Lessons Learned in Moving to the SAP S/4HANA Cloud
*This post was originally posted on the PwC webpage.
SAP S/4HANA Cloud is the next generation intelligent ERP suite that is characterized by simplification and automation. It helps organizations streamline business processes as well as operate with a faster and more reliable digital core for your company, employees, and customers.
Value for Organizations to Move to SAP S/4HANA Cloud
Based on customer feedback there are three things that make SAP S/4HANA Cloud worth the transition:
- Innovations. Any innovation SAP is doing around machine learning, process automation is delivered automatically, so you always have the latest and greatest technology available to you without the need to go through a time-intensive upgrade.
- Agility. SAP S/4HANA Cloud’s best-practice content offers operational flexibility, keeping organizations nimble and adaptable to changing business models. It also merges transactions and analytics on a single platform, providing real time insights that allow users predictive, rather than reactionary capabilities.
- Cost saving. The more obvious cost saving aspects of the transition to SAP S/4HANA Cloud are due to the minimal hardware footprint and shorter implementation timeframe. Because it’s a SaaS solution managed by SAP, SAP S/4HANA Cloud unburdens your own IT staff from managing it. The less obvious way you’ll save is by reducing the effort put toward ongoing change management. Since the organization is adopting SAP best practices, the contextual help is more relevant and requires less hand holding Additionally, since all SAP S/4HANA Cloud customers are always on the same version, users can leverage robust community-based help, which is a fast and easy way to get answers and tips.
Implementing Multi-tenant (Essential) vs. traditional SAP S/4 HANA implementations
Many customers are realizing three key shifts when you’re moving from on-premises to what we’re now doing in the cloud:
- Cloud way-of-working. SAP S/4HANA on-premise and cloud are based on the same code line and have a very similar look-and-feel. That being said, being in the cloud brings its own unique set of challenges. It is imperative that the System Integrator understand these nuances and address challenges upfront. For example, the cloud version has a two-system landscape (Quality and Production) which is different from a typical three-system landscape (Development, Quality, and Production) for on-premise. It sounds like an insignificant change, but if not managed properly it can severely impact your configuration planning, mock data loads, etc.
- Fit-to-Gap verses Fit-to-Standard. In the fit-to-gap on-premises environment, you’re taking client requirements and customizing their system around the framework. With fit-to-standard in the cloud, you’re aligning with SAP’s best practice content. This change in approach requires a significant effort upfront to ensure that business is aligned and ready to adopt to SAP best practices.
- Project Planning. Since SAP S/4HANA Cloud is a cloud-based solution, SAP is managing the provisioning of services, activating content on specific timelines, etc. So instead of planning out the go-live of your systems on your own, you incorporate SAP’s schedule into your own project plan. In addition, it’s important to consider the quarterly innovations in your planning cycle and to account for them.
System Integrator’s Role Has Changed
With the cloud solution, SAP has made the technical aspects of deployment easier so now the System Integrator’s (SI) role becomes more about ensuring clients successfully transition to the cloud.
Therefore, the role of the SI is that of an implementation consultant and a change agent. An experienced transformation consultant who combines project management skills with strong change management capabilities.
The most common challenges for organizations when moving to SAP S/4HANA include:
- Fit-to-standard has been the most typical challenge with SAP S/4HANA Cloud. There is a shift from being fully customizable to using a set of best practices leveraged across the core. Companies see the advantages of standardization and just need to come up with alternatives for processes that were previously customized.
- The quarterly release schedule can be a bit tricky for some companies because they have to factor the release cycles and release down times into their overall project planning. It’s very dynamic. They also have to plan ahead during the implementation process. A six-month implementation would include two releases and SAP S/4HANA Cloud can change considerably within that time. This just requires up-front planning so it’s part of the implementation process.
- Data can be a challenge. When moving from customized processes to a fit-to-standard process, we don’t recommend bringing your old data. It’s better to start fresh with a limited set of data you really need. If a company must bring in older data, it has to be converted into the new taxonomy. That can be a very big exercise and can extend project timelines. An alternative that we recommend is to move legacy data to a data warehouse for reporting purposes.
Will Companies benefit When Switching to the Cloud?
The challenges are minor compared to the considerable benefits of moving to the cloud. If your company is comprised of a lot of customized processes, you would need to do an assessment to determine whether those processes are truly necessary.
This area is where the customer should spend a lot of time – looking at processes and finding new ways of addressing those needs. As long as you’re aware of the challenges and plan appropriately, there’s every reason why it can be one of the more valuable technological transition your organization has made.
So if you value innovation and standardization, you should look into this SAP S/4HANA Cloud.
It represents the future that’s already here.