ERP Insights >> Magazine  >> March - 2021 issue

Advisory For CXOs At A Crossroads To Modernize Sap Erp

Author : Prabhakar Lal, Director- SAP S/4HANA Portfolio Lead, Capgemini
Friday, February 12, 2021

Prabhakar Lal, Director- SAP S/4HANA Portfolio Lead, Capgemini

Prabhakar Lal is an SAP consultant with over 20 years of experience in manufacturing, application development, SAP consulting and project delivery. He understands both traditional and modern world of SAP and has been helping customers all over the world to decide on SAP S/4HANA adoption approach.

SAP has modernized their ERP software in 2015 by transforming underlying data model and running it on high performant SAP HANA database. With new SAP S/4HANA ERP, SAP has removed duplicate functionalities, consolidated various solutions (including industry solutions) in the core which resulted in the simplification of the landscape and the way customer runs its business. Since 2015, SAP S/4HANA has evolved and there have been 5 releases of SAP S/4HANA (one every year) to not only help customers run its existing business processes but also leverage the power of artificial intelligence, machine learning in day-to-day operations.

“It is important to build a transformation roadmap including landscape simplification opportunities arising out of SAP S/4HANA adoption”

As SAP has stopped any further enhancements of existing SAP ERP (ECC6.0) beyond enhancement package 8, it seems intuitive that all the existing SAP customers will have already made the plan to move to SAP S/4HANA sooner or before 2025 when maintenance support is stopped for existing ERP software. It is not the case. Move to SAP S/4HANA is not an easy decision as it requires significant investments both in terms of costs and time. Also, to add to the complexity, there is no one single approach to adopt SAP S/4HANA.

I have been working with customers for last 4-5 years to help them find value, list impacts on the existing investments (business processes, developments, integrations, change management etc.), identify suitable approach for adoption and advise right time for the move. I have summarised my experiences below to help you take the very first preparatory step with your in-house IT team or your partner.

Find value in your context
SAP has been positioning SAP S/4HANA as next generation ERP leveraging artificial intelligence and machine learning to help customers remain relevant in the fierce competitive market. There has been a flurry of marketing campaigns both from SAP and IT service providers articulating the value of SAP S/4HANA. You need to identify applicable value propositions in order to build the business case for SAP S/4HANA. What’s in it for us is the most important question you can pose it to your inhouse IT team and/or your IT consulting service provider. It is important that you analyse SAP S/4HANA in your context and find values that help you in articulating the proposition in front of decision makers. You can leverage SAP’s tools or market leading key performance indicators analytics tools to perform this assessment.

Protect your investments
SAP S/4HANA is positioned as digital core for the enterprise and SAP advises to keep the core standard as much as possible and perform all business-critical customization on side-by-side extension platform or third-party application development platform. How do you define core of an enterprise? In my opinion, core is not only ERP software in the centre of your business operations but combination of all the software applications including ERP, customizations and custom developments. You as a customer have developed your core over a period to serve your business and these assets need to be protected while migrating to SAP S/4HANA irrespective of adoption approach. There are number of tools from SAP and other vendors which can help you identify assets to be re-used in SAP S/4HANA and provide you a suitable migration options such as re-development on extension or application development platform, retrofit for target SAP S/4HANA or discard to use standard features of SAP S/4HANA.

Select right adoption approach
There are multiple approaches to adopt SAP S/4HANA and you need to invest to find out most suitable approach in your context. Greenfield or new implementation may not be justifiable if you are in the middle of or recently undergone large ERP transformation and roll-out for your enterprise. Brownfield or system conversion approach seems an easy adoption approach but calls out for careful planning and analysis in order to identify impacts on the system landscape, integrations, custom developments, applications and business processes. Selective data transition approach is appropriate if you are cautious in the adoption approach and start small with one business unit or geography. However selective data transition approach requires specialised tools for data carve out and migration.

It is important that you evaluate each approach in your context and decide accordingly for smooth transition to SAP S/4HANA.

Build transformation roadmap including innovation
SAP S/4HANA impacts SAP ERP and other peripheral systems/applications in your landscape such as GTS, APO, SCM, SAP HR, SAP Ariba, Concur etc. While evaluating your landscape, you identify all the impacted systems and build a transformation roadmap for all the systems including SAP ERP. Considering SAP ERP migration to SAP S/4HANA as a stand-alone project is not going to be helpful for your enterprise. It is important to build a transformation roadmap including landscape simplification opportunities arising out of SAP S/4HANA adoption. While you are planning for SAP S/4HANA adoption, you should not forget to leverage pre-built innovations and prepare the development platform for future. You can have design thinking workshop with key stakeholders per process area to identify innovation opportunities and provide an edge to the business over competition.

To summarize, irrespective of your decision to move to SAP S/4HANA immediately or later, it is imperative to perform thorough discovery of value in your context, identify impact on core of your business operations, find right adoption approach and build transformation roadmap including strategic innovation adoption.