In an industry driven by forward thinking and technological advancement, a company-wide uniform approach to SAP is essential for any organization with a digital strategy. A transformation to SAP S/4HANA can help any enterprise achieve real-time data-driven insights, increased efficiency and speed, cloud capabilities, improved user experience, a culture of innovation, and simplified processes.
What is SAP S/4HANA and how can it help your business keep up with industry trends? How should your business approach a migration to SAP S/4HANA and how can Wavestone help?
What is SAP S/4HANA?
SAP S/4HANA is SAP’s next generation ERP software to cover all processes and core capabilities of an organization. It integrates new functions and industry solutions, as well as re-integrates portions of SAP Business Suite applications. It runs on the in-memory SAP HANA database and utilizes Fiori as its user interface.
SAP S/4HANA can be thought of as the digital core to support business processes, which can be used with other cloud-based applications for interaction with external parties, namely suppliers and customers.
The SAP strategy behind this new solution is to promote the standardization of implementation of the solution through: a cloud-first strategy delivering new features to the cloud edition, proposing many Cloud Model Companies for industries and business processes, providing SAP Best Practices for end-to-end processes, and a convincing SAP Active Methodology, based on Agile Methodology.
There are two editions being offered: Cloud & On-Premise, as well as a hybrid:
The Cloud edition is required for linking machines and Internet of Things (IoT) and comes with machine learning, artificial intelligence, and process automation capabilities for better performance and user experience. However, it is still in the process of being fully developed, with new editions being released quarterly.
The On-Premise edition is more flexible and customizable, enabling faster data processing and enhanced user experience. However, this option lacks some of the higher technology benefits that the Cloud edition offers.
A Hybrid approach would implement the On-Premise edition while leveraging Cloud-based applications. While the industry is moving towards the Cloud approach, the decision should be made based on the maturity of your individual company.
When should SAP S/4HANA be implemented?
According to a public industry study done in Q3 2019, SAP reported 12,000 subscribers for its S/4HANA ERP package. This is an increase of approximately 800% from 1300 in Q3 2015 and 26% from 9500 just one year ago in Q3 2018.
In a more recent study in January 2020, SAP reported over 13,800 SAP S/4HANA customers, with over 7100 deployment projects currently taking place. Additionally, leveraging our industry knowledge, we have seen that the majority of clients have already completed or have plans to complete their transformation in the near future. Overall, the industry feedback has widely been positive as companies are satisfied with the platform (concrete examples of benefits that customers have reported can be seen in the next section).
This information suggests that the industry trend is towards SAP S/4HANA, and in most cases it is not a matter of if but when it will be implemented for remaining businesses. In order to stay in line with this industry trend, it will be necessary for most large enterprises to adopt this platform eventually. Depending on the current state of your organization, in most cases sooner is better than later.
Why implement SAP S/4HANA?
SAP S/4HANA is essential for a forward-thinking Digital Strategy in many ways. The current industry trend is towards a holistic approach to IT, where all divisions of a company operate on one consistent, shared platform, specifically one SAP platform. This requires globally standardized, harmonized, simplified, and consolidated SAP solutions, processes, and system landscapes across all entities. SAP S/4HANA will be vital in making this ideology a reality in your company.
The core advantages of implementing SAP S/4HANA include:
- Staying in line with industry technology trends towards IoT, Artificial Intelligence, and Blockchain
- Intelligent automation through insight, prediction, and improved processes
- Promoting data-driven decision making through analytical tools and an improved “single source of truth” approach towards data
- Improving and streamlining business processes through simplification (notably of back-office processes such as the financial function, customer relations, supply chain, and manufacturing)
- New functionalities, which include new applications as well as simplified and improved versions of existing applications (e.g. Simple Finance, Fiori user interface, Ariba supplier interface, Hybris customer interface, SuccessFactors, Concur, Supply Chain Planning, and many more)
- Improving end-user experience to retain talent in the digital age
More specifically, SAP customers have reported the following benefits in their organizations:
Source: SAP SE, 2019
Additionally, SAP estimates the following financial benefits to implementing SAP S/4HANA:
Reduction in budget and forecasting costs
Reduction in G/L & financial closing as well as audit costs
Reduction in treasury & cash management costs
Reduction in A/R management costs
These advantages are based on industry trends, which will only strengthen moving forward, so considering the timing is crucial when deciding to start SAP S/4HANA implementation. However, it is essential that migration is done in a strategic and thoroughly planned manner that is customized specifically for your business.
How to migrate to SAP S/4HANA?
Once you have decided to move forward with migration, there are some key success factors that should be considered:
- A holistic approach to align your IT strategy to business activities and goals
- Heavily involved & engaged stakeholders from both IT functions and executive management
- Clear understanding of the current state context of business & IT
- Identification of unnecessary complexity
- Immediate focus on benefits management & value delivery supported by data analytics
- Clear definition of scope
- Defined budget based on value-add
- Early planning for data migration
- Strong and clearly defined project & change management
In order to guarantee these success factors, we recommend taking a four-step methodology:
1. Strategic Approach
Defining business case and corresponding budget
2. Scoping
& Pre-Planning
Identifying a clear scope and data migration plan and selecting the right S/4 HANA solution (ie. On-Premise vs. Cloud) as well as related security, risk, and controls
3. Roadmap
& Planning
Defining the roadmap of the project, focusing on value delivery
4. Implement,
Monitor & Improve
Transforming the business and integrating the technical solution
It is also important to consider the three ways of implementing: Greenfield, Brownfield, and Landscape Transformation. Depending on the current state of your business, each approach has its advantages. According to SAP, the vast majority of customers choose either Greenfield or Brownfield, in almost equal parts.
- Greenfield is a completely new implementation in which SAP S/4HANA removes and replaces the old system. Greenfield allows for the freedom to introduce standardization and simplification into the business; however, it takes more time and effort to implement. The average project length for this implementation is 11 months, according to SAP.
- Brownfield is a conversion of an existing SAP Business Suite system to SAP S/4HANA. Brownfield has a shorter runtime with less disruption of operation, as it keeps the business operating closer to the current way of working; however, the benefits of standardization and simplification may not be fully realized with this option. The average project length for this conversion is 8 months, according to SAP.
- Landscape Transformation is a consolidation of current regional SAP systems into one global SAP S/4HANA system. The consolidated system can then be implemented using either Greenfield or Brownfield.
There is no right or wrong choice when choosing how to implement. Most importantly, you must keep in mind all factors and the current state of the business while making this decision.
How can Wavestone help?
Hiring consultants can help you get your SAP S/4HANA migration started in a fast, efficient, and cost-effective way. Wavestone can provide you with a deeper understanding of the solution and its functionalities to maximize benefits and manage project governance and change management to guarantee a smooth transition. Wavestone is also able to utilize an agile methodology to accelerate your SAP transformation.
- Added Value: Increased value gained in the form of financial benefits (e.g. IT cost reductions, employee satisfaction for higher retention), reduced risk, increased compliance, and more.
- Technological Vision: A defined vision for the future of your company’s IT (cloud, architecture, infrastructure).
- Project & Change Management: A structured, phased approach including explicit documentation of stakeholder involvement, timelines, strategic planning, and budget to ensure smooth transition.
- Holistic Approach: This migration will not just be implemented as an IT project. The transformation will include all aspects of the business to align IT strategy with business aims.
- Industry Insight: Our core competencies in helping past clients through their digital transformations allow us to offer you key knowledge and lessons learned to maximize the overall benefits gained from the transition.
Related Insights
Federico Chiarelli 
Simon Weber 
Federico Di Mauro 
Keith Worfolk
Samuel Lyou
Tom Lawrie
Steve Glasgow
Pallvi Gautam