What is SAP S/4HANA?
SAP S/4HANA is a replacement to the SAP R/3 or Business Suite platforms that have been in place in many global businesses since the release of SAP R/3 in 1992.
The important thing about the SAP S/4HANA launch is that it clearly lays down SAP’s software strategy for the next 10 years. The launch is done in parallel with a Capital Markets day, which means that SAP is looking to immediately explain the impact to investors and customers.
What does the “S” in SAP S/4HANA mean?The “R” in SAP R/3 stood for “Real-time”, and whilst S/4HANA is all about the real-time business, SAP chose to use “S”, meaning Simple. This is a nod to the fact that many SAP ERP customer installations have become extremely complicated, and SAP is looking to simplify business process with S/4HANA.
What databases will SAP S/4HANA run on?As its name suggests, SAP S/4HANA will only run on SAP’s HANA platform, and it will not run on any other platform. This is extremely significant because previously, all SAP products were designed to run on any database platform, including those from Oracle, Microsoft and IBM in recent years.
To be clear, SAP S/4HANA will run only on the HANA platform.
What will S/4HANA look like?The User Interface for S/4HANA is SAP’s Fiori responsive UX. This will be the front for on-premise S/4HANA, cloud S/4HANA and all the centralized cloud applications that form part of S/4HANA including Concur, Fieldglass, Cloud for Customer and Success Factors.
What is SAP HANA?I wrote about that in a lot of detail in the SAP HANA FAQ, but SAP HANA is a next-generation database technology, which runs in main memory and process information extremely fast. It’s so fast that it does not need a separate operational analytics system or data warehouse.
It is the platform for all of SAP’s innovation. Because it is so fast, it is no longer necessary to hold all of the duplicate data in a transactional system including calculations like percentages, totals, indexes and aggregates. This leads to a much smaller data footprint and dramatically faster processing.
Why is there no support for other DB vendors?SAP has been upgrading its applications to run on SAP HANA for the last 4 years, and in doing so, they found that HANA was a much more capable database platform.
However to get the best out of HANA, they found that quite different data structures were required than for traditional disk-based RDBMS like Oracle. As a result, SAP created Smart Financials or SFIN, then renamed Simple Finance. This had dramatically simpler structures, used fewer resources and therefore could run much larger business workloads than previously imagined.
Unfortunately, the other database vendors did not invest in innovation, and they do not have the capabilities of SAP HANA and the Simple Finance codebase does not run efficiently on them.
What if I am still on Oracle. Will I still get support from SAP?Yes, and we can expect SAP to retain its relationships with other database partners. There is an install base of tens of thousands of Business Suite customers running other databases, and these will not be forgotten.
It’s important to remember that ERP systems have extraordinary longevity – the lifespan can be 10-20 years or more, and SAP will continue to support existing systems in the long term.
SAP claims that it will continue to innovate in the Business Suite for AnyDB – for example, by porting any innovations which are created for
Will I still get innovation if I do not move to HANA?SAP will certainly provide security and regulatory fixes for what they call AnyDB customers (Oracle/Microsoft/IBM) but innovation will be focused on HANA.
This already happened in the SAP BW data warehouse software: in the latest SAP BW 7.4 release, almost all the innovations for customers are only available for the HANA DB.
Does SAP S/4HANA still run on the ABAP platform?Yes, S/4HANA will be based on SAP’s ABAP platform. Extensions for the Public Cloud version will be possible via HANA Cloud Platform extensions, and the Private Cloud and On-Premise versions will allow ABAP customization.
Is SAP S/4HANA Backwards Compatible?Once you have moved your Business Suite to the HANA platform, either on premise or in the cloud, it will be possible to take advantage of SAP S/4HANA components as they become available.
Existing code will continue to run because ABAP is compatible with HANA. Some code requires optimization when customers move to the HANA platform, but this is normal.
What modules are available for SAP S/4HANA?Currently, there is support for core finance (GL). This will be extended to Logistics in 2015, and other modules will follow. It’s worth noting that the existing Business Suite code lines are backwards compatible with HANA, so all the existing supported modules will run.
SAP will rewrite the existing modules for HANA over a 3-5 year period, based on popularity.
What’s the difference between SAP S/4HANA and the existing Business Suite powered by SAP HANA?Today, there is no difference. Simple Finance is available on premise or in the cloud and it is an add-in to the existing Business Suite.
With Simple Logistics, we expect the first cloud-first release of a SAP ERP product. This likely will pave the way for a separate installation for SAP S/4HANA through 2016 and the regular Business Suite and S/4HANA will part ways.
What is the upgrade path to SAP S/4HANA?The initial path is to move to the Business Suite on HANA platform, and the SAP S/4HANA move will be possible. For example, the conversion to Simple Finance is an automated data migration.
Here’s an excerpt from SAP CTO Irfan Khan’s blog post:
"Moving to SAP S/4HANA for a typical existing SAP ERP 6.0 customer will require a database migration from any database to SAP HANA, combined with a move to the latest enhancement package and the deployment of the exchange innovation, meaning the current code is replaced by the new one. Moving to SAP S/4HANA for an existing SAP Business Suite powered by SAP HANA will be even faster as only the deployment of the exchange innovation is required where current code is replaced with the new one."
What is the business case for SAP S/4HANA?Since details on the specific options and capabilities of SAP S/4HANA are still evolving, the details of the business case haven’t been fleshed out yet.
That said, SAP has come under a lot of pressure in 2014 from the User Groups to deliver information about business value with its technology, and we can expect SAP to be extremely explicit about the benefits of moving to SAP S/4HANA.
Will SAP S/4HANA run on-premise or in the cloud?It’s clear that cloud computing is SAP’s stated direction. SAP S/4HANA will have three modes – a Public Cloud, Private Cloud, and on-Premise. It will be “cloud first” approach and the cloud versions will provide innovation earlier than the on-premise version.
SAP S/4HANA Public CloudThe public cloud will be a shared HANA multi-tenant database using the HANA multi-tenancy database option. This will have mandated quarterly releases containing new functionality, and there will be one code-line for all customers.
In the quarterly releases starting in Q1 2015, there are three initial options:
Despite the fact that there are disparate clouds, the user experience is designed to seamlessly knit the products together into one interface.
SAP S/4HANA Private CloudThe S/4HANA Private Cloud is designed for customers who are looking for increased security and privacy and who don’t want to share a database container with other customers. Despite that, quarterly releases will be mandated for Private Cloud customers.
The scope for the private cloud will be delivered at SAPPHIRE 2015, in May, but it is designed for larger scale adoptions, with customizations, and the consumption and conversions of on-premise Business Suite systems.
SAP S/4HANA On-PremiseThe SAP S/4HANA on-premise option will lag behind the Public and Private Cloud offerings and this is deliberate. On-Premise customers tend to update less frequently, so yearly updates are planned.
In addition, it will be possible to migrate a Business Suite system into the SAP S/4HANA cloud, and then migrate it back into an on-premise system.
Is S/4HANA Cloud Multi-Tenant?The Concur, Fieldglass, Ariba and SuccessFactors clouds are already truly cloud multi-tenant.
The Public Cloud version will use database multi-tenancy, which is quasi-multitenant from a cloud perspective. ABAP Code-lines, configuration tables etc. will not be shared yet between customers on one SAP HANA container database. This is expected to come in time, as SAP HANA supports true cloud multi-tenancy.
What is the roadmap for application delivery?SAP has stated a “Phased Roll-out” strategy which will take years rather than months to deliver. Presumably it will never port the whole Business Suite – some less popular Industry Solutions and Add-Ins will be sunsetted along the way.
The roadmap is expected to be released at the annual SAPPHIRE conference in May 2015. This roadmap is expected to be closely tied to customer journeys and business value including ROI and TCO models.
What skillsets are required?As previously explained, the Private Cloud version will require HANA Cloud Platform (HCP) Extensions. These will be a key commodity in all S/4HANA projects.
In addition, the ABAP programming language didn’t go away, and ABAP OO programmers will be as popular as ever.
HANA DB skills won’t be lost, although SAP plans to take care of the feeding and watering of the systems in the Public and Private clouds.
More significantly, there is a new role emerging in the market for business-savvy configuration experts who will quickly tailor S/4HANA systems for customers using the new guided procedures for configuration.
Does this have an impact on the SI market?Yes it does, and this continues a trend that has been happening for some years outside the SAP Ecosystem.
SAP S/4HANA projects will be faster and cheaper, and there will be less time spent doing configuration and development. Business Consulting skills will be in-demand, but ERP configuration skills will slowly wane away.
Do note that from a consulting perspective, the transition to S/4HANA will take 10 years or more – Enterprise ERP systems are extremely sticky.
Why isn’t S/4HANA based on byDesign?When SAP built byDesign, they elected to completely change the data model. The programming language is different, which meant that a move to byDesign is effectively a complete data migration and rewrite.
SAP realized that Business Suite customers wouldn’t want to undergo this level of change, and so they built S/4HANA on the original Business Suite.
What are the licensing implications for SAP S/4HANA?For various reasons, SAP S/4HANA is a new product SKU, which means that it does have to be purchased by customers. Existing customers will not get SAP S/4HANA licenses included in the maintenance of their SAP Business Suite, but existing SAP Business Suite for SAP HANA customers are covered.
SAP has also been clear that they are looking to take a larger portion of customer spend in the cloud – the average revenue per customer over 5 years is higher than for on-premise software.
The existing 15% SMBV license will be available for SAP S/4HANA for any customer who makes a purchase in 2015 and is set to include all the future S/4HANA innovations.
SAP S/4HANA is a replacement to the SAP R/3 or Business Suite platforms that have been in place in many global businesses since the release of SAP R/3 in 1992.
The important thing about the SAP S/4HANA launch is that it clearly lays down SAP’s software strategy for the next 10 years. The launch is done in parallel with a Capital Markets day, which means that SAP is looking to immediately explain the impact to investors and customers.
What does the “S” in SAP S/4HANA mean?The “R” in SAP R/3 stood for “Real-time”, and whilst S/4HANA is all about the real-time business, SAP chose to use “S”, meaning Simple. This is a nod to the fact that many SAP ERP customer installations have become extremely complicated, and SAP is looking to simplify business process with S/4HANA.
What databases will SAP S/4HANA run on?As its name suggests, SAP S/4HANA will only run on SAP’s HANA platform, and it will not run on any other platform. This is extremely significant because previously, all SAP products were designed to run on any database platform, including those from Oracle, Microsoft and IBM in recent years.
To be clear, SAP S/4HANA will run only on the HANA platform.
What will S/4HANA look like?The User Interface for S/4HANA is SAP’s Fiori responsive UX. This will be the front for on-premise S/4HANA, cloud S/4HANA and all the centralized cloud applications that form part of S/4HANA including Concur, Fieldglass, Cloud for Customer and Success Factors.
What is SAP HANA?I wrote about that in a lot of detail in the SAP HANA FAQ, but SAP HANA is a next-generation database technology, which runs in main memory and process information extremely fast. It’s so fast that it does not need a separate operational analytics system or data warehouse.
It is the platform for all of SAP’s innovation. Because it is so fast, it is no longer necessary to hold all of the duplicate data in a transactional system including calculations like percentages, totals, indexes and aggregates. This leads to a much smaller data footprint and dramatically faster processing.
Why is there no support for other DB vendors?SAP has been upgrading its applications to run on SAP HANA for the last 4 years, and in doing so, they found that HANA was a much more capable database platform.
However to get the best out of HANA, they found that quite different data structures were required than for traditional disk-based RDBMS like Oracle. As a result, SAP created Smart Financials or SFIN, then renamed Simple Finance. This had dramatically simpler structures, used fewer resources and therefore could run much larger business workloads than previously imagined.
Unfortunately, the other database vendors did not invest in innovation, and they do not have the capabilities of SAP HANA and the Simple Finance codebase does not run efficiently on them.
What if I am still on Oracle. Will I still get support from SAP?Yes, and we can expect SAP to retain its relationships with other database partners. There is an install base of tens of thousands of Business Suite customers running other databases, and these will not be forgotten.
It’s important to remember that ERP systems have extraordinary longevity – the lifespan can be 10-20 years or more, and SAP will continue to support existing systems in the long term.
SAP claims that it will continue to innovate in the Business Suite for AnyDB – for example, by porting any innovations which are created for
Will I still get innovation if I do not move to HANA?SAP will certainly provide security and regulatory fixes for what they call AnyDB customers (Oracle/Microsoft/IBM) but innovation will be focused on HANA.
This already happened in the SAP BW data warehouse software: in the latest SAP BW 7.4 release, almost all the innovations for customers are only available for the HANA DB.
Does SAP S/4HANA still run on the ABAP platform?Yes, S/4HANA will be based on SAP’s ABAP platform. Extensions for the Public Cloud version will be possible via HANA Cloud Platform extensions, and the Private Cloud and On-Premise versions will allow ABAP customization.
Is SAP S/4HANA Backwards Compatible?Once you have moved your Business Suite to the HANA platform, either on premise or in the cloud, it will be possible to take advantage of SAP S/4HANA components as they become available.
Existing code will continue to run because ABAP is compatible with HANA. Some code requires optimization when customers move to the HANA platform, but this is normal.
What modules are available for SAP S/4HANA?Currently, there is support for core finance (GL). This will be extended to Logistics in 2015, and other modules will follow. It’s worth noting that the existing Business Suite code lines are backwards compatible with HANA, so all the existing supported modules will run.
SAP will rewrite the existing modules for HANA over a 3-5 year period, based on popularity.
What’s the difference between SAP S/4HANA and the existing Business Suite powered by SAP HANA?Today, there is no difference. Simple Finance is available on premise or in the cloud and it is an add-in to the existing Business Suite.
With Simple Logistics, we expect the first cloud-first release of a SAP ERP product. This likely will pave the way for a separate installation for SAP S/4HANA through 2016 and the regular Business Suite and S/4HANA will part ways.
What is the upgrade path to SAP S/4HANA?The initial path is to move to the Business Suite on HANA platform, and the SAP S/4HANA move will be possible. For example, the conversion to Simple Finance is an automated data migration.
Here’s an excerpt from SAP CTO Irfan Khan’s blog post:
"Moving to SAP S/4HANA for a typical existing SAP ERP 6.0 customer will require a database migration from any database to SAP HANA, combined with a move to the latest enhancement package and the deployment of the exchange innovation, meaning the current code is replaced by the new one. Moving to SAP S/4HANA for an existing SAP Business Suite powered by SAP HANA will be even faster as only the deployment of the exchange innovation is required where current code is replaced with the new one."
What is the business case for SAP S/4HANA?Since details on the specific options and capabilities of SAP S/4HANA are still evolving, the details of the business case haven’t been fleshed out yet.
That said, SAP has come under a lot of pressure in 2014 from the User Groups to deliver information about business value with its technology, and we can expect SAP to be extremely explicit about the benefits of moving to SAP S/4HANA.
Will SAP S/4HANA run on-premise or in the cloud?It’s clear that cloud computing is SAP’s stated direction. SAP S/4HANA will have three modes – a Public Cloud, Private Cloud, and on-Premise. It will be “cloud first” approach and the cloud versions will provide innovation earlier than the on-premise version.
SAP S/4HANA Public CloudThe public cloud will be a shared HANA multi-tenant database using the HANA multi-tenancy database option. This will have mandated quarterly releases containing new functionality, and there will be one code-line for all customers.
In the quarterly releases starting in Q1 2015, there are three initial options:
- Finance: Simple Finance
- Professional Services: Project Systems, Fieldglass, Employee Central
- Sales: Simple Finance, Hybris, Cloud for Customer
Despite the fact that there are disparate clouds, the user experience is designed to seamlessly knit the products together into one interface.
SAP S/4HANA Private CloudThe S/4HANA Private Cloud is designed for customers who are looking for increased security and privacy and who don’t want to share a database container with other customers. Despite that, quarterly releases will be mandated for Private Cloud customers.
The scope for the private cloud will be delivered at SAPPHIRE 2015, in May, but it is designed for larger scale adoptions, with customizations, and the consumption and conversions of on-premise Business Suite systems.
SAP S/4HANA On-PremiseThe SAP S/4HANA on-premise option will lag behind the Public and Private Cloud offerings and this is deliberate. On-Premise customers tend to update less frequently, so yearly updates are planned.
In addition, it will be possible to migrate a Business Suite system into the SAP S/4HANA cloud, and then migrate it back into an on-premise system.
Is S/4HANA Cloud Multi-Tenant?The Concur, Fieldglass, Ariba and SuccessFactors clouds are already truly cloud multi-tenant.
The Public Cloud version will use database multi-tenancy, which is quasi-multitenant from a cloud perspective. ABAP Code-lines, configuration tables etc. will not be shared yet between customers on one SAP HANA container database. This is expected to come in time, as SAP HANA supports true cloud multi-tenancy.
What is the roadmap for application delivery?SAP has stated a “Phased Roll-out” strategy which will take years rather than months to deliver. Presumably it will never port the whole Business Suite – some less popular Industry Solutions and Add-Ins will be sunsetted along the way.
The roadmap is expected to be released at the annual SAPPHIRE conference in May 2015. This roadmap is expected to be closely tied to customer journeys and business value including ROI and TCO models.
What skillsets are required?As previously explained, the Private Cloud version will require HANA Cloud Platform (HCP) Extensions. These will be a key commodity in all S/4HANA projects.
In addition, the ABAP programming language didn’t go away, and ABAP OO programmers will be as popular as ever.
HANA DB skills won’t be lost, although SAP plans to take care of the feeding and watering of the systems in the Public and Private clouds.
More significantly, there is a new role emerging in the market for business-savvy configuration experts who will quickly tailor S/4HANA systems for customers using the new guided procedures for configuration.
Does this have an impact on the SI market?Yes it does, and this continues a trend that has been happening for some years outside the SAP Ecosystem.
SAP S/4HANA projects will be faster and cheaper, and there will be less time spent doing configuration and development. Business Consulting skills will be in-demand, but ERP configuration skills will slowly wane away.
Do note that from a consulting perspective, the transition to S/4HANA will take 10 years or more – Enterprise ERP systems are extremely sticky.
Why isn’t S/4HANA based on byDesign?When SAP built byDesign, they elected to completely change the data model. The programming language is different, which meant that a move to byDesign is effectively a complete data migration and rewrite.
SAP realized that Business Suite customers wouldn’t want to undergo this level of change, and so they built S/4HANA on the original Business Suite.
What are the licensing implications for SAP S/4HANA?For various reasons, SAP S/4HANA is a new product SKU, which means that it does have to be purchased by customers. Existing customers will not get SAP S/4HANA licenses included in the maintenance of their SAP Business Suite, but existing SAP Business Suite for SAP HANA customers are covered.
SAP has also been clear that they are looking to take a larger portion of customer spend in the cloud – the average revenue per customer over 5 years is higher than for on-premise software.
The existing 15% SMBV license will be available for SAP S/4HANA for any customer who makes a purchase in 2015 and is set to include all the future S/4HANA innovations.