The path to SAP S/4HANA A guide from SNP AG and PAC. PAC Guide By Frank Niemann and Dr Cristian Wieland

Transcription

1 The path to SAP S/4HANA A guide from SNP AG and PAC PAC Guide By Frank Niemann and Dr Cristian Wieland

2 PAC Guide I The path to SAP S/4HANA 2 INTRODUCTION S/4HANA is the long awaited new product generation from SAP. The successor to the SAP Business Suite is based on the SAP HANA in-memory platform and is optimised for its use. The software can be operated on premise as well as in the cloud. In addition, SAP offers a new user experience with SAP Fiori. SAP S/4HANA is not just a new SAP release. It is a new technological architecture based on SAP HANA. Switching to the new product is more than just a release upgrade for existing SAP customers. For this reason, the changeover to the new SAP product requires some consideration. A number of companies are already discussing the adoption of S/4HANA. A recent PAC study supported by SNP AG and other IT providers 1 ( showed, among others, that around 66% of SAP customers are considering introducing the software; 36% are planning a suitable implementation project over the coming years and a further 30% are discussing it. 1 The completion and publication of this PAC study was supported by arvato Systems GmbH, Dell & Intel and SNP Schneider- Neureither & Partner AG

3 PAC Guide I The path to SAP S/4HANA 3 Are you planning to implement S/4 HANA in your company? No, implementation currently not planned/ discussed/ relevant, 33% Yes, within the next 1-2 years, 17% Yes, within the next 2-3 years, 4% Yes, within the next 3-5 years, 15% No, but we are discussing it, 29% No, project already being implemented, 2% PAC - a CXP Group Company, 2015 n = 100 Investment plans for SAP S/4HANA Existing SAP customers are now considering whether and how they should introduce SAP S/4HANA. There are two main approaches: Greenfield approach: complete reimplementation of existing SAP systems based on SAP S/4HANA. Brownfield approach: gradual migration of existing SAP systems to SAP S/4HANA (technical or transformational). According to the PAC study on SAP S/4HANA, around 60% of SAP customers prefer the brownfield approach, whereas about 40% favour the greenfield approach (see chart). Both approaches are relevant for customers. Therefore, system integrators should be able to optimally support both. The choice of migration path always depends on the individual situation of the customer. This guide is intended as a first step in helping readers ascertain which path to choose for their companies.

4 PAC Guide I The path to SAP S/4HANA 4 Companies that have implemented, plan to implement or are discussing implementing S/4 HANA: What implementation approach do you prefer? Brownfield: Gradual migration of existing SAP systems Greenfield: Complete reimplementation of existing systems 62% 38% 55% Certain existing SAP systems 39% Certain existing SAP systems 45% All existing SAP systems 61% All existing SAP systems Single response, n = 67 Project approaches for SAP S/4HANA (Source: PAC study S/4HANA Relevance for SAP customers, expectations and obstacles ) Aim of this guide The aim of this guide is to provide SAP users who are considering SAP S/4HANA with considerations in order to evaluate the pros and cons of the two project approaches. This guide deals with the basic issues of migration and thus offers a simplified overview. PAC and SNP AG have worked together to draw up this guide.

5 PAC Guide I The path to SAP S/4HANA 5 SAP S/4HANA GREENFIELD APPROACH Definition The greenfield approach involves the complete reimplementation of one or more SAP systems. Processes and systems are fully reconfigured. Primarily the business data of the existing systems is transferred. According to PAC, SAP begins a new chapter in its ERP history with S/4HANA. SAP customers can take advantage of it to free themselves from burdensome existing SAP system environments. Thus, S/4HANA can be a new start for them to align SAP-based processes to current and future process requirements. The greenfield approach is suitable for SAP customers who favour a migration of existing SAP systems to the SAP S/4HANA cloud edition. SAP S/4HANA cloud edition SAP ERP SAP Business Suite Processes/ configuration Master and transaction data Complete reimplementation of processes/ new configuration Master and transaction data SAP S/4HANA on premise edition Complete reimplementation of processes/ new configuration Master and transaction data Greenfield approach

6 PAC Guide I The path to SAP S/4HANA 6 Pro greenfield approach New start with SAP: Using the greenfield approach, SAP customers have the opportunity of a new start. Many SAP user companies use a long-standing technical infrastructure and process configuration, which is often so complex that cost and labour intensive adjustments are necessary due to requirements from the different departments. Companies in this situation now have the chance with SAP S/4HANA to reinstall processes and thus detoxify their backend. According to the PAC study, reducing the complexity of the system landscape is one of the biggest challenges for SAP customers. Challenges of digitisation: Digitisation has accelerated the need to completely align business processes and even support new business models with SAP software. According to the PAC study, over 70% of SAP users find it a big or even very big challenge to carry out new business requirements faster. The greenfield approach offers a way to reconfigure SAP systems to optimally support current business challenges and simultaneously lay the foundation to be able to meet future requirements. Restandardisation and upgradability: Customer-specific enhancements (customising) make it difficult to perform SAP upgrades. Such customising, which has been developed over years, has not always been necessary since SAP standard functionality offers equivalent or even better alternatives. A complete reimplementation of SAP software results in a state-of-the-art system. Less customising makes software maintenance easier and ensures upgradability. In addition, necessary customising is much easier to implement in a less burdensome software environment. Risks and project costing: Greenfield projects tend to be easier to calculate than brownfield projects. Since the implementation of the system architecture and the process of a first installation of SAP software are very similar, there is no planning and costing for the migration of the existing SAP configuration. This tends to reduce the risk of cost overruns or that the project does not yield expected results. It should be noted here that the new start in terms of processes requires coordination between IT, the various departments and in some cases an external consultancy firm. Under certain circumstances, and there are practical examples, the coordination effort can escalate, consequently even delaying the project and adding extra cost. The advantage of the greenfield approach in reducing project risk is thus lost. Increasing data quality: The basis of efficient processes is high data quality. With the greenfield approach of complete reimplementation, only the business data of the existing applications is transferred. This results in reduced data quality. The greenfield approach offers companies the chance to increase data quality before the actual SAP reimplementation. This option is available in principle with the brownfield approach, but not in the same way.

7 PAC Guide I The path to SAP S/4HANA 7 Companies should however be aware that data cleansing must fit into the time and cost budget of the project. However, in practice, many companies do not perform data cleansing especially in time-critical SAP projects. Contra greenfield approach Low investment protection: SAP users have invested time and money in SAP configuration over the years. This work and experience is largely wasted with the greenfield approach. Change management burden: Complete reimplementation of SAP software offers clear advantages. However, the effort required for change management can be substantial if the SAP software has to be completely reconfigured. This primarily concerns the relevant process changes for the various departments in addition to the technical challenges. Appropriate skills: A complete reimplementation of SAP S/4HANA may require skills that neither the existing SAP partner nor the internal SAP organisation possess. For example, according to the PAC study, almost 90% of companies find it important that SAP service providers can deliver S/4HANA innovation to both business and IT. Thus, it may be necessary to change the IT service provider. Existing contracts: Companies who operate their SAP systems in external data centres (SAP hosting) or avail of SAP application management services may have to adapt these contracts or renegotiate. Since a new SAP application is created through complete reimplementation, the contractual basis changes. In addition, ongoing leasing contracts for hardware should be reviewed since new hardware generally needs to be purchased to operate SAP S/4HANA.

8 PAC Guide I The path to SAP S/4HANA 8 SAP S/4HANA BROWNFIELD APPROACH Definition The brownfield approach involves the gradual migration of one or more SAP systems to SAP S/4HANA. A distinction is made between technical and transformational migration. With technical migration, a software update to SAP S/4HANA is carried out and the new infrastructure platform based on SAP HANA is introduced. With transformational migration, the software update is combined with the SAP transformation. This may include, for example, the consolidation of systems or the harmonisation of SAP-based processes. Most SAP customers prefer the brownfield approach. However, it is still worth providing the arguments for and against this approach. SAP ERP SAP Business Suite Processes/ configuration Master and transaction data Technical migration SAP S/4HANA on premise edition Existing processes/configuration on new technology Master and transaction data SAP ERP SAP Business Suite Processes/ configuration Master and transaction data Transformational migration SAP S/4HANA on premise edition Consolidated and harmonised processes and configuration on new technology Consolidated and harmonised master and transaction data Brownfield approach

9 PAC Guide I The path to SAP S/4HANA 9 Pro brownfield approach Manageable effort: Technical migration is relatively easy to perform with little associated risk since it is simply a software update. The configured SAP-based processes remain untouched but run on the new platform after migration and thereby benefit from its advantages. Combining upgrading and consolidation: Transformational migration is well-suited to companies who want to consolidate their SAP system landscape and harmonise SAP-based processes in various functional areas in the changeover to SAP S/4HANA. Companies are interested in combining software upgrading and SAP consolidation: according to the PAC study, over 60% of companies implementing SAP S/4HANA want to invest in the optimisation of their SAP environment. Integration with external systems: Companies often use a number of other internal applications and external systems from customers, suppliers or partners in addition to their SAP systems. The integration of third-party systems must, as a rule, be maintained after switching to SAP S/4HANA. In this respect, the brownfield approach can be advantageous since the integration interfaces need to be reinstalled with complete reimplementation (greenfield approach). Legal requirements (compliance): Depending on the sector, companies must meet various legal requirements such as documentation requirements in the pharmaceutical sector, the delivery of reports in the financial sector, and the maintenance of data history in the IT sector. With complete reimplementation, there tends to be a risk that compliance requirements cannot be fully met. Therefore, the brownfield approach may be the better choice for the relevant SAP systems.

10 PAC Guide I The path to SAP S/4HANA 10 Contra brownfield approach No opportunity for new SAP start: With the brownfield approach, especially with a technical migration, the existing SAP history is largely maintained. Thus, there is no opportunity to realign the SAP processes with the new software generation. Although SAP processes run faster after migration, a new user environment ( SAP Fiori ) is introduced and excess customising may have been removed, the same old business processes are still maintained. Difficulty in estimating the cost and effort involved: According to the PAC study, the greatest obstacle for companies with regard to using S/4HANA is the difficulty in estimating the cost and effort involved in the changeover to SAP-based processes. This is exactly the case with the brownfield approach, where existing processes are switched over. Since there have only been a few S/4HANA installations to date, experience is limited. The results of the study speak for themselves. However, the complex estimation of cost and effort need not be a fundamental obstacle to brownfield implementation since S/4HANA projects can be calculated with greater accuracy using the appropriate skills and tools as well as the support of an external project partner.

11 PAC Guide I The path to SAP S/4HANA 11 CHECK LIST: WHAT TO TAKE INTO ACCOUNT WHEN CHOOSING THE GREENFIELD OR BROWNFIELD APPROACH The decision to opt for the brownfield or greenfield approach when implementing SAP S/4HANA is based on a number of criteria. The following check list includes some criteria, which we feel are relevant for SAP customers when deciding between greenfield and brownfield. PAC assumes that, in practice, many companies combine both approaches, especially where several SAP systems cover a number of different task areas. I. Ongoing SAP transformation: If your company is currently going through an SAP transformation project, it is advisable to check whether and how SAP S/4HANA can be integrated into the ongoing project. It is possible that the properties of the new SAP system are beneficial to the intended transformation. But perhaps it also offers the opportunity to rethink the transformation strategy so that certain systems are not transformed but rather newly rebuilt. II. SAP Business Suite end-of-maintenance date: Every SAP customer will eventually have to introduce SAP S/4HANA at some point since the maintenance window for SAP Business Suite terminates in There is therefore still time to carefully prepare a migration and benefit from the experience of other projects that have already been implemented. Companies can use the time to decide which systems they want to transform or completely redesign. III. Migration to the cloud: There are basically two options for companies using SAP S/4HANA when migrating to the cloud: either switching to the SAP S/4HANA cloud edition or the SAP S/4HANA on premise edition, which is operated in the SAP HANA Enterprise Cloud. Companies must decide whether SAP systems can be transformed and then migrated to the cloud or whether a complete SAP reimplementation should be carried out as part of a cloud switchover. IV. Project risks: The risk that a project takes longer and turns out to be more expensive than planned tends to be higher with migration than complete reimplementation. There is little empirical data on the cost, effort and time-limit of a migration. V. International rollout: If a company is faced with the task of rolling out SAP solutions to other international locations, it should consider whether this could be used as an opportunity to establish a globally standardised SAP system environment.

12 PAC Guide I The path to SAP S/4HANA 12 VI. Alignment of SAP processes to business requirements: If the implemented SAP systems insufficiently meet business requirements, the situation in the coming years will only deteriorate rather than improve. In such cases, a company should assess whether a completely new start could achieve more than an attempt at a transformation. VII. Strategic importance of SAP systems: According to the PAC study, SAP systems play a central role in digital transformation for around 60% of companies. In these companies, the SAP system is not just a backend where an upgrade to SAP S/4HANA is carried out in order to stay in standard maintenance. Rather, these SAP users will consider how they can support the digital transformation on an SAP level through transformational migration or complete reimplementation. VIII. Assessment of the entire IT environment: Companies who use many other business applications such as BI and data warehouse systems in addition to SAP software should consider whether they want to upgrade the SAP programme with SAP S/4HANA or whether they want to replace part of the external system with SAP S/4HANA. The latter would be an SAP transformation, including the replacement of third-party applications. IX. Evaluation of existing customising: Before starting the migration, it is beneficial to evaluate the existing modifications of the SAP system with respect to their future need. This analysis will give the extent of required re-standardisation.

13 PAC Guide I The path to SAP S/4HANA 13 ABOUT THE CXP GROUP Founded in 1976, Pierre Audoin Consultants (PAC) is part of the CXP Group, the leading independent European research and consulting firm for the software, IT services and digital transformation industry. The CXP Group offers its customers comprehensive support services for the evaluation, selection and optimization of their software solutions and for the evaluation and selection of IT services providers, and accompanies them in optimizing their sourcing and investment strategies. As such, the CXP Group supports ICT decision makers in their digital transformation journey. Further, the CXP Group assists software and IT services providers in optimizing their strategies and go-to-market approaches with quantitative and qualitative analyses as well as consulting services. Public organizations and institutions equally base the development of their IT policies on our reports. Capitalizing on 40 years of experience, based in 8 countries (with 17 offices worldwide) and with 140 employees, the CXP Group provides its expertise every year to more than 1,500 ICT decision makers and the operational divisions of large enterprises as well as mid-market companies and their providers. The CXP Group consists of three branches: Le CXP, BARC (Business Application Research Center) and Pierre Audoin Consultants (PAC). For more information please visit: PAC s latest news: Follow us on CONTACT Frank Niemann Vice President Software & SaaS Markets T: +49 (0) M: +49 (0) E: f.niemann@pac-online.com Dr Cristian Wieland Vice President BAS Services & Consulting T: +49 (0) M: +49 (0) E: c.wieland@pac-online.com