Cost Savings And Business Benefits Enabled By SAP S/4HANA
SAP S/4HANA is an ERP system designed specifically for in-memory computing and reengineering business processes around key business functions such as financial systems and supply chain management. To better understand the benefits, costs, and risks associated with an SAP S/4HANA investment, Forrester interviewed four customers with experience using SAP S/4HANA and surveyed an additional 110 customers to validate Forrester’s observations and support the analysis with empirical data.
Prior to using SAP S/4HANA, most customers already used SAP applications. SAP S/4HANA enhanced the organizations’ ability to reach new markets, accelerate revenue, increase customer retention, and improve business capabilities. In fact, in a survey of 110 SAP S/4HANA customers, 37% reported capabilities that increased revenue. Respondents also indicated that capabilities within SAP S/4HANA enabled them to reduce customer turnover by 4% per year. Of course, the companies also needed to adapt business processes and change internal operations, but SAP provided an enabling foundation on which to build change.
In the words of a VP of technology: “SAP S/4HANA is a game changer. It changed my role and contribution as a VP in my company — I’m more involved in solving business problems. It changed the efficiency of our technology team by making us more efficient. It also changed the experience of our end users. They don’t know why run times are faster and previous problems are gone, but they appreciate how things are working and are accomplishing more in their workday.”
Key Findings
- Quantified benefits – The following risk-adjusted present value (PV) quantified benefits are representative of those experienced by the
companies interviewed:
- Increased revenue from functionality enabled by SAP S/4HANA of nearly $156 million, resulting in a net profit of $25.2 million.
- Increased customer retention due to capabilities enabled by SAP S/4HANA valued at $8.4 million.
- Increased end user productivity due to reduced run times valued at over $2.1 million.
- Avoided cost of previously licensed software and hardware of $524,042.
- Increased productivity of IT organization employees worth $442,971.
- Accelerated cash flow managing customer orders valued at $439,675.
- Accelerated collections due to simplified accounting capabilities worth $1.1 million.
- Costs – The interviewed organizations experienced the following riskadjusted PV costs:
- Cost of SAP licenses totaling $4.6 million over three years.
- Cost of infrastructure to host S/4HANA, totaling $2.6 million.
- Cost of staff to design, build, and manage transition valued at $9 million.
