How to Get the Most from SAP S/4HANA

Michael Sokollek has produced a good S/4HANA article on the SAP website. Reproduced below. 

Many companies plan the switch to SAP S/4HANA in the form of a system conversion. But if you want to tap the innovative potential of this suite, it’s worth considering a greenfield implementation or – if you have a system landscape with several ERP systems – a landscape transformation.

Companies that already work with SAP ERP 6.0 (from enhancement package 0) often choose a system conversion as the way to transition to SAP S/4HANA. The reasons are obvious: If you’ve already invested in an SAP solution, you’ll want to continue to utilize the investments you made.

But the move to SAP S/4HANA is always more than a one-off project or purely a database migration. It always involves the entire IT system landscape, which is why it should always be viewed with an optimal SAP target architecture in mind – one where complexity is reduced and processes are simplified. An analysis against this background may result in opting for another transformation approach, namely a greenfield (that is, new) implementation or a landscape transformation.

Convert or Go for Greenfield?

While a greenfield implementation involves setting up a completely new system, a landscape transformation also offers the opportunity to convert an existing system. In this case, the existing SAP ERP landscape is reduced step-by-step through selective data transfer, and the scope of the SAP S/4HANA software is enhanced where necessary.

IT organizations are generally familiar with both options, although they had reservations about them in the past. One reason with greenfield implementations is that configurations, enhancements, and data are not automatically retained, despite the use of SAP upgrade and migration tools – something that is possible with upgrades or system conversions. And with landscape transformations, too, the greenfield approach is now often necessary, even if a system conversion would be theoretically possible, either because the processes mapped in the ERP systems are different or because the current ERP systems don’t provide a valid basis for a new start with SAP S/4HANA.

But even if both project approaches mean starting from scratch – and the investments made might have to be written off – this option makes long-term sense for customers in many situations. The reason is that added value can only be gained from SAP S/4HANA if the company’s processes take advantage of the technical possibilities offered by the SAP S/4HANA software and if the data in the system – particularly the master data – reflects the current business situation. If the transformation to the SAP S/4HANA suite is viewed purely as a technical switch, the innovative potential of SAP S/4HANA won’t be realized. A step-by-step adjustment of processes and a subsequent purge of the data basis then becomes difficult, because it’s seen as an option and not as an integral part of the project.

Ultimately, the decision about the route to take should be made based on an analysis that compares the duration, complexity, effort, and achievable benefits of a system conversion and compares it with a greenfield approach.

Greenfield in the Cloud

If the decision is made to transition by way of a new implementation – for example, if there’s only one system in the landscape – it’s worth looking at SAP S/4HANA Cloud as an option. The type and scope of the processes in this operating model aren’t exactly the same as with the on-premise version, and more functions are added on a quarterly basis. In principle, individual enhancements are possible. However, the public cloud option is especially suited to organizations that give high priority to standardization.

Option: Greenfield

New Implementation: When and Why?

A new implementation makes most sense if:

• Companies have high ongoing operating costs or complex end-to-end processes with low user buy-in.
• The system landscape includes many custom developments that have grown over time and don’t have a clear use, especially if functions were transferred to SAP R/3 when legacy systems were replaced. (A reduction in the number of such developments is almost impossible and, from a business perspective, will not generate added value.)
• Established processes no longer fit the company structure, for example, if an organization goes from operating locally to globally.
• The data from a unit in the organizational structure no longer reflects current needs with its number of controlling areas, company codes, or hierarchies.

New Implementation Step-by-Step:

Step 1: Installation of a local or cloud-based SAP-S/4HANA suite using the best practices that are part of the SAP Activate innovation adoption framework

Step 2: At the same time, assessment of the as-is processes and enhancements

Step 3: Performance of a fit-gap analysis: Which processes already fit? Which ones need adjusting? The IT team must then make the necessary adjustments based on the assessment, and achieve an 80% build status.

Step 4: Transfer of the data from the SAP ERP system, for example, using SAP S/4HANA Migration Cockpit

Objectives

The new implementation will simplify processes, and possibly change them, too. Users will work in a role-based way with SAP S/4HANA using the SAP Fiori launchpad with native SAP Fiori apps and familiar SAP transactions. From a business perspective, the setting up of new processes and the redesigning of existing processes is combined in line with requirements.

With the greenfield approach, another key benefit of the transformation to SAP S/4HANA can be tapped in the process design: the reduction of complexity, for example, the creation of operational reports without using a business warehouse.

More complex enhancements are no longer implemented in SAP-S/4HANA directly, but are instead realized on the basis of SAP HANA Cloud Platform. The goals of the transition are: to make system maintenance easier, to simplify the transition to the next version of SAP S/4HANA, and to optimize the enhancements outside of the SAP S/4HANA system and with a faster innovation cycle – based on the two-speed IT concept.

Option: Landscape Transformation

Landscape Transformation: When and Why?

Unlike a new implementation, a landscape transformation makes sense, for example, if comprehensive restructuring is needed and it’s no longer appropriate to deploy X number of SAP systems for a company’s divisions or regions.

Companies that are in such a situation usually:

• Have high operating costs
• Lack a common view of data in real time
• Need to make changes to processes in X number of systems, which leads to reduced speed and agility in the further development of the system as well as difficulties in coping with the digital transformation, where it’s necessary to adjust processes in ever shorter cycles.

Landscape Transformation Step-by-Step

Step 1: Decision about whether the basis for the landscape transformation should be greenfield or system conversion

Step 2: Analysis to ascertain the order in which the SAP ERP systems can be replaced

Step 3: Option: First achieve a cross-system view in the area of financials. By deploying Central Finance in the SAP S/4HANA suite, it’s possible to see all financial data in real time.

Step 4: Expansion of the system by fully configuring SAP S/4HANA and transferring data step-by-step from the other ERP systems

A landscape transformation thus leads to a significant consolidation of the system landscape and uniform processes across the company. If that’s your goal, the landscape transformation option is the right path to take to SAP S/4HANA.