SAP, the backbone of ERP for most businesses, will not provide maintenance for its legacy business management solution – SAP ERP 6.0 after 2025. But a next-gen business suite – SAP S/4HANA supersedes, with better speed and data consistency. S/4HANA is built on the most advanced in-memory platform existing today. It uses modern design principles with the SAP Fiori user experience (UX) as well as a new role-based user experience concept.
To leverage the market leading capabilities by S/4HANA, you must look into optimizing your ROI. However, to move from a bulky legacy system to a more agile business suite solution comes with its own challenges. Let’s take a quick look at the three paths to transition to SAP S/4HANA so that we can understand the challenges associated better.
Transition Paths
Every business must pick their own path to transformation. The choice should be based on what outcomes matter to your organization. Following are the three approaches to an S/4HANA conversion:
System Conversion also called as brownfield approach enables migration to S/4HANA without re-implementation and without disruption to existing business processes. In this approach, you take your existing SAP ERP system and convert it to S/4HANA using tools such as Software Update Manager, data migration programs in Finance etc. For existing SAP customers who want make the most of their current SAP investments, this conversion approach tends to be faster and less disruptive.
The New Implementation or greenfield approach does not allow the older ERP processes to influence your current implementation. Here, you get to build a new system and configure it. With data migration tools such as SAP S/4HANA migration cockpit, you can easily import all the old SAP ERP data.
System Landscape Transformation is value driven data migration. It combines the above approaches to consolidate multiple systems or selective migrations. Following this approach allows you to identify processes which optimize your ROI and begin with their conversion first.
Learn more about the three approaches in our blog: Choose Your Path to S/4HANA Transition, where we discuss which approach would make sense for you with case studies.
Challenges
Transition comes with a few challenges both during and after the conversion process. This is because it is not just a software upgrade, it involves changes to business processes and functionalities. Before deep diving into the conversion process, you must understand the challenges and possible risks associated with the project.
In this blog, we will discuss the different challenges that an enterprise is likely to face if they are going for a system conversion to SAP S/4HANA.
1. Business Partner Approach
The concept of a business partner isn’t something that’s new to SAP customers. You have probably seen it in different SAP Business Suite application such as CRM SRM, FSCM Credit and Collection management. SAP S/4HANA provides a business partner master as the only point of entry. This change is likely to impact the most considering that the business partner master also acts the single point for maintenance of SAP customers and vendors.
Since data comes from multiple sources and stakeholders, the entry is refrained to the business partner. It promotes ease of maintaining master data. Maintaining data according to the business partner approach has many benefits.
- One legal entity is represented by one Business Partner.
- Business Partner maintains multiple addresses with corresponding address usages.
- One Business Partner can be associated with multiple roles.
- Easier data consolidation is facilitated by maximal data sharing and reuse of data.
- General Data and specific data is stored for each role.
- Time Dependency at different sub-entities roles, address, relationship, bank data etc, is maintained.
To ease this process, CVI framework works the best. It helps to synchronize data from business partner data into customer and vendor master data tables. This involves redesigning some of the processes related to life cycle of customers and vendors; configuring new business partner object and CVI framework for synchronization between business partner and customers/vendors; and migrating data. In consumer sectors such as retail, banking, travel that have large volume and variety of data would require an expert business partner who takes ownership of the committed project areas.
2. Data Inconsistencies
Fixing problems related to data inconsistencies can involve time-consuming and expensive processes. Large volume of data, a lot of custom code and non-reconciled data during the year-end close process can lead to inconsistent transactional data. To build data consistencies, it is required for you to identify any data quality problem well in advance before your SAP S/4HANA conversion project starts. The thumb rule is that data should be clean and consistent, all through.
3. Financial data migration
Data inconsistencies pertaining to financial data come with a very different set of challenges. In reality, financial data needs to be complaint to the accounting and business standards. The compliance and regulatory complexities makes this one of the most challenging aspect, according to SAP. Its accuracy needs extra care.
You are required to run a consistency check after each data migration step. We noticed that SAP S/4HANA checks are more advanced and able to detect data errors which slip through the standard set of checks in SAP ERP. This also means that some undiscovered inconsistencies will be only found later as the project progresses.
Since, data cleaning and migration should happen during a downtime, it is complicated to implement financial data migration successfully, without errors and flaws.
4. Functionality Changes
The additional capabilities of SAP S/4HANA compels you to relook at the functions that you intend to migrate. For instance, SAP Classic Cash and Liquidity Management has been made unavailable in SAP S/4HANA and replaced with newly developed solution SAP S/4HANA Cash Management. SD (FI/AR) Credit Management has been replaced with SAP Credit Management. This requires you to migrate old credit management master data and credit exposures.
The recommendation says that customers are to use SAP BPC product for CO-OM and financial planning. However, if you choose to continue to use legacy systems, you will not be able enjoy the advantages and power of SAP FIORI.
5. SAP FIORI
The new web-based FIORI UI has replaced the outdated SAP GUI interface. This can only bring more efficiency, convenience and other subjective advantages to the conversion and implementation process. The flipside to this is the resistance to adoption. Also, the technical configuration of FIORI can be a long and arduous process. A phased approach is often undertaken for SAP FIORI adoption.
Conclusion
Careful planning goes into a successful conversion to SAP S/4HANA. In an attempt to not disturb your existing ERP processes, you can face some challenges in your S/4HANA conversion.
As an SAP Gold Partner, we have worked with organizations from different industries to help them in their digital transformation journey. We work closely with you to understand the nuances specific to your organization, and hence come up with an SAP S/4HANA conversion roadmap that aligns with your business outcomes. Our activate methodology helps you decrease time-to-value while ensuring a smooth implementation.
We adopt a rapid transformation approach which has enabled us to implement S/4HANA for some of the industry leaders in retail, healthcare and hospitality.
Sports Basement, a sporting goods retailer based in San Francisco bay area, was looking to convert from SAP ECC to SAP S/4HANA on-premise. Working closely with Savantis, they became the first retail SAP customer to go for SAP S/4HANA conversion, and can now leverage the speed and flexibility enabled by the platform. Read more of our case studies.
Reach out to our experts to understand how we can help you address the challenges in SAP S/4HANA conversion and optimize the ROI for your business.
