Introduction

Prior to the 1970s, each function within an organization ran in isolation, making it extremely hard for the management team to get a clear picture of its business and coordinate activities across functional silos. With the introduction of SAP ERP, over the past four decades, enterprises have very successfully leveraged the power of enterprise systems wherein the transactions across the organization stay synchronized, and any activity in any corner of your organization can be instantaneously accounted for.

At the core, the key to this phenomenon can be attributed to the adoption of relational database as a technology foundation. However, despite its success in driving efficiency in transaction processing, bringing in corporate level transparency and control, analytical processing remains one of the key shortcoming of the relational database management systems (RDBMSs) based on the SAP ERP system. In any organization, SAP ERP is a reservoir of very valuable information whose usage is restricted within the “operational analysts.” Therefore, the SAP ERP systems can’t be effectively used for managerial decision-making, at least not in an efficient manner. Over the past two decades, this challenge gave rise to a large number of enterprise data warehousing (EDW) programs where data from one or multiple SAP ERP and non-SAP ERP systems is extracted, transformed, and loaded (ETL) into a large database that becomes the primary source for all analysis and management decision support within the organization. Though conceptually it sounds attractive, this two-tier system has two primary weaknesses. First, data latency associated with the ETL process makes real-time decision-making almost impossible. Second, this solution doesn’t allow business users to easily trace the root cause of any issue they observe in data analysis back in the transaction system.

All along, technology professionals have been challenged with ambitious business requirements that are difficult to meet. The advent of in-memory database such as SAP HANA made it possible for product managers to design an enterprise system that can serve both purposes: transaction processing as well as analytical processing—all in one single database. This simple but fundamental change in enterprise system design has introduced a new wave of transformation in ways corporations process transactions, consume enterprise information, and make management decisions.

SAP pioneered building the very first in-memory database-based ERP system. In early 2015, SAP released its first SAP HANA-based ERP system, focused only on finance processes, which was branded as SAP S/4HANA 1503, also known as SAP Simple Finance. Thereafter, multiple versions have been released that include all functional processes within an enterprise, and thousands of customers have started their journey to embrace the new SAP S/4HANA Enterprise Management system. Simultaneously, SAP also introduced its first SAP HANA-based public cloud system. In this book, we are focusing on on-premise SAP S/4HANA versions 1610 (released in October, 2016) and 1709 (released in September, 2017). Deloitte has been a forerunner in embracing SAP S/4HANA right from the get-go. Not only is Deloitte in the process of helping hundreds of companies embrace SAP S/4HANA, but the company is currently taking its global organization to this new and transformative platform. Over the past three years, as we interacted with various clients, executives, and management teams, we realized that organizations have several questions that need to be addressed. This book is our honest effort to help business experts as well as technology professionals understand and analyze what and how SAP S/4HANA can do for their organizations. We observe that the marketing messages are often focused on technology innovations/novelties of SAP HANA and fail to address the basic question executives and management teams continue to ask:

We are also convinced that for the first time in the history of enterprise applications, technology professionals are now armed with an enterprise system that not only satisfies but surpasses the boundary of imagination and innovative ideas that businesses want to accomplish. Furthermore, we believe that SAP HANA has opened the door of significant process simplification and innovations. Therefore, while it’s important to understand how the underlying tables within SAP ERP have been simplified, or how columnar databases can accelerate data processing, it’s more important to understand how these capabilities help optimize the business processes, improve operational efficiency, and use available information in an optimal and effective manner. As you read and learn about SAP Fiori apps that SAP S/4HANA brings to your disposal, think about ways these can streamline process steps and facilitate decision-making within your organization. Throughout this book, we have made a conscious effort to explain the changes in SAP S/4HANA along with their associated business impacts.

SAP S/4HANA Enterprise Management can certainly transform your business by optimizing process steps, providing capabilities that were not available before, and making use of real-time analytics enabled by in-memory capability. But first and foremost, it provides a completely new way of solving business issues. The transformational journey of SAP S/4HANA has similarities with the introduction and adoption of smartphones by consumers. Like smartphones, with time, corporations and users will identify new ways to redesign their business processes, adopt new user interaction models, and solve business problems that today we don’t think SAP ERP can or should address. An early start will give you and your organization an advantage in this journey and help unlock potential value for your shareholders.