First, a definition. Single-tenant SaaS means that each customer has its own, independent instance of a software stack which is not shared with other customers – as opposed to multi-tenant SaaS where one instance of a software stack serves multiple customers.
To be quite honest, when I first heard about S4HC STE, I thought “single-tenant SaaS? That is not what we want, right?” After all, not all the charms of SaaS are met in a single-tenant mode:
- Customers have a certain freedom to customize the ERP core with all the risks that we know from the past
- The vendor (SAP SE) is no longer pushing its frequent release cycles and software upgrades to the customers automatically, increasing the risk of outdated ERP landscapes that are difficult to upgrade like in the early days. The dream of “continuous innovation” may be at risk
- The lowest possible TCO resulting from the sharing of software and infrastructure among multiple customers will not be reached.
In addition to this, the line between SAP S/4HANA® Cloud (S4HC) and the more traditional deployment options, such as SAP HEC (HANA Enterprise Cloud), SAP S/4HANA® on hyperscale infrastructure or partner managed infrastructure, is getting thinner with STE and often difficult to explain to customers and even to my own colleagues.
Digging more into the material, I realized however that S4HC STE is a good stepping stone for customers who have a strong cloud/SaaS mindset for their ERP core but for whom multi-tenant S4HC (S4HC MTE) is still a bridge too far, customers who want the selling points of SaaS ERP but need the full functional scope of S/4HANA on premise (which cannot be offered yet by S4HC MTE), and those who still need some flexibility to tailor the system to their individual needs and decide themselves upon the release cycles of the software.
S4HC STE is very well positioned for such customers. Better than the more traditional deployment options:
- The vendor (SAP SE) manages S4HC STE for the customer, from top to bottom, including half-year release upgrades and offers the ERP core truly “as-a-Service” (maximum unburdening of IT management)
- In S4HC STE, modifications are not allowed and the implementation approach is very much geared around “five golden rules” that realize the cloud/SaaS mindset and pave the way to a possible future migration to S4HC MTE. “Fit-to-standard” and “keep the core clean” are key in this
- S4HC STE is cheaper than SAP HEC and S/4HANA on hyperscale infrastructure or partner managed infrastructure (TCO).
So, S4HC STE may not be full-blown SaaS ERP. And it may not be the terminus for customers who want S4HC MTE in the end. But it is the preferred deployment option for customers who want to modernize their SAP ERP core (S/4HANA), who want Software-as-a-Service with all its characteristics, and who want to smoothly migrate to full blown SaaS ERP (S4HC MTE) whenever they are ready for it.
With the Highway-to-S4 offering, Capgemini helps customers qualify how strong the customer’s cloud/SaaS ERP mindset is, and what this means for the choice between S4HC STE and S4HC MTE when they need to modernize their ERP core (S/4HANA). The more traditional deployment options are in scope of this qualification as well (SAP HEC, hyperscale infrastructure, partner-managed infrastructure, on premise).
In case it turns out that S4HC STE is the right option, Capgemini helps customers make their “five golden rules” of implementation more concrete to maximize the advantages of SaaS ERP and to pave the way to a possible future migration to full-blown SaaS ERP (S4HC MTE).
If you are interested to discuss this further, send me an e-mail (email@example.com)