SAP releases new products, services and upgrades at a rapid pace, which can make it difficult to understand the distinctions between their offerings. Most tenants have come to grips with the Business Suite vs. S/4HANA distinction, but the SAP S/4HANA Public Cloud announcement at SAPPHIRE NOW 2017 unleashed a new round of head scratching.
What is it? A brand new product? Just S/4HANA hosted in a public cloud? Something in between? Read on to learn about SAP’s newest service, and how it fits in with the rest of SAP cloud strategy.
Explaining SAP’s Cloud Strategy
The challenges SAP faces in the cloud are typical of early ERP pioneers. They’ve always excelled at providing powerful, customizable software that can be tailored to meet the needs of businesses across industries, whether on premise, in the cloud, or in a hybrid cloud environment. However, their solutions require considerable investment and expertise to run, which can be an obstacle to adoption by smaller organizations.
Additionally, SAP HANA ERP enterprise cloud workloads are not readily adaptable to a SaaS model. Cloud native workloads are web scale — you can scale up, pack in new tenants, and just throw compute at your cloud to meet increasing demand. But SAP landscapes are traditional workloads that have to be individually sized and configured to meet exacting performance standards, which has been an obstacle to SME adoption
To meet these challenges, SAP cloud strategy has focused on providing new tools, service models, and integrations aimed at a greater range of organizations. The SAP Cloud Platform opened SAP up to developers, allowing them to harness SAP cloud functionality, while maintaining a low TCO. The platform offers tools in a wide range of areas, from storage, integration and security, to cutting edge applications like IoT, machine learning and big data.
Recent partnerships have also helped to make HANA more effective in the cloud. For example, the SAP-Apple partnership has supported the development of new apps for Apple devices, with an iOS SDK, a training academy, and a Fiori App. Other vendor relationships, such as the Microsoft partnership, have offered new integrations, giving consumers more flexibility in creating customized, multi-vendor solutions. However, some of the biggest changes are in how SAP is delivering HANA ERP.
SAP HANA Enterprise Cloud
The HANA Enterprise Cloud (HEC) encompasses the top two tiers of a suite of SAP S/4HANA services. The second tier is called the S/4HANA Cloud Private Option. It offers all standard SAP S/4HANA applications at a moderate price point, making it suitable for most industries. However, it differs from a traditional HANA solution in two ways: it is not highly customizable, and it only supports greenfield implementation (building your SAP HANA ERP landscape from scratch), not brownfield SAP HANA migration (upgrading and migrating your existing landscape).
This isn’t always a bad thing. For businesses with relatively straightforward business processes, the HEC Private Option can provide a cost-effective way to attain valuable S/4HANA functionality. However, the lack of support for brownfield migration and low customizability make it a poor choice for many larger companies, as well as organizations with complex or unusual business logic, or a highly-customized existing SAP landscape.
For those companies, SAP offers the top tier Custom Hana Enterprise Cloud. As the name indicates, this tier delivers a more customizable delivery of SAP HANA ERP, and supports brownfield migration. The main drawback is the price. High service charges make it generally unsuitable for companies bringing in less than $1 billion in annual revenues.
SAP S/4HANA Public Cloud
The SAP S/4HANA Cloud service is SAP’s newest public cloud offering. Introduced at SAPPHIRE NOW 2017, it rounds out SAP’s cloud offerings, with an affordable, entry-level product. The new service delivers essential SAP HANA ERP functionality in a cloud-native SaaS model. As with other SaaS offerings, the vendor provides upgrades, governance and other support automatically, as well as guided process configuration to setup your landscape.
There’s been a lot of confusion about what the S/4HANA Cloud does and does not do. Despite the name, this cloud service isn’t really the same thing as other versions of SAP S/4HANA. It isn’t designed to compete with Oracle, MS SQL Server, and other big-name RDBMS solutions — it’s designed to compete with affordable, cloud-native tools for SMEs, such as Netsuite and Salesforce. It’s a standardized range of tools that companies can plug into easily, without the cost, overhead, extensive configuration or in-house support traditional ERP requires. As of 2017, SAP offers an S/4HANA Professional Services Cloud and Manufacturing Cloud, although support for other industries is on the way.
SAP S/4HANA Public Cloud can be a great solution for enterprises with fairly simple needs, but companies need to understand its limits as well as its strength. For many midsized and large enterprises, however, it’s just not flexible and powerful enough yet.
SAP S/4HANA: Managed Cloud Options
Most companies implement and run SAP HANA ERP with third-party partners like application hosting providers and VARS. That isn’t likely to change any time soon. Companies that need extensive customizations or complex brownfield upgrades can benefit from the knowledge, experience, and customizability of vendors. For example, companies on the IBM AS/400 platform and other legacy or rare landscapes will be able to choose specialized vendors able to adapt their landscape to a cloud solution with minimal disruption.
MSPs also fill a crucial niche for companies wishing to migrate SAP HANA ERP to the cloud, but who aren’t ready to adopt S/4HANA immediately, including organizations that may need multi-phase migrations — for example, as a way to get the most value out of existing investments. The right enterprise cloud provider can use the hybrid cloud as a bridging strategy, allowing the company to migrate to the cloud on a timetable optimized for their needs. Likewise, companies facing exacting regulations such as 21 CFR Part 11 compliance may benefit from MSPs with industry-specific expertise.
Finally, companies should consider cost and SLAs in their own SAP cloud strategy. In many cases, third-party vendors can offer extremely high SLAs at a price point that compares favorably to the Hana Enterprise Cloud.
SAP HANA ERP Should Meet Your Needs
SAP’s cloud strategy is focused on increasing SAP’s role in delivering SAP HANA ERP directly to the client, but those solutions aren’t right for everyone. Third-party providers fill a crucial role in the HANA cloud ecosystem, providing highly-customized service, competitive pricing and support for novel cloud landscapes and migration paths.
Although the SAP cloud space can be confusing, understanding your choices is worth the work. Customers should consider the SAP HEC and the S/4HANA Cloud alongside third-party offerings — and they should take the time necessary to find the right solution for their business. Read case studies from prospective providers, ask some tough questions, and choose the SAP HANA solution that makes the most sense for you.
Contact us to learn more about your SAP HANA ERP options, and what we have to offer.