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BUSINESS INSIGHTS – SAP IS CHANGING; WHAT’S THE IMPACT?

by Eric McConnell, Principal
If you are planning to implement an ERP solution or have an existing system, the rollout of SAP’s latest business suite, S/4HANA, deserves consideration. Read on for how this change will impact your organization and insights to help you navigate through the next steps.

Not since SAP’s 1992 release of SAP R/3 has there been an update to their ERP platform at this scale. The key changes and potential impact to your business that come with S/4HANA are widespread and include transformations across the enterprise:

  • Simplified data model through table consolidation
  • Improved user experience via an updated user interface
  • Real-time analytics utilizing the HANA database platform
  • Those who stay on legacy software will incur additional support costs as SAP will be discontinuing support of previous versions
  • Most companies have a customized SAP solution, rendering some of the HANA database and S/4HANA enhancements incompatible
  • Your data footprint is reduced on a 10-1 scale, allowing for improved speed of processing, cost savings, and most importantly, quicker business decision-making capabilities

Where Do I Start?

When was the last time your organization prioritized an upgrade in its SAP environment? Leaders often struggle to articulate the business and IT value in performing upgrades, thus never tackling them as a strategic initiative for the organization. Because of the complexity of these changes, your organization might not have the capabilities or bandwidth to perform this type of migration or upgrade – making it important to have a clear understanding of where you are today and your implementation options, before developing a plan for where you want to go.

Current State:

If you already use an SAP ERP, but it’s not running on the HANA platform, you may find value in a HANA implementation – which can provide some processing performance enhancements, along with an easier migration to S/4HANA. If you have an existing, but outdated ERP, you may consider a full system migration from your legacy software to S/4HANA. Or if your business doesn’t have an ERP at all, it may be time take a closer look at your system strategy by determining your current business problems and subsequently conducting a Packaged Software Evaluation.

Utilizing an internal team or an external partner, you should perform an assessment on the current modules in scope, current version or enhancement packs, and the current data size of your SAP footprint. There are SAP and third-party tools that help with versioning and sizing standards for your environment, including pre-transition check reports and SAP Data Volume Management. Observing employee and customer interactions as well as getting feedback from stakeholders is also important at this stage to identify your opportunities, issues, and risks. 

Weigh Your Options:

It’s time to determine when (and how) it makes most sense to upgrade. Defining the scale of your migration or implementation, prioritizing the initiatives, and assessing the impact these changes could have on your business functions are important considerations when evaluating the options available to you. Keep in mind:

  • Deployment can range in complexity and is determined by variables in the current state of your business and your roadmap.
  • For those with an existing ERP, options include piloting the functionality and challenges by migrating to the HANA database while maintaining your current ERP. This option allows you the advantage of continuing to use your existing system while leveraging HANA as a secondary database to prove its value.
  • SAP offers various options within on-premise, cloud, or hybrid editions for its users. An advantage to a cloud solution is lower IT cost for physical hardware purchases, which could be obsolete in the next 3-5 years. However, some businesses manage sensitive data that doesn’t allow for such a deployment. In those cases, adding an in-memory computing engine is an option to consider, allowing organizations to take advantage of vast amounts of information at a considerably lower cost.
  • Not all functions provided in SAP R/3 are available in S/4HANA today – so a thorough analysis of future state options is recommended prior to migration or implementation.

Plan for Change: 

With a realistic starting point in hand, you can now plan for change. This begins with creating a detailed roadmap to understand the implementation or upgrade to SAP S/4HANA along with the potential benefits. Due to the size and complexity of a program of this nature, it is essential to adequately plan and select the solution that is right for you.

Embarking on this major change will most likely require an outlined business case that accurately documents and articulates the justification, ROI, and need for such a transformational change. Developing a detailed organizational change management and communication strategy that manages your risks and supports adoption is also a key for success.

If you are considering implementing an ERP, think strategically. There are significant implications that come with the recent changes in the ERP landscape – particularly for those considering SAP. Understanding your current state, weighing your options, and thoughtful planning, in light of these implications, are critical to effectively navigating a change of this scale.

Click here for a simple, downloadable asset to help assess your ERP needs

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