Abstract: After 20 years SAP launches a new version of its ERP platform. The new platform will rely heavily of the disrupting capabilities of the innovative SAP HANA database. This impacts both business and technical operations. S/4HANA comes in a time where SAP follows a transformation of its product and services portfolio and we expect that this will strongly influence SAP’s new ERP future.

Our vision

The disruptive capabilities of the SAP HANA platform had to influence more drastically the development of SAP’s ERP platform. With S/4HANA SAP is able to move part of the business logic to the database and create complex views and transformations that operate directly on the data. This enables SAP developers to eliminate database tables that were only used for storing results of transformations and consolidated results. Such tables, that were needed for providing an acceptable performance for users, became totally obsolete with SAP HANA.
But S/4HANA is not only about simplification. The new platform is thought to support innovation and totally new business processes. SAP HANA incorporates analytical, predictive and even business libraries that potentially allow creating a new generation of powerful applications that require neither large amount of ABAP code, nor complex integration to 3rd party systems. This goes so far that 3rd party software vendors are providing their own HANA native libraries: SAS offers the so called In-Database Deployment Packages for SAP HANA . This allows developers to use SAS functionality natively on the platform data. [1] 
The native geo-spatial capabilities of SAP HANA, as well as Fiori’s availability, transform S/4HANA into a platform that is perfectly adapted to the new mobile world.  
Last but not least by optimizing the ERP for the new in-memory technology, SAP is achieving rationalization of code and reduction of the data footprint. This is the main reason why SAP’s key marketing message around the new platform is “simplify”. As you will see, this concept impacts not only technical operational aspects, but also the business processes themselves.

Business impact

We think that the adoption of the new platform will depend on the business impact. Indeed there is no point to go through a technology renewal if this is not going to bring clear benefits to business or enables new business processes.
With Simple Finance, the first delivered component, we see that S/4HANA is a platform that presents clear advantages for operational costs. Let us take the example of Financial close: to execute a financial close it is necessary to execute series of inter-dependent batch processes that calculate profitability results, which need than to be exported and analyzed in a separate data warehouse (usually SAP BW). In this scenario errors, can only be detected at the end of the process meaning that fixing issues is a long process that requires re-running a number of steps usually under considerable time pressure. With Simple Finance on S/4HANA, the removal of aggregate tables , integration of analytic capabilities in the ERP platform and the new speed of the platform, this greatly reduce the processing time and the effort necessary for delivering accurate results.  
The example mentioned above is just one of many, meaning that several business processes will have to be revised to take into account the process improvements that are now at reach with the new technology.

Technical impact

SAP claims that with the new platform we can achieve up to a 10 fold reduction of the total data footprint. This has a direct impact on IT operations, especially because it drastically affects all processes that involve the transport of data. We could mention for example all activities related to data synchronization, like the ones we need for setting up disaster recovery scenarios, or system backup operations. By drastically reducing the data footprint, activities like cloning systems require less time and resources to be performed.

In our opinion the reduction of data footprint is a great chance for companies that want to manage hybrid infrastructures that mix on-premise with cloud system resources. Indeed it is easier and cheaper to move to the cloud 100 GB than  1 TB of data required by a traditional ERP.

But the impact of S/4HANA does not reside only on data volumes. Platforms that have less tables and application code represent better quality and lower maintenance costs. We lower as well application management costs. To give an example: it is simpler to create sandboxes or test systems from production.

Cloud versus on–premise

S/4HANA shares the same code line as SAP’s cloud solutions. This together with the smaller data footprint of the platform will greatly improve the portability of applications between on-premise and cloud deployments. This will increase the deployment options and allow corporate IT departments to adapt their cloud/on-premise policies to the ever-changing infrastructure market conditions.     

Is this a new concept of ERP?

During the last years we observed a deep transformation of SAP’s product and services portfolio. SAP has become recently not only a serious database provider, but also its product portfolio counts with a growing number of SaaS [2] solutions like Ariba, Hybris and SuccessFactors . What does this mean for the  new ERP platform? This new product  will need to have from one side key components like Finance, Logistics, Materials Management, etc. but also an efficient integration to Cloud and/or SaaS applications. Meaning that the new platform will have to be ready to operate transparently on hybrid environments where the different components may integrate on-premise as well as cloud solutions.    

Managing the challenge of innovation

The tight integration between SAP HANA and the new ERP platform greatly simplifies the effort of building innovative business processes. Moreover process complexity was often driven by technological limitations of the existing systems, meaning that SAP’s Simplify key message will certainly extend to business.

For the next years our key challenge will be to understand the new platform evolution and help our customers to move without risk to leaner and more efficient processes, that are better adapted to the new technologies.       


I would like to thank Detlev Sandel and Andreas Blache for the stimulating discussion and valuable points of view about SAP HANA and S/4HANA. Alex Bennel and Danny Nooyens helped me to start to understand the impact of HANA in corporate finances. Last but not least I would like to thank Christophe Lacroix, Valery Smague, Jerry Lacasia and Philippe D’Amato for their unconditional support and commitment.


[2] Software as a Service