What is SAP S/4 HANA? A User Guide to S/4 HANA
The 4th ERP suite developed by SAP, SAP S/4HANA allows businesses to work more seamlessly in today’s digital environment. If you’re interested in learning more about what SAP S/4HANA can do for your digital supply chain, how to handle implementation issues, where you need to focus your attention in terms of security, or how to carry out a post-implementation review, you’ve come to the right place.
Simply put, SAP S/4HANA is the next step in ERP management software. More than merely a relational database, S/4HANA stores data columns and runs on the HANA in-memory platform, allowing for almost-real-time analytics that help its users make data-driven decisions more quickly and easily. In turn, this helps to increase efficiency (as it doesn’t take as long to get the data you need) and productivity (because you have more time to use the data you’ve gathered), and a business that’s more efficient and more productive is…? You guessed it: more successful.
Proper supply chain management is a key priority for many businesses, but complexities throughout the process can make it easier said than done. Luckily, SAP has recently integrated its S/4HANA platform into its digital supply chain solutions, ensuring companies everywhere will be able to take advantages of the ERP giant’s powerful software. As Hala Zeine, president, digital supply chain and manufacturing, SAP, says:
Intelligent technologies help businesses make better sense of data, plan and predict outcomes, and optimise the entire product lifecycle including the customer experience. SAP helps companies embrace smarter business based on data-driven insights to run supply chains with greater insight, speed and purpose.
Let’s take a closer look at the specifics of how S/4HANA is going to upgrade the SAP digital supply chain.
A Step Above ECC
You’ve probably already heard, but SAP plans to cut off support for ECC by 2025. Luckily for those involved in the supply chain space, S/4HANA includes components from ECC like Materials Management (MM), Production Planning (PP), Sales and Distribution(SD), and Warehouse Management (WM), so there’s no worry about losing those. In addition, S/4HANA also offers newer and embedded components that were either not included with ECC or were stand-alone modules and had to be integrated, like Production Planning and Detailed Scheduling (PP/DS), Extended Warehouse Management (EWM), and Demand-Driven Replenishment (DDR). All in all, S/4HANA promises to be an improvement when it comes to boosting supply chain optimization.
Enhancing the 5 C’s
Speaking of a well-functioning SAP digital supply chain, the ERP giant has identified 5 C’s that are vital to a fully optimized one: Complete, Connected, Cognitive, Compliant, and Capable. Any supply chain management software out there needs to be able to hit all of those areas, or it’s just not doing its job properly. As you’d expect from the latest and greatest SAP solution, S/4HANA knocks all 5 C’s out of the park. Here’s how:
SAP S/4HANA’s digital supply chain software can handle all of the systems and processes needed to manage production planning and scheduling, transport and warehouse management, as well as coordinating suppliers and logistics, all from a single system.
By connecting suppliers, employees, third parties (including third-party producers), logistics providers, equipment, and resources, S/4HANA increases speed and efficiency of the process as a whole, as well as the propagation of any needed changes.
Based on a single platform with built-in predictive analytics, SAP S/4HANA avoids the issues that arise from having separate data stores for transactions and analytics (helping to keep everything up to date and in sync). Since analytics works directly on the transaction database, you can rely on complete and accurate machine learning and enable artificial intelligence to do its thing.
Tracking logs, batches, and processes all need to flow smoothly for an accurate supply chain and to ensure end-to-end quality. Should errors occur, you need to be able to quickly track them down, figure out why they happened, and prevent them from happening in the future. S/4HANA helps you make that happen.
The SAP S/4HANA works with a platform that is dynamic, real-time, and works off of HANA. Everything in it can be managed, monitored, and maintained by SAP, which makes upgrades easy and helps to ensure system integrity and resilience. (There’s a reason SAP leads the ERP industry, after all.)
Other Ways S/4HANA Can Boost the SAP Digital Supply Chain
But the five C’s aren’t the only benefits companies will see with S/4HANA. As an SAP product, the solution also plays nicely with a ton of other SAP solutions, and the synergy of those complementary pairings offers an incredible boost. Components you can pair with S/4HANA include:
A HANA-powered, cloud-based procurement system, Ariba connects goods or services suppliers with buyers and complements the S/4HANA’s MM component.
SAP IBP (Integrated Business Planning)
Another HANA-powered, cloud-based software solution, IBP allows users to expand control beyond what’s available in the standard PP and MM components and manage complex procurement and production planning processes.
SAP EWM (Extended Warehouse Management)
With capabilities like slotting or kitting processes that aren’t available in S/4HANA’s MM component, EWM helps you to manage the logistics and supply chain challenges that large and complex warehousing operations face.
Formerly known as SAP Hybris, C/4HANA is SAP’s HANA-powered, cloud-based end-to-end CRM software which works with S/4HANA’s SD component to help you optimize your sales and customer service processes.
SAP TM (Transportation Management)
In addition to managing end-to-end transportation for companies that have large transport networks or complex transportation processes, SAP TM also manages your third-party logistics and provides better visibility into them as well as transport planning and inter-/intraborder crossings.
“Leonardo” is SAP’s umbrella name for all of its next-gen technologies (IoT, machine learning, big data, etc.), and integrating it with S/4HANA offers plenty of futuristic advantages. By collecting massive amounts of unstructured data from installed sensors, data collection points and more, Leonardo can help companies come to actionable insights like predicting needed machine maintenance and anticipating delays in distribution due to rough weather or road conditions.
As major players in the ERP space know, SAP has made it clear that they plan to cut off support for ECC (as well as 3rd-party databases) by 2025. This news—not to mention a host of benefits offered by S/4HANA—has prompted companies to take a long hard look at whether they plan to migrate to the solution, the issues they may face during such a move, and how to make their migration successful. A recent report by Saas-provider LeanIX and PwC, “State of SAP S/4HANA Transformation,” illustrates some S/4HANA migration challenges companies in this position need to keep in mind as well as possible solutions. Let’s dig a little deeper into the issue together.
Do You Really Need to Migrate Now? (Or at All?)?
Of course, you might be asking whether you need to make the switch to S/4HANA right now, if ever. 60% of companies surveyed are working with legacy SAP systems that are over 10 years old, and in that time, most have heavily invested in customizing their SAP environments. As such, they’re understandably hesitant about dramatically changing things up. A full 20% of companies in the survey, however, have already made the switch to SAP S/4HANA, with another 49% planning making the transition before by 2019-2020. With only 18% not planning on migrating at all, the supermajority sees a clear need to switch solutions. If you decide to change over as well, you’ll be in good company.
Another factor to consider about making the switch—above and beyond the lack of support for ECC by 2025—is to think of the process as more than just a technical upgrade and system conversion. Many companies are taking advantage of the opportunity to also improve their business processes and modernize their solution architecture overall. 83% of companies surveyed combined their technical upgrade along with a renovation of their SAP landscapes, either before or during the migration. Since businesses are often hesitant to touch their core SAP solution under normal circumstances, a migration gives you a chance to streamline processes, rationalize interfaces, decommission custom code, and enforce the use of standard SAP modules.
65% of survey participants indicated that SAP is a critical part of their digital strategy, so it’s clear that many no longer view SAP as simply a system of record—it’s a vital part of how businesses are operating in the digital space. Don’t you want your SAP operation working at peak efficiency?
Major Issues to Watch Out For
Once you’ve made the decision to migrate to S/4HANA, you need to mindful of the pitfalls inherent in such a transition. A significant pain point to watch out for will be the manual collection of application and interface data for use of business capability mapping (a key part of planning transformation efforts). Other challenges reported by the companies in the survey include:
- Complex legacy landscapes (60%)
- High customization (59%)
- Unclean master data (51%)
- Non-harmonized master data (46%)
- Achieving business stakeholder buy-in (31%)
- Lack of skills and knowledge (29%)
- Lack of functionality (13%)
Solving Your S/4HANA Migration Challenges
If these are the challenges companies face when migrating to S/4HANA, what are the solutions? Obviously, there’s no such thing as a silver bullet in this sort of situation, but here’s a closer look at three of the most widely reported issues and some strategies for handling them:
Complex Legacy Landscapes
Companies will need to keep a lot of things in mind when working on a migration like this one, including country-specific configurations, custom modules, manual workflows, interface dependencies, etc.
Companies that have heavily invested in custom ABAP developments will find that (unfortunately) a lot of legacy code will no longer be compatible—with the change to S/4HANA, whole database tables have been removed. To avoid syntax errors and other unexpected results, you’ll need to identify and adapt your custom ADAP code objects.
Unclean Master Data
Master data plays a vital role across a number of aspects in your business, including marketing and sales, supply chain management, monthly reporting and business intelligence, and more. Using unclean data during your conversion to S/4HANA (especially in a brownfield approach) is just asking for trouble, so make sure to clean things up ahead of time.
Whether you’re considering a switch from SAP Business Suite to SAP S/4HANA in the future, you’re in the process of making the switch right now, or you changed from the former to the latter in the recent past, your organization needs to be thinking about how to secure your SAP implementation. Although Business Suite and S/4HANA share the same SAP NetWeaver AS ABAP core, S/4HANA is an application server as well as a database, which means you’ll need to consider a few more things when securing it. Here are five key areas to think about.
Authorizations and Roles
Like any upgrade to SAP (and it’s important to remember that changing to SAP S/4HANA is an upgrade), a key component of securing your implementation is updating your authorizations and roles. A strong grasp of how best to use SU 24 (Maintain Check Indicators) and SU25 (Upgrade Tool for Profile Generator) should be a big help when it comes to authorization object checks, transactions, and more.
In addition, SAP S/4HANA sees the inclusion of new SAP Fiori apps, which essentially act like web services. The fact that users will need authorization to access these apps isn’t new, but the way app catalogs are integrated and how one communicates and syncs with the publishing instance are new to the role-building transaction PFCG. After all, creating roles incorrectly could create some major vulnerabilities in your SAP org.
SAP HANA System Security
Because SAP HANA development and admin activities are now primarily performed through web interfaces, how you should secure your system has changed as well. SAP HANA databases now need new security settings and authorization setups to not only reduce the chances of improper access but ensure that it’s operated correctly as well.
If you’d like to make the most of your SAP HANA engine and take advantage of SAP HANA extended application services, advanced model, (also known as “XS Advanced”), it’s important to know that the authorization- and role-building processes have changed significantly compared to the traditional methods of securing a regular SAP database. An expert will not only help you build these out correctly but also assist you in getting the most “bang for your buck” out of your SAP org.
Securing Your Infrastructure
In older SAP setups, opening business processes to those outside the company required using the SAP Enterprise Portal or asynchronous processing via email. In comparison, SAP S/4HANA (or more specifically, SAP Fiori) makes things simpler and easier. Publishing dedicated small apps to user groups is a snap in SAP S/4HANA, giving users real-time access to their transactions and process change steps. However, “easier” doesn’t mean “impenetrable.”
A strong security architecture is always a necessity when it comes to business-critical system component access, and SAP S/4HANA is no different. To secure your infrastructure, you’ll want to ensure that everyone is on the same page about who has what network access, how traffic should flow through the network (using tools like Web Dispatcher and SAProuter), how firewalls should be set up, and so on.
Giving external user groups access to cloud solutions is not only easier than giving them access to on-prem applications—as many activities already take place in the cloud—but it’s more secure as well. To that end, companies that use SAP S/4HANA have access to Cloud Connector, an easy and safe way to connect on-prem systems like SAP S/4HANA with SAP Cloud Platform applications.
The key things to remember when it comes to security and Cloud Connector are setting up and running Cloud Connector securely (using it with products other than SAP Cloud Platform or S/4HANA Cloud is a big no-no, for example) and using the SAP Cloud Platform Identity Authentication and SAP Cloud Platform Identity Provisioning services to grant the correct permissions to cloud applications. The Cloud Connector is a great tool, but it can only be as secure as you make it.
User Access and Authentication Management
Especially in a hybrid cloud/on-prem setup, access type coordination is vitally important to the security of your SAP S/4HANA org. Overly restrict access, and users have to log in with their password over and over (and over…). Overly lax restrictions, however, give users access to systems they shouldn’t. At best, those users don’t realize they have this access and never use it (or only accidentally make easily fixable mistakes). At worst, business-critical information could be tampered with out of ignorance or malice.
To prevent these scenarios from happening, your security team needs to have a firm handle on both federated single sign-on and Security Assertion Markup Language (SAML) 2.0, as well as a well-thought-out plan for your identity management solution. (Losing track of individual accounts that need to be created and maintained is a recipe for trouble.) In addition, the latter needs to be capable of provisioning users whether they’re using cloud systems, on-prem systems, or both, depending on how you choose to set things up.
All too often, implementing a new system (like SAP S/4HANA) is seen as the end of a sprint instead of the start of a marathon. Post-implementation, there’s still work to be done in assessing the new system, evaluating training needs, measuring success, and more. A post-implementation review is a great way to take a closer look at the success of your SAP S/4HANA implementation.
Here’s what you can expect from a post-implementation review of SAP S/4HANA, what it consists of, when you should do one, what questions it should answer, and who should perform it.
What is a Post-Implementation Review?
A post-implementation review (or PIR) is an audit of your system after implementing SAP S/4HANA to better understand how the implementation has affected your company. A PIR is a way for you to evaluate whether your company is more efficient after the implementation, to judge where users need more training to make the most of the new features, and so forth.
What Does a PIR Consist of?
While no two PIRs are exactly alike, you’ll want to ensure that you take a good look at both your enterprise platform architecture as well as your application architecture.
The former is primarily a BASIS audit (although you may want support from a Senior ABAP developer) and analyzes everything from the configuration of the enterprise platform (such as SAP instances, patch levels, applied OSS notes, and so forth) to network connections and deployment of the platform.
Essentially a functional audit, the application architecture analysis is usually performed by consultants skilled in SAP FI/CO and Logistics and covers analyses of transactions, studying module implementation, gap analyses, external system interfaces in modules, and more.
When Should You Perform a PIR?
You don’t want to do your PIR too close to the end of your implementation, because you won’t have a good picture of how well the new system is working for you. The best practice is to wait until the kinks have been worked out and for everyone to get the training they need. (We recommend that you complete at least one full processing and reporting cycle.) On the other hand, if you wait too long after an implementation, inertia sets in and it’s more difficult to make useful changes because people will start developing a routine with the new process in mind, even if it’s not the most efficient one.
What Questions Should Your PIR Answer?
The point of performing a PIR is to better understand how your company is functioning after the implementation of your ERP solution. As such, you’ll use the PIR to answer a number of questions, including:
- To what extent did the implementation meet your objectives?
- Can further changes be made to make the system more efficient?
- Do users still need training? (If so, on what subjects?)
- What lessons did you learn during this process that could be used on similar projects?
Who Should Perform Your PIR?
A choice you’ll need to consider before performing your PIR is to decide who’s going to be involved in it. People often think it’s a choice between using an internal team or an external one, but we recommend a hybrid approach of an internal project team and a neutral third party of expert consultants.
The advantage of an internal project team is that they will have a better understanding of what problems the implementation was supposed to solve, how things changed after the implementation, whether goals have been met, and so forth, because these are often the same people who were involved in the implementation itself. The advantage of independent consultants is that they’re able to serve as neutral observers who will be able to ask questions or see issues that internal employees might be too close to see, as well as providing expert advice thanks to their working with a variety of companies going through a similar process. Using both of these strategies will ensure your PIR takes advantage of the best of both worlds.
Whether you’d like to learn more about SAP S/4HANA in general or security-related matters in particular, or you need help with implementation (pre-, current, or post-), we’re here for you. Our expansive network of US-based, senior-level consultants has the skills you need to take your SAP organization from where it is to where you’d like it to be. Contact us today to get started.