When it was launched, S/4HANA was flaunted as the biggest SAP platform update in over two decades. For business leaders, it was positioned as an opportunity to streamline processes, automate, unlock insight and innovation. S/4HANA was going to be much more than yet another implementation: a vehicle for digital transformation. Like most revolutions, change did not happen overnight. At first, the reception from big business was lukewarm. But a few years on, and with many businesses now live on S/4HANA, we have a clearer view of the benefits – but also the common challenges and yes, the lessons learnt, from those that went first. In this post, we tackle five of the biggest hurdles they faced:
- Making a solid business case
S/4HANA doesn’t come cheap and can be rather complex to implement, to say the least. You really need to think widely about how it will help standardise and automate the business in the long run. It’s important to focus on value and how to maximise your return on investment. For instance, why limit your implementation to reporting when you could use it for full transaction processing? S/4HANA can be used to transform your overall operating model, whether that is distributed teams, shadow IT organisations, labour intensive tasks or shared service organisations. Explore how your organisation can use most, if not all, processes that S/4HANA supports, and map your transformation roadmap around this.
- Choosing the right architecture
S/4HANA has to be about your business needs, not technology per se. Ask yourself the tough questions. These considerations are important to help you choose the right target architecture. For example, consider your business’s growth strategy – organic growth or acquisitions? For many businesses, the holy grail is a single instance of SAP. However, if your organisation is active in the M&A market, an agile 2-tier architecture (also known as ‘Hybrid ERP’ at SAP) may suit it better. This is where a head office could run on-premise S/4HANA with subsidiary operations on Cloud, using real-time integration to disseminate budgets or report on financial results. This would allow you to integrate acquisitions onto a common platform rapidly in the future.
- Get your data in order
Let’s be clear: S/4HANA is only as good as your data. Archiving unnecessary historical data, remediating custom table extensions at source and cleansing master data at source are all recommended for any SAP programme. While legacy data cleansing might be a high investment, the benefits of system-driven master data governance are numerous. Not doing this would also risk missing the business insight opportunities S/4HANA provides such as harnessing the power of data that is often spread across multiple systems in the business. This will, in turn, enable business leaders to implement a common data structure to represent their legal entities, business units, products, customers and so on, and access cross geographical and divisional reporting in a consistent way. The prize? No more delays in getting insights from geographical business units to group and consistent numbers across the business.
- Biting off more than you can chew
Going too fast, too far, too soon is a risky strategy. Many businesses today are already grappling with complicated and fragmented systems (whether ECC, another ERP or best of breed applications), rushing would possibly make things worse. Pressing the button too early means costs can ramp up: once the systems integrators are working, the clock starts ticking. Start small, with a proof of concept, and consider an agile roadmap based on fit to standard principles. See if you can implement the changes piece by piece. Don't see SAP merely as a software vendor and get them to accompany you as you take your tentative baby steps. Treat them as an outright partner in your transformation journey. This is especially important as keeping up with the rapidly changing portfolio and developments from SAP (regular product names changes, variants of products, evolution of key messages etc.) can be a challenge.
- Put people at the heart of transformation
Finally, for the switch to S/4HANA to be successful, it is vital to get everyone on board. S/4HANA implementation is not a technical transformation, it is one driven by people and change, driving new ways of working, behaviours and culture in order to fully embed the technology and process element. Show the businesses that S/4HANA acts as a catalyst and an opportunity to start the wider transformation journey – no one can dispute the need to modernise in an era of disruption where doing nothing is akin to business suicide.