Published 8 October 2018 – ID G00363664
From the report:
By 2020, at least 35% of SAP ERP clients will be running one or more functional modules of SAP S/4HANA.
Gartner predicts that there will be a tsunami of S/4HANA adoption between 2021 and 2023, which could drive up the implementation cost as skilled resources are scarce. SAP customers may be at risk if they recruit less-experienced talent, as this could result in unsuccessful implementation programs.
It is critical to understand that, even if your company decides not to adopt S/4HANA immediately, you still have to consider the changes imminent with S/4HANA — including for all your current work on your existing ECC landscape — in order to not add further technical debt. For example, continuing to add customizations to your current ECC landscape will further complicate your migration approach and certainly increase project costs.
All existing SAP Business Suite users need to analyze the impact of S/4HANA on their ERP strategies and SAP investments. Gartner’s advice is do not wait and perform this analysis now. Many application leaders are tempted to ignore SAP S/4HANA “until it is mature” because understanding its impact is complex. This is the wrong approach because any additional investments made in current SAP deployments will be impacted by future plans regarding S/4HANA. Application leaders must ensure that the business has a clear strategic direction agreed for S/4HANA adoption roadmap before making any further investments in its current SAP ERP landscape.
Gartner has defined six categories of potential benefits that S/4HANA can deliver, based on our own analysis and growing evidence from reference customers:
- Performance improvements: The IMC (in-memory computing) platform of S/4HANA means that existing application processes should run faster and, in some cases, the performance improvements can be dramatic, with long-running process execution reduced from many hours to minutes, or even seconds.
- Real-time analytics: The combination of IMC technology and the hybrid transaction/analytical processing (HTAP) architecture of S/4HANA means that analytics can be performed in real time on transaction data (instead of extracting data to a separate instance of SAP Business Warehouse or other data warehouse platform). Also, the processing power of the IMC platform means that forecasts and simulations can be run in real time against large volumes of transaction data, something that is not possible with traditional relational architectures. The HANA IMDBMS technology includes predictive analytic algorithms (the Predictive Analytics Library), which are being leveraged by the S/4HANA product developers.
- Impact of the simplified architecture and associated Fiori applications: The architectural changes in S/4HANA both simplify the data schema and, in some areas, change the way existing functionality is used. For example, the new Universal Journal table in financials removes the need for reconciliation between the various ledgers in SAP financials, and should simplify month-end financial close processes. It also enables profitability analysis at lower levels of granularity through new and customizable derivation rules for profitability characteristics. Each release of S/4HANA delivers more architectural changes (for example, 1511 and 1610 have delivered real-time inventory valuation and accelerated material requirements planning).
S/4HANA includes Fiori applications that only work with the simplified architecture. These include transaction processing applications, fact sheets (these display KPI tiles and allow further drill-down) and packaged analytics applications. These are mostly role-based and could deliver improvements in how users process transactions and access information. Each release of S/4HANA includes new Fiori applications of all types.
- Benefits of new S/4HANA functionality: SAP has already released several new functional capabilities that are unique to S/4HANA; for example, SAP Cash Management, Central Finance (see Note 1) and a version of SAP Business Planning and Consolidation that is optimized for S/4HANA. So far, these new capabilities have been focused on the finance domain, but it is likely that SAP will release new solutions that impact other domains in the future. Any assessment of potential S/4HANA benefits should include the impact of these new capabilities, but they may require additional licenses, so it is important to check licensing requirements with SAP.
- IT benefits: There will be a reduction in database size because of the simplified data architecture. There may also be some simplification of the IT landscape (for example, the need for SAP Business Warehouse may be reduced or even eliminated through the use of real-time analytics).
- Potential for enabling new ways of doing business: The combination of performance improvements, real-time analytics, the simplified architecture and new functionality being delivered in S/4HANA could enable significant process innovation. For example, running complex “time-bound” processes in minutes or seconds rather than hours, coupled with real-time predictive simulation and forecasting capabilities, means S/4HANA could become a real-time business management system rather than a transaction-processing system based on daily, weekly and monthly cycles. However, this may be challenging because business leaders will have to rethink and change established ways of working to realize this potential.