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Organizations have deployment options for SAP S/4HANA: in the cloud, on premises or in a hybrid environment. There are benefits and drawbacks to each model, and while companies wrestle with which one to use, the SAP S/4HANA 2025 deadline looms on the horizon. Companies that have completed mergers and acquisitions or those that are undergoing a digital transformation are already making the move.
Those that haven't are looking at what they need to meet the 2025 deadline. While the technical requirements certainly are important, organizations also need to build a strong business case beyond just the SAP ERP Central Component (ECC) sunset deadline, experts say.
For the two primary business cases -- mergers and acquisitions and digital transformation initiatives -- moving to SAP S/4HANA is pretty straightforward. The digital transformation customers in particular look at SAP S/4HANA as not just a single initiative but as part of a strategy around other SAP products, like Concur, Ariba and SuccessFactors, according to Len Riley, commercial advisory practice leader at UpperEdge.
"In a lot of cases that aren't mergers and acquisitions, it's tough to build a business case to move from ECC to SAP S/4HANA," Riley said. The SAP S/4 HANA 2025 deadline isn't a compelling enough reason to move over. In these cases, Riley advised looking at the company's entire relationship with SAP, as well as its priorities with other departments, such as HR, supply chain and finance. "Business engagement is key," he added.
However, many customers don't want to fix something they don't see as broken. SAP ECC has fully developed modules for a number of industries and a full range of functionality, but it's not enough for capabilities like real-time decision-making, big data processing and other applications that are a part of business today, according to Bjoern Braemer, head of SAP S/4HANA movement at SAP.
"The discussion we would love to have is to explain that times have changed … and that the application lifecycle is getting faster," he said. Additionally, data volumes are growing exponentially, and SAP ECC will likely not be able to support the demand for resources that result from it. The business intelligence and analytics capabilities present a compelling case, Braemer added.
"You can build certain business intelligence models around ECC and use tools outside SAP, but you can't leverage certain advantages without using S/4HANA or participate in the roadmap that includes embedded analytics," Braemer said.
Greenfield installation may not be a complete rip and replace
As more SAP S/4HANA migrations are completed, a full greenfield, rip-and-replace installation may not be necessary for every situation, according to Braemer. "We could think about greenfield migrations where we're using the existing process models and simplification models but don't convert as a technical upgrade from the existing landscape," he said. Highly modified add-ons can be left behind, but the business processes and tools that assisted with data cleansing can be brought over, making greenfield migrations a financially palatable option, he added.
For small and midsize customers, a brownfield migration is the obvious choice. However, large healthcare or automotive customers end up going with greenfield migrations due to the sheer number of custom objects, according to Braemer.
Get infrastructure in order
While the business case is most important for organizations, the technical capabilities also have to be there to make SAP S/4HANA worthwhile. For example, deciding on a cloud deployment necessitates choosing among Microsoft Azure, AWS or Google Cloud. "A lot of work has to be done to evaluate the three solutions if you're going to go with a hyperscaler," Riley said.
Part of the sourcing process has to involve determining what the internal support and operating model will look like for a hyperscaler as well. For example, the company might be moving infrastructure, internally managing SAP S/4HANA or using a managed service for support. That part of the sourcing process and strategy needs to be considered, Riley noted.
"People are underestimating the numbers of decisions that need to be made from the operating model standpoint, as well as the stack of solutions, as they're considering the move from SAP ECC to SAP S/4HANA," Riley added.
The bottom line is there are no plans to extend the SAP S/4 HANA 2025 deadline, and companies have less than six years to get their SAP environments on S/4HANA. Organizations can use this perception of time to engage the systems integrators and internal stakeholders and determine what a viable path forward looks like, according to Riley.
Enterprises that will successfully make the move to S/4HANA aren't waiting for a compelling event like a merger, acquisition or digital transformation to occur. They're not betting that SAP is going to move the date -- they're conditioning the enterprise for what it will cost and what the impact to the business is and are starting to set expectations for the project, Riley said.
While every migration will be different, depending on custom objects and code, six years leave companies with plenty of time to evaluate their current environments, build the business case and engage the service providers they need for a successful project.