SAP introduced its next-generation ERP system, SAP S/4HANA, in February of 2015 and has since made a push for all current SAP ECC 6.0 users to migrate to it by 2025. The effort, time, and cost associated with a migration, however, have become roadblocks for some.
By Q3 of last year, SAP reported that more than 9,000 customers had purchased the system, but only 2,100 had completed their migration. It’s still unclear how many more will make the move before SAP stops supporting its ECC 6.0 systems, but the momentum is growing.
2025 is fast approaching. So, what’s next?
SAP S/4HANA in a Nutshell
SAP S/4HANA is SAP’s most substantial update to its ERP platform in more than 20 years. It runs on an in-memory database, SAP HANA, that makes it possible to process large volumes of operational and transactional data in real time.
Organizations that have made the move can benefit from embedded analytics and other intelligent technologies capable of detecting patterns, predicting outcomes, and suggesting actions to drive better business decisions.
It can be deployed on-premise, in the cloud, or through a hybrid of both. Organizations have the option to take on a new implementation (also known as greenfield), a system conversion (known as a lift-and-shift), or a landscape transformation. There are pros and cons to each, and the right approach depends on the state of your data, your current business processes, your budget, and future business needs. It’s not necessarily easy to determine the right answer, but the starting point is always the business case to decide whether or how to take this on.
Building the Business Case
Why do you need to make the move? If your current ERP system is providing the functions you need and it’s meeting your business objectives, what’s the logic behind migrating to a new platform?
According to a survey conducted by ASUG research in 2018, 41 percent of respondents identified making a business case to management as the top impediment to an SAP S/4HANA move. Cost and a lack of understanding are also key concerns, but a business case that answers these concerns would likely be most effective at persuading management.
There are benefits you can expect from SAP S/4HANA, but the key is identifying how they fit with your organization’s goals.
ASUG wants to hear your SAP S/4HANA story. Contact us at asugnews@asug.com to let us know about your experiences evaluating or implementing the system.
Know the Benefits and the Challenges
Carl Dubler, senior director of product marketing at SAP recently held a webcast on building a business case and identified three key adoption drivers. First, you can reduce your total cost of ownership (TCO). Second, you can improve and optimize your processes. And third, you have the ability to undergo a digital transformation. What this really means is that your systems will be better prepared to accommodate the next wave of technology changes. “You’ll start with TCO, then you’ll begin to realize the process improvements along the way, and then you’ll be ready for the big business transformations that you know are going to come at some point in the future,” he said.
Respondents of the ASUG research study agreed and said optimizing existing business processes and staying up-to-date were two of the biggest benefits of moving to SAP S/4HANA. More than half, however, pointed to budget constraints, losing customizations, and potential downtime as challenges.
From Making the Case to Making the Move
Larger organizations have a greater level of concern about moving to SAP S/4HANA, which could be due to their large data sets and the anticipated complexity of the transition. On the other hand, some big businesses, including Hunter Douglas, are actually using SAP S/4HANA to help reduce complexity. At the same time, smaller businesses such as Valley National Bank in Tulsa, Oklahoma have found that making the move was a relatively easy decision that brought immediate benefits to their customers and gave them a head start on the competition.
Despite the size of your business, your current landscape, the state of your data, and the amount of customization you currently have are all important considerations before making a move. If you want to avoid some of the biggest challenges, you’ll need to take a close look into how all three of these factors play a role at your organization.
ASUG News recently sat down with the authors of Migrating to SAP S/4HANA and asked them what businesses need to know and how they should prepare for an implementation. They shared details on each of the three different migration scenarios, as well as their advantages and disadvantages. They also discussed the differences between on-prem, cloud, hybrid deployments.
Bringing SAP S/4HANA Home
Although businesses are starting to better understand benefits of moving to SAP S/4HANA, most also recognize that the cost of implementation and having a skilled staff to manage it are some of the issues they’ll have to be ready for after they launch.
Not all of those waiting to begin or complete the process are doing so because of challenges mentioned here. Some are waiting for the right time, whether that means upgrading equipment or waiting to plan the timing so that the changes don’t interfere with the business.
Whatever the reason, SAP says it will stop supporting the framework for SAP ECC 6.0 in 2025, which means companies looking to make the move should start looking into what they need to do to get prepared.
Attend an ASUG Express Day of SAP S/4HANA Essentials in your area to learn more about SAP S/4HANA and what tools and services can help accelerate your project.