(R)evolution: how to make the transition to S/4HANA | NTT DATA

Wed, 17 February 2021

(R)evolution: how to make the transition to S/4HANA

As far as adaptable tech companies go, SAP has proven to be a reference. From building applications for financial accounting and inventory management in the ‘70, to early adopters of new technologies such as mobile, database and cloud in the early 2000’s, they are now among the first major players to build products based on IoT and blockchain technologies.

In a continuous effort to offer the best possible product on the market, SAP launched in 2015 S/4HANA, the latest generation of business software, running entirely on SAP HANA, an in-memory database. It’s important to understand that shifting to S/4HANA is not just a technical upgrade, it’s taking a giant leap towards becoming a company of the future thanks to the many digital-by-nature functionalities that S/4HANA brings along.

In order to incentivise companies to shift to S/4HANA, SAP decided to discontinue support for SAP ECC by 2025. However, given the complexity of migrating successfully to a new system or implementing a new one, SAP recently announced they will extend the maintenance for core applications of SAP Business Suite 7 until the end of 2027, followed by optional extended maintenance until the end of 2030. 

However, when using S/4HANA’s digital-by-nature capabilities to transform business processes, new saving levers come into play: agility, execution excellence, integrated real-time analytics, automated procedures, anywhere/anytime access. The possibilities are endless but we can’t ignore the enormous potential for savings and benefits either.

The transformation itself is also a challenge: process redesign and change management add complexity to an already complex technical task. So, what is the best way to tackle this task?

The 2 main approaches to implementing S/4HANA for any company: Brownfield and Greenfield

Technically, there are two main ways of carrying out a migration to S/4HANA: either a new implementation, also known as Greenfield, or the conversion of an existing older system, named Brownfield. Additionally, a selective migration, also known as the Selective Data Transition, combines the Greenfield approach for all the processes that need to be transformed, with the Brownfield approach for all the processes that want to be preserved.

Companies that are interested in an end-to-end migration of their central ERP processes to S/4HANA, will have to adopt the Greenfield approach. It is generally the most intricate option, but it also creates the opportunity to rethink from scratch all the business processes and introduce innovation together with the implementation.

Alternatively, the Brownfield is an upgrade of the existing SAP ECC 6.x system into a S/4HANA one. It is typically the fastest option while it also preserves the existing configuration, all customizations and historical data, while also allowing for a more rapid technical conversion and the option to add innovations gradually for its users.

At everis we consider both these options as an advancement in the development of any company, but at the same time unsatisfactory as it puts the focus on technical tasks and not business process improvement possibilities. And so, we evolved these approaches and developed a more complete concept in order to showcase the impact they have on a business:

(R)evolution, the new implementation of superior digital processes which will revolutionize at once the way a company functions, and Evolution, the journey that will steadily improve performance on all levels across the organization.

The (R)evolution

A company goes through a (R)evolution when it decides to re-engineer its business processes end-to-end putting focus on its value-based goals and using the new digital tools made available by S/4HANA and the rest of the SAP suite to achieve them.

In a post-COVID volatile and uncertain scenario, organizations will probably require agility and resilience in their supply chain, as part of their value-based goals. At the same time, efficiency and quick detection of new trends will likely be essential in back office areas like finance or human resources. Customer orientation, clarity and flexibility could be critical in sales processes. Ultimately, that will be for each business leader to decide.

Based on these value-based goals, expert consultants and business leaders together, making use of the many tools that S/4HANA and the SAP suite offer, will define business processes, reporting systems and alert management that will finally be implemented in the new system.

By revolutionizing their system with the implementation of S/4HANA, companies not only experience technical progress, but they also improve how they function from a business perspective. The direct consequence is an increase in productivity in the short and long term, coupled with more agile processes, and a positive S/4HANA Return on Investment.

In order to achieve this, an organization needs to understand its value-based goals and design processes that encourage them. Then it needs to migrate from a central ERP  to S/4HANA through a Greenfield approach, ensuring those value-based goals are preserved and promoted. An active change management strategy needs to support this transformation. Finally, it needs to manage the post S/4HANA adoption by nurturing the new.

The Evolution

A company goes through an Evolution when it decides to first enable itself with the tools that a technical migration to S/4HANA brings, and then begins a steady piece-by-piece improvement of some of its business processes based on its value-based goals and using the new digital tools made available by S/4HANA and the rest of the SAP suite to achieve them.

The first execution stage of this path is having a technical team of experts support the organization to execute a technical migration of the existing SAP ECC 6.x system into an S/4HANA. After that, the organization can start picking its processes one by one, starting from the ones where transformation will bring more value to the company, and start applying a value-based renovation applying all the new tools available.

This path is less stressful than a large-scale implementation, but it will be needed to make this renovation compatible with using the old system and maintaining yet-to-be renovated processes during a longer period of time.

By evolving their system with the implementation of S/4HANA, companies not only go through an upgrade from a technical point of view but they also improve how they function. The direct consequence is an increase in productivity on the long term, coupled with more agile processes, and progressive cost cutting. Return on Investment of the pure technical migration tasks will continue to be scarce, but when added to the gradual business effects from process-by-process transformation ROI will improve. That is why it is important to have a comprehensive view when defining business cases.

In order to achieve this, an organization needs to understand its value-based goals and prioritize transformation adoption. This will produce the overall business case. Then it needs to technically migrate from a central ERP to S/4HANA through a Brownfield approach. Finally, it needs to manage the post S/4HANA adoption with an active and steady process-by-process transformation, ensuring those value-based goals are realized.

Assessing companies throughout their evolution process

Choosing (R)evolution or Evolution, deciding on value-based goals, prioritizing processes or redesigning them based on the new digital tools are not easy tasks.

In an effort to facilitate this transformation and mitigate the risks associated with it, we have created a program to help companies with their paths to S/4HANA.

Our solution to minimize risks and anticipate issues is called Readiness Assessment and is part of a complete program of different services created to help our clients’ journey, seamlessly to the new system. The goal is to support companies in the 3 stages of the process:

  • Before starting the process, by assessing the state of the current system, understanding the value-based goals, evaluating the impact of the new solution, analyzing the (R)evolution strategy and defining the roadmap of the transformation
  • During the migration or implementation, by constant support throughout the process
  • After the adoption of S/4HANA is complete, the client can choose to include regular quality assessment sessions in order to follow-up on the value-based goals adoption

A system like S/4HANA will help make processes agile and thus, more efficient, lowering costs across the organization. For any organization looking to become a company of the future, the implementation of S/4HANA is a necessity.

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