How SAP Sucker Punched Customers with S/4HANA

Executive Summary

  • SAP continually overstates the number of S/4HANA customers that are live.
  • SAP has misled customer how much cost and time S/4HANA is for ECC customers minimizing the problems with S/4HANA.

Introduction

SAP’s S/4HANA is an curious product. It is made more interesting in that it has what is in our estimation one of the highest overheads of any application ever introduced. This issue was highlighted by the following comment by Amed Azim.

“C4/HANA is SAP’s final attempt at getting the CRM story right. The intelligent enterprise and the front-back office suite all hinge on customers being already on S4/HANA for DATA to be shared between SCM and CRM systems. Solving for S4/HANA migration, again.”

This is correct. It is not only C/4HANA, but other SAP applications are forecasting that many customers will be migrating to S/4HANA. However, S/4HANA’s penetration is extremely low.

SAP’s Continual Overstatement of the Number of S/4HANA Customers

As of SAPPHIRE 2018 SAP stated that it had sold 8900 licenses of S/4HANA and had 1500 customers live on HANA. We published a Study on S/4HANA implementations. What we found was that SAP has been greatly exaggerating the numbers of live S/4HANA implementations since S/4HANA was first introduced.

Upgrade to S/4HANA or Lose the Value of Support?

SAP thinks that companies that don’t move towards S/4HANA are really missing out. In fact, SAP has stated that..

“If you are paying maintenance but not getting innovation, there is no reason not to upgrade. Support value comes from being upgraded.”

However, the cost of migrating to S/4HANA is enormous. The costs hit SAP customers for more angles than they can possibly forecast before they perform the implementation. And of course, Hasso Plattner who lives in a perpetual land of unicorns proposes that S/4HANA reduces a company’s TCO!

“Dr. Plattner says in the book “You wouldn’t believe my prognosed TCO savings (for S/4HANA), but here are some facts, data entry is three to four times faster, analytics is ten to one thousand times faster, the development of extensions is much faster, and there is significantly less database administration work, with a data footprint of 1/10 and an unlimited workload capacity via replication.””

Our score on Hasso’ “facts” are as follows:

  • Data Entry: No evidence presented, but no reason to think data entry is three to four times faster. If Hasso is referring to SAP Fiori, we found Fiori to be slower than SAPGUI!
  • Analytics: Slower than a lower hardware footprint for the same year of Oracle, DB2 or SQL Server.
  • Database Administration Work: Significantly more database administration work, as we cover in our Study into the TCO of HANA.
  • Data Footprint: Estimated to be between 30% and 50% smaller, as we cover in the article The Secret to Not Talking About the Cost of HANA.

Amazingly, SAP wants to be paid for the S/4HANA upgrade. And the major consulting companies are doing whatever they can to hide the cost of upgrading from customers. Furthermore, SAP is building its strategy around S/4HANA. However, if S/4HANA penetration continues to be so low, then what about these other items that rely upon S/4?

How SAP Could Improve its Customer Numbers with S/4HANA

SAP has two easy decisions to make on S/4.

  1. Certify Oracle, DB2 and SQL Server for S/4. This will stop penalizing companies and be forcing them to use the disaster that is HANA.
  2. Make S/4HANA free. S/4HANA should be covered by the normal upgrade. There is no reason for SAP to stab customers who already paid for ECC maintenance.

Those two things would do wonders for S/4HANA. A third thing they could do would admit too much defeat, so they won’t do it. but it is the following:

  1. Replace the HANA schema with the ECC schema. This will minimize the breakage of customizations and integrations.

The column-oriented design is entirely unnecessary for an ERP system.

Conclusion

Buying and implementing S/4HANA for companies that have ECC is a ridiculous proposal because of the costs it imposes on the customer. Its like SAP was body-slamming its customers in a way that will lead to some of the IT leadership losing their jobs because of how disruptive and expensive (in implementation) S/4HANA is. Secondly, there is no way around most of these costs.

We predict that S/4HANA is going to cost SAP customers in the future and lead to SAP’s declining market share in the large ERP market in the coming years.

We cover what customers should do about S/4HANA in the article What Should Customers Do About S/4HANA Failures?

SAP’s Inaccurate Messaging on S/4HANA as Communicated in SAP Videos

Fact-Checking SAP Information on S/4HANA

This video is filled with extensive falsehoods. We will address them in the sequence they are stated in this video.

SAP Video Accuracy Mesurement

Appleby's StatementAccuracy % of the CommentExplanationLink to Analysis Article
S/4HANA is what allows key processes to be digitized.
0%
ECC was already fully digitized and digitized across key business functions.The Problem with Using the Term Digital Transformation on IT Projects
HANA is a Platform
0%
HANA is not a platform, it is a database.How to Deflect You Were Wrong About HANA
Fiori is a major advantage for S/4HANA.
10%
In S/4HANA implementations Fiori is infrequently used when S/4HANA. How Accurate Was SAP on the Number of Fiori Apps?
Fiori is far more efficient than what came before.
10%
In testing Fiori and S/4HANA, Sven Deneken's statements did not hold up. There was a particular weakness in actually making changes after noticing something needed to be changed, and we found the efficiency below that of ECC with of course SAPGUI.
S/4HANA is innovative as it brings "real time inventory."
0%
Sven Deneken brings up the topic of "real-time capabilities," however there is nothing particularly real-time or different in terms of a reaction than ECC. Whenever you make a change in ECC or any other ERP systems for that matter, the entry is real-time. Sven Deneken states that "the physical inventory is the same as the digital inventory." However, under what system would this not be true?What Happened to the Term Perpetual Inventory?
S/4HANA is innovative because it allows access to supplier information.
0%
Sven Deneken states that information about the supplier is "just a fingertip away." Sven Deneken may be familiar with ECC, where supplier data is also a fingertip, or say mouse click away. It called the Vendor Master in ECC.
Sven Deneken says that the cycle could be changed to daily or sub-daily.
0%
Why would that occur? This is a very strange scenario that is being laid out.
S/4HANA is innovative because it allows MRP to be rerun interactively for a product location.
0%
Sven Deneken is extremely confused when he states that S/4HANA allows a fresh MRP run to be performed for a specific product location and that this is a differentiator for S/4HANA. For a single product location, there is no ERP system that cannot run MRP for a single location. Secondly re-running MRP does not remove uncertainties. MRP can be re-run when something changes. For example, when the forecast changes.Performance Problems with HANA and MRP
Sven Deneken states this demo shows SAP has reimagined inventory management.
0%
However, all of this functionality, save for several of the graphics shown in the video have already been available in ECC for many years, in fact, decades.

The Problem: A Lack of Fact-Checking of S/4HANA

There are two fundamental problems around S/4HANA. The first is the exaggeration of S/4HANA, which means that companies that purchased S/4HANA end up getting far less than they were promised. The second is that the SAP consulting companies simply repeat whatever SAP says. This means that on virtually all accounts there is no independent entity that can contradict statements by SAP.

Being Part of the Solution: What to Do About S/4HANA

We can provide feedback from multiple HANA accounts that provide realistic information around S/4HANA — and this reduces the dependence on biased entities like SAP and all of the large SAP consulting firms that parrot what SAP says. We offer fact-checking services that are entirely research-based and that can stop inaccurate information dead in its tracks. SAP and the consulting firms rely on providing information without any fact-checking entity to contradict the information they provide. This is how companies end up paying for a database which is exorbitantly priced, exorbitantly expensive to implement and exorbitantly expensive to maintain. When SAP or their consulting firm are asked to explain these discrepancies, we have found that they further lie to the customer/client and often turn the issue around on the account, as we covered in the article How SAP Will Gaslight You When Their Software Does Not Work as Promised.

If you need independent advice and fact-checking that is outside of the SAP and SAP consulting system, reach out to us with the form below or with the messenger to the bottom right of the page.

Financial Disclosure

Financial Bias Disclosure

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

S/4HANA Implementation Research

We offer the most accurate and detailed research into S/4HANA and its implementation history. It is information not available anywhere else and is critical correctly interpreting S/4HANA, as well as moderating against massive amounts of inaccurate information pushed by SAP and their financially biased consulting ecosystem.

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Option #3: Are You a Buyer Evaluating S/4HANA?

For companies evaluating S/4HANA for purchase. See this link for an explanation to software buyers

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References

TCO Book

 

TCO3

Enterprise Software TCO: Calculating and Using Total Cost of Ownership for Decision Making

Getting to the Detail of TCO

One aspect of making a software purchasing decision is to compare the Total Cost of Ownership, or TCO, of the applications under consideration: what will the software cost you over its lifespan? But most companies don’t understand what dollar amounts to include in the TCO analysis or where to source these figures, or, if using TCO studies produced by consulting and IT analyst firms, how the TCO amounts were calculated and how to compare TCO across applications.

The Mechanics of TCO

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  • Learn why ERP systems are not a significant investment, based on their TCO.
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  • Learn how SCM Focus can provide you with unbiased and well-researched TCO analyses to assist you in your software selection.
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  • Chapter 2:  The Basics of TCO
  • Chapter 3:  The State of Enterprise TCO
  • Chapter 4:  ERP: The Multi-Billion Dollar TCO Analysis Failure
  • Chapter 5:  The TCO Method Used by Software Decisions
  • Chapter 6:  Using TCO for Better Decision Making