Last Updated on March 21, 2021 by Shaun Snapp
- This is the only independent research into S/4HANA implementation studies.
- This study determines the actual adoption of S/4HANA.
- The importance of differentiating research from marketing information.
*The introduction is in the free portion of the research and will not be repeated here.
Introduction to the Study
This is the S/4HANA Implementation study by Brightwork Research & Analysis. It is the only study into S/4HANA’s implementations that is independent of SAP’s influence. As such, it draws very different conclusions that either SAP’s marketing claims around S/4HANA or the conclusions by media entities that have been paid by SAP to promote S/4HANA.
Our References for This Article
If you want to see our references for this article and other related Brightwork articles, see this link.
Lack of Financial Bias Notice: We have not financial ties to SAP or any other entity mentioned in this article.
- This is published by a research entity.
- Second, no one paid for this article to be written, and it is not pretending to inform you while being rigged to sell you software or consulting services. Unlike nearly every other article you will find from Google on this topic, it has had no input from any company's marketing or sales department.
Getting Clear on the Terminology
S/4HANA is SAP’s new ERP system, meant to replace SAP ECC, the renamed R/3 ERP application. S/4HANA combined many SAP initiatives into one application. These initiatives include the following:
- Although never presented in this light, S/4HANA is a large house cleaning project that includes code removal, code adjustments, and other typical changes 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 by 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.
- 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 several articles in the Brightwork blog dedicated to HANA and S/4HANA.
- 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 said that S/4HANA represents an “opportunity” to SAP customers to evaluate all current customizations and remove them. SAP is silent on 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 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 covered in the Brightwork article Why S/4HANA Should be Free.
- Unlike previous versions of SAP’s ERP system, an integrated system, SAP introduced S/4HANA with only the Finance module complete. It is the first time that that SAP has introduced an ERP system this way. It means that S/4HANA would have to be implemented as a non-integrated system. This important fact about S/4HANA is lost on many.
- SAP has moved to incrementally developing the non-Finance S/4HANA modules, meaning that the implementation complexity is far higher than any ERP version that SAP released in the past. The implementation differences between S/4HANA versus ECC are actually so complex it is beyond this study’s scope. An introduction to these topics is covered in this article How Accurate is the Messaging on S/4HANA?
- S/4HANA means re-implementing the ERP system and doing so in a piecemeal manner. IT departments and the SAP consulting companies are generally staffed to analyze and 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.
Getting Actual Adoption of S/4HANA
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 customer numbers statement 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.
What is the Definition of a Software Customer?
Unknown to many who follow software vendors, being a “customer” only means that they own a license for S/4HANA. In many cases, the number of customers who have a license of something means more than what it does with S/4HANA. However, with S/4HANA, SAP has engineered these numbers 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 meager 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. At the end of 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 Business Suite customers on HANA. At the end of 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. To negotiate away an indirect access claim, S/4HANA is one of the most preferred applications in front of customers to purchase.
- 2,700 is 50% of the number of S/4HANA licenses claimed at the 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.
Customers that are live on S/4HANA are certainly more committed than a customer that uses S/4HANA as shelfware. 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 that the business relies upon substantially. 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 there are presently over 6,300 “customers” of S/4HANA reported by SAP as per the Q2 2017 earnings call (roughly 26% being new and 74% being upgraded), the 850 number is reported by SAP as live is most certainly exaggerated.
“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. 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 of customers reported by SAP. There is certainly a lag between the purchase of software and going live with the software, but this is a strange percentage duplicated with few applications.
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 various topics, it is clear that ASUG has transitioned from being a user group to 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 set up very well to fund truly independent research.
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 necessary to know to interpret the study, we will move into the study itself.
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 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 was 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 written 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 can publish information that is true but not flattering. However, we ran into something unusual when performing this research. Those sources 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.
- SAP’s S/4HANA NDA: SAP has required that companies sign an NDA as part of implementing S/4HANA. We learned of this from several SAP customers. This means that a company could open itself to legal implications by disclosing this information for the study. We do have a number of the client 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.
- The Available Data Points on S/4HANA Implementations: The study does not have the luxury of obtaining all S/4HANA implementation data points. The only entity with 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.
- S/4HANA Functionality Review and What it Means for S/4HANA Implementation: The background information is not only based on discussing and interviewing those with experiences on S/4HANA projects. It is also in reviewing the capabilities of S/4HANA. We used the logic that has served us well that one cannot implement functionality that 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 the positive bias of being released by entities that tend only to release positive information related to the project. The review of the S/4HANA functionality helped point to how S/4HANA projects turned out.
The Importance in Differentiating Research from Marketing Information
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 that are not bound by research rules. They have a straightforward agenda when they release information. For consulting companies and software vendors, they intend to increase sales of implementation services or software.
Customers who agree to have filtered information released in conjunction with a consulting and company and/or software vendors want 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 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.
The Categories of Case Studies
The research is based upon several case studies that are categorized as follows with the following sources.
- Public Case Studies: These are case studies that are published. They are often what amounts to press releases and often on the part of consulting companies or SAP. The source of these case studies will normally be something like a Computer Weekly article or published on SAP’s website.
- Missing Public Case Studies: 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.
Private Case Studies: Private case studies are implementations that were from where it was possible to obtain a source who was familiar with the implementation. Here, only the broadest outlines of the sources for the private case studies are not feasible for SAP or the client to guess as to who provided the information.
The S/4HANA Public Case Studies
Before reading through these public case studies, now is an opportune time to mention 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 do 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 that have been through even one S/4HANA implementation is difficult.
Secondly, and quite importantly, the public case studies all met customer expectations, while most private case studies did not. Several 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 on the same implementation published by SAP (and implemented by IBM). Still, 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.
What follows is an analysis of each of these case studies. It is not an exhaustive list of S/4HANA projects, but the public case studies had at least some information about them made available. Some of these case studies contain information that needs to be analyzed but was too lengthy to be included in this study. Therefore, in those cases, there is a synopsis of the case study and then a link out to a separate article for those interested in reading more details.
HANA TCO and Cost Categories Cost Description Cost Category Estimated Multiple or Fraction Traditional Cost as a % of Total Cost Purchase Price Software 1.7 Average Software Multiple or Fraction 1.7 13% Changed Table / Data Structures + need to check, confirm availability of add-on's Implementation 2.5 General HANA Implementation Costs Implementation 2.5 Required Data Archiving, House Keeping, Clean Up Implementation 3 Complexity of Getting the Sizing Right (in particular, if user or data growth rates are unknown vs. any prior pattern) Implementation 3 Average Implementation Multiple 2.75 20% Frequency of SAP HANA Database Patches, Version Upgrades Maintenance 2.5 Complexity of "Multiple" Database Building Blocks "Commodity" Hardware/Appliance Costs, Refresh Cycles (Very Spiky, Peaky Utilization) Maintenance 1.8 Average Implementation Multiple 2.15 60% Non-Commodity Hardware/Appliance Costs, Refresh Cycles (Very Spiky, Peaky Utilization) Hardware 3 Inefficient use of Non-Commodity H/W Resources - Cores, GB Ram, lots of SAP TDI based storage (X5 for Logs (x1) Hardware 3 DC Impacts, Significant Additional Power, Cooling, Space, + Any Drag Along ("per core licenses" for backup/recovery, monitoring, scheduling, etc) Hardware 2 Total Hardware Multiple 2.5 7%
In addition to these companies, the following can be found on SAP’s website.
- Lamb Weston/Meijer
- Turner International Argentina
- Swiss RE
- Comfenalco Cartegena
- GenScript Biotech
- SCHOTT KAISHA
- Siam City Cement
- National Electric Vehicle Sweden
- Woowa Brothers
- WEIG Group
- ASIA CUANON Technology
- Tuk Telecom Finance
- Broadgreen Finance
- DaiKonie Michaelshoven e.V.
- T&G Global Limited
- Emami Cement
- Ashapura Minechem
- Asian Paints
- Delaware Consulting
- Technische Universitat Munchen
- Eastman Chemical
- Horizon Pharma
- McInnis Cement
- Grupo Eurona Telecom
- Abeam Consulting
- Dickinson and Associates
- O.C Tanner
- ArcLight Cinema
- BYBO Dental Group
- Mangalam Cement
- Indeks Bilgisayar
- ICHIBAN Crop Science
- Electronica Steren
Interpreting the Public Case Studies
Several things stand out about the public case studies.
- The Limited 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 clear what was implemented. 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, even less of the S/4HANA functionality outside of finance was even ready to be implemented when Swiss Properties 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 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: It is clear that many 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.
- Bizarre Companies 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 it 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.
In addition to the public case studies above, there are also case studies published on SAP’s website. Some of the case studies discussed above are included on the SAP website, some aren’t but SAP adds another seventy-four case studies. 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, 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.
As with the studies of pretty much any software, these published studies are really just pure marketing collateral.
Of all the information sources 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 seventy-four case studies. However, the source is so problematic I cannot include them and be considered to follow a good research approach.
There are quite a few case studies to keep track of, so I have generated the following matrix, which shows what can be taken from each case study. The matrix below shows the public case studies by three questions:
- Implementing Company
- Was the implementation by a consulting company (that is self-implemented)?
- Is the case study credible?
- If the cast study was not credible, why not?
- Believable Implementation Time?
- Was this a normal ECC customer?
This attempts to adjust for the bias of the case studies. As discussed, while companies are named in published case studies, they are actually released through consulting companies or SAP. Therefore, to get an accurate representation of the public case studies, we need to evaluate them actively. We want to balance the chance of being overly optimistic with the chance of being overly pessimistic.
- We may have coded a case study as credible that, in fact, has large issues and is not live in the real sense.
- Alternatively, the case study may have been coded as not credible, which in fact is live and adding value.
If public implementation case studies were reported 100% honestly, this process would not be necessary, but that is obviously not the case.
- For all of the case studies, only one, Toyota Indus Motor Company, rated a positive or a “Yes” for three different questions, “Is This Case Study Credible,” “Is the Implementation Timeline Believable,” and “Is This a Normal Customer for ECC?”
- For the one case study that answered all of these questions in the affirmative, the experiences of a consultant that worked on the project indicated a very mixed result from the implementation and a heavy effort actually to bring the application live.
- A single case study with high implementation effort and mixed results are not what one would expect for all the marketing effort put into S/4HANA.
This study listed nineteen public case studies, but none came out on the other side as credible, with timelines that made sense and are more beneficial to the companies that were actually able to take S/4HANA live than using ECC. This brings up how many of the 350 S/4HANA live customers, as estimated by ASUG, would meet these rather basic criteria.
The Missing Public Case Studies
Just as prominent as the public case studies that came from announcements are the announcements of S/4HANA selections that never announced they were live. The following three companies were announced to have selected S/4HANA previous to the press release publication, which was on October 20, 2015. This is roughly a year and a half before this research being published.
Arcelor Mittal S.A.
“ArcelorMittal S.A., the world’s leading steel and mining company with a presence in 60 countries and 232,000 employees, selected SAP S/4HANA to streamline its core business processes, increase overall productivity and drive significant cost savings. ArcelorMittal wants to secure its leading position by serving an increasingly strong innovation agenda across the globe, delivering better customer service and creating more shareholder value.” – SAP/PRNewswire
Associated British Ports
“Associated British Ports (ABP), the United Kingdom’s largest ports group, selected SAP S/4HANA for a major business transformation program.” – SAP/PRNewswire
“Dabi Atlante is the largest dental equipment manufacturer in Brazil with almost seven decades of history based on pioneering research and development in the dentistry sector. The company chose SAP S/4HANA in order to accelerate the modernization of its IT landscape and support its growth agenda through effective governance of its acquisitions and mergers. Dabi is working to reduce the total cost of ownership by 20 percent each year, decrease the time of closing accounting processes by 50 percent and reduce manufacturing costs by 15 percent.” – SAP/PRNewswire
“Koelnmesse GmbH, an international trade fair organizer located in Cologne, Germany, hosts around 75 trade fairs and more than 2,000 conferences annually. Koelnmesse is looking to energize business with SAP S/4HANA, cloud marketing edition.
“With SAP S/4HANA, our team can effortlessly analyze contact data, create target groups and trigger campaigns,” said Achim Stolzki, vice president, IT, Koelnmesse GmbH. “This will allow us to run marketing with speed and agility, deliver contextually relevant offers and gain real-time insights, resulting in higher revenue and growth.” – PRNewswire
“Zhejiang Greenco is a Chinese manufacturer of air fluid equipment, specializing in compressors and vacuum pumps. With SAP S/4HANA, the company will standardize production processes and data, achieve system integration and establish comprehensive automation to help decrease costs significantly while accelerating the supply chain. The SAP hybris® Commerce solution will help Zhejiang Greenco better target and engage with customers wherever they are, delivering the best possible customer experience across every channel. SAP will also help Zhejiang Greenco accelerate financial close processes, working to reduce month-end close cycles to just one day while using just half the staff. The estimated increase in efficiency of inventory calculation and analysis is 1000x” – PRNewswire
After the publication of these companies selecting S/4HANA, there has been no publication of any of these companies going live on S/4HANA. One and a half years is a long time to wait, and each of these companies would have had to have selected S/4HANA before the October 2015 article being written.
And this brings up another question. Why are there are so few published S/4HANA implementation case studies?
Now we will move into an analysis of the private case studies. As you will see, the private case studies look absolutely nothing like the published case studies. None of the private case studies were massaged by IBM, Deloitte, or Answerthink of any other entity intent upon providing a rose-colored impression of the implementation of S/4HANA to try to make more S/4HANA implementation sales.
The Private Case Studies
The private case studies are listed below. As I have not included customer names, each case study has received a number.
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 implementation. I do not want to specify in any more detail than this, as the study intends to keep the sources anonymous.
Private Case Study (#1)
This customer is a utility that planned to implement S/4HANA Finance and used Accenture as the implementation company.
The implementation duration was to have been 12 months. However, the project is still considered as work in process as there have been multiple delays due to technical issues, code errors in S/4HANA, patch application failures, and testing frustrations. There has been rework of thousands of customizations that the S/4HANA code checker missed.
The S/4HANA Code Checker has been heavily marketed by SAP as helping companies identify all the areas where the code of a customization must be adjusted. The code checker is new, S/4HANA is new, and the code checker was introduced primarily for marketing reasons. Therefore, it should not be surprising that it does not work as advertised. Actually, this leads to a related topic. In my implementation experience, most of the SAP tools don’t really help much, and I dislike having them on projects. This includes highly touted tools such as the ASAP methodology, SAP Best Practices templates, RDSs, etc..
It creates an impression on the part of the client that they can get things done more quickly than they actually can. I covered how misleading RDS’s were in the following article. If a customer trusts something like the S/4HANA Code Checker, but it does not work out, there is no recourse for the customer.
During this implementation, entire business processes were missed. Rework of the Solution Manager links to business processes is now necessary. The data translation issues between S/4HANA and other systems resulted in $4 million on remediation in Phase I.
The company is interested in a minimal investment in S/4HANA to make Finance work. The company is currently in a holding pattern for 12 months while WorkDay is implemented. It will be necessary to divert funds to core retooling.
The company plans to implement S/4HANA Finance, then wait and see. Secondly, this company plans to investigate alternative, disruptive technologies. Third, they plan to tinker at the edges with excellence, IoT, AI, and AR/drones investment.
 Solution Manager is the combination content management solution and infrastructure management and organization application used on some SAP projects.
Private Case Study (#2)
This customer is in the utility industry, and they are investigating moving from ECC to S4/HANA and using only Finance. They were estimating a 12 to 18 Months implementation duration, but the project is now postponed. This company cannot make the business case. The current financial modeling indicates that S/4HANA will cost the company around 2.5 – 2.8 times more in TCO than staying on ECC or going Suite on HANA. For this reason, the business case was declined at the board of director’s level.
- The custom code remediation and CoA rework would exceed $1million and a duration of 10 months.
- The testing effort alone would exceed $500k and a duration of more than 9 months.
- This company cannot see how EAM would work across the platform. It has been learned by this company that Fiori apps do not work in EAM, and CRM for IS-U is incomplete. The project, therefore, was deemed too high a risk to undertake.
- This company uses Salesforce to access customer data, and this company needs an urgent plan to mitigate the legal risk. The company sees no value in S/4HANA foreseen in the next 5 years.
Private Case Study (#3)
This customer is in the utility industry. The company is looking at EAM and core Simple Finance, using ECC. The currently estimated implementation duration is 36 months. S/4HANA is under investigation for feasibility. Concerns have been raised about the quality of the solution and fit for the business.
- This particular customer has over 20,000 customizations and is concerned about the expected TCO to migrate and TCO to own S4/HANA solution.
The company is approved for investment but no longer headed down the path for S/4HANA and instead will go Suite on HANA and then go into a holding pattern for 3-4 years.
This risk on this project is considered extreme and high. This company cannot deploy the required solution in S/4HANA in isolation as it would require multiple platforms, and the costs would be prohibitive. Instead, this company will go to Suite on HANA and remediate the custom codebase.
In this company’s determination, S4/HANA is too expensive and too immature. The company decides to go to Suite on HANA and invest in other technologies around the edges. SAP Cloud, not an option due to cost and performance.
Private Case Study (#4)
This customer is in the mining industry and had estimated its implementation to be Estimated between 12 to 18 months. The company went to Suite on HANA due to the high predicted S/4HANA TCO combined with product immaturity. During its research, the customer discovered that other S/4HANA mining clients have many technical issues with the application, which changed its plans with S/4HANA.
The company will continue to invest in Suite on HANA but will revisit S4/HANA in three years. This company has concerns about the quality of support from SAP.
Private Case Study (#5)
This customer is in the retail industry. It implemented wall to wall S4/HANA – Simple Finance, Logistics, Supply Chain, Concur, SuccessFactors, Ariba, etc. All cloud-based. The implementation duration was fifteen months. This customer is live but with several issues. The latest SPS application resulted in four issues requiring emergency remediation. S/4HANA has harmed the business.
There is a large amount of technical remediation required for the client’s customizations.
The S/4HANA investment decision is approved. No further SAP investment. Instead, the company plans to invest in drones and other technologies.
SAP is engaged on-site to remediate issues. There are concerns around the quality of support from SAP. (This is similar to the experience that Toyota Indus Motor Company also faced in its S/4HANA implementation).
No further SAP investment is planned by this company for the next 36 months other than maintenance.
Private Case Study (#6)
This company is in the utility industry. It attempted to implement S/4HANA Finance. However, it failed.
This was a very problematic implementation with a budget that rose from $14 million to $50 million and was eventually canceled.
No further investment in S/4HANA is planned.
While spending such a large amount of money and then failing on implementation may seem surprising, there are, in fact, many ECC implementations where companies spent far more than $50 million before failing.
Private Case Study (#7)
This customer is an SAP consulting company. The company implemented S/4HANA Finance.
In reviewing the company’s website, it was clear that the company very much highlighted their S/4HANA experience. However, in discussions with a junior member of this consulting company, the implementation was not what the company had communicated to prospects.
“We basically did the bare minimum to implement S/4HANA. Its a vanity project for marketing really. A company our size does not have really a need for S/4HANA. Plus, we are not given time to work with the system internally. The entire focus for the consultants is to be billable — and that means not worrying much about doing things internally beyond the basics. I think our accounting just does their analysis in Excel and does not use S/4HANA at all. But I have been in presentations where senior members in our company have proposed that S/4HANA has been transformational for us. It hasn’t. Things are about the same as before. It is nice to have a S/4HANA demo environment to work in, but honestly, I don’t have the time to scale myself up on it.”
Private Case Study (#8)
- This company is in the home goods market. They started with S/4HANA Finance. They had plans to move to more of S/4HANA — which they purchased based on the concept that they would soon have an integrated system. SAP offered them S/4HANA very inexpensively and promised them priority resources. Because the rest of the suite was not viewed as ready, they have a S/4HANA system that is more for demo purposes than one source within the company. But because the internal staff was not augmented, the company has “run out of steam on the S/4HANA implementation.”
“I am not sure the IT group knows what to do with it (S/4HANA). The application was bought for a few strange reasons. I think there were some support deadlines that were imposed. This spooked our management. Overall, this was really an IT initiative. And our company has always had a really strong relationship with SAP at the senior level. The new idea presented to us is that we will use the leading edge system (S/4HANA) to test things. However, that was not how it was originally presented. I remember when the implementation was announced, and we were all supposed to be using it now — and using it (S/4HANA) as an integrated system.”
The source cannot seem to get a straight story on what the next steps for S/4HANA are. The company continues to use ECC as it did before the S/4HANA implementation.
Private Case Study (#9)
This customer is in the oil and gas industry. The company implemented S/4HANA Finance. However, they ended up being 3x over budget on the implementation.
This company was hit with $20 million in indirect access charges, but I could not determine if the indirect access issues were related to S/4HANA.
Private Case Study (#10)
This customer is in telecommunications. They were planning on implementing S/4HANA Finance. Yet, once they began evaluating S/4HANA, what they learned caused them to postpone the implementation. They fell into a constant analysis phase, eventually spending $2 million analyzing all aspects of S/4HANA. From what they learned, they decided not to implement the software.
Private Case Study (#11)
This company is in the aerospace industry. They implemented S/4HANA Finance planning to use Deloitte but then halted the implementation.
Deloitte originally proposed a $40 million budget. However, Deloitte then returned with a far higher estimate of $200 million after what appeared to be lowballing to get into the account.
In response, the customer canceled the project. So the software is unused.
Private Case Study (#12)
This company is in the transportation industry.
The company planned to implement S/4HANA Finance. However, they also learned things about S/4HANA that caused them to cancel the project.
I could not find the specific item that was the straw that broke the camel’s back and caused them to change their plans.
Private Case Study (#13)
This company is a manufacturer. The scope is so specific that revealing the client would reveal the client when combined with other information provided below.
However, the most interesting part of this case study that we could uncover is that the company was told it could upgrade from ECC to S/4HANA when this is not possible. This idea of an upgrade has been communicated even within the company and without. However, it did not actually occur.
We do use S/4HANA finance functions. However, Fiori has been far more work than anyone anticipated. The effort to get the Fiori applications to work has been considerable.” (This source used the term applications, but that is not technically accurate. Fiori is the UI, although SAP refers to them as apps.)
Private Case Study (#14)
This company is a consumer products company. This is another project where the overall implemented scope has been explained to us. Still, we can’t provide all of the implemented components without revealing the company to those familiar with the catalog of S/4HANA implementations.
While S/4HANA Finance was implemented yet, this particular company uses other products to perform the enhancements to the supply chain. So while the presentation is that the rest of the suite is being used, that is not the case according to our source. This has created a high integration overhead project as the integration between S/4HANA and other SAP applications. S/4HANA and other SAP components have been very high in maintenance, which this company had not planned for. And for this reason, there is insufficient support of the users of the (S/4HANA) system and the other SAP components.
Overall, the source questioned the sustainability of the overall SAP implementation.
Various S/4HANA Implementations
There were quite a few S/4HANA case studies that we obtained a glimpse of, but where only one area of the implementation was described. Either the timeline or what the company was using S/4HANA to do or particular challenges faced.
One reason for the confidence that the private case studies that have been listed generalize to the larger S/4HANA “installed base” is that the stories shared a remarkable consistency. Customers are learning the limitations of S/4HANA individually, experiencing the same things, and globally. The pattern is the same where virtually identical information comes from both SAP and their consulting partners.
The important distinction is that because virtually no realistic information is being published about S/4HANA implementations, each customer has to discover these items independently.
The things written in this research paper are known by many people. Many people inside of SAP and in consulting companies and various customers distributed globally. The important feature is that the vast majority would face negative career consequences if they publish what they know on S/4HANA.
Observations from the Private Case Studies
There is no way to sugarcoat the private case studies. They show inferior outcomes from S/4HANA. However, as a researcher who has analyzed S/4HANA and HANA from many dimensions, they were not surprising.
This is because an application cannot be implemented above what its capabilities actually are because one can’t ride a motorcycle that is missing major parts.
Observation from the Case Study Overall
As one can see, the anonymous and private S/4HANA case studies look quite a bit different than the published S/4HANA case studies. Not many companies co-release press releases with SAP or their implementation partner, stating that they just failed on a S/4HANA implementation. Those types of stories are buried. And they are buried for several reasons.
One reason is to burnish the reputation of management. Management at companies needs to maintain their credibility, so failures are kept as quiet as possible. This was repeatedly a story in other private case studies that lacked any real detail regarding the study aside from the fact that they were not working as presented on SAP’s website.
Secondly, companies don’t want their investors or employees to know anything about money spent in this way. IT implementations have a roughly 50 percent success ratio, with “success” being a relative term. However, the presentation of most companies regarding their IT initiatives is that 100% are successful. Covering up IT failures is normal and has both corporate reasons as well as career reasons.
All of these issues apply to software vendors as well. Although not stated directly, software vendors do not talk about the failure rate of software implementations. SAP is not different from other vendors in this area. However, SAP can bring out far less mature applications than most competing vendors and have those applications actually implemented because of its market power.
There are many examples of this over the years. And it is no stretch to say that if another software vendor had S/4HANA in the state that it has been in since its initial release, it is unlikely it would have been released when it was. The private case studies’ problems demonstrate that SAP has a margin of error with introducing immature applications that other vendors do not enjoy.
Interestingly SAP proposes that because most of its implementations of S/4HANA have been at either insubstantial companies with a minimal number of users, this can be used to market into the SBM.
“More than a fourth of the projects so far have been completed at companies with less than 100 SAP users.” – SOA People
The most likely reason why so many customers have purchased or been given S/4HANA that are not the traditional market for ECC is that the application is simply not mature enough for large customers.
Conclusion and Recommendations
- So Few Case Studies: SAP has really very few S/4HANA case studies as a percentage of all of the S/4HANA licenses in customers’ hands. 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.
- Unsubstantial Case Studies: SAP’s public case studies that contain enough information to conclude anything are insubstantial and not compelling. As was shown in the public case study matrix, several case studies were simply not credible, and the information has been clearly engineered by SAP and with client representatives coached on what to say. A high percentage of the case studies that were commented upon in this research study were implemented by SAP consulting. These consulting partners implemented S/4HANA merely to sell S/4HANA implementation consulting. Even if an SAP consulting partner had implemented S/4HANA, it should not be taken as an endorsement of S/4HANA as ERP systems are primarily designed for companies that make or distribute physical objects. Service companies have implemented ECC, but this has never been the primary implementation market for ECC or ERP companies generally. None of the case studies of S/4HANA implementations that consulting companies implemented were implemented by consulting companies that did not also offer S/4HANA implementation services.
- Inconsistencies in the S/4HANA Case Studies: Many if not most public stories regarding S/4HANA implementations have holes in them. The companies that implemented S/4HANA are insubstantial, or the scope of workflows the company possessed does not cover the functionality proposed to be implemented, or other statements contain inaccuracies or impossibilities call into question the validity of the other parts of the case studies. Considering the holes’ size, 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 the control over SAP consulting companies and the funding of IT media can 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 can also 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. As a researcher who has read through an enormous amount of material on S/4HANA, 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, selling a S/4HANA implementation project (the motivation of the SAP consulting partners), or 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, which 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 history, with the far more mature ECC application than 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 an 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 could not provide convincingly false information on something as verifiable as project.
- S/4HANA’s Payoff?: For such a large initiative, S/4HANA is not paying dividends to customers or 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 who decided to implement S/4HANA on 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 the public case studies to set their expectations regarding S/4HANA will have wildly different experiences than what is expected from reading the public case studies.
Also, the 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 case study is looked at individually when taken as a group, a clear pattern emerges.
Implications of the Research and Future Research
This research has several implications, which we will be analyzing in future research.
- The Logic of Many Customers to Continue Paying a Premium for SAP Support
- What Companies Should Expect Regarding SAP’s Claims for MRP and End of Period Close Performance Improvements.
- Potential Expansion in Use of Non SAP Applications
- The Future of S/4HANA as Exclusive to HANA
- The Overall Roadmap
- Investments into ECC
Uncovered Research Details and More on SAP
Our research ended up unearthing various information about S/4HANA, which combined with our long-term research into the product. To keep this research to a digestible length and not cover areas that are too detailed for the research intent, we did not publish many of these details as part of this research. We offer advisory on everything from S/4HANA to many other areas of SAP. The idea outlined in our book Rethinking Enterprise Software Risk is that those companies wanting to determine SAP products’ implementation ability should engage a company that is not financially tied to SAP and does not offer SAP implementation services. You can find out about our S/4HANA and SAP advisory at this link.
Updates and Reaching Out to Brightwork
This research will be updated in the future as it attempts to track developments in S/4HANA. If you have exposure to information on S/4HANA implementations, we encourage you to reach out to us. In return, we can provide some information that we did not publish in this article, which gets into some more detail.