2019 Update: How Many Live SOH and S/4HANA Customers Are There?

Executive Summary

  • SAP has proposed 3500 go-lives for S/4HANA. What SAP says is normally repeated by those that cover SAP.
  • What is the reality of the S/4HANA go-lives in 2019?

Introduction

Recently we were questioned about how many customers are live on S/4HANA or Suite on HANA, which is ECC on HANA.

This is a topic we had been considering after tracking S/4HANA numbers for roughly 3 years. We covered this of live S/4HANA customers in 2017 in The S/4HANA Implementation Study, and in 2018 we covered this topic How Accurate Was SAP on S/4HANA’s Go Live Numbers?

We decided to write this article to update readers as to the background for our current estimate for 2019, or at least for mid-2019.

Taking the AOK Hessen S/4HANA Case Study as an Example

Typically when a case study is published, information is communicated that SAP and the customer and implementation partner did not want critically analyzed.

This is a good example of the issues with some of the S/4HANA case studies.

AOK Hessen is an insurance company. They stated that they implemented performance management and financial accounting. They stated that they integrated the

“SAP HANA in-memory database and data structures tailored to this technology, applications can leverage their full potential and achieve significant speed advantages.”

We know that this part is untrue and that AOK would have seen a performance decline for transactions, which is, of course, most of what S/4HANA does, as we covered in the article HANA as a Mismatch for S/4HANA and ERP.

They also stated with S/4HANA they took

“A big step in digitization and in our fields of action Automation, Simplification and Big Data Management.” For future S/4HANA applications,”

This would not have happened and HANA is not simplified and S/4HANA has nothing to do with Big Data Management. This is a common feature of S/4HANA go-lives. They have a strong tendency to refer to things that are not within the domain of ERP or that don’t come as part of S/4HANA. AOK Hessen goes on to make this claim around Fiori.

“SAP Fiori will be used. Fiori enables ergonomic and reduced-click user interfaces, which greatly accelerate the processing of mass processes and make them more efficient. In conjunction with intelligent regulations and process automation, it is possible to process insured claims more quickly.”

First, why is this statement in the future tense? If the system is live, it would be Fiori is used. Furthermore, there is no evidence that Fiori allows for users to processes transactions faster than SAPGUI. In fact, user testing often shows that Fiori slows the process versus SAPGUI.

  1. One question that comes to mind is why it sounds like SAP wrote this case study, AOK Hessen or AOK Hessen being coached by SAP. If a case study includes talking points from SAP marketing that are known to not be part of the reality of the system, then the independence of the company from the influence of SAP can be questioned.
  2. But secondly, this shows a common feature of S/4HANA implementations that they tend to not be in manufacturing or distribution companies — which is the core of ECC’s customer base, and the primary logic for ERP (that it ties together finance, sales, production and materials management) This case study does not prove that the S/4HANA suite is ready, because AOK Systems would have implemented only a small part of it.

The Swiss Property S/4HANA Example

SAP is very good at making glossy case studies like this. Swiss Property is a tiny company that appears to have been given some type of incentive to “implement” S/4HANA, and their business processes not only does not map to S/4HANA, but they also don’t map to ERP. 

The Typical Technique for Analyzing S/4HANA

Every article we have read on S/4HANA implementations, a specific case study assumes that everything published in the case study and every number reported by SAP is true. This ignores the fact that the primary reason information is released about S/4HANA is to promote S/4HANA, HANA, and related consulting services. The only releases of information that contradict this is when a S/4HANA project goes south and information leaks out. And even here, the information is typically highly censored, with the statements from the customer being that there has been just a “brief hiccup” and soon the project will be back on track.

How Our Technique Differs

First, we aren’t a toadie of SAP trying to sell SAP projects or paid by SAP to promote S/4HANA, we are a research entity without any conflicts.

  • We both analyze each case study in depth, but then perform analytics on the batch of case studies, which drives further insights.
  • When we do this, curious or interesting observations come from the overall case study analysis.
  • Case studies are designed for decision-makers to read, most implementers don’t read the case study, that means that the case studies aren’t designed to impress those people that know, but those people that do not know.
  • We often combine the published research with our contacts that provide very different information from the published case study.

Conclusion

We have performed analysis into over 120 S/4HANA case studies and we are preparing that research for consumption which companies can access on a per-user basis. The benefits of this research are as follows:

S/4HANA Paid Research Benefits Listing

 
Benefits
Description
1Accuracy on S/4HANAThe most accurate information on S/4HANA implementations anywhere entirely devoid of any SAP influence. This make us the only entity we are aware of (and we are aware of all of them) ACTUALLY interested in communicating the real story about S/4HANA's implementation history. Nearly all that publish material on S/4HANA emphasize promoting S/4HANA. This is in our estimation the only studies that has not rigged the results to continue to receive funding from SAP. The study's customer is you, or the research purchaser, not SAP or Deloitte.
2Detailed S/4HANA Case Study AnalysisDetailed analysis of close two hundred S/4HANA case studies. This cross case study analysis includes insights that are not available anywhere else. This research has competitive intelligence, software buyer and investment implications.
3Based in SAP Project Domain ExpertiseNearly all of the coverage of S/4HANA implementations is by either biased SAP consulting firms, or by media or IT analysts who have never worked on an an SAP project, and in many cases never touched SAP software. We have worked on many SAP projects going back to the late 1990s. Our conclusions are based upon a combination of the case studies along with our expertise in as the top researchers into S/4HANA (with the most, and most accurate material published) and SAP implementations to determine fact from marketing hyperbole.
4Estimating the Fit of S/4HANA to Client Business RequirementsThose that cover S/4HANA implementations never discuss the fit of S/4HANA to the customer. It is simply assumed that the application was a good fit because it was selected by the customer. However, this is critical to understanding the potential benefits of S/4HANA. Our analysis uses the estimate of the fit between S/4HANA and each implementation to provide insights as to what the outcome likely is per implementation. We then take this to an analysis of the overall fit as aggregated for the implementation data set.
5Forecasting the Implications of the ImplementationsThe S/4HANA implementation history has implications for SAP competitors, third party support providers, investors, and IT departments. We cover the major implications of the observed pattern of S/4HANA implementations. Due to the unfortunate fact that all of these entities receive rigged information on the topic of S/4HANA and therefore have by in large formulated inaccurate opinions regarding S/4HANA's history and its future.
6Related Links and Supporting InformationWe frequently refer to previous articles that support our analysis of different features of case studies. These links are included in this research offering in order to provide readers with the appropriate background.
7Evidence for Prospects During Sales InitiativesThis research provides ability to be shared with prospects. (each prospect requires a separate use license)

Search Our Other S/4HANA Content

Brightwork Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

HANA & S/4HANA Research Contact

  • Interested in Research on S/4HANA & HANA?

    It is difficult for most companies to make improvements in S/4HANA and HANA without outside advice. And it is not possible to get honest S/4HANA and HANA advice from large consulting companies. We offer remote unbiased multi-dimension S/4HANA and HANA support.

    Just fill out the form below and we'll be in touch.

References

https://searchsap.techtarget.com/news/252463458/Plattner-Cloud-is-the-way-forward-for-S-4HANA-systems

*https://news.sap.com/2017/11/sap-s-4hana-at-jti-change-as-opportunity/

https://www.sap.com/documents/2016/12/300f5998-9d7c-0010-82c7-eda71af511fa.html#

https://www.sapvirtualagency.com/FileExplorer/Partners/S4HANA%20smb/Flipbook_S4_Partner_SME_Customer_Stories.pdf

https://www.sap.com/documents/2017/07/c2743ffd-c87c-0010-82c7-eda71af511fa.html

The Risk Estimation Book

 

Software RiskRethinking Enterprise Software Risk: Controlling the Main Risk Factors on IT Projects

Better Managing Software Risk

The software implementation is risky business and success is not a certainty. But you can reduce risk with the strategies in this book. Undertaking software selection and implementation without approximating the project’s risk is a poor way to make decisions about either projects or software. But that’s the way many companies do business, even though 50 percent of IT implementations are deemed failures.

Finding What Works and What Doesn’t

In this book, you will review the strategies commonly used by most companies for mitigating software project risk–and learn why these plans don’t work–and then acquire practical and realistic strategies that will help you to maximize success on your software implementation.

Chapters

Chapter 1: Introduction
Chapter 2: Enterprise Software Risk Management
Chapter 3: The Basics of Enterprise Software Risk Management
Chapter 4: Understanding the Enterprise Software Market
Chapter 5: Software Sell-ability versus Implementability
Chapter 6: Selecting the Right IT Consultant
Chapter 7: How to Use the Reports of Analysts Like Gartner
Chapter 8: How to Interpret Vendor-Provided Information to Reduce Project Risk
Chapter 9: Evaluating Implementation Preparedness
Chapter 10: Using TCO for Decision Making
Chapter 11: The Software Decisions’ Risk Component Model

Is SAP Justified in Lying About S/4HANA?

Executive Summary

  • SAP told enormous lies about S/4HANA.
  • Is SAP justified in lying about S/4HANA for competitive reasons?

Introduction

This article is in response to a question we received about the reports of problems with S/4HANA.

Is It Ok For S/4HANA to Lie?

“You may have plenty of evidence of SAP marketing machine running strong…However, the world is also spinning awfully fast. Prior to iPhone’s introduction, Nokia was selling 1 out of every two mobile phones in the world. Few could have foreseen its demise in merely a few years… In a winner take all world today, customers rightfully and perhaps naively demand flashy solutions as the key for survival. Many also demanded faster IT solution refresh cycles under the name of Agile, which again could be debatable. SalesForce came out of a small office in SF to be the king of CRM, essentially forcing SAP to reboot through internal and external moves….. Under customer and competitive pressure, SAP has every reason to market forward-looking solutions… If you decide to buy a car only based on a TV commercial, is it all the fault of car companies?”

Our Response

“If S/4HANA were a car, it could not be purchased. Consumer protection laws are in place that would stop it from being sold as it would be an incomplete car missing various components. So I would stay away from any examples in the consumer market. I found this comment you made odd. “You may have plenty of evidence of SAP marketing machine running strong…However, the world is also spinning awfully fast. ” So this is a problematic comment. It puts you in the category of people who do not care what is true.

Now let us look at this part of your comment. “In a winner take all world today, customers rightfully and perhaps naively demand flashy solutions as the key for survival. Many also demanded faster IT solution refresh cycles under the name of Agile, which again could be debatable.” This translates into a justification for lying. But SAP has no justification for lying like this. No company deserves to “win” by lying. And lying makes the market less efficient, not more efficient. This is similar to the catch me if you can argument used by salespeople that I covered in this article Caveat Emptor: Catch Me if You Can. SAP is not “keeping pace” with other liars in a “winner take all world.” It is the pacesetter. See this article where we put SAP in the bottom category of vendors in terms of accuracy Honest Vendors Ratings for SAP.”

Conclusions

Customers were aggressively misled and the culprits are obvious. Now there is an attempt by those that make money from SAP are about justifying this lying by any means necessary.

Search Our Other S/4HANA Content

Brightwork Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

HANA & S/4HANA Research Contact

  • Interested in Research on S/4HANA & HANA?

    It is difficult for most companies to make improvements in S/4HANA and HANA without outside advice. And it is not possible to get honest S/4HANA and HANA advice from large consulting companies. We offer remote unbiased multi-dimension S/4HANA and HANA support.

    Just fill out the form below and we'll be in touch.

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

Not only will this book help you appreciate the mechanics of TCO, but you will also gain insight as to the importance of TCO and understand how to strip away the biases and outside influences to make a real TCO comparison between applications.
By reading this book you will:
  • 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.
Chapters
  • 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

What Should Customers Do About S/4HANA Failures

Executive Summary

  • S/4HANA has sucked massive amounts of resources from SAP customers that implemented it.
  • We will recommend what to do about this now that S/4HANA has failed so dramatically.

Introduction

This article is in response to a question we received about the reports of problems with S/4HANA.

1. Adjust Who One Sees as Sources of Information

Stop listening to SAP or Deloitte & co or any of the entities laid out in the article Who Was Right About S/4HANA Readiness? without finding independent corroboration.

Without fact checking these entities, customers are guaranteed to be lied to.

2. Just Say No to Vendor NDAs

Never accept an NDA from a vendor. Never implement software that has an NDA attached.

3. Inform SAP and Your Consulting Partner You Know You Were Lied To

Inform SAP that continual lying will not be tolerated and that immature products cannot simply be misrepresented without consequences.

4. Request Compensation

Demand compensation for implementing a product that SAP knew was defective when it was being sold. This means that SAP would be liable beyond the license amount, but also for restitution of implementation monies.

5. Question Compliant IT Departments

IT departments are also culpable in this equation. Many IT departments wanted to implement S/4HANA so they could get the fact they had managed a S/4HANA project on their resume. If the business in companies continues to allow their IT departments to be so easily manipulated by software vendors and consultancies, they will not get the systems that they need to run their business. The waste in the SAP space is enormous and will continue until the point where other parts of the company begin to ask questions.

6. Public Audits

Public and government agencies that implemented S/4HANA should demand audits of these implementations. What was promised prior to the S/4HANA implementation and what was actually delivered? It is well known that SAP and SAP consulting firms consider public firms easy targets. They will continue to take this view as long as no one requests that public taxpayer-funded entities are audited.

Conclusions

Customers were aggressively misled and the culprits are obvious. Furthermore, there are specific steps that SAP customers can take to use the information of S/4HANA to make positive changes in how they manage SAP.

Search Our Other S/4HANA Content

Brightwork Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

HANA & S/4HANA Research Contact

  • Interested in Research on S/4HANA & HANA?

    It is difficult for most companies to make improvements in S/4HANA and HANA without outside advice. And it is not possible to get honest S/4HANA and HANA advice from large consulting companies. We offer remote unbiased multi-dimension S/4HANA and HANA support.

    Just fill out the form below and we'll be in touch.

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

Not only will this book help you appreciate the mechanics of TCO, but you will also gain insight as to the importance of TCO and understand how to strip away the biases and outside influences to make a real TCO comparison between applications.
By reading this book you will:
  • 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.
Chapters
  • 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

Is it Really Easy to Point Fingers at SAP?

Executive Summary

  • When we exposed the falsehoods proposed by SAP around S/4HANA we were told it was easy to point fingers at SAP.
  • We provide the reasons why this is a false argument.

Introduction

This article is in response to a question we received about the reports of problems with S/4HANA.

The Quote on How Easy it is to Point Fingers

Easy to point fingers,now what? Name one mega ERP provider, there are major disasters associated with it…from SAP to workday. Two sides of the coin..three in this case: Software developer, SI and customer. SAP has brilliant minds, I am lucky to know many, but SAP does not own the customers’ processes. Deloitte abounds best consultants, I was there, but Deloitte might not have the best insight into new SAP products or the customers’ real requirements. Customer is not always right here and can certainly be at fault for turning blind eyes counting on SAP or SI to take you down to the unnumbered new house. Until a day everybody runs a process that spells 1,2,3, best chance of success always goes to the three-horse carriage.

Our Response

“The first premise of your comment is not correct. The SAP space is primarily filled with financially biased entities that rig information against buyers. They not only don’t point fingers, they mindlessly repeat whatever SAP says. So as we are one of the only entities of many thousands to call out SAP, it appears that pointing fingers at SAP is in practice quite difficult.

Secondly, we pointed fingers before any of this happened. We predicted the wide-scale problems with S/4HANA while Deloitte and co. were telling everyone they should move to S/4HANA.  Just one of our articles dealing with clear exaggerations around S/4HANA goes back to April 2016 in When Articles Exaggerate SAP S/4HANA Benefits.

We covered who got S/4HANA right and who got it wrong in this article Who Was Right About S/4HANA Readiness.

As far as ERP projects having high failure rates this is true, but S/4HANA has a higher failure rate than any other we track — and this is for one obvious reason. Since its introduction 4 years ago, S/4HANA has not been ready to be implemented. SAP has falsified an enormous number of its go-lives. See our research for the details. http://bit.ly/2EuoqPv

S/4HANA has failed as much as it has because it was a product that was immature but presented as ready. If companies had known the actual maturity of S/4HANA, it would likely have not been implemented.

Neither the article nor any of the comments have anything to do with the topic of the customer’s processes, and does not state or take the position that the customer is always right. In any case, these were not the primary factors for the S/4HANA failures. Many of the S/4HANA customers were already ECC customers, and S/4HANA has no new functionality, so why would the customer processes be related to the issue? Secondly, customers are actively hiding S/4HANA failures. So this is not customers making the claim. This is the evidence coming out through direct contacts from lower level employees direct to us, or from media coverage.

We called this correctly years ago, while all of the brilliant minds you talked about in SAP mislead customers about S/4HANA. If you want to talk about solutions, companies and taxpayers could have saved many hundreds of millions if they had listened to us rather than Deloitte and co. That seems like a pretty good solution to us.”

Conclusions

One of the biggest false claims is that it is easy to point fingers at SAP. In fact, it is very rarely done. The reason being that most of the entities in SAP are incentivized not to point fingers at SAP.

Search Our Other S/4HANA Content

Brightwork Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

HANA & S/4HANA Research Contact

  • Interested in Research on S/4HANA & HANA?

    It is difficult for most companies to make improvements in S/4HANA and HANA without outside advice. And it is not possible to get honest S/4HANA and HANA advice from large consulting companies. We offer remote unbiased multi-dimension S/4HANA and HANA support.

    Just fill out the form below and we'll be in touch.

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

Not only will this book help you appreciate the mechanics of TCO, but you will also gain insight as to the importance of TCO and understand how to strip away the biases and outside influences to make a real TCO comparison between applications.
By reading this book you will:
  • 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.
Chapters
  • 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

Why Do SAP S/4HANA Customers Have to Sign an NDA?

Executive Summary

  • SAP makes S/4HANA customers sign NDAs.
  • What does this say about the maturity and quality of S/4HANA?

Introduction

This article is in response to a question we received about the reports of problems with S/4HANA.

The Quote on How Much S/4HANA Failures are Published

But to be fair – this is the case for all embarrassing things both companies and persons does. We all tend to exaggerate the good things we do and not talk about the bad things.

Our Response

“Now on your comment about observing data points, is generally true. However, in this case, I don’t think it applies very well. I know of many failed S/4HANA implementations that never became public. People within those companies reached out to me. The Under Armour situation is far worse than reported — and is being covered up by IT. So the problems with S/4HANA are suppressed, not exaggerated. IT departments routinely suppress their failures. I can walk into any SAP account and find large numbers of applications that are not working as advertised or just on zombie servers, and it is in secret. And there is something else. Customers sign NDAs when they implement S/4HANA. This is very odd, and the question is why. The only conclusion I can come to is that SAP knew the issues they would have with S/4HANA and needed to put a muzzle on their customers.”

Conclusion

This should be a good lesson for customers of SAP or other vendors. If a vendor asks you to sign an NDA as part of purchasing an application, this is an indicator that the application is highly problematic. As soon as an NDA is part of a software purchase, this is a good indicator that you should pass on the application. No vendor should ever submit an NDA to a customer as part of an application purchase.

Search Our Other S/4HANA Content

Brightwork Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

HANA & S/4HANA Research Contact

  • Interested in Research on S/4HANA & HANA?

    It is difficult for most companies to make improvements in S/4HANA and HANA without outside advice. And it is not possible to get honest S/4HANA and HANA advice from large consulting companies. We offer remote unbiased multi-dimension S/4HANA and HANA support.

    Just fill out the form below and we'll be in touch.

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

Not only will this book help you appreciate the mechanics of TCO, but you will also gain insight as to the importance of TCO and understand how to strip away the biases and outside influences to make a real TCO comparison between applications.
By reading this book you will:
  • 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.
Chapters
  • 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

Why Did SAP Fake S/4HANA Maturity So Aggressively?

Executive Summary

  • S/4HANA was massively exaggerated in terms of maturity by SAP.
  • The question answered by this article is why SAP did it.

Introduction

If you observe the comment debates that I had with SAP consultants previous to around nine months ago, they debated me very hard on S/4HANA. They then did the same thing on HANA. S/4HANA has performed a massive face plant in implementation. It is difficult to see how a major new ERP version could be less successful than S/4HANA. Once you take into account how falsified the S/4HANA go live numbers as we covered in How SAP Controls Perceptions with Numbers are and how most companies that have the S/4HANA license are not implementing it, you see a failed product launch. Those people that promoted S/4HANA look quite inept or corrupt (take your pick) right about now.

Where Did All the Pro-S/4HANA SAP Consultants Go?

Those SAP consultants have mostly disappeared from my articles. When they start to bring up SAP’s talking points, I bring up the known history of these two products and they gradually get exposed. They don’t like this. So they don’t comment on my articles anymore; instead, they are looking for soft targets. So they are saying the same things but to people that don’t research and don’t know.

How Much did SAP Know?

All of this was known and premeditated on the part of SAP. We have the dates of the statements around S/4HANA and S/4HANA’s immaturity, and we can pinpoint when the statements were made and the state of S/4HANA at the time of the announcement.

How Did So Many Customers End Up With Unimplemented S/4HANA Licenses?

As time has progressed, the ratio of “live” S/4HANA customers to those that hold a license has been steady at roughly 1/5 or 20%.  SAP has stated that there are thousands of current S/4HANA implementations underway, but evaluation of job postings does not support this claim.

When SAP sold S/4HANA to many customers, they both knew they would not use it, and pressured many customers to purchase S/4HANA to satisfy an indirect access claim or through adding it to the BOM of other products. This was done to exaggerate the numbers of S/4HANA sales to Wall Street and prospects. They would have to have known that a large percentage if not most of those that engaged in a S/4HANA implementation would fail.

Why Such Extreme Fakery?

So why? It all sounds illogical.

My conclusion is for short term gain. Some executives need to get paid and show Wall Street they are making progress as soon as possible. Pulling S/4HANA forward or releasing it early enabled SAP to make a splash in the market earlier. However, they got caught with their pants down. This is because development has made so little progress since S/4HANA’s introduction. So it makes the initial statements around S/4HANA look even more inaccurate than the executives thought they were at the time. But when you gut your development, and offshore a significant component of it, then there are consequences. SAP now has enormous numbers of low paid developers working on things.

Conclusion

Executive compensation and how SAP selects executives is critical to understanding how SAP made so many false statements around S/4HANA’s maturity. SAP selects only the most unrealistic executives, executives like Vishal Sikka, Bernd Leukert, Rob Enslin, Bill McDermott, Luca Mucic. People that will say anything without consideration for what is true.

Search Our Other S/4HANA Content

Brightwork Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

HANA & S/4HANA Research Contact

  • Interested in Research on S/4HANA & HANA?

    It is difficult for most companies to make improvements in S/4HANA and HANA without outside advice. And it is not possible to get honest S/4HANA and HANA advice from large consulting companies. We offer remote unbiased multi-dimension S/4HANA and HANA support.

    Just fill out the form below and we'll be in touch.

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

Not only will this book help you appreciate the mechanics of TCO, but you will also gain insight as to the importance of TCO and understand how to strip away the biases and outside influences to make a real TCO comparison between applications.
By reading this book you will:
  • 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.
Chapters
  • 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

Why It Is Important to Pull Forward S/4HANA Code Remediation

Executive Summary

  • S/4HANA code remediation is one of the most critical parts of S/4HANA implementations.
  • In this article, we will explain why it is important to pull the remediation effort forward.

Introduction

S/4HANA means radical changes in the code that companies have developed. In this article, we will make the proposal that companies that plan to move to S/4HANA should not wait until the implementation to perform the code remediation analysis.

The Problem Getting Accurate Information on S/4HANA Code Remediation

SAP has published its perspective on remediating code for S/4HANA. Both SAP has its consulting partners have consistently underrepresented the complexity involved in code remediation to customers in order to make the migration to S/4HANA seem to be less work and less cost than it actually is. In this article, we review the material on remediation without any SAP bias.

The Confusing Aspects of S/4HANA Code Remediation

SAP’s explanations of the process and how to use the tools for S/4HANA code remediation are extremely confusing and requires determining a path independent of SAP.

The Major Factors in S/4HANA Code Remediation

S/4HANA means using HANA and this means that the tables change, that code that was originally written to be portable between databases now has to be altered for only HANA. It means that SQL must change. Overall, S/4HANA upgrades will be the most extensive and trouble-prone code remediations that an SAP customer will normally have faced (for their SAP systems at least).

Code Remediation Analysis Versus Code Remediation

Code remediation analysis is different than actually performing the code remediation. The code remediation analysis or CRA is simply the process of determining what items need to be changed and then planning the work effort and even the resourcing. One typically attempts to obtain a list of code items to be remediated, and then determining the severity of most of the remediations, and then applying an appropriate time estimate (which then goes to budget) for each remediation. This can be done without owning any S/4HANA software because the rules of how the code needs to be changed are known.

The Approach of SAP and their Consulting Partners

SAP and SAP consulting companies typically want this analysis to be pushed into the implementation when they are firmly in control of the project. The strategy is to keep the unappealing details away from the customer until they have signed so that it reduces the resistance on the part of the customer to move to S/4HANA or to move to S/4HANA in a particular timeframe.

Conclusion

Rather than listening to SAP or their compliant consulting partner and perform the code remediation into the project it actually makes much more sense to pull the remediation analysis forward so that the implementing company can incorporate the remediation estimate into the project plan before consultants or SAP hit the project in force.

Search Our Other S/4HANA Content

Brightwork Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

HANA & S/4HANA Research Contact

  • Interested in Research on S/4HANA & HANA?

    It is difficult for most companies to make improvements in S/4HANA and HANA without outside advice. And it is not possible to get honest S/4HANA and HANA advice from large consulting companies. We offer remote unbiased multi-dimension S/4HANA and HANA support.

    Just fill out the form below and we'll be in touch.

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

Not only will this book help you appreciate the mechanics of TCO, but you will also gain insight as to the importance of TCO and understand how to strip away the biases and outside influences to make a real TCO comparison between applications.
By reading this book you will:
  • 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.
Chapters
  • 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

The Realities of Upgrading SAP and Oracle Cloud ERP

Executive Summary

  • Upgrades for cloud ERP applications are not very straightforward.
  • Often organizations using ERP have limited resources to devote to adopting new capabilities as they are released by vendors. They’re also wary of pushing aggressive updates that can have a large impact on various aspects of the business.
  • In the case of SAP and Oracle, their cloud ERP applications have far less functionality than their on-premises counterparts.
  • S/4HANA, which SAP promises will have 20% more functionality every quarter, is marketed as having a speed of innovation that will amount to instability for its client user base. Brightwork does not recommend S/4HANA Cloud for production environments before 2019.
  • Oracle ERP Cloud accounts for a small percentage of its overall ERP business. Money being funneled into Oracle ERP Cloud has not translated into application benefits or ease of upgrades.
  • Oracle does not push its Cloud ERP customers to its latest updates, so organizations can adopt changes at a pace that fits their business. Field experience shows that these Oracle ERP Cloud upgrades are in fact difficult and lead to substantial downtime.
  • Not all vendors are equal in the cloud. Oracle ERP Cloud works better with vendors like Workday or ERPNext, which started in the cloud and have a long history of providing updates while minimizing disruption for their customers.

*Disclaimer. This article makes statements that apply to SAP S/4HANA Cloud and Oracle ERP Cloud . It does not generalize to NetSuite (an acquired cloud ERP by Oracle) or to SAP’s acquired cloud applications. Brightwork Research & Analysis categorizes Oracle and SAP’s internally developed cloud applications separately from their acquisitions. 

Introduction: The Issues with Upgrading SAP and Oracle Cloud

This article will describe what is often an overlooked aspect of cloud ERP. Moreover, this is the reality of upgrades for cloud ERP. You will learn about the reality of upgrading SAP and Oracle ERP.

A Brief History of Cloud/SaaS Vendors

Cloud/SaaS vendors started up around 15 years ago as a way to leverage the Internet to compete with on-premises vendors that had more abundant resources, marketing budgets, sales teams and other big vendor luxuries. The first SaaS vendors were concentrated in simpler applications (CRM being the defining SaaS application, with Salesforce the defining SaaS vendor) that could allow all or nearly all of the customers to work off of a single database instance (in many cases) but most importantly a single application instance. This eventually came to be known as multi-tenancy. SaaS vendors also provided free trial access to their software and easy cancellation terms. The concept was that rather than following the standard and expensive sales process where viewing the system was controlled by pre-sales demo teams, the prospects could test out the application often for free. I became enamored by the Arena PLM application in 2008 following this exact process.

Everyone reading this article right now uses some type of cloud application, be it Gmail, a cloud invoicing program, Facebook, etc.. We often don’t think of them as cloud/SaaS, we just think of them as “websites.” However, they are in fact cloud/SaaS applications.

In the rush to embrace the cloud, application categories that have never been historically “cloud” inherited cloud expectations. Wall Street, with its cadre of technically shallow analysts, has yet to get the memo that not all enterprise applications are equally straightforward for migration to the cloud.

One of these non-historically cloud application categories is ERP. And one of the inherited cloud expectations became pushed upgrades.

Upgrading Cloud ERP Applications

Diginomic published the article “Workday Bows to Enterprise, Reins in Release Cycle” in 2013. The following quotations from the co-CEO Aneel Bhusri caught my eye.

“I just want to crank out new functionality but our customer groups said no, we need more time to do these updates,” he explained.

It’s a totemic shift for Workday, which has hitherto made a selling point of the frequency of updates compared to the once-every-three-years-or-worse cycles of its on-premise competitors. Release 23 next August will be the last of the current regime, after which Workday will fall in with the same twice-yearly release schedule and Summer and Winter naming system as cloud CRM giant Salesforce.com.

The shift is a reflection of a paradox that many cloud application vendors face as they win increased adoption among established enterprises. For all the agility that such organizations aspire to, there are limits to the management resources they can devote to supporting new capabilities as they’re introduced. Workday has had to throttle back the frequency of updates to match those constraints.

The irony is that — although Workday presumably intends to maintain the same rate of innovation under its sparser release cycle — those looking on from the faster-moving, consumer-led end of the cloud industry may see it as evidence Workday is becoming more like the traditional enterprise software vendors that it claims to supplant.

In another move designed to ease the update cycle further, Workday has added a 4-week preview phase to the release process. As well as having 2-3 weeks for technology testing of a sandbox release instance before rolling out the production instance, customers will in the future have the option of letting users access a preview instance where they can try out new features or test new business processes.”

Facing the Reality of Cloud Updates

The Diginomica article on Workday demonstrates the challenges faced when upgrading an ERPish system (I say “ish,” as Workday does not have supply chain functionality) in the cloud.

If we can all recall, the original idea of SaaS was that the upgrades would be performed in a way that is seamless for the user. Multi-tenancy combined with a single code base for all customers.

Why is this Wall Street analyst so happy? Well, he thinks that all enterprise systems can be as easily migrated to the cloud as CRM. This makes him see reduced operational expenses for the software vendors he tracks as far as the eye can see.

Does the Cloud = Money?

This is a reason that Wall Street bid up the price of cloud companies and is promoting SAP and Oracle to overstate their “cloudiness.” This tantalizing prospect is the idea of many customers shared over a far smaller investment than with on premises software. This profitability for cloud vendors promised by Wall Street has yet to appear. The most profitable vendors continue to be the major monopoly on-premises vendors. (Salesforce has weak profitability, as does Azure. The only impressive profitability of any size comes from AWS.)

While some simple software categories, notably CRM, works like that, ERP systems do not work this way. This Diginomica article back in 2013 on Workday’s upgrade process gave us a hint of these complicating factors. Moreover, all of this is quite common for cloud ERP vendors.

The following quotation is from Rushabh Mehta of ERPNext who is very upfront about their cloud upgrade process.

“We push minor upgrades seamlessly without the customer knowing, but a major release takes 2-3 months for us to push across the customers… unlike GMail or CRM, ERP has enormous implications on things like finance, payroll, etc., so any change in configuration could be disastrous, so customers are naturally wary of pushing aggressive upgrades.

There needs to be a fine line here. Some customers can get a longer window so they can schedule any potential disruption.”Rushabh Mehta

Unequal Cloud Capabilities

SAP internally developed products that don’t “do the cloud” very well. Oracle’s long-term problematic unifying development project, one of the longest in the history of enterprise software, was called Fusion, which is now Oracle ERP Cloud (in part). However, both of these applications have far less functionality than their on-premises counterparts and also come with the negative implication of SAP and Oracle’s cloud.

Unfortunately for the major monopoly enterprise software vendors, it is not that easy to be good in the cloud. If all vendors could be, they would be. Furthermore, it is one thing to bring out a good cloud CRM system, it is quite another thing to create a cloud ERP system. It can’t be something a vendor is doing because it is trendy, but this seems to be the case with both SAP and Oracle.

Back when the cloud was just starting off, SAP and Oracle did everything they could to undermine it. SAP and Oracle speak of the cloud now because Wall Street has informed them they have no alternative. SAP and Oracle, however, have zero interest in upsetting their on-premises software business, which has been amazingly profitable for both of them.

Taking a Step Back with SAP and Oracle Cloud

This brings up the question of why a company would want to get what amounts to a weak host with S/4HANA Cloud and Oracle ERP Cloud (i.e., choosing SAP or Oracle as your hosting provider) versus just putting the much larger S/4HANA “on premises” edition on AWS.

The historically on-premises vendors have tried to propose that they are the equal of historically cloud vendors. It has become more than apparent at this point that cloud capabilities are a distinct capability. AWS gets it. Google gets it. SAP and Oracle do not get it.

It’s the difference between doing something because it is trendy, versus doing something because you believe in it.

What SAP Has Been Telling Customers About S/4HANA Cloud Development/Upgrades

SAP warned the audience in several S/4HANA Cloud presentations given at SAPPHIRE 2018 that S/4HANA Cloud has so much “innovation” that customers need to accept the risk of having what SAP calls,

“20% more S/4HANA Cloud functionality every quarter.”

SAP presenters in S/4HANA Cloud told audience members to only focus on S/4HANA Cloud for the most innovative areas of their business.

This is a euphemism for “get ready for instability.”

Is S/4HANA Cloud Ready for Production?

It’s difficult not to interpret S/4HANA Cloud as a development box. All one has to do is review the number of changes/improvements along with the frequency of improvements. It sounds like a curious statement as S/4HANA Cloud + S/4HANA on premises is touted by SAP as being used by more than 1,500 customers (SAP combined the numbers of S/4HANA Cloud and S/4HANA on premises because it would be embarrassing if it reported the S/4HANA Cloud customers by themselves.). Moreover, the application has been out for several years. But, if we strip away the name for a moment and all of the SAP marketing literature to look at the underlying facts, it is not actually a difficult determination to make.

A Question for IT Directors

If one were to approach an IT director with the following question…

“How do you feel about going live and running the business with a system that will have an automated push every quarter with a large amount of untested functionality by a development team trying to create product that was released too early?”

Simply by the nature of the releases, they would designate the S/4HANA Cloud as a development environment.

All of this brings up the question, who could possibly live with S/4HANA Cloud?

SAP has a number of slick S/4HANA Cloud videos, none of which correspond to the actual S/4HANA Cloud product. If you want to find out what is not true about S/4HANA Cloud, be sure to listen to Sven Deneken. There is no lie about S/4HANA Cloud that Sven Deneken is unprepared to tell. I can’t be sure, but Sven may moonlight as a standup comedian. 

I would not recommend S/4HANA Cloud, in its current state out until 2019, for production environments.

Why?

Because there is no way such a system can be relied upon, and the overhead of dealing with pushed updates is too high. The costs imposed by the system, even if the small footprint of functionality is ignored momentarily, would put a company’s business at risk.

Could there be some reason almost every company on this slide of S/4HANA Cloud implementations is an SAP consulting partner? How many of these companies would claim to have gone live with S/4HANA Cloud for marketing purposes, while using something else to run their business?

Do I have to say it? 

Notice Anything Odd About the S/4HANA Cloud Customers?

This is one reason why so many of S/4HANA Cloud customers are small and why there are so few of them. Nearly every S/4HANA Cloud customer can either be traced to an SAP consulting partner or an insubstantial entity that implemented the application to raise its marketing profile in some way. (The overall exaggerated nature of S/4HANA implementations (on premises + cloud) was covered in our research, A Study into S/4HANA Implementations.)

What SAP is calling innovation with S/4HANA Cloud is really just a euphemism for development. This development is so extensive because the application was announced far too early (to impress Wall Street) and it’s still going through its primary development phase. 

Buying a Ticket on the S/4HANA Cloud Rollercoaster

SAP is projecting a high degree of disruption for S/4HANA Cloud going out at least until 2019. However, the distinction between S/4HANA Cloud and Workday and SuccessFactors is that S/4HANA Cloud has few customers using the system for production. For this reason, you don’t hear very much about customers running into problems with S/4HANA Cloud upgrades. Moreover, this brings up an important question.

To see why, let us start with several of SAP’s statements:

  • SAP proposes a lot of changes to S/4HANA Cloud on a quarterly basis.
  • SAP proposes that there are over hundreds of S/4HANA Cloud customers.

If you search, you cannot find complaints about upgrade issues with S/4HANA Cloud (on SAP message boards, articles (even if sanitized), etc.). Given the instability of S/4HANA Cloud, we should see complaints. That lack of these complaints gives us a clue about the S/4HANA Cloud uptake/usage, even if I had not performed the detailed research into the subject to already know.

Oracle’s Cloud Updates

Oracle’s cloud ERP is very similar to SAP’s cloud ERP in many respects. Like SAP, Oracle ERP Cloud is a small percentage of the overall ERP business for Oracle. Still, Oracle ERP Cloud has been around much longer than S/4HANA Cloud and it has quite a few more live customers. Unlike S/4HANA Cloud, Oracle does not push Oracle ERP Cloud customers to the latest update.

Let’s review Oracle’s Cloud ERP upgrade policies.

  • Oracle ERP Cloud has upgrades every other quarter.
  • Oracle ERP Cloud also has monthly patching.
  • Oracle ERP Cloud  is tested and cutover like any on-premises application.

Experienced Oracle ERP Cloud  consultants know that changes to the application to meet new business requirements are different than on-premises, with which the upgrades are generally less frequent, and therefore the system is more stable and controllable. Oracle keeps funneling money into Oracle ERP Cloud as noted by the following quotation from Rimini Steet.

“Currently Oracle is pouring vast funds into Cloud ERP with little innovation being built for EBS. It’s unlikely that there will be a new feature in a release in the next 5 years beyond 12.2 that will be critical for your business. If EBS 12.2 has some important new functionality you want, upgrade on your own timeline and when there is a real business need.”

However, this is not translating into that much benefit to the application, or to its ease of upgrading. From a marketing perspective, Oracle has been fighting this reality.

Asserting the Opposite of What is True with Against Type Marketing

In June 2018 Oracle introduced “Soar,” which is ostensibly a way of automating the upgrade process of Oracle applications, including Oracle ERP Cloud. Oracle and Ellison began with making very similar claims around their database and have now moved to make the same claims around their SaaS applications.

As was covered in the article, How Real is Oracle’s Automated Database, I determined Oracle’s automated database claims to be not only inaccurate but impossible. This is due to the number of Oracle databases that customers want on previous versions of the Oracle database and that have dropped Oracle support.

It is also curious how automation impacted both Oracle’s applications and databases in such close timing to one another, especially considering the fact that the technology for automating database and application upgrades (only one aspect of automation) is not the same. This is referred to as “against-type” marketing. It is where you take a known weakness and assert the opposite.

SAP did this with their “Run Simple” marketing program. Before the Run Simple campaign, SAP was for decades the most complex software to implement with the highest TCO. Therefore, SAP’s Run Simple program simply asserted the opposite (as did every SAP consulting partner, aka “Team Parrot”). Oldsmobile did the same thing with their “Not Your Father’s Oldsmobile” to try to dispel the fact that Oldsmobiles were boring.

Against type marketing programs do not have much of a history of success. They are most often attempts by marketing to change perception, without the changes being incorporated into the actual product. The campaigns usually boil down to sales reps being tired of hearing something about the product that is true, and marketing deciding to assert the opposite. 

Oracle Puts in the Effort to Improve and “Automate” Updates (Through its Marketing)

Oracle puts most its emphasis on improved updates and automation in marketing rather than anything real. The reality from the field is that Oracle Cloud products have historically not only been difficult to upgrade but have substantial downtime, as explained by Mark Dalton of AutoDeploy.

“Every Oracle Cloud customer has to deal with a maintenance window that starts out as 1 hour and runs into multiple days. If their systems are autonomous, why all this manual work? And why would any customer want this disruption to their business?”

While Larry Ellison is putting batteries in his presentation “reality distortion field generator” and making ludicrous statements to please Wall Street (which is easy, as Wall Street analysts don’t work with the actual software), AWS and Google Cloud Services are making true strides in upgrading and downtime reduction. The level of documentation on the topic of upgrades and downtime available at AWS and GCS is far beyond anything that either SAP or Oracle have. The reports from the field on AWS and GSC is also far beyond anything SAP or Oracle are capable of.

Conclusion

S/4HANA Cloud is a glorified development box with a quarterly push of changes that cannot be relied upon for a company that is interested in doing something other than using the implementation to sell implementation services to other companies. S/4HANA Cloud contains a shadow of the functionality of S/4HANA on premises, which is itself a shadow of the functionality in ECC.

As for Oracle, it is misleading customers as to the upgrading required for the Oracle ERP Cloud . Ellison believes he can market his way around Oracle ERP Cloud’s limitations, using monopolistic profits to shovel money at Gartner to obtain a preposterous score, above that of Workday.

Not all vendors are equal in the cloud. Cloud ERP works better with companies like Workday or ERPNext, which started in the cloud and have a long history of providing updates while minimizing disruption for their customers. This makes both SAP’s and Oracle’s cloud ERP a liability for current and potential customers. SAP and Oracle’s cloud ERP is a great story for Wall Street, but not much of a story for customers.

Search Our Other S/4HANA Content

Brightwork Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

HANA & S/4HANA Research Contact

  • Interested in Research on S/4HANA & HANA?

    It is difficult for most companies to make improvements in S/4HANA and HANA without outside advice. And it is not possible to get honest S/4HANA and HANA advice from large consulting companies. We offer remote unbiased multi-dimension S/4HANA and HANA support.

    Just fill out the form below and we'll be in touch.

References

There are three different types of multi-tenancy

1. Shared application, a separate database
2. Shared application, shared database, a separate table
3. Shared application, shared table (pure multitenancy) – Bezemer & Zaidman

Cor-Paul Bezemer, Andy Ziadman, Multi-Tenant SaaS Applications: Maintenance Dream or Nightmare?, Association of Computing Machinery, Sept 2010

Thanks to Ahmed Azmi and Mark Dalton for feedback on the article.

Workday Bows Enterprise Reins Release Cycle, Phil Wainewright, Diginomica, 2013

https://www.asug.com/news/sap-s-4hana-customer-adoption-live-customers-implementations

https://godsofadvertising.wordpress.com/tag/not-your-fathers-oldsmobile/

Something that I did not know, as I do not study marketing outside of software marketing, is that against type marketing occurs when the brand is in decline. Examples of this are Oldsmobile, Buick (Is That a Buick?).

*https://www.investors.com/news/technology/salesforce-profitable/

Rimini Street White Paper Five Upgrade Strategies or Oracle E Business Suite Customers to Consider

“Business Disruption — Upgrading to EBS 12 in a complicated process that could tie up your IT team for 12–18 months and have unintended consequences for the business. Sometimes an upgrade “backfires,” leading to unpleasant and expensive results. One CIO of a mid-market light fixture company commented around their Oracle upgrade: “Long story short, we went through the pain of doing this upgrade only to find that not only there’s no functionality there that we could use, but, also in essence, we had to upgrade our hardware because performance fell back and we’re still not at the performance we were before!”

The Real Story on ERP Book

ERPThe Real Story Behind ERP: Separating Fiction From Reality

How This Book is Structured

This book combines a meta-analysis of all of the academic research on the benefits of ERP, coupled with on project experience.

ERP has had a remarkable impact on most companies that implemented it. Unplanned expenses for customization, failed implementations, integration, and applications to meet the business requirements that ERP could not–have added up to a higher Total Cost of Ownership for ERP were all unexpected, and account control, on the part of ERP vendors — is now a significant issue affecting IT performance.

Break the Bank for ERP?

Many companies that have broken the bank to implement ERP projects have seen their KPIs go down— but the question is why this is the case. Major consulting companies are some of the largest promoters of ERP systems, but given the massive profits they make on ERP implementations — can they be trusted to provide the real story on ERP? Probably not, however, written by the Managing Editor of SCM Focus, Shaun Snapp — an author with many years of experience with ERP system. A supply chain software expert and well known for providing authentic information on the topics he covers, you can trust this book to provide all the detail that no consulting firm will.

By reading this book you will:

  • Examine the high failure rates of ERP implementations.
  • Demystify the convincing arguments ERP vendors use to sell ERP.
  • See how ERP vendors take control of client accounts with ERP.
  • Understand why single-instance ERP is not typically feasible.
  • Calculate the total cost of ownership and return on investment for your ERP implementation.
  • Understand the alternatives to ERP.

Chapters

  • Chapter 1: Introduction to ERP Software
  • Chapter 2: The History of ERP
  • Chapter 3: Logical Fallacies and the Logics Used to Sell ERP
  • Chapter 4: The Best Practice Logic for ERP
  • Chapter 5: The Integration Benefits Logic for ERP
  • Chapter 6: Analyzing The Logic Used to Sell ERP
  • Chapter 7: The High TCO and Low ROI of ERP
  • Chapter 8: ERP and the Problem with Institutional Decision Making
  • Chapter 9: How ERP Creates Redundant Systems
  • Chapter 10: How ERP Distracts Companies from Implementing Better Functionality
  • Chapter 11: Alternatives to ERP or Adjusting the Current ERP System
  • Chapter 12: Conclusion

How SAP Sucker Punched Customers with S/4HANA

Executive Summary

  • SAP continually overstates of 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 interesting 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.

Search Our Other S/4HANA Content

Brightwork Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

HANA & S/4HANA Research Contact

  • Interested in Research on S/4HANA & HANA?

    It is difficult for most companies to make improvements in S/4HANA and HANA without outside advice. And it is not possible to get honest S/4HANA and HANA advice from large consulting companies. We offer remote unbiased multi-dimension S/4HANA and HANA support.

    Just fill out the form below and we'll be in touch.

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

Not only will this book help you appreciate the mechanics of TCO, but you will also gain insight as to the importance of TCO and understand how to strip away the biases and outside influences to make a real TCO comparison between applications.
By reading this book you will:
  • 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.
Chapters
  • 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

The Discrepancy Between SAP and DSAG on S/4HANA’s Growth

Executive Summary

  • DSAG, the German-speaking SAP user group’s survey of S/4HANA adoptions showed important distinctions from what SAP has been reporting to Wall Street.

Introduction

We have been saying for some time that SAP’s numbers on S/4HANA do not add up. When perusing a survey by DSAG, which is the German-speaking countries user group for SAP, we found interesting discrepancies between what SAP is reporting to Wall Street and what DSAG found.

DSAG on S/4HANA

We will be begin by listing the most interesting quotations from the study.

“Just like last year, DSAG members were also asked about the relevance of Business Suite and S/4HANA, both on-premise and in the cloud. The survey found that there has been no further shift towards S/4HANA. In fact, main and mid-size investments in Business Suite fell by around 10 percent (from fall 2017) to 48 percent. However, this did not affect investments in S/4HANA projects, which remained almost constant. But there is a noticeable increase in the use of S/4HANA as a cloud solution (up 4 percent).”

And on the topic of S/4HANA Migration

“The survey also found that DSAG members’ plans on when to migrate to S/4HANA remained unchanged from last year, although 3 percent of members are already using S/4HANA (up 1 percent). 5 percent of those surveyed plan to migrate to S/4HANA this year, and one-third plan to do so in three years. A quarter of survey participants have not yet decided when to migrate and 13 percent plan to stay on Business Suite. For Marco Lenck, this is a noteworthy finding. He says: “The growth of 4 percent migration to S/4HANA that was forecast last year wasn’t realized.” And despite a large of number of projects, the number of migrations hasn’t significantly grown. Marco Lenck continues: “This could be because the transition is more complex than expected, meaning S/4HANA projects couldn’t yet be completed.”

This is as we have stated. S/4HANA is seeing little growth. One should be careful not to take the “planned to…” estimates as hard commitments. Many companies plan to do things, and it in many cases it does not mean that it occurs within that time frame or at all. Notice that the “planned to” numbers are higher than the “currently” numbers.

What SAP Communicates About S/4HANA Adoption to Wall Steet

Now notice how different what SAP tells Wall Street about S/4HANA.

These following quotations are from the Q4 2017 analyst call.

Question 1: Ross MacMillan

“Thank so much. Maybe one for Luka, I think by my math, we’re just over 20% of the core ERP base on S/4HANA and I just wondered if you could maybe remind us, where do you expect as to be in terms of conversion of base as we look out to our 2020 target? And then a follow-up and I don’t know if this is for Bill or Bernd, but your comments on S/4 cloud are obviously bullish.”

Notice the statement. Ross MacMillian has repeated what SAP said that they had converted 20% of their ERP customer base. But here Ross is repeating the language that converts the “sale” of a S/4HANA license with the “conversion” of the customer. This is highly problematic as the vast majority of S/4HANA licenses are shelfware. Many of them either unpaid for or part of an indirect access dispute that resulted in S/4HANA being “purchased.”

Notice Luka Mucic’s answer

Answer 1: Luka Mucic

“Yes. Then just very quickly, I would definitely expect that by 2020, we should be done with half of the customer base and having it converted let’s not forget that with our current S/4 customer count. We also have net new customers on top, not only installed base conversions. So that implies that I expect to see now an acceleration of the migration curve as customers have waited in some cases for the full round out of functional capabilities of S/4HANA as that work is now complete. They are starting their programs. So that will be my indication. We would do something wrong as by 2020. We have not already migrated at least half of our installed base.”

Once again, SAP is referring to licenses sold by SAP. Luka Mucic is, therefore, saying that by 2020 1/2 of SAP ECC customers will hold a license of S/4HANA. That is the actual translation of what Luca Mucic is saying, but this is not what SAP wants the analysts to believe. SAP has adopted the term “conversion” to deliberately blur the distinction between a license purchase and a software implementation.

Conclusion

Ever since SAP introduced S/4HANA its proposals about S/4HANA’s adoption have been misleading. We covered this in several articles, including How SAP Controls Perceptions with Customer Numbers. And SAP is intent on deceiving as many people for as long as possible regarding the uptake of S/4HANA.

Search Our Other S/4HANA Content

Brightwork Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

HANA & S/4HANA Research Contact

  • Interested in Research on S/4HANA & HANA?

    It is difficult for most companies to make improvements in S/4HANA and HANA without outside advice. And it is not possible to get honest S/4HANA and HANA advice from large consulting companies. We offer remote unbiased multi-dimension S/4HANA and HANA support.

    Just fill out the form below and we'll be in touch.

References

https://www.sap.com/documents/2018/02/de1db6cd-ee7c-0010-82c7-eda71af511fa.html

https://www.dsag.de/pressemitteilungen/budgets-feel-impact-digitalization

https://seekingalpha.com/article/4141369-saps-sap-ceo-william-mcdermott-q4-2017-results-earnings-call-transcript

DSAG Survey scope
“In total, 334 CIOs and company representatives from DSAG member firms in German-speaking countries took part in the online survey between November 2017 and January 2018. One contact was surveyed per company. Nearly 60 percent of those surveyed come from companies with between 1,000 and 4,999 employees, and nearly 30 percent come from companies with over 5,000 employees. 52 companies in Switzerland took part and 37 in Austria.”

The Real Story on ERP Book

ERPThe Real Story Behind ERP: Separating Fiction From Reality

How This Book is Structured

This book combines a meta-analysis of all of the academic research on the benefits of ERP, coupled with on project experience.

ERP has had a remarkable impact on most companies that implemented it. Unplanned expenses for customization, failed implementations, integration, and applications to meet the business requirements that ERP could not–have added up to a higher Total Cost of Ownership for ERP were all unexpected, and account control, on the part of ERP vendors — is now a significant issue affecting IT performance.

Break the Bank for ERP?

Many companies that have broken the bank to implement ERP projects have seen their KPIs go down— but the question is why this is the case. Major consulting companies are some of the largest promoters of ERP systems, but given the massive profits they make on ERP implementations — can they be trusted to provide the real story on ERP? Probably not, however, written by the Managing Editor of SCM Focus, Shaun Snapp — an author with many years of experience with ERP system. A supply chain software expert and well known for providing authentic information on the topics he covers, you can trust this book to provide all the detail that no consulting firm will.

By reading this book you will:

  • Examine the high failure rates of ERP implementations.
  • Demystify the convincing arguments ERP vendors use to sell ERP.
  • See how ERP vendors take control of client accounts with ERP.
  • Understand why single-instance ERP is not typically feasible.
  • Calculate the total cost of ownership and return on investment for your ERP implementation.
  • Understand the alternatives to ERP.

Chapters

  • Chapter 1: Introduction to ERP Software
  • Chapter 2: The History of ERP
  • Chapter 3: Logical Fallacies and the Logics Used to Sell ERP
  • Chapter 4: The Best Practice Logic for ERP
  • Chapter 5: The Integration Benefits Logic for ERP
  • Chapter 6: Analyzing The Logic Used to Sell ERP
  • Chapter 7: The High TCO and Low ROI of ERP
  • Chapter 8: ERP and the Problem with Institutional Decision Making
  • Chapter 9: How ERP Creates Redundant Systems
  • Chapter 10: How ERP Distracts Companies from Implementing Better Functionality
  • Chapter 11: Alternatives to ERP or Adjusting the Current ERP System
  • Chapter 12: Conclusion