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Why are Customers reluctant to move from ECC to S/4HANA

Although we are out of the early adoption phase I honestly believe that the SAP S/4HANA market may still considered very immature by many clients in the Global ERP market. Any pivotal shift or major change is looked at with skepticism and from past experience when implementing ECC many clients had significant over-runs, major disruptions and costly replanning exercises. This coupled with market uncertainties like, stability, recession, Brexit, GDPR, and a myriad of other issues.

 

S/4HANA versions and Innovations are now rolling of the production line in quick succession but it wasn’t like that in the beginning

 

When S/4HANA was first announced back in 2014, many of us got rather excited about the offerings that have been shared and showed. We have since spent a year looking at the simple finance trying to understand the real benefits case and disruptive improvements brought by the early adoption of S/4HANA. Then in 2015 real S/4HANA is released which is called version 1508 that contains new code set and some Logistics Simplifications. This has new core component called S4CORE.

Each and every year SAP has improved functionality and released new versions. Every version brought new possibilities, for example embedded TM was brought by version 1709.

Now we have latest version 1809, embedded Customer Management 2.0 is available with this version. And 1811 is just around the corner.

 

Why have we listed all these details?

Honestly this is because one of the main barriers to change is all these S/4HANA versions and unstoppable SAP innovations is causing customers and prospective clients to hesitate. You might say why are they complaining about continuous innovations, this is what we need in this new digital economy era. Totally agree with this personally, however, mature SAP customers could not get into a moving S/4HANA train. Once they deliberate, do some due diligence and then decide on a version/roadmap, Oops SAP has releases a new version and new functionality, all discussions start from beginning again.

 

So many customers think they needs an S/4HANA stop, to get into the S/4HANA train.

Fast Changing Deployment and Licensing Options

Early stages of S/4HANA product there were 2 main products and so called options: On-premise and Cloud. Customers who have complex business scenarios gone with on-premise, lean ones has selected cloud versions, however today on-premise versions can be deployed on SAP Cloud (HEC), with all functionality. Licence can be purchased/converted on subscription bases, including one time/year free upgrade. If you are a new customer this sounds great, however what will happen to existing SAP products which can not be moved to HEC (because of Legal or private reasons), from technical point of view it is possible and recommended by SAP architects. If you have MII or ME of course you need to run them locally even if your S/4HANA in running on HEC.

But what will the SAP licensing look like?

Customers need a clear licence policy, during a TOM change this adds greater complexity and the question remains… what will be the final destination be, will all products be on subscription base? Even if they run on-premise and managed.

 

SAP Product Offerings and Names Changing too Fast

As I have written beginning of this blog, S/4HANA has changed the known ERP rules and approaches. Disruptive innovations both in UX and DB side re-shaped everything, this is fare, however, it shattered SAP as well, what will happen to existing product areas like SRM? CRM? Hybris? VM? Payroll? SNC? APO?…all of these have been restructured or replacements. However the timeline, how, when, transition period?

How long can we use SAP SRM with S/4HANA?

All these questions are slowing S/4HANA conversion decisions.

 

SAP provides transition roadmaps and tools to ease the process. (see example above)

Finally it is worth noting that many of the Mature SAP customers seem to need a clear stop or method to make the decision to get into S/4HANA locomotive. Once the decision is made though its full steam ahead as each and every customer wants to make the change and transition as fast as it is possible, however in today’s dynamic and evolving circumstances require a very disciplined team and experienced control mechanisms in place OR its just not too safe to get into a liquid/moving and constantly changing environment.

My name is Mike Davis and I have been managing and supporting transformational change within major corporates for over 20 years. I am a keen contributor to the digital agenda and would be very interested in supporting and advising on successfully delivering business transformation change programs. Feel free to review my LinkedIn profile and should you wish to have a brief confidential discussion, a project or program review or engagement for a bid or program delivery please do not hesitate in contacting me.

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