What can S/4 Hana actually cost?
SAP has attempted to define an economically meaningful metric for digital scenarios with Digital Access. In theory, easily applicable metrics have been found here.
In practice, however, this metric destroys any business case for innovation projects for existing SAP customers. The same applies to "simplified" processes under S/4 Hana and the use of new SAP products in the cloud, for example.
An economically sensible decision for S/4 Hana, for Digital Access and thus for an SAP-based innovation strategy is based on the fulfillment of a business case in which the potentials achieved are implemented primarily for the SAP user and not for the software manufacturer SAP.
How this can be objectively evaluated and thus the conditions for the economically sensible use of SAP can be achieved will be presented in the following.
Every existing SAP customer is faced with the decision of aligning their further strategy with S/4 Hana and implementing appropriate measures or looking for alternatives to SAP that better support the future strategy.
In any case, the dependency of a company with a digital strategy on its software supplier is growing - and that does not give many SAP customers much confidence in the future. So the task now is to find deliberate, sustainable, stable solutions and secure them in the licensing strategy.
Essential segments of an economic S/4 consideration are "
- Simplifications" in the move to S/4 based on technology Process innovations in the course of a greenfield approach in S/4 implementation
- Business model innovations in the course of a digital strategy (supported by SAP or non-SAP)
- Changed cost models, such as costs for indirect use that did not exist before or rental models as an alternative to depreciable purchase models
One example of "simplification" is the simplified structures in internal and external accounting, which eliminate the current reconciliation effort between internal and external accounting and make reporting much simpler.
The implementation and licensing costs for the accounting system are therefore compared with the savings in FTE - both in the operational area and in support.
An example of process innovation in the greenfield approach can be the invoice receipt process, which can be implemented either with SAP means (Vendor Invoice Management) or with external tools.
The potential depends largely on the number of incoming invoices, on the basis of which the time savings in invoice verification can be calculated. At the same time, the number of documents forms the basis for calculating the costs of the application as well as for indirect use in the case of an external tool.
Business model innovations often involve new sales channels or customer segments, so the number of orders (for example, via app, portals, etc.) forms the basis for potential (number of orders times expected margin) and costs (Hybris or Digital Access).
An overall view of all four segments leads to an objective profitability analysis of an S/4-based strategy. The Digital Access of the new SAP license model becomes central variables in all four segments - both on the cost and on the potential side.
Conversely, this leads to the determination at which price (discount) of a digital access an economic use is at all conceivable and reasonable. This should be the central question in every SAP negotiation!
The simplified key figure model under "score" on the author's homepage allows a simple pragmatic approach and a simulation of the business case depending on the SAP conditions and the document volume to be considered.
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