By Glenn Sawyer on 3/6/19 10:41 AM
Reading about adoption of SAP S/4HANA in the news, you’d be hard-pressed not to run out and start planning your migration right away. With SAP touting rapid adoption growth- to the tune of 1,700 customers live on HANA with more than 200,00 active users and 50+ TB of data running on its systems -- we are seeing clear momentum for S/4HANA in the marketplace. Additionally, a quick poll on one of our recent webinars found that 33% of organisations are already in the planning phase to adopt S/4HANA with another 50% in the discovery phase.
With these findings, I agree with Gartner that now is the time to start your in-depth analysis of the technology and build out your business case for S/4HANA. If the idea of an assessment sounds overwhelming, fear not. I’ve narrowed it down to three critical elements you should consider, or risk facing significant disruption from faster, more agile competitors.
1. Reduce -- Or Eliminate -- Your Technical Debt
Over the last 40 years SAP has amassed a loyal customer base building their businesses on the company’s innovative technology. They have invested heavily in their ERP suite and have adopted several iterations with different versions of its applications dotted around different locations and verticals. Additionally, they have customized these applications to address a multitude of business needs to affect the variety of unique challenges and opportunities companies like yours grapple with on a daily basis. The result is a set of very robust systems managing huge volumes of transactions.
Today, though, businesses are facing a challenge unlike any other they have dealt with in the past. A quick glance at the S&P500 shows that even the most established players are fighting a constant threat of creative destruction from more agile, digitally savvy competitors. No industry is immune from this threat and every business needs to have a plan of attack.
Consequently, when customers look at their existing SAP implementations they have to ask themselves a couple of key questions:
- Have these applications evolved as quickly as my business and the industry I’m in?
- Will I be able to keep up with the pace of change moving forward?
If the answer to either of these questions is “no,” then it is clear these businesses are racking up a technical debt in terms of legacy applications and complex customizations that will leave them unable to compete.
2. A single source of truth to deliver actionable insights in real-time
On the flip-side Forrester has already explored the significant benefits of adopting S/4HANA and found that customers saw ROI within nine months on average. Even more dramatically, the scale of return was huge-- estimating the total return-on-investment in that time period as 265%.
Agility is the watchword for most CEOs today, but delivering on this promise is incredibly hard as businesses have to be able to adapt and change direction at high speed if they are to spot market opportunities before their competitors. This puts tremendous pressure on CIOs who are not only tasked with managing down on-going IT expenditure, but are also now burdened with finding ways to make the infrastructure more responsive. I have already outlined the complexity of legacy applications and customizations, but if the CIO is to fulfill the demands of the business it is critical to be able to draw together information from disparate systems and create a single source of truth. Only then will the organisation be able to create a clear picture of the customer and market opportunity. This requires more agile systems to extract and analyse data in real time, which identify actionable insights that the business can use to drive revenue growth or fend off competitors.
Therefore, the next big question has to be: does your existing SAP implementation give you a single source of truth?
If you cannot provide the business with the strategic information it needs, then you have another clear justification for your S/4HANA business case. A key element of the migration to S/4HANA is the opportunity it gives you to deal with the vast swathes of data you have, streamlining it with effective data archiving and de-cluttering your SAP environment of custom code. Moving to S/4HANA you will have the opportunity to adopt industry best practices, which will allow you to maximize performance gains from the SAP HANA in-memory database. This could lead to dramatic improvements in delivering real-time information.
3. The Law of Supply and Demand
Despite support of the ECC6 platform extending to 2025, I would suggest it is dangerous to put off planning for S/4 HANA because you believe you have plenty of runway to create an adoption framework. While our experience suggests customers can achieve rapid gains through its implementation, it is by no means a small undertaking, which involves not just changing IT systems, but also adjusting business processes and organisational behaviors. This requires a robust change management approach, but more importantly, it requires the right resources to implement the change.
“Moving to S/4HANA requires a robust, strategic approach that is not just built with the 2025 deadline in mind but seeks to build an SAP platform that can respond to the business now and in the future.”
For those of you concerned that implementations of S/4HANA are fewer in number today than they will be in 2025, I ask this: can you afford to wait to implement S/4HANA? Obviously, the longer companies wait the more likely demand for S/4HANA expertise will grow, which will make implementing the platform a far more expensive, and urgent, affair. If you act now you can conduct a proper assessment of the merits of S/4HANA and there are a number of very useful tools to help with this process (more on this point shortly!).
I encourage all SAP customers to start evaluating S/4HANA. Do not build a view of the technology based on the wild assertions of the social media grapevine. Use the tools SAP is offering to create a robust business case for the platform. I strongly recommend starting with the Business Scenario Recommendation (BSR) tool, which is free and helps you to focus the mind on where changing business processes to S/4HANA can have the most impact.
I would also say that custom code and the associated technical debt it creates requires your close attention. We found on a recent webinar with our customer Naturipe there could be anywhere between 40% – 60% of the code in your existing SAP environment that is no longer needed. There are excellent tools to assess the impact of such code on your S/4HANA migration, including the SAP Custom Code Migration Worklist. Finally, I am going to reiterate what many of our customers already know, namely that moving to S/4HANA requires a robust, strategic approach that is not just built with the 2025 deadline in mind but seeks to build an SAP platform that can respond to the business now and in the future.
With improved performance, companies can make agility part of their organizational approach to new market opportunities. The improved performance will support better relationships with customers by delivering actionable insights to the business in real-time. This makes the business case for S/4HANA more than the migration of an ERP system. It builds into a strategic business imperative to help your business remain competitive in the future.
READ MORE in our blog series: Is Data Archiving Part of Your S/4 HANA Implementation?
 Source: What Customers Need to Know When Considering a Move to S/4HANA — Gartner, October 2018
 Source: Innosight 2018 Corporate Longevity Forecast: https://www.innosight.com/insight/creative-destruction/
 Source: Forrester Total Economic Impact of S/4HANA