Michael Jolton, NIMBL
SAP’s new S/4 HANA Public Cloud, although currently a relative unknown, possesses an amazing strength that enterprises already running SAP (as well as those who aren’t) should pay attention to. Here are three of the main reasons to keep S/4 HANA Public Cloud top of mind:
S/4 HANA Public Cloud presents a new model and opportunity. Because S/4 HANA Public Cloud utilizes the same code base as S/4 HANA, holding companies can now have the power of an SAP solution without the overhead required for a full scale ERP. At the same time, the Public Cloud solution provides a Finance Only edition which contains scope to only what the holding company requires. Plus, due to its Software as a Service nature, no IT department is required to maintain S/4 HANA Public Cloud, allowing the holding company to focus on what is important: the operations of its subsidiaries.
For a variety of reasons, multi-business unit enterprises set up holding company structures. Typically the holding company does not have the complex operating requirements that led the subsidiary companies to SAP for ERP support. Still, the holding company must be able to manage finances across the organization and as a stand-alone business. As a result, many holding companies end up running on an expensive, but stripped down version of SAP (or another large scale ERP), complete with expensive IT departments and infrastructures (in-house or sourced) when it would otherwise not be required.
As S/4 HANA Public Cloud comes preloaded with SAP best practices, processes that have been found to maximize efficiency in operations across a variety of company types and industries, subsidiaries can readily adopt these best practices, allowing for the rapid standardization of ERP solutions to the S/4 HANA Public Cloud platform – reducing IT infrastructure costs and intercompany operating inefficiencies and costs while providing the additional benefit of improving individual company operations with a world class ERP solution.
The second scenario provides a related set of problems that have just been pushed off to delay dealing with the cost and complexity of merging systems. These issues only get exacerbated as more companies are acquired. Ultimately, the enterprise is left in a viscous state where nothing can change because of the “chicken or egg” issue of how to standardize processes to be able to move to a single ERP platform before the ERP capabilities are known. The result is multiple IT departments, significant expenditure in hardware and software maintenance, and a painstaking and costly consolidation and close process (often requiring additional hardware, software and support).
In the case of the first scenario, critical to the conversion will be that the companies have similar operations. If not, the IT department could be left managing an increasingly complex ERP with significant customizations to address each business’ unique processes. By implementing S/4 HANA Public Cloud, an enterprise must adopt common best practices for standard operations. A company running on S/4 HANA Public Cloud, utilizing SAP best practices, possesses a strong baseline for operations that merging companies should be readily available to adopt. In addition, since the application is in the cloud, no additional IT resources or hardware are required once the migration is complete, helping the acquiring company meet the financial and synergistic targets envisioned in the merger.
Growth by acquisition usually implies one of two scenarios: (1) that the company being absorbed converts to the acquiring company’s ERP or vice-versa, or, (2) the company being purchased is left to operate independently on their pre-existing ERP. Both scenarios generate great opportunity for improvement and great risk if not managed carefully; and both present an excellent rationale for considering S/4 HANA Public Cloud.
Whether in the parent holding company, in subsidiaries, or just in the news, keeping track of the S/4 HANA Public Cloud will be extremely valuable for all enterprises currently employing SAP, as well as those who aren’t but are looking to improve.
The last reason to pay attention to S/4 HANA Public Cloud is that, with quarterly releases and SAP’s significant investment, it will soon contain ALL S/4 HANA functionality. From that point forward, the public cloud version will become the leader in functionality with continued quarterly releases, while the on premise/private cloud version will adopt the new functionality with annual updates. Even if larger organizations prefer the annual updates, paying attention to S/4 HANA Public Cloud will provide the looking glass to the future to be able to best prepare to take advantage of new functionality.
If you have any questions or would like to further discuss your company’s S/4 HANA Public Cloud needs, please feel free to contact Michael at Michael.firstname.lastname@example.org