ERP Solution Evaluation Study: SAP S/4HANA

In 2023 ISEE conducted a survey to explore ERP systems’ functional constructs and whether they incorporate Business Model Ontology principles of universal management of any enterprise economy.

This research is critical for the Mission of ISEE which seeks to develop and disseminate new digital technologies for managerial modeling of enterprise economies. Such knowledge, already embedded in the Business Digital Twin software developed by Institute for Systemic Economic Engineering (ISEE), could surpass traditional economic education in terms of practical applicability.

In 2023, ISEE conducted an ERP evaluation study focused on SAP S/4HANA’s capabilities and evaluating its functional construct as a carrier of Business Model Ontology. A meeting was held with a SAP Platinum Partner – the highest possible partner level. The survey team prepared a detailed questionnaire to assess SAP S/4HANA’s capabilities in reflecting and simulating enterprise processes. This evaluation aimed to compare SAP S/4HANA’s functional construct with ISEE’s Business Digital Twin software to determine if similar comprehensive knowledge of BMO is embedded and practically applied elsewhere in the world. The meeting was attended by five consultants from the software provider company and a survey-leading team consisting of two people. For the successful conduct of the meeting, questions and examples were prepared in advance by the leading team, according to the objective of the survey:

First area of questions

It aims to establish to what extent SAP is aware of the need to reflect and simulate (in order to manage future states) the principle structure of the enterprise as a uniquely identified and hierarchically ordered technological environment.

Second area of questions

It aims to establish to what extent SAP is aware of the need to reflect and simulate (in order to manage future states) the Operational Technological Field (workplace) as a set of technical and organizational elements.

Third area of questions

It aims to provide insight into the system’s capabilities as an effective tool for managing the Operational Technological Field in past and present times, but most importantly in future time horizons and in two key aspects for any enterprise – cost management and capacity management.

Findings and Insights

1. The investigated ERP system lacks the ability to comprehensively reflect the functionally organized technological environment of the enterprise that ensures the implementation of all the processes in it. The reason for this lack is that in the functional construct of the system, there is no integrated knowledge of the principle setup and the way of functioning of the enterprise in its entirety (the system is not based on and built on such holistic knowledge). This is a major obstacle to the effective management of the processes in the enterprise.
2. There is a lack of an established, written down, and integrated understanding of the structure of the Operational Technological Field. It is not realized that the Operational Technological Field is the foundational building block of the technological environment of the enterprise and that the management of its potential consists in the management of the potential of the technical and organizational elements that comprise it. The set of technical and organizational elements are modeled in order to achieve the functional purpose of existence of the Operational Technological Field – to realize a certain set of operations successfully.
3. The system does not have the capability to effectively track the individual costs incurred on various cost items as a result of the operation of an Operational Technology Field.
4. The system does not provide the capability to perform engineered organizational value analysis of manufactured products. The reason is a lack of understanding of, on the one hand, the principle structure and way of functioning of the enterprise as a whole, and on the other hand, a lack of understanding of the way in which the enterprise creates value – through the expenditure (consumption) of technical and organizational elements that make up its technological environment.
5. The tracking of Operational Technology Field’s capacity is performed only at the lowest level of accuracy. This is an obstacle to the effective planning of the production capabilities of the enterprise and a prerequisite for the emergence of bottlenecks.

Implications

The absence of knowledge about the enterprise’s principle structure and way of functioning embedded in the functional construct of the investigated ERP system is the basis for all its fragmentary. The countless modules, even integrated with each other, are unable to reflect reality as it is. And this defect is substantial.

In conclusion, after detailed research and analyses of the achievements of SAP in the field of management, we can note that the investigated ERP system does not allow effective reflection of the state of the enterprise in its entirety here and now nor for past periods, while the management of future states of the enterprise is completely missing.