Take 4: Essen­tial Con­sid­er­a­tions Before Start­ing Any SAP S/4HANA Cloud Migration
Kimberly Reid and Matt Montgomery Sep 9, 2022
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The 2022 SAP S/4HANA Cloud release is a next-gen­er­a­tion tech­nol­o­gy that gives orga­ni­za­tions the abil­i­ty to evolve into intel­li­gent orga­ni­za­tions. But some busi­ness­es hes­i­tate to tran­si­tion from their lega­cy enter­prise resource plan­ning (ERP) plat­forms. While all aspects of any major tran­si­tion should always be con­sid­ered, it’s not uncom­mon for orga­ni­za­tions to decide against upgrad­ing based on eval­u­a­tions that miss the mark — and cause these busi­ness­es to miss out on the oppor­tu­ni­ties that come with upgrading. 

30% of busi­ness­es that invest in an ERP do so with the pri­ma­ry goal of sup­port­ing com­pa­ny growth — mak­ing it the top rea­son for imple­men­ta­tion.1

A suc­cess­ful eval­u­a­tion looks past tra­di­tion­al busi­ness deci­sion dri­vers, like total cost of own­er­ship (TCO), to also con­sid­er the capac­i­ty to sup­port busi­ness agili­ty, cre­ate val­ue faster, and ulti­mate­ly build a sus­tain­able com­pet­i­tive advan­tage. Busi­ness­es that don’t ful­ly under­stand these ben­e­fits miss out on new tech­nolo­gies their col­lab­o­ra­tors and com­peti­tors are harnessing. 

62.7% of orga­ni­za­tions now choose cloud-based ERP sys­tems over on- premise soft­ware.2

Hitachi Van­tara helps orga­ni­za­tions think out­side the box to achieve a true busi­ness trans­for­ma­tion that puts cus­tomers at the fore­front and allows enter­pris­es become futur­is­tic orga­ni­za­tions with SAP S/4HANA.

Enter­pris­es want to upgrade but fear commitment 

Most enter­pris­es would like to use a data-dri­ven frame­work to make crit­i­cal deci­sions. How­ev­er, many only use ana­lyt­ics and intel­li­gence spo­rad­i­cal­ly, leav­ing room for poten­tial oper­a­tional inef­fi­cien­cies like inven­to­ry over­pro­duc­tion or cus­tomer deliv­ery mismanagement. 

SAP S/4HANA offers a sin­gle gate­way to all data resources by inte­grat­ing third-par­ty and eCom­merce appli­ca­tions into one sys­tem. This uni­fied plat­form enables real-time data aggre­ga­tion and results in action­able intel­li­gence orga­ni­za­tions can use across all enter­prise func­tions, such as mar­ket­ing, oper­a­tions, and finance. 

Yet, the tech­ni­cal and busi­ness com­plex­i­ties of upgrad­ing to a cloud ERP solu­tion often pre­vent enter­pris­es, espe­cial­ly small and mid-sized com­pa­nies, from migrat­ing to the more exten­si­ble and scal­able solution. 

Com­mon bar­ri­ers to impli­ca­tion include: 

  • New skill sets beyond the com­pa­ny’s exist­ing ones 

  • Changes to orga­ni­za­tion IT strategy 

  • Exten­sive plan­ning and orches­tra­tion to avoid oper­a­tional dis­rup­tions dur­ing data migra­tions and new user onboarding

There are also fears about cloud data secu­ri­ty result­ing from mis­con­fig­ured set­tings and archi­tec­ture, and lin­ger­ing trust issues with SAP after strug­gles with the orig­i­nal imple­men­ta­tion of lega­cy prod­ucts. Gen­er­al secu­ri­ty con­cerns can result in miss­ing that key upgrade oppor­tu­ni­ty. And, mak­ing mat­ters worse, there is pres­sure in know­ing that tech­ni­cal sup­port for the old­er plat­forms will cease in 2027. Unfor­tu­nate­ly, these con­cerns are caus­ing enter­pris­es to miss out on native SAP inte­gra­tions, upgrad­able func­tion­al­i­ty, and valu­able mod­ern-day tools. 

25% of SAP S/4HANA adopters say that user train­ing is the biggest bar­ri­er to plat­form accep­tance.3

Hitachi Van­tara helps small and mid­size busi­ness­es over­come adop­tion hes­i­ta­tion by act­ing as a trust­ed guide through­out the entire­ty of the S/4HANA migra­tion process — from selec­tion and plan­ning through imple­men­ta­tion and beyond. With expe­ri­ence across more than 1,000 trans­for­ma­tion projects – where more than 150 involved cloud upgrade projects – Hitachi Van­tara knows where the pit­falls are — and how to avoid them. 

With our experts in the field and exten­sive, cur­rent SAP tech­nol­o­gy cer­ti­fi­ca­tions and cre­den­tials, Hitachi Van­tara helps bridge the gap between envi­sion­ing the process and what is suc­cess­ful­ly planned, installed, cut over, and then evolved to improve busi­ness results. Hitachi Van­tara enables enter­pris­es to make bet­ter deci­sions, with action-dri­ven intel­li­gence, to act in real-time, and out­per­form competitors. 

Mis­con­cep­tions of busi­ness val­ue result in missed oppor­tu­ni­ties for growth 

There is a dis­con­nect between how enter­pris­es eval­u­ate the SAP S/4HANA Cloud tran­si­tion and the real­i­ty of the full busi­ness val­ue of a com­plete trans­for­ma­tion — lead­ing to an inabil­i­ty to see the big­ger pic­ture. For instance, many firms treat the sys­tem migra­tion as a pure­ly tech­ni­cal upgrade, a rel­a­tive­ly expen­sive process that pre­vents them from being able to jus­ti­fy the total adop­tion cost. 

Addi­tion­al­ly, some fail to grasp the full poten­tial of the tran­si­tion. S/4HANA Cloud isn’t just a finan­cial and ana­lyt­ics solu­tion: its poten­tial appli­ca­tion spans oth­er vital busi­ness areas, such as strate­gic plan­ning, sup­ply chain man­age­ment, mar­ket­ing, and sales. As a result, the return on invest­ment (ROI) appears sig­nif­i­cant­ly low­er because there is no con­sid­er­a­tion for the oth­er depart­men­tal use cases. 

ERPs reduce IT costs by 40%, optimize/​reduce inven­to­ry by 38%, and short­en cycle times by 35% — earn­ing busi­ness­es a sig­nif­i­cant ROI.4

Hitachi Van­tara brings out­side per­spec­tive and skills to an enter­prise while sup­ple­ment­ing cus­tomers’ exist­ing knowl­edge — enabling all busi­ness func­tions to become ful­ly aligned and real­ize the true val­ue of S/4HANA Cloud. With Hitachi Fast­Track to S4/HANA ser­vices, we con­duct deep explo­rations across your envi­ron­ment, sys­tems, and per­for­mance impli­ca­tions to gen­er­ate more finan­cial­ly jus­ti­fi­able rea­sons to make the transition. 

Enter­prise con­sid­er­a­tions for tran­si­tion­ing to SAP S/4HANA Cloud 

Enter­pris­es need to con­tem­plate long-term dri­ving fac­tors when look­ing to tran­si­tion to S/4HANA Cloud. Work­ing with imple­men­ta­tion part­ners who can address their unique chal­lenges with rel­e­vant exper­tise can help to eval­u­ate all avail­able tran­si­tion options. In addi­tion, the most ben­e­fi­cial part­ners will lever­age pre-con­fig­ured solu­tions to accel­er­ate the adop­tion process and pro­vide pur­chas­ing insights that look beyond the solu­tion price. Here are key con­sid­er­a­tions we rec­om­mend to get started: 

1. Estab­lish key migra­tion benefits 

Every­thing about the major SAP tran­si­tion is about the long game. Enter­pris­es must real­ize that obtain­ing a com­pet­i­tive advan­tage today starts with data-dri­ven deci­sions and har­ness­ing advanced solu­tions, includ­ing arti­fi­cial intel­li­gence (AI), machine learn­ing (ML), Inter­net of Things (IoT) tech­nol­o­gy, and embed­ded report­ing to pro­vide bet­ter analytics. 

For instance, man­u­fac­tur­ers using SAP’s embed­ded ana­lyt­ics can lever­age decades’ worth of data to rapid­ly uncov­er pre­vi­ous­ly hid­den trends and pat­terns essen­tial for improv­ing pro­duc­tion plan­ning, sched­ul­ing, and sup­ply man­age­ment — all with­out push­ing infor­ma­tion out to exter­nal busi­ness intel­li­gence (BI) plat­forms. Now, they can carve out a siz­able com­pet­i­tive advan­tage by deploy­ing insights that help to pro­duce opti­mal prod­uct quan­ti­ties deliv­ered to the right loca­tion at the right time — avoid­ing cost­ly stock­outs or lan­guish­ing inven­to­ries that plague their competition. 

2. Ana­lyze costs vs. benefits 

Small and mid­size enter­pris­es con­sid­er­ing tran­si­tion­ing should weigh quan­ti­ta­tive and qual­i­ta­tive ram­i­fi­ca­tions that may arise, includ­ing the unpre­dictable. Orga­ni­za­tions must con­sid­er all the sce­nar­ios, mit­i­ga­tions, options. 

ROI assess­ments with real­is­tic timeta­bles are ide­al for objec­tive­ly jus­ti­fy­ing the deci­sion. The holis­tic eval­u­a­tion should also con­sid­er oth­er essen­tial ele­ments of a migra­tion project, such as oper­a­tional down­time, top-down man­age­ment sup­port, and poten­tial user engage­ment with the plat­form, etc. 

65% of orga­ni­za­tions go over bud­get because their ERP sys­tems need mod­i­fi­ca­tions for bet­ter usabil­i­ty. This can be avoid­ed by select­ing the right soft­ware provider and imple­men­ta­tion experts who under­stand an enterprise’s inter­face and sys­tem func­tion­al­i­ty requirements.5

3. Gain a 360-degree perspective 

Orga­ni­za­tions must con­sid­er their entire cur­rent infra­struc­ture and tech­nol­o­gy envi­ron­ment before upgrad­ing to SAP S/4HANA Cloud. Because it’s a shift from an on- premis­es solu­tion, enter­pris­es have to make crit­i­cal deci­sions on whether to retire the on-prem envi­ron­ment entire­ly or sig­nif­i­cant­ly reduce its foot­print while method­i­cal­ly migrat­ing into the cloud over time. 

SAP cloud tran­si­tion done right – Prac­ti­cal steps 

Com­mit­ting to and adopt­ing SAP S/4HANA Cloud isn’t sim­ple or easy. It’s a total busi­ness trans­for­ma­tion rather than just one sim­ple IT exer­cise. To derive the most busi­ness val­ue from the tran­si­tion, enter­pris­es must com­mit to a path of dis­cov­ery, plan­ning, and strate­gic imple­men­ta­tion steps. 

1) Define the start­ing point 

Through a com­pre­hen­sive overview of an orga­ni­za­tion’s IT and busi­ness land­scape, it is crit­i­cal to under­stand whether the cur­rent ERP solu­tion is serv­ing nec­es­sary intel­li­gence require­ments, cus­tomers’ needs, and whether a change is nec­es­sary. It’ll also help deci­pher pref­er­ences for a cloud, on-premise, or hybrid solu­tion, which will, in turn, will deter­mine where in their com­plex land­scape to start and when to begin the migra­tion process. 

2) Employ the lat­est technologies 

Though employ­ing next-gen­er­a­tion tech­nol­o­gy such as IoT, AI, and ML may require a sig­nif­i­cant IT strat­e­gy adjust­ment, it’s a busi­ness imper­a­tive that unlocks incred­i­ble capa­bil­i­ties for col­lect­ing infor­ma­tion, gain­ing insights, and mak­ing data-informed deci­sions. SAP S/4HANA is the dig­i­tal core to becom­ing an intel­li­gent enter­prise after enabling all its advanced tools and modules. 

For instance, auto­mo­tive busi­ness­es invest­ed in SAP S/4HANA can use data col­lect­ed from IoT devices to help avoid work­place injuries, reduce work­ers’ com­pen­sa­tion claims, and improve team pro­duc­tiv­i­ty and safe­ty. By track­ing data on human move­ment for how work­ers should lift objects, the sys­tem will alert man­age­ment for reme­di­a­tion after improp­er phys­i­cal motions — reduc­ing the risk of low­er pro­duc­tiv­i­ty caused by work­er displacement. 

3. Deter­mine data require­ments for a com­pet­i­tive advantage 

Iden­ti­fy­ing the data types need­ed to build a sus­tain­able com­pet­i­tive advan­tage will dic­tate the right time to tran­si­tion into an on-premise or cloud S/4HANA plat­form. Using an ana­lyt­i­cal focus, Hitachi works with orga­ni­za­tions to select the SAP solu­tions to fit their unique busi­ness needs based on indus­try-spe­cif­ic data. 

4. Part­ner with the experts 

Top-per­form­ing orga­ni­za­tions know bet­ter than to take every­thing on them­selves. This is par­tic­u­lar­ly true giv­en that cloud tran­si­tions require new skills and tal­ent beyond what is inter­nal­ly avail­able and in short sup­ply indus­try-wide. Instead, indus­try-lead­ing enter­pris­es work with expert migra­tion part­ners that under­stand the future of ERP tech­nol­o­gy and the mechan­ics and uses of inno­v­a­tive IoT, AI, and ML solu­tions. They have the exper­tise and sys­tems to guide any busi­ness through a suc­cess­ful S/4HANA transition. 

87% of com­pa­nies seek guid­ance for ERP imple­men­ta­tion.6

SAP S/4HANA Cloud is the cat­a­lyst for a com­pet­i­tive advantage 

Adopt­ing SAP S/4HANA Cloud with guid­ance from expert part­ners like Hitachi Van­tara unleash­es a mul­ti­tude of busi­ness-defin­ing capa­bil­i­ties for small and mid­size enter­pris­es. It allows orga­ni­za­tions to grow their intel­li­gence uti­liz­ing an arse­nal of IoT, AI, and ML for data col­lec­tion and advanced ana­lyt­ics tai­lored for each unique busi­ness case. 

With SAP solu­tions from Hitachi Van­tara, firms of any size, in every indus­try and loca­tion can: 

  • Cre­ate flex­i­bil­i­ty in their val­ue chains when devel­op­ing prod­ucts and services 

  • Increase busi­ness agili­ty to make faster yet insight­ful decisions 

  • Improve busi­ness process­es that deliv­er supe­ri­or cus­tomer expe­ri­ences, inspire cus­tomer loy­al­ty, and dri­ve revenue

Enabling an intel­li­gent enterprise 

Enter­pris­es need to widen their per­spec­tive on SAP S/4HANA Cloud to under­stand that it’s more than just a rou­tine soft­ware upgrade: it’s a chance to sep­a­rate them­selves from oth­er indus­try play­ers to become change-resilient, improve oper­a­tional effi­cien­cy, and max­i­mize the cus­tomers’ experience. 

The key to this trans­for­ma­tion is align­ing with a knowl­edge­able imple­men­ta­tion part­ner who will sup­ple­ment and sup­port their cus­tomers’ exist­ing skill sets, objec­tives, and resources. As the indus­try leader in help­ing enter­pris­es with dig­i­tal trans­for­ma­tion projects, Hitachi Van­tara can help orga­ni­za­tions imple­ment their SAP S/4HANA tran­si­tion to build capa­bil­i­ties for futur­is­tic enterprises. 

Kim­ber­ley Reid is Vice Pres­i­dent, Dig­i­tal Enter­prise — SAP Solu­tions, at Hitachi Van­tara; Matt Mont­gomery is Direc­tor, U.S. SAP Prac­tice, at Hitachi Vantara. 

For more infor­ma­tion, vis­it Hitachi Van­tara and learn more about all of their solu­tions for dig­i­tal modernization. 

Hitachi Van­tara, a whol­ly owned sub­sidiary of Hitachi Ltd., deliv­ers the intel­li­gent data plat­forms, infra­struc­ture sys­tems, and dig­i­tal exper­tise that sup­ports more than 80% of the for­tune 100. To learn how Hitachi Van­tara turns busi­ness­es from data-rich to data- dri­ven through agile dig­i­tal process­es, prod­ucts, and expe­ri­ences, vis­it hitachivan​tara​.com

ASUG is the world’s largest SAP user group. Orig­i­nal­ly found­ed by a group of vision­ary SAP cus­tomers in 1991, its mis­sion is to help peo­ple and orga­ni­za­tions get the most val­ue from their invest­ment in SAP tech­nol­o­gy. ASUG cur­rent­ly serves thou­sands of busi­ness­es via com­pa­ny­wide mem­ber­ships, con­nect­ing more than 130,000 pro­fes­sion­als with net­work­ing and edu­ca­tion­al resources to help them mas­ter new chal­lenges. Through in-per­son and vir­tu­al events, on-demand dig­i­tal resources, and ongo­ing advo­ca­cy for its mem­ber­ship, ASUG helps SAP cus­tomers make more possible.

1What 1,384 ERP projects tell us about select­ing ERP. Soft​warepath​.com. Jan­u­ary 2022. 

2 Roul, Rajen­dra. 60 Must-Know ERP Sta­tis­tics Before Mak­ing a Buy­ing Deci­sion. G2​.com. Jan­u­ary 2021 

3 Scott, Geoff. ASUG Pulse of the SAP Cus­tomer 2021 Results. ASUG​.com. Jan­u­ary 2021.

4 Ben­nett, Steve. Project-Based ERP Sta­tis­tics 2022. Webi​na​rcare​.com. May 2022. 

5 45 ERP Sta­tis­tics for the 2021 Mar­ket. TrustRa​dius​.com. July 2021. 

6 Roul, Rajen­dra. 60 Must-Know ERP Sta­tis­tics Before Mak­ing a Buy­ing Deci­sion. G2​.com. Jan­u­ary 2021