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Many roads lead SAP into the cloud, but which one is the right one?

GAMBIT IOT Grafik

SAP HANA Enterprise Cloud, S/4HANA Cloud, SAP Cloud Platform – you can get lost in the confusion of new SAP technologies.

The introduction of SAP HANA in 2010 was, after the leap to client-server technology with R/3, SAP’s biggest paradigm shift in product technology to date. As an in-memory computing architecture, SAP HANA enables high-performance processing of large amounts of data in the production system. In addition to the performance gains of up to 90% in individual processes, this also opens the door to digital transformation topics such as predictive analytics or machine learning. But SAP HANA is also the solution basis for non-digital topics such as reporting, which enables better management decisions on an always up-to-date, real-time fact basis.

In recent years, SAP has increasingly linked HANA database technology to its ERP software (and other SAP products such as SRM, CRM and SCM). Initially only offered as an alternative to existing databases (“AnyDB”), in-memory technology is now firmly connected to SAP Business Suite 4. The name of the new, integrated product: SAP Business Suite 4 SAP HANA, or SAP S/4HANA for short. SAP has redeveloped and streamlined its applications to take full advantage of the performance benefits of in-memory technology. SAP S/4HANA is thus an ERP business suite that is optimally prepared for operation in a digital, networked world.

A second central theme of SAP’s product strategy is the cloud. According to Bernd Leukert, Chief Technology Officer, Enterprise Resource Planning (ERP) is the future in the cloud. With this operating model, companies should be able to reduce the purchase costs for ERP systems, shorten implementation times and be able to adapt their systems to the new requirements and possibilities through automated and centralized updates.

ERP goes into the Cloud

For many years, SAP has offered products for the cloud – a diverse portfolio of so-called line-of-business solutions for specific topics. Cloud-based SAP Business ByDesign for small businesses was one of the first products in this area. SAP has now expanded its cloud strategy and accelerated the availability of cloud-based applications through acquisitions of companies such as SuccessFactors, Hybris, or Ariba – each one of the market leaders in its field.

Because HANA in-memory technology has redefined the market for enterprise software, as Hasso Plattner put it, it was only logical for SAP to make it available in the cloud. In spring 2013, the SAP Enterprise Cloud (SEC, formerly SAP HANA Enterprise Cloud, HEC) was presented. The enormous performance potential of in-memory computing is to be combined with the potential of cloud products. The main advantage of the SAP Enterprise Cloud (and SAP HANA in general) is that you can process transactional and analytical data with much higher speed than with traditional sequential database technology. SAP Enterprise Cloud provides SAP Business Suite 4 as well as individual and standard applications in a private cloud based on HANA technology. An SAP NetWeaver Business Warehouse is also provided on a single instance of the HANA in-memory database. The target group of the SEC are companies that use SAP HANA but do not want or cannot install it on-premise, i.e. on their own servers.

By using SEC and SAP’s Application Management Services, IT staff are relieved of many of the day-to-day tasks of an on-premise installation; they can therefore concentrate on value-adding activities such as the improvement of business processes or the harmonization of master data through master data governance.

Freedom of choise: on-premise vs. cloud

However, SAP gives users further options when operating S/4HANA. In addition to the familiar on-premise variant and the SAP Enterprise Cloud (SEC) described above, the system can also operate as a complete S/4HANA from the SAP Cloud Platform (SCP), whereby the SCP is a public cloud (see also Table 1).

On-premise currently still offers the widest range of functions and can be customized to the wishes of the company (with all advantages and disadvantages).

Those who run S/4HANA on the SAP Enterprise Cloud, on the other hand, no longer have to worry about hosting and especially security. These are then the responsibility of SAP. However, as with an on-premise installation, he can make adjustments and modifications to the software completely independently of SAP.

Excursus: SAP Enterprise Cloud (SEC) vs. SAP Cloud Platform (SCP)

The SAP Enterprise Cloud is easily confused with the SAP Cloud Platform. The former can be presented as “Infrastructure-as-a-Service plus Managed Services for SAP software”. This means that customers can also run their own SAP HANA applications (Z programs) and software for selected third-party applications approved by SAP. SCP, on the other hand, is a platform-as-a-service offering that enables customers and partners to extend existing applications (cloud or on-premise applications) and create applications. It was first presented in 2012, was called SAP HANA Cloud Platform (HCP) in between and, with new extensions and functions, was renamed to SCP again at the Mobile World Congress 2017.

Everything from the cloud as a complete SaaS solution: S/4HANA Cloud

The third option is the S/4HANA Cloud and thus the complete purchase of the Business Suite as “Software as a Service” (SaaS). The entire technology will be moved to the cloud, SAP will take care of server provision, operation and possible system updates. SAP S/4HANA Cloud provides quarterly updates and extended industry-specific core functions. The operational effort of customers to operate an ERP landscape is thus reduced many times over.

Since the user has no hardware of his own with this public cloud variant, however, there is also limited scope for modifications to the SAP code. According to SAP, however, you should be able to implement your own enhancements and applications. The model is therefore best suited for companies whose core business consists of standardized processes, for example in sales, warehousing or controlling.

SAP’s external presentation focuses in particular on the SAP S/4HANA Cloud product, which was launched in February 2017. As a provider of S/4HANA Cloud licenses, GAMBIT can respond individually to the requirements regarding a future-proof alignment of its customers’ IT landscape and offer on-premise, public/private cloud or hybrid solutions from a single source.

The current version 1709 of the S/4HANA Cloud is an intelligent SaaS-based ERP solution and can be fully integrated with SAP SuccessFactors, SAP Ariba, SAP Hybris and SAP Fieldglass.

In the further development of SAP S/4HANA Cloud, SAP has concentrated on areas such as finance and procurement, where manual routine activities have been automated. Financial planning, budgeting and forecasting processes have been simplified through integration with SAP Analytics Cloud for Planning.

SAP S/4HANA Cloud – Private Options bridges the gap to hybrid IT

If this is not enough, SAP S/4HANA Cloud can also be used in a private option. Standardization, scalability and total cost of ownership of the public cloud are combined with the functionality of the on-premise solution, but still hosted as a private cloud in the SAP SEC. This builds a bridge to the on-premise system. This works because all versions of SAP S/4HANA are based on the same code line. Each function once provided can be easily transferred to another version at any time. A typical case would be if a company operates its SAP system on-premise, transfers the processes of its subsidiary(s) to the SAP S/4HANA cloud and links the two worlds together.

Such a hybrid ERP landscape can be set up with little effort. Companies can gradually move their ERP processes to the cloud without affecting the operation of their existing IT landscape. SAP is helping its customers here by allowing them to synergetically combine the advantages of the cloud with their established on-premise systems.

In practice, a company often operates its core business/processes on-premise to set itself apart from the competition. This provides the greatest possible flexibility or configuration option for adapting the SAP business logic to your own requirements. In areas where high standardization is more important, the use of SAP S/4HANA Cloud, which already provides specific best practices and maps the most important scenarios with which companies can conduct their business in the cloud, makes sense: Finance and accounting, controlling, procurement, sales, production, maintenance, project system and product lifecycle management. In addition, the above-mentioned integrations with SAP SuccessFactors Employee Central, SAP Ariba Network, SAP hybris Marketing, SAP Fieldglass and SAP JAM.

Despite these manifold possibilities to design the SAP IT landscape, it can be seen that the SAP user community is not yet following the product strategy in the direction of HANA and Cloud so quickly. This explains the Walldorf concessions in the form of private option and hybrid operation. And the decision to guarantee the on-premise operation of its personal solutions by 2030 is also an indication that the customer base for cloud-based solutions is still reserved.

Nevertheless, the cloud is coming. The reason alone is that SAP focuses its product developments on the cloud. For the user base, this means that it is best to prepare now to jump onto the cloud train at the right time and be digitally ready.