The Math of Probable S4 & Fiori Apps Usage

What This Article Covers

• The Math Behind my Estimate.
• How to Get the Real Story on S/4 HANA
• Previous Proposals on SAP Application Readiness
• The Interaction Between S/4, HANA and the Fiori Apps

Introduction

SAP has been releasing false numbers regarding the uptake and usage of S4 HANA and Fiori apps for several years now. This is driven by the desire to make it appear as if SAP’s new offering is far more popular than it is. The more that they can seem to have the wide acceptance of these new products the more they can convince others to purchase S/4 HANA (and accompanying Fiori) and the more they can convince Wall Street that their strategy is working. SAP claims 4,200 customers of S/4 HANA. (I prefer to call S/4 HANA simply “S4” as I find S/4 HANA to be marketing centric as there is no reason to have the database as part of the application’s name). The evidence I bring is one cannot find another application with the database in its name.

This is as short article designed to show the actual usage of both S4 and by extension the Fiori apps.

How to Get the Real Story on S/4 HANA

For the foreseeable future, the only way to know what parts of the rest of the S/4 suite work, is to test them or learn second hand from someone else (who you trust) who has tested it. You can’t ask SAP or ask their consulting partners. In most cases, the answer is that S/4 is ready to be implemented as soon as you can get around to signing a statement of work with them! Beyond this, S/4 is being made to appear far more implemented than it is.

One of the exaggerations that SAP proposes is that S/4 has 3700 customers.

I don’t doubt that 3700 companies somehow ended up with a S/4 license (most of them for free). This is the only definition of a customer — do you own (somehow) a S/4 license. But the actual number of S/4 implementations is probably less than 100, with most of these not live. And none of them live in the whole suite — for reasons that should be obvious at this point in the article. SAP recently reported that they have 170 customers live. SAP has stated that 30% of their clients are referenceable.

• 30% of 170 is 51 companies, well below my estimate of even less than 100 companies.
• And live can also mean different things. If S/4 HANA is live, it is live only with Finance, so that means it has to be integrated to ECC to function.

The idea that SAP likes to give that 3700 S/4 customers are in some state of using this software is so ridiculous that the industry needs to come up with a more strict measurement of what a customer is. A customer should not be someone who is only sitting on shelf ware. If you are a plumber and you give a gift certification for a particular plumbing service, and 80% of the people that have this certificate never use your services, this 80 % are not “customers” of that plumbing service. SAP has given away so many copies of S/4 that they will not release the actual revenues for the application. I suspect they have not only given away copies to existing users (who should get it for free) but for net new deals as well.

By the way, I am not the first to question the 3700 customer number for S/4. Most people who study this topic think this number is highly overstated.

Previous Proposals on SAP Application Readiness

Exaggerating the readiness of applications is nothing new for SAP. So please, if some people are going to comment to the contrary, let’s not pretend to be so shocked. SAP APO was released back in the early 2000s was a barely functional product that only made it through those early days because it was pushed by the major consulting companies.

Another “application” that comes to mind as one that was significantly pre-announced was Netweaver. I take the following quotation from Vinnie Mirchandani’s book SAP Nation 2.0:

“With so many unanswered questions, an emerging viewpoint is that S/4, as initially defined, is just a placeholder. If anything, it will probably evolve in the same manner as another of SAP’s initiatives, NetWeaver, did a decade ago. In their 2004 book on NetWeaver, Dan Woods and Jeff Word said with confidence:
“All this talk about successive versions and incremental progress and fulfilling visions could easily give you the wrong impression that SAP NetWeaver is still on the drawing board. That’s not at all true. SAP NetWeaver is here now. All the SAP NetWeaver components that we have mentioned are working products and can be purchased and used to make your business run better today.”

That turned out to be completely untrue. In fact, NetWeaver was never actually released as it never actually existed. NetWeaver was a name appended to other applications. I pointed this out repeatedly and wrote on this, and now all the people who were so high on NetWeaver never emailed me to apologize. On project after project, NetWeaver is nowhere to be found. Where is the World is Carmen San Diego? Where in the World is NetWeaver is a much better game to play.

I seem to debate a lot of people who have incredible confidence in their positions, but then appear to disappear when it turns out they were wrong. One excuse they will use is that they could not have known differently because they were told something was true by SAP. Anything to avoid the responsibility of being held accountable for previous statements. By the way, all these items which were so easy to see at the time, just happen to be in line with their financial interests. I can guarantee that those people that may respond to this post and talk about how S/4 is the “next stage,” and how it has an entirely simplified data model, will all have a financial bias for why they want S/4 to be accepted. However, they won’t discuss this financial bias. They will instead carry forward the conversation as if they are some impartial observer. However, I am in fact impartial, financially at least. I do not financially benefit if customers buy S/4 or do not buy S/4. That is an important consideration. Also, unlike anyone who works for Bluefin, IBM, etc… as an independent I can write what I believe to be true. I covered the topic of forecast bias in the book Supply Chain Forecasting Software and included it again in this LinkedIn post. And it is amazing to me, knowing what is known about forecast bias that we don’t seem to discuss bias when considering what people and companies propose.

Now, NetWeaver was something at the beginning related to rewriting parts of SAP in J2EE but later devolved into a marketing construct. S/4, unlike Netweaver, is something. It will not only turn into a marketing construct, but its development has been and will look like it will be fraught with greater confusion and problems than most other SAP applications. But whatever one’s opinions of S/4, and it should be acceptable to be unimpressed with S/4, without being admonished about how S/4 has a new data model that “simplifies everything.”

At least we should be able to agree whether S/4 as a suite, that is what is known as S/4 Enterprise Management is released. And it isn’t yet released. What is currently being re-written was written by thousands of people over decades, so no surprise it is taking longer than projected by SAP.

The Math for the Estimate

To estimate the amount of Fiori apps usage and how drastically it differs from the statements made by SAP, we have to isolate where Fiori apps is used.

• Fiori apps have been designed to be used mostly with the S4 ERP system.
• S4 only works with HANA, and Fiori only works with HANA for roughly 87% of its apps.

Therefore determining likely Fiori usage means estimating S4 usage.

According to SAP, they have 50,000 ERP customers across 25 industries. I have been on projects where it is claimed that SAP has upwards of 250,000 customers. However, this would mean any company that was in possession of a SAP license for any application. It would not necessarily include active customers. SAP may count customers that used their software ten years ago and moved off of their software.

So for this estimate, I have gone with the 50,000 ERP customers to compare against the total number of S4 customers.

I have spent time estimating the number of customers using S4 with inputs from multiple sources and come to around 150. This is 150 global customers either in the current state of implementing S4 or having already implemented it (almost all only having implemented S4 Finance). The largest concentration of these implementations is in Germany, and they were not undertaken because of S4’s value (as it is a currently being developed application — set of applications) but because of the control that SAP has over these companies.

That would mean that of the 50,000 customers, 150/50,000 or .003 of SAP ERP customers use S4. But this is not 150 live customers with S4.

However, this is not sufficient for estimating how small the usage of Fiori is. Unlike what has been proposed by Hasso Plattner, Fiori is not a replacement for SAPGUI. Fiori is only a series of a little over 1000 apps that are concentrated in small data intensive transaction. No company can use S4 without spending most of its time in SAPGUI. Companies would use S4 some percentage of the 1000 apps, but these apps replicate screens in the SAPGUI, and there would be a transitionary time and training required to use these Fiori apps.

• Therefore of the 150 implementations of S4, some small subset of the overall transactions accessed by SAP customers that use S4 use some Fiori apps.
• Of these 150 implementations, only some portion of which are live may be using some of the Fiori apps.

Conclusion

Understanding these limitations of the possible usage of Fiori apps indicates that Fiori’s overall usage must be incredibly small. This likely fact, combined with the fact that Fiori apps have been around for several years now, argues very poorly for Fiori’s likely survival.

Related Links

• This article asks if the time has come to jump off the Fiori bandwagon.
• There is less discussion on the fact that S/4 should actually be free. This article provides the explanation as to why.
• SAP has made it a policy to only have S/4 run on HANA. This article proposes this SAP will backtrack on this.
• A huge amount of published information on S/4 has exaggerated its benefits.
• There is a question as to what one actually gets in the Fiori box.
• This article describes SAP’s history of releasing inaccurate customer numbers.

References

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