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SAP S/4HANA: Three Huge Advantages

Feature Article | September 14, 2015 by Andreas Schmitz

Hasso Plattner changed the rules of the database game with SAP HANA. And now, companies planning to deploy the new SAP S/4HANA suite will also need to adopt a new mindset, according to Rüdiger Spies, patent attorney and analyst at PAC.

SAP News: With SAP S/4HANA, SAP has created one of the first software solutions that is equipped to master the digital transformation. Just how far ahead of the competition is it?

Spies: The IT world has been struggling to find a new architecture for some time now. With SAP, SAP R/3 worked well for a good while, but it was always based on relational databases from its competitors such as Informix, Oracle, Microsoft, and IBM. Especially in the area of applications, and most notably in business intelligence, IBM was going from strength to strength. Hasso Plattner’s masterstroke precisely in this phase was SAP HANA, because, for the first time, SAP had its own database – which was in-memory into the bargain – and became independent from relational databases.

The market never really accepted MaxDB or SAP DB, which were developed from Software AG’s ADABAS D. And other attempts by SAP and its competitors to work with column-based databases never took off. It’s different with SAP HANA.

With SAP S/4HANA, SAP has launched a product that is powered by the SAP HANA platform. Is it the right time for SAP S/4HANA to hit the market?

Five years ago would definitely have been too early. But the license policies – for example, of SAP’s main competitor – have been pretty misguided, so launching the innovation right at this moment presented a great opportunity. Also, there is the critical mass of SAP as the market leader. Seen from this perspective, the timing is good.

What are the decisive advantages of SAP S/4HANA?

The new business suite based on SAP HANA offers three huge advantages

One, there are no more redundancies, such as duplicate tables and metatables. They’re no longer necessary, because everything is kept “in-memory,” that is, in the main memory. Two, the back end has been slimmed down massively. And three,  development, operation, and backups have become simpler.

This not only means faster processes, but also opens up completely new decision-making opportunities. If a simulation in production planning only takes a few minutes instead of half a day, you can reschedule logistics processes in a matter of minutes and not just once every 24 hours. A company is then not only in a position to quote an individual price to a customer while he or she is ordering, it can even factor in the buying history at that very moment and thus offer appropriate discounts. Currently, none of SAP’s competitors can do this.

It takes time to convince the SAP users of this paradigm shift. Are the customers ready for this yet?

If a company opts for SAP S/4HANA and therefore SAP HANA as a platform, it needs a new IT architecture that must be aligned with its business objectives. But any such reorientation must also be seen in the context of a company’s innovation cycles. That’s because organizations have ongoing contracts with service providers and SAP competitors, which would then have to be renegotiated.

In addition, there must be some pressure and reason to act. Only if people are unhappy with their existing architecture will they want to change the status quo, particularly as it will be necessary to build a knowledge base for the new technology in the company first of all. Against this background, I assume that one fifth of SAP customers has the potential to immediately transition to the state-of-the-art SAP S/4HANA suite.

Digital transformation: “We’re at a similar stage to the cloud after two years”

Ultimately, SAP S/4HANA with SAP HANA as the platform is driving the digital transformation in enterprises. Do companies have a strategy to deal with this?

Generally speaking, major corporations are now well aware of the digital transformation. However, the midmarket has so far been much less receptive to the topic. Of course, there are examples that show where the digital transform can succeed. There’s the yoghurt that can be digitally traced from the cow to the refrigerator, and the motor insurance policy that bases its rates on the driver’s behavior behind the wheel.

But these are the exceptions. We’re at a similar stage to the cloud after two years. It will take a while. Many people today still don’t realize the serious impact that the digital transformation will have on the economy. Administration will be streamlined; many services will become superfluous; banks will close their branches, because online banking will pocket the revenue; and insurance claims will be handled more efficiently as a result of networking through the Internet of Things.

And this trend will continue unabated when the next wave comes crashing over us – that of cognitive software. HR departments will face the biggest challenge: They want to keep hold of their employees and offer them attractive jobs. Yet, merely the path to SAP HANA has shown that the biggest obstacle to success is the fact that software causes huge and radical changes, and we have to get people to embrace these changes.

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