SAP's Plattner: How S/4Hana Simplifies ERP

statement is the reality, that's good news, since it means SAP will rationalize overlapping functionality that has crept into the portfolio as SAP has moved into the cloud.

Customers might question whether they really need this or that process to be 3X faster or 7X faster, but Plattner said that flexibility is as important as performance gains.

"When you introduce aggregated data, that has to follow rules," he explained. "If you want to change the rules -- how you build the reporting structure and hierarchies in a company -- it's a massive job for IT. If you have 50 reporting cubes in a BI system and management says, 'We want to do things differently,' it's a huge IT project -- particularly when you want to carry the history forward."

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Because there are no spinning plates to keep in sync with S/4Hana, companies will be able to change profit-and-loss and reporting structures on the fly because they are virtual views, calculated in memory. Want to consider the financial ramifications of divesting of a business unit? No problem, according to Plattner. Want to change your P&L structure, the sales structure, or the org structure in the middle of the year? You can make the change or just analyze the differences in seconds, he said.

SAP customer Swiss Re confirms that these performance and flexibility gains are compelling. In August 2014, the global reinsurance company started piloting SAP Simple Finance -- the app that has formed the core of S/4Hana. Swiss Re CIO Markus Schmid told InformationWeek at Tuesday's launch event that he expects the company to deploy S/4Hana within a year.

Swiss Re piloted three use-cases for Simple Finance. One test validated whether the company could use a single Simple Finance system to report financials both in US GAAP (generally accepted accounting principles) and in an internal "Economic" view similar to IFRS (international financial reporting standards). Today, that requires two separate SAP Business Suite systems running on conventional databases. The pilot proved that one Simple Finance system could deliver both views.

"It's fulfilling the promises of simplifying the architecture and giving us quicker response times," said Schmid, a member of Swiss Re's global management board. Schmid said he expects S/4Hana will enable Swiss Re to collapse its quarterly financial close process from six weeks down to as little as one week.

Swiss Re's two other pilot projects looked at very common accounting requirements. In one use-case, Swiss Re tested whether Simple Finance could handle integrated cost-accounting processes used in services-based cost management. Like most big companies, Swiss Re has many cost centers and lines of business. The cost-accounting process allocates what share of taxes or the cost of capital, for example, gets assigned to which entity. Similarly, in the third pilot, Swiss Re tested whether Simple Finance could handle complex end-to-end reporting requirements across business units, product lines, and legal entities.

The pilots proved that "we can reproduce reports for all these different perspectives all on the same [S/4Hana] platform," whereas this previously required multiple reporting processes with many interim reporting steps, Schmid said.

Swiss Re's take is on the performance and flexibility benefits of putting financial management on S/4Hana. Yet to come are reports on what customers can do once HR, supply chain, logistics, project lifecycle management, and other aspects of ERP are available in simplified form.

Customer adoption of SAP's next-gen apps will depend on exactly what apps will be made available, to what degree they fit industries and companies, and, most importantly, what they will cost. But nobody seems to be questioning whether speed and flexibility -- both of which are enabled by in-memory simplification -- are benefits worth considering.

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