When Hitachi High-Tech, a Japanese supplier of industrial equipment, transitioned from its legacy SAP enterprise resource planning (ERP) software to the next-generation S/4Hana Cloud, the company deliberately adopted a “clean core” implementation strategy.
That means leveraging out-of-the-box ERP capabilities in S/4Hana to support business processes such as sales and manufacturing while minimising customisations and only developing necessary add-ons using the SAP Business Technology Platform (BTP), according to Takuya Sakai, general manager of Hitachi High-Tech’s digital transformation business group.
In fact, of the 9,000 add-ons Hitachi High-Tech had previously developed for its legacy SAP ECC 6 system, the company has built less than 600 add-ons related to business functions, user interfaces and reports for S/4 Hana Cloud with BTP.
SAP has been positioning BTP as a platform for customers to extend the capabilities of SAP applications. It provides not only software development and integration capabilities, but also artificial intelligence (AI), analytics and a data source unification tool called Datasphere.
Anja Schneider, chief operating officer of SAP, said: “The majority of our BTP message is really about integration, automation, application development, either in low-code, no-code or pro-code, as well as bringing all the data that currently resides in S/4Hana, SuccessFactors and non-SAP applications to build the foundation for AI.”
At the recent SAP TechEd conference in Bangalore, SAP introduced new BTP capabilities, including SAP Build Code, which leverages generative AI capabilities to enhance developer productivity, as well as AI Foundation, which provides access to large language models (LLMs) and empowers developers to create AI-powered extensions and applications.
Schneider said BTP can also assist in the transition to S/4Hana Cloud, allowing enterprises to integrate SAP with non-SAP systems and develop front-end applications that connect to back-end SAP systems.
“Uniper in Germany has a roadmap where they started with BTP in their S/4Hana Cloud journey with one subsidiary, and as soon as the rest of the corporation are ready, they’ll make the move in full swing,” she added.
A key challenge that many enterprises face during ERP migrations is dealing with custom code, some of which becomes unused over time. Schneider said BTP’s custom code analysis capability can help identify how much custom code is genuinely in use and prioritise what needs to be migrated to the new ERP system.
For SAP, the capabilities within BTP, particularly those related to AI, have sparked conversations with its customers about migrating to S/4Hana. “The AI Foundation in BTP has been a conversation starter for customers to think about how they can leverage AI and the prerequisites they need to have on that journey,” said Schneider.
“We can definitely see a benefit for customers who have already started the BTP journey in advancing their S/4Hana Cloud journey. By combining technology, applications, data, business logic and business context, we can deliver AI in a meaningful way to our customers,” she added.
As with any move to cloud, cost management and financial operations (FinOps) are critical to avoid unexpected expenses, especially when using LLMs. Schneider said BTP’s Analytics Cloud can be used for cost planning scenarios to manage cloud costs.
“Planning is potentially one of our best-kept secrets in our portfolio – what happens if I invest more into this and decrease costs in that? You could do these kinds of planning on a regular basis based on the value driver tree,” she added.
For SAP customers like Hitachi High-Tech that have hinged their S/4Hana migration strategy on BTP, the platform has also paved the way for technology modernisation efforts.
“We don’t use ABAP anymore as we’ve made the shift to Java in our IT policy,” said Sakai, referring to SAP’s proprietary Advanced Business Application Programming language used to enhance SAP applications.
In the third quarter of 2023, SAP grew its cloud revenue from S/4Hana by 67% to reach €914m.
Read more about SAP in APAC
- SAP is incorporating generative AI capabilities into software development and the Hana database, prioritising data privacy and use cases that drive efficiency and cost savings for customers.
- SAP debuts the Grow with SAP programme in Southeast Asia to drive adoption of S/4 Hana Cloud among small and medium-sized enterprises.
- A top SAP executive is confident that more of its customers in Asia-Pacific will adopt S/4 Hana this year, as the company shores up integration of its ERP software with other business applications.
- SAP is investing S$250m in a new innovation lab in Singapore to shore up its capabilities in AI and machine learning, cloud transformation, digital supply chain and intelligent business networks.