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How can we deliver more cost effective SAP upgrades

Using the latest, or perhaps just more recent, SAP software could provide significant business benefits. With SAP S/4HANA gaining momentum and the 1902 and 1905 series already released, upgrading legacy systems is becoming an even more pressing concern as companies look to simplify the transition from R/3 and ECC to S/4HANA.

However, implementing SAP has traditionally been a slow, expensive process, not least because it is critical to ensure new opportunities don’t come at the expense of existing business processes. This operational risk – essentially unavoidable when making extensive changes to complex, business-critical enterprise applications – prevents many firms from even attempting to update their SAP systems, not least because of the time and money traditionally needed to mitigate the potential for problems.

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Automation can transform the way we maintain and enhance SAP software, virtually eliminating the majority of risks to change so that businesses can take advantage of the latest that SAP has to offer.

We will be looking at how;

Automation increases speed and quality when implementing SAP upgrades

Robotic Test Automation can massively shorten project duration and cost

The importance of automation in a streamlined multi-track development environment is the next big step in enabling client adoption.

 

There is no single solution when it comes to SAP S/4HANA migration, and each organisation is in a different stage of readiness. Some have chosen to start clean by implementing a new system, or commonly referred to as the greenfield approach. Others choose to perform a complete system conversion, known as the brownfield approach, because it doesn’t disrupt their existing business process. And for those who want to consolidate their current multi-system landscape into a single system, they can opt for a landscape transformation.

Each has its advantages and challenges, we need to have a look at the database, platform, and configuration before making a decision as to which route may be most suitable for the given situation.

Below, we analyse each option to help identify the methodology that best fits.

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The Greenfield Approach – As a New Implementation

The greenfield approach requires a new implementation of SAP S/4HANA. This can be a tiresome and time-consuming project, especially on the change management side, since it is essentially starting everything from scratch. The upside to this path is that the client can redefine and simplify the business processes and take full advantage of the ‘Business Best Practices’ and S/4HANA capabilities.

Going through this re-implementation route can be unnerving because there will be radical changes in the way the system is operated. So if the client chooses this option, make sure that the plan and time-scare accounts for a considerable re-engineering process.

The Brownfield Approach – The System Conversion

With all the repercussions of the greenfield approach, there is an alternative a system conversion: the brownfield approach. This is SAP’s newest recommendation for existing customers who are operating on a SAP ECC landscape and want to migrate to S/4HANA but still keep the investment in the current system.

With a system conversion, the client will move the whole system and business process to a new S/4 HANA platform via a technical system upgrade. This approach can offer a better solution if you the client doesn’t want any changes in the current operations or business process. It essentially allows the client to run the business with less disruption since it’s more of a technical system conversion. The downside is that possible issues on the technical side can arise, but these are minimised as SAP has provided conversion tools and guidelines for this. Therefore, the risk can be reasonably mitigated.

Landscape Transformation

The focus of landscape transformation is not on the whole system conversion, but rather on selective parts of the business process that you want to migrate. Using SAP landscape transformation, you can perform selective data migration to SAP S/4HANA or consolidate your business landscape into one global system. This means that you can first select the process that gives you the best—and fastest—ROI to be migrated to S/4HANA. Customers may choose to go down this route, for instance, when adopting S/4HANA capabilities for Central Finance.

Use Case: Central Finance

The components architecture surrounding S/4HANA allows customers to implement a stand-alone business process linked to S/4HANA’s ERP core system. One example of this is SAP Central Finance. With landscape transformation, the client can utilise SAP Central Finance by migrating your financial postings to the HANA database. It uses the single database table called Universal Journal for all data from General Ledger, Profitability, Management Accounting, Asset Accounting, and Material Ledger. This new architecture allows the client to produce a multidimensional financial reporting structure by incorporating the data from legacy systems into Central Finance without any data duplication.

Using this function of Central Finance, the client can still perform the financial postings in the legacy system while the data is being replicated into the Universal Journal entry database via the SAP Landscape Transformation Replication Server. This means that the client can gradually move the process piece by piece into the new SAP S/4HANA before completely turning off the old system. This significantly reduces the risk of replacing many different systems all at once.

The Dual or Combined Approach

This is a hybrid approach that is a combination of both greenfield and brownfield. This approach starts with creating a shell system, an empty target system using Business Suite client with no data. Using various SAP service provider’s tools the client can then perform any transformation activities and upgrade from the target system to S/4HANA. This approach claims to be non-disruptive, however, as the approach is fairly new there is not enough data to provide a cost, risk and efficiency analysis at this stage.

 

So how do we support the client in Choosing the Right Approach?

Choosing the right approach requires that an organization performs extensive analysis and evaluation of both technical and functional sides. The existing system landscape, business function, and user readiness are a few things that need to be taken into consideration. More importantly, the client should take a look at its own roadmap for digital transformation. That is, identify where they are currently and where they want to go in the upcoming years.

 Here are the key points to help decide which path should be taken for the S/4HANA migration.

What Are the Steps to Execute?

Once the path has been decided upon, it’s time to prepare for the actual migration by planning the exact steps that will be needed for a successful implementation.

Greenfield

If your decision is to perform a new implementation via the greenfield approach, there is an entire methodology called the SAP Activate Framework (S4H) that explains each step required to do so. (see infographic below)

SAP-Activate-Framework-S4H

Discover: The first step is to identify the value of your business and then develop the roadmap and strategy to be used in the implementation of the project.

Prepare: In this phase, you initiate the project and start working on your final project plans as well as preparing your team. Choosing the right people for your team is essential to ensure the project will run optimally.

Explore: SAP S/4HANA offers a wide range of solutions for your business, especially for a new implementation. In this phase, the scope evaluation process will be performed, and Fit/Gap analysis can be adopted—instead of traditional blueprint requirements—in order to ensure a more efficient and faster implementation.

Realise: This phase focuses on the realisation process of the business requirements that have been defined in the previous phase. These include system configuration settings, integration scenarios, and data migration.

Deploy: The production environment is set up in this phase. When it’s ready, cutover activities will be performed and business operations are moved to the new system.

Run: Now, you’re ready to adopt the new solution and run on the new system.

Brownfield & Landscape Transformation

On the other hand, if you decide to do a system conversion or landscape transformation, there is a sequence that you have to follow to ensure a smooth deliverable. The process is divided into two phases: preparation and realisation.

Preparation Phase

System Requirements & Planning: This assessment should be conducted to analyze the existing system and then define the best possible solution to execute the migration.

Conversion Pre-Check: A compatibility check of any add-ons or business functions that are active in the current system is required to ensure they can technically be converted into S/4HANA. SAP has provided the Simplification Item Check to identify the mandatory steps before converting your system.

Custom Code Migration: This step will check your custom code against S/4HANA compatibility. This is essential, especially if there are enhancements in your current system.

Realisation Phase

System Installation: After the preparation phase, you can start the conversion to SAP S/4HANA. This step includes database migration and data conversion.

Follow-On Activities: After the technical conversion, all relevant customized settings must be migrated.

Data Consistency Check (especially for financial data): Since SAP S/4HANA collects all relevant components from Financial Accounting (FI) and Controlling (CO) into one data pool, called the Universal Journal, it is imperative that you perform reconciliation between your accounting components. In this way, the data can be merged correctly into the Universal Journal.

Iteration Testing: When all customizing has been performed and all data have been migrated, you need to perform test iterations to make sure that the system runs correctly.

Summary

Migrating to S/4HANA is inevitable for virtually every SAP customer. It’s not a matter of “if,” only a matter of “when.” However, the migration process can be a very daunting exercise for many customers because they don’t actually know what to expect from the process. This is why choosing the right approach will be essential for the business transformation.

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