At the outset of any SAP S/4HANA transformation initiative, well before any tactical work gets done, every enterprise must make a series of strategic decisions around why they are making the transition and what their objectives are. Ultimately, these strategic drivers inform their overarching technological approach to the program. Case in point: an enterprise-wide mandate to move to the cloud will necessitate a cloud vs. on-premises approach. Similarly, a strategic decision to modernize and simplify business processes will necessitate evaluating current processes and mapping new ones, as well as implementing new S/4HANA components to support them.
In my last blog post, I shared some high-level strategic questions enterprises must ask and decisions they must make to determine their project’s trajectory and position them to achieve their business goals. In this post, I will explore a similar set of high-level questions around technology, including what deployment method and implementation approach are best suited for your situation, as well as what your solution roadmap will include. These technological considerations bring additional detail to your program and will be determining factors in the type of expertise you need to bring it to fruition.
What outside technical expertise will you need to support your initiative and how will you access it?
Given the massive scale and complexity of an S/4HANA transformation initiative, even enterprises with mature internal SAP capability will need to partner with either SAP and/or another systems integrator (SI) to guide you on key decisions around high-level strategic objectives and your overarching technology approach, as well as for the more practical and tactical support you will need daily throughout the implementation. This is not a binary choice—both SAP and SIs bring different expertise and insight to the table, and you would be well served by engaging with and maximizing the strengths of each. Enterprises with a pre-existing relationship with an SI are already positioned to leverage their knowledge of your organization’s strategy, goals, objectives, operational practices, and business systems and can naturally extend those arrangements. For example, a company currently engaged with Accenture might take advantage of its SOAR offering if they are planning to move from ECC to SAP RISE.
As you begin to formulate your overall integrated resource plan, identifying and engaging a specialized SAP enterprise performance partner to provide access to expertise beyond what SAP, the SI, and your own team bring to the table, would be highly beneficial. As I have discussed in prior posts, assuming a traditional IT staffing agency has the prior experience, specialized knowledge of SAPs' next generation technology, and relationships with proven resources to support you, is in many cases a flawed strategy.
Will you outsource infrastructure management or maintain internal control?
A critical part of the overarching technology approach to any S/4HANA initiative is determining what consumption model is best for your enterprise—whether your applications will reside on premises or in the cloud and whether you will maintain operational control of them or outsource some or all of it to a third party. Key considerations here are whether your organization has a mandate to move to cloud and how hands-on it makes sense for your company—and your IT team specifically—to be in the ongoing day-to-day management of the system. Some companies have mature IT infrastructure and core expertise in this area and will benefit from being highly or moderately involved, while others recognize this is not a core competency and will benefit from outsourcing.
In addition, many companies are looking to move away from the high OPEX expenditures that come with maintaining internal support teams and infrastructure and toward a CAPEX model that comes with outsourcing. Depending on your situation, it may also be an opportunity to lower total cost of ownership.
While the list below isn’t comprehensive, the following are a few approaches our clients at Baer most frequently adopt.
Companies that select this approach also stand to benefit from reduced total cost of ownership from the SaaS software model and decommissioning legacy hardware/software; SAP's ongoing innovation of their core code base; accelerated implementation timelines; opportunities to automate/replace manual processes; and the ability to create vastly improved user and customer experiences.
It is also a good fit for enterprises that are looking to make the most of recent investments in SAP ERP by continuing to use elements of it, while undertaking a transition to the cloud. It allows for parallel access to on-premises and cloud applications, and like the public edition, is still a managed service.
I expect we will see larger enterprises most frequently opting for hyperscalers and only in rare instances electing to implement the solution on-premises. For an enterprise that already has a trusted services outsourcing relationship with a company like Accenture, for example, SOAR would be a more natural progression.
You can read more about the S/4HANA deployment options on SAP’s site.
What will your implementation approach be: greenfield, brownfield, or bluefield?
Another key technology-related consideration is whether you will take a greenfield, brownfield, or bluefield implementation/migration approach. With a greenfield approach, which is essentially a brand-new S/4HANA landscape, an enterprise must take a hard look at their business processes and in some cases completely reengineer and optimize them to align with S/4HANA standard functionality, in parallel with all the change management necessary to prepare thousands of users to work in a new environment.
Greenfield also means you have the option to decommission your SAP ECC legacy system and archive its associated data based on your company’s data retention policies, then create completely new master data constructs in S/4HANA. In this scenario, migration of legacy transactional data is limited. The benefits to this approach are the ability to leverage new S/4HANA standard capabilities related to the Fiori UI; SCM innovations including aATP and embedded EWM/TM; and a significantly simplified landscape. Potential downsides are inherent complexity, longer implementation timelines, a higher lift for user training, and generally higher costs.
With a brownfield migration approach, companies largely maintain existing ECC processes, configuration, and data, reconfigure and modify code to be compliant with S/4HANA. In addition, this approach requires data cleansing, data mapping, and data transformation activities to ensure data quality and consistency, and necessitates using various ETL tools such as SAP’s Data Migration Cockpit, RDM, LSMW etc. A brownfield approach enables organizations to selectively implement new S/4HANA components; minimizes business disruption since existing processes are largely maintained; and is faster and generally less costly to implement in comparison to a greenfield. It can be effective for organizations with processes not inherently supported by the S/4HANA minimum viable product, but they risk replicating inefficient processes. It can also be more difficult to support.
Bluefield is the middle ground—it offers a hybrid approach with subsets of selected data and processes integrated within a mix of new, Greenfield S/4HANA processes and capabilities. For organizations with clearly defined process and technology landscape simplification strategies, this may prove to be the right balance between implementation cost and innovation.
What is on your roadmap and in what order will you implement it?
There is a vast and complex ecosystem of solutions built on and around S/4HANA to support financial management, supply chain management, procurement, asset management, human resources, sales, and many other critical business processes. There are over a dozen industry solutions for everything from oil & gas and the public sector to telecommunications and utilities. In road mapping, enterprises must determine what their desired end state is; what core and industry-focused solutions and add-on components they will need to implement; and in what order they will implement them, a process which may take place over the course of years. At Baer, our clients often start with the finance layer, since it is central to all business operations looking for better ways to manage cash flow, analyze margins, adherence to evolving compliance standards, etc.
There are number of other factors that weigh into the overall implementation roadmap, including geographic and line of business considerations, industry nuances, funding, timing of current licensing and maintenance agreements, and M&A considerations. No matter how an organization evaluates these elements and derives their S/4HANA implementation strategy, the guiding principles are inevitably improved performance and justifiable return on investment.
In addition, as SAP actively invests in and advances its solution set, new functionality continues to become available—the SAP Business Transformation Platform (BTP) is one example of ongoing innovation. For this reason, road mapping is a dynamic, and ongoing process. This makes it critical to stay apprised of relevant changes and their impact on your plan, and to be prepared to adjust your implementation strategy so that you can leverage new functionality in ways that are most advantageous to your organization.
What migration tools will you need?
SAP provides a broad range of migration enablers to make transitioning to S/4HANA possible, and which ones are right for you are highly dependent on your specific program parameters, including your target deployment architecture, the data and configurations you will be bringing over, and your roadmap. The solution set includes tools like the SAP Readiness Check to determine how well prepared you are to make the transition, the SAP Transformation Navigator which provides a framework for digital transformation, and the SAP Custom Code Migration Workbench which ensures customized processes are transferable to S/4HANA.
These tools answer some of the questions around how, from a highly tactical perspective, you will make the transition, although they are only part of the equation.
Your Technology Approach Informs Your Strategic Resourcing Plan
The answers to these high-level questions, as well as a detailed and thoughtfully architected roadmap, are key to developing a strategic resourcing plan with your enterprise performance partner. They provide information that answers questions about what type of expertise you will need, when you will need it and for how long, and what your peak staffing levels will be. From there, you will have to determine how and where you access that expertise, which I will explore in depth in my next blog post.
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 firstname.lastname@example.org, Executive Vice President, Sales
We look forward to speaking with you and learning about your specific challenges.