What are the challenges for new SAP S/4HANA?

[Former Member]

In 2010 it was the first time I heard of HANA, I was at Sapphire in Orlando and for me HANA Data Base was unveiled. Since then I was very skeptic but at the same time really curious about the innovation announced. It has been almost six years since that first time, then in 2014 I also heard about Simple Finance which it turned afterwards into S/4HANA, the new technology from SAP to enter into the digital age, I was not that skeptic but I was eager to know more about it.

Then last year I went through a Project for implementing Simple Finance, which uses HANA DB, and I can say that it was really a challenge. A lot of companies will face that same challenge if they want to go with SAP’s new technology, a brand new product with table simplification, increased user experience and real-time information within the Enterprise Management solution. Well I have to say that SAP is going on the right direction, but it will be a real challenge to adopt this innovation.

Before explaining why is that challenging I have to clarify that S/4HANA product is still improving and evolving, for sure when publishing this note a lot of changes are still happening on SAP Labs and/or ramp-up projects. While several companies are wondering if it is time to move on into S/4HANA or wait, there are some important points to consider before making that decision. I have learned that there are many variables that play into the big step to move towards S/4HANA, but let’s make a brief description of the most relevant for me.

Strategy to move into S/4HANA

A clear strategy on moving to S/4HANA must be defined prior to start any project or activities to move into the newest SAP innovation. This strategy must be aligned with business strategy, I liked a phrase I read a couple of days ago: “We don’t need a digital strategy - - we need a business strategy for a digital world“.

There are three scenarios on moving to S/4HANA:

1. New implementation, also known as “green field” implementation, for companies that does not have SAP ERP core or companies willing to re-implement SAP core solution.
2. System conversion, which means there is not an upgrade for going to S/4HANA. As a new product system migration is possible, but consider that a lot of data transformation needs to be done.
3. Landscape transformation, that could include migration of selected applications or system consolidation into one S/4HANA system. This is when having several instances or different functionality in several SAP systems to consolidate them on S/4HANA.

In the last two scenarios system upgrade is not an option, one example of migration would be converting vendors & customers into business partners, in order to do it data transformation should take place. SAP is providing some tools for data migration and transformation, even though process validation, data analysis and data cleansing times must be considered during the project’s timeline.

Tip: Main challenge and pain point is to establish a business-aligned road-map to move into S/4HANA, planning times for transition schema should be considered for all activities within to avoid operation risks and business downtimes. For any selected scenario clear strategy should be addressed from the very beginning, actually to make the strategy will take time and resources so you must budget for that as well.

Functionality

For this part make sure all your current business processes are already covered by new product functionality on the new suite, there is a road-map for S/4HANA to include all ECC functions or even other solutions like APO, CRM, SRM, EWM, TM are already or will be included on core suite. That is part of SAP’s simplification, also if you are planning to expand your business or enter to new markets where you will need new business processes or new ways of doing things, you should consider a full functionality review beforehand. The good thing is that also S/4HANA can help you on entering to new markets or going to new business processes providing speed and some flexibility with HANA Cloud Platform (to make extensions).

Tip: you definitely have to take a deep review of S/4HANA simplification list and SAP Help (http://help.sap.com/s4hana) to check for functionality on each version. Be aware that each quarter new releases are coming for cloud edition and every year for on-premise edition. S/4HANA most recent release on premise is 1511 (FPS02) and cloud 1605.

Architecture

This is one of the big changes in S/4HANA, with this new product a lot of components must be installed or activated (Application engines, Fiori, CDS, Gateway, HANA Studio, KPI modeler, OData, BW-Embedded, Analytics, etc.). These component versions are updated and enhancement packages are constantly released to make improvements on the new product, so take into consideration periodic checks on system and component versions, support packages and/or enhancement packages. SAP mentions that releases will not be disruptive as in predecessor technologies (R/3, ECC), but a clear strategy into that statement should be adopted by companies on sticking to standard S/4HANA processes.

Also when integrating to other SAP systems you could find new standard API’s (Application Programming Interface) like SuccessFactors - Employee Central integration to S/4HANA Human Resources, new integration tools like HANA Cloud Integration (HCI) and more. Some considerations when integrating with Non-SAP systems could affect definitions for SOA and S/4HANA integration processes.

Tip: make sure global Architecture definitions are made before to start S/4HANA implementation or conversion, check for periodic updates on components and make sure releases on cloud edition are planned in advance to avoid system failures generated by updates.

Customization

Avoid system customization by developing code out of standard functionality always is a huge challenge, in Mexico because of law regulations and localization is almost impossible. But for sure making customization reduction is a good recommendation so far, keep core development at minimum and non-core customizations on external applications, so when going into new versions non-disruptive adoption really happens.

Tip: HANA Cloud Platform has tools for code development and extensions on standard functionality, an architecture validation for customization should be driven to choose the right component for developing new code. Beforehand should not consider S/4HANA cloud edition if core development is taken as a business strategy, so S/4HANA on-premise will be the best option. So far I still recommend to stay on standard processes all the way through the transition (it does not matter if there is cloud or on-premise edition).

Change adoption

Embrace change and innovation as one of the most important things on moving into S/4HANA, easy to say and very hard to apply. A lot of transformation processes fail because of people’s change resistance, with this new product not only users or business analysts must be willing to adopt change, but also consultants, IT specialists, even directors and sponsors must understand innovation and their participation as part of the business transformation. An active roll is clearly needed from company’s leadership to help get things done while change is the biggest challenge of all.

Tip: Change Management is a must on any transformation process, this is not an exception, make sure all the project’s team, company’s leaders, sponsors and change agents are aligned to embrace change and innovation. Clarify objectives and participation for all business roles during the transitions, while more communication provided the more understanding on each person’s contribution to achieve the final goals.

S/4HANA is here now, and is really changing the way of doing business, these challenges could be surpassed by taking into consideration these main points. Do not be afraid to affront these obstacles, look forward for a good strategy and expert support to move into S/4HANA, if you think about it maybe your Organization needs this transformation now, and getting into it soon will give your company an advantage that other would not have.