SAP S/4HANA Services

How to Prioritize Your SAP ECC to S/4HANA Migration

SAP’s S/4HANA platform provides both functional and technical advantages over the prior ECC version. However, migrating to any new ERP platform requires significant effort and expense, plus carries varying degrees of business risk. The good news is, as of now, there is not an absolute drop-dead date when support for ECC will end. So, you have time and can set your own roadmap pace for your migration to S/4.

• Whispered Aside: Even if there were an upcoming end-of-support date, there are ways to remain on a prior SAP version out of support. While this is not a good path for the vast majority of companies, I have seen business situations where it made sense.

From ECC to S/4HANA: Should I Stay, or Should I Go?

This will qualify as a Captain Obvious statement, but it really helps to have some truly compelling business reasons to pursue the migration. Technical reasons alone are rarely interesting enough to executive leadership to gain buy-in.

At its most basic level it comes down to whether your business is dynamic and changing, or more mature and steadier.

• IF your business model is robust and sustainable (i.e. not easy to disrupt by competitors)
• AND IF your ECC system is well-tailored to your current business model (i.e. no major stakeholder feels there are gaps)
• AND IF you have a successful track record of incrementally enhancing the ECC system to improve the business (i.e. business processes and the system do evolve when gaps arise)
• THEN it will be harder to make a case to migrate. Staying on ECC for a decade could easily make sense.

I suspect many companies will not automatically say “yes” to all the above. There are business threats around a lot of corners and keeping the business processes and system from going stale requires commitment.

So, the more detailed question becomes: “In what ways is my business dynamic and does S/4HANA directly help in those areas?”

A growing company is not in and of itself dynamic. Organic growth of existing product lines and growth through acquisition to roll-up similar businesses can benefit from the stability of a well-designed ECC platform. Essentially, a stable ERP platform is a competitive advantage that allows growth to be absorbed into proven, successful business processes.

To get at the kind of dynamism that is more impactful, questions to ask are:

• Is the pace of my business accelerating? Do customers expect faster results? Do I need to make more frequent supply chain and operational decisions to optimize margins and working capital?
   
  • The promise of S/4HANA is to improve user experience across devices using Fiori, real-time analytics, data integration (Internet of Things), and better support for robotics process automation (iRPA). All of these support accelerating business processes and decision-making. While these are doable with ECC and add-on solutions, it is easier on S/4HANA.
  • This type of business case is also compelling if your company has a complex ecosystem of bolt-ons to ECC and S/4HANA would allow for eliminating systems and interfaces.
• Will my company be adding business units, product lines, or sales/distribution channels that require different capabilities than my current ECC platform?
   
  • If you are staring down the barrel of adding new business processes, then it may make sense to build on top of S/4HANA capabilities for the same reasons described above.

Unfortunately, for some, the response is, “Uh, no, my dynamic is we have a mess to clean up.”

The above discussion will make what I would call a “positive” business case for S/4HANA. Moving from a good ECC situation to a better S/4HANA situation. There are also “negative” business cases where the starting point is to remediate a clearly bad situation.

• Is my business model under threat from competitors and requires fundamental restructuring?
   
  • This is a higher risk / higher reward scenario where new owners/the Board/executive management are setting aggressive goals to remake the company. This might be after a Chapter 11 bankruptcy where the old operating model is being shed.
  • If a company knows it must transform itself, then it can frame its roadmap as a fresh implementation that replaces ECC with a new S/4HANA system as the catalyst for creating a new operating model.
• Do I have multiple ECC systems and other ERPs which serve disparate purposes?
   
  • This is another higher reward scenario but can be managed so it does not have to be higher risk.
  • The obvious business case will be to consolidate to fewer ERP systems. The good news is S/4HANA can be implemented and proven for one part of the business first then other parts of the business migrated to the new platform. Direct IT cost savings should be delivered along the way to help fund the effort. Business benefits would also accrue along the way. The trade-off is that business benefits are realized slower to avoid taking on too large of a project that increases risk.

S/4HANA is right for me! How would I prioritize my roadmap?

More important to success than money, ERP implementations require management engagement and significant resource commitments from both business and IT groups. Taking control of when you choose to do the migration will allow financial, technical, and business readiness to undertake the effort.

• Is your business cyclical over timeframes of two years or more?
   
  • Planning ahead for a migration during the down cycle can be advantageous so the new version is available to be exploited during the upcycle. This may even involve avoiding IT spend during a peak to “save up” for the migration to be done during the downcycle when the business typically seeks to avoid spending.
• If you are running ECC internally, where are you in your hardware lifecycle?
   
  • It is not necessary to view an upcoming hardware lifecycle as a constraint that forces you to pick an earlier date. Instead, alternate hardware financing models can be chosen to bridge any gap between an earlier hardware lifecycle on ECC and a migration to an alternate infrastructure or cloud model on S/4HANA. The goal is to manage these factors to have the financial and technical resources ready at the desired time.
• What is the degree of ECC customization for key processes?
   
  • As with any ERP, avoiding customizations and using standard functionality is more cost effective over time. If your ECC instance is heavily customized then your roadmap can be front-loaded with a detailed assessment to re-validate what the true business requirement was that prompted the customization and what business requirement the company would define in a new operating model. This can be done before any S/4HANA project even begins to gain executive commitment on real, practical goals rather than relying on a Project Guiding Principle that can be worked around/ignored to re-implement the same customization that existed before.
• How involved will business leaders and subject matter experts need to be?
   
  • One of the first things I look for when assessing whether an ERP project will be successful is to see whether business functions are assigning some of their best people to work on the project. Defining key roles and subject matter expertise that will be needed for the project will allow for freeing up the right SMEs and having backfills ready. If there are other business initiatives requiring key people, then the S/4HANA migration can be scheduled for later when the right expertise will be available.

Wrapping Up...

The above ideas are a start that hopefully prompts more detailed discussions unique to your company. An overarching but unstated theme is that “Success Costs Less”. Spending effort up-front so you can set the right pace and be ready when you start will increase your odds of success. And, it will lower your cost.

If you feel your company has unique challenges in assessing your roadmap options, Vaco has a range of S/4HANA service offerings, including no-charge strategy workshops, to help you take control of your S/4HANA journey.

Interested in learning more about how Vaco can help you? Reach out to Casey Hall today at caseyhall@vaco.com.