SAP has declared the end of its mainstream ERP product – ECC support in 2025, and that is the deadline marked to migrate to its latest platform – SAP S/4HANA. Hence, now a days SAP S/4HANA is lot in discussions and in thoughts, though its implementation has to pick up pace. Few years from 2025 while in 2018, we see many customers are still challenging the business case to move on S/4HANA.
Not that before S/4HANA there were no upgrades or migrations happened at SAP customers. Those were mainly at software version levels. So why this time, so much of hype & bubble. SAP S/4HANA is an in-memory appliance with hardware & software together. The hardware part is an expensive one and software architecture has paradigm shift in compare to the current platform of SAP ECC.
There are multiple migration ways guided by SAP to shift on the S/4HANA platform. It is up to the customers whether they want to migrate just technically, or by leveraging new functionalities too. This is like classic an upgrade case in SAP – either go technical first, and plan functional upgrade if really required, or leave it; or in another approach plan technical & functional upgrade together. Earlier such options looked okay, as their costs were manageable.
With high appliance cost and struggling business case, it doesn’t justify to move just technically on S/4HANA. In this case, without any changes, all the supported functionalities will be migrated to S/4HANA as it is. Like any upgrade, in this case too, there will be technical ABAP program level changes to support architecture demanded changes. Rather, such customers may plan to move technically on Suite on HANA (SOH) first, and then in the second step, move on S/4HANA functionally.
With S/4HANA, there is demand of innovative and digitized ways of doing business leveraging its strengths & capabilities. All these need to be justified in its migration business case.
Another focus is from business point of view. Now a days, almost every industry is undergoing transformation on business models, technology, and the entire end user experience. With the competition risk & demand of keeping up to date with the pace of changes, there is no choice left for businesses to transform & align. Else, some other product or competitor will completely take over the business. These risks call for robust, scalable, and new-edge technology platform. For SAP customers, S/4HANA is the answer, which has the capability to innovate business model as per business demands. These risks are also an enabler for S/4HANA business case.
So the question is when to start the S/4HANA journey? When is the right time? This being 2018, it feels at least business case preparation activities should kick off. While quantifying cost and value proposition are important elements of a business case, I feel that the deadline to move on S/4HANA & risk of portfolio stabilization period are the biggest drivers today, for its business case approval.
Customers can look back in their SAP portfolio like how long they took for the sizeable projects completion & stabilization, which works as a guidance to consider the time S/4HANA may take. In fact, it may take little more due to extensive preparation activities recommended for optimum SAP portfolio cost in the future.
This is the cost pressure which now opens up an opportunity to find means on reducing migration cost, its risk, and cost-effective support portfolio. These items get more focus than ever. Automation in migration & support activities can be strong enablers. Similarly, cleansing ABAP portfolio and making it lean, facilitates optimum support cost model. There is no scope of project failure in such huge investments. So taking known risks is the only way out. To ensure this, trying out every required functionality first hand in the service provider PoC landscape, is the simplest way.
It is likely that the existing SAP customers might have done prep study. They may have found that certain functionalities are not supported in S/4HANA as per the product guideline laid by SAP. There may be no idea on how those functionalities will be addressed post S/4HANA move. Now, what to do in such cases. Partner solutions can be one of the options. Though there might be customization to those functionalities in existing SAP to meet specific business requirements. So this one is a struggle and looks like a grey area at the moment. There are likely chances that such customers may move to alternate ERP altogether, in case their business sensitive functionalities are at risk.
What will happen when customers won’t take decision to move on S/4HANA with given deadline and continue with their current landscape in unsupported version? This is a risky stand, though I had seen customers in the past, who preferred to continue with their old unsupported SAP product versions. In such cases, there are hurdles of not getting SAP support specifically in Production problems, although those customers were prepared to face that situation to some extent. They knew the product in the current form supports their minimum basic needs. If it is not available for some time, they knew alternate way to continue in business till it gets available.
To my surprise, such customers did survive for years without much of business disruptions. It will be interesting to see how relevant this case would be in 2025, given the frequent changing business and demanding market needs. Which all customers may fall in this case and how they would manage their portfolio, will be known in 2025.
On the other note, who knows SAP may push S/4HANA migration 2025 deadline to some other future date. It depends on SAP’s product strategy and how fast the existing SAP customers show traction in shifting to S/4HANA platform. Until then, it is not the matter of just wait & watch, rather it is to act fast and move on with a business case to start with.