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SAP VP explains why early S/4HANA migration is mostly on-premises

In a Q&A, Robert Vetter talks about overall S/4HANA migration trends, how legacy business users are reacting to the platform and where S/4HANA is going in the future.

When SAP introduced S/4HANA a year and a half ago, users were skeptical. The S/4HANA migration path seemed anything but simple, and the functionality didn't seem worth the hassle of upgrading. However, earlier this year, SAP provided more clarity on the S/4HANA roadmap, and the reactions of users polled at Sapphire 2016 were generally positive.

SAP is now seeing more adoption of S/4HANA, and small to medium-sized enterprise (SME) customers are included in those S/4HANA migration numbers. met with Robert Vetter, senior vice president of global partner operations and solution portfolio management, at last month's SME Summit at SAP's new Hudson Yards offices in New York to discuss progress on the S/4HANA migration, user adoption rates and where the software is going in the future.

Where does S/4HANA stand in terms of adoption?

Robert Vetter: Selling [SAP S/4HANA] is going extremely well. We now have close to 4,200 customers on the global level overall. We have, by the end of the year, 700 customers going live. It's a complete rebuild of the application. It's a simplification of the data model. It [has the] user experience with Fiori involved. There is functionality coming into the ERP product from other products, so it's a lot. So based on this, we're pretty happy.

What are you seeing in S/4HANA migration among legacy businesses?

Vetter: [For] what we call install base customers, or existing customers, we see ... about 50% new customers and 50% existing customers. It [is going] well, but we have tens of thousands of existing customers, and we need a few years to migrate over to S/4 standards.

But, with Fiori and our new consumer-grade UI, it's been a much easier journey to move them over. It's so easy to use, it's so intuitive and it has built-in analytics. It has taken the solution from a transactional support system to a decision support system. You're able to do transactions, analytics and social networking -- everything -- in this one front end, this consumer-grade UI which we call Fiori.

What are you seeing with on-premises versus cloud adoption?

Vetter: S/4HANA is, for on-premises, very mature and mass scaled. In the cloud, we just started a few months ago. We have about 20 customers now.

SAP senior VP Robert VetterRobert Vetter

With S/4, it's one platform. We can expose the functionality and the user experience for on-premises and cloud. But in the cloud, everything needs to be super simple because of the access to the system. We have to develop cloud-first from the user experience and simplification and transfer that to on-premises. In the cloud, every three months, we have a new update, so it's going fast. On-premises, we have a yearly innovation cycle with yearly updates.

As S/4 continues to mature, what can customers expect to see in the near future?

Vetter: We will obviously have more functionality included with every release. We will cover more and more roles of the user experience. What we [can] do now is make sure the system goes from a decision support system with real-time analytics to a system that recommends what you [should] do and provides you with options and solutions to solve a specific business problem.

The next step that we're already thinking about is included machine learning: intelligent machines resolving complex business problems.

If you're working in the procurement department, sales, [are] a quality manager in the warehouse or responsible for cash management, those are roles. We're looking to optimize more roles for digital business. These have different requirements that [need] a lot of analytical information for decision support. We're having all the roles covered in a company, but it's an ongoing exercise.

What other developments are happening with S/4HANA?

Vetter: Our native integration with all of our cloud line-of-business products to S/4, end to end. S/4 is the digital core, and then the outside business solutions [connect].

What else can you tell me?

Vetter: [When we] grow so fast, the job we need to get done is really to increase channel capacity. What we can do is make existing partners more efficient. We can make investments into more resources, and we can go into partner acquisition and look for new partners. To go to market, that's what we need to do -- build more capacity.

Next Steps

Read an S/4HANA upgrade case study

Learn why Sabre is moving to S/4HANA

Use SAP Activate to implement S/4HANA

Dig Deeper on SAP S4HANA on premise