When it comes to SAP S/4HANA migrations, there’s good news to share with the SAP community, tempered by a cautionary caveat.
Companies that managed to work through the initial cycles of implementation are, in fact, reaping the rewards of improved integration, better analytics, and elevated levels of performance. Like most worthwhile ventures, however, transformation often takes longer and requires more resources than initially budgeted, according to ASUG SAP S/4HANA research conducted in March 2023.
The SAP S/4HANA migration journey has become a pivotal undertaking for organizations seeking to modernize their ERP systems. With the promise of enhanced performance, streamlined processes, and improved innovation capabilities, SAP S/4HANA presents a valuable opportunity to thrust business forward. A successful migration, however, is contingent on a deep understanding of the benefits SAP S/4HANA offers, the associated risks and costs, and the support and planning required.
The Current State of SAP S/4HANA Migrations
According to this year’s survey, SAP customers are at various stages in their migrations to SAP S/4HANA, reflecting a dynamic landscape. A full third (33%) of organizations have completed their migrations, while another 10% are actively in the process of moving. Another 5% plan to begin migrating within six months, and 46% state that their transitions will occur after seven months.
Breaking down the data further, we find that half of organizations (50%) plan for swift migrations in which most processes are moved into the new system. Slightly more than one third (35%) said they plan to undergo gradual transitions, moving a few processes at a time onto SAP S/4HANA.
The Rewards of SAP S/4HANA Migrations
Our findings confirm that the decision to migrate to SAP S/4HANA brings myriad benefits that resonate with organizations seeking a competitive edge. Enhanced performance paves the way for innovation and automation to take root. For instance:
● Improved Performance. One of the most tangible advantages of SAP S/4HANA migration is the substantial improvement in system performance. According to ASUG research, 55% of organizations report significant enhancements post-migration. This boost in performance not only accelerates day-to-day operations but empowers organizations to handle larger workloads efficiently.
● Faster Access to Analytics. Access to real-time analytics is a game changer. The data underscores that SAP S/4HANA provides 46% of organizations with faster access to critical analytics, facilitating data-driven decision-making. With timely insights, businesses can respond swiftly to changing market conditions and customer demands.
● Optimization of Business Processes. For 52% of organizations, one fundamental outcome of migration is optimization of existing business processes. Leveraging the advanced capabilities of SAP S/4HANA, organizations can streamline workflows, reduce complexity, and enhance overall efficiency. Optimization reduces IT staff support, reallocating resources to more strategic initiatives.
● Innovation Enablement. SAP S/4HANA paves the way for innovation for 41% of SAP customers. Businesses report being able to adapt more readily to evolving market conditions and harness cutting-edge technologies like artificial intelligence (AI) and machine learning (ML). Moreover, the platform supports continuous improvement through regular updates and enhancements, ensuring that organizations remain at the forefront of technological advancements. Organizations also leverage automation for data (37%), testing (37%), and automation of SAP operations (25%), among a host of other automation benefits.
Navigating Risks and Costs of SAP S/4HANA Migrations
While the benefits of SAP S/4HANA migrations are compelling, these journeys are not without challenges, risks, and cost. Gaps in planning and migration support exacerbate these issues.
● Migration Timelines and Downtime. There’s no quick path to an SAP S/4HANA future. Survey respondents indicate the average migration takes between 1.7 and 1.8 years, illustrating the considerable time commitment that must be budgeted for the projects’ preparation and planning. During transitions, organizations experience some degree of downtime, ranging from less than one month to six months.
● Unforeseen Expenses. Approximately one in three respondents (32%) experienced unanticipated expenses during their migrations. According to respondents, extra costs often come as the result of consulting fees (53%), additional staff (48%), and integration-related costs (40%). The shift from on-prem to cloud environments can also introduce unexpected expenditures such as training, upskilling, and new cloud-related licensing fees.
● Top Migration Risks
ASUG respondents reported that too many customizations within old instances is the number one risk factor that organizations experience while migrating. SAP customers also report complications from a lack of clear process documentation (45%), the amount of time required to complete projects (45%), and support needed while diverting teams from current primary responsibilities (45%).
Key Migration Success Factors
As the next generation of SAP users implements technology modernization and business transformation strategies by adopting SAP S/4HANA, here are lessons learned from those who pioneered the migration frontier.
● Plan for Comprehensive Support. There’s no underestimating the importance of planning and resourcing the robust support needed to ensure successful SAP S/4HANA migrations. ASUG research shows that organizations have encountered challenges at various stages of their migration journeys because of ineffective planning and inadequate support. Survey responses suggest that permanent staff are relied on most to handle the heavy lifting in migration efforts. When external resources are needed, they’re for business case development, implementation planning, implementation, and rollout.
● Leverage SAP Resources. 51% of organizations are using SAP for training, materials, workshops, or solutions for upskilling their internal staff for migrations. Given the substantial reliance on internal teams, organizations are also using other training methods (35%). Additionally, SAP customers are relying on Sis, consultants, and partners for knowledge transfer (20%). A few organizations (15%) note they are learning on-the-job, or their organization did not have any upskilling initiatives in place.
The Importance of Planning
While ASUG research shows that organizations need ample support throughout their modernization journeys, that support is essential in the early stages of SAP S/4HANA migrations. To achieve success, organizations should work with the right implementation partners, involve all levels of the business from the outset, and implement change management practices early in the migration process.
SAP S/4HANA migrations represent a transformative journey for organizations. Understanding the current state of migrations, the potential benefits, risks and costs, as well as the significance of robust planning and support, is instrumental in achieving a seamless transition. As organizations across diverse industries continue to embrace this ERP revolution, the SAP S/4HANA migration journey promises to reshape the way they operate and innovate, positioning them for success in a rapidly evolving business landscape.
ASUG surveyed 193 of its members, who are North American SAP customers, in March of 2023.