Deciding When to Move to SAP S/4HANA Part 2

Part 2: Deployment Options and Completing the Business Case

The Power of Next Continues

In our previous post, Deciding When to Move to SAP S/4HANA Part 1 we drew from Illumiti’s Power of Next methodology to plan a move to S/4HANA. We first tackled how to think through your enterprise’s reason for moving to S/4HANA, leveraging the Change Matrix. And we hit upon some of the steps in defining what the appropriate scope of S/4HANA will be, based on your current SAP environment and desired capabilities going forward. This detail feeds into implementation planning and assists with the development of building a business case.

In Part 2, we look at different approaches to moving to S/4HANA and what is required to complete the business case, including internal considerations on the backend (I don’t know what this means?) that can impact when you move forward.

How Will You Execute the Change?

Moving on to the “how”, there are multiple deployment options to consider for moving to S/4. The fastest way is to do a Technical Migration. This deployment option moves you to S/4HANA with a minimum impact on the business, so that you have the platform you need for the future. And for clients who are looking to go that way, our guidance is to at least turn on Fiori apps so that your users see some immediate benefit. Upgrading to S/4 comes at a cost and asking your users to do a lot of testing, when they see no immediate benefit, is a hard pill to swallow. Our experience has been that transitioning them to Fiori helps with user adoption.

A second way to move to S/4HANA is a Brownfield Migration. Illumiti leverages a tool called the SAP Readiness Check to identify what’s not compatible with S/4. In addition, we recommend setting up a sandbox environment so you can see what needs to be remediated when moving to S/4 and it allows us to demo S/4HANA functionality for clients to evaluate with their data, which is more meaningful.

A third way to move is to do a Greenfield Implementation, which is very much a new implementation. This approach makes sense for companies who are unsatisfied with their current SAP environment and/or would prefer to move away from a highly customized environment and leverage SAP’s best practices.

There’s also a Selective Data Transition, which is a bit of a hybrid between Brownfield and Greenfield in that you're setting up a new S/4 environment, but you're bringing over some of your existing data and configuration.

Completing a Business Case

Having worked through the compelling reasons for a move to S/4 (why), identified the relevant scope (what), and established the best approach to execute the change (how), it’s time to complete the business case. Leveraging SAP’s Value Lifecycle Manager tool, it starts with establishing the benefits—selecting the SAP products that make up the scope, then moving through each business area and selecting the processes and value drivers, including KPIs.

Turning attention to the costs, we enter into the tool infrastructure costs corresponding to the sizing information provided by the SAP Readiness Check, the licensing costs based on the SAP products selected from the SAP Transformation Navigator exercise and the implementation costs based on the S/4HANA scope selected. In a recent engagement, the client also wanted to include the cost for their people for the duration of the project, so that cost was incorporated.

Client key financial data points such as revenue, number of employees, operating income, cost of goods sold, average annual inventory, days payable, and days sales outstanding are the final inputs to allow the tool to calculate the client’s specific business case. The tool calculates one-time and recurring benefits, the project economics, and key data figures including ROI and payback period. 

Clients at times are skeptical of the benefits provided by the Value Lifecycle Manager. Because the tool has been enhanced to provide actual calculations and formulas, it allows us to vet the numbers with you and adjust them accordingly so that you feel comfortable presenting the numbers to your stakeholders. 

Internal Considerations

With the S/4HANA scope defined, SAP product roadmap, implementation plan, proposal and business case in hand – it is time to look at internal considerations:

• What needs to happen internally to ready the organization or to overcome any obstacles in realizing the value of such a move?
• What organizational or cultural change needs to align with a migration to S/4?
• Given the effort required across the entire organization to support such an implementation, where does this fit with other priorities of the business?

Now you can come to the table with data, rather than emotion, and have the conversation about the right time to move to S4/HANA.

Illumiti’s Power of Next

The process of establishing a plan and business case for a move to S/4HANA will depend on your organization’s complexity: how many instances, how many locations worldwide, how many modules you have implemented, etc. But an average time horizon is about three months. Talk to an Illumiti specialist to facilitate your organization’s path to S/4HANA.

Learn more about Illumiti’s Power of Next at https://illumiti.com/wp-content/uploads/2020/07/ILUM_13110_Illumiti_SlipSheet_PowerOfNext_Final-Online-2.pdf