All SAP customers are currently wondering whether now is the right time to migrate to the S/4HANA ERP system. What are the impacts and what benefits result? What is the best practice advice from those who have already migrated? Despite the extension of SAP ECC maintenance until 2027, or even 2030, which has reduced the sense of urgency surrounding any move to SAP S/4HANA, an increasing number of migration projects are starting, with a greater focus on input from the business side. The health and economic crisis brought about by Covid-19 has ultimately simply added to the need to innovate, and at the same time pushed IT back under the spotlight in its role of ensuring business continuity while continuing to optimize costs. That is the reason behind this post on S/4HANA migration. It is intended to help you gather together all the information you need in advance, by explaining SAP’s own messages about its innovations, and to clarify the different ways to migrate based on feedback from successful projects.
Why migrate to S/4HANA? What benefits should you expect to gain?
All customers interested in migration are seeking to clearly identify what genuine potential exists for value creation. Customers can of course read many success stories from all over the world from SAP users happy to testify to the gains achieved in all aspects of business, technology, etc. But each migration is different, and occurs in different circumstances. Migration trajectories can vary according to business objectives, and it will be important to leverage the integrator’s expertise to create real synergy in order to succeed. What are the main benefits seen by customers who have already migrated?
Simpler data model and architecture
One significant new feature is obviously the simplification of the data model and table structures. For example, all accounting and financial data is stored in a single table to provide “one version of the truth”, as SAP likes to describe it. The SAP ECC structure with a number of different modules and tables is replaced by a single table in S/4HANA, with customization and extension options, plus various reporting and navigation possibilities to simplify analysis aspects. This is therefore a fairly drastic simplification. There are no more barriers between the different FI modules and other modules, all data are stored once and can be cross-matched on the fly. There are no gaps in your audit trail. A user can analyze an indicator at any time, and see the details of the entries and transactions that make up that KPI in real time. This real-time dimension is made possible by the HANA in-memory database, a technological breakthrough that positions S/4HANA as a new generation ERP system. The ERP system still actually works in a multi-tier architecture but is now in-memory and the application layer uses data loaded into memory at startup; there is no longer any reading of the hard drive. As data are stored in the memory, access times are instant and interaction with the ERP solution takes a great leap forward.
A new user experience focused on decision support
While the design has changed radically, which improves the UX and shortens the time taken for new users to gain familiarity with S/4HANA and so become operationally effective team members, this is not generally the first argument used to justify migration. However, all customers who have migrated, without exception, confirm productivity and efficiency gains compared with ECC. The new design puts users into an entirely customizable full-web environment with a comprehensive search engine allowing them to find any data using a keywords search, for example. The benefits of migration can therefore be seen as soon as you use the home page of each ERP module. Numerous indicators are available in the form of thumbnails, produced as the result of real-time data analysis. This helps every user to better understand the business information on which they need to act, or to see the problems that need to be solved. The boundary between transactions and decisions is removed. These KPIs give users a permanent 360° view of how data are changing, and they can respond more quickly by using transactions to take whatever action is needed, such as releasing an order for example…
Improved collaborative working using AI and machine learning
With no boundaries between decision-making and operational transactions, S/4HANA users agree that collaborative working becomes much simpler and a great deal more efficient. In addition, AI and machine learning algorithms are some of the vital new technologies influencing how workflows operate. In fact, machine learning means SAP S/4HANA learns from users’ actions. For example, in the Procurement module, S/4HANA will analyze a supplier’s delivery habits as regards meeting deadlines, changes in costs, etc. in order to offer users better advice if they are, for example, looking for a new supplier to make up a shortfall. The ERP system is consequently able to provide a realistic estimated delivery date and an impact on unit price, depending on the quantity ordered. Migrating to S/4HANA therefore makes it possible to address new business issues and secure definite business benefits.
Lastly, lower operating costs are a certainty
The public health and economic crisis brought about by Covid-19 has only increased the burden on IT departments to further reduce operating costs. And S/4HANA can certainly help to reduce costs in particular through its new architecture where all functionality is integrated within a single, simpler environment. It is therefore possible to tidy the application landscape without losing any functionality. In the same way, new operational reporting options are created by the in-memory database. Real-time direct analysis of the transactions database becomes possible. The same technology also greatly simplifies the architecture of the decision-support system.
What about you – are you more brownfield or greenfield? What are the various possible migration routes to reach S/4HANA?
With SAP’s announcement that ECC support is being extended to 2027, it might be thought that customers would postpone their plans, or favor a purely technological migration to the HANA platform while keeping their ECC environment, but this is not the case, and SAP S/4HANA upgrade projects are still a popular choice. Many SAP customers are running fairly old versions and have already experienced migrations, but there is no comparison between shifting from version 4.0 to 4.6 and moving from ECC to S/4HANA. Such a move demands thorough planning. It is the most significant migration since the jump from SAP R/2 to SAP R/3. It is therefore crucial to understand the different possible trajectories and, whatever route is chosen, ensure that migration to S/4HANA creates value…
First possible route: a “brownfield” technical migration
A technical migration basically means keeping ECC while migrating the technological environment and database to HANA. It is a compromise position, prioritizing lower project costs and continuity of existing business processes. The business can subsequently seek to optimize certain functionalities to develop the system as needs arise, and purge any obsolete data no longer used. While this option might look straightforward and appear a good choice in times of economic uncertainty, make no mistake – it is still a major and complicated migration exercise. Although SAP’s technical utilities can speed up many tasks, migrating to the new database nevertheless entails structurally significant changes in many modules (receivables/payables, banking, fixed assets, etc.). There is a risk that bespoke features developed on ECC might suffer “side effects” that need to be anticipated. An impact assessment beforehand is therefore essential. In addition, this route means missing the benefit of S/4HANA’s functional innovations, and this postpones the migration’s potential value creation and its ROI alike.
Second possible route: a new “greenfield” install
A completely new implementation or “greenfield” approach entails replacing ECC with a new S/4HANA install, taking on some but not all existing data, as with any changeover of an ERP system. This route involves reviewing all processes in some depth to find ways to optimize them, including by adopting new functionalities to support the business or to remove custom developments from ECC to reduce maintenance costs and TCO. This scenario is preferable when some aspects of ECC are already felt to be unsatisfactory, and the wish is to build a new, more effective and more innovative system. In these circumstances, it is therefore important not to try to replicate the existing system, but to buy into the new way of working proposed by SAP S/4HANA and move the organization forward. All the basic data are migrated, and anything current is transferred over, but not all historical data. It is preferable to retain old data that are no longer used in the current ECC environment. This option creates the most value, but the project can take longer and prove more complicated unless use is made of Cadexpress S/4HANA prepackaged solutions. Our Cadexpress solutions are vertically integrated by industry and accelerate migration to S/4HANA, cutting the time to a few months by virtue of pre-configuring business processes and functionalities by following your industry’s best practices. You consequently gain the benefit of all the new features and advantages for S/4HANA with business accelerators designed to meet your requirements as standard. You are then ready to cope with ongoing changes, thanks mainly to S/4HANA architecture that enables more regular system enhancements without needing further complex and costly migrations.
The S/4HANA by TVH Consulting PoC can help you prepare thoroughly and choose the most appropriate route for your business
Migrating to S/4HANA does not require a specification to be produced. The S/4HANA by TVH Consulting PoC was created to help you easily answer the question: brownfield or greenfield? Our expert ERP consultants will analyze your current ECC environment and your data, and produce a full application map. They also analyze your business processes and then identify areas for improvement and all the potential gains that installing SAP S/4 HANA would deliver. This means you can draw up a complete project plan with an accurate estimate not only of the cost of migration but also of the benefits and main areas of innovation made possible by S/4HANA. You can then be sure of starting your migration project armed with all the information you need, and little risk of being forced to backtrack. So rather than feeling your way through the fog, contact us for a clear view of your S/4HANA migration.
The TVH Consulting Group
TVH Consulting brings together more than 170 Microsoft, SAP ERP and BI solutions experts, committed to 100% project success.
These contents may interest you:
- Reconciling ERP specifications with the need for agility
- SAP S/4HANA migration: why and how?
- Agri-food ERP systems: a comprehensive review to ensure the right choice
- ERP projects: advice on achieving success, from preliminaries to implementation
- How to make the right choice between Microsoft and SAP ERP systems
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