SAP S/4HANA is the next-generation ERP platform that is revolutionising the way businesses operate. However, the transition from traditional SAP ERP to SAP S/4HANA requires a major commitment of time and resources. In this guide, we will walk you through the key steps to ensure a successful migration.
1. Understanding the Need to Migrate to SAP S/4HANA
The first step in your journey towards SAP S/4HANA migration is to understand the fundamental reasons for making this transition. While SAP has set a 2027 deadline for the migration, there are several other compelling reasons to shift to SAP S/4HANA.
1.1 Reasons to Migrate to SAP S/4HANA
The decision to migrate to SAP S/4HANA is often driven by the need for a more contemporary ERP system that can access cutting-edge technologies. Here are some of the key benefits of an SAP S/4HANA migration:
- Enhanced User Interface: The user interface of SAP S/4HANA is simpler and more intuitive, improving user experience and productivity.
- Real-time Analytics: With in-memory computing capabilities, SAP S/4HANA provides real-time analytics, reinforcing data-driven decision making.
- Process Automation: SAP S/4HANA allows for widespread automation of business processes, reducing manual workload and increasing efficiency.
- Access to Latest Technology: SAP S/4HANA provides access to the latest technologies, including AI, chatbots, and IoT, to keep your business at the forefront of innovation.
- Increased Speed: SAP S/4HANA can significantly increase the speed of financial closings and other business processes.
- Standardisation: SAP S/4HANA allows businesses to standardise their operations and processes globally, ensuring consistency and uniformity.
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2. Approaches to SAP S/4HANA Migration
There are several approaches to migrating to SAP S/4HANA. The choice of the approach depends on the specific needs and circumstances of your organisation.
2.1 Greenfield Approach
The greenfield approach involves building a completely new ERP system, often on new data centre or cloud infrastructure. This approach offers the best way to leverage all the benefits that S/4HANA offers, such as process automation, real-time reporting, and predictive analytics.
2.2 Starting with S/4HANA Finance
Another common approach involves migrating to the financial module of S/4HANA first, before moving to other modules. This approach is feasible because accounting is a conventional back-end process that doesn’t change much, allowing the migration to be conducted without disruption.
2.3 Using RISE with SAP
RISE with SAP is a bundled service that enables customers to quickly start using S/4HANA and its broader ecosystem. This approach automates the testing process of ERP program code, helping to determine what can move to S/4HANA.
3. Choosing the Right SAP S/4HANA Migration Approach
Choosing the right migration approach is critical. This choice is usually made during the design phase of the implementation when you set your strategy and roadmap. Here is a step-by-step guide to help you make the right choice:
3.1 Evaluate the Current System
The first step is to assess your existing ERP system, its data, and the business processes that it impacts. This includes evaluating the licensing and maintenance costs, and understanding the pain points of your users.
3.2 Review the Architecture
Next, you need to determine how your existing ERP modules and business processes map to the available S/4HANA modules and deployment options. This will help you decide which components to leave behind.
3.3 Analyse the Future State
Finally, gather requirements from users, department heads, executives, and other stakeholders to envision what the new ERP should do. This will help you quantify the benefits, such as cost savings from consolidating ERP systems or launching a new e-commerce business.
4. SAP S/4HANA Deployment Options
SAP S/4HANA offers several deployment options to choose from. The choice of the deployment option depends on your specific business needs and objectives.
4.1 On-Premises Deployment
In an on-premises deployment, S/4HANA runs on your own data centre. This option gives you full control over your ERP system but also requires significant resources to manage and maintain the system.
4.2 Cloud Deployment
In a cloud deployment, S/4HANA runs on the cloud infrastructure of SAP or a third-party provider. This option reduces the resources required to manage and maintain the system, but you have less control over your ERP system.
4.3 Hybrid Deployment
A hybrid deployment combines on-premises and cloud deployment. This option gives you the benefits of both on-premises and cloud deployment, allowing you to balance control and ease of management according to your needs.
5. Challenges in SAP S/4HANA Migration
Migrating to SAP S/4HANA is a complex process that can pose various challenges. Here are some common challenges that organisations face during S/4HANA migration:
- Complex Legacy Landscapes: Many organisations have complex IT landscapes with a mix of on-premises, SaaS, and private cloud applications, making integration a major challenge.
- High Degree of Customisation: Customised ERP systems can complicate the migration process, as the customisations need to be carried over to the new system.
- Unclean Master Data:
6. Key Steps to a Successful SAP S/4HANA Migration
To overcome these challenges and ensure a successful migration to SAP S/4HANA, follow these key steps:
6.1 Develop a Clear Roadmap
A clear and well-thought-out roadmap is crucial for a successful migration. This roadmap should outline how S/4HANA can meet your current business needs and how you can achieve your desired goals.
6.2 Design Your Architecture
You need to carefully design the architecture of your SAP environment and decide the necessary changes. For example, SAP S/4HANA provides remote access and allows users to easily access data from mobile devices.
6.3 Train End Users
The migration to SAP S/4HANA will introduce new user interfaces, technologies, and processes within your organisation. Therefore, it’s important to consider the training requirements for implementing the SAP environment.
6.4 Collaborate with Third Parties
Your SAP environment changes will impact the hosting infrastructure and managed services offered by your provider. Therefore, it’s essential to take feedback from business users and third-party service providers.
7. Choosing the Right SAP S/4HANA Implementation Partner
Choosing the right implementation partner is crucial for a successful SAP S/4HANA migration. Here are some tips to help you choose the right partner:
- Look for a Strong Selection of Deployment Methodologies: Your implementation partner should offer a variety of deployment methodologies to suit your specific needs.
- Check for SAP S/4HANA Certification: Certification is a good indicator of experience and expertise in S/4HANA implementation.
- Ask for References: Talk to other organisations that have worked with the implementation partner to get a sense of their experience and satisfaction levels.
8. More Migration Best Practices
Here are some additional best practices to ensure a successful SAP S/4HANA migration:
- Use What’s Already Available: No need to reinvent the wheel. If there is an S/4HANA extension available that meets your needs, use it rather than developing one from scratch.
- Think Long Term: Plan for your future needs when designing your S/4HANA migration. This will help you avoid getting locked into an inflexible model.
- Avoid Customisation: Some organisations aim for zero customisation when designing their S/4HANA migration projects. This requires a willingness to use out-of-the-box functions.
- Set a Time Limit: With prebuilt templates available from SAP and its partners, some parts of your business could be running on S/4HANA in as little as six months. Set a one-year time frame and ensure you have a strong change management process in place.
9. Licensing Models and License Conversion Choices
When migrating to SAP S/4HANA, you also need to consider your licensing models and license conversion choices. Get advice from SAP experts on the following:
- Preparatory Work: The necessary preparatory work can save a significant amount of money.
- Choosing Between Contract or Product Conversion: Understand the differences between these two options to make an informed decision.
- Using Simulations to Save Money: See how other companies have used simulations to minimise costs during their migration.
10. Finally…
Migrating to SAP S/4HANA is a significant undertaking, but with careful planning and the right approach, it can bring enormous benefits to your organisation. By following the steps outlined in this guide, you can navigate the migration process more effectively and ensure a successful transition to SAP S/4HANA.
