When it comes to switching to S/4HANA – two schools of thoughts exist in terms of how to approach this often painful, but necessary process. It is possible for organisations to either convert existing SAP ECC investments to limit the costs and change impact (“brownfield”) or use this as a chance to transform the way their whole business works – and create a digital core (“greenfield”). A recent Panaya survey revealed that while SAP recommends the latter, the majority of organisations has adopted a brownfield implementation (31%) vs. 14% for greenfield, the rest being undecided. Short-termism? Based on our experience, this is what you need to know:
The brownfield approach
Also known as “conversion”, this approach allows organisations to adopt S/4HANA without significantly disrupting existing business processes - thought there will inevitably be some disruption purely from the technical change. The brownfield approach is typically for organisations that wish to preserve some of their custom environments and whose business models have not evolved significantly. It is, in essence, a technical upgrade that makes it possible to build on existing elements of the SAP environment, as well as on systems interfacing with supplier and partners’ systems. As it requires a defined sequence of activities to execute and a series of post-completion checks to perform, this approach is typically faster and less invasive, at first glance, than a greenfield implementation. This, in turn, minimises delays and disruption caused by testing to mission-critical applications. Companies that completed an SAP implementation within the last five or six years often use the brownfield approach – many will have “transformation fatigue” or genuinely feel their processes are best in class, but they still want to take advantage of the S/4HANA digital platform. And yes, of course, it is generally less costly than a new implementation - in the short to medium term at least.
- Faster implementation
- Step-by-step approach
- Less business change impact/disruption
- Lower-cost path
- Fewer resources required to deliver
- Enables re-evaluation of customisation and existing process flows
On the downside:
- Adds to the organisation’s existing technical debt
- Less standardisation
- Fewer opportunities to capitalise new functionalities
- Does not solve deep-rooted data and process problems
- Not as M&A friendly
The greenfield approach
This is a radically new implementation of S/4HANA that existing data can be migrated to. It enables complete re-engineering and process simplification. This is, in essence, similar to implementing a new platform for your business - it builds a totally new SAP environment. This is for the organisations that want to start afresh and have a ‘clean’ ERP. The strategy, approach, timelines and sequencing of activities for a migration are largely controlled by the organisation, and often stem from a desire to standardise best practices and address deep-rooted challenges in current systems and design enterprise structures. This approach, though, can be lengthy and resource-intensive because the change impacts are significant. You need to invest time heavily up front to get the reward of transformation down the line. Greenfield implementation is not just a technical exercise, it’s a major change that impacts every way of working. The new configuration should always be better aligned to the business’s strategic direction because it is designed for that very purpose. It’s also the opportunity for the organisation to digitalise its core and be fighting fit for a future business environment where IoT, AI and automation will be ubiquitous.
- Clean slate start
- Addresses deep-rooted issues
- Adoption of best practices processes
- Opportunity to implement more automation, more innovation and more control
On the downside:
- More complex
- More expensive
- Longer deployment time
- More change management required
Who dares, wins
Approaching the greenfield vs. brownfield decision with the organisation’s future strategy and operating model in mind (rather than being driven by technical and costs considerations) is often the ideal place to start. Ask yourself:
- Does your current ERP system support your future operating model and strategy?
- Are any challenges with systems, processes and data easily fixable in current systems, or are they rooted in the structural foundations of your solution?
- Do current systems provide the agility to suit the changing business landscape (and absorb shocks such as Brexit and more routine events such as M&A or tax rule changes)?
- And, finally, the toughest question yet: are you willing to change your organisation enough to capitalise on your choice?