A three stage rocket to S/4HANA
Moving to S/4HANA gives businesses access to the innovations of real-time data, centralised systems, future proofing, and the cloud – but also requires many to make significant steps including technology, business, and digital transformations.
Taking on the full scope of a transformation often entails getting the full business involved – with approval and buy-in from every stakeholder.
My name is Dennis Onstenk, Business Development Director for Cognitus EMEA, and here is my vision on S/4HANA transformation after talking to many CIO’s and solution architects within my company.
Taking a Staged Approach
“For many organisations, it’s increasingly obvious that adopting a cloud ERP like S/4HANA is necessary to stay competitive. At the same time, a full S/4HANA transformation involving business, and digital transformation is a massive project. With stakeholder concerns, budgeting, and the pure number of tasks to be done, the scope of the project necessitates authority levels beyond the scope of the people involved. Eventually, there’s a massive delay, everyone has an opinion, and no change happens”.
This approach aligns with a staged transformation – allowing you to break technological, digital, and business transformation down into different steps. During stage one and two, SAP S/4HANA is an IT project; it is fully in the hands of IT people. While you will have to spend a considerable amount of budget without the business seeing direct benefits, it’s step one of the process; putting everything into place so that the business transformation can succeed.
The foundation of that is an SAP Brownfield transformation, where you transform the technology while leaving business processes largely untouched.
“I’ve had dozens of conversations this year, with CIOs looking to make transformations, with clients in the middle of transformations, and with architects and engineers. These insights led me to see S/4HANA transformation projects like a multi-stage rocket – each piece has to finish its own process before you move on to the next”.
Stage 1: Assessment, Pilot and Roadmap
The first stage of an S/4HANA transformation is planning. At my company, that’s brought to life with an Assessment, Pilot, and Roadmap. Here, we run an automated ECC assessment and a Pilot using your actual business data – which allows us to identify obstacles, streamline your transformation process, report on your custom code usage and help you to cost and resource the project in advance of starting.
“Often, when you start an assessment, you’re not ready to discuss beyond that. The assessment is your horizon, it gives you a stage one to launch your project. You get a realistic roadmap, a full map of your current environment(s), and your people get hands-on experience with S/4HANA, Fiori, and Best Practices”.
Stage 2: Digital Transformation
“A Brownfield transformation allows you to do the technological or digital transformation first. In this staged approach, you move from an SQL server to HANA, update the GL and Business Partners, and get the technology stable. You might have to change business processes here and there where they’re driven by the technology change. However, these impacts will contained where possible, so getting buy-in and approval is typically easier.”
This almost Technical Upgrade, puts your organisation in a position to reap the benefits of S/4HANA from security, system administrative, and data perspectives. The enterprise in now running on a fully supported ERP platform again.
When looking at your custom code in the first phase, we’re using state of the art machine learning to determine which code is being used and which is not, this reduces the technical debt in the new set-up. Custom code of which we have established that it needs to be migrated to S/4HANA can be done so largely automatically. Brownfield even allows you to migrate from ECC to S/4HANA without using FIORI tiles or the interface. So, you can adapt the application without seeing business impact (or value) other than increase safety and compliance.
“When you move from ECC to S/4HANA, not all of your systems will work. You may have to migrate systems like APO – and you’ll have to move those core components. Other major changes include the New GL, the merge of Finance and Controlling into the Universal Ledger, Customers and Vendors to Business Partners and Material Ledger activation. Therefore, there will always be some business process changes. And, getting those through is already enough work. But, you want those settled and stable before you start the actual business transformation. Once you get the organisation running smoothly on the new ERP – it’s time to start involving business process owners and business unit owners. You’ll need the business to start taking advantage of S/4HANA. “
Stage 3: Business Transformation or Business Process Optimisation
“Some of the CIOs I talk to want to do Business Process Optimisation as the very last step of the S/4HANA transformation. That can make sense when you want to prioritise the technical project and starting the transformation over doing everything at once.”
During the business transformation, you analyse and optimise business processes to take advantage of your ERP. In S/4HANA it’s set up to be Agile, to deliver real-time information, to deliver data for decision-making, and to operate in the cloud. SAP’s Best Practices also offer opportunities for businesses to standardise and optimise processes.
“Most importantly, implementing organisational change management, helping people to adapt to new processes, and understanding what you have before you change it can take time. Taking the right steps and investing in change from a people perspective is a crucial factor in the success of the project.”
“Eventually, changing the business processes to leverage S/4HANA’s flexibility and real-time data is one of the most important parts of moving to the S/4HANA cloud. At the same time, leaving it as the last step means you’ll have the technology and support in place once you start that process – simplifying the full scope of business change.”
How do you recommend your clients transform to S/4HANA from ECC and do you find these 3 stages helpful? I look forward to reading your thoughts in the comments section.