Creating future-ready, intelligent companies with S/4HANA and SAP Cloud Platform

When we hear about intelligent technologies and smart systems, we usually think of revolutionary innovations in software and hardware solutions that enable new, often disruptive business processes and thereby fundamentally change entire companies or even threaten their existence.

The real challenge starts a bit before that point, at the heart, with the core business. Meaning in the individual production processes, the monitoring of machines or the optimization of internal processes at companies. Companies have to digitalize their core business to gather important data and create networks, which form the basis for generating further customer benefits and competitive advantages. Companies therefore first need to generate data, then filter out the relevant information from the mass of data and use it correctly – in a way that is automated, target-oriented and fast. They need to look at the variety of old and new technologies, platforms and applications, identify the most suitable ones for their business and combine them in a productive way. Once this basis is in place, companies are in a position to consider new and comprehensive business models and, ideally, involve customers and suppliers in the process.

Sustainable further development is therefore no longer limited to individual company divisions. The entire company, with its diverse business processes, structures and overall system architecture – from production, accounting and sales to HR – must be taken into consideration.

Many companies have already developed into powerful data processing organizations in which every employee, every customer, every machine and every transaction produces new data every day.

Intelligent companies can use this data to draw conclusions about purchasing behavior, the efficiency of production processes or the maintenance cycles of their machinery. When they do this, it is essential that they are able to base their projections for the future on the experience gained from the past. If companies can already predict when a machine will break down or which goods customers will buy and from where, they can optimize their production and pricing and save costs. Companies can use sensors, IoT and intelligent systems to help them achieve this, but increasing automation throughout the company is also key. It consistently further reduces manual activities and breaks in the system, decreases the risk of error and speeds up processes.

Intelligent companies therefore view IT as an enabler for business success. They use the new SAP technologies and platforms to generate customer benefits and automate their own processes, thereby saving costs.

With 'Intelligent Enterprise', SAP offers a brand 'new SAP world'. The new core product is no longer a purely reactive system that only maps the internal processes of a company. Instead, real-time operational data, customer activity and sensor data are used in planning and analysis. The focus is on end-to-end processes, such as 'lead-to-cash' and 'source-to-pay', which do not stop at the company itself.

SAP also relies on a large number of new products and methods that are constantly being enhanced and that help to digitalize companies and make them intelligent in all divisions and processes. In the 'new SAP world', it is much easier to use the latest technology and keep pace with the constantly changing user experience requirements of your customers.

Another very important innovation is that the SAP Intelligent Enterprise product suite has become a truly open system. In the past, SAP was considered to be a closed system with its own programming language, which meant that companies using SAP were almost fully dependent on the manufacturer. Now, in principle, any other system, platform or application can be connected to the Intelligent Enterprise suite. This is the ideal scenario that many companies like to rely on when pursuing a best-of-breed approach. The system is open not only in its cloud layer, but also in the underlying service layer. It is also possible to keep certain applications in the cloud and others on premises, all without any integration difficulties, resulting in the greatest added value for companies.

S/4HANA represents the digital core of the 'new SAP world', stored either on premises or in the cloud. In it, users will find components they are already familiar with from the previous ERP Central Component (ECC), enhanced by a simplified data model and the very fast SAP HANA in-memory database. Processes can therefore be mapped holistically and digitally. There are also many predefined standard processes for minimizing manual tasks, making S/4HANA an essential component of the 'new SAP world'. But there is still more to it.

Individual extensions, the integration of external systems and even digital services are provided via the SAP Cloud Platform (SCP). These include, for example, interfaces with banks, machine learning services with trainable or pre-trained models such as image recognition, and much more. Cloud products like this are known for their fast and agile implementation. When in operation, they impress users with often lower operating costs, a fast innovation cycle and an excellent user experience.

The C/4HANA CRM and customer experience software suite and the Ariba e-procurement and strategic sourcing suite help companies to quickly adapt the functional scope to the functions required in the business.

What’s more, thanks to the new promise of customer centricity, the SAP applications are easier, more transparent and more inspiring for both internal and external users. In other words, the customer experience is excellent.

The SCP is not just technology on which to run an SAP application. It also offers many valuable functions for the integration of system landscapes and data and for enhancement using algorithms and AI, as well as a really good analytics platform. Developers who have already worked with cloud technologies in the enterprise range, such as Java EE, will find much of what they are used to from other platforms here. Lastly, the current SAP Cloud Platform is also based on the Cloud Foundry open source standard. Companies can therefore use SAP Business Application Studio, a fully web-based development environment, to get to work on smaller development projects immediately.

SAP software can generally be used in virtually any industry, since it maps the typical back-office functions of a company, such as accounting, controlling, purchasing, sales or materials management. In addition, there are a number of industry add-ons that are now fully integrated into S/4HANA.

Considering the size of the company, I would say that S/4HANA and C/4HANA are suitable for companies with approximately 500 employees or more. SAP also offers individual SaaS components for smaller companies, which can be used optimally and with a good cost-benefit ratio. In principle, there is something for everyone, you just need to find the solution that is right for you.

The cloud has generally become important because application management, hosting and the IT infrastructure do not form part of the core business of most companies. Cloud-based solutions are helpful in this case because companies no longer need to deal with infrastructure issues and can concentrate on the actual core business of their company. SAP S/4HANA can be a cost-effective solution, and it runs on all cloud platforms.

Further advantages of cloud services include their prompt scalability and flexibility, 24-hour access to geographically distributed IT resources from anywhere and on any device, good data security, optimal performance and high data availability, and the ability to implement new applications quickly and cost-effectively.

The added value for existing SAP customers lies in the innovative additional possibilities offered by the new SAP suite. Finding out about the cost advantages and additional business models that can be realized by using SAP Intelligent Enterprise is more important than focusing on how long SAP will continue to provide maintenance support for the old ECC stack. Companies should know that integration with SCP is possible in the ECC world today. As a result, this technological innovation is already theirs for the taking.

For new SAP customers, the best possible technological platform should be selected on the basis of the overall strategy or the digitalization strategy. These days, SAP offers the advantage of an open architecture. It is important to consider the consistency of end-to-end processes when selecting individual products. An S/4HANA preliminary assessment is recommended as the best way for making this decision.

As already mentioned, the key driver for transformation should not be that the maintenance support package is ending soon. Instead, the focus should be on the added value from technological innovation and the consistency of end-to-end processes through to the customer.

The demand for digital processes with modern technologies is constantly and rapidly increasing. Digital processes with a high amount of customer benefits require a high level of integration into corporate business processes. These processes must be able to adapt quickly to new business requirements or new technological possibilities. With SAP Intelligent Enterprise, companies can increase the speed of innovation through standardization, improve customer experience through the use of feedback or optimize and automate processes through the use of artificial intelligence. It is important that these technologies are used in the right places in end-to-end digital processes. The earlier a company develops its existing IT landscape in this direction, the greater its competitive advantage in a rapidly changing environment.

SAP has so far been perceived as being hugely complex, with lengthy, expensive implementation and migration projects, where business processes have to adapt to the conditions of the SAP solution rather than the other way around. That results in good, tried and tested business processes being changed – and not always for the better. In addition, there are concerns about the high training costs for employees and the perceived risk that production may collapse once the new system is introduced, for example because the new system cannot be managed so quickly and so well by the employees.

But there is no need for all of these difficulties and concerns. Along with identifying the right tools, companies must rely on the expertise of qualified SAP consultants who are experienced in agile procedures, reliable and able to implement SAP migration projects to a premium standard.

In the greenfield approach, a new SAP system is set up and rolled out in parallel to the legacy system. Although all processes need to be set up anew, this is the right approach for companies looking to align with the SAP standard or introduce S/4HANA in the cloud. In this way, legacy systems can be streamlined and realigned to meet current requirements.

As part of the brownfield strategy, the existing ERP system is converted to a S/4HANA system. This is the strategy to choose if a company’s system is already closely modeled on the SAP standard, or if the company attaches great importance to the processes already implemented. Advantages include a lighter workload for involved business units compared to the greenfield strategy. In addition, legacy data and comparisons with previous years can be transferred to the new system.

However, it is also possible to use what is known as a colorful approach. This approach combines the two strategies, since a greenfield approach usually does not migrate legacy components and the brownfield strategy does not allow fundamental changes to the processes. That said, the complexity of the colorful approach should not be underestimated.

On the whole, it is not possible to predict which approach is best, as there are many factors to bear in mind when choosing the right transformation scenario. A detailed S/4HANA preliminary assessment will help point companies in the right direction.

At Lufthansa Industry Solutions, we rely on the aforementioned S/4HANA preliminary assessment to show our customers the best way forward. Together with customers, and in accordance with their IT strategy, we first define their end goal of how they envisage their 'intelligent company'. It is important to keep in mind that customers are laying the technological foundation today for the next 20 years. Therefore, it is essential to maintain a link to the corporate strategy when developing target business processes. We use tools and reports provided by SAP, among other aids, to identify weaknesses in the current system landscape and other innovation opportunities. Within the scope of our technical preliminary checks, we can determine the level of customization required by the customer and identify suitable preliminary projects in order to reduce the complexity of the subsequent transformation. As part of the workshops, we enter into a dialogue with the IT department and the business units to find out their needs, objectives and innovation potential. This enables us to develop a target architecture that not only presents the customer with the plan for its migration to SAP S/4HANA, but also demonstrates the future SAP Intelligent Enterprise world.