- What is the Background of the Article?
- A Pizza Chain Takes S/4HANA Leap?
In this article, we will review ASUG’s article on the S/4HANA Cloud relaunch.
Quotes from the ASUG Article
“While S/4HANA in all flavors appears to have had a successful sales start, with SAP now claiming 6,000 customers having purchased its next-generation, in-memory-centric ERP, those buys have primarily come in the form of on-premise or managed cloud deployments.”
That is misleading. According to ASUG’s own S/4HANA Study of 2016, only 350 customers are live on S/4HANA. Brightwork’s estimate is that the number is quite a bit lower than 350 live customers. Many of the S/4HANA implementations are either demo type systems or offline systems. ASUG knows that the 6,000 customer number is a gross exaggeration, but they published it anyway. This is covered in the article How SAP Controls Perceptions with Customer Numbers.
“The public cloud, or software-as-a-service (SaaS), edition, which was originally announced alongside the other two versions originally, has not picked up the same steam—with SAP having set a goal of 30 S/4HANA Cloud customers by the end of 2016 last May.”
And is ASUG going to explain why that is? Why does SAP have so few public cloud customers on S/4HANA?
The answer is very simple. S/4HANA is not now and will not be in the future a good fit for the public cloud. The reason is that history shows us that 92% of customers either moderately or aggressively customized ECC. However, you can’t customize a public cloud application, because at that point it ceases to be multi-tenant. And therefore, it becomes private cloud.
It is curious that ASUG does not explain this to its readers.
“Since August, however, SAP has put a renewed focus on S/4HANA Cloud by creating a dedicated division led by Darren Roos, who told a roundtable of analysts and reporters at SAP Capital Markets Day in New York City this week that the vendor signed up more S/4HANA Cloud customers in the Q4 of 2016 than it had in all previous quarters combined. He declined to give specific numbers, but the goal by the end of 2017 is to see the customer numbers “in the hundreds.”
SAP effectively re-launched S/4HANA Cloud this week. To be clear, this is not a new offering but rather the maturation of the product that was announced in early 2015. What the announcement does signal is SAP’s clear dedication to growing S/4HANA Cloud.
“We are gaining good momentum,” says Roos.”
That is quite doubtful, for reasons that were just covered.
SAP needs to continue to present a brave public cloud face for Wall Street. However, S/4HANA is not inherently designed for the cloud as is covered in this article.
Pizza Chain Takes S/4HANA Cloud Leap
SAP is targeting the mid-market—businesses with above 1,500 employees but not quite at enterprise scale—with S/4HANA Cloud. Most of the S/4HANA Cloud customers thus far have been net new SAP ERP customers, Roos says.
SAP may or may not be targeting this segment, but it won’t matter. S/4HANA public cloud so far has only attracted the smallest customers. This is because some small customers can get by without customizing S/4HANA. That will be the market in the future that will work for S/4HANA regardless of who Roos wants to target.
“One of those net new customers is MOD Pizza, a fast-casual pizza chain that launched in 2008. MOD is currently two months into its S/4HANA Cloud Core Finance module implementation, with about another two months of work before go-live.
MOD’s commitment to S/4HANA Cloud is an encouraging sign for the product, which had previously been targeting at professional services firms that could implement, then help their own customers do the same. MOD, instead, is a 3,000-employee consumer-facing organization with hundreds of locations conducting thousands of transactions every day.”
Why is S/4HANA targeted towards professional service firms? S/4HANA is an ERP system, why would a professional services firm deal with the expense and overhead of S/4HANA unless they were managing a physical product. Actually, there is one reason why that it is covered in the article, The Problem with S/4HANA Consulting Company Case Studies.
“So why did MOD go with S/4HANA Cloud above other options on the market that may be currently more mature? One major reason was a belief in SAP as a stable organization committed to growing its product.
“Some other alternatives were more advanced than where S/4HANA is today,” says Bob Barton, chief financial officer at MOD Pizza, who also spoke at roundtable in New York this week. “But it wasn’t about where they are today, but they are going to be. The ultimate selection came to the fact that SAP is a real company with a real set of solutions that has been there and done that before.”
This is a fairly ridiculous statement. Intacct and FinancialForce, which are two far better choices for a professional services company, are also real companies with a real set of solutions. And they have also been there and done that before.
“Barton also cites the support and commitment received from SAP in the selection process, saying “it felt like we were doing them a favor” and that SAP was there to answer any questions, offer creative pricing to ensure affordability and promises to implement quickly.
Of course, MOD is doing SAP a favor. Being an early adopter is never an easy task, but MOD saw that as a positive, adds Barton.”
MOD is doing SAP a favor. S/4HANA is still not ready to implement and MOD won’t be able to get much value out of S/4HANA, but it will be a boon to SAP to be able to use them for propaganda purposes. Which is really the entire point of the ASUG article.
“If we got in early, we could influence where the product is heading,” he says. “It’s a great opportunity. We’ve got an SAP-based product, a new product that is going to evolve.”
Tiny little MOD will not be influencing where the product is heading. And S/4HANA is not a new product. It is roughly 93% identical in code to ECC. But I can see that SAP told them that it was new. Rod Enslin, head of SAP Sales apparently tells clients that S/4HANA is a totally new product.
As with any ASUG article, it is difficult to tell how much of it was written by SAP, but this is a rather standard piece of SAP propaganda that has been released by ASUG. The nice thing about writing for ASUG is that SAP writes most of the article for you.
This ASUG article receives a 3.5 out of 10 on the Brightwork Accuracy Scale.
See our The S/4HANA Implementation Study. for real story and details on actual S/4HANA implementations.
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.
The Real Story on ERP Book
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.
- 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