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A new decade brings a new ERP: Making the migration case for SAP S/4HANA

(Image credit: Image source: Shutterstock/violetkaipa)

By 2025, SAP is discontinuing support for its SAP ERP Central Component (ECC) solutions. With just five years to reach full migration, there is no lack of discussion about the imminent SAP S/4HANA.

With SAP’s next-generation ERP, companies can expect to see real-time data access that will help significantly cut the reaction time for market and business changes, simplified business functions, data structure, and much more. But even with clear benefits across differing levels of the organisation, a migration can seem daunting. Moreover, IT directors are still struggling with buy-in from their teams, which becomes an even bigger challenge when trying to convince the C-Suite. 

When it comes to SAP S/4HANA, one of the biggest migration hurdles is making the initial business case. This guide will help IT teams gain organisational buy-in for SAP S/4HANA, and begin the journey to SAP’s next-generation ERP faster.

What to know before you go

There are a few established methods for moving to SAP S/4HANA. By choosing one, businesses are better positioned to identify the pain points and hurdles they will inevitably overcome, as well as key considerations their transition to SAP S/4HANA.

  • Greenfield approach: This method requires a completely new implementation of SAP S/4HANA, essentially starting from scratch. The Greenfield allows organisations to predefine best practices while improving Time-to-Value, lowering TCO and facilitating faster adoption of innovation. And while this can be a lengthy project, especially on the change management side, it presents an opportunity to redefine and simplify business processes, and take full advantage of S/4HANA capabilities. However, complete re-implementation of course brings radical change and a deep re-engineering of processes across the company. Since the migration to S/4HANA ultimately touches every business unit, it’s understandable that organisations would opt for a less disruptive approach than greenfield.
  • Brownfield approach: For SAP ECC customers who want to retain investments in their current system, there’s the brownfield approach for migrating to SAP S/4HANA. Such organisations favour this approach since it avoids a complete upheaval to existing business processes, and it’s a calculated process that allows internal change managers to re-evaluate and customise existing processes without starting from scratch. However, it also means that on their journey to SAP S/4HANA, some of the simplification of existing processes may be delayed until after the migration, and it may take longer before they experience some of the new innovations offered by SAP S/4HANA. Because of this, there is a chance that they get left behind.

Prioritising the backbone technology

As organisations grow, the next step is usually to expand operations geographically. But as they launch new offices and scale operations, the quality of their technical infrastructure plays a vital role in supporting these operations. And because of this increased role for IT, many organisations are looking for an ERP system that can be the backbone for operations across entire regions or countries. With this in mind, businesses must start building a viable business case far in anticipation of their move to SAP S/4HANA. By delaying the inevitable, they risk paying the cost of indecision, technical debt, market share loss to competition and eventually, a rushed, insufficiently resourced migration project.

With a focus toward innovation, here are a few pointers that every IT director should keep in mind as they create the business case for the move to SAP S/4HANA:

  • Determine the infrastructure – SAP offers a few different options for deployment, primarily cloud and on-premises. To determine which option is best for their business, organisations should consider licensing models, infrastructure needs, maintenance, customisation needs and ultimately, cost. On-premises will provide the full spectrum and functionality of SAP S/4HANA, especially if compliance with industry-specific requirements and flexibility to customise the system are top concerns. Those looking for a more scalable ERP solution should consider cloud, which allows easier expansion as the organisation grows. But there is one more option gaining momentum among SAP customers – called “lift and shift”. This entails bringing the compute infrastructure to the cloud, but implementing the SAP solution in an on-premises fashion. This approach is becoming more popular to accommodate the global trend of IT organisations moving all their compute resources to the cloud.
  • Communicate Financial Stakes – Migrating to SAP S/4HANA is more than just following the latest hype in technology, since it offers truly competitive advantages with its simplified architecture, real-time analysis and performance capabilities. SAP S/4HANA will play a vital role in helping businesses achieve ROI faster, and the expected return far outweighs the initial investment. Thus, by outlining any and all potential revenue loss from not migrating, it can help build the business case and secure buy-in across the organisation.
  • Outline the Scope – In order to properly plan a project and estimate a timeframe and budget, organisations need to have a clear breakdown of what solutions should be developed, which processes should be standardised, and which processes can be tailored to local needs. If a specific customisation is needed (e.g. a certain form should be designed to fulfil local tax regulations), make sure that this additional need is included as part of the project scope and addressed early.
  • Promote a Diverse Team – Choosing the right people for the team is essential for achieving your project’s objectives. An SAP rollout project requires a diverse team of people—from those who have deep skills and an understanding of the whole process across all business units to those who can collaborate with different stakeholders like key users and developers.

SAP S/4HANA: All cleared for take-off

While there is still significant hesitation about migrating to SAP’s newest ERP, the move to S/4HANA is inevitable for SAP customers. The migration process itself involves numerous challenges, but fortunately the likelihood of success becomes much higher once organisations can present a strong business case in the first instance – highlighting the strengths of SAP S/4HANA and the competitive capabilities it will bring to departments across the business, now and into the future. As companies determine their global expansion plans, they must consider the value having the technical infrastructure to support that growth.

And if you’re still struggling to make the business case, know that there are best-in-class, automated software and easy-to-integrate tools designed to facilitate precise scoping for migration projects. This technology can, for example, provide a complete estimation of the effort and activities involved in an SAP S/4HANA migration, even broken down into various application areas. With this critical data outlining effort, cost and impact, it can be much easier to build the business case. There are inevitable hurdles on the path to SAP S/4HANA, but with the right technology in your tool belt, many aspects of the migration become clearer, painless, less costly and far more successful.

Oren Peleg, Director of Product Management, SAP, Panaya

Oren serves as Director of Product Management at Panaya, leading the company's SAP portfolio of testing, change management, impact, migration and assessment solutions.