Brightwork Research Study: The 2019 Estimate of Total S/4HANA Implementations

Executive Summary

  • SAP has proposed exaggerated go-lives numbers for both Suite (ECC) on HANA and S/4HANA.
  • How accurate are these reported numbers?

The Estimates

This is the research into SOH and S/4HANA.

Estimating Live HANA (SOH) Instances

We think there are more than a thousand customers using R/3/ECC on HANA, with our estimate being between one and two thousand, probably somewhere above 1,500. If we take the middle value, that is 1,750.

We have used the total number of live ERP customers (that is ECC, R/3 and R/2, non-Business One and ByDesign customers, Business One and ByDesign being for the SMB market) from HG Insights at 39,853. This means that we estimate 4.3% of SAP ERP customers are on Suite on HANA or SOH.

SAP’s Customer Claims Regarding S/4HANA

This research document uses expansion sections extensively in order to control the size of the document and make navigation easier. When the eye is closed the section is compressed, when selected the eye will open. Just select again to close the section.

Frequently the claim will use a statistic regarding the success of an application. SAP will often have the word “number of customers” that it has. SAP has also taken this approach this with HANA and S/4HANA.

SAP has announced roughly 500 new “customers” every quarter for S/4HANA. SAP will often follow the statement about the customer numbers with something quite optimistic about how the software is transforming the way their customers are doing XYZ. This again was stated in the 2017 Q1 analysts call.

“Driven by S/4HANA, our core innovations are growing really fast with software licenses up 13%. We now have more than 5,800 S/4HANA customers with global companies like Energy SE, choosing S/4 in the first quarter. Big brands like Citrix Systems selected S/4 cloud edition, the leading intelligent cloud ERP solution in the market by far.” – Bill McDermott, SAP

“Were we happy or disappointed with 400? I think the bigger topic is we have 5,800. We have a snowballing effect now that on the go-live customers and we have more and more projects ongoing that are more complete than just finance and logistics, so it’s really a very, very good story for all of SAP.” – Ron Enslin, SAP

This is covered in the article How SAP Mislead Analyst Q1 2017 Earnings Call.

One of the peculiar things about S/4HANA has been the discrepancy between the number of “customers,” or companies that own S/4HANA versus the number of companies that are live on S/4HANA. And understanding this means getting into what the definition of a customer is to a software vendor.

SAP continues to show consistent growth in customers for S/4HANA (image from UpperEdge — https://upperedge.com/sap/migrating-to-sap-s-4hana-could-get-you-fired-not-deciding-on-s-4hana-will-probably-get-you-fired/)

Category: S/4HANA

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Unknown to many who follow software vendors, being a “customer” only means that the customer is in possession of a license for S/4HANA. Now in many cases, the number of customers that have a license of something means more than what it does with S/4HANA. However, with S/4HANA SAP has engineered these numbers in order to exaggerate the impression of adoptions for S/4HANA. This topic is covered in detail in How SAP Controls Perceptions with Customer Numbers.

In this way, software companies can, if they choose, exaggerate this number in the way that a company that produces a physical product cannot. Companies have always employed techniques to seem more successful than they are. End of quarter pushes, which provide promotions and incentives are quite common. Yet this is an important distinction between software companies and companies that make physical products. For companies that make physical products, they incur a far higher cost to exaggerate sales. If for instance, General Motors were to attempt to inflate its customer numbers this way, it would have to ship more cars to customers for free — incurring a large loss for every car is “sold” this way. The software has a very low incremental cost, therefore software companies don’t incur these same costs.

Important things to know about these licenses are the following:

  • Many of these licenses were transitioned from SAP to customers at no cost. S4 was free from February 3, 2015, to December 31, 2015. End 2015 SAP claimed 2,700 S4 customers that obviously signed because it was free. In the promotion customers only need to buy HANA for 15% of the S4 modules.
  • SAP has offered S/4HANA at a very reduced price to SAP consulting partners. Several of these SAP consulting partners are profiled as case studies in this paper.
  • When S4 was announced in Feb 2015, SAP stops disclosing the number of customers of Business Suite on HANA, at the end 2014 the number was 1,850 customers. Then just once on April 6, 2016, SAP said, 2,500 customers, Business Suite on HANA. What happened with those customers? How many went live?
  • SAP has been bringing what Brightwork refers to as Type 2 indirect access claims against its customers. In order to negotiate away an indirect access claim, S/4HANA is one of the most preferred applications put in front of customers to purchase.
  • 2,700 is 50% of the number of S/4HANA licenses claimed end of 2016 = 5,400, so half were free. One can fairly say the promotion motivated to sign not necessarily having the intention to implement anytime soon.

The final bullet is supported by the Brightwork article How SAP Controls Perceptions with Customer Numbers.  

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Customers that are live on S/4HANA are certainly more committed than a customer that uses S/4HANA as shelfware, but even these customers had to be evaluated because there are many ways of being “live” on a system. A live system can be a glorified POC, a system some transactions are running through, etc. Normally the definition of a live system is one which the business is relying upon in a substantial way. Yet in interviews with S/4HANA customers, this definition has been stretched. In SAP’s haste to add as many customers to the live status for S/4HANA, they have categorized many customers as live who do not meet the normal definition of live.

While in early 2019, there were over 10,900 “customers” of S/4HANA reported by SAP (roughly 26% being new and 74% being upgrades) the 850 number that is reported by SAP as live is most certainly exaggerated. Here is an earlier quote from SAP.

“Yes, sure. I think Bernstein [ph] as well. But we have over 850 live customers now to just over two and a half thousand projects ongoing, so it continues to be very successful. And as Bill said these customers are also investing in the top product. So this is really a tremendous success story for a city and the more they go live, the more expansion we will see.” – Rob Enslin

The number of go-lives reported changes depending upon the publication. The numbers seem to range from the 200s to the high 400s. Yet, the problem with these estimates is they have all come from entities with a financial incentive to promote S/4HANA. But even if you take the number of 350 live proposed by ASUG in Aug of 2016 implementations as 100% accurate, the question naturally arises, why are so many SAP customers in possession of a license of S/4HANA is so few (comparatively) customers are live. Dividing 350 live customers by 5,800 total customers (the number at the time of ASUG’s estimate) is 6% of the total number customers reported by SAP. There is certainly a lag between the purchase of software and going live with software, but this is a strange percentage that is duplicated with few applications.

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The 350 number is from ASUG and their 2016 survey which was critiqued by Brightwork in an article entitled Analysis of ASUG’s SAP HANA Adoption Survey. This survey was published a year ago, from the publication of this research paper you are reading, so ASUG’s 2017 survey will be higher. But in our review of ASUG’s media output on a variety of topics, it is clear that ASUG has transitioned from being a user group to be just another outlet through which SAP distributes press releases. In fact, while ASUG authors are attached to articles, it is not clear that ASUG authors are even writing the articles attributed to them. If ASUG is actively promoting S/4HANA and SAP generally, then ASUG cannot produce any research in the field. Biased sources lead to biased research results. ASUG spends time in their study describing their methodology. However, as with Gartner or Forrester, if the research entity takes money from those it is researching, the methodology does not matter. This is an extremely well-understood topic in academic research. But is a problem in the enterprise software space because private industry is not setup very well to fund research that is truly independent.

For this reason, whatever ASUG’s estimate, the real number is considerably lower. Brightwork developed an estimate of S/4HANA implementations which is lower than the commonly presented estimates. Unsurprisingly, the Brightwork estimates differ greatly from an organization like ASUG that is highly intertwined with SAP.

Now that we have set the table with pertinent information that is necessary to know in order to interpret the study, we will move into the study itself.

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Estimating Live S/4HANA Instances

Estimating S/4HANA live customers is a far more complicated affair than estimating the number on SOH. First, the SOH implementation is far more straightforward. This is because the ERP systems stay the same, but just the database, Oracle/DB2/SQL Server, is switched out.

For S/4HANA this becomes a classification and counting issue, because the vast majority of S/4HANA systems that are installed in the world, are actually not live. These S/4HANA instances fall into the categories a single module up (always the finance module, which is still the most mature), test systems, abandoned implementations and other types of non-functioning systems.

Due to this complication, we will just lay out what we think the reality is, and let the reader interpret.

  1. There are probably close to one hundred customers on S/4HANA Cloud. Most of them are consulting companies that received access to the system inexpensively, and are using it to market S/4HANA consulting, build skills, etc.. S/4HANA Cloud is so limited in scope that it can’t support a business with physical products. This allows SAP consulting partners to mislead customers to get them to choose them as an implementation partner. It should also be noted that S/4HANA Cloud and S/4HANA are two separate products How SAP Confuses People on S/4HANA On-Premises Versus S/4HANA Cloud.
  2. Hasso just recently claimed 3,500 live S/4HANA customers, but Hasso Plattner and others at SAP routinely provide inaccurate information on SAP topics, so Hasso’s claim means little in terms of what is real.

Let us review some case studies not covered in our study into S/4HANA implementations.

Case Study Classifications

The case studies are broken into the following classifications.

  1. Public Case Studies
  2. Missing Public Case Studies
  3. Private Case Studies

Case Studies

To see details for each case study classification, expand the item below.

These are by far the most numerous in this study. These are the most straightforward case studies in which to gain access, however, they are largely inaccurate. Our analysis of each case study illustrates the inaccuracy.

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Missing case studies are companies that have been announced to have selected S/4HANA, but then no information about the project or the go-live can be found. What happened to these projects is anyone’s guess.

These are case studies that were caught between the announcement of the implementation, with no announcement of success. They are normally predicted as “Potential Failures,” particularly considering the lag between the announcement of the implementation and the time this research was compiled.

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These are case studies that have come to us through our network.

The sources for this case studies include consultants who are either involved in S/4HANA implementations or involved in analyses of S/4HANA that companies moved some way along the process of considering for implementation.

I do not want to specify in any more detail than this as the intent of the study is to keep the sources anonymous. Case studies that are anything but glowing cannot be associated with a customer because the individual providing the information fears reprisal. The first order of those that work on S/4HANA projects is to keep their current jobs.

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S/4HANA Implementation Background

It does not make sense to try to understand the S/4HANA case studies without having some familiarity with the technical underpinnings of S/4HANA and its history as an SAP product.

S/4HANA is SAP’s new ERP system, meant to replace SAP ECC, which is the renamed R/3 ERP application. S/4HANA combined many SAP initiatives into one application. These initiatives include the following:

What is S/4HANA Technically?

Although never presented in this light, S/4HANA is a large house cleaning project which includes code removal, code adjustments, and other changes that are typical of when a software vendor dives into its application to change the technical components for improved efficiently, redundancy reduction, etc..

S/4HANA removes and changes come of its functionality, but much of S/4HANA is the same as ECC. SAP has done what it can to obscure this by introducing a new user interface called Fiori and by trumping up S/4HANA’s “innovation” and also through pointing out performance improvements in HANA (the database). Yet, while many of these points are infinitely debatable, the actual functionality of S/4HANA and its similarity to ECC is not.

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The Technical Tie Between S/4HANA and HANA

S/4HANA has been artificially restricted so that it only runs on the HANA database. Although not part of the research, I have thoroughly analyzed the technical merits of SAP’s argument for why this is necessary and found all of SAP’s claims in this area to be without merit. SAP intends to use the artificial restriction of tying S/4HANA to HANA to push Oracle and other database vendors out of being used for S/4HANA. What will likely occur with S/4HANA being ported to non-SAP databases is covered in the Brightwork article Why SAP Will Have to Backtrack on S/4HANA. HANA and S/4HANA more from a technical perspective are covered in a number of articles in the Brightwork dedicated to HANA and S/4HANA.

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As S/4HANA uses a different database schema from ECC, S/4HANA is the first ERP system that will break all integrations and customizations that customers added to ECC. SAP has released information on these topics that indicates it prefers to obscure this issue as it would negatively impact S/4HANA purchases. SAP has instead performed a classic pivot and has said that S/4HANA represents an “opportunity” to SAP customers to evaluate all current customizations and to remove them. SAP is silent on the topic of integrations that will break and will need to be rewritten when S/4HANA is implemented.

S/4HANA is charged as a new application even for customers that have been paying maintenance for years on ECC. SAP pulled S/4HANA out of the normal upgrade terms, where new versions are free, by declaring that S/4HANA is the “logical successor,” but not the “legal successor” to ECC. Therefore S/4HANA has been set up so that ECC customers will be charged twice, a topic which is covered in the Brightwork article Why S/4HANA Should be Free.

S/4HANA means re-implementing the ERP system and doing so in a manner that is piecemeal. IT departments along with the SAP consulting companies are generally staffed analyze and to implement far more stable and simpler applications than S/4HANA. Consulting companies that are going after the S/4HANA implementation business are, from the information coming to us from accounts are, by in large, underplaying the complexity of S/4HANA to their accounts.

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Details Around the Research Method

The Brightwork Research & Analysis method was to reach out to as many of our contacts as possible to find case studies on SAP.

These are the critical features of this research.

The Necessity of Using Anonymous Sources

It is preferable to be able to use actual customer names where S/4HANA implementations occurred. The problem is that this is not realistic given the constraints of the market. SAP customers do not like publishing the details of their implementation outside of glossy generalizations of project success. The only time the problems on projects are published is when an implementation went so poorly, that the customer decides to sue the implementing company or SAP. Outside of those occurrences, all SAP projects are presented as successes outwardly. As a long time consultant and author, I have published many articles that described the reality of SAP functionality as implemented in companies. However, I would never have been able to write what I covered if I had not anonymized the sources. Therefore, the only way to obtain any information on S/4HANA is to rely on anonymous sources for those sources that are original research.

Special Circumstances of Anonymous Sources

Using anonymous sources has been one of the only ways that Brightwork has been able to publish information that is true but not flattering. However, we ran into something unusual when performing this research. And that is sources who have spent so much money on S/4HANA that they did not want any of the details to be used even when provided by anonymity.

The Available Data Points on S/4HANA Implementations

The study does not have the luxury of obtaining all of the S/4HANA implementation data points. The only entity that has this information is SAP, and SAP only releases information that makes S/4HANA look successful. Companies are under no obligation to participate in the study, and in fact companies and individuals within these companies were under a disincentive to participate. The reason why become clear as we began to review the results of the case studies.

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SAP has required that companies sign an NDA as part of implementing S/4HANA. We learned of this from several SAP customers. This is a highly unusual step taken by SAP. And it brings up interesting questions as to why. We cannot confirm that all S/4HANA projects operate under an NDA, only that some do.

This means that a company could open themselves up to legal implications by disclosing this information for the study. We do have a number of the customer names as part of the private case studies. However, they are not published as part of this study. We have also removed the countries where these companies are based. This was done on the same principle, which is to increase the anonymity of the SAP customers. This allowed us to release the most information and to prevent the blowback on the SAP customers. The purpose of this study is to determine the true state of S/4HANA implementations, not to identify “who” has implemented S/4HANA, what countries they are from, etc.

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Unlike all of the studies on S/4HANA published by other entities, the background information is not only based on discussing and interviewing those with experiences on S/4HANA projects but in also testing S/4HANA. This is consistent with Brightwork’s approach to testing software which comes from our implementation background.

We used the logic that has served us well in the past that one cannot implement functionality which is not complete. This provides a predictive lens by which to analyze the information provided in the public case studies. This is necessary because the public case studies have a positive bias of being released by entities that have a strong tendency to only release positive information related to the project. The review of the S/4HANA functionality helped point to how S/4HANA projects turned out.

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Entities that release information about SAP projects are generally not interested in research or interested in releasing accurate information or following the scientific method. They are profit-seeking entities who are not bound by research rules. They have a straightforward agenda when they release information. For consulting companies and software vendors, their intent is to increase sales of implementation services or software.

Customers that agree to have filtered information released in conjunction with a consulting and company and or software vendors want to appear to be competent, and perhaps leading edge. They also are not focused on getting the truth out about implementations, and once again, they are not research entities. The decision makers that are prominently featured in the case studies will often have career-enhancing objectives in mind when they agree to share information with the media.

This means that any publicly published case study must be analyzed for whether the information is likely to be true. That is the information cannot be accepted at face value. This has really nothing to do with S/4HANA, but is a general rule when interpreting published case studies.

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Individual Case Study Listing and Analysis

This is the case study listing portion of the research. Each case study can be evaluated individually by selecting the box or tile. Below this listing, we provide our cross-case study observations. This is generally absent from the coverage of the S/4HANA case studies, as they tend to be reported on a case by case basis.

  • This listing contains roughly 230 S/4HANA case studies.
  • They can be scrolled through or searched through by selecting the small magnifying glass in the upper right corner. Readers can search by company name or other search terms and that case study will light up.
  • The descriptions are longer than fit in each description section. To read the longer descriptions, just select the tile and a larger view will open.

 

Interpreting the Public Case Studies

The public case studies are by far the large percentage of the overall case studies. Several things stand out about the public case studies.

The Limited Scope of Functionality Implemented

In all cases, the implementations are small portions of the overall S/4HANA functionality. Yet, in several of the case studies, it is stated that S/4HANA Enterprise Management (EM) was implemented. S/4HANA EM is the overall suite. The WiPro implementation is clear that nothing outside of financial functionality was implemented. However, the Swiss Properties case study is not at all clear what was implemented, and the statement that S/4HANA EM was implemented seems misleading as Swiss Properties does not have the workflows as a real estate company to implement very much of S/4HANA outside of the financial suite. Secondly, when Swiss Properties implemented, even less of the S/4HANA functionality outside of finance was even ready to be implemented. Kurlon would have the workflow to implement more of S/4HANA than either WiPro or Swiss Properties. Yet, there is close to nothing available about the details of the Kurlon implementation. In case studies such as New York Life, there is a clear intent to make it appear as if more of S/4HANA was implemented than actually was, which I have not included in this document, but is covered in detail in the article The New York S/4HANA Life Case Study. Companies like New York Life which implemented only a sliver of the finance module (such as the ledger) will never be able to see any return on investment unless SAP waived all license costs, all maintenance costs, provided a great deal of free consulting etc. (And we don’t know the state of the New York Life Case Study after this point as I brought up in the case study write up) And that gets to the next point.

Special Treatment From SAP

It is clear that many of the companies that make up the public case studies received special treatment from SAP. This is undoubtedly the case with all the implementations at the SAP consulting partners. This is a relatively inexpensive way for SAP to “seed” the market with S/4HANA stories. This is not a guess or conjecture. I have been in contact with consulting companies that have been offered very low-cost access to S/4HANA if they would implement the software, and then announce the implementation. However, while the implementations may have made sense for companies that receive special treatment, they don’t generalize to the broader market. That is SAP is not offering the same deal to non-SAP consulting partners. SAP eventually intends to use S/4HANA to drive revenues and they can’t give special treatment to everyone.

Non-Typical Nature of the SAP Customers Used as Case Studies

It is rare for a services company to implement ECC or SAP R/3. I have worked for many consulting companies, and there is very little to the systems of these types of services companies. They bill hours and expenses to clients. They have to buy things like computers and office supplies. They have to maintain HR records for employees. And like everyone, they have to pay taxes. There are inexpensive cloud applications that do all of these things that are fast to use. Consulting companies do not have a supply chain (they do perform what is called indirect procurement for office supplies, computers, etc.). Therefore, services companies don’t need ERP systems.

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In addition to the public case studies above, there are also case studies published on SAP’s website. The issue is that when SAP publishes a case study they either provide a video, which contains a lot of praise of the solution, but very few details about the implementation. The case studies or they provide a 3 page PDF. The three page PDF only contains two pages of actual information because the 3rd page is legal boilerplate that basically states that nothing in the press release should be relied upon. One well-known sentence is the following:

“All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations.”

Secondly, other problems persist:

  • SAP marketing leaves out important details from the case studies. Some of the case studies have the company size included, but when the company is small, those details are often excluded.
  • The public case studies are filled with quotes that are directly taken from SAP marketing. This calls into question the independence of the reference companies, as quite a few of these marketing claims are not true, and would not have been observed by the reference company post go live.
  • When independently verified a number of the case studies with contacts that have worked on some of these projects, they have so little in common with the published SAP document, that all of SAP’s S/4HANA published case studies should be considered unreliable.

These published studies, as with the studies of pretty much any software are really just pure marketing collateral.

Of all the sources of information that we reviewed, the case studies on the SAP website were the poorest quality. Now there is most certainly some good information contained in these case studies, however, the source is so problematic I cannot include them and be considered to follow a good research approach.

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Public Case Studies Versus the Private Case Studies

There is a very considerable discrepancy between the public case studies and the private case studies.

The first obvious difference is the implementation duration, with the public case studies not only being significantly shorter in duration than the public case studies, but suspiciously the implementation times for the public case studies being far shorter than the generally accepted duration of ERP implementations. These implementation durations to not match with experience implementing ECC and they are not realistic. ECC should be significantly faster to implement than S/4HANA as ECC is far more mature than S/4HANA. Secondly, experienced ECC resources are simple to find, whereas finding resources who have been through even one S/4HANA implementation is difficult.

Secondly, and quite importantly, the public case studies all met customer expectations, while most of the private case studies did not. A number of private case studies did not complete the implementation. Complaints about how SAP supported the implementation exist in the private case studies, and interestingly in one public case study, but not in the official press release by SAP for this case study.

Rather a single consultant published his experiences being on the same implementation that was published by SAP (and implemented by IBM), but the consultant offered realities not covered in the SAP press release. And these realities were not complementary to SAP in terms of their support for S/4HANA.

With the Florida Crystals public case study, the CIO was effusive with his praise of SAP and pointed to SAP’s support as what allowed Florida Crystals to implement an “upgrade” of S/4HANA in “4 weeks.”

Facts, which are quite verifiable, such as the lack of documentation for areas of S/4HANA, are not mentioned at all in the public case studies but are mentioned by implementers.

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The average implementation duration for public case studies is considerably shorter than for private case studies. SAP marketing inconsistently reported the implementation duration. This is “cherry picking” the data.

Secondly, many of the claimed implementation durations would just not have been possible. The public implementation durations are entirely inconsistent with ECC’s historical implementation duration. ECC being the precursor to S/4HANA, and also being far more mature than S/4HANA when all of the ECC projects were implemented.

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Detailed Analysis

Overall

The overall average number of employees of the companies in the data set is 26,120. This is a bit overstated as some of the companies were so small, we could not verify their number of employees. And one company, Wal Mart, has 2.3M employees but falls into the category of Indeterminate as to the Likelihood the Case Study Worked as Stated.

The High And Medium Category

Of the 19% of the case studies that fell into the High to Medium category for the Likelihood the Case Study Worked as Stated, the average number of employees per company (for this group) was 9,982 employees.

The only companies over 25,000 employees in this category were the following:

  • Erste Group Bank AG
  • Colgate-Palmolive Company
  • Japan Tobacco International
  • Thai Union Group
  • JFE Steel
  • ENEL

The countries being (one implementation for each listed country):

  • Austria
  • US
  • Switzerland
  • Thailand
  • Japan
  • Italy

That is a very small number of large companies implementing S/4HANA that we consider high to medium likelihood implementations. These are the most credible large company implementations that SAP has for S/4HANA. ECC has 45,000 implementations, with many companies over 25,000 employees running the system in production. S/4HANA was introduced in Feb of 2015. This is getting close to 4.5 years since its introduction as a product.

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SAP gets most of its business from the US and Europe. Something which looked off was that the case study database does not match the traditional markets of SAP.

Sixty-one percent of the case studies are from neither the US (or Canada) or Europe. The consumer of the case studies is left to ask

“Why are such a high percentage of the S/4HANA case studies not from SAP’s traditional market?”

And our conclusion is that the traditional markets have not shown the expected interest. This indicates an issue with S/4HANA, because if S/4HANA were ready, the easiest customers to convert would be those already in the prime markets for SAP.

 

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ERP systems and S/4HANA, in particular, have a fit to industry. The less a company manufactures or distributes a physical product, the less the overlap between the application and the industry requirements.

Over 1/2 of the case studies have a low fit to the industry where they were implemented. There is an amusement park in the case study, a number of travel and transportation customers, professional services firms. Overall, there are a disproportionate percentage of customers that would receive a marginal value from implementing S/4HANA.

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The Number of Case Studies

SAP has really very few S/4HANA case studies as a percentage of all of the S/4HANA licenses that are in the hands of customers. ECC is one of the most widely implemented ERP systems, and therefore S/4HANA has a tremendous starting point in terms of the installed base that can be pitched S/4HANA. There are roughly several hundred S/4HANA implementations globally at the time of this study. Therefore it should not be surprising that the number of case studies for which there is much documentation is very The highest number of documented case studies, technically, is from SAP’s website.

However, most contain so little information and are so biased, they cannot contribute to knowledge as far as S/4HANA implementations.

Inconsistencies in the S/4HANA Case Studies

Many if not most of the public stories regarding S/4HANA implementations have holes in them. Either the companies that implemented S/4HANA are insubstantial, or the scope of workflows the company possessed do not cover the functionality that is proposed to be implemented, or other statements contain inaccuracies or impossibilities that call into question the validity of the other parts of the case studies. Considering the size of the holes, it is perplexing that there is not more open questioning of them in the IT media. Yet is it not at all surprising. This is for the simple reason that the IT media system is strongly tilted in SAP’s favor. How and why is explained in the article IT Media and the Fake News Debate. SAP employs a media model where because of the control over SAP consulting companies and the funding of IT media, it is able to control the storylines that it wants to as is covered in the article The SAP IT Media Model. This allows it to exert influence over the IT media landscape, that due to its extensive partner network is unparalleled in the enterprise software space.

  • In addition to receiving positive coverage on newly introduced applications and narratives, SAP is also able to minimize the negative media that would ordinarily be caused by applications that have either a poor uptake or do not work as advertised.
  • This is because no media entity or consulting company has any financial incentive to either investigate or disclose this information.
  • It is jarring how great the gap is between the positive coverage of S/4HANA and both the public and private case studies. The money is almost entirely on the side of companies that promote S/4HANA. This can come in the form of receiving a commission for selling S/4HANA, or from selling an S/4HANA implementation project (the motivation of the SAP consulting partners), or from receiving funding to agree with or repeat information that is first released by SAP marketing. There is very little money on the other side of SAP. That is there is virtually no way to monetize any entity publishing accurate information about S/4HANA. However a functioning market requires information, and this means entities that will publish accurate, rather than purely promotional information.

Inconsistencies Between Sources on the Case Studies

The details of the published S/4HANA implementations show no consistency with the private and anonymous S/4HANA implementations. Secondly, the private S/4HANA implementations are much closer to what one would expect from implementing a new and immature application (along with a new database). One of the notable differences between the public and the private case studies is not only that all of the public implementations went live (while most of the private implementations did not), but the duration was vastly different. The durations posted for the public case studies are so much faster than has been the history with the far more mature ECC application that the stretch credulity. Other case studies, such as with Binderholz Nordic that have an unrealistic but longer timeline, make no sense when the individual tasks are evaluated. The shorter timeline case studies, if published, would make even less sense. Durations are the most elementary of information related to IT implementation. Areas such as what functionality was implemented, or the use of the functionality if far more difficult to verify without being on the actual account. However, the public case studies were not even able to provide convincingly false information on something as verifiable as project

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For such a large initiative, S/4HANA is not paying dividends to customers or to SAP. Many customers were promoted into implementing S/4HANA by SAP or their consulting partner, yet what have customers received in return from these implementations? From this research, we learned that there are many hidden S/4HANA implementations. They are non-functional, but those that made the decision to implement S/4HANA on the basis of SAP’s exaggerated claims would prefer if they were not discussed. It was not the objective of this research study to estimate the amount of waste in S/4HANA implementations, but it would have to be quite large.

What all of this means is that companies that use public case studies to set their expectations regarding S/4HANA will have wildly different experiences than what is expected from reading public case studies.

Also, public case studies do not serve to illustrate the risk of a S/4HANA implementation. Large amounts of information that should be considered and that will come up during a S/4HANA implementation are covered up. There have been numerous SAP customers that have announced S/4HANA projects, but over a year afterward, there is no public announcement. From the private case studies. It is quite likely that many or most of those implementations failed.

Obviously, SAP does not want to publicize this information. But it is not only SAP, and should be considered that the SAP S/4HANA customers also do not want this information made public.

There is an issue with the S/4HANA implementations. While it may not seem particularly strange or obvious when each individual case study is looked at individually when taken as a group a clear pattern emerges.

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Problems with the S/4HANA Go Lives Numbers

The problems with S/4HANA go-lives are apparent from the individual case studies. However, there are other data points as well outside of the individual case studies.

The job listings don’t come anywhere near to matching SAP’s current estimate of 3,500 live implementations. There will be job listings for any technology, even if that technology is entirely lacking in implementations because there is presales work that needs to be done. And even failed implementations will still consume consulting resources. But the job listings are clearly off what would amount to a robust number of S/4HANA activity proposed by SAP.

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When S/4HANA was first released, SAP stated that ECC development was finished. However, SAP has backtracked on this — with the vast majority of customers running ECC, it was not feasible to simply stop updating ECC.

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SAP has published a number of case studies for S/4HANA that show it as live. However, in a study funded by SAP and published by Forrester, SAP was only able to come up with three customers for Forrester to use in the study. And the average implementation budget for what they called the “composite customer” was $877,000. We estimate the TCO of SAP and other projects, and the sub-million dollar SAP ERP implementation is unknown to us. This means that SAP completely lied to Forrester, and Forrester went ahead and published this ludicrous study anyway. We covered this topic in the article How to Understand Forrester’s Fake S/4HANA TCO Study. This Forrester study is a complete joke, but it brings up interesting questions, and if SAP had thought it through, they probably would not have funded its publication. The biggest curiosity is how an application with 3,500 live customers (and with more than that currently in implementation), can result in SAP only giving Forrester three very small customers to use. It was easy money for Forrester. In their haste to publish the study, they forgot to include any listing for HANA, which means that either S/4HANA was implemented at all three customers without a database, or they made a reporting error. SAP resources, normally quite accepting of a study any quality as long as it reinforces their billability, tried to guess where that HANA budget may have gone. If it was included in the average $877,000 figure that is extra weird, as HANA is a very expensive database to buy and to implement.

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The following is a prototypical example of an estimate of S/4HANA go-lives.

There are many problems with this estimate.

  • The estimate was put together by ASUG, which serves as a repeater for SAP marketing claims.
  • There is exactly zero information about who filled in this poll. ASUG has not even listed the number of companies that responded to the poll.
  • If the “are already live” percentage was applied to all of the potential customers of S/4HANA, it would result in an estimate of roughly 6,495 live S/4HANA customers, which is far beyond even SAP’s own estimate of 3,500 live S/4HANA customers. This means that the poll is entirely unrepresentative of the customer base, which means the poll has no reason to exist beyond serving to promote S/4HANA.
  • This poll will be repeatedly referred to by various consulting companies, customers and media entities, without any focus being on whether the poll has any validity.

Reference

http://blog.asug.com/asugs-2019-state-of-the-community-study-reveals-sap-customer-insights-challenges-and-opportunities

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S/4HANA Case Study Analysis Implications

This analysis is entirely contrary to the coverage of S/4HANA. Nearly every entity that covers S/4HANA has an incentive to make the story appear better than it is.

We predicted that SAP would certify other databases for S/4HANA in the article Why SAP Will Have to Backtrack on S/4HANA on HANA. To our surprise, this has yet to happen. There is little doubt that the requirement to use HANA has held back S/4HANA implementations.

It is 2019, and more than five years from the planned drop of support for ECC by SAP. We previously predicted SAP would move that deadline past 2025. We view this deadline as entirely artificial and designed to scare customers into moving to S/4HANA and has nothing to do with SAP’s ability to provide that support. S/4HANA is now more than 4 years old and has so few live customers, and with ECC being updated it appears that ECC and S/4HANA will now coexist in the market for some time — much as the Oracle database does, with most Oracle customers using older versions of the database and not seeing the value to upgrading. This will create a fertile market for 3rd party support providers particularly as once a 3rd party support provider can cover ECC and BW, they can cover the needs of a large segment of SAP customers as SAP products outside of ECC and BW, even if implemented, have an exceedingly high failure rate.

This can’t have been SAP’s plan and means that either SAP will extend the deadline (which they will do) or the third party support business for SAP will explode.

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It is our conclusion that there are a large number of S/4HANA implementations that have failed and are being kept quiet. Customers may classify the projects as “postponed” but they are failures. It would be difficult to evaluate every ERP system on the planet, but S/4HANA has to be one of the least mature ERP systems ever to have a broad and high profile introduction. Oracle bombed very heavily with its rollout of Fusion (now cloud) ERP, but the damage was far less extensive because most Oracle customers simply refused to try to implement it (but still ended up owning a copy and were thus counted as “customers.”)

It is oddly difficult to get people on the record about their S/4HANA implementations.

The “buzz” around S/4HANA has actually decreased from 2017 when we published our study into S/4HANA go-lives.

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Conclusion

For the vast majority of customers that purchased and implemented S/4HANA, SAP and their consulting partners took advantage of their customers by misleading them about S/4HANA’s maturity as we covered in the article Why Did SAP Fake S/4HANA Maturity So Aggressively?

The following applies to this research conclusion.

This estimate may appear shocking to many readers, and it is in comparison to the estimates provided by many entities. However, there are no independent entities that actually track S/4HANA implementation figures. ASUG and SAPInsider have both published S/4HANA estimates that interestingly enough, match perfectly with SAP’s numbers when the studies where published. However, neither ASUG or SAPInsider is independent of SAP, or produce research or follow any research rules. They are trade publications, we read them to critique them but never taking anything in them seriously. They are designed to promote SAP. They publish what they are told to publish by SAP.

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Other sources such as Forbes or Diginomica are both funded by SAP and will publish uncritically any case study that is communicated to them.

Recent articles on S/4HANA adoption tend to reference one of these fallacious estimates and declare something like..

“adoption of S/4HANA is slow”

Adoption of S/4HANA is not “slow,” this interpretation completely underestimates the actual adoption problems of S/4HANA. This is the problem in a market where SAP marionettes nearly every entity that covers SAP. This provides a highly distorted view as to what is actually happening in the SAP market. Notice our disclosure form below, we take no money from vendors to produce content of any kind.

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