How SAP S/4HANA can transform your business

Next-level SAP in the oil and gas industry

The SAP S/4HANA suite represents one of SAP’s most significant updates to its ERP strategy and platform, yet many leaders are ill-equipped in understanding the principal technology and the value it can unlock. Our latest article sheds light on what SAP S/4HANA is and its potential to transform business—particularly in the oil and gas sector.

Technology’s role in a time of market uncertainty

For many executives, SAP S/4HANA has become an almost inescapable topic of conversation, particularly within the oil, gas, and chemicals (OG&C) sector, where a predominance of the world’s companies use SAP. And it’s easy to see why this has become such a hot topic.

First, there’s the announced 2027 sunset deadline for phasing out support of the legacy SAP ECC platform, essentially creating a hard deadline for companies to complete their transitions (which, technically speaking, may be closer to a full ERP reimplementation than an upgrade).

Tackling the SAP S/4HANA conundrum l Part 1

Second, and perhaps more importantly, OG&C leaders are in the midst of one of the most dynamic periods in the industry’s history, one that is marked by demand shocks and extreme price volatility in the near term and by climate change and the approach of peak oil on the horizon. And embedded within that macroeconomic context are individual OG&C organizations searching for digital solutions to drive operating efficiency and increase the long-term viability of their businesses.

Yet, despite the central importance of digital to these organizations, many OG&C executives are still ill-equipped in their understanding of the principal technology that drives most of their businesses (i.e., their ERP platform). So, we thought we’d tackle a few of the basics, in as nontechnical a way as possible, over the course of two papers:

  • SAP S/4HANA basics and its value potential: What is the SAP S/4HANA platform, and how is it different from my existing ERP? What value can I expect to be unlocked by moving or transitioning?
  • How to think about starting the SAP S/4HANA journey: Is there a “most efficient” path (financially, operationally, or strategically) that’s tailored specifically for my business?

In this first article, we seek to provide a simple, straightforward point of view on what SAP S/4HANA is and what it could mean for your business.

What is SAP S/4HANA?

Some basics: It’s important to distinguish between SAP S/4HANA and HANA. SAP S/4HANA refers to the next major iteration of SAP’s ERP platform (succeeding ECC and its predecessor, R/3), which supports a wide variety of operational and strategic capabilities, such as marketing and sales, finance, supply chain, and support services.

HANA (high-performance analytic appliance), on the other hand, is the underlying technology and one of the critical components that makes this version such a game changer. At its most basic level, HANA structures data in a new, more simplified way and leverages in-memory computing to allow for better and faster analytics.

While the SAP S/4HANA suite, which was first launched in 2015, has taken a few years to mature as a product, it still represents one of SAP’s most significant updates to its ERP strategy and platform.

It’s also important to note that the SAP S/4HANA platform offers some distinct business process enhancements for oil, gas, and chemicals industry segments. To support the move to SAP S/4HANA, SAP has developed individual model companies and industry solutions for the OG&C industry (essentially business process reference models) that showcase the foundational software characteristics for key industry segments and provide a view of the product road maps for these segments. But it’s also worth noting that the maturity of these solutions does vary, so each of them should still be fit-gapped against your organization’s unique needs.

In addition to industry solutions, some consulting service providers (like Deloitte) have also developed SAP-certified, preconfigured OG&C solutions that further help companies get to an even closer fit, thereby reducing implementation time, complexity, customization, and risk.

What’s the value proposition for migrating to SAP S/4HANA (now or soon)?

Putting aside the 2027 deadline, one of the most basic questions that corporate executives ask themselves when considering an IT system upgrade or reimplementation is “Will I actually get a return on my investment?”

There are countless articles and opinion pieces touting the benefits and improvements that SAP S/4HANA provides, but for purposes of simplicity, we think of these benefits in three major buckets

  • Improving operational efficiency
  • Streamlining your IT landscape
  • Enabling digital transformation

Taking the next step in SAP S/4HANA transformation

When it comes to upgrading your ERP, it’s easy to be paralyzed by the projected costs and haunted by the stories of failed or delayed attempts. And while those concerns are both understandable and valid, the inevitable reality of the SAP S/4HANA transition timeline, and the need to harness the power of digital just to stay competitive, isn’t changing. Given that, it is important for every leader, technically minded or not, to at least understand the basics of the SAP S/4HANA topic:

  • What is SAP S/4HANA? SAP’s next-generation ERP platform that provides the IT infrastructure for businesses to make smarter and faster decisions to remain competitive in a changing industry
  • The core value proposition of SAP S/4HANA: What types of operational improvements and financial returns can you expect from your investment?
  • Understanding SAP S/4HANA’s role in your digital transformation: Leveraging the unique opportunity that this journey provides to set your organization’s digital foundation for decades to come

Having covered the above, the next logical questions are “How should I think about getting started on the journey?”, “How long will this realistically take?”, and “How much is it really going to cost?”

Those are the questions we’ll tackle in the next article.

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