Big-Bang or Baby Steps – How you want to move to S4HANA Public/Private Cloud?
After the advent of S4HANA cloud and the benefits that the current and new SAP customers can reap after moving to the cloud is unparalleled. Obviously, there is a huge push from SAP as well so that customers can make the move. When ERP systems were first introduced a few decades ago, clients were reluctant to move to these newly developed systems. The reluctance was not due to the lack of features or unstable product. However, the unwillingness was due to the fact that why bother to change an existing running system. Leaders don’t want to maintain status quo and knew that the technological advancements will lead to these organizational changes. Additionally, few root causes behind those hesitations were the time, money & the effort it took to make these organizational changes.
Today, we know that those changes happened. We also know that the organizations that kept themselves apprised and up to date with technical advancements were flourished. How they took the leap of faith is immaterial for the outcome. But, from the client perspective and as an SAP platinum consultant and program manager, I thought it is important to understand the nuances of these approaches. The question – “Shall we take the big-bang approach or baby steps?” – is an important question that deserves a well-rounded, to the point answer. Based on our prior experience in such a large and organizational change management, we can list down few of the pros & cons either approach. However, critical question is, do we have any other approach? A hybrid one? In next few paragraph, first, we will look into a couple of different scenarios, discuss the two (or possibly three) approaches, their pros & cons and finally read more about the third approach.
Here is a very obvious and a simple scenario. A small manufacturing company pharma manufacturing has one physical plant in the USA and few offices across the United States. Their last year revenue was less than 100M USD and they do not currently use SAP. They are on another ERP system – Finance, Production Planning, Sales & Distribution and Materials Management, strong in their processes and cost-conscious. Even though they are on legacy ERP system and the key stakeholders/decision makers have mixed feelings about the legacy system but they want to explore the option of moving to cloud and use S4HANA. In this scenario, what would be your approach – a big bang, phased approach or a hybrid one?
Again this is my personal opinion and I would prefer to suggest an incremental approach or a phased approach. I would take something like core Finance and move that to the public cloud. Of course, we need to fit-to-standard but the underlying assumption is that the gap is minimal and acceptable. It should be done more as a POC and integrate the cloud with their legacy ERP application. Here are the reasons
- Since the leadership has mixed feeling about the legacy ERP system, I would prefer to showcase full functionality in greater detail of a specific function rather than going through all the functions superficially. It will help gain their confidence. The idea is not to hide missing functionalities but to show the details as much as needed for the existing functionality that they need most.
- They are cost aware – implementing core Finance on public cloud within 3 – 6 weeks is cost effective. It will help win their vote easily.
- Integration between core Finance on Cloud and their legacy ERP system will definitely create a “WOW moment” for the client.
- In case of any missing functionality, say in Sales & Distribution, we can show them the S4HANA roadmap and built their roadmap in line with S4HANA roadmap. It may or may not acceptable to the client depending upon their need; however, the integration between cloud and legacy ERP will help you win this war.
- Most importantly, it will help you get your foot into their system.
Even though they have only one physical plant, I would prefer to go by the phased approach. Obviously, in this whole process, you need to build relationships with people at a different level within the organization. You can get first-hand feedback about their challenges, their need or if they love, like or hate the new system on the cloud.
This is the first blog in this series. Stay tuned for the following two scenarios in the second & third blog.
- A huge manufacturing company with a global presence is using SAP for decades and has multiple instances. Their key business stakeholders don’t want to move to public cloud however they are open to private cloud.
- A financial services company wants to utilize SAP cloud and move their core finance to the cloud. They have a presence in Europe, USA, and Currently, they are using different localizations for the same SAP instance.
Finally, in the fourth blog, I will conclude the series with outlining the pros & cons of different approaches.
Aditya, for phased approach, you may want to highlight considerations related to cloud integration with on premise legacy applications and interim solutions (if any needed) till all phases are live in SAP cloud.
‘Integration... will definitely create a wow moment...” interfacing is one of the key challenges here, and it is not only non-trivial, but a major negative of this approach, in lieu of Big Bang, where everything is cleanly integrated. Hopefully, the “WOW” is not a negative one! I am not necessarily against this approach, but I do not see integration as a ‘positive,’ especially when the new requiement is intra-ERP integration (SD, PP and MM to FI-CO).
Excellent article on implementation approach. I like the risks that you outlined for both the approaches.
Awesome article on implementation methodologies.
Thank You Aditya for this article. It’s a great one.
Great blog Mr. Lal. It was nice meeting you in person after almost 10 years and going back down the memory lane in Chicago during our GE days. In recent past I have seen some great writings from you and I hope you won't go back in hiding. I would request you to continue your writing on other SAP topics including SAP Analytics. Looking forward!!!
I got some great points from this article for one of my client interaction who is looking for modular approach. Thanks
Thanks Aditya I really like your blog.
Mr. Aditya, Thank you for the article. It’s a great one.
Thanks, Aditya. Do you write frequently or this is only. I would like to read your other articles as well.
Nice Mr. Aditya. I like your blog. Can you please update us more on it?
They have other blogs as well. Please visit at https://people.sap.com/aditya.nlal05
Thanks, Aditya for this article.
I found a great view of your article.
I have gone through your article and I found which I was searching.
Again, Very Nice Article Mr. Aditya Lal
Awesome Mr. Lal
Yeah, He has good writing skill about SAP.
Woww another blog from you. Thanks for your points.
Well Researched Articles.....
Good one Aditya.
Good Job Aditya
Thank You, Aditya, for this article. It’s a great one.
Amazing write-up Aditya.
Do you regularly write blogs like this one? I really enjoy to reading your blogs.
Amazing Aditya. Keep it up.
Excellent article on implementation approach.
Very nice Aditya. Got another well-detailed post.
Good one Aditya.
Nice Article Mr. Aditya Lal. It’s a good read.
Very helpful article.
Good and well researched blog.
Awesome post Aditya. This is really help us to improve our knowledge.
Thank You Aditya for this article. It’s a great one.
Thank you Aditya for this post as well. This is really good.
Another great post.