Key Considerations for SAP S/4HANA Public Cloud

⇨ Choosing an ERP solution for any business is an intricate task, necessitating thorough discussions and evaluations, especially in today's digital era where cloud-based solutions are rapidly gaining prominence.

⇨ Customer should ensure that SAP S/4HANA Public Cloud ERP can handle all their current business processes or improvise them.

⇨ Engaging both SAP and the implementation partner from the outset of the ERP selection process is crucial for accurate insights.

In today’s fast-paced digital era, enterprises face many challenges that are presented by their existing ERP systems. From the lack of integration, which often results in disjointed processes and inefficiencies across departments to legacy business processes that are heavily customized, that not only hinder adaptability but also escalate the complexities involved in business transformations. Change management emerges as another pressing issue, with organizations struggling to ensure smooth transitions while implementing new systems or processes. Moreover, data conversion and migration pose risks of data loss or inaccuracies, necessitating meticulous planning and execution. Lastly, the total cost of ownership (TCO) of these systems often escalates due to the continuous need for upgrades, maintenance, and customization, pressuring enterprises to seek more streamlined and cost-effective ERP solutions.

Companies want to be more agile, effective and at the same time want to leverage new technology to cut costs, improve quality and transparency, and build value. Companies that are starting new or moving to Cloud ERP are focusing to bring multiple advantages such as efficiency, scalability, simplified administration, lower costs, clean core, and innovation by following the cloud best practices (Figure 1)

Figure 1: Cloud ERP Best Practices

The decision to select SAP S/4HANA Cloud is driven by its advantages that address modern enterprise needs. When considering SAP S/4HANA Cloud adoption, businesses must evaluate their specific requirements, the potential cost implications, and the strategic alignment with their long-term objectives. The platform’s scalability, security features, and integration potential are also crucial considerations to ensure a seamless digital transformation journey.

Some of the benefits of selecting SAP S/4HANA Public Cloud ERP are:

• Continuous Innovation

SAP S/4HANA Cloud ERP is always on the latest release with upgrades fully managed by SAP,  providing continuous innovation with minimal disruption and increased agility.

• Total Cost of Ownership (TCO)

Total Cost of Ownership is the cost to procure, deploy, run, and retire the software. It has multiple components are:

• Software cost
• Infrastructure cost
• Implementation cost
• Ongoing Operations/Staffing cost
• Upgrade cost
• Continuous Improvement cost

SAP S/4HANA Cloud ERP has a high degree of standardization. The infrastructure and platform are maintained by SAP because of which the customers have to spend less on the implementation, ongoing operations, upgrade etc. which reduce the overall TCO and provide monetary benefits.

• Implementation Cost

Implementation Cost of the Cloud ERP is dependent on some of the following components

• Cost to add custom functionality to the standard solution
• Cost to test the solution
• Change management cost
• Data Migration Cost

SAP S/4HANA Cloud ERP has a high degree of standardization which means less deviation from the standard solution and reduced cost to add custom functionality. SAP ERP comes with best practices combined with preconfigured content and accelerators such as SAP API Business Hub which helps to implement the solution in the cloud faster, hence, reducing project duration, resources, and implementation cost.

• Standard Integration with SAP and other solutions

To provide flexibility, SAP has standardized predefined integrations for cloud and  on-premises systems between SAP and non-SAP products. Customers can access the SAP Best Practices Explorer tool and SAP API business hub to understand the available integrations. This  helps to expedite the integration development in the projects.

• Machine Learning and new solutions

SAP has developed multiple standard machine learning solutions and is working to provide more options to the customers. Some of the SAP standard applications are as follows.

• Cash Application
• Payment advice extractor
• Payables line-item matching
• Intelligent accrual recommendation
• Tax Compliance Smart Automation/GRC
• Detection of abnormal liquidity items

Figure 2 shows the different options available with the customer to develop the AI/ML solution.

Figure 2: SAP Machine Learning

• User Experience

With SAP Fiori as the new use experience, customers have achieved the following benefits and integrating AI/ML such as ChatGPT or Chabot etc. helps in achieving business goals     better and faster:

• • Improved user satisfaction
  • Increased user productivity
  • Analytics can be embedded into the application using analysis path framework, analytical card for real-time decision-making process
  • Increased mobility and user

• Infrastructure Cost

As the infrastructure is maintained by SAP (Figure 3) and not by the customer, it saves cost, time, and resources on systems maintenance. The customer needs to focus only on the application and not the infrastructure activities like upgrades, network, security, back-up storage, system refresh, etc. SAP S/4HANA Cloud ERP.

Figure 3: SAP S/4HANA Public Cloud ERP Service Models

 

SAP S/4HANA Cloud Architecture

SAP S/4HANA Cloud ERP has a simple architecture (Figure 4) which includes SAP BTP for extension, SAP Fiori for user experience and SAP CPI or any other integration platform for the integration between the systems as shown below. There can be other systems, if required, such as SAP Datasphere, SAP Analytics Cloud, SAP BW/4HANA etc.

Figure 4: SAP S/4HANA Public Cloud Architecture

Key Steps/Considerations for SAP S/4HANA Cloud

Choosing an ERP involves discussions and evaluations regarding cloud vendors and implementation partners so that the solution must fulfill majority of the business requirements. The cloud ERP varies significantly when compared to the on-premises ERP. The following questions can be asked to get more clarity on the solution:

• Who owns the operating hardware?
• What options/tools are available to customize the Cloud ERP?
• What is the RACI for the Cloud ERP between customer, implementation partner and SAP?
• Can we modify the cloud ERP solution with BADI’s like the on-premises solution?
• Do we have direct access to database tables?
• What options are available if the required integration is not available?
• How the local business requirement of the countries like Brazil will be implemented in the Cloud ERP?
• What will happen in the future if we want to migrate from Cloud ERP to some other solution?
• What will happen if the required integration is not available on the SAP S/4HANA Cloud ERP?
• Is System Conversion or Selective Data migration possible to SAP S/4HANA Cloud ERP?
• What is the SLA of the systems 9 or 99.5?

Below are some of the important points to consider for SAP S/4HANA Cloud adoption:

• Localization

There are certain country- and region-specific requirements such as tax codes and procedures, fiscal year, general ledger settings etc. A majority of the customers create a common global SAP template which covers most of the business needs, and also make delta changes due to country-specific legal or statutory requirements as the template is rolled out. Customers might configure or custom code as per the local requirements for which SAP has provided a configuration localization tool that is a part of SAP Central Business Configuration

• Extension/Customization/Missing Functionality

Many legacy SAP ECC customers currently have a significant amount of custom ABAP code and custom configuration that need to be adapted to move to the SAP HANA Cloud. However, not all customizations and custom code (Figure 5) can be migrated.

Figure 5: Custom Code Flowchart

We will have to utilize the cloud best practices instead of following the previous on-premises ERP approaches (Figure 6) where extensive customizations and custom code (Figure 7) were allowed on the systems.

Figure 6: Classic vs New Cloud Extensibility Concept

We must understand principle of Clean Core, Cloud First Approach, S/4HANA Simplifications to implement SAP S/4HANA Public Cloud and get the following benefits.

• Speed and Innovation
  • Be able to absorb innovation delivered by SAP at a faster rate
  • React fast on changing business requirements

• Reduce TCO by making upgrades eventually non-events from a custom code point of view
  • Reduce test efforts for business users
  • Reduce adaption efforts for developers
  • IT service providers being able to offer upgrade projects at a fixed price

SAP has provided the following option/solutions (Figure 7) for extension/customization.

Figure 7: Custom Code & Customization Decision Flow Chart

• In-app/key user extensibility includes low code and no code extensions based on Fiori (Figure 8) intended for business experts without programming skills. The extension options (Figure 9) are more limited in comparison to the on-premises extensibility.

Figure 8: SAP S/4HANA Cloud – Extensibility Fiori Applications

• • The UI adaptation mode in SAP S/4HANA Cloud offers key users many options to make modification-free changes to the UI using a drag-and-drop functionality. The adaptation mode can be started by selecting AdaptUI.
  • Custom Fields and Logic Fiori application allow key users to add new fields while at the same time hiding underlying software’s technical details.
  • Creating custom business logic is an important option as it allows extending the behavior of applications such as data validations, data calculations, mapping the custom field with the standard application and process. The Custom Fields and Logic app, which allows for the development of custom business logic is based on SAP.
  • The custom business logic has access to the BADIs, which are released for the usage on the SAP S/4HANA Cloud.
  • Creating custom CDS views application on Fiori which allows to make changes in the CDS views released from SAP to retrieve and consume data. The tool also supports joining several CDS views and performing operation such as calculations and aggregations.

Figure 9: SAP S/4HANA Cloud – In-app/key user extensibility Use Cases

Regarding objects transportation, the adaptation transport organizer tool in SAP S/4HANA Cloud supports the transport between the systems and the extension continues to run after each upgrade or update without any further activity.

• Side-by-side extensibility is leveraged when the requirement is not fulfilled by the In-app. There can be multiple conditions (Figure 10) like:
  • Custom application requires data access to other SAP backends or third-party.
  • Custom application requires to make changes in the current business process which cannot be achieved by In-app extension forex, adding an additional business step for certain countries.
  • Extending reach to external users instead of providing them access to the SAP S/4HANA.

Developers can implement their own applications on SAP BTP through its development models and technologies:

• • Utilize the SAP Connectivity service, SAP Event Mesh and SAP API Business Hub for the integration between SAP S/4HANA and SAP.
  • Utilize the ABAP environment, Cloud Foundry runtime and Kyma runtime to deploy the application on SAP.
  • Utilize the SAP Cloud Application Programming Model, ABAP RESTful application programming model or any other language like Node.js to create an application on SAP.

Figure 10: SAP S/4HANA Cloud – Side-by-side extensibility Use Cases

• In-app developer extensibility is leveraged when the requirement is not fulfilled by the In-app extensions but can be fulfilled by the side-by-side extensions. The decision factor whether to develop the application on SAP BTP (side-by-side extensions) or SAP S/4HANA Cloud utilizing ABAP restful application programming model (In-app developer extensibility) are:
  • Custom application which requires tight coupling with SAP S/4HANA Cloud can be developed on In-app developer extensibility.
  • Custom application which does not require any integration with third party application, or any use of the SAP BTP service can be developed on the In-app developer extensibility.
  • Customers want to develop the custom application utilizing ABAP code on SAPS/4HANA Cloud with required Cloud restrictions.

This is the most powerful extensibility option as supported the ABAP development skill. The In-app developer extensibility is only available in a 3-system landscape.

Integration

Many customers have both niche and legacy systems in their landscapes. Such technology integration is dynamic, works in real-time with other systems, partners, or end consumers. As a result, companies need to keep the current integration working and design next-generation integration architectures to support more dynamic interaction models and enforce open standards, while minimizing cybersecurity and risk issues.

Customer should ask following questions while implementing SAP S/4HANA Cloud:

• How can SAP S/4HANA Cloud be integrated with the already existing SAP and non-SAP landscape systems?
• What options are available if the required integration is not available in SAP S/4HANA Cloud?
• Can any other middleware such as Boomi be leveraged apart from SAP Cloud Platform integrations?
• Are API types such as remote function call (RFC) protocol, such as IDocs etc. available on SAP S/4HANA Cloud?

SAP has provided following integration approaches with SAP S/4HANA Cloud:

• Use preconfigured, end-to-end integration scenarios provided by SAP Best Practice Explorer and SAP API Business Hub for rapid deployment.
• Customize predefined content to tailor SAP-provided integration scenarios to your requirements provided by SAP API Business Hub by leveraging the extensibility and self-service configuration features provided with SAP S/4HANA Cloud to extend and adjust the standard content until it fits your specific requirements.
• Create a custom-defined integration to meet your organization’s unique business needs, such as integrations with third-party systems or solutions built by customers on SAP Cloud Platform:
  • Customers can create custom Core Data Services (CDS) views to access data in SAP S/4HANA Cloud and wrap them as OData services. Custom CDS views are created using the Custom CDS Views tile in the SAP Fiori launchpad for SAP S/4HANA Cloud.
  • Customer can configure SAP S/4HANA Cloud to trigger a “business event” which can be captured by SAP Event Mesh service of SAP BTP and then further connected to the SAP Cloud Platform Integration or other systems.

Data Migration

Normally during data migration, master data, balances, and open items such as account payable and receivable are moved. SAP has provided the SAP S/4HANA Migration Cockpit which helps in migrating master data and transactional data from a legacy SAP or third-party system to an organization’s SAP S/4HANA Cloud systems.

Analytics

Analytics has transformed businesses by providing real-time information for accurate decision-making by reducing bias in decision, identifying early-stage trends, and anticipating complex market  dynamics. In SAP S/4HANA Cloud and SAP Hana database, embedded analytics allows to perform tactical and operational reporting on real-time data directly from system of records instead of transferring data to another data warehouse.

Customers can integrate SAP S/4HANA Cloud (Figure 11) with other SAP solution such as  SAP Analytics Cloud, SAP Datasphere and SAP BW/4HANA to combine data from multiple sources etc. SAP has provided the following solution for analytics:

• Utilize the analytical queries based on the core data services (CDS) for providing the data in real-time and consumption in the SAP Fiori Smart Business KPI’s, Analytical List Pages etc.
• Regarding custom analytical query, Custom Analytical Queries app in Fiori can be utilized to create a new query based on the existing data source.

Figure 11: SAP S/4HANA Analytics Architecture

Lesson Learned

• Check if Cloud ERP can fulfill all the business requirement as there are multiple modules available in the solution.
• Check if all the required integration are available as per the business needs with the Cloud ERP. Forex – SAP does not currently offer pre-built integration to any CAD or any third-party PDM solution.
• Understand how cloud extensibility will be leveraged to fulfill the business requirements.
• Check how will you migrate the old historical data to the Cloud ERP as many industries have regulatory or legal requirements to maintain historical data for defined periods.
• Check how can we create extension on the SAP Business Technology Platform (SAP BTP) instead of realizing at a later stage during fit-gap workshops.
• Understand the RACI between the SAP, implementation partner and customer as the roles and responsibility changes on the SAP S/4HANA Forex – infrastructure is the scope of the SAP.

Conclusion

Customers need to confirm that SAP S/4HANA Public Cloud ERP is equipped to manage their existing business processes or enhance them. It’s essential to allocate appropriate resources, including selecting the right implementation partner, to ensure the solution functions as anticipated, preventing unforeseen challenges. Engaging both SAP and the implementation partner from the outset of the ERP selection process is crucial for accurate insights. Additionally, attention should be given to other critical factors such as data handling, change management, and preliminary tool training.