You have heard the pitch about SAP HANA many times. It promises lightning-fast processing and real-time analytics. It claims to support better decision-making across the board.
However, when the time arrives to write the check, your CFO wants numbers. They need real metrics that demonstrate the return on investment.
Building a solid HANA ROI business case requires more than just throwing together a few spreadsheets. You must paint a complete picture that connects technology capabilities to actual business outcomes.
Most companies get stuck at this exact point in the process. They know HANA could help but cannot prove it effectively.
A proper business case changes everything regarding approval. It transforms your HANA project from a risky IT expense into a strategic investment.
Let us walk through the process of building a case that gets results.
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Traditional IT projects focus heavily on cost savings. The goal is usually to cut hardware expenses, reduce maintenance fees, and lower licensing costs.
HANA projects work differently. While there are cost reductions, the substantial value comes from new capabilities.
Consider this perspective on digital transformation. When Walmart decided to transform into a technology company, they were not looking solely at server costs. Their CIO spoke about reinventing the entire business model.
That is the mindset shift you need for this analysis. HANA enables operations that were not possible before.
You gain real-time pricing optimization and instant supply chain visibility. You also gain predictive analytics that provide accurate forecasts.
Your business case needs to capture both sides of the equation. You must list the hard cost savings and the softer opportunity gains.
Research from Forrester shows that organizations dramatically cut their total cost of ownership after moving to SAP Cloud ERP. However, that reduction is just the starting point.
The real question becomes quite simple. What can your business do with HANA that it could not do previously?
If you only focus on infrastructure consolidation, you miss the larger story. The revenue gains from real-time agility often dwarf the savings from server retirement.
This phase is where most HANA business cases go wrong immediately. IT teams often build them in isolation.
They estimate faster reports, quicker data loads, and reduced batch processing times. These are all technical metrics that executives rarely value.
Instead, start by talking to the people who actually run your business processes. Schedule time with Finance, Logistics, Sales Operations, Trade Promotion, and Transportation.
Ask them what keeps them up at night. Find out what opportunities they are missing because of data limitations.
A finance director might tell you they cannot analyze profitability by customer segment quickly enough. By the time they receive the analysis, the quarter is already over.
Your supply chain lead might explain how stockouts happen because demand signals arrive too late. They see the problem in hindsight but cannot act fast enough to stop it.
Sales operations could be struggling with regional pricing models. They suspect they are losing revenue in some markets but cannot prove it with current data.
These conversations reveal the real pain points. These are the issues that connect directly to revenue and profit.
Do not limit your questions to current problems. Ask about their vision for future possibilities.
What if they could see point-of-sale data instantly? What if they could run simulation scenarios instantly instead of waiting days?
Imagine if external market data, social media signals, and internal sales data all lived in one place. This integration creates massive potential.
Most process owners have never faced these questions. They have been told what the system cannot do for so long that they stopped imagining potential improvements.
Your job is to open that conversation and record every detail. According to surveys from the Americas SAP User Group and German SAP User Group, many companies struggle because they fail to involve the right people early enough.
Create a structured approach to these conversations. Map out every critical business function in your organization.
For each function, identify the key process owner. Set up one-hour interviews with each of them.
Come prepared with questions that stimulate creative thinking. Ask how immediate data access would change their daily decisions.
Determine what external data sources they would love to utilize. Ask where they believe their team wastes the most time today.
Document everything they say. You are collecting the raw material for your entire HANA ROI business case.
Now you have a mountain of interview notes. Process owners have shared their struggles, their dreams, and their frustrations.
The next step is turning that qualitative feedback into quantifiable value drivers. This is where the business case starts taking shape.
Value drivers fall into several specific categories. These include revenue generation, cost reduction, operational efficiency, risk mitigation, and customer satisfaction.
Take that pricing optimization pain point as an example. The inability to analyze pricing by region means you are likely underpricing in some markets.
How much revenue are you losing? Ask the process owner for their best estimate.
They might say a 2% price increase in certain regions is justifiable. Calculate what 2% means across your revenue base in those specific markets.
That calculation provides a revenue generation driver. Document it with the annual financial impact and the confidence level.
For the supply chain stockout issue, there is both a revenue and cost component.
Lost sales from stockouts represent missed revenue.
Expedited shipping to fix stockouts adds unnecessary operational cost. You must calculate both figures to be accurate.
Work through each pain point in this manner. Some will have massive impact, while others will be smaller.
The priority is assigning dollar values wherever possible. Your CFO thinks in dollars, not in faster report speeds.
If a benefit seems too abstract, try to determine the cost of labor it saves. Even time savings have a hard dollar value attached to them.
A value wheel is a visual way to show where HANA will create the most impact. It breaks down value drivers by category or by department.
If logistics will see 40% of the total benefit, that becomes visible immediately. If cost reduction represents 30% and revenue generation represents 50%, you can display it clearly.
This visualization serves two specific purposes. First, it helps prioritize which HANA solutions to deploy first.
Second, it helps with funding allocation across the organization. Maybe logistics should fund 40% of the project since they receive 40% of the benefit.
You can build your own value wheel or use existing tools. There is even a short assessment developed with IDC to help communicate HANA Cloud's potential value.
This section is where you bridge the gap between business needs and technical solutions. Your process owners have described what they need.
Now you need to map those needs to specific HANA capabilities. BW on HANA accelerates your data warehouse and creates new analytical possibilities.
ECC on HANA with sidecars lets you speed up transaction processing without moving your entire ERP immediately. Reports that took 30 minutes can now come back in 10 seconds.
That is not an exaggeration of performance. Real customers have seen GL line item reports drop from hours to seconds.
S/4HANA gives you a completely reimagined ERP built for real-time business. It offers embedded analytics, simplified data models, and new capabilities throughout.
SAP has published detailed S/4 HANA FAQs that help clarify the path forward, although using them takes some effort.
BPC on HANA transforms planning and consolidation tasks. EPM solutions get faster and more capable.
Predictive analytics on HANA lets you build models that were too slow to run before. Trade promotion management receives real-time optimization updates.
The HANA marketplace offers applications built by startups and partners. Industry-specific solutions might fit your exact need perfectly.
Your job involves matching capabilities to needs. The pricing optimization need might combine BW on HANA with predictive analytics.
The supply chain visibility need could be ECC on HANA with real-time dashboards pulling from multiple data sources. This matching process is critical.
It determines what goes into your technical roadmap. Without this map, you risk buying technology that does not solve the defined problems.
Now we arrive at the numbers that your CFO actually cares about. These include Net Present Value (NPV), Internal Rate of Return (IRR), and payback period.
These are standard project finance metrics. Any MBA program teaches them, and any finance executive expects them.
The formula for Net Present Value considers four key inputs. You must calculate benefits, costs, time, and risk.
Benefits are all those value drivers you documented previously. The revenue gains, cost savings, and efficiency improvements form this column.
Costs include hardware, software licenses, implementation services, training, and ongoing support. Get detailed quotes from SAP and implementation partners.
Time refers to the expected lifespan of your HANA deployment. Most companies use 5 to 7 years based on standard depreciation schedules.
Risk is where the analysis becomes interesting. Every value driver has a probability of being achieved.
Maybe you are 80% confident in the pricing optimization gains but only 50% confident in some newer capabilities. Apply those probability factors to your calculations.
This risk-adjusted approach gives you a realistic NPV rather than an inflated best-case scenario. It also gives you three scenarios to present.
Create a low-risk scenario with conservative assumptions. Build a moderate risk scenario with likely outcomes.
Finally, offer a high-risk scenario with aggressive targets. Let your executives choose which scenario they find most comfortable.
To help organize this data, consider using a structure similar to the table below.
| Cost Item | Benefit Item (Hard) | Benefit Item (Soft/Strategic) |
|---|---|---|
| Hardware & Infrastructure | Server Consolidation Savings | Improved User Experience |
| Software Licensing | Reduced Maintenance Fees | Real-time Decision Agility |
| Implementation Services | Inventory Holding Cost Reduction | Better Customer Satisfaction |
| Internal Staff Training | FTE Reallocation/Savings | Competitive Market Advantage |
| Change Management | Increased Revenue from Upsells | Reduced Operational Risk |
Structuring your data this way clarifies the comparison. It allows stakeholders to see where the money goes and where the value returns.
Year zero shows your initial investment. This includes hardware, licenses, implementation costs, and proof of concept expenses.
Years one through five show annual benefits by category. List revenue generation, cost reduction, and efficiency gains.
Subtract any ongoing costs like maintenance and support. Apply your discount rate to calculate present value.
Sum it all up to get your Net Present Value. Calculate your Internal Rate of Return and payback period.
If your NPV is positive, you have a financially viable project. If your IRR exceeds your cost of capital, the project is even better.
A payback period under three years is generally considered strong for enterprise software projects. Similar approaches work for other strategic initiatives, like business continuity as a service.
Here is the reality regarding HANA business cases. They are built on assumptions about what is possible.
Process owners gave you their best guesses. You applied probability factors to account for uncertainty.
A proof of concept (POC) turns guesses into facts. It proves that the claimed benefits are actually achievable.
A good POC takes your highest-value use case and tests it in a real environment. It is not a vendor demo with perfect data.
You must use your actual data, your actual complexity, and your actual performance requirements. You measure the results objectively.
How much faster did reports run? Could you actually integrate that external data source?
Did the predictive model work as expected? Successful POCs dramatically reduce your risk factor.
That 50% probability on uncertain benefits jumps to 80% or 90% after a test.
When you recalculate your NPV with lower risk factors, the business case gets much stronger.
Your CFO sees proof instead of promises. The key is keeping POCs focused and time-bound.
Pick one or two critical use cases rather than testing everything. Run the test for 4 to 8 weeks.
Measure specific outcomes against specific targets. You can run POCs in various ways, such as cloud-based environments, partner labs, or your own sandbox. Please note - they are rarely free anymore, so expected to invest substantial dollars in a good POC.
The cloud option has become increasingly popular. It offers lower upfront investment, faster setup, and makes it easier to walk away if results disappoint.
Define success metrics before you start the project. Determine what performance improvement makes this effort worthwhile.
If you are testing BW on HANA, measure query response times before and after. Document the exact difference in seconds or minutes.
If you are testing predictive analytics, measure model accuracy and processing speed. Compare it directly to your current approach.
If you are testing real-time integration of external data, measure how current the data is. Also, record how long it takes to refresh.
Capture everything in a clear results document. Show the baseline, the HANA result, and the percentage improvement.
This documentation becomes part of your final business case. It serves as the evidence that backs up your projections.
You have likely identified 50 different ways HANA could help your business. However, you cannot do them all at once.
A phased roadmap prioritizes what happens and when. It spreads the investment and the benefits over time.
Start with quick wins that have high value and low complexity. These initial victories build momentum and credibility.
Maybe you start with BW on HANA to accelerate reporting. That touches many departments and delivers obvious benefits quickly.
Phase two might add predictive analytics for demand planning. Phase three could implement trade promotion optimization.
Each phase should have clear business objectives tied to specific value drivers. Each phase must also have defined costs and timelines.
This roadmap serves multiple purposes. It makes the project more digestible for executives who might balk at a massive one-time investment.
It lets you spread costs across multiple budget cycles. It allows you to learn from each phase before moving to the next.
It also helps significantly with change management. Your organization can absorb changes in waves rather than all at once.
When you present your roadmap, show how each phase builds on the previous one. Explain how the value accumulates over time.
Show how technical dependencies influence the sequence. You might need certain infrastructure in place before you can deploy specific applications.
The business case approach you use here mirrors best practices from other domains, including marketing technology investments.
Even with a solid HANA ROI business case, you will face questions. Be ready for them.
"Can we not just upgrade our current system instead?" Yes, but upgrades give you the same capabilities, just slightly faster.
HANA gives you new capabilities. You get real-time processing instead of batch processing.
You get predictive analysis instead of descriptive reporting. You get integrated data instead of siloed information.
"What if SAP changes direction?" This is a fair concern given the history of the software industry. But HANA is the foundation of their entire strategy now.
S/4HANA, their next-generation ERP, requires it. Their cloud solutions run on it.
It is not going away anytime soon. Data from SAP user groups consistently shows that early adopters gain significant operational speed advantages.
Another common concern involves staffing. Executives often worry if the current team can manage this new technology.
Address this head-on in your cost section. Include budget for training or external support.
You might also hear concerns about the disruption to the business. This is where your phased roadmap becomes your best defense.
Explain how the phased approach minimizes risk. Show how you protect core operations during the transition.
Finally, be prepared to discuss cloud versus on-premise options. Many executives prefer the operating expense model of the cloud over capital expenses.
Have your numbers ready for both deployment models. Flexibility in your proposal shows you have thought through the financial implications.
Most organizations begin seeing technical benefits immediately after go-live, such as faster reporting. Business process improvements typically materialize within 3 to 6 months as teams adjust to real-time capabilities. Full ROI achievement usually spans 2 to 3 years depending on the project scope.
You can calculate projected ROI based on benchmarks, but the risk factor remains high. A Proof of Concept validates your specific assumptions using your own data. This validation allows you to lower the risk adjustment in your financial model, resulting in a more accurate and defensible calculation.
Change management is often the most underestimated cost. The technology works, but getting people to trust and use real-time data requires training and cultural shifts. Failing to budget for organizational change can delay the realization of your projected benefits.
A strong business case includes both, but revenue growth and agility often yield higher long-term value. Cost savings are finite, while opportunity gains from better decision-making are scalable. Your presentation should balance "keeping the lights on for less" with "growing the business faster."
Building a HANA ROI business case is about more than justifying a software purchase. It is about defining the future operational state of your company.
You are moving from a world of looking backward to a world of acting in the moment. That shift has a quantifiable value.
By engaging process owners, documenting specific value drivers, and building a risk-adjusted financial model, you create a compelling narrative. You prove that this investment pays for itself.
Do not present technology for technology's sake. Present a business solution that happens to run on high-performance technology.
When you connect the technical power of HANA to the bottom-line goals of the CFO, you get approval. More importantly, you set the project up for genuine success.
I developed the SAP ROI Secrets Mastery Quiz to be simple, focused and effective.
It will help you quickly focused on those key activities you need to undertake to maximize your ROI from your SAP investment.
It will take you about 5 minutes and deliver immediate, implementable ROI improvement recommendations.
I've spent over 27 years implementing and optimizing SAP systems.