The New Reality
The new reality has brought in many changes to our lifestyle. Digital workplace strategy became the new normal in a short span of time and those changes seem set to stay. Given the demands of accelerated digital change, there is more need than ever to ask the question - "Should I stay, or should I move my systems from on-premises to cloud?"
The pandemic has shifted the emphasis from the pace of change to the operational imperatives of digitization. Flexibility is fundamental to business survival and cloud enables value-based outcomes that can shore up businesses in this difficult time.
SAP Enterprise Central Component (popularly known as SAP ECC) has laid the groundwork for software that can manage the key business processes of an organization.
However, SAP ECC does have its challenges, which need to be addressed to fully realize its benefits and drive enterprise integration.
According to a Nucleus Research study conducted in 2016, 80% of SAP reference customers reported experiencing significant technical problems during implementation and serious support issues when problems arose after go-live. It also found that most customers did not find SAP’s roadmap compelling enough to consider a future investment and that customers feared a complex and painful transition away from their existing SAP ERP implementations. [Source]
With an initial ambiguity around the end of mainstream support, SAP has now announced that this will continue until 2027 for ECC. [Source] This also implies SAP S/4HANA will be their primary ERP offering.
The critical need to move to the cloud and drive enterprise agility means that organizations currently using SAP ECC should be reviewing their options. Here, we will look at those options:
4 Options to Consider When Migrating your SAP ERP to the Cloud
1. Migrate SAP to a suitable IaaS
A technical migration in the same application layer retains the possibility of losing direct support from SAP. Although migration to IaaS can accelerate digital transformation in the short term (with the future option to adopt a SaaS solution), the room for innovation and implementing the latest technology reduces if you do not have a future SaaS migration in mind.
This exacerbates the challenges arising from business change management as you will need to replace IaaS with SaaS, duplicating financial investments and the knock-on effects of change. The downside of migrating to IaaS is, therefore, that it is only a temporary solution— a step on your cloud journey — rather than a solid foundation for future planning and implementation.
2. SAP ECC to SAP S/4HANA Migration
SAP S/4HANA has been quoted multiple times as "a lighter SAP edition" or "a limited version of its on-premises edition. SAP's move to cloud was not just a step slower than competitors but was more inclined towards acquiring existing solutions (Hybris, SuccessFactors, Concur, Leonardo) than creating a single, integrated service.
Multiple data models create a version of truth using different data structures and a single line-item table in SAP S/4HANA. By enabling in-memory computing, it just makes reading this data faster.
In this digital age, analytics is the driving tool of decision making. Even though there has been an organically developed SAP Cloud for analytics, the usage has not been extensive. There are functional differences between SAP ECC and SAP S/4HANA, but the missing factor is innovation.
In fact, in the Nucleus research study [Source] "9 of 10 SAP customers expressed no interest in moving to SAP S/4HANA" as they do not think that the functionality, data structures and architectural integration is not high enough quality when weighed against the complexity and cost of moving from existing SAP ERP implementations.
3. Move Away from SAP to Best in Breed Solutions
To replace current systems with new solutions might be a very enticing option (for example, separate best-in-breed systems for Finance, Procurement, HR and Payroll.
However, the key drawback of these is the need to investigate value and challenges with a multitude of third-party vendors, introducing numerous implementation projects, requiring your users to adapt to differently structured systems and terminologies and performing integrations in between them so that the systems talk to each other to build a streamlined process.
The effort isn't always worth the outcome and there are easier ways to enhance your digital services.
4. SAP to Cloud Migration
SAP S/4HANA was introduced in 2015. Its evolution has been a slow process and much behind other cloud leaders who have complete options available already. We have seen an active shift in preference of existing SAP customers towards Oracle Cloud over the past year.
Oracle Cloud Fills in the Gaps Right Where SAP S/4HANA Fails:
From general to technical evaluation, Oracle Cloud has seemed like a more viable option for organizations undergoing options appraisal from SAP. With a single SLA to deal with, unlike SAP S/4HANA, it is more streamlined and removes the need to juggle multiple SLA's.
A unified data model is another compelling reason for SAP to Oracle Cloud migration - big local government organizations like Birmingham City Council have chosen Oracle Cloud over SAP and other disparate solutions. With no additional reporting layer, reconciliation is a fully automated and integrated process in Oracle Cloud, thereby giving a Single source of truth—where in SAP there are multiple platforms for multiple processes. For instance, Finance and Human Resources are on different platforms (SAP S/4HANA & SuccessFactors), different data models within SAP Ecosystem like ARIBA, HYBRIS, Concur. Hence, there is a broken flow of data resulting in problematic reporting and analysis processes.
Oracle Cloud has the key benefit of automatic technical updates whilst in SAP S/4HANA, where this is only partially automated and updates, resemble on-premises manual upgrades.
When we look at analytics, Oracle Analytics Cloud with OTBI, Oracle SmartView, or Oracle Financial Reporting is top graded by Forrester.[Source]
So, Who's the Best Strategic Vendor?
Oracle has a clear vision for ERP in the cloud and has been cited by customers as among their most strategic technology vendors. Oracle Cloud is ahead with ML, digital assistants, use of Robotic Process Automation (RPA), blockchain and many more.
Oracle Cloud also comes with better security, essential for next generation technologies like IoT and Augmented Reality. SAP, on the other hand, supports these technologies but misses the security element.