SAP has the greatest opportunity to succeed or fail with S/4 HANA. The success or failure will be based around the ability to easily, simply, quickly and cheaply integrate into each company’s Digital Enterprise Ecosystem. S/4 HANA’s core value today is about running your transactions (OLTP) on an analytics (OLAP) system enabling real time analytics on the data in your SAP system. The real-time analytics capability is not enough to take the risk of going to S/4 HANA. SAP must go far beyond its comfort zone of building a great business system to building in an unparalleled ability to participate in the Digital Enterprise Ecosystem directly to and from S/4 HANA.
The value and the power of the Digital Enterprise Ecosystem can not be ignored and is becoming well understood by companies today. The following quote is just one illustration.
In 1990, the top three automakers in Detroit had among them nominal revenues of $250 billion, a market capitalization of $36 billion, and 1.2 million employees. The top three companies in Silicon Valley in 2014 had nominal revenues of $247 billion, a market capitalization of over $1 trillion, and only 137,000 employees. From McKinsey – Competition at the digital edge: ‘Hyperscale’ businesses.
SAP can not afford to play favorites in the Digital Enterprise Ecosystem. SAP claims openness, and in many cases they do adopt generic open standards, but there has always been a better, easier, simpler, faster and far cheaper way to integrate to other SAP products. In today’s API driven world, this is unacceptable. Being the hub of the Digital Enterprise Ecosystem means simple, easy, native, real-time API driven integration to every major SaaS system.
SAP needs to start with most recognized SaaS solution on the planet, SalesForce. Next they need to hook up Workday their dreaded rival to SuccessFactors and then they should just keep going down the list based on what SaaS solutions SAP clients are using with no prejudice. SAP execs should go ask your clients for their wish list and put it in S/4 HANA immediately. Certainly they should enable their own excellent SaaS products like SuccessFactors. While this strategy may be non-intuitive in the pre-ecosystem world, it is THE requirement in the new one.
What happens if SAP does not open S/4 HANA to the Digital Enterprise Ecosystem? The S/4 HANA will succeed as a modest upgrade. Companies will have to find overwhelming new, required processes in S/4 HANA (Simple Finance, Simple Logistics, …). At this point, every process is now being reevaluate and potentially rethought. The most likely scenario is migrating that process to a more agile SaaS solution. SaaS enables participating in the Digital Enterprise Ecosystem and adopts to the inevitable changes in business and technology. The changes like mobile, new currencies, new laws, rise texting, IaaS, etc. produce more gain than highly optimized process system than the more rigid on premise solutions like SAP ERP.
Simply put, if SAP S/4 HANA doesn’t become become 100% open to all SaaS players, companies will continue to tear apart the monolith ERP system and push its functions out to much more nimble SaaS solutions. The existing ERP systems will be put on life-support, made highly stable, and programmed around until they become useless and atrophied (see McKinsey’s A two-speed IT architecture for the digital enterprise).
SAP is in a great spot as companies are recognizing the power of the Digital Enterprise Ecosystem. It is my sincere wish that SAP recognizes they need to be the premier player in that Ecosystem and become the hub of their client’s Digital Enterprise. After 22+ years working with SAP, I know they have the talent and I know the companies that have believed in SAP deserve it.