Selective Transformation for moving to SAP S/4HANA® – Having your cake & eating it.

It is well known that SAP has set a deadline of 2025 (extended to 2027/2030) for the end of SAP ECC ERP maintenance support. SAP has stopped investing in SAP ECC ERP and prioritizes investment into SAP S/4HANA® as the future flagship digital core solution. The majority of SAP’s thousands of SAP ECC customers have yet to start their transition to SAP S/4HANA®.  This delay is due to a combination of trepidation around the scale of the investment and the fact that many of these customers are largely happy with their existing ECC system(s) and don’t yet have a compelling business case to justify the transition.

Migration paths to SAP S/4HANA
Companies considering their future digital core solution options have a spectrum of possibilities to transition to SAP S/4HANA®, which are summarized in the diagram below. Understanding the transformation ambition of the company is a critical first step in defining the right transition approach.

The Greenfield approach has been the historical preference for earlier adopters of SAP S/4HANA® looking to genuinely transform their businesses and deliver tangible business benefits. These programs by their nature tend to be longer, which extends ‘time to value’ compared to other options.

Brownfield technical conversions are delivered more quickly but can be with little initial business benefit beyond keeping ERP software on a supported release.  If the SAP organization and data structures are not fit for purpose it requires some configuration as well as data clean-up during the technical conversion. However this platform first approach is with low risk and low business involvement and allows for flexible planning of innovations projects. All in all these programs may be longer and costlier than initially expected and actually constrain the benefits the SAP S/4HANA® solution can deliver. The planning exercise for the Brownfield conversion and the incremental projects is of high importance to lower the overall project execution time.

We often see that a Selective Transformation approach is increasingly adopted by companies wishing to drive targeted value by modernizing specific aspects of their existing SAP ECC system to better serve the business, drive efficiency or reduce costs. At the same time, these companies are not ready to take on an end-to-end transformation and want to retain certain value adding assets that they’ve built into their SAP ECC systems while removing redundant code and to embrace digital possibilities with the most optimized investment level.

Benefits of Selective Transformations and Brownfield conversion with innovation projects
The benefits of these approaches, compared to Greenfield transformations are that it allows companies to:

• Preserve their existing investments whilst innovatively transforming business processes to drive standardization and simplification across the business
• Adopt SAP S/4HANA® innovations, through a roadmap of agile projects that are delivered at a pace driven by business priorities, benefits and the ability to absorb the change
• Have a quicker time to initial value – as they deliver faster than Greenfield transformations
• Streamline demand for business and IT resources, building their trust and momentum needed to support further post-migration innovation project
• Smooth cash flows and enable the program to be ‘self-funding’, such that the benefits realised from early go-lives help to fund the subsequent innovation projects

Other considerations
There are a few other areas to consider with a Brownfield or Selective Transformation approach:

• Thoughtful planning of which elements of the existing ECC solution should be migrated, which require remediation, and which should be transformed. For the elements which would be migrated, understanding all of the implications and complexities related to data, configuration, custom code, and integrations is critical to the development of a robust migration plan. For elements which require remediation, understanding the degree of remediation required will impact resourcing, timelines, effort, and costs. On the transformation side, identifying the capabilities which will deliver the desired improvements requires careful review of system functionality and processes and whether each should be transformed as part of the migration or as a later innovation project
• The new SAP S/4HANA® system is created without initial data and this data needs to be migrated from the original ECC production system. Just like a greenfield project this can be done using the SAP S/4HANA® Migration Cockpit combined with leading data extraction and transformation tools. If however, historical data also needs to be migrated, then this is best loaded through the use of specialist Selective Data Transformation partners, such as SNP and CBS, which have certified load tools that update data directly against the SAP S/4HANA® database. Companies should carefully consider how much historical data to migrate and in which areas
• The optimal approach depends upon the company’s ability to absorb the required business change, manage temporary ways of working and minimise business downtime
• SAP S/4HANA® Selective Transformation like Brownfield conversions can be delivered with On Premise / hyperscaler hosted or SAP RISE Private Cloud environments. Selective Transformation, like Brownfield, is not currently supported with SAP RISE Public cloud edition.

Learn more about Deloitte’s SAP S/4HANA® capabilities
With a global network of more than 28,000 business and technology professionals focused specifically on SAP, Deloitte is recognised around the world for our depth, experience and leadership in helping our clients manage their digital transformations. Clients choose to work with us because we combine business insight with technical know-how to deliver practical, results-driven solutions that work in alignment with larger strategic goals.

As the world’s leading SAP S/4HANA® Transformation Partner, Deloitte brings a wide range of experience helping our clients transition to SAP S/4HANA® and SAP BTP via Greenfield, Brownfield or Selective Transformation approaches. Within Selective Transformation, we are experienced in both the Shell Conversion and Mix and Match approaches and working with Selective Data Transformation partners. We also bring deep experience of hosting SAP S/4HANA® on all the hyperscalers and SAP RISE Private and Public cloud offerings. We bring a suite of automated tools to accelerate and streamline the delivery of these SAP S/4HANA® programmes.

Our team is ready to guide your company through the transition options and help you develop the scope, roadmap and compelling business case for change as well as to pilot- or co-pilot you through your SAP S/4HANA® transition. Contact us to get the conversation started and read more about selective transformation here.