Any enterprise undertaking an S/4HANA transformation must first explore and internally align around strategic objectives, including both “why” behind the initiative and the desired outcomes. The strategic imperatives underlying an initiative of this scale and complexity are as diverse as the range of industries and enterprises that rely on SAP as their foundational ERP solution. However, there are several that rise to the top: reimagined business processes, operational standardization and alignment, improved customer, supplier, and employee experiences, deeper business insights, and total cost of ownership (TCO) considerations.
Common Strategic Approaches
For enterprises that are new to SAP, maximizing the operational benefits of S/4 is a common strategic driver. As such, they are often seeking to align their business processes with SAP-recommended best practices from inception. However, with current SAP ECC customers, I have noticed an interesting dichotomy emerging, aligned with what area of the business is initiating the transformation. If the impetus originates on the business side of things, then there is often an inherent recognition that it is desirable and/or necessary to reimagine business processes to prepare the enterprise for the emerging opportunities in AI and unknown challenges, as well as to standardize and align operational best practices. If the impetus originates on the IT side of the organization, strategic drivers can be more focused on technology alignment, architectural simplification, and reduction of total cost of ownership through to the cloud.
There is no right or wrong here—these are all equally valuable pursuits.
1. Are you planning to reimagine your business processes at an organizational level?
In developing S/4HANA, SAP leveraged their deep insight into and experience with leading enterprises across numerous verticals to develop a long-term vision for world-class business processes, aligned with cutting edge technology optimized to maximize efficiency, that will serve their clients well into the future. Given this, the most pivotal question an enterprise must ask itself is whether it can gain significant competive advantages, deeper insights, and operational efficiencies by reimaging its business processes to take full advantage of all that S/4HANA has to offer. Beyond that, it must ask is whether it is able to undertake the intensive but necessary enterprise-wide exploration and business process rationalization/consolidation to make this happen. Ultimately, the answer to this question will inform the organization’s technological approach, including whether it is greenfield or brownfield.
I would hazard that reformulating business processes is a strategic imperative, and any enterprise that is unable or unwilling to do so may be doing itself a disservice. It’s an enormous undertaking either way—why risk recreating old processes in a new system? However, we have partnered with clients who remain largely committed to their current processes, either because they are proprietary to the way they deliver customer value or aspects of their business are so unique that they will not fit within the constructs of S/4HANA standardization. What is important is that it is an intentional decision and that you fully understand the downstream impacts of this choice, including ongoing customization and creating additional complexities in your SAP core.
2. Are you looking to achieve greater operational standardization and alignment?
As global and national enterprises grow, different business units, regions, and teams often adopt different operational approaches and technology solutions to support them. These misaligned operational practices make it challenging to get essential enterprise-wide insights in a timely manner, are burdensome for IT teams to support, and result in cost inefficiencies. It is also a riskier position to be in as it relates to IT security and legal or other compliance mandates. At its core, implementation of or migration to S/4HANA presents an opportunity for enterprises to leverage and standardize around a common set of best-in-class business processes, thereby increasing efficiency, positioning themselves to gain deeper operational insights, and reducing the pain associated with misalignment.
Enterprises with a history and/or trajectory of growth through mergers and acquisitions would be particularly well-served by making operational standardization and alignment a strategic imperative of their initiative. Enacting a simpler enterprise systems architecture will facilitate a growth through acquisition strategy, especially since S/4HANA features an inherent ability to ingest data from external sources as acquisitions are made.
3. What types of insights will you need into your business to move it forward, both now and in the future?
One of the challenges that enterprises face when they have decentralized technology infrastructure is that while individual operational entities may have healthy analytics and reporting practices, they do not have real time visibility into the organization as a whole. The S/4 HANA in-memory data foundation coupled with SAP Analytics Cloud and aligned with the platform’s predictive analytics capabilities supports in depth reporting and AI-powered “what if” analysis of your business across a broad spectrum of dimensions. This enables organizations to unearth new insights and opportunities to maximize revenue. Predictive capabilities are enabled through Extended Planning and Analysis, Predictive Models, and Predictive Scenarios.
With analytics, however, to see the big picture, all the smaller pieces must be in place—you must capture the right information at every level of the organization, and to do that, you must know what the right information is; what underlying data supports it; where it is located, either inside or outside of the enterprise; and whether it is currently being captured. This requires setting an overarching strategy around enterprise-wide analytics early on. However, a significant amount of additional exploration around this subject will need to happen as you are road mapping your technology approach, as different regions, divisions, and corporate functions will each have very specific and detailed needs that will need to be individually addressed.
4. Are you seeking to transform the way customers, vendors, and employees interact with your enterprise?
Migration to S/4HANA presents an opportunity to rethink what matters most to both your customers, suppliers, and employees, design better ways for them to interact with your business and create best-in-class user experiences. From a customer perspective, S/4HANA offers newly reimagined CX and CRM technologies tailored to specific industries and verticals. In addition, it features comprehensive business partner functionality. For example, the SAP Cloud Platform Portal is designed to automate and simplify onboarding new vendors and supply chain transactions, while other solutions help with evaluating suppliers, managing procurement, collaborating around the supply chain, and more. From an employee perspective, SAP SuccessFactors offers enhanced self-service capabilities for employees to manage their benefits, career goals, and opportunities to network and advance their skills through training.
Although I have only mentioned a few key applications, the functionality across each of these areas is foundationally different and quite comprehensive, and each of these areas represent major decision points at the strategic level.
5. What are your expectations in terms of financial outcomes and/or total cost of ownership (TCO)?
As organizations explore each of the previously mentioned strategic drivers for their S/4HANA migration, they should also be exploring the financial implications of these choices. At the highest level—and perhaps the least quantifiable—there are a broad set of the long-term impacts around opportunities and efficiencies. How will S/4HANA’s AI-enabled intelligent automation capabilities create efficiency within corporate and business line practices? What will it mean for you to be able to surface insights with Embedded Analytics? Will it open new business opportunities and/or help you maximize existing ones? Will improved customer experiences translate into sales impact? If so, then similarly, will reducing friction in processes for employees drive greater engagement? And how will real-time, enterprise-wide financial visibility help you run your business more effectively?
Beyond these, there are a host of other, more quantifiable impacts. First, SAP is ending regular support for ECC in 2027, after which companies will begin accruing elevated maintenance charges, and this is necessarily creating some urgency around migrations. Another important consideration is the status of their current licensing agreement with SAP, as those are certain to change. Enterprises should also be asking themselves what a move to the cloud means in terms of sunsetting their on-premises infrastructure and associated costs, consolidating third-party solutions, and right sizing the personnel needed to maintain them. In addition, these are massive, multi-year investments. So, they will need to ensure they have the buy-in and resources to sustain it, and/or plan a phased approach built around business units and regions.
The Impact of Strategic Considerations on Finding the Right Expertise to Support Your Transition
There are many other strategic considerations that I have not touched on here, from cultural acceptance to change to the impact on areas such as legal, compliance, and security. Keep in mind that these considerations, as well as the ones I have mentioned above, are not discrete—they are all deeply interconnected. Strategy will have to be set and many decisions will have to be in each area that will determine the scale of the transformation, inform your overarching technical approach, help you identify which solutions to implement and position you to begin road mapping them.
All these choices ultimately impact the type of expertise you will need to staff the initiative, and long before every detail is clear, a resource impact assessment will need to be conducted to determine who should and can participate in the transformation internally and how that affects current operations and individual workloads, what outside expertise will be needed, and whether you have the personnel and or/service model to maintain the solution after implementation.
Baer's specialized access to highly experienced S/4HANA expertise has been a key component in assisting organizations in answering and developing solutions for these critical resource-focused questions, depending on the strategic approach they have defined.
About Baer
Unlike typical technology staffing companies, Baer is a true enterprise performance partner. We have a deep understanding of the scope of enterprise technology transformation initiatives and the highly specialized skillsets you will need at different stages of the process.
To learn more about how Baer can make a positive impact on your enterprise transformation, please reach out to Brian Trout at btrout@baergroup.com, Executive Vice President, Sales, or John Wilson, Vice President of Strategic Accounts, at jwilson@baergroup.com.
We look forward to speaking with you and learning about your specific challenges.