The current S/4HANA Migration Study by Camelot and techconsult shows the three biggest obstacles to transformation: 1) not enough time for S/4 implementation, 2) building expertise for technical operation and new specialist functions, and 3) a lack of information on available services to facilitate the transformation.
The study “Expectations for S/4HANA—Can the Transformation Deliver What Companies Expect?” by Camelot ITLab and techconsult paints a clear picture: just 16 percent of the 200 companies participating in the survey had not experienced problems in previous SAP projects. Despite these experiences, many companies underestimate the migration to or introduction of SAP S/4HANA. At the same time, 85 percent of the companies participating wish to switch to SAP S/4HANA within the next three years, and their expectations are fairly high (for details, see this article on expectations).
Beyond that, migration to the new Business Suite is more than an IT project: it is a transformation that involves fundamental decisions, impacting the entire company. Even if, for example, four out of every five companies (80 percent) claim to invest enough in change management, the estimated resources often turn out to be insufficient in practice.
These and other factors can be obstacles to S/4HANA implementation—and already are in many companies.
Three Obstacles When Migrating to SAP S/4HANA
46 percent of respondents say there’s not enough time for transformation. 21 percent cite the development of operational expertise of the solution as a challenge; 33 percent cite the development of departmental knowledge about the new functions. And only 10 percent of the companies feel sufficiently informed about the transformation. Let’s take a closer look at the issues at play here.
1. Too little time for S/4 implementation
Almost half of companies have a critical opinion with regard to the time required for the changeover to S/4HANA. There are several reasons for this: IT departments often lack the capacity to handle the large-scale project of introducing S/4HANA.
Additionally, and contrary to some assumptions, S4 migration or introduction isn’t just a project for the IT department alone. It is in fact a full-scale business transformation that builds on a willingness to change, and which ties up departmental capacities: this is because end-to-end process design is required for further company digitization. That is the foundation for synergy effects and data-driven decisions based on consolidated data sources. For this change to happen, fundamental decisions need to be made at every point of the S/4 transformation.
In the end, major effort is required to adapt mature system landscapes and data architectures to the S/4 environment. The burden of company-specific adjustments to the legacy ERP system makes transformation even more difficult for about one quarter of the companies surveyed.
2. Building expertise
Alongside the major effort involved, the two points just mentioned add a further dimension to the complexity of the S/4HANA transformation: For 21 percent of the companies surveyed, building the expertise to internally operate the S/4HANA system is a challenge. By a significant margin, the majority of companies surveyed (71 percent) are planning their future in the cloud, with the expectation of lowering internal needs in respect to expertise and resources. They expect this to result in greater agility and scalability, enabling them to respond more quickly to new market requirements.
During an S/4HANA transformation, a company’s departments are confronted with a lot of work: on the one hand they have high expectations of things such as automation, while on the other, the business transformation has a major influence on the life blood of the business in the form of business processes and collaboration between teams or departments. In some instances, new skills or entire skill profiles must be built up for this purpose—even including the ability to work uniformly with data (see for example this article on data literacy). But this is the exact thing many companies fail to do, resulting in employees learning new skills far too late—thus not necessarily increasing their readiness for change. 33 percent of the companies surveyed, however, already recognize this as a challenge in the transformation process.
3. Lack of information
S/4 transformation is a long-haul project. Accordingly, planning and execution need to be well-managed, with attention being paid to strategic goals across the various time horizons. Many companies draw on experiences with introducing or changing over to a new ERP system.
But many companies do their planning with a number of unknowns still in the air: just one in ten companies (10 percent) feel they have sufficient information for the transformation.
The respondents to the study very specifically expressed a desire for SAP and partners to better explain technologies—and for specific service portfolios from partners. Process models and target images for SAP solutions, use cases, and best practices would also be welcome.
One SAP offering that aims to provide this is RISE with SAP. It supports companies on the Intelligent Enterprise path, regardless of their starting points and the complexity of their transformation. This is bundled into three stages and SAP relies on the proven partner ecosystem for implementation. This blog article provides an overview of the RISE with SAP program.
To successfully complete the gargantuan task of S/4HANA transformation, it pays to address the points above during planning and preparation.
Specifically, early decisions should be made with regard to the following:
- what are the strategic goals of the S/4 transformation? This helps companies to prioritize work tasks and raises awareness that expectations of better performance, response time, and competitiveness affect whole swathes of a company.
- How close should the new solution be to the SAP standard? Here, experiences with legacy solutions go a long way.
- Brownfield, greenfield, or somewhere in between? There is no patent recipe. It depends on a company’s objectives, how well existing processes fit, and partly too on the complexity of the existing landscape.
- How much of a buffer is calculated for the relevant capacities? As well as impacting the IT department and change management team, this issue also affects business departments.
- What are the strategic goals for transformation change management? This focuses efforts on informing, engaging, and training key employee stakeholders.
Even if rethinking processes, renewing business models, and mapping future business requirements involves a lot of effort, migration to S/4HANA is the cornerstone of comprehensive company modernization. When managed proactively, with a clear vision in mind and an agile mindset, this is an investment many companies will benefit from for years. And it is in this context that CAMELOT Management Consultants, the strategy and organization consultancy at CAMELOT Consulting Group, offers preliminary studies to enable better assessment.
The survey findings in this blog article are taken from the study “Expectations for S/4HANA—Can the Transformation Deliver What Companies Expect?” by Camelot ITLab and techconsult, published in January 2022. For this, the survey questioned decision-makers in C-level management and IT and experts with managerial roles. Respondents came from 200 companies across three size categories and seven industries in Germany: The questions focused on these topics:
- What are your implementation plans?
- How are things with the status quo and your transformation planning?
- What transformation challenges do you see?
- What expectations and fears do companies have?
- What do you require from SAP partners?
Click here to download the free study.