Moving to SAP S/4HANA is the No. 1 project on the minds of SAP customers. As the 2025 deadline approaches, organizations find themselves at least in the evaluation and fact-finding stage of the project. SAPinsider had the opportunity to sit down with Sven Denecken, Senior Vice President of Product Management, Co-Innovation SAP S/4HANA at SAP SE, to discuss the latest trends in SAP S/4HANA adoption, the most recent Microsoft partnership announcement, and next steps companies can take to accelerate their journeys.
Following are some key SAP S/4HANA transition takeaways from our conversation with Denecken.
What’s driving customer adoption?
The transition to SAP S/4HANA is not a typical upgrade project. SAPinsider research shows that those companies that are successful at building the business case are bringing together both IT and the business side to learn about, understand, and consider the potential impact of SAP S/4HANA. Our early research also showed that early adopters of SAP S/4HANA are being driven by pressure for digital transformation more than any other factor (see chart below).
Top Drivers of Enterprise Cloud Migration: Modernizing or digitizing infrastructure is driving respondents to cloud migration, according to July 2019 SAPinsider Benchmark Report, “Enterprise Cloud Migration: State of the Market.”
Denecken confirmed that SAP is seeing similar trends. He also highlighted the pressure to transform business models to meet changing customer demand as a factor that’s at the center of many companies’ business cases for SAP S/4HANA.
“On the business strategy side, new business models must evolve that cater to the customer segment of one and the lot size of one,” Denecken said. “On the operating side of the business, there’s growing complexity of business processes when customers want simplicity. This is the type of industry disruption and expectation that companies now have in front of them. These are some of the trends we’re seeing that are causing customers to evaluate and adopt SAP S/4HANA.”
Denecken confirmed that the number of licenses for SAP S/4HANA has now risen above 12,000 worldwide, and customer interest in SAP S/4HANA is buoyed by growing requirements for an ERP platform that is flexible, responsive, and modern.
Easy Ways to Get Started Today
One of the most difficult things for early-stage customers to understand is what the potential impact is on the technical, business, and strategic layers of their organization. To that end, Denecken discussed an array of information tools and services that SAP has developed to help companies comprehend these impact zones and prepare for their project:
- Discover the impact on innovation and business processes: SAP documented case studies and benchmarks that can help you explore SAP S/4HANA enhancements by line of business and industry use cases highlighting where innovation can impact specific processes or strategic initiatives. To get very specific to your existing implementation, SAP offers the Business Scenario Recommendation Tool. You can use this tool to identify specific business processes that you are running that can be potentially transformed by SAP S/4HANA.
- Build your business case: SAP’s business case value advisor provides a universe of value drivers that can help make your case for the move to SAP S/4HANA. It helps narrow down these drivers based on your unique implementation and strategy.
- Plan and execute your project: SAP has a host of tools that can help you analyze the specific impacts on custom code and technical infrastructure. The SAP readiness check performs a functional assessment of your simplification items and recommends SAP Fiori apps that would be beneficial to your project. It also provides an assessment of technical infrastructure along with system sizing guidelines. The ABAP Test Cockpit examines custom code and provides ideas for efficiency and elimination of outdated or seldom-used programs that can be potentially sunset. The SAP S/4HANA Migration cockpit can help streamline the migration of data and custom objects to the new system.
“We are constantly developing tools and content that is the juice that’s inside these resources,” Denecken said “But also important is the fact that, with every project, we’re constantly putting new information and feedback in there. We want to make these resources and information actionable.”
More information on these offerings can be found here.
Tackling Key SAP S/4HANA Deployment Decisions
Denecken touched on the critical deployment decisions that go hand-in-hand with any SAP S/4HANA project. One of the most critical questions is whether you should run SAP S/4HANA in the cloud or on premise. SAPinsider is seeing close to 70% adoption of cloud deployment in early adopters with cloud serving as a broad category that includes managed services as well as Software-as-a-Service (SaaS), Infrastructure-as-a-Service, and Platform-as-a-Service deployments.
Denecken maintains that cloud will continue to be a strong option in future decisions related to SAP S/4HANA for both existing and new customers. “We’re seeing growth on both SaaS as well as deployment of SAP S/4HANA in hyperscalers,” Denecken says. “Cloud is growing significantly among our net-new customers where more than 50% of that group went with cloud deployment. We also are seeing huge differences in cloud adoption between regions. Some of our fastest cloud growth is coming from China.”
The recent deal SAP struck with Microsoft will only help accelerate and simplify existing customers’ path to the cloud, according to Denecken. “Infrastructure-as-a-Service needs to be commoditized as part of every ERP project,” he says. “While we work with all major hyperscalers, Microsoft is one of the most prominent with significant global reach. That’s why we said this is where we’re going to start.”
Microsoft and SAP will jointly release content, tools, and services that will help companies accelerate their move to SAP S/4HANA on Microsoft Azure. Many of these offerings will incorporate industry-specific content and knowledge that will enable a more tailored approach to their projects.
The other foundational decision for SAP S/4HANA projects revolves around the system migration approach that most traditional upgrade or migration projects have utilized vs. a new implementation approach that brings companies back to the starting gate. SAPinsider is seeing much more interest in re-implementations as companies seek to reduce their technical debt and embrace more industry-standard processes in key areas. Close to 40% of early adopters in the SAPinsider study chose re-implementation vs. system conversion.
SAP is seeing a similar balance in approaches. “Currently we’re seeing a 50/50 split between new implementations and system conversions. Our larger and more entrenched installed base tends to favor the system conversion process,” says Denecken. To help speed some of the commoditized tasks and processes associated with system conversion, SAP together with a group of select partners have created “conversion factories” throughout the world. For a fixed price and a single service-level agreement, customers can leverage these factories to speed the execution of various parts of their code and data migration activities.
What This Means for SAPinsiders
Based on the insights from Denecken and the SAPinsider research, below is some valuable advice for SAPinsiders:
- Start using the resources and tools that are available to you: One great place to go is www.sap.com/jointhemovement where you can access presentations, content, and other tools mentioned in this article for free. Also check out www.sapinsideronline.com to get the latest research and news from SAPinsider on the SAP S/4HANA journey. For those of you in Europe, check out our upcoming event in Barcelona, where Sven Denecken will be delivering the keynote address and you can access more experts and presentations that delve deeply into the important aspects of your SAP S/4HANA journey.
- Make your early education journey a joint effort: One of the most critical success factors to building a successful case and project for SAP S/4HANA is ensuring that it represents the joint perspective between the business and IT. By starting your educational and analytical journey together, you can make sure both perspectives are appropriately reflected throughout the process.
- Get your partner involved sooner rather than later: There’s a significant amount of data and content to wade through as you start to analyze impacts on business strategy, processes, and technical infrastructure. Having a trusted advisor to help you leverage the tools and analyze the results can provide important guidance throughout early decisions and obstacles you may face.
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