By the end of 2021, IT spending on enterprise software is expected to reach £441 billion, with enterprise resource planning (ERP) software forecast to account for more than a sixth of this figure. As a leader in the enterprise software space, SAP is one area of IT that many organisations will be focusing on, particularly as one of the biggest changes on the horizon is SAP’s plan to end mainstream support for its legacy ERP system, SAP ECC, from 2027. More than half (58%) of businesses currently on SAP ECC are intending to migrate to SAP S/4HANA in the next three years.
However, data published by SAP show that at present, only 17,500 of its 425,000 users have made the transition. This is largely explained by SAP S/4HANA being the biggest update to the company’s ERP platform in over two decades. Research in 2020 from the UK & Ireland SAP User Group shows that 34% of SAP users say the upgrade will require significant change management, and 73% worry a lack of available skills will impact the speed of their organisations’ S/4HANA migration.
While it may not be an easy undertaking, migrating to SAP S/4HANA does offer potential performance and efficiency benefits, including enabling organisations to reinvent business models, drive new revenue streams, and access to a new innovation, including the IoT, machine learning and AI. It’s also important to get started sooner rather than later. While SAP states moving from traditional systems to S/4HANA should take between 12 and 18 months, research from Gartner shows it can take far longer. So, what should organisations consider to make the move smoother? Here are three key areas.
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1. Defining a transformation path
Having a plan is the first and most important step of the migration process. SAP S/4HANA is complex, so businesses must assess and understand their unique needs and SAP landscape. This equips organisations when determining which migration path best suits their business case for moving to SAP S/4HANA. There are two main routes to take:
- Greenfield – the opportunity to start from a blank canvas. This breaks the constraints of legacy processes and data but is a full business transformation. With a greenfield approach, businesses can align their SAP usage with their organisation’s strategic direction. While more intensive, this implementation approach also allows for businesses to digitalise its core and completely transform its use of technology for the future.
- Brownfield – a technical upgrade or conversion from the current system in-use to SAP S/4HANA. The brownfield approach enables businesses to retain legacy data and processes and preserve some of their custom environment. Brownfield is also typically faster and less invasive than greenfield, as it is more of a conversion exercise than a full-scale new implementation.
After deciding which migration path best aligns with their business requirements, organisations can then begin considering their deployment options.
2. Choosing the right hyperscaler
For many SAP customers, deploying SAP S/4HANA in a hyperscaler cloud environment is the preferred option. It enables users to leverage the infrastructure and cloud cost savings presented by hyperscalers, rather than running their own data centre. Options could include the likes of Google, AWS or Microsoft Azure. Each offers something different, so research is required to make the right choice.
For instance, Azure has the industry’s most scalable public cloud infrastructure, offering anywhere between 192GB and 12TB HANA certified virtual machines. AWS offers hybrid architecture for customers that may not want to put their entire SAP workload in the cloud. One of Google’s differentiators is the ability to select customer machine types, allowing you to choose precisely how much vCPU and memory you need.
It can be hard knowing the differences between the various hyperscalers and which is the most suitable for your SAP landscape. Many organisations may find it helpful to engage a partner to help choose the route that best matches their IT and business strategy.
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3. Understand the licensing estate
After deciding which migration strategy and hyperscaler they plan to use to move to S/4HANA, organisations must then evaluate their licensing position. Businesses need to know what is currently in use and what exactly they need for the SAP S/4HANA conversion. This includes assessing how many SAP licences are already owned, taking stock of unused licences and shelfware, understanding exactly what licences are being used for, and how they map to the new SAP S/4HANA landscape.
Making the journey smoother
Many businesses rely on SAP technology to manage their business operations and customer relations, so migration is something they need to get right. Following the steps above will help organisations develop a robust migration strategy, better understand their unique licensing and cloud position, and enter vendor negotiations equipped with this knowledge – to put them on the path to success with SAP S/4 HANA.