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Does SAP S/4HANA make Business Suite obsolete?

SAP has made it clear S/4HANA is Business Suite's future, but that doesn't mean the older ERP platform will go away anytime soon – or that the migration path is clear.

The future of SAP's popular Business Suite seems straightforward: Business Suite's future is SAP S/4HANA. That's putting it bluntly, but it should not be a surprise. After several years of HANA-related rollouts, SAP has nailed down the S/4HANA brand: For example, Simple Finance is now SAP S/4HANA Finance.

Moving forward, SAP's best new software will continue to coalesce around the S/4HANA suite, much in the same way Business Suite grew in its heyday, evolving into a set of interconnected applications.

And yet heyday isn't exactly a fair term. SAP claims to have close to 35,000 Business Suite customers. Despite those numbers, the vendor wants the world to believe that SAP S/4HANA is the next-generation business suite, figuratively and literally.

SAP S/4HANA represents new technology that is nimble enough to handle today's digital economy while filling the role as the next version of Business Suite -- the next logical upgrade -- despite being the "version" that little resembles its parent with its reduced data footprint, obliteration of third-party databases, speedier analytics, changed business processes and cloud-based customizations.

But S/4HANA isn't exactly a simple upgrade.

"I think what you'll see from the Business Suite customer base is that the majority are not ready to move to S/4HANA," said Paul Hamerman, vice president and principal analyst at Forrester Research. "They want to see more proof points at scale. They want more clarity in the roadmap. They have to figure out how to get there and what it will cost, and they need to understand the benefits of S/4HANA.

"Moving to S/4HANA is a heavy undertaking for any company that spent a lot of time and effort to roll out ECC 6, and now they have to make the investment to migrate to a new version of the product on a different platform? It will take several years to get 50% of the base to migrate -- and I think that would be a good outcome," Hamerman added.

SAP S/4HANA surges in fourth quarter

By the fall of 2015, SAP S/4HANA had garnered 1,300 customers, but in the fourth quarter, sales rocketed, ending the year with 2,700 customers. That's impressive, no doubt, but it's still a mere shadow -- only 7-8% -- of the Business Suite customer base. A good many of these users are Business Suite upgraders, but SAP isn't revealing the exact percentage.

To deliver what the Business Suite customer wants for innovation, the customer will have to get to S/4HANA.
Joshua Greenbaumprincipal, Enterprise Applications Consulting

So, is SAP S/4HANA the elephant in the room? Or is Business Suite the elephant?

"SAP is very respectful of the investments that customers have made with SAP," said Uwe Grigoleit, SAP global head of business development for Business Suite on HANA and HANA applications. Consequently, SAP is offering a long promise of support, saying it will offer its mainstream maintenance and support programs for Business Suite owners to 2025, while adding some enhancements along the way.

"We have just released Enhancement Package 8 for SAP Business Suite," Grigoleit said. "Moving forward, we will also continue to work with customers on further enhancements of the Business Suite in a program we are calling Customer Connect, which means when customers are approaching SAP and requesting some additional development, we then will be facilitating this development and deciding if we want to bring it into standard," he explained. "Our Customer Connect is available for Business Suite and we will continue this."

On the other hand, most of SAP's new software enhancements will only be possible through the in-memory database architecture of HANA. "It is clear that our innovations of the digital core are moving into S/4HANA," Grigoleit said.

SAP S/4HANA migration challenge affects Business Suite's future

"The risk for SAP is when customers look at their Business Suite portfolios and say, 'I'm going to be steady at the helm with Business Suite, and the real innovative stuff that's going to help me out of a quandary or disruption, I'm going to get that from somewhere else -- from Salesforce, Workday or Microsoft or wherever,'" said Joshua Greenbaum, principal at Enterprise Applications Consulting.

"Obviously, SAP wants them to say, 'I'm going to get that from SAP.' Except getting it from SAP absolutely means the customer is going to have to end up on S/4HANA at some point -- and that's SAP's dilemma. To deliver what the Business Suite customer wants for innovation, the customer will have to get to S/4HANA," he said.

The future of Business Suite, then, may depend on how gently it will fade into the night.

[Customers] are seeing the move to S/4HANA can be less disruptive than anticipated.
Uwe Grigoleitglobal head of business development, SAP

One of the keys to the transition, Hamerman said, is that SAP could benefit from getting more reference customers -- success stories that show SAP S/4HANA can scale.

"Then, from a technical standpoint, part of the migration challenge is being on the very latest release of ECC 6 before you can then begin the migration journey, to migrate the data to get up on HANA," Hamerman said.

After the technical challenge, "S/4HANA introduces a significant user experience change with Fiori," Hamerman said, noting that pervasive new user interfaces present significant training and acceptance issues.

Meanwhile, SAP has been working to make the move to S/4HANA as easy as possible. Part of that effort is selling the business case to upper management while downplaying the migration challenge.

Grigoleit said customers are seeing that SAP S/4HANA offers the agility and flexibility they want, adding that SAP did not build the new ERP platform from scratch.

"By building S/4HANA from the technical and semantical infrastructure of our ERP system, this allows our customers to move to S/4HANA without having to do a reimplementation," he said. "They are seeing the move to S/4HANA can be less disruptive than anticipated."

But what about customizations?

"Our Business Suite customers can load their custom code into an analyzer system and the system will come up with a list of the customizations that will be affected by the move," Grigoleit said. "We have also invested in tools that are helping our customers to adapt or optimize their own transactions, and we have built a lot of compatibility elements into our new solution that guarantee custom code will work."

He said S/4HANA's simplified data model eliminates the need for the aggregated index tables on which most customizations are based. To address concerns that customizations won't work without the index tables, SAP created HANA Compatibility Views. "For every table we are making obsolete, we have a dynamic view that is automatically created by the HANA platform in case a program is asking for that table," he said. "All of the custom programs that are asking for such a table will still work."

The next major challenge for Business Suite owners, Greenbaum said, is knowing when S/4HANA processes are as functionally complete as their Business Suite predecessors.

"If you're a large enterprise running Business Suite today, you're not going to be able to replicate everything you're doing between the two systems," he said. "There is definitely functionality that's not available yet on S/4HANA and that compels companies to take a cautious approach."

Next Steps

Understand the S/4HANA roadmap

Decide when to upgrade to S/4HANA

Get more expert advice on migrating to S/4HANA

Read how Swiss Property enables its innovative business model with S/4HANA

This was last published in March 2016

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