The huge ERP implementations of the 2000s and 2010s took forever. In the post-corona reality, fortunately, better options are available, and speed is of the essence.
The 2000s were an exciting decade for the business world. The new millennium brought huge optimism, the creation of global value chains, widespread digitalisation of business models and cross-border collaboration – but also the erosion of old value streams, failing IT experiments and, as I remember particularly in my career, huge ERP projects that lasted for years and years.
Today, things are looking very different in the world of core enterprise systems. SAP has recently announced that it is discontinuing development on its flagship ERP, only providing mainstream maintenance for SAP Business Suite core applications towards the end of this decade. This also means that many large companies have already started planning for the change to S/4 HANA, essentially future-proofing their businesses as they quickly evolve into the uncertain digital future.
As an SAP expert at Deloitte, I speak to many large companies about the move to S/4 HANA – both companies that have started the transition already and those that have decided they want to wait. Like with any big decision, what I tell them is that they should only move if there is a good business case; the technical case alone for SAP is seldom good enough.
There is no doubt that the move to S/4 HANA is a sizeable investment. To fully unlock the possibilities, you need to ensure that you take the opportunity to move to a ‘clean’ ERP, thereby removing the customisations that you were forced to make in your previous ERP platform. In addition, this means revisiting old business processes and perhaps even outdated organisational structures. A flexible cross-functional digital platform requires material business transformation if it is to set the business up for the future – and of course, that transformation costs money.
On the other hand, we cannot close our eyes to the fact that, in many industries, markets and client expectations are evolving at a huge speed, pressuring companies to have digital solutions to complement their current products and services. Some companies have coped by building digital towers, seemingly detached from their core business platforms. Although this might work in the short run, it is seldomly a long-term solution when digital products and channels become mainstream rather than peripheral.
As a consequence of these trends, companies who have taken the decision to move to S/4 HANA have typically found that having a digital core to support their overall business agenda largely overshadows the investment. Rather than seeing obstacles, they see many possibilities associated with the new S/4 HANA functionality, including real-time analytics, demand driven MRP, production to individual customer specifications, support for product servitisation and intelligent digital back office functions in finance and HR, just to name a few.
Are we repeating the past?
What it all boils down to is the question of whether the implementation of S/4 HANA is really just a repetition of the huge ERP implementations of the 90s, the 2000s and the 2010s, only in a new disguise. The brief answer to this question is no!
Here is why:
Here to stay
Although moving to S/4 HANA is a large investment for any size company, when adopted as part of a business transformation for the right reasons, it can definitely allow an enterprise to leap into a more cost effective and flexible position compared to its peers in the industry and position it better for the next wave of digital influence.
S/4 HANA can provide a core digital platform for a much more responsive, intelligent, kinetic enterprise, with data that is unlocked, and available in real-time to manage the business in a more timely manner or combined with other business data to support the launch of new digital products or efficiently support the management of their digital businesses with digital intelligent technologies.
In this light, businesses should adopt S/4 HANA to support evolution, not just survival in the digital age – something which is paramount to move past the current crisis.
No business today can afford to wait another seven years to get its core up to speed, and luckily, they don’t have to. The monolithic ERP solution is a chapter that is ending. There is no point reliving what’s in the past.
Ask me about: SAP, S / 4 HANA, Digital transformation, IT strategy, Program management, Digital Finance function, Cloud David is a partner in Deloitte and the Nordic manager of our SAP business. David has worked with SAP since 1997 and thus has more than 20 years of experience with transformation programs, where the underlying theme is SAP and financial optimization. David helps and advises Danish as well as Nordic companies with digital transformations and implementation of SAP.