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Why SAP S/4 HANA on SaaS Model ?

Many enterprises envision the digital transformation journey with adoption of cloud solutions. Needless to mention that cloud solutions offer unique benefits like greater business agility, quick implementation, scalability, lower TCO, assured regulatory compliance and access to next generation technologies like Internet of Things (IOT), Machine Learning (ML) and Artificial Intelligence (AI).

SAP S/4 HANA cloud (SaaS), provides for a cloud based ERP business suit which enables digital, integrated, intelligent business processes across the entire business landscape.

SAP S/4 HANA Cloud is the SaaS version of S/4 HANA where the end user organization can utilize the S/4 HANA functionalities without any upfront capital investment in hardware, database and IT infrastructure

Some of the Influencing factors in making a choice for an S/4 HANA cloud (SaaS) ERP solution are;

  • New business or existing business but in a new geography: S/4 HANA cloud ERP solution is recommended option where an enterprise is either starting off with new business or expanding existing business in a new geography. In this scenario the standard ready to run preconfigured business processes are quick to deploy and align the business teams to follow the standard processes

  • The requirement is to have a highly agile and scalable solution that cover the core business process and has fast innovation cycle

  • There is no legacy of rigid business processes and organization is flexible to adjust to work with the standard best practices offered

  • Business needs rapid digital transformation and quick value realization

  • The objective is to leverage on lower TCO derived from optimal utilization of IT resources in a multi-tenancy environment

  • The business need is to have a high availability, secure and very professionally managed cloud ERP solution

As compared to S/4 HANA on premise, the S/4 HANA on cloud (SaaS) option provides following benefits;

  1. Fast innovation cycle: SAP S/4 HANA cloud software instance has a multi-tenant architecture which runs on SAP’s own data center and is completely operated and managed by SAP. SAP follows a cycle for three months to make all the new innovations available to its customers and also constantly keeping it compliant to changing national and international regulations.

  2. Reduced Total Cost of Ownership (TCO): Multi-tenancy and fit to standard approach drives optimal utilization of the IT resources for the service provider i.e. SAP and this translates into reduced TCO for the end user organization.

  3. Minimized overheard of IT management: As SAP S/4 HANA cloud is offered by SAP on SaaS model, so the end user organization is absolved from the overhead of managing the software instance in terms of backups, OS upgrades, security patch applications, BCP, DRP etc. This all is done by SAP which operates and manages the software instance in their data centers

Here are some the key drivers for lower overheads in case of SAP S/4 HANA Cloud ERP

S/4 HANA Cloud ERP deployment options

S/4 HANA Cloud ERP is available in either as a Single-tenant or Multi-tenant deployment options. Depending on the organization’s need on additional functional scope, configuration and maintenance flexibility a single or multi-tenant deployment option can be chosen. While a single-tenant option offers additional functional scope, configuration and maintenance flexibility, but it also brings in higher TCO than the multi-tenant option.

The table below summarizes how a Single-tenant Vs Multi-tenant deployment options differ as an S/4 HANA cloud ERP options and how these compare with an on-Premise option.

As compared to Multi-tenant, the Single-tenant S/4 HANA Cloud option provides for additional flexibility in terms of availability of full functional scope, support for all Industries solutions, full extensibility option with access to IMG and SE38.

SAP S/4 HANA Cloud Implementation Approach

SAP Activate Methodology for SAP S/4 HANA Cloud is led by best practices, rapid, prescriptive and repeatable delivery steps, tools, templates, predefined content, agile approach and native integration to other cloud solutions.

Additionally, as of SAP S/4 HANA 1902, SAP cloud Application Lifecycle Management (ALM), a cloud based tool build to address the needs of cloud customers is available. The tool uses the SAP activate methodology and significantly simplifies the journey to cloud adoption by providing to-do lists with all implementation tasks.

SAP Activate Methodology for S/4 HANA Cloud implementation involves a phased approach comprising of phases as Discovery, Prepare, Explore, Realize, Deploy and Run

Discovery: The S/4 HANA cloud projects start with Discovery Phase, where project teams get free of charge access to the SAP S/4 HANA cloud trial system to become familiar with the solution capabilities. Additionally, SAP Discovery Assessment Service can also be requested to determine the high level scope of implementation.

Prepare: The next phase is Prepare Phase, in this phase the project is initiated, plans are finalized, project team is assigned, starter system is provisioned and business team and project team is on boarded. The project team completes kick-off and onboarding sessions with SAP product expert and also self-enablement activities. Business team access the learning resources to learn about the S/4 HANA cloud solution capabilities.

Explore: The Explore Phase is the next phase after Prepare Phase. The purpose of this phase is to perform a fit-to-standard analysis to validate the solution functionalities included in the project scope and to confirm that business requirements can be met. The standard end-to-end business scenarios are setup and demonstrated to the business teams in the starter system and identified requirements or configuration values are captured for realization in the next phase. The business team is also encouraged to make use of the starter system to explore and familiarize with the available solution features. Explore phase concludes with backlog list, sprint planning and request for Quality System provisioning


Realize: Next phase, the Realize phase is supposed to be longest running phase. Starting with receiving Quality System, in this phase the solution is incrementally built, configured and tested in series of iterations in an integrated business and system environment based on the scenarios and the business requirements captured in the explore phase. In this phase master data is uploaded, adoption activities occur and operations are planned. Production system provisioning request, cut-over planning and handover planning mark the conclusion of this phase

Deploy: Deploy phase is the next phase, the purpose of this phase is to setup the production system, confirm organization readiness, execute cutover and switch business operations to the new S/4 HANA Cloud system.

Run: The Run phase is the last phase, the purpose of this phase is to continue adoption of the implemented solution across the organization. SAP support service is used as required. During this phase, new users may get added, continuous enablement of the users to execute business transactions happen, regression testing is performed for the quarterly upgrades and new functionalities are requested for activation as required.

In certain aspects a S/4 HANA cloud implementation project is different from the S/4 HANA on premise implementation project. Below are the key aspects that make S/4 HANA Cloud ERP implementations unique.

Integration options in S/4 HANA Cloud ERP

SAP S/4 HANA Cloud provides for Application Programming Interface (APIs) or SAP Cloud Platform Integration middleware for integration to other SAP cloud and On-Premise solutions, which comes as SAP pre-delivered end-to-end business process integration scenarios.

The SAP S/4 HANA public APIs can also be used to develop additional integrations to 3rd party cloud or 3rd party on premise solutions. Also any other custom developed cloud apps on SAP Cloud Platform can be integrate with the core business processes using these public APIs.

SAP S/4 HANA covers different type of APIs such as: Web technology based APIs (OData, REST and SOAP), traditional APIs (BAPIs and IDOCs) and CDS views which can be exposed as OData services.

Extensibility options in S/4 HANA Cloud ERP

SAP S/4 HANA Cloud supports multiple approaches of extensibility – directly within the software stack for in-app extensibility as well as on the SAP S/4 HANA Cloud platform for side-by-side extensibility.

The In-App extensibility is implemented in the same system as the enhanced apps and enables business experts or key users to implement common extensions without any requirement of deep technical knowledge. Below are some of the In-App extensibility scenarios;

  • Field extensibility (custom fields)

  • UI extensibility (hide, move, add fields, change labels)

  • Table extensibility (custom objects, node extensibility)

  • Business logic extensibility (code breakouts)

  • Report extensibility, new reports

  • Form extensibility, new reports (print forms and email templates)

The Side-by-Side extensibility is meant to weave external content, which could be SAP cloud solutions or third-party applications, into SAP S/4 HANA cloud ERP. This requires deep technical knowledge and development in SAP cloud platform. SAP Cloud Platform is open platform as a service (PaaS) which provides in-memory capabilities, core platform services, and unique business services for building and extending personalized, collaborative, mobile-enabled cloud applications.

Final Thoughts

SAP S/4 HANA Cloud deployment on SaaS model is the right choice where business requirement is to;

  • Quickly implement a cloud ERP solution adopting standard business processes

  • Not make any upfront capital investment but still be able to realize business value from the S/4 HANA innovations at optimal TCO

  • Implement a ERP solution that is agile and scalable to match the changing business needs

  • Deploy a ERP solution which can easily be integrated to other best of the breed SAP and Non-SAP cloud and on premise solutions

  • Gain competitive edge rapidly exploiting next generation technologies like IOT, ML and AI

  • Implement a ERP solution that is compliant, secure and reliable

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