Expanding Section: The Research Method

The Brightwork Research & Analysis method was to reach out to as many of our contacts as possible to find case studies on SAP. These are the critical features of this research. The Necessity of Using Anonymous Sources It is preferable to be able to use actual customer names where S/4HANA implementations occurred. The problem is that this is not realistic given the constraints of the market. SAP customers do not like publishing the details of their implementation outside of glossy generalizations of project success. The only time the problems on projects are published is when an implementation went so poorly, that the customer decides to sue the implementing company or SAP. Outside of those occurrences, all SAP projects are presented as successes outwardly. As a long time consultant and author, I have published many articles that described the reality of SAP functionality as implemented in companies. However, I would never have been able to write what I covered if I had not anonymized the sources. Therefore, the only way to obtain any information on S/4HANA is to rely on anonymous sources for those sources that are original research. Special Circumstances of Anonymous Sources Using anonymous sources has been one of the only ways that Brightwork has been able to publish information that is true but not flattering. However, we ran into something unusual when performing this research. And that is sources who have spent so much money on S/4HANA that they did not want any of the details to be used even when provided by anonymity . The Available Data Points on S/4HANA Implementations The study does not have the luxury of obtaining all of the S/4HANA implementation data points. The only entity that has this information is SAP, and SAP only releases information that makes S/4HANA look successful. Companies are under no obligation to participate in the study, and in fact companies and individuals within these companies were under a disincentive to participate. The reason why become clear as we began to review the results of the case studies.

Expanding Section: Fit to Industry

ERP systems and S/4HANA, in particular, have a fit to industry. The less a company manufactures or distributes a physical product, the less the overlap between the application and the industry requirements. Over 1/2 of the case studies have a low fit to the industry where they were implemented. There is an amusement park in the case study, a number of travel and transportation customers, professional services firms. Overall, there are a disproportionate percentage of customers that would receive a marginal value from implementing S/4HANA.

Expanding Section: The Average Number of Employees Per Case Study

Overall The overall average number of employees of the companies in the data set is 26,120. This is a bit overstated as some of the companies were so small, we could not verify their number of employees. And one company, Wal Mart, has 2.3M employees but falls into the category of Indeterminate as to the Likelihood the Case Study Worked as Stated . The High And Medium Category Of the 19% of the case studies that fell into the High to Medium category for the Likelihood the Case Study Worked as Stated, the average number of employees per company (for this group) was 9,982 employees. The only companies over 25,000 employees in this category were the following: Erste Group Bank AG Colgate-Palmolive Company Japan Tobacco International Thai Union Group JFE Steel ENEL The countries being (one implementation for each listed country): Austria US Switzerland Thailand Japan Italy That is a very small number of large companies implementing S/4HANA that we consider high to medium likelihood implementations. These are the most credible large company implementations that SAP has for S/4HANA. ECC has 45,000 implementations, with many companies over 25,000 employees running the system in production. S/4HANA was introduced in Feb of 2015. This is getting close to 4.5 years since its introduction as a product.

Expansion Section: Public Versus Private Case Study Implementation Duration Differences

The average implementation duration for public case studies is considerably shorter than for private case studies. SAP marketing inconsistently reported the implementation duration. This is "cherry picking" the data. Secondly, many of the claimed implementation durations would just not have been possible. The public implementation durations are entirely inconsistent with ECC's historical implementation duration. ECC being the precursor to S/4HANA, and also being far more mature than S/4HANA when all of the ECC projects were implemented.

Expanding Section: The Missing Details

In addition to the public case studies above, there are also case studies published on SAP’s website. The issue is that when SAP publishes a case study they either provide a video, which contains a lot of praise of the solution, but very few details about the implementation. The case studies or they provide a 3 page PDF. The three page PDF only contains two pages of actual information because the 3 rd page is legal boilerplate that basically states that nothing in the press release should be relied upon . One well-known sentence is the following: “All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations.” Secondly, other problems persist: SAP marketing leaves out important details from the case studies. Some of the case studies have the company size included, but when the company is small, those details are often excluded. The public case studies are filled with quotes that are directly taken from SAP marketing. This calls into question the independence of the reference companies, as quite a few of these marketing claims are not true, and would not have been observed by the reference company post go live. When independently verified a number of the case studies with contacts that have worked on some of these projects, they have so little in common with the published SAP document, that all of SAP’s S/4HANA published case studies should be considered unreliable. These published studies, as with the studies of pretty much any software are really just pure marketing collateral. Of all the sources of information that we reviewed, the case studies on the SAP website were the poorest quality. Now there is most certainly some good information contained in these case studies, however, the source is so problematic I cannot include them and be considered to follow a good research approach.

Expanding Section: Interpreting the Public Case Studies

The public case studies are by far the large percentage of the overall case studies. Several things stand out about the public case studies. The Limited Scope of Functionality Implemented In all cases, the implementations are small portions of the overall S/4HANA functionality. Yet, in several of the case studies, it is stated that S/4HANA Enterprise Management (EM) was implemented. S/4HANA EM is the overall suite. The WiPro implementation is clear that nothing outside of financial functionality was implemented. However, the Swiss Properties case study is not at all clear what was implemented , and the statement that S/4HANA EM was implemented seems misleading as Swiss Properties does not have the workflows as a real estate company to implement very much of S/4HANA outside of the financial suite. Secondly, when Swiss Properties implemented, even less of the S/4HANA functionality outside of finance was even ready to be implemented. Kurlon would have the workflow to implement more of S/4HANA than either WiPro or Swiss Properties. Yet, there is close to nothing available about the details of the Kurlon implementation. In case studies such as New York Life, there is a clear intent to make it appear as if more of S/4HANA was implemented than actually was, which I have not included in this document, but is covered in detail in the article The New York S/4HANA Life Case Study . Companies like New York Life which implemented only a sliver of the finance module (such as the ledger) will never be able to see any return on investment unless SAP waived all license costs, all maintenance costs, provided a great deal of free consulting etc. (And we don’t know the state of the New York Life Case Study after this point as I brought up in the case study write up) And that gets to the next point. Special Treatment From SAP It is clear that many of the companies that make up the public case studies received special treatment from SAP. This is undoubtedly the case with all the implementations at the SAP consulting partners. This is a relatively inexpensive way for SAP to “seed” the market with S/4HANA stories. This is not a guess or conjecture. I have been in contact with consulting companies that have been offered very low-cost access to S/4HANA if they would implement the software, and then announce the implementation. However, while the implementations may have made sense for companies that receive special treatment, they don’t generalize to the broader market. That is SAP is not offering the same deal to non-SAP consulting partners. SAP eventually intends to use S/4HANA to drive revenues and they can’t give special treatment to everyone. Non-Typical Nature of the SAP Customers Used as Case Studies It is rare for a services company to implement ECC or SAP R/3. I have worked for many consulting companies, and there is very little to the systems of these types of services companies. They bill hours and expenses to clients. They have to buy things like computers and office supplies. They have to maintain HR records for employees. And like everyone, they have to pay taxes. There are inexpensive cloud applications that do all of these things that are fast to use. Consulting companies do not have a supply chain (they do perform what is called indirect procurement for office supplies, computers, etc.). Therefore, services companies don't need ERP systems.

Expanding Section: What is the Definition of a Software Customer?

Unknown to many who follow software vendors, being a "customer" only means that the customer is in possession of a license for S/4HANA. Now in many cases, the number of customers that have a license of something means more than what it does with S/4HANA. However, with S/4HANA SAP has engineered these numbers in order to exaggerate the impression of adoptions for S/4HANA. This topic is covered in detail in How SAP Controls Perceptions with Customer Numbers . In this way, software companies can, if they choose, exaggerate this number in the way that a company that produces a physical product cannot. Companies have always employed techniques to seem more successful than they are. End of quarter pushes, which provide promotions and incentives are quite common. Yet this is an important distinction between software companies and companies that make physical products. For companies that make physical products, they incur a far higher cost to exaggerate sales. If for instance, General Motors were to attempt to inflate its customer numbers this way, it would have to ship more cars to customers for free -- incurring a large loss for every car is "sold" this way. The software has a very low incremental cost, therefore software companies don’t incur these same costs. Important things to know about these licenses are the following: Many of these licenses were transitioned from SAP to customers at no cost. S4 was free from February 3, 2015, to December 31, 2015. End 2015 SAP claimed 2,700 S4 customers that obviously signed because it was free. In the promotion customers only need to buy HANA for 15% of the S4 modules. SAP has offered S/4HANA at a very reduced price to SAP consulting partners. Several of these SAP consulting partners are profiled as case studies in this paper. When S4 was announced in Feb 2015, SAP stops disclosing the number of customers of Business Suite on HANA, at the end 2014 the number was 1,850 customers. Then just once on April 6, 2016, SAP said, 2,500 customers, Business Suite on HANA. What happened with those customers? How many went live? SAP has been bringing what Brightwork refers to as Type 2 indirect access claims against its customers. In order to negotiate away an indirect access claim, S/4HANA is one of the most preferred applications put in front of customers to purchase. 2,700 is 50% of the number of S/4HANA licenses claimed end of 2016 = 5,400, so half were free. One can fairly say the promotion motivated to sign not necessarily having the intention to implement anytime soon. The final bullet is supported by the Brightwork article How SAP Controls Perceptions with Customer Numbers.

Expanding Section: Why this Study Appears to Different from IT Media Coverage

This estimate may appear shocking to many readers, and it is in comparison to the estimates provided by many entities. However, there are no independent entities that actually track S/4HANA implementation figures. ASUG and SAPInsider have both published S/4HANA estimates that interestingly enough, match perfectly with SAP's numbers when the studies where published. However, neither ASUG or SAPInsider is independent of SAP, or produce research or follow any research rules. They are trade publications, we read them to critique them but never taking anything in them seriously. They are designed to promote SAP. They publish what they are told to publish by SAP.

Expanding Section: The Case Study Problem

SAP has published a number of case studies for S/4HANA that show it as live. However, in a study funded by SAP and published by Forrester, SAP was only able to come up with three customers for Forrester to use in the study . And the average implementation budget for what they called the "composite customer" was $877,000 . We estimate the TCO of SAP and other projects, and the sub-million dollar SAP ERP implementation is unknown to us. This means that SAP completely lied to Forrester, and Forrester went ahead and published this ludicrous study anyway. We covered this topic in the article How to Understand Forrester's Fake S/4HANA TCO Study . This Forrester study is a complete joke, but it brings up interesting questions, and if SAP had thought it through, they probably would not have funded its publication. The biggest curiosity is how an application with 3,500 live customers (and with more than that currently in implementation), can result in SAP only giving Forrester three very small customers to use . It was easy money for Forrester. In their haste to publish the study, they forgot to include any listing for HANA, which means that either S/4HANA was implemented at all three customers without a database, or they made a reporting error. SAP resources, normally quite accepting of a study any quality as long as it reinforces their billability, tried to guess where that HANA budget may have gone. If it was included in the average $877,000 figure that is extra weird, as HANA is a very expensive database to buy and to implement.

Expanding Section: ECC's Continued Development

When S/4HANA was first released, SAP stated that ECC development was finished. However, SAP has backtracked on this -- with the vast majority of customers running ECC, it was not feasible to simply stop updating ECC.

Search Results for: hana

Expanding Section: The Research Method
ByPrimary Researcher May 30, 2019

A Expanding Section: The Research Method Posted on May 30, 2019 The Brightwork Research & Analysis method was to reach out to as many of our contacts as possible to find case studies on SAP. These are the critical features of this research. The Necessity of Using Anonymous Sources It is preferable to be able…

Read More Expanding Section: The Research Method
Expanding Section: Fit to Industry
ByPrimary Researcher May 30, 2019

A Expanding Section: Fit to Industry Posted on May 30, 2019 ERP systems and S/4HANA, in particular, have a fit to industry. The less a company manufactures or distributes a physical product, the less the overlap between the application and the industry requirements. Over 1/2 of the case studies have a low fit to the…

Read More Expanding Section: Fit to Industry
Expanding Section: The Average Number of Employees Per Case Study
ByPrimary Researcher May 29, 2019

A Expanding Section: The Average Number of Employees Per Case Study Posted by Shaun Snapp on May 29, 2019 Overall The overall average number of employees of the companies in the data set is 26,120. This is a bit overstated as some of the companies were so small, we could not verify their number of…

Read More Expanding Section: The Average Number of Employees Per Case Study
Expansion Section: Public Versus Private Case Study Implementation Duration Differences
ByPrimary Researcher May 29, 2019

A Expansion Section: Public Versus Private Case Study Implementation Duration Differences Posted by Shaun Snapp on May 29, 2019 The average implementation duration for public case studies is considerably shorter than for private case studies. SAP marketing inconsistently reported the implementation duration. This is “cherry picking” the data. Secondly, many of the claimed implementation durations…

Read More Expansion Section: Public Versus Private Case Study Implementation Duration Differences
Expanding Section: The Missing Details
ByPrimary Researcher May 29, 2019

A Expanding Section: The Missing Details Posted on May 29, 2019 In addition to the public case studies above, there are also case studies published on SAP’s website. The issue is that when SAP publishes a case study they either provide a video, which contains a lot of praise of the solution, but very few…

Read More Expanding Section: The Missing Details
Expanding Section: Interpreting the Public Case Studies
ByPrimary Researcher May 29, 2019

A Expanding Section: Interpreting the Public Case Studies Posted by Shaun Snapp on May 29, 2019 The public case studies are by far the large percentage of the overall case studies. Several things stand out about the public case studies. The Limited Scope of Functionality Implemented In all cases, the implementations are small portions of…

Read More Expanding Section: Interpreting the Public Case Studies
Expanding Section: What is the Definition of a Software Customer?
ByPrimary Researcher May 29, 2019

A Expanding Section: What is the Definition of a Software Customer? Posted on May 29, 2019 Unknown to many who follow software vendors, being a “customer” only means that the customer is in possession of a license for S/4HANA. Now in many cases, the number of customers that have a license of something means more…

Read More Expanding Section: What is the Definition of a Software Customer?
Expanding Section: Why this Study Appears to Different from IT Media Coverage
ByPrimary Researcher May 29, 2019

A Expanding Section: Why this Study Appears to Different from IT Media Coverage Posted on May 29, 2019 This estimate may appear shocking to many readers, and it is in comparison to the estimates provided by many entities. However, there are no independent entities that actually track S/4HANA implementation figures. ASUG and SAPInsider have both…

Read More Expanding Section: Why this Study Appears to Different from IT Media Coverage
Expanding Section: The Case Study Problem
ByPrimary Researcher May 29, 2019

A Expanding Section: The Case Study Problem Posted on May 29, 2019 SAP has published a number of case studies for S/4HANA that show it as live. However, in a study funded by SAP and published by Forrester, SAP was only able to come up with three customers for Forrester to use in the study….

Read More Expanding Section: The Case Study Problem
Expanding Section: ECC’s Continued Development
ByPrimary Researcher May 29, 2019

A Expanding Section: ECC’s Continued Development Posted on May 29, 2019 When S/4HANA was first released, SAP stated that ECC development was finished. However, SAP has backtracked on this — with the vast majority of customers running ECC, it was not feasible to simply stop updating ECC. Category: S/4HANA Permalink

Read More Expanding Section: ECC’s Continued Development

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