SAP S/4HANA Cloud

What are the advantages of SAP S/4HANA Cloud?

SAP S/4HANA Cloud offers numerous advantages, especially for small- and medium-sized companies. For example, many technical or financial requirements that would be necessary to implement a classic on-premise solution are eliminated. But what exactly speaks for the use of SAP cloud ERP software?

Flexible subscription

With the subscription model, a monthly fee is paid for using the SAP cloud platform. This is linked to the number of users. Users can add or remove users from the subscription as required. However, additional maintenance costs are never incurred.

Fast implementation

In contrast to an on-premise solution, SAP S/4HANA Cloud can be implemented faster. The pre-built platform is provided to the user in a standard version, so no custom programming is required. In addition, the user-friendly user interface requires no prior knowledge.

Increase efficiency

SAP best practices enable users to adopt standardized, proven processes and procedures for resource management. This simplifies and accelerates analysis and business processes. Industry-specific functions are also available in the form of individual roadmaps.

Maintenance and support

Thanks to the SAP cloud platform, customers do not have to worry about server capacity or software maintenance. The development and support of new products and services are also possible with little effort thanks to integrated analysis tools and configuration, pricing, and offering functions.

Fast innovation cycle

Flexibility and adaptability are particularly important for customers in rapidly growing companies. The SAP S/4HANA Cloud offers a quarterly innovation cycle. Users can benefit from new innovations such as machine learning or predictive analytics as they become available.

The main pillars of SAP S/4HANA Cloud

The intelligent ERP system is based on three innovative technologies. These were developed by SAP and enabled SAP S/4HANA Cloud to achieve company-wide process improvement and a seamless digital transition. The three pillars at a glance:

SAP Digital Assistant

SAP S/4Hana Cloud provides users with a virtual assistant, SAP CoPilot. By using artificial intelligence, the assistant can adapt to the user and their role based on contextualized information. The natural interaction via voice and text commands facilitates the use of ERP applications and functions. 

SAP Machine Learning

The integrated machine learning in SAP S/4HANA Cloud enables users to automate tasks. This is particularly useful when tasks are recurring and errors could occur due to manual execution. In addition, automation means increased time savings. 

SAP predictive analytics

Thanks to SAP Predictive Analytics in SAP S/4HANA Cloud, informed decisions can be made quickly. In fact, the analysis tool can predict the results of certain actions by taking into account all data available to it. In the form of individual applications, the tool can be adapted to the user's needs and application areas.

What are the biggest challenges of the SAP S/4Hana Cloud?

In 2018, LeanIX and PwC conducted a study in which various companies were asked about the SAP S/4HANA ERP system. 65 percent of those surveyed said that migration to SAP S/4HANA was an important part of their digital development strategy.

The ERP system is therefore not seen as a mere data management tool, but as a driving force behind the digital transformation, which can be used to completely re-align company models and processes.

However, the transition to S/4HANA involves some challenges. Since SAP plans to discontinue mainstream maintenance for its current ERP solutions from 2027, companies must prepare for migration to S/4HANA now.

According to the study, the biggest challenges are existing, complex IT landscapes, unclean master data, and proprietary developments in ABAP that are not compatible with S/4HANA. The respondents also see inconsistent business processes that need to be harmonized as a major hurdle. Furthermore, there are concerns about the necessary expertise and stakeholder support.

The study also found that most companies do not yet feel ready for the SAP Cloud Platform. 44 percent of respondents said they would prefer an on-premise solution but wanted to prepare for a migration to the cloud. There are several reasons for this reluctance: On the one hand, they have already invested in an expensive hardware and their own IT infrastructure. On the other hand, SAP offers a slimmed-down, smaller range of functions in its cloud version.

In addition, many companies already use other cloud solutions for various business areas. Integrating these into a new ERP cloud system represents a further challenge.

How do you migrate to SAP S/4HANA Cloud?

Companies have two options when migrating to SAP S/4HANA. Enterprise architects differentiate here between the greenfield and the brownfield approach. In the greenfield strategy, the SAP system is implemented from scratch. Although all data is transferred in a cleansed form, processes must be re-built and adjusted.

When switching to the S/4HANA Cloud variant, companies cannot avoid this effort because the entire system landscape has to be reworked. In the brownfield strategy, which is often used in the on-premise solution, a system conversion takes place. This means that current processes are adopted and optimized.

Migration to the SAP S/4HANA Cloud is a multi-step process and requires good planning. In addition to the SAP S/4HANA Migration Cockpit tool, there are useful enterprise architecture (EA) tools that simplify the transition to digitalized management and provide a transformation roadmap. According to the study, 73 percent of those surveyed are already taking advantage of the benefits of business capability mapping.

This concept is used by enterprise architects and serves as a bridge between strategy and implementation in IT. Professional enterprise architecture solutions such as LeanIX integrate seamlessly with SAP Solution Manager, so that the current status, progress, and target architecture are always kept in view.

Conclusion

Even though the migration to the S/4HANA Cloud is challenging, the SAP Cloud Platform offers companies the opportunity to implement a unified and efficient ERP system that saves costs and effort in the long run.

In contrast to the on-premise solution, customers with the S/4HANA Cloud variant relieve their own server and do not have to worry about software maintenance. They also benefit from fast data processing, the latest innovations, and flexible pricing models.

To make the transition to S/4HANA Cloud or On-Premise as smooth and transparent as possible, appropriate enterprise architecture tools with S/4HANA and a team of SAP experts are required: These divide migration into different phases and ensure that a company keeps track of its system restructuring.