SAP S/4 Hana gains traction in APAC

While SAP now counts companies such as China’s Ameco Beijing as clients, it is also going all out to address hitches that stand in the way of wider adoption of its S/4 Hana software

A “significant percentage” of SAP S/4 Hana’s global customer base is in Asia-Pacific (APAC), signalling the growing adoption of SAP’s next-generation business software by companies in the region to simplify business processes, according to a company spokesperson.

In an interview with Computer Weekly, Rohit Nagarajan, vice-president for digital enterprise platform group at SAP Asia-Pacific and Japan, said that although SAP did not reveal regional customer numbers, global S/4 adoption had doubled year-on-year to more than 5,400 customers in 2016.

In the fourth quarter alone, SAP gathered 1,300 additional S/4 customers, of which about 30% are new, such as Ameco Beijing, China’s largest aircraft maintenance supplier.

Nagarajan said it was “extremely encouraging” that a significant proportion of S/4’s customers were new.

Apart from large customers such as Nike and Ameco Beijing, SAP also signed up small and mid-sized customers that were moving from customised enterprise resource planning (ERP) software to off-the-shelf systems for the first time, he said.

“They are all seeing the value of S/4 as a digital core to power their digital transformation journey,” said Nagarajan.

He added that while some SAP customers that had embarked on digital transformation initiatives were already adopting S/4, others might wait until their IT systems were due for a refresh. But all of them had a clear intention to move to S/4, he said. “It’s not a matter of if, but when.”

As with any migration of core ERP systems that power an entire enterprise, moving to S/4 is not a simple matter. Organisations will need to consider the impact of S/4 on auxiliary systems, and develop a clear business case before making the move.

“Customers have an important decision to make, and they need to understand the impact of S/4 on everything downstream,” said Nagarajan, pointing out that SAP had received queries from customers, especially larger companies, on what their S/4 journey should be.

In response, SAP developed the Digital Transformation Navigator tool to help enterprises map out their digital transformation plans and business imperatives, before deciding on which S/4 applications to deploy and when.

“Do I start with finance first, or wait and implement finance and logistics together?” he said. “It’s almost tactical from an IT perspective, but that’s very important to a customer because there is change management involved.”

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Nagarajan also addressed another hurdle for S/4 adoption – the high cost of larger Hana appliances. He said the cost of such appliances had fallen over the past two years because of the larger scale of the platform.

Enterprises can also reduce deployment costs by using the public cloud editions of S/4, or running the software on Amazon Web Services and Microsoft Azure.

More importantly, said Nagarajan, when enterprises are determining the total cost of ownership (TCO) of their investments, they should consider the transformative benefits that S/4 can bring.

“It’s not a case of one ERP system or database replacing another,” he said. “What you’re doing is addressing gaps in your digital transformation journey, so you should be making TCO comparisons with other investments you would have made in customer or employee experience, for example.”

Moving to S/4 can also mean changes at multiple levels across an organisation’s IT infrastructure, such as from one operating system to Linux, or from another database to Hana. But according to IDC, firms lack the operational experience at each of those levels, from managing integrations to monitoring performance.

To address these challenges, IDC said organisations could consider an application management service that transfers the migration risk to a service provider via service-level agreements.

Focus on partners

With systems integrators and IT consultants playing a key role in ERP software implementations, SAP has equipped its partners with tools such as the Digital Transformation Navigator, as well as keeping them up to date on S/4’s technology roadmap.

“The expertise of our partners is growing tremendously,” said Nagarajan. “Two years ago, when S/4 was launched, the most common question we got from customers was whether our partners were ready to implement S/4, but I no longer get that question today.”

Gartner research director Derek Prior wrote in a recent article in Computer Weekly that smaller SAP hosting partners could go out of business because of fierce competition from the market and SAP’s Hana Enterprise Cloud (HEC).

But Nagarajan said SAP had not heard of such concerns, noting that many of its HEC engagements, such as certifying datacentres, were done in conjunction with its partners.

If anything, he said, S/4 and HEC would speed up the conversations that partners can have with enterprises. “If there is a customer that wants to leapfrog its competitors by starting on its S/4 journey, that same customer may be keen on internet of things or machine learning capabilities, which our partners can deliver.”

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