5 min Applications

How Mid-Sized Companies Are Making the Migration to S/4HANA Work

Insight: Cloud ERP

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How Mid-Sized Companies Are Making the Migration to S/4HANA Work

With its latest “Grow with SAP” program, the ERP manufacturer aims to establish the public cloud as the standard platform for S/4HANA. Things are looking bright as skepticism about public cloud models is fading.

It will be at least another four years before maintenance for SAP ERP will be phased out (in 2027), as was recently confirmed by SAP. That should be ample time to migrate even the largest and most complex installations. But what if all companies start their migration projects at the same time? This will make it difficult for every company to find consultants to support the changeover. And only very few companies have sufficient internal resources to carry out such a huge undertaking on their own.

Therefore, now is the time to start considering how the project can be streamlined by dividing it into multiple subprojects. One such example would be the conversion of applications, such as an existing invoice workflow, to Fiori now, independently of SAP S/4HANA. Good preparation is another way to take stress out of the migration project. This includes integrating as many applications as possible into a future-proof software standard that is easy to migrate.

Public cloud is gaining in popularity

The migration coincides with the general trend towards the public cloud, whose acceptance and adoption in the SME sector has increased significantly. The cloud is the new normal, even for business processes.

This is e.g. supported by data from a 2022 survey. According to a study, 60 percent of companies in neighbouring Germany already use a cloud-based ECM solution, 38 percent of them in the public cloud.

This model has gained in popularity for pragmatic reasons: the public cloud generally implies software-as-a-service. And this service allows companies to outsource administrative effort, which is a helpful strategy in light of the shortage of skilled workers.

This also makes it the key to a successful transformation to S/4HANA. SAP is aware of this and has wanted to take its customers to the cloud for some time, especially with S/4HANA. There are various deployment models suitable for this purpose:

Hosting in an external data center is a traditional infrastructure-as-a-service (IaaS) model. Here, S/4HANA system is hosted in the data center of an external provider. This can be a local or industry-specific hoster, or a typical hyperscaler (like Azure, AWS or Google). SAP treats this operating model just like a local installation, and the model is already widely in use for SAP ERP systems.

On the next level, the SAP S/4HANA system is operated in the SAP HANA Enterprise Cloud (HEC). The deployment model is very similar to the first mentioned option. The system runs in a data center in a private cloud managed by SAP. Here, too, deployment is based on an IaaS model.

Different operating models for existing and new customers

The S/4HANA Cloud Private Edition is an offering that SAP launched when introducing their “RISE with SAP” initiative in 2021 – a modified software-as-a-service (SaaS) model that provides customers with an out-of-the-box S/4HANA system in the S/4HANA Cloud; future updates, however, must be managed by the customer. The Private Edition is the preferred alternative for existing customers to make the switch to SAP S/4HANA.

Furthermore, SAP is offering the SAP S/4HANA Cloud Public Edition. This is a SaaS offering based on a multi-tenant infrastructure hosted by SAP, and thus a truly public cloud. In light of growing acceptance of the public cloud, SAP launched a new initiative called “GROW with SAP” in March 2023. It targets new customers and mid-sized companies and focuses exclusively on the public cloud (to make the program distinct from “RISE with SAP”, which targets existing customers who primarily opt for the private cloud).

How SAP wants to get mid-sized companies excited about S/4HANA

“GROW with SAP” is intended to provide customers with the incentive to choose the deployment model known as S/4HANA Cloud Public Edition. Here SAP provides a ready-made S/4HANA system to multiple customers rather than just a single company, each of whom is given restricted access to a dedicated system client. The S/4HANA Cloud Public Edition is a typical SaaS offering that specifically addresses the needs of mid-sized companies and new customers. SAP wants to make the migration to a cloud-based SAP system appealing to these target groups by offering rapid deployment and automated updates. This is as well interesting to companies that have opted for a greenfield approach, meaning they are planning to implement S/4HANA as a completely new system.

Cloud-first – the deployment model of the future

The public cloud model makes the SAP Business Technology Platform (BTP) even more relevant. It is the preferred way to connect extensions and add-ons to SAP S/4HANA Cloud, such as an accounts payable invoice automation software or a supplier portal.

Early on, the xSuite Group believed in the public cloud as the deployment model of the future and focused their development on offering an AP solution on this platform. Therefore, xSuite was among the first to provide a comprehensive invoice management software solution on SAP BTP.

For many years now, the software vendor has been focusing on bringing “cloud first” even further to the fore as the operating model of the future. The strategy is paying off: Last year, 80 percent of new customers opted for cloud solutions or a subscription model instead of a traditional license-based purchase.

Add-ons are integrated via the BTP

xSuite moves business processes in the Procure to Pay area, such as with a supplier portal as well as accounts payable invoice automation, to the cloud or to the SAP Business Technology Platform. Despite this shift, the manufacturer is not losing sight of its existing on-premises customers: Thanks to consistent SAP certifications across the entire portfolio, xSuite leaves it up to its customers to pick their preferred model by offering software that supports all of SAP’s deployment models.

This is a contribution from xSuite. Through this link you can learn more about the company’s services.