SAP S/4HANA migration is a pivotal step for many organizations looking to modernize their enterprise resource planning (ERP) systems. While the move promises enhanced functionality, improved performance, and a path to digital transformation, it also comes with its fair share of complexities.
In this blog, we explore the current trends in SAP S/4HANA migration and offer practical tips for overcoming challenges and leveraging best practices to ensure a successful transition.
Understanding SAP S/4HANA Migration Trends
Despite the benefits of moving to SAP S/4HANA, adoption rates remain relatively low. As of mid-2024, only 37% of SAP ECC customers had licensed S/4HANA. The primary reasons for this slow uptake include high migration costs, concerns about potential business disruptions, and the extensive changes required to adapt existing business processes to the new system.
Many organizations still perceive the migration as a daunting task, involving not just a technological upgrade but a comprehensive transformation of their business processes. This transformation often requires significant investment in both time and resources, making companies hesitant to take the leap until absolutely necessary.
Financial Incentives and Migration Support Programs
To alleviate concerns about the cost and complexity of migration, SAP has introduced several financial incentives through its RISE and GROW with SAP programs. These initiatives aim to reduce migration costs by up to 50% and provide support for cloud services and subscriptions. Organizations can access credits to offset expenses related to maintenance, cloud infrastructure, and even specific line-of-business solutions such as supply chain and human resources.
The SAP S/4HANA Cloud Safekeeper service is another support measure designed to help businesses extend the lifespan of their older systems while preparing for the upgrade. This service provides extended support, infrastructure optimization, and upgrade assistance, giving organizations more time to plan and execute their migration effectively.
Overcoming Business Transformation Challenges
Upgrading to SAP S/4HANA involves more than just moving data from one system to another; it requires a fundamental shift in how business processes are managed. SAP’s RISE methodology offers a structured approach to this transformation, focusing on predictable timelines and consistent quality. This methodology is supported by a network of certified partners and SAP services that guide organizations through each phase of the migration, from discovery to go-live.
A critical aspect of this transformation is eliminating custom code that may have been developed for the SAP ECC environment. For businesses migrating to the cloud, this often means rethinking and re-engineering existing business processes to align with the capabilities of SAP S/4HANA. Utilizing the SAP Business Technology Platform (BTP) for extensibility can help organizations run custom business logic outside of the core ERP system, reducing the complexity and cost of the migration.
Managing Migration Costs and Timelines
Cost overruns and extended project timelines are common challenges in SAP S/4HANA migrations. According to recent research, nearly half of the organizations surveyed reported that migration costs exceeded their original budgets, primarily due to unforeseen consulting fees and implementation services. However, on average, the timeline for migration projects was consistent with initial expectations, taking approximately 1.5 years to complete.
Effective project management is essential to keep costs under control and ensure the project stays on schedule. This involves detailed planning, accurate forecasting, and allocating sufficient resources to handle the complexities of the migration. Engaging experienced partners and leveraging SAP’s RISE methodology can further reduce the risk of cost overruns and delays.
Best Practices for a Successful S/4HANA Migration
To ensure a smooth transition to SAP S/4HANA, consider the following best practices:
1. Develop a Clear Business Case
Clearly define the business objectives and expected benefits of the migration. This helps secure buy-in from key stakeholders and provides a solid foundation for decision-making throughout the project. This includes the scope of the project which may involve additional cost-saving digital solutions like AP automation.
2. Engage Experienced Partners
Work with certified SAP partners who are well-versed in the RISE methodology. Their expertise can streamline the migration process, reduce implementation costs, and ensure that best practices are followed.
3. Leverage Financial Incentives:
Take advantage of SAP’s financial incentives, such as migration credits and support services, to offset costs and reduce the financial burden of migrating to S/4HANA.
4. Prioritize Change Management:
Successful migration is not just about technology; it’s about people and processes. Invest in change management initiatives to prepare your teams for the new system and ensure a smooth transition.
5. Plan for Custom Code Migration:
Identify and evaluate custom code developed for SAP ECC. Decide which codes are still necessary and which can be replaced by standard S/4HANA functionality or moved to SAP BTP for better integration.
Conclusion
Migrating to SAP S/4HANA is a complex but essential step for organizations looking to future-proof their ERP systems and drive digital transformation. By understanding the challenges, leveraging available support, and following best practices, businesses can navigate this transition smoothly and unlock the full potential of their SAP investment. As the end of support for ECC approaches, now is the time to act and begin your migration journey with confidence.
For more information, learn why companies who migrate to S/4HANA are also introducing invoice automation at the same time, or schedule a 30min discovery call with an AP Specialist.
