4.4    Business Case

In this section, we’ll discuss the business case for SAP S/4HANA. First, we’ll look at SAP S/4HANA as the next-generation business suite and see what key benefits SAP S/4HANA gives to enterprises from a business and technical perspective. We’ll describe the core capabilities that SAP S/4HANA offers as the digital core and how it can support enterprises to become digital enterprises.

Additionally, we’ll go through each LoB and reveal their key challenges and how these challenges can be addressed with SAP S/4HANA. Lastly, we’ll provide a summary of the top five key CSCO challenges and a summary of the SAP S/4HANA functionalities.

4.4.1    SAP S/4HANA: The Digital Core

SAP S/4HANA is the next-generation business suite that enables companies to reinvent business models and drive new revenue and profits. With SAP S/4HANA, enterprises can now easily connect to people, devices, and business networks in real time to deliver new value in the digital economy.

SAP S/4HANA enables enterprises to do the following:

• Drive digitized mission-critical business processes across all operations.
• Get instant business insight on one single source of live information on any device.
• Predict and simulate to anticipate future business outcomes.

With these core capabilities, SAP S/4HANA will allow enterprises to expand their digital transformations to reach all corners of their enterprise and collaborate with suppliers, deliver new experiences to their customers, and manage their assets more effectively.

Following are some of the key benefits of SAP S/4HANA, as the digital core:

• Real-time operations and analytics
  With SAP S/4HANA, enterprises are now able to run their operations in real time and use real-time data to analyze and predict changes, which will have a massive impact and change how enterprises are working, how they are doing business, and how they are organized.
• Ability for prediction and simulation
  With the help of predictive and simulation tools in SAP S/4HANA and real-time business insights, employees have better support to drive perfect decisions, optimize productivity, and increase profitability significantly.
• Cognitive-enabled processes
  SAP S/4HANA offers cognitive-enabled processes that not only help employees better understand the situation but also help them make better and more informed decisions.
• Agility
  The digital economy requires a flexible system that creates agility in an enterprise to quickly respond to market or organizational changes. SAP S/4HANA offers the ability to rapidly enter new markets, acquire and onboard new companies, or reflect organizational changes in a tenth of the time it takes with the traditional system.

SAP S/4HANA is designed to drive instant value across LoB and industries and master complexity end to end.

From a business perspective, SAP S/4HANA creates opportunities to reinvent business models and drive revenues in the following ways:

• Enterprises can connect to people, devices, and networks to deliver new value to their customers.
• Enterprises can simplify their processes and improve efficiency.
• Enterprises can now get instant insight on any data from any processes in real time.

From an IT perspective, SAP S/4HANA creates the following opportunities to dramatically simplify the landscape:

• Enterprises can now reduce their data footprint with larger data sets in one system. SAP ERP, SAP SCM, SAP SRM, and SAP PLM are integrated into one system with one source of live data.
• Innovation is made simple, as SAP S/4HANA provides an open platform to drive advanced applications.
• Business users can leverage a simple and role-based UX based on modern design principles to minimize training efforts while increasing productivity.

Now, let’s look at some of the key features within SAP S/4HANA and see how these features can help you build a business case for SAP S/4HANA within individual areas.

4.4.2    Manufacturing

Table 4.1 shows the key challenges for the CSCO in the manufacturing area and how SAP S/4HANA functionalities can address today’s challenges.

Challenge for the CSCO	How SAP S/4HANA Enterprise Management Can Address This Challenge
1. Lack of visibility: Lack of real-time availability of granular data to identify and analyze bottlenecks and improve planning and execution decisions. Lack of tightly integrated supply chain capability to respond to variable market conditions. Have a centralized demand and supply planning capability to create a forward vision. Use real-time market and customer-related data to predict and manage shifts in demand. Lack of analytical insight to drive optimal performance of assets, facilities, and energy.	MRP Cockpit improves the following: Transparency on internal and external shortages across the entire enterprise. Visibility of accurate inventory position across multiple plants. Ability to track overall material flow and visibility over fast and slow runner inventories. Increased visibility into capacities and bottlenecks. Real-time stock alerts, based on current stock situation.
2. Increasing volatility in demand and supply: Limited real-time and advanced analytics doesn’t provide sufficient capabilities for CSCOs to predict demand and identify issues quickly. Most processes requiring human intervention don’t offer opportunities to automate specific tasks and have users focus on exception-based management.	MRP enterprises can be more resilient against supply and demand volatilities, due to the following: Real-time alerts of supply problems, improving transparency into critical situations. Faster MRP runs to propagate demand information faster and allow quicker action in response to changes in demand and supply. Prescriptive algorithms such as decision support in case of changes in demand and supply. Simulations and evaluations of supply alternatives. Ability to manage and track change requests.
3. Increased complexity: Lack of support for using robotics. The usage of robotics continues to increase as new applications are found across the value chain from production to warehousing, distribution, and the customer. Increased complexity due to globalization and the respective efforts to expand into new markets, seeking low-cost manufacturing locations and the need to offer new and innovative products and services.	Simplifications in the following processes: Introduction of MRP area level, offering a more advanced and efficient logic and allowing a larger degree of differentiation possibility in MRP. Simplified subcontracting logic. Simplified sourcing logic. Several product master fields eliminated to avoid redundant setup. Production planning and detailed scheduling embedded into SAP S/4HANA, resulting in complexity in integration.
4. Lack of collaboration: Lack of collaboration between different departments due to different systems and lack of integration. Collaborative demand planning should establish flexibility in the planning process on different levels of aggregation with different groups of customers. Lack of collaboration with external partners for support for codevelopment.	MRP Cockpit allowing seamless collaboration between production and procurement departments. Improved collaboration among R&D, sales, and manufacturing by creating seamless visibility into new product development projects, available and required capacities, and current sales figures and promotion budgets, as well as better integration of product design with manufacturing. Improved integration between sales and production through the integrated ATP processes. Improved collaboration through standard integration with the SAP HANA extended solution SAP IBP.

Table 4.1    Manufacturing Challenges and SAP S/4HANA Advances

4.4.3    Supply Chain Management

Table 4.2 shows the key challenges for the CSCO for the area of supply chain management and how SAP S/4HANA functionalities can address today’s challenges.

Challenge for the CSCO	How SAP S/4HANA Enterprise Management Can Address This Challenge
1. Lack of visibility: Lack of visibility of most-up-to-date stock levels (internal and extended supply chain). Lack of real-time support to improve planning and execution decisions. Lack of support to identify, where and how many products are stocked, how to allocate stocks to improve the service levels and reduce logistics costs, and how to reduce waste along the supply chain.	SAP S/4HANA provides increased visibility using the following: Real-time insights on inventory levels, improving accuracy. Advanced ATP, improving visibility to remaining noncommitted inventories and possibilities to cover incoming customer orders. SAP EWM embedded into SAP S/4HANA, increasing transparency.
2. Increasing volatility in demand and supply: Limited system capabilities to provide real-time data to identify issues and to react on stock shortages and ultimately improve service level and optimize processes.	Enterprises can be more resilient against supply and demand volatilities due to the following: Better real-time data and analytics allowing enterprises to quickly identify issues and follow up. Real-time alerts of the current stock situation and supply issues.
3. Increased complexity: Complex data models for IM (various tables for stock status), increasing complexity in programming and decrease of throughput. Inflexible valuation methods, not allowing different currencies, and complexity in table structure containing transactional data and master data attributes (decrease of throughput).	SAP S/4HANA provides simplifications in the following processes: Simplified data model for IM reducing memory footprint. Only main tables remaining, no redundancies. Simplified inventory valuation data model of one valuation method instead of two in the traditional SAP ERP system (IM+ML). In addition, transactional data are retrieved from the ML instead of stored in separate tables, increasing system throughput. SAP EWM embedded into SAP S/4HANA, reducing complexity in interfaces and data setup. Integrated QM processes and increased efficiency by optimizing quality inspection process.
4. Lack of collaboration: Inability to view accurate inventory levels across different departments, resulting in different views, incorrect commitments to customers, and misalignment between departments.	SAP S/4HANA improves collaboration using the following: Advanced ATP allowing better visibility to remaining noncommitted inventories and possibilities to cover incoming customer orders. Increased collaboration between manufacturing, logistics, sales, and quality team through embedded quality management and extended warehouse management processes.

Table 4.2    Supply Chain Management Challenges and SAP S/4HANA Advances

4.4.4    Sourcing and Procurement

Table 4.3 shows the key challenges for the CSCO for the procurement area and how SAP S/4HANA functionalities can address today’s challenges.

Challenge for the CSCO	How SAP S/4HANA Enterprise Management Can Address This Challenge
1. Lack of visibility: No single view of the entire purchase order flow. Lack of real-time data to provide accurate inventory levels. Limited search capabilities; users have to go through different screens (or even different systems) to view data related across contract worklists and contract and supplier data. Users have to access different systems to be able to view different data across the entire flow.	Improved visibility and transparency with the following: Ability to track purchase order flow. Visibility of accurate inventory position across multiple plants. Dynamic and flexible search feature across contract worklists with capability to navigate directly to contract and supplier fact sheets. One system for purchasing of all direct materials, indirect materials, and services with a harmonized UI.
2. Increasing volatility in demand and supply: Lack of an integrated view of the process doesn’t provide sufficient support to enterprises to be more prepared for volatility in demand and supply. Lack of analytics.	SAP S/4HANA for sourcing and procurement help reduce the impact of volatility in supply is reduced with the following: Standard integration for SAP Ariba for a more efficient procurement process. Advanced analytics to identify discounts and pricing opportunities for better supply planning.
3. Increased complexity: Technical complexity of the landscape due to different solutions for different parts of the processes. Challenges aligning data across different systems.	Complexity is reduced by the following: One-step management of contracts and use of self-service requisitioning for procurement. One central master data object (business partner) for vendors, customers, and business partners. Standard integration with SAP Ariba for more optimized processes and one single source of truth.
4. Lack of collaboration: Lack of integration between different systems, providing a single source of truth. Inability to view the entire material flow for in-house production and procurement production.	Collaboration is enhanced with the following: Ability to secure many-to-many networked collaboration with trading partners. Seamless collaboration between production and procurement departments via MRP cockpit. Standard integration with SAP S/4HANA solutions, such as SAP Ariba to improve collaboration.

Table 4.3    Sourcing and Procurement Challenges and SAP S/4HANA Advances

4.4.5    Sales

Table 4.4 shows the key challenges for the CSCO for the sales area and how SAP S/4HANA functionalities can address today’s challenges.

Challenge for the CSCO	How SAP S/4HANA Enterprise Management Can Address This Challenge
1. Lack of visibility: Traditional SAP ERP system doesn’t provide capabilities to provide a holistic overview of the order fulfillment flow. Lack of real-time visibility of accurate inventory level results in incorrectly committed sales orders.	SAP S/4HANA provides the following: Advanced a single source of holistic transparency on sales order fulfillment issues on desktops and tablets. Increased visibility to remaining non-committed inventories and possibilities to cover incoming customer orders. Sales order fulfillment cockpit improving visibility of the order flow and allowing internal sales representatives to monitor and focus on exceptional cases. Increased visibility through new improved SAP Fiori apps for performance and order fulfillment management.
2. Increasing volatility in demand and supply: Insufficient capabilities to meet the increasing customer demand due to the following: Lack of order flow status and inability to track orders. Insufficient system support to allow exception-based work. Inability to have an accurate overview of stock levels.	SAP S/4HANA improves the process through: Improved sales processes help enterprises be more prepared for volatility in supply. Improved customer retention by enhancing the flow of information on order status and tracking. Accelerated complaints and returns management. Exception-based working to monitor and react to shortages faster. Clarification of issues effectively and efficiently by prescriptive decision support and facilitated collaboration. Advanced ATP process with flexible rules to quickly reschedule orders based on customer and demand priorities with prescriptive decision support.
3. Increased complexity: Complexity in document tables. Inefficient and complex process to get order status flow or stock status; need to go through different screens or different sources to get the full status.	Following simplifications have been made: One central master data object (business partner) for vendors, customers, and business partners. SAP GTS replaces SD foreign trade/customs. SAP Credit Management replaces SD credit management. Settlement Management replaces SD rebates. SAP Revenue Accounting and Reporting replaces SD revenue recognition. Various document status tables eliminated and moved to corresponding header and item tables. Elimination of redundant document and rebate index tables. Material master foreign trade will be replaced by SAP GTS.
4. Lack of collaboration: Lack of integrated view of the ATP situation. Lack of integration with SAP CRM-related systems, resulting in inability to view customer data to predict demand and take action accordingly.	Better collaboration due to the following: Improved integration of sales and production through the integrated ATP process. Standard integration with SAP S/4HANA extended solution SAP Hybris for improved collaboration.

Table 4.4    Sales Challenges and SAP S/4HANA Advances

4.4.6    Summary of SAP S/4HANA Key Benefits for Logistics

SAP S/4HANA can support the key challenges that CSCOs face today. The following subsections describe what SAP S/4HANA can help enterprises do to meet these challenges.

Increase Visibility

Within SAP S/4HANA, companies increase visibility across the enterprise in the following ways:

• Enterprises can run real-time mission-critical business processes across the entire enterprise.
• Companies can run advanced analytics at any point in time with the most accurate information.
• One single source of truth is provided.
• Solution proposal and simulation reduces human intervention effort to perform standard tasks. Instead, enterprises can focus more on exception-based handling.

Reduce Impact of Volatility in Supply and Demand

With SAP S/4HANA, enterprises can now be more resilient against supply and demand volatilities and increase competitiveness with integrated, fast, and flexible business processes. With the optimized processes and exception-based management in SAP S/4HANA, employee productivity will increase due to a higher focus on value-added tasks. Better integration of the processes enables higher visibility of the full supply chain, which will help reduce the impact of volatility in supply and demand due to better information, capabilities to proactively follow up on issues, and help with predicting changes.

Reduce Complexity

SAP S/4HANA offers reduced complexity in the IT landscape, resulting in faster business outcomes and reduced operational costs. The SAP S/4HANA digital architecture has three aspects:

• The standardized core processes are integrated into one single suite that serves as the backbone of the enterprise where speed plays the biggest role. Next to that, core processes are also wired in SAP S/4HANA in an innovative way, allowing application of new business models and processes such as IoT. In this layer, many simplifications and standardizations of core processes have been implemented (e.g., simplified data model for IM, exception-based management, etc.).
• A modular layer sits on top of the core serving as the middle office and allowing the maximum level of flexibility in reacting to customer requirements.
• An intuitive, user-friendly (SAP Fiori-based) layer supported by predictive and prescriptive analytics sits on top to collaborate with internal and external users.

This architecture enables users to run and process a massive amount of data in just a fraction of the time compared to the traditional SAP ERP system.

Improved Collaboration

With SAP S/4HANA, several new features have been offered that enable seamless collaboration between departments (e.g., between production and procurement through the MRP Cockpit, between sales and production through the integrated ATP, etc.). Additionally, collaboration isn’t only limited to internal core processes; SAP S/4HANA offers standard integration with SAP S/4HANA extended solutions (e.g., SAP IBP, SAP Ariba, and SAP SuccessFactors).

User-Friendly Interface

With SAP S/4HANA, SAP offers its customers a flexible customer platform that capitalizes on the data that are available. It looks at their behavioral patterns, transaction histories, and feedback they provide to predict new trends and manage their supply chain proactively. With the user-friendly (SAP Fiori-based) interface, SAP S/4HANA offers a personalized experience with instant insight on any device.