Is it Right to Lead Clients into SAP Software Failure?

Executive Summary

  • S/4HANA is an implementation that makes money for SAP and consulting partners but has a very low likelihood of success.
  • S/4HANA implementation has turned into quicksand, and the consulting partners know this.

Introduction to S/4HANA Risks

Our observation from many implementation data points of S/4HANA as outlined in our S/4HANA implementation study is that S/4HANA is the highest risk application with the least likelihood of going live of any application we track. One major reason? S/4HANA is not a completed application.

The risks of S/4HANA implementations that are specific to S/4HANA (that is exclusive of all of the factors outside of S/4HANA such as the implementation partner, customer, etc..) break into the following:

  1. Incomplete nature of the overall application. (see SAP’s Misleading Storyline For S/4HANA Being Incomplete)
  2. Problems with HANA has in supporting a S/4HANA ERP system.
  3. Customization remediation effort due to changes in the database schema.
  4. Data migration effort due to the changed in the schema and the shortage of tools for making the migration (along with migrating custom tables)
  5. The loss of functionality through “simplification.”
  6. Customization remediation effort due to changes in functionality.

Obtaining Financially Biased Information About S/4HANA from SAP’s Coterie

Interestingly, the entities that provide information about S/4HANA to the market are either SAP itself or SAP consulting firms. SAP has been massively overstating S/4HANA as covered in How Accurate was Hasso Plattner on S/4HANA? Media entities that cover SAP are paid directly by SAP. We are a research entity that focused mostly on SAP. When we receive research requests from companies interested in the validation of information about S/4HANA that has been provided by SAP and their coterie, we find that in 100% of cases the company is working from an inaccurate set of assumptions. And in 100% of cases, the assumptions are positively biased. It is clear that the objectives of SAP and their coterie is to get S/4HANA into companies by any means necessary, and by telling any lie they need to tell.

S/4HANA’s extremely poor implementation history has been almost entirely censored. SAP consulting firms won’t discuss these failures and halted projects with prospects, they want to discuss SAP marketing talking points. And when an individual from a consulting firm writes an article about S/4HANA, they are very careful to never discuss their financial bias in favor of S/4HANA, or that they, for instance, have a quota to sell S/4HANA services. Instead, they prefer to present their views as if they are impartial.

This explains articles like this, that vastly overestimate the readiness of S/4HANA for implementation and underestimate the implementation challenges with S/4HANA. They have no other purpose than to drum up business for S/4HANA implementation services.

The S/4HANA On-Premises vs Cloud Distinction

These are all called out for S/4HANA on premises. S/4HANA Cloud has too small of a functionality footprint for any one company but small professional services firms to implement. (S/4HANA on premises and S/4HANA Cloud are two separate applications, something which SAP deliberately obscures to customers and Wall Street.)

Implementation Costs

Secondly, the implementation cost of S/4HANA on premises is guaranteed to be extremely high for the factors listed above. Merely the costs of item 3 and 4 will be extremely high. S/4HANA is like no other SAP ERP upgrade, which was already quite problematic and expensive.

ERP Failure Rates

ERP and more broadly enterprise software failure rates are a frequent topic of conversation among those that work in the industry. However, what is curious is how undiscussed the implementation of applications that have a very low likelihood of implementation success. If the implementation advisory function is more focused on billing hours than in selecting applications that have higher probabilities of implementation success, then naturally, failure rates will be higher than necessary.

Increasing Consulting Revenues with S/4HANA

Even with S/4HANA extremely low implementability, SAP consulting firms still want the S/4HANA consulting business. This means they work with SAP to mislead customers and prospects about the existing S/4HANA case studies, their personal implementation experience with S/4HANA and S/4HANA’s revenues.

But what happens if the project that is being recommended by the consulting company has close to no chance of being successful?

Consulting

What we are seeing is a consulting ecosystem that is recommending S/4HANA implementations that in most cases will not go live and will worsen the condition of the client, but which benefit the consulting company. So should consulting companies be recommending implementations that they know will fail? The SAP consulting market has become so profitable for so many companies, combined with SAP bringing out such immature applications, that implementations are recommended that have close to zero chance of improving the condition of the customers.

Financial Disclosure

Financial Bias Disclosure

Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

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References

Repair MRP Book

 

MRP System

Repairing your MRP System

What is the State of MRP?

MRP is in a sorry state in many companies. The author routinely goes into companies where many of the important master data parameters are simply not populated. This was not supposed to be the way it is over 40 years into the introduction of MRP systems.

Getting Serious About MRP Improvement

Improving MRP means both looking to systematic ways to manage the values that MRP needs, regardless of the MRP system used. It can also suggest evaluating what system is being used for MRP and how much it is or is not enabling MRP to be efficiently used. Most consulting companies are interested in implementing MRP systems but have shown little interest in tuning MRP systems to work to meet their potential.re

The Most Common Procedure for Supply and Production Planning?

While there are many alternatives to MRP, MRP, along with its outbound sister method DRP, is still the most popular method of performing supply, production planning, and deployment planning. In the experience of the author, almost every company can benefit from an MRP “tune up.” Many of the techniques that the author uses on real projects are explained in this book.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: The Opportunities to Improve MRP
  • Chapter 3: Where Supply Planning Fits Within the Supply Chain
  • Chapter 4: MRP Versus MRP II
  • Chapter 5: MRP Explained
  • Chapter 6: Net Requirements and Pegging in MRP
  • Chapter 7: Where MRP is Applicable
  • Chapter 8: Specific Steps for Improving MRP
  • Chapter 9: Conclusion
  • Appendix A: Calculating MRP