- SAP along with many entities made projections about S/4HANA’s ability to be implemented.
- Four years into S/4HANA who was right and who was wrong?
This article was published on Feb 8th 2019. S/4HANA just had its 4th birthday as it was introduced in Feb 3rd, 2015. S/4HANA has been a highly promoted application with many entities making projections about it. Four years is quite a while for an application to build up a history. In this article, we will cover who got it right and who got it wrong.
Overestimation of S/4HANA’s Usage
SAP has been playing a game for four years where they have exaggerated the implementation success of S/4HANA. The following is a common set of statements made about S/4HANA by SAP. This is from the Q2 2018 analyst call.
“Driven by fast adoption of SAP S/4HANA, cloud and software revenue grew by a stellar 10%.
And, remember that new high-growth cloud solutions like S/4HANA Cloud and C/4HANA will have more impact on growth as they scale to be a bigger part of the mix.
And then, maybe, coming back to S/4HANA, obviously, very successful ramp-up with customers.
We have close to 2,000 live customers on S/4HANA by now already (Q2 2018), and we have another close to 3,000 ongoing implementation projects, which means that given the implementation timeframe for S/4HANA is greatly reduced versus traditional ECC implementations of the past decade, we will soon have 5,000 reference customers to speak for us.”
Large Numbers of S/4HANA Reference Customers on Wall Street Calls, But Only Three for Forrester
Interestingly, when it came to having Forrester perform an SAP funded study to evaluate S/4HANA implementations SAP provided Forrester with a grand total of three customers to talk to. Of 2000 customers, SAP, which is obviously aware of every single one of the 2000 “live” customers were able to come up with three names. And of those three, all three had tiny implementation timelines and costs.
When SAP is talking to Wall Street. But when it comes to providing clients, Forrester gets three clients. Let us do some math. 3/2000 = .0015. We covered Forrester’s “study” in the article How to Understand Forrester’s Fake S/4HANA TCO Study.
What is the Risk Level of S/4HANA When Implemented?
Since S/4HANA was first introduced we rated as the highest risk of applications. This was primarily due to the immaturity of the application which we determined through first-hand testing of the application. S/4HANA in our view was release several years too early, which we covered in the article How Accurate Was SAP on S/4HANA Being Complete?
Our estimate was recently supported by UpperEdge who stated the following about S/4HANA projects.
“While 32% of S/4 clients have a go-live date, our research shows project failure rates go as high as 70%.”
We have never performed an estimate, but we do know that S/4HANA failures are quite common.
The Recent High Priced S/4HANA Failures
S/4HANA has had a number of high profile failures or postponements which include the following:
- UnderArmour (which we covered in the article The Real Reason for Under Armour’s S/4HANA Problems) (cost unknown)
- Lidl (which we covered in the article KPS Continues to Keep Promote HANA for Retail for Lidl After Failure) (estimated to 500 million Euro
- Haribo (cost unknown)
- The Swiss Government (estimated to rise to close to a billion Swiss Francs or USD)
Uncovered in the IT media is that fact that there have been countless postponements of S/4HANA projects and very few of the 2100 estimated customers that SAP states as live are actually live, which we covered in the article A Study into S/4HANA Implementations.
How did we figure this out?
Well, the first clue was the immaturity of S/4HANA when we tested it. Then we started getting complaints from companies implementing S/4HANA about that exact thing. Finally, we evaluated every S/4HANA case study (both public and private) and analyzed each. When we did this we found that most made no sense.
SAP marketing had released information that they did not realize allowed us to figure out that many of the go-lives were fake, exaggerated, not really live, etc.. This is true even though S/4HANA has appeared like wildfire on resumes, and is now currently one of the most falsified skills in the SAP space, along with its cousin HANA.
Who Was Right About S/4HANA?
Two entities stand out.
- One is us. Brightwork Research & Analysis published more accurate information about S/4HANA than anyone else in the market.
- Two is UpperEdge. UpperEdge consistently told the truth about what it saw from working with SAP clients around S/4HANA. Like Brightwork, UpperEdge is not a partner with SAP, and they are not controlled by SAP, and generally, it is apparent from what they published that they don’t care what SAP thinks.
Who Was Wrong About S/4HANA?
This is a long list indeed. However, the primary culprits are the following:
- SAP: (obviously, and the worst offender as they knew they were lying more than any of the following parties).
- The SAP Consulting Companies: One cannot know what was said in every private meeting, but generally the SAP consulting companies I worked with or knew of provided my clients with terrible advice on S/4HANA and really only seemed to care about selling S/4HANA projects and staffing S/4HANA resources. We could include the links of our analysis of SAP consulting firms inaccurate articles on S/4HANA, but then this article would be 1/2 links.
- IT Media: Nearly all the IT media is paid by SAP to run paid placements. They wrote mostly what SAP wanted them to write.
- ASUG: ASUS is really just a marketing arm of SAP that masquerades as a user group. We only list them separately from SAP because many people think that they are independent from SAP.
- Gartner and Forrester: Forrester has egg all over their face from the S/4HANA TCO/ROI study they produced, but Gartner was less active in promoting S/4HANA. However, neither of them did anything to educate their customers as to the reality of S/4HANA.
The past four years have been a torrent of false information about S/4HANA from all the major information providing entities in IT. Two entities got it right, and they were the two that are not partners with SAP and are not paid by SAP. That is no coincidence.
Getting to the Detail of TCO
The Mechanics of TCO
- Understand why you need to look at TCO and not just ROI when making your purchasing decision.
- Discover how an application, which at first glance may seem inexpensive when compared to its competition, could end up being more costly in the long run.
- Gain an in-depth understanding of the cost, categories to include in an accurate and complete TCO analysis.
- Learn why ERP systems are not a significant investment, based on their TCO.
- Find out how to recognize and avoid superficial, incomplete or incorrect TCO analyses that could negatively impact your software purchase decision.
- Appreciate the importance and cost-effectiveness of a TCO audit.
- Learn how SCM Focus can provide you with unbiased and well-researched TCO analyses to assist you in your software selection.
- Chapter 1: Introduction
- 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