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The Evolution of SAP ERP: SAP S/4HANA

by Ricardo Santos

The greatest SAP’s innovation solution today is the system that is the evolution of SAP ERP: S/4HANA. Where this new ERP uses SAP’s own database with in-memory technology for storing application information. With this greater memory and speed potential, S/4HANA allows significant business processes enhancements such as the improvement of Financial processes, Logistic and material control. Everything can work even better with the technological support of trends like BIG DATA, BlockChain, Cloud computing, Internet of Things, Machine Learning and Mobility.

A bit of background

The biggest ERP in the market today, ‘SAP’ has evolved over the past four decades and has been the single most integrated business solution implemented in the market. With companies across the globe in numerous industries utilizing SAP solutions for business and IT functions, has created a vast amount of career opportunities for a number of highly skilled and specialized consultants.

The integrated nature of the SAP S/4HANA offering requires a combined effort from many professionals who come with deep business knowledge and expertise in different business areas (functional consultants) such as procurement, manufacturing, sales & distribution, finance, quality, maintenance, warehouse, service, etc. In addition to these process areas, consultants with deep technical expertise (technical consultants) are also needed to install, maintain, customize and update the SAP solution. Also, there is a need for system administrators and people who administer security (basis and security consultants).

Traditionally, companies hired consulting firms (also called system integrators or SI’s) to understand their business processes and bring in their consultants with specific skill sets who can, design and configure the future SAP system and also train their personnel.

A quick look at how SAP product(s) evolved

The mainframe-based SAP R2 was released in 1979 with a two-tier architecture. The widely popular R3 system was released in 1992 which comprised of a 3 tier architecture (database, application server and the presentation server being the 3 tiers). SAP kept enhancing the product in the form of updated releases. SAP stabilized its product with the name ECC 6.0 released in 2006. SAP kept adding enhancement packs until 2013, the last one being EHP7 released in 2013.

In the last decade, SAP released numerous products that worked in conjunction with core ECC 6.0 (also called as ERP6) to meet specific business needs, a few examples being mySAP CRM, SRM, APO, PLM, EWM, BW/BI, MII, SCM, MRS among many others.

In addition, numerous industry specific versions of SAP ECC6 (ERP) are made available, which catered to specific industry segments such as retail, utilities, public sector, oil & gas, healthcare, banking to name a few.

The advent of a new generation of SAP products – S/4HANA Cloud

SAP came up with strategies to stay as a leader in the ERP market with sustaining growth over years to come. SAP’s new mantra to achieve this is by bringing the new S/4 HANA solution into the market.

What is HANA?

SAP traditionally operated on databases that they did not own. All of the SAP installations done prior to HANA were utilized using competitor’s databases. HANA is SAP’s own ‘state-of-the-art’ database which is column oriented and stores data ‘in-memory’. It offers ‘real-time’ analytics.

SAP introduced HANA database to the market in 2011. SAP has issued new HANA releases since then with different names and functionality. ‘BW on HANA’ was released in 2012 which gained a lot of momentum in the world of analytics. In 2013, SAP released ‘Suite-on-HANA (SOH)’ which basically means the entire existing SAP products suite is running on a HANA database. Since the introduction of HANA, SAP is working towards enhancing and optimizing all of the existing products to take advantage of the capabilities of HANA database and eliminate restrictions that the existing relational databases imposed.

SAP continued to expand their product portfolio by acquiring a number of companies and merging the products with their new generation products. A few such examples are SuccessFactors, Ariba, Hybris, Syclo, etc.

SAP released Simple Finance in 2014, which is an S/4 product and also runs on HANA. Simple Finance saw a big change in terms of how financial data is stored in the SAP system. Numerous tables that traditionally stored SAP Finance and Costing (FI/CO) data have been condensed into a handful of HANA tables which reduces complexity in data storage and increases reporting speed.

Moving ahead on the same path, SAP intends to “HANA-ize” all the traditional modules in the ERP. SAP release 1511 S/4HANA covers the latest suite of SAP products including S/4HANA Enterprise Management.

What is Fiori?

SAP also addressed the age-old complaint that the SAP screens are not user-friendly and non-intuitive, by releasing what is called ‘Fiori’ user interface (Ux). Fiori is based on UI5 technology and contains a set of front end templates called ’tiles’ that users can pick and choose from the applications they intend to run on SAP. One other key feature of Fiori is mobility integration. All the new generation SAP products are web enabled, persona-based and configurable.

It appears like future SAP implementations will typically comprise of S/4HANA Enterprise Management application running on Fiori front-ends and will be mobility enabled. Since the table structures will be simplified, there will probably be a limited need for RICEF (custom developments). Reports would be generated using the in-memory (cloud) capabilities. Just a guess but simple queries might be able to generate complex reports given that the table structures are simple. We may have to wait to see if the new generation of digital analytics might possibly eliminate the need for traditional BW reporting!

What it means to SAP Consultants

While SAP is driving big changes and is on their way to creating new markets for the new generation products, customers are still confused with the fast pace of changes and the array of products available currently with overlapping functionality. They have a hard time making the right choices and need help in understanding what the S/$HANA voyage really means.

This offers a huge challenge as well as a huge opportunity for SAP consultants to catch up with SAP’s pace of innovation to understand the latest products and provide customers with right information to guide them in making the right choices. Good news is that the core business processes are driven by the industry solution and more or less will remain the same irrespective of the technology advancements. So, the need of the hour for SAP consultants is to invest the proper time in upgrading their skills, after all, consultants are the ones that need to understand the new products, features, and functionality to make themselves valuable and marketable for the future!

Demand for SAP Consultants

The number of SAP consultants has increased steadily as the number of SAP implementations has increased from the late 80s until now. Depending on the demand for certain skills, consulting companies, and independent consultants can charge premium rates for specialized skillsets and expertise. However, the demand for certain skillsets is varied based on the industry trends, the number of ongoing implementations, support requirements, and the pace of innovation being released by SAP. Seasoned SAP consultants will v understand quickly that they need to constantly upgrade their skills with newer product releases and acquire newer skills that are in demand constantly so that they can stay in high demand as well.


Photo by Cris Ovalle on Unsplash