SAP S/4HANA transformation requires planning in advance, knowing key migration approaches, and best practices that will make the transition a smooth process.
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An SAP S/4HANA transformation includes a migration from an old SAP ERP system, such as SAP ECC that runs on-premise, to SAP's simplified 4th-generation SAP S/4HANA business suite, hosted either on-premise, in the cloud, or as a hybrid.
Migrating all your data and operations to S/4HANA with SAP Activate methodology is easier said than done. However, it is a move every SAP ERP customer will have to make. Read further to see how.
📚 Related: ERP Transformation
The migration to a new ERP system is not a typical IT project, but rather a fundamental system change, the implementation is associated with some challenges. Our SAP study with PwC identified the biggest transformation hurdles, such as:
One of the biggest challenges organizations and their SAP system experts face when it comes to SAP S/4HANA transformation is showing the value that can be generated in the long term, therefore, making a strong case for migration is essential.
Before writing a business case, your SAP Architects or enterprise architects should extensively research the problems of your existing SAP ECC system. This will help you evaluate the benefits of SAP S/4HANA for your business and sell the transformation to your management, demonstrating its benefits and ROI.
It’s important to get executive buy-in early as executive leadership can navigate roadblocks and maintain momentum throughout the transformation project. Key drivers enabling the transformation are:
Depending on what S/4HANA deployment option you decide on, there are two options to approach transformation: the Greenfield approach, which is starting from scratch, or upgrading SAP ECC 6.0 in a Brownfield approach, which allows the transformation without re-implementation and without disrupting existing business processes.
Some organizations opt for a hybrid approach, which lets you choose the best parts of Greenfield and Brownfield implementations. This approach is best for large enterprises with a lot of data and complex systems.
A short introduction to all three S/4HANA transformation approaches is explained below and in our detailed Greenfield vs. Brownfield approach comparison.
If a company decides to adopt the Greenfield approach, it abandons its existing ERP system. This has the advantage that a new, uniform system can be implemented that only contains the processes and data that are actually necessary.
If a company completely redefines its enterprise architecture, innovations can also be integrated more easily and a high level of functionality can be achieved. In the study mentioned above, only 14 percent of all respondents chose this approach because it involves more effort.
However, when switching to the SAP S/4HANA cloud version, the Greenfield approach is unavoidable as the systems are completely replaced.
With the Brownfield approach, a system conversion takes place. This means that existing business processes are taken over and optimized if necessary.
Since most companies do not want to completely abandon their custom ERP system, the Brownfield approach is the most popular migration path. According to the study, 44 percent of respondents choose this strategy, while 42 percent opt for a combined Greenfield and Brownfield variant.
To ensure a smooth transition, EA tools are used to divide the conversion into clear phases. The tools also ensure that old processes are rethought so that redundancies and complexity are not adopted. The advantage over the Greenfield approach is that the project time for system conversion is reduced.
Strictly speaking, the hybrid approach and its landscape transformation is not an independent transformation strategy. It is simply a method that large companies with complex system landscapes can use to prepare for transformation. In practice, this means that databases are cleaned up and consolidated to reduce the Footprint before the change.
Companies can also use this approach to combine several ERP systems from different vendors. Such a simplification is also possible during the actual transformation. Whether this makes sense depends on the system landscape and the target system. In many cases, an enterprise architect works with all three approaches to achieve the best possible approach.
Before transitioning to SAP S/4HANA, a company has to make a few important fundamental decisions that influence the overall transformation strategy. For example, switching to SAP S4HANA Cloud System requires a different approach than switching to SAP S/4HANA On-Premise System.
Another crucial question is whether the existing SAP ECC system with its data and settings should simply be converted. In some cases, it may make sense to set up a completely new ERP system that will cause fewer problems in the future. In any case, a transformation requires good preparation and a transparent strategy that is understandable for all business areas and stakeholders.
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Understanding all the hurdles for a smooth transformation can be overwhelming but following the key S/4HANA transformation steps and using an enterprise architecture tool can turn your initiative into a manageable project for the key stakeholders in your company.
To take advantage of the benefits of SAP S/4HANA, organizations have to develop well-prepared transformation plans and pull in enterprise architects to help execute on them while following best practices, such as:
The high complexity of such transformations can cause difficulties in project planning and quickly result in excessively large project budgets.
From the study mentioned above, it is clear that the right enterprise architecture (EA) tools are an important tool for a smooth transformation. More than half of the companies surveyed stated that they use EA tools to assess the current status and plan the target architecture.
Enterprise architecture solutions such as LeanIX EAM integrate easily with SAP Solution Manager and bring the necessary transparency to a complex ERP landscape. This is ultimately seen by the respondents as the greatest transformation challenge.As part of the business capability concept, the LeanIX EAM tool provides:
SAP S/4HANA transformation offers a number of benefits, including speed, cost savings, and innovation. As this is much more than just a technical update, organizations are taking advantage of the opportunity to combine the migration with business process improvement and overall modernization of their solution architectures.
Discover: Strategic goal definition and roadmap planning
Prepare: Project scoping, planning, and team enablement
Explore: Fit-to-standard analysis and process modeling
Realize: Configuring, building, and testing the new environment
Deploy: Setting up a system in production and moving
Run: Driving adoption and continuous improvements
Why migrate from ECC to S/4HANA?
How do I migrate from ECC to S/4HANA?