SAP
What CIOs need to know about the SAP S/4HANA crossroads
SAP S/4HANA is a next-generation ERP system that offers a number of advantages over legacy SAP systems, including improved performance, simplified processes, and new capabilities such as machine learning and artificial intelligence. However, migrating to S/4HANA can be a complex and expensive undertaking. As a result, many organisations have not yet made firm plans for their migration.
SAP will continue supporting the legacy SAP systems until 2027 and will provide extended support at additional cost until 2030. Even then this is dependent on which version you are on and how you’ve updated your systems. So, organisations using SAP and without firm plans have a short window to decide and deliver, be that their S/4HANA migration or something else.
There are a number of reasons why organisations may be hesitant to migrate to S/4HANA. Some organisations are concerned about the cost and complexity of the migration process. Others are not sure whether they are ready for S/4HANA, either in terms of their technology infrastructure or their business processes. Others are frustrated with SAP's approach to S/4HANA or feel that it does not align with their corporate objectives.
For those organisations that do have S/4HANA plans, many are considering a technical migration only. This means that they would simply upgrade their data and applications from their legacy SAP system to S/4HANA, without making any major changes to their business processes. While this may be a more straightforward approach, it misses the opportunity to drive transformation through S/4HANA.
S/4HANA is more than just a new technology platform. It is also an opportunity to rethink and reengineer business processes. By taking a transformational approach to S/4HANA, organisations can achieve significant benefits such as improved efficiency, reduced costs, and increased agility.
Organisations facing a decision about S/4HANA are at a crossroads. They need to make a conscious decision to either migrate to S/4HANA (and make the necessary investments to do so effectively) or to move away from SAP altogether. Waiting is not a viable option, as the risks of increasing costs and falling behind the competition are too high.
Here are some things that organisations can do to make a decision about S/4HANA:
Assess their current state. Organisations need to understand their current SAP environment, including their technology infrastructure, business processes, and data landscape. This will help them to identify the challenges and opportunities associated with a move to S/4HANA.
Define their goals and objectives. Organisations need to define what they want to achieve with S/4HANA. These goals and objectives should align with, or even better, deliver upon their corporate objectives, rather than be different. This strengthens the case for S/4HANA and raises its importance to the organisation. This will help them to determine the scope of their migration and the best approach to take.
Develop a business case. Organisations need to develop a business case for S/4HANA that quantifies the potential benefits and costs. This will help them to make a financial decision about whether to migrate. When developing the business case, the ambitious and transformational version should be included to counter the idea that S/4HANA is a technical migration task only. For some organisations, the technical migration may be best, but the transformation opportunities are significant and to be explored.
Create a migration plan. Once an organization has made the decision to migrate to S/4HANA, they need to develop a detailed migration plan. This plan should include a timeline, budget, and resources required for the migration. It is a significant undertaking so that alignment to corporate objectives is key to ensuring governance, sponsorship, priority, and resource is secured and endures.
Execute the migration plan. Once the migration plan is in place, the organization can begin executing it. This process should be carefully managed to minimize disruption to business operations. Change management will be an essential element for benefits and value to be realised.
As well as the recommended actions above, which assume the decision is to proceed with a S/4HANA plan, organisations must be alive to the consequences should they decide not to migrate to S/4HANA. This will still need a business case, migration plan and delivery for what is being proposed instead of S/4HANA. Be that a change of core systems, a move to a different support model or a re-think of the technology landscape. A non-decision isn’t an option with serious deadlines looming.
Organisations that take a thoughtful and strategic approach to S/4HANA migration can achieve significant benefits. S/4HANA can help organisations to improve their efficiency, reduce costs, and increase agility. It can also help them to innovate new products and services and to stay ahead of the competition.
Organisations cannot afford to delay the decisions about whether and how they should move to S/4HANA.
If I can assist as you work through these decisions, drop me a line, it’ll be great to talk with you about your plans.