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In what it said was its biggest product announcement in 23 years, SAP today rolled out the next generation of its ERP platform. Called SAP Business Suite 4 SAP HANA (SAP S/4HANA, for short), the software is SAP's biggest effort so far to deliver on the user-friendly "Run Simple" theme it launched last spring.
In a presentation before industry and financial analysts in New York, SAP CEO Bill McDermott portrayed S/4HANA as a major rewrite of SAP's core ERP technology to run on its HANA in-memory database. "The thing we had to do is reinvent that great core," McDermott said, adding in a press release that "this is an historic day and we believe it marks the beginning of the end for the 20th century IT stack and all the complexity that came with it."
McDermott characterized the new S/4HANA code base as capable of being run in public or managed clouds, or on-premises. "Anything you can do in the cloud you can also do on-premises," he said.
Hasso Plattner, the company's founder and chair of its supervisory board, took the stage to give the technical history. Recalling SAP's evolution from its early 1970s beginnings, Plattner said he once argued at a conference that "if SAP is not able to rewrite the 400 million lines of cloud, they will die." With S/4HANA, he added, "we have a completely new system built on HANA. We have a completely new database, we have a completely new [user interface]," referring to the Fiori UI that is a key part of the Run Simple branding.
Plattner reiterated the benefits of the HANA platform he helped invent, which he said makes S/4HANA unique among ERP offerings "not currently in the same league." HANA eliminates the need for redundant tables, database indices and updates, he said, which allows transactions to run three to seven times faster. "We reduce the data footprint by the factor [of] 10. Think about what that means in cost savings."
Plattner then outlined how S/4HANA will be available in public cloud, managed cloud and on-premises editions. He called the S/4HANA Public Cloud Edition the lead system, with the Multi-tenancy he admitted SAP has often been criticized for lacking. "We have added multi-tenancy to the database," he said. "It's actually not that critical for ERP. It is more for the network applications where we have relatively small communities, but many of them in the same system."
Moving Business Suite to HANA in the public cloud also allows "satellite" application modules such as customer relationship management and supply chain management to run in the same system and exchange data faster than before, according to Plattner. To get the full-blown suite, he said, customers will need S/4HANA Managed Cloud Edition. The first industry-specific cloud versions will target SAP's biggest user bases.
The on-premises edition is the same as the cloud edition, Plattner said, likening it to the approach Salesforce.com uses for its largest customers. "Cloud software can, any time, be ported back to on-premises."
An SAP spokesperson said "S/4HANA is already available on-premises for all industries and regions. Simple Finance is also already available in the cloud and on-premises. For the S/4HANA cloud we will deliver quarterly innovation releases." She differentiated the newly shipping S/4HANA products from a HANA version of Business Suite released in 2013, in which "the applications remained unchanged and primarily optimized to run on SAP HANA in a non-disruptive way for customers. S/4HANA is an entirely new product built on SAP HANA and only HANA. It cannot run on other databases."
Breakdown of new components, migration paths still to come
Industry analysts termed S/4HANA a logical progression in SAP's multi-year effort to move its ERP to the cloud and make HANA essential to more customers' strategies. But they had many questions about when the fully rewritten pieces of Business Suite would become available and what it means for organizations that are heavily invested in older SAP technology.
"A significant part of the strategy with S/4HANA is that it can run as SaaS [software as a service] -- they refer to this as public cloud -- although not exlusively as SaaS," said Paul Hamerman, vice president and principal analyst at Forrester Research, which is based in Cambridge, Mass. "The growth rate for SaaS is accelerating, and SAP wants to be in a position to capitalize on this growth curve with this new offering."
However, because S/4HANA is a different codebase than Business Suite, only fully rewritten components get the touted S/4HANA benefits of real-time analytics, simplified configuration layer and Fiori UI. "The entire suite can already run on HANA, but only the finance piece so far can run with the new UI and configuration layer," Hamerman said, referring to the Simple Finance application released during the Run Simple rollout that is now used at 100 organizations.
Holger Mueller, vice president and principal analyst at San Francisco-based Constellation Research, said S/4HANA has "nice qualities" for a next-generation ERP system, including a compelling UI, new business practices and a self-service setup option. "But SAP needs to do more to explain how this is really new, how it differs from Suite on HANA and how it positions in the marketplace." Mueller added he isn't sure where S/4HANA falls on the continuum between brand new and repositioning of existing assets. "The next briefings and days will need to shed some light," he said.
Current SAP ERP users could have strong feelings about S/4HANA pricing, according to Duncan Jones, a UK-based analyst for Forrester. "SAP wants to present this as a new product that customers will have to buy or rent, irrespective of whether or not they own fully maintained licenses to Business Suite," Jones said. "They haven't answered the main question: 'What is now the point of paying maintenance on my Business Suite licenses?"
Jones said for years SAP has been telling Business Suite customers that part of their maintenance fees helps to fund innovation. "The question to me is, is this the next release of SAP ERP -- that when Business Suite customers are ready to upgrade, they upgrade to S/4HANA?"
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