Earlier this summer, SAP released SAP S/4HANA Cloud 2008. With this latest quarterly release, the ERP platform delivers innovations and new capabilities as organizations work to adapt to the challenging business conditions of 2020. Broadly speaking, the 2008 release tackles processes critical to businesses operating remotely. It also brings new tools to workers in the finance, sourcing and procurement, and supply chain lines of business. The 2008 release followed SAP’s first virtual SAPPHIRE NOW event, where the company laid out some exciting new developments and reaffirmed its commitment to its concept of the Intelligent Enterprise. This new release fits in firmly with those initiatives.
ASUG spoke with Jan Gilg, president of SAP S/4HANA. He laid out some of the biggest changes included in the 2008 release, along with the new innovations that excite him the most. Gilg also spoke about the SAP Movement program and how this new release is addressing problems companies are facing during the COVID-19 pandemic.
Jim: Tell us about the SAP S/4HANA 2008 release and what’s in this new update.
Jan: This is a special release because it was completely built during the COVID-19 outbreak. Like everyone else, we’ve had to adjust to this new situation where we are all working from home. It was a unique situation.
As you know, SAP S/4HANA Cloud is a pretty comprehensive ERP solution that covers a lot of capabilities across various lines of business. There have been some noteworthy updates included in the SAP S/4HANA Cloud 2008 update. First is finance, where we now have event-based revenue recognition capabilities for projects. We do have a pretty sophisticated revenue recognition module, which is event-based. It’s been expanded for project-based sales. At SAP, we always talk about efficiencies. We’re reducing the manual effort for finance employees. There are now real-time revenue recognition postings for the projects being sold. The platform already has a real-time margin analysis system. Now, we can combine that with analytical and transactional aspects to provide real-time matching of revenue and cost with no separate settlement required in between. That takes away a lot of manual work while also creating transparency and key audit trails.
On the supply chain side of things, we're seeing a lot of demand in that area. We tried to improve the inventory situation. As you can imagine, customers are looking very closely now at their inventories and turnovers and trying to optimize them both. We've added more intelligence to the inventory monitoring, specifically figuring out whether a restocking or recount of inventory has to take place or if the differences in inventory that are acceptable or not. This is called a situation framework. We have an SAP S/4HANA framework that reacts to situations and business events. Users can subscribe to many situations—such as creating an order when an inventory reaches a certain threshold. Then we take those trigger points and combine them with some logic and some intelligence to help notify the end user to either take an action or the system takes an action itself.
On the professional services side, we created a new project billing cockpit that helps customers prepare their bills and turns the principal from push versus pull when comparing billing data. This will help back and front office employees. Billing can be quite complex for various contracts and agreements.
Finally, I want to discuss sourcing and procurement. SAP has added commodity pricing. Commodity pricing fluctuates a lot, and it can be difficult to find the right prices and pricing formulas. They depend on variables like the commodity weight and the pricing conditions. Now, in the central procurement module, you can automatically calculate commodity pricing. This results in more accuracy in distributed contracts and saves procurement costs.
Jim: How many customers are live on SAP S/4HANA?
Jan: We have over 14,600 customers now on SAP S/4HANA as of Q2/2020. Of that, more than 7,400 are live. When it comes to customers using SAP S/4HANA Cloud, we are seeing more and more people coming to the solution every quarter.
Jim: Do you think SAP will see more customers choosing to migrate to SAP S/4HANA Cloud given the events of the last few months? Why or why not?
Jan: Yes. I think we’ve seen two big things over the last few months. First is the customers’ desire to get away from capital expenses and move toward operational expenses. So, they’re very interested in getting our solutions via a subscription. That’s why we have seen a lot of demand in the private cloud. SAP has also seen a lot of demand for the public cloud solution because of the lower time to implement and higher standardization. We are seeing a lot of net-new demand for the cloud solution.
Jim: One of the main focuses of SAP S/4HANA Cloud 2005 is integrations. How will SAP S/4HANA 2008 continue to make integrations more streamlined for SAP customers?
Jan: Integration remains a key topic. Through our Intelligent Enterprise program, we have been delivering a lot of integrations in the cloud, starting with SAP S/4HANA Cloud 1911. They’ve gotten better with each release. One highlight for SAP S/4HANA Cloud 2008 is certainly the integration between SAP Concur and predictive accounting. This helps customers predict costs and provide transparency on their travel budgets. While this might not be relevant now, business travel will bounce back eventually.
SAP continues down the path of integrating business processes between SAP S/4HANA and our acquired Line of Business solutions. We’ve also done a lot of work integrating SAP SuccessFactors and SAP Ariba in the hybrid world because a lot of our customers want more standard integration between SAP S/4HANA on-premise or on the private cloud and some of the SAP cloud-based solutions.
Jim: What are some of the new capabilities included in SAP S/4HANA Cloud 2008 that will explicitly assist customers as they continue conducting business during the pandemic?
Jan: In addition to some of the things I mentioned earlier, we’ve done work in finance, giving customers transparency on cash flow and accounts receivables. That’s an example of us trying to help customers get ahead using analytics capabilities.
Jim: What are some innovations that SAP customers are looking for right now?
Jan: The planning piece is something customers are specifically very interested in. Also, making the combination of network planning to execution very seamless—it’s what we call concurrent planning. We also see a lot of interest in the network and some of the capabilities available. This is because the network is a means to get visibility and collaborate with training partners. We have the SAP Ariba Network and SAP S/4HANA is natively integrated into that network. You can run your procurement processes through the network with your trading partners. We are investing heavily in the logistics network, as well. SAP is in the process of bringing those together to make one unified SAP network and have every customer be part of the network just by virtue of being an SAP customer, giving them visibility and collaboration capabilities.
Jim: What are the updates to SAP S/4HANA Cloud 2008 that excited you the most?
Jan: I’m excited about the procurement commodities pricing feature because I’m not sure there is anything like that in the cloud currently. Another new feature that I like a lot is in the service and sales area, where we continue to build out the possibility of bundling different types of orders such as subscriptions, hardware, products, or services. We bring this into one order and can eventually issue one invoice. This supports the business model transformations of our customers as they are starting to sell more services and combinations of products and services.
SAP also has made progress on the sustainability front, under the umbrella of Climate 21. We built the Carbon Footprint Analytics tool to give insight into the tracing of carbon emissions. It is based on SAP Analytics Cloud, together with SAP S/4HANA. This is something that sees a lot of traction in the market.
Jim: With everything that's been happening over the last few months, has anything changed with the SAP Movement program?
Jan: No. We are extremely interested in getting more of our SAP ECC customers onto SAP S/4HANA. I think we’ve seen pretty good success so far. The question now is how can we also get customers primarily into the cloud? We are looking into adding a strong angle to the SAP Movement program that brings customers from SAP ECC directly into SAP S/4HANA Cloud. This is something we haven't pushed much in the past. It is certainly something we are currently working on and figuring out how we can offer attractive packages and paths to do so.
If anything, I think the SAP Movement program has become more relevant. We are expanding on that because today we have been very focused on moving customers from SAP ECC to SAP S/4HANA. The reality is that a migration usually involves more than that. Often customers also have a customer relationship management (CRM) or supplier relationship management platform. They want us to help them move that to the strategic target and basically make efforts to move customers to the Intelligent Enterprise. I think that’s going to be the next evolution, if you will, of the SAP Movement program.
Jim: What would you like ASUG members to know about SAP S/4HANA 2008?
Jan: We are continuing down the path of SAP S/4HANA Cloud as our strategic product. We are making great progress with every quarter. We are seeing more and more things come together with the Intelligent Enterprise. We also acknowledge that the world is hybrid and we will continue to develop with that in mind. We are starting to see some of the results in the hybrid scenarios. I think that is extremely relevant for our customers who are ASUG members.
Be sure to register for the ASUG Best Practices: SAP for Industries virtual experience to understand how companies are leveraging SAP S/4HANA across different industries.