SAP is about as traditional a legacy vendor as you are likely to find, delivering complex on-prem ERP solutions for the largest organizations on the planet. But like everyone else, SAP sees a future in which companies rely less on software installed in private data centers and more on public cloud products to handle the heavy lifting for them.
And SAP S/4HANA, the company’s public cloud product is designed to address that. While the product was released at the end of 2015, the company is announcing some key updates to the cloud product this week that include some artificial intelligence and machine learning underpinnings, as well as an integrated analytics package to take advantage of the increased intelligence.
The idea is to provide more automated insight into the company data being collected by the ERP system. For instance, the system could automatically surface the best vendor for a procurement manager based on price, past performance, ability to deliver and so forth. Rather than deliberately searching for this, the system acts as a more active participant to assist and augment the human decision makers.
It’s important to understand that, even while SAP makes its move to the cloud, it’s not completely abandoning its on-prem roots. It still offers a similar product with a shared code base as an on-prem product, but whereas the cloud version gets updated on a quarterly basis, the on-prem one gets updated annually.
SAP S/4HANA president Darren Roos says they have figured out how to maintain the two products, but the tricky part is making sure that the cloud updates don’t break anything. “If we think of customer implementation in the public cloud, that needs to be the same as when you are updating an app on your phone. It has to be completely seamless. Everything that was connected before has to be connected after,” Roos explained.
And while he acknowledges that there is a level of complexity here with an ERP system you don’t find with a phone app, it’s still important to make it an easy update for customers.
The company understands that some customers want to move to the cloud because of the flexibility and agility that brings them, and while Roos clearly recognizes that their target customers might not go full bore to the cloud right away, they need to offer a product for those who want to be on the path to it. They might try the cloud product on a division level or a country level and see how that works with the on-prem versions — and then roll out cloud versions slowly across a company, rather than all at once.
“This is part of the maturing of ERP in the enterprise space in the public cloud. It’s really coming of age now. This is a learning curve and maturity. It starts off being an incremental investment, and then [they layer more in the cloud] over time,” he said.
Customers like the self-service provisioning of the cloud and the fact that you can get up and running in 8-12 weeks, compared with 6 months or even longer with an on-prem version of the software.