It's always a wise idea to view software vendor press releases with a degree of skepticism, especially when they tout—as SAP did on Wednesday for its next-generation S/4HANA suite—a "massive wave of innovation." But the truth is that SAP has apparently delivered and arguably over-delivered on road map promises for S/4HANA it made early this year, and both customers and competitors should take notice. Here are the details from SAP's press release at the TechEd Barcelona conference:
SAP SE (NYSE: SAP) today announced the next update for the SAP® Business Suite 4 SAP HANA® (SAP S/4HANA) suite, on-premise and cloud editions.
SAP S/4HANA solutions for lines of business combine the digitized core capabilities included in SAP S/4HANA Enterprise Management with the on-premise and cloud solutions in the SAP portfolio for each line of business – such as SAP Cash Management application in finance; SAP SuccessFactors® solutions in human resources; the Ariba® Network in procurement, and SAP hybrid solutions in marketing and commerce.
Key simplifications and innovations include:
Optimized working capital with new accounts payable and receivable cockpits
Decreased stock buffers with a simplified data model in inventory management for real-time, high-volume processing
Increased visibility with real-time insight into stock and material flow
Reduced manufacturing cycle time with streamlined material flow for internal requirements and material requirements planning
Augmented reactivity with real-time monitoring of production orders for flow and critical issues
Improved operational decisions with easier simulation of supply alternatives
Lower procurement costs with standard integration to the Ariba Network
Better customer service with a new sales order fulfillment cockpit to help identify bottlenecks and issues instantly
SAP calls S/4HANA, which was launched in February, its fastest-growing product ever, with more than 1,300 customers. Two caveats here: It's not clear how many of those customers are live, or close to going live, and initial sales were likely helped by a pricing promotion SAP is running through the end of this year.
The SAP user community is viewing the launch, also known as S/4HANA Release 1511, with far from jaded eyes. Wednesday's announcement marks "a momentous day," writes Kevin Reilly, S/4HANA Community Advocate at the Americas' SAP Users' Group. "The last time the SAP ecosystem saw a similar event was R/3's introduction more than 20 years ago."
The update advances the functional scope of S/4HANA significantly, particularly in the area of logistics. SAP has also made some nomenclature changes, dropping titles such as Simple Finance and instead pushing a wide variety of ERP modules under the header of S/4HANA Enterprise Management. (An official FAQ goes deep into the details.)
The Bottom Line
SAP historically has not been known for delivering major ERP software updates quickly. (To be fair, it's hardly the only vendor one could say that about). The rapid delivery of Release 1511 for S/HANA speaks to both the company's commitment of resources to the project, as well as competitive pressures.
"It's a major release and they did more than what I expected," says Constellation Research VP and principal analyst Holger Mueller. "They of course want to make it look more than it is by roping in the cloud assets—but that was to be expected anyway."
Another point to consider is that S/4HANA "is morphing from an all-encompassing suite to a digital core and integration platform with some automation, with critical pieces in the cloud. It's all about time-to-market, as Oracle has had it all and SAP is behind."
SAP is taking a bifurcated approach to S/4HANA's road map, with quarterly updates planned for the cloud version and annual ones for the on-premise edition. The approach isn't earth-shattering, as it aligns with industry practice on the cloud/SaaS side and reflects SAP's own enhancement pack strategy for the Business Suite.
For now, it seems the pace of innovation for S/4HANA has been set, and it is a brisk one. What to watch for now is how quickly SAP can get customers live and stable on broad S/4HANA implementations, given the difficulty many have historically faced when implementing the Suite and R/3.
