Many people in charge are asking the question whether they should shift essential platforms such as Enterprise Resource Planning (ERP) to the cloud. In this interview, SAP expert Marcel Deichmann of the ERP specialist valantic explains what is behind ERP systems in the cloud and for which users solutions such as the SAP S/4HANA cloud are best suited.
Fundamentally: what is SAP S/4HANA Cloud and how does it differ from the “usual” SAP S/4HANA?
First and foremost: SAP S/4HANA Cloud is not just SAP S/4HANA in the cloud. S/4HANA Cloud offers the customer a turnkey SAP system. This is also called “Software as a Service” (SaaS). In contrast to an on-premise variant, customer do not have to concern themselves with technical issues such as hardware, installations, activations, updates, etc. SAP does this for the customer. Therefore, companies can begin with implementation and use right away. Thanks to the use of SAP best practices, there are already completely configured business processes. This way, there are various industry-specific sample companies available; these make getting started in the cloud much easier. In summary, SAP S/4HANA represents an innovative approach: Uses can concentrate on their core competencies and do not have to worry about the operation and maintenance of the ERP system.
For which users is SAP S/4HANA suitable?
We have determined that companies whose business processes are close to the standard and those who are prepared to adapt their processes to the standard can profit especially from the cloud, for the cloud provides the most added value for these companies. However, in principle, all companies that want to profit from Software as a Service can use the cloud, even companies with a greater need to customize. Here, the cloud offers nearly as many possibilities as an on-premise system. And operating the S/4HANA Cloud system can be up to 35% less expensive than on-premise operation.
It’s a well-known fact that ERP systems are not just black and white. What do you think of the hybrid approach, that is, the simultaneous use of an on-premise system and S/4HANA Cloud?
As I just said, this approach is especially interesting for companies with many branch offices. Frequently the corporate processes at the headquarters are very complex, which is why a mixture of on-premise and S/4HANA Cloud systems is a good choice there. On the other hand, branch offices usually have less complex processes, so they’re perfect for the use of cloud-based ERP systems such as the SAP S/4HANA Cloud. Furthermore, with this scenario, the developments made for the company’s headquarters do not get in the way of the branch offices’ processes. Unfortunately, it is frequently the case that the SAP standard can’t be used in a branch office because a development from the company’s central office can’t be used there.
Long projects and extremely expensive: These are the preconceptions that SAP has to work against. How do you respond to critics?
For companies with close-to-standard processes, I can rebut the preconception of long projects very easily; an implementation is possible in four to 25 weeks. In comparison to this, projects in the on-premise sector frequently last several years. The shorter the implementation, the lower the start-up costs – that’s only logical. Furthermore, the return on investment (ROI) for SAP S/4HANA Cloud is generally achieved much faster. Companies that rely on ERP as software as a service, and this includes SAP S/4HANA Cloud, report faster value creation, greater savings, and efficiency increases.