Current situation

In recent years, more and more companies have acknowledged the need to start planning a transformation project from SAP ERP to SAP S/4HANA, due most of all to SAP’s decision to terminate maintenance of SAP ERP 6 at the end of 2027. As a result, many companies are now facing the increasingly urgent task of planning and initiating this transformation.

The transformation from older SAP systems to the modern SAP S/4HANA is a strategically important business decision, but also a complex task.

Because every SAP user company is different, with specific system landscapes, customized business processes, and a different technological infrastructure, it is not possible to use standardized plans as a copy template for your own SAP S/4HANA road map.

More than half of companies that use an ERP system from SAP are still in the basic consideration phase and therefore have an open approach to the design of their own transformation strategy. Some have reservations about potentially losing their years of investment in their ERP system, among other concerns. Rushed decisions, uncertainties in assessing SAP’s current services, and – last but not least – the anticipation of future developments are all key factors.

Eliminating planning uncertainty

In this context, it is important to be aware of the added value of carrying out an in-depth preliminary study at first, instead of launching an implementation project immediately.

Which transformation strategy is best for you is highly specific and will depend on your current situation and the business objectives you hope to achieve with SAP S/4HANA. To identify it, many companies carry out an SAP S/4HANA preliminary study, which examines a variety of aspects. To do so, they often use external consultants, to draw on their broad product and industry-specific expertise.

Comprehensive understanding of a company’s current situation is essential for a focused, successful SAP S/4HANA transformation project. In addition to the current SAP systems, this also includes changes to the business, the system architecture, and of course the company’s strategic objectives. The current situation is usually complex and requires a thorough analysis to identify potential opportunities and obstacles. According to study results, 70 percent of companies that have already undergone an SAP S/4HANA transformation stress how important a detailed analysis of the current situation was for the success of their projects.

Therefore, user companies need a detailed road map for the transformation. This will avoid unnecessary complications, together with the delays and increased costs they would cause during implementation. The transformation path to SAP S/4HANA can vary widely, depending on the result of these considerations before the project itself.

There are many hybrid forms between the two clearly differentiated approaches “brownfield” (system conversion) and “greenfield” (initial implementation), which are also referred to as “selective” or “hybrid” adoption.

Overall, companies that carried out a preliminary study beforehand achieved greater satisfaction with their migration projects. In cooperation with the trade magazine “IT-Onlinemagazin”, Scheer published an SAP S/4HANA study in August 2023 that confirms this: 36 percent of the surveyed companies want to conduct a process analysis before their SAP S/4HANA project for this very reason.

Contents of the preliminary study

A preliminary study goes beyond merely running and interpreting the standard SAP reports for assessing the system status (see “SAP Readiness Check”). Preliminary studies can be more or less work-intensive, ranging from more strategically focused management considerations to far-reaching process analyses that illuminate all operative aspects (as well as organizational aspects where applicable).

A preliminary study should answer specific questions, to create a sound foundation for the transformation. To this end, companies can choose the areas that are relevant for their own preliminary study from the following areas:

• Business process analysis: How can SAP S/4HANA support current and future business requirements and improve processes? Nearly 60 percent of the companies surveyed by IT-Onlinemagazin and Scheer in 2023 attach great importance to SAP’s Best Practice scenarios when it comes to getting closer to the SAP standard again as part of their transition to SAP S/4HANA. As part of a fit/gap analysis in a preliminary study, they examine the extent to which their existing processes can be adapted to these reference processes or even replaced by them.
  SAP S/4HANA also offers new processes in many scenarios. They are often capable of replacing proprietary developments, simplifying workflows, or even opening up entirely new lines of business for the company.
• System landscape and architecture: What should the future technical infrastructure look like and which adjustments and investments are needed to achieve it? What is the company’s stance on cloud solutions and which data and processes could potentially be transferred to them? How would integration be achieved in a hybrid architecture like this?
• Data migration and data integrity: In the beginning, you must answer the question as to which data is currently used by which processes. How good is the data quality and consistency in the current systems? It is often advantageous to archive certain data ahead of time, to reduce data volumes before migration. Does the data need to be transformed for SAP S/4HANA and how will the technical migration of the data to SAP S/4HANA be designed?
• Technical modifications: Of course, part of an SAP S/4HANA transformation primarily involves implementing the technical modifications. The SAP simplification list plays a key role here: It lists and explains these changes in the SAP system and how they should be handled in the project.
• New UI strategy (SAP Fiori): In the future, the look and feel of an application will be very important. Whenever possible and useful, modern Fiori apps that are tailored specifically to the respective application scenarios should be used. Because users only see the applications and workflow steps that are relevant for them, the user interfaces become much more manageable, boosting productivity significantly. The integrated help function is also very user-friendly and comprehensive. In addition, working with mobile user devices is greatly simplified and becomes possible without system discontinuity. AI functions continue to advance in the latest releases, guiding users through their tasks.
• Custom code check: Which custom-coded applications (also known as “Z programs”), tables, and data fields will need modifications in the migration scope and what effort will be required to do so? Alternatively, can they be replaced by new standard features?
• System integration and interfaces: This involves identifying existing interfaces and their potential need for modifications, as well as defining the standards for integration in the future system landscape. As part of the Business Technology Platform, the SAP Integration Suite offers new opportunities for connecting and consolidating the necessary interfaces.
• Assessment and definition of the transformation approach: Decisions regarding the future system landscape are made based on the analysis of the current situation and the definition of the target status. These definitions are taken into account when choosing from the available transformation scenarios. The best possible approach is selected on this basis.
• Change management and training strategy: Aside from identifying specific training needs for employees at different levels, this step also involves evoking motivation for the change and maintaining it over the entire course of the project. A stakeholder analysis and the development of a communication concept, for instance, are just as important as the ongoing integration of the relevant people and, when necessary, their active participation in the project.
• Compliance and security: This subfield involves reviewing the current compliance requirements, for example, with regard to industry-specific security guidelines, and defining measures to guarantee compliance during the transformation. Any country-specific legal requirements must also be taken into account.
• Supplier and partner integration: Coordinating processes for seamless collaboration and defining standards for integrating suppliers and other partners in the new SAP S/4HANA system. This can also involve clarifying the extent to which complementary solutions from SAP, such as Ariba/SAP Business Network, can contribute to optimization.
• Project planning: Planning the transformation project from the perspective of the project manager is an important part of the preliminary study. This includes schedules, milestones, budget and resource allocation for the transformation, project organizations, and formulating the specific project order and scope.

Results of the preliminary study

The results of the preliminary study serve as the basis for making the decisions in preparation for the transformation project. They provide concrete findings about the steps required to guarantee a smooth transformation.

If the results of the preliminary study are taken into account in preparation for the SAP S/4HANA transformation, the project’s efficiency and its prospects for successful implementation will increase. As such, the preliminary study delivers added value for the transformation project, because the well-grounded decisions will lower the costs and risks of the project as a whole.

As such, the specific results of the preliminary study form the foundation for a clearly formulated road map for SAP S/4HANA implementation. This can also mean that other preliminary studies are needed, for example, to implement new SAP features that are not already part of the main project (such as Business Partners, CVI). Measures for archiving and for improving data quality are often performed ahead of time. In addition, the road map usually defines how the legacy systems will be decommissioned.

Conclusion

In general, conducting a preliminary study prior to the transformation to SAP S/4HANA is recommended in all cases. It enables companies to understand their current situation, identify potential challenges at an early stage, and create a solid foundation for the transformation project. The effort and resources that are invested in the preliminary study pay off in the form of more efficient implementation and reduced project risks.