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.