SAP S/4HANA and the Future of SAP PLM

SAP recently released its most ambitious software application in recent history – SAP Business Suite for HANA, or SAP S/4HANA, which is an amalgamation of the HANA platform and the Business Suite. Though we had the Suite ‘on’ HANA earlier, S/4HANA differs in that it runs only on HANA and has been optimized and (I believe) significantly rewritten for it. The current version just has ERP (and PLM) as far as I could understand, but the vision is to have SCM, SRM and CRM as well in the same application server, eliminating the need for all middleware between these components.

Following points immediately come to mind:

1. Database neutrality has been a strong point so far for SAP. S/4HANA departs from that principle. This may give jitters to some customers, as database migrations are not as easy as one would like to believe, and there is the additional question of vendor lock-in. The first question doesn’t arise for customers (especially in SME segment) who are going for ERP for the first time, or are migrating to SAP from, say, Oracle, since they have to migrate database anyway. As for vendor lock-in, that is a fact of life in the ERP world
2. Two lines of code: SAP says it will support the existing Business Suite till 2025. This means that till then they will need to maintain 2 sets of code – the ‘anyDB’ version, and ‘4HANA’ version. Both of these will compete for investment internally at SAP, who will have to put a significant marketing dollars in the newer solution so as to justify its development further
3. Multi-tenancy: It remains to be seen how this really works. If it turns out to be as good as other modern SaaS applications that we’ve seen, then SAP will finally have a home-grown  winner in the cloud

 (Image courtesy: SAP)

What does the launch of S/4HANA mean for SAP PLM? A lot. First of all, SAP PLM has always been targeted at the installed-base of SAP ERP, and any gains for the latter would directly impact the market for the former. Secondly, from a technology perspective, SAP PLM has always been embedded within ERP, a fact that sometimes works against it when prospective buyers from engineering/R&D compare it with competitor products that are independent and therefore more under ‘their’ control. This is a battle of perception, which will be easier to fight when SAP aggressively goes to market with its ‘all-in-one-box’ vision, targeted at higher echelons within the customer organization. How far it is going to succeed, only time will tell.

How will S/4HANA shape SAP PLM as a solution? Potentially, in multiple ways. First of all, PLM will benefit from the HANA database and we can expect better solutions on Product Development Costing and even more contextual analytics. The existing functionalities could improve in performance. Newer functionalities could potentially be rolled out faster. I expect new functionalities to be delivered in the Fiori UI, and there will also be a gradual move to Fiori for the entire solution. This may cause some disruption, just as the transition to Web Dynpro did. I am sure the two UIs will coexist for some years to come.

SAP S/4HANA is also being offered as a multi-tenant solution in the cloud, and if SAP has thought through the technical impact of this on the PLM solution (content server integration, front-end components like CAD connectors, etc.), it will mean SAP PLM is finally being offered as a cloud solution (as part of ERP, that is).

All in all, I am very optimistic personally about the success of S/4HANA, and its positive impact on SAP PLM. I am especially happy that SAP will now hopefully talk more once again about applications than the platform – having now created the best platform that a great enterprise application deserves.