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Selective Transition as Silver Bullet for S/4HANA

SAP S/4HANA is on the agenda of all companies. The search for the right path for the changeover remains the exciting question. New Implementation or System Conversion have been the only options so far. Companies for whom project time is less important and want to completely reinvent themselves prefer the greenfield approach. Companies that think pragmatically and want to expend less innovation energy opt for conversion.

Many industrial customers evaluate the two transformation approaches – reimplementation or conversion – and say, “Neither of the two fits into our strategy and innovation concept. We lack the business case for business added value”. On the one hand, they want to take proven processes with them. On the other, they want to establish value-creating innovations in the company, streamline production and logistics processes, and create added business value in the process. The time factor hovers over everything – very few can afford a lengthy, cumbersome S/4HANA project lasting five or six years.

An S/4 conversion usually only lasts one year – but with a significantly lower innovation share. Viessmann already showed in 2019 how things could be done differently: manageable project duration with innovation measures – which really help the global corporation and take along historical data and mature processes. The energy system manufacturer from northern Hesse impressed the entire community with the world’s largest S/4HANA migration in record time.

The selective approach is already suitable for 80 to 90 per cent of our industry customers.
Henning Krug
Consulting Director

One thing is certain: In S/4 conversion projects, the number of stakeholders is growing: IT, finance, production, logistics, new customer interfaces and business models. IT remains the driver in some companies – especially when mature solutions are already available. The company wants to switch quickly to S/4 as a digital platform to take the business units’ next steps. In other cases, functional areas such as sales or service demand rapid digitisation. However, in the concert of IT projects today, it is not about the one transformation project, but about strategic digitisation programs – with the S/4 switch as the basis.

Selective S/4HANA Transition has evolved from compromise to silver bullet. SDT divides large programs into small packages and lifts the organisation onto a digital S/4 future platform. Many companies now understand that this first innovation hub sets up other stages well. Anything else takes too long; most run out of steam before the summit. For the volume of change, the 80/20 rule comes into play: identify topics that really add value and solve as many pain points as possible.

 

Innovative software cbs Enterprise Transformer

In this way, a short project durations of months instead of several years can be realised. The special software cbs ET Enterprise Transformer is critical to data migration success in such projects: With ET, the transformation is minimally invasive. Ideally, users log out of the legacy system on Friday evening and can continue working on open orders, invoices or projects in the S/4 system on Monday morning, exactly where they left off before the weekend.

Now that some industrial companies have taken the selective path to S/4HANA, what are we seeing? First, that there are few pure new implementations or system conversions. Most companies look at lighthouse projects and want to achieve the same successes in the foreseeable future, with optimised business processes and innovative technology. The result must justify the cost, and the selective approach offers the best cost-benefit ratio. Viessmann is still a showcase for this approach: 6,000 users and 30 billion data records, yet the project was completed in just a few months.

In addition to this path, there are now new reference projects for digital innovation in the industrial environment, for example, from the USA: cbs successfully completed the transformation from ERP on-premise to the S/4HANA private cloud for the steel group SPS Steel and Pipe Supply. It was a world premiere. The Selective Transition focused on what was really necessary and targeted innovations: transforming finance, selecting, reducing and integrating processes and historical data. Initial conversations with customers in Europe confirm to us that the trend of running systems in the cloud will not remain just an American path.

Henning Krug
Consulting Director
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