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SAP S/4HANA app migration: Lessons from the trenches

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John P. Mello Jr. Freelance writer,
 

One of the benefits of procrastination is that you can learn from the experiences of others. When embarking on a massive project such as moving to SAP's S/4HANA, that can be a good thing.

SAP wants its customers to move to its next-generation ERP as soon as possible. To that end, the company set a sunset date of 2025 for support of the core applications in its SAP Business Suite 7 software, also known as the SAP ERP Central Component. That proved to be too ambitious, so in February, it extended the deadline to 2027.

Conversion to S/4HANA is a complex, involved project, said Ekrem Hatip, senior solution architect with Syntax, a managed cloud provider for mission-critical applications.

"Not many companies are prepared to complete that conversion by the 2025 deadline. To everyone's delight, SAP listened to the marketplace and decided to extend its support of the previous version of its ERP."
Ekrem Hatip

The new deadline will give companies more time to learn from their peers who have already embarked on their S/4HANA journey. Here are some of those lessons.

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Don't treat the move to S/4HANA as an upgrade

SAP's ERP solution has been around for decades. Throughout the various versions of the software, however, its data modeling layer remained similar. That meant that if a business wanted to move from one version to another, it could do so with minimal impact to its legacy processes. With S/4HANA, though, a number of changes were made at the technical layer.

"S/4HANA is entirely different from the previous ECC product. It's not only the look and feel of the product, but under the hood has changed. It's like moving from a gasoline engine to an electric vehicle."
—Ekrem Hatip

Brad Little, executive vice president and global head of application services at Capgemini, a provider of strategy and transformation consulting services, said he's seen too many clients treating the move to S/4HANA as a technical upgrade.

"That's missing the value of S/4HANA. If you treat it like an upgrade, you're basically taking all your junk and putting it in a new wrapper."
Brad Little

Some clients are not fully embracing the broader SAP cloud platform, he said. "There's a ton of value out there if you look at the long-term view of where you want to be."

The term "migration" can also be misleading for companies, said Ranjit Rao, principal and US finance and enterprise performance leader at accounting firm Deloitte.

"You can't just flip a switch and have S4 running. It requires the articulation of a full vision—the design of processes and data, and the subsequent deployment activities around testing and data conversion."
Ranjit Rao

S4 is a "next-generation ERP," she said. In the past, functions such as transactions, analytics, and forecasting were performed by crossing multiple systems. With S4, that's now all sitting in one place. "There's a significant shift in mindset required because you're no longer jumping around datasets."

Migrating legacy customizations can be hazardous to your S4 deployment

Many businesses have been SAP customers for years. Over that time, they've extensively customized their systems. "It can be challenging for customers to convert those customizations to the new features introduced in S/4HANA," Syntax's Hatip said.

One of his customers had SAP solutions for close to 20 years. "They used SAP as a platform to build their own order fulfillment product," he said. "They have extensive customization throughout their SAP system. For that customer, it's going to be really challenging to convert to S/4HANA."

Deloitte's Rao maintained that customizations have contributed to the high cost of IT in many organizations. "We're running all these one-off customizations that are not sustainable," she said. The mindset of an S4 implementation should be to "adapt your processes to SAP and deploy standard solutions to the greatest extent possible."

She added that customizations can create future problems for organizations. "Every time you want to upgrade or change the system, you don't know how those customizations are going to react because they're not standard SAP," she said.

"Companies are starting to shift their mindset. They no longer want technical debt and high IT costs. To minimize those costs, they're limiting custom development."
—Ranjit Rao

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Make S4 an opportunity to reduce complexity

Some organizations are removing customizations and complexity from their ERPs before moving to S/4HANA. "At the end of that, they're left with a much more simplified and standard ERP, or digital core, that will reduce risk and increase the speed of the move to S/4HANA," Capgemini's Little said.

"A lot of companies are finding they no longer need a lot of their customizations. They were things done 10 years ago because someone thought they had to have it. And you know what? They didn't have to have it." 
—Brad Little

S/4HANA is an opportunity to "clean out your closet and do it the right way," he said.

"It's a once-in-a-generation opportunity to get your enterprise IT architecture right."

Trim the amount of data you bring into S4

Over time, many SAP customers have created large databases in their legacy systems. "Moving those databases in a live environment to a new database is not only time-consuming, but requires a lot of compute resources on the target environment," Syntax's Hatip said.

"Companies need to enter this with their eyes wide open. Large migrations can take two to three days. That may not be acceptable, so you need to think about the amount of data you need to bring over."
—Ekrem Hatip

Hatip recommends that businesses with large databases seriously consider an archiving project so they can limit the amount of data that needs to be converted to the new system.

"Not only will that give them a leaner system, but it will reduce the amount of downtime needed for the conversion."

It's like starting your ERP environment from the ground up, Hatip said. But at the same time it gives customers an opportunity to "review their existing, and possibly inefficient, business processes and make use of the innovations introduced by S/4HANA."

Cleanse your data before bringing it into S4

Deloitte's Rao noted that data quality is a persistent problem for companies. "If you don't take the time and the effort to address your data cleansing activities, then you're going to get the same garbage data that you have today," she said.

"S4 is not a magic bullet. It will not solve your data quality problems for you."

She explained that data must be cleansed so it corresponds to what S4 is expecting. "That is the root cause of a lot of challenges when companies move to S4," she said.

Don't ignore SAP's cloud platform

Capgemini's Little explained that SAP users are accustomed to developing applications inside their ERPs. "There wasn't any other place to do customizations," he said.

But development should not be done inside the ERP anymore, he said. SAP is advocating development move outside the ERP and onto the SAP cloud platform.

SAP's cloud platform "has all the cloud-native development standards," he said. You don't even have to develop in SAP's development language ABAP. You can use JavaScript or Python or Spring "to build the services and APIs and all the special things that everyone needs for their business."

There's a lot of times he looks at customers' bill of materials for their S/4HANA move and the SAP cloud platform is not even included, Little said. "To me, that's a real disservice."

Address your process issues before the move

SAP's next generation won't resolve organizations' inefficient processes or ineffective policies and procedures. A process may call for 10 levels of approval before a payment is authorized. That kind of red tape is clearly inefficient, but S/4HANA isn't going to automatically fix that.

"A lot of companies will come to this with a mindset of, 'It's just technology.' You won't get the benefits of S4 if you think of it that way. That's why we highly recommend articulating your opportunities and vision early on and developing a road map."
—Ranjit Rao

Be prepared for opposition

As with all big changes, some organizations' moves to S/4HANA will be met with resistance.

"There will always be customers who want to stay on the existing platform because it satisfies their needs now, and they assume it will satisfy their needs in the future. But most customers will realize the benefits of S/4HANA and will use this opportunity to review their business processes and improve them, if possible."
—Ekrem Hatip

A wild card in SAP's plans to move its customer base to S/4HANA will be COVID-19. It could force SAP to rethink its deadlines again, as companies struggle to recover from the abrupt global halt in economic activity caused by the pandemic.

"It's too early to say what the impact of the coronavirus might be. I haven't seen any pullback from our customers, but a few have changed their phase-in dates."
—Brad Little

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