Digitalization of enterprise platforms has been a hot topic for years now in keeping with the advent of Industry 4.0 and emerging technologies like Internet of Things (IoT), machine learning (ML), artificial intelligence (AI), and blockchain.
S/4HANA is SAP’s answer to this call for digitalization. Following this, SAP customers have been pre-empted to migrate to S/4HANA as SAP will eventually stop supporting the ECC versions (SAP’s old ERP). Even back in 2019, an IDC survey reported that 73% of the surveyed organizations were planning to deploy and 18% were in the process of deploying SAP S/4HANA.
It’s unarguable that ECC is still able to support the day-to-day running of operations from accounting, sales, procurement, manufacturing, distribution, to plant maintenance. But S/4HANA has the infrastructure and functionalities needed that provide a foot in the door for companies to transform into an intelligent enterprise.
It’s time to stop viewing S/4HANA migration as a technical necessity, but as a strategic imperative to breathe a new life to your business processes, operations, and long-term goals. While you may be aware of the general benefits, there are bigger advantages in planning for and executing an early migration.
The Benefits of Early Migration to S/4HANA
Leverage enhanced features and state-of-the-art innovations
SAP has invested a lot in S/4HANA to facilitate companies’ digital transformation agenda and continues to do so through dynamic quarterly releases. The key components like in-memory database, real-time processing and analytics, embedded AI, and award-winning FIORI interface (no more boring blue SAP GUI from the olden days!) are already there with continuous enhancements and addition of features.
But the focus is not on technological enhancements alone. SAP has pulled out all the stops in redefining and simplifying business models. This is evident through the introduction of Universal Ledger which merges the previously disparate Financial Accounting (FI) and Controlling (CO) modules to seamlessly attain a single version of truth.
Another example is Intelligent Asset Management (IAM), an extension of Enterprise Asset Management (EAM) but enhanced with intelligence and collaboration capabilities like IoT, predictive analytics, and mobility. This is coupled with Asset Intelligence Network (AIN) that enables asset information sharing among suppliers, manufacturers, and operators through a standardized framework.
Moving to SAP S/4HANA enables organizations to reap benefits from both technological (e.g., real-time data processing speed and machine learning applications) and business (e.g., integrated finance, extended warehouse management, and intelligent asset management) perspectives.
Avoid skyrocketing complexity and cost
Although most of the new SAP functionalities like Intelligent Asset Management and Digital Supply Chain are still ECC-compatible, there’s always the caveat that the more advanced features are only available on S/4. The same goes for other traditional ERPs. You’d have to do additional development, customization, and integration to bridge the technological gaps and satisfy current business needs.
It gets interesting when you decide to migrate to S/4HANA further down the road. The patchworks on existing systems need to be ported over too. Imagine the cost, time, and manpower to assess, rebuild, test, and move these extra configurations! There’s also the risk of incompatibilities and failures where you’d have to devise workarounds just to make them work.
As S/4HANA would already have these breakthrough features, choosing to migrate now rather than later definitely saves time, cost, headaches, and sleepless nights.
Gain competitive advantage
You might be tempted to wait until 2027 when ECC approaches end of support before performing S/4HANA migration. Sure, you may be able to secure the right expertise and budget to handle the migration at the eleventh hour.
The adage “the early bird catches the worm” may well be relevant here. Why not get a head start by planning the migration early? This way, you’ll gain the coveted edge against your competitors who have yet to migrate to S/4HANA.
View this as an opportunity to transform your entire business models and operations to increase productivity and boost profitability. IoT connectedness, predictive analytics, simplified data models, industry-driven solutions — these are all catalysts towards broadening new revenue streams and capitalizing on market opportunities.
On the flip side, what if your competitors decided to move to S/4HANA first? Who’s at the losing end now?
Future-proof business and strategic imperatives
Forward-looking organizations would have their long-term strategy roadmap in place. Equally important is to have a corresponding IT strategy that prescribes the system landscape and infrastructure.
Running your business and operations on high-maintenance, suboptimal IT systems that are fast becoming obsolete is like building and renovating your house on a loose foundation. The foundation could give way at any time, causing your operations to malfunction or worse, come to a grinding halt. This translates to productivity and revenue losses. The worst-case scenario is your company’s image could be tarnished.
So, it’s better to start strategizing for S/4HANA move now where you’re guaranteed a strong, agile foundation to run your core business and critical operations for now and the future.
Planning for Data Migration
Now that we’ve understood the wealth of values behind early S/4HANA migration, one critical element that you should consider in this migration is your data. Oftentimes, people emphasize high-level strategy, business assessment, and project planning. And there are also the deployment options to think about. Is it going to be greenfield (totally new implementation), brownfield (system conversion), or any other color?
We would argue that formulating sound data migration planning needs to be high on the list too. The migrated data should be of high quality so that people can confidently use it. That’s why a governance and assurance framework should be factored in to ensure ongoing data quality.
This empowers your people to use data in their day-to-day tasks, as a basis for collaboration, and in informing their decisions. These are essential behaviors towards establishing a data-driven culture.
In short, your digital transformation agenda wouldn’t be complete without including strategy and behaviors to build a data-driven culture. Hence, data migration should come hand in hand with your overall S/4HANA migration planning and as the first step in your overall data strategy.
Written by: Shigim Yusof