Tomasz Zajda - Fotolia
A few years ago, running an ERP system on a public cloud infrastructure was an unlikely choice. Public cloud deployment options were limited, and most organizations were reluctant to put critical business data in the cloud.
This is changing, however, as public cloud infrastructure options expand and reasons for running ERP on the public cloud increasingly outweigh doubts about doing so.
SAP customers have become very comfortable over the last several years at running line-of-business functions, like procurement, human capital management and CRM, as cloud applications, and they are becoming more comfortable with the idea of putting ERP in the cloud, according to Darren Roos, president of SAP S/4HANA Cloud.
All of the benefits of running those applications via public cloud infrastructure -- the ability to scale, flexibility, lower TCO, faster pace of innovation, maintenance handled by the vendor rather than the company, and improved security and compliance -- hold just as true for ERP, Roos said.
"There's no reason why any workload, be it an application workload or an infrastructure workload, shouldn't be consumed in the public cloud in the future for all of those reasons," he said. "If you look at the last 10 years, every prediction [about public cloud] has proven to be wrong, and they've always been overly conservative because we see that the pace of the acceleration to the public cloud is accelerating."
Make sure you read the fine print
SAP appears to be approaching public cloud infrastructure in a prudent way, said Jon Reed, co-founder of Diginomica.com.
"A few years ago, I was concerned that SAP was going to move into the cloud infrastructure business, which I did not advise," Reed said. "But they have made a number of shifts since then which point toward a public cloud-agnostic strategy, at least in terms of allowing customers to run SAP applications on the big three public cloud providers: Azure, Google and AWS [Amazon Web Services]."
However, Reed cautioned that customers should always look closely at the fine print, and should make sure they know exactly what they're getting before moving to the public cloud.
"It's a mistake to assume that all SAP products can run on all three public clouds," Reed said. "That's where a customer should seek independent advice, as well as advice from SAP, on how their product options line up with their cloud or hosting preferences.
"It's also important to read the fine print and make sure that the option you want is generally available because, in some cases, you may need to be in a beta program or have to access certain cloud services via a partner."
Nimbl jumps into the cloud
SAP partner and customer Nimbl LLC is one company that has jumped into the public cloud infrastructure future with both feet. The Denver-based firm, which provides application management and systems integration services, was an early adopter of S/4HANA Cloud, according to Michael Jolton, vice president of service delivery at Nimbl.
"About a year ago, we saw S/4HANA Cloud as the future of SAP, and we wanted to get much more heavily involved with it," Jolton said. "We became an early adopter and got to implement and use the system ourselves as an introduction to it and a way to get more proficient, and then, coincidently, as a way to improve our own financial operations."
Nimbl is a small but fast-growing company, Jolton explained, and was outgrowing QuickBooks.
"It couldn't give us profitability reporting that we needed to see. It couldn't give us the details on our managerial accounting reporting that we wanted to be able to focus our energies in the right places," he said. "It was keeping the books, and that was fine, but we weren't getting any value add out of it."
Public cloud makes running S/4HANA possible
The cloud made it possible for Nimbl to implement S/4HANA in a way that would not have been possible otherwise.
"One main benefit is that we were able to very quickly move to a world-class accounting system, really in a matter of weeks, and take advantage of the controls it provides and the reporting it provides very quickly," Jolton said. "The other thing is that our chart of accounts wasn't as structured, and certainly wasn't using best practices. And by adapting the SAP S/4HANA best practices chart of accounts, we added a great deal of structure and improvement to our ability to report."
Change the customization mindset before going to the cloud
Running a cloud-based ERP system comes with some tradeoffs that companies need to understand before moving to the cloud, especially for those who are coming from an on-premises system. Cloud systems are typically quicker to implement and manage in some ways, but it's not advisable to customize them as extensively as you would on-premises systems, Jolton said.
"Our whole approach was to stay within the best practices and not try to challenge the product, but change Nimbl to work within the products' best practices," he explained. "There's lots of room to adapt it to your business based on how you set up your master data, and if you need extensions for functionality that isn't there. Otherwise, we strongly recommend [you] don't fight the system; if you're fighting it too much, maybe it's not the right system for you."
Organizations that have been running ERP Central Component on premises for years may have to face change management issues around customizations, but they should find that working with the cloud system as it's configured is the way to go with S/4HANA Cloud.
"They're used to changing things around in the software to work the way they want it to work. And, in many cases, we found that they would be better off if they stay within the boundaries of the system," Jolton said. "There are ways to do things without making customizations, but because they could make the customizations and they had that freedom, they would do that. So, in this case, they have to change their mindset."
Implementation issues resolved quickly with support team help
The implementation of S/4HANA Cloud went smoothly for the most part, Jolton said, other than a few technical issues that they dealt with, aided quickly by SAP support teams.
"Being an early adopter, we went in with our eyes open. So we didn't expect everything to be perfect and to run 100% perfectly the first time," Jolton said. "So I can't really say we were ever surprised about anything.
"We had a few hiccups along the way, but SAP also provided us with a customer engagement team that was available to us whenever we had a question or came up against something that didn't make sense so we wouldn't spin our wheels for a day; we would maybe spin our wheels for an hour [before the problem was resolved]."
Nimbl has only implemented S/4HANA Finance so far, but is looking forward to putting more operations in the cloud, Jolton said.
"Our hope is to eventually get all of our project operations, as well as our services operations to the cloud," he said. "Certainly we'd like to hand over the project services piece to S/4HANA cloud."
Discover if public cloud is really the most cost-effective option for enterprises
Read how SAP Business Planning and Consolidation for BW/4HANA can simplify enterprise financial planning
For some, cloud is not all they hoped it would be, and they are going hybrid