S/4HANA follow-ons to Simple Finance, like Procurement, Manufacturing, Supply Chain, HRMS, etc., will be available.

But more importantly, SAP needs to tell the story about how a customer running ECC 6.0 becomes a customer running S/4HANA. They should approach it like a recipe – take one enhancement pack 7 update, add a database migration service, sprinkle in some Fiori upgrades to ECC 6.0, do a HANA RDS implementation, switch to Simple Finance, bake until well-done. Then start on the second course – be it manufacturing, HR, whatever. And along the way answer some tough questions: What’s the process? What’s the complexity? What tools and services will SAP provide? How long will it take? What’s the cost? What’s the value? If SAP wants to get S/4HANA on the strategic planning agenda, it needs to give strategic planners something to go on.

Of course, all of this advice will really just allow SAP to begin to put its best foot forward in a complex and highly competitive market. It really isn’t 1992 anymore, nor is it 1999 (Y2K time) either. SAP has some great assets, like a helluva fast DBMS and the tools and services to make it easy to use. SAP is also the most successful purveyor of software that embodies business processes in the market today, and that position can only be good for S/4HANA.

But as so much of what S/4HANA can do isn’t available in packaged software, not from SAP or anyone else, SAP has to create an amazing, partner-lead innovation wave, based on S/4HANA, that will close the manifold last-mile gaps that are widening all over the business world. That means SAP has to partner with ISVs and VARs in a way it never has before (hint: partnering should be for the benefit of the partner and the customer, not just the vendor). It has to take ownership of the success of the customer, not just act as though the job is done once the license deal is signed (a situation One Service is intended to address). And SAP has to stop talking about how cool HANA is and start talking about how cool businesses that run S/4HANA are.

Because perhaps the biggest difference between 2015 and 1992 is that the buyer is orders of magnitude more savvy, more jaded, and more desperate than ever before. Customers need the kind of change that S/4HANA is proposing – real time functionality with blazingly fast support for existing and new business processes, all running in whatever cloud configuration the customer wants. But customers aren’t going to just write a check to SAP because they say so. SAP has to show why it it’s the biggest and baddest, and then go out and prove it.

Because if SAP can’t get the customers to ultimately lead the charge – not the SIs, not market forces, not the pain of legacy systems – it’s not clear who, if anyone, will be around in 2035 to write the next chapter.

One thought on “S/4HANA: It’s not R/3, and it’s not 1992 either (part II)

  1. About migration, Sven Denecken said a few days ago:
    “First, the user gets a current enhancement package. Then, in a second step, the database will be migrated and finally the user gets an Exchange add-on. We offer here a service where the user passes us the complete system and we’ll convert the legacy system in our data center. He can realize the transition with us or he can also take a look at individual transition scenarios. Optionally, he can outsource running of S/4 HANA to SAP.”
    (translated, http://www.silicon.de/41608868/echtzeit-statt-rueckspiegel-sap-s4hana-ist-anders/)

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