Are you the CIO, CDO or Global Head of IT running one or several SAP ECC systems, and you are looking for a how to guide for your SAP S/4HANA transformation project?
In this pocket guide, you are going to
- find an overview and guidance for selecting the appropriate transformation path.
- understand how to best begin your SAP S/4HANA transformation journey.
- learn about real-world insights on how to make your SAP S/4HANA transformation a success.
This pocket guide is applicable for the SAP S/4HANA Cloud Private Edition and is equally applicable if you are ECC systems are under a RISE with SAP contract.
Available SAP S/4HANA transformation paths
The straightforward way to SAP S/4HANA is the “System Conversion” (aka Brownfield). Simply put this is a system upgrade with an embedded data migration mapping data from ECC tables to the new table logic in SAP S/4HANA. Therefore, some ECC features are no longer going to be available and some new S/4HANA features become available. These are called simplification items. From a business point of view, you continue working as before. However, there is a high likelihood you are going to run “optimization projects” post system conversion. The scope is limited, the risks are minor, and efforts are moderate.
There are situations, where the “System Conversion” is not available as an option due to some restrictions (e.g., some industry solutions in ECC). In this case the “Selective Data Transition” (SDT, aka Bluefield) is your next best option. Another reason to choosing the SDT is a need for consolidating productive ECC systems with related business process reengineering. Like the “System Conversion” the SDT is a system upgrade with an embedded data migration mapping data from ECC tables to the new table logic in SAP S/4HANA. In addition, the configuration in SAP S/4HANA (aka Customizing) can be updated and new features in SAP S/4HANA can be activated and deployed. The scope is selectively extended, the risks and efforts are increased.
Assuming that neither the “System Conversion” nor the SDT is right for your enterprise you need to consider a new SAP S/4HANA implementation (aka Greenfield). With a Greenfield approach you can redesign your business process model and related end-to-end business scenarios.
For the sake of completeness, I would like to mention a fourth SAP S/4HANA transformation option, which is not a transition path, but rather a deployment option. SAP S/4HANA with Central Finance would allow to implement S/4HANA Greenfield, by leaving the source systems “unchanged” and replicating data into the Central Finance system for a “Single Finance View” of the company. The main business driver for the Central Finance option is that the business models in each productive system is distinctively unique. Therefore, the effort of business process harmonization across several productive ECC systems is too high. The Central Finance scenario requires a dedicated assessment, which is not covered with the SAP Readiness Check mentioned earlier.
The comparison of the indicative impact on Scope, Risk and Effort can be found in the table underneath.
| Transformation Path | Scope | Risk | Effort |
System Conversion
(aka Brownfield) | Limited | Minor | Moderate |
Selective Data Transition
(SDT, aka Bluefield) | Selective | Increased | Increased |
New Implementation
(aka Greenfield) | Extended | Significant | Significant |
Central Finance
(deployment option) | Focus on Finance | Increased | Increased |
Table 1: Indicative overview of transformation paths and related implications
Pro Tip: SAP Activate supports all three transformation paths, including the Central Finance deployment option. For the Greenfield approach it is beneficial using SAP Signavio Process Navigator and LeanIX to design the business process model for designing the company code template.
Jump start your SAP S/4HANA transformation
Start with the assumption that the “System Conversion” is the right fit for your company. By assessing this transformation option first as your baseline you will gain an understanding on which transformation path might be your best option.
First thing to do, is to run an SAP Readiness Check in all your productive SAP S/4HANA systems.
The results from the readiness check require thorough assessment by subject matter experts from finance, logistics, procurement, sales, HR, SAP development and SAP basis. They need to assess the impact on business processes, master data and transactional data. The most common topics requiring special attention are Customer Vendor Integration (CVI), Financial Data Quality, New General Ledger, New Asset Accounting, and Custom Code. Those topics need to be cleared otherwise the System Conversion cannot be executed.
It is not uncommon to realize that the efforts for the reaching “Conversion Readiness” are going to be significant. Therefore, looking at the options is not unusual. SDT, Greenfield, or Central Finance deployment option might be suitable, however they come with a different scope, risk and effort profile requiring a specific and differentiated assessment.
The indicative end-to-end durations for the SAP S/4HANA transformation journeys with Brown- (12 to 15 months), Blue- (12 to 18 months), Greenfield (15 to 21 months, assuming a single wave of roll-in), and the Central Finance option (15 to 18 months, assuming a single wave of roll-in), are another important element for planning the transformation journey.
Consider the validity of the release and maintenance for your SAP product version when planning your SAP S/4HANA transformation. Details can be found in the publicly available SAP Maintenance Strategy document or the SAP Product Availability Matrix (aka PAM).
The table underneath is showing the indicative timelines by SAP Activate phase.
| Transformation Path | Discover | Prepare | Explore | Realize | Deploy |
System Conversion
(aka Brownfield) | 2 to 3 months | 2 to 3 months | 2 to 3 months | 3 months | > 3 months |
Selective Data Transition
(SDT, aka Bluefield) | 1 to 2 months | 1 to 2 months | 1 to 2 months | 6 to 9 months | > 3 months |
New Implementation
(aga Greenfield) | 3 months | 3 months | 3 to 6 months | 3 to 6 months | > 3 months |
Central Finance
(Deployment Option) | 3 months | 3 months | 3 months | 3 to 6 months | > 3 months |
Table 2: Indicative deployment timelines for SAP transformation options by SAP Activate phase
Pro Tip: Start with a System Conversion approach. Executing an SAP Readiness Check on all your productive ECC systems is not in vain, when you are going to gain valuable insights, which comes in handy for the transformation planning irrespective of the transformation path and deployment option.
Real-world insights from SAP S/4HANA transformations
To be successful with your SAP S/4HANA transformation journey you need a couple of insights.
First, get executive and senior management buy in. Not just for funding, but also for support in decision making and organizational change management.
Second, your SAP S/4HANA transformation is not just an IT project. It requires the business to participate and even get involved. The degree of business involvement various depending on your transformation path. Even with a system conversion you need the business participate and contribute.
Third, assemble a transformation core team with members from business and IT you can rely on and can make required time available. Your core team will be at the centre of everything and will enable you to focus on what matters.
Fourth, adopt an end-to-end business scenario mindset. Stop thinking in business functions.
Pro tip: To get you SAP S/4HANA transformation rolling you need all of them and they need to be aligned. Missing one of them will make your transformation project less effective and less efficient. Should you consider changing your project methodology let’s say from a waterfall to agile within you transformation project, you should factor in additional time for organizational learning.
Underneath matrix is an attempt to make the transformation paths and Central Finance deployment option assessable. Based there on a first high-level assessment of your to-be transformation roadmap can be made.
| Transformation Path | Lean Transformation Approach | Business Process Reengineering | System Consolidation | Ongoing Adoption |
System Conversion
(aka Brownfield) | Fully Supported | Not Supported | Not Supported | Post Conversion |
Selective Data Transition
(SDT, aka Bluefield) | Supported | Selectively Supported | Fully Supported | During and Post Conversion |
New Implementation
(aka Greenfield) | Limited | Fully Supported | Fully Supported | Fully Supported |
Central Finance
(deployment option) | Supported for Finance | Supported for Finance | Supported for Finance | Supported for Finance |
Table 3: Assessment guide on the SAP conversion paths and Central Finance option
Conclusion
First and foremost, an SAP S/4HANA transformation is not just an IT project. To be successful, it requires people from Business and IT to work together. Get the Executive buy-in, get a budget, get the organizational change management in place, and get a capable team together. Stick together and support each other. Don’t be shy to get help if needed. Nobody knows everything.
Failure is the one thing all SAP S/4HANA transformations have in common. This is meant in a positive way: Failing is learning. The difference between a successful and an unsuccessful SAP S/4HANA transformation is how early they fail and how fast they can adapt and take corrective measures to limit disruption and delays. The key is to avoid mistakes that will result in a major financial loss, caused by significant efforts and time required to fix the issue. Planning is a solid option to identify the major risks and develop strategies on how to avoid them. And as such planning is your first step in your SAP S/4HANA transformation journey.
For a sound planning you should you consider using insights from the Readiness Check. Use the knowledge gained to take an informed decision on which transformation path, or deployment option, you are going to choose. Once you company has taken the decision, write down the underlaying rational and drivers, so you do not get go off track along the way.
Selecting the SAP S/4HANA transformation path, or deployment option, which is most suitable to your business is the first design decision you are going to take. Consider that SAP S/4HANA is a standard software (aka Off-the-Shelve, OTS) and therefore you might experience limitations. This where the Clean Core and extensibility approach comes in. Try make smart solution design decision and don’t get fooled by short term gains, which you might regret in the mid to long term.
Recommended reading
To gain a deeper understanding on SAP S/4HANA transformation and the related transition paths, including the Central Finance deployment option, underneath some recommended reading.
SAP publications on the SAP S/4HANA Transformation
SAP S/4HANA Simplifications and Clean Core
SAP S/4HANA Release and Maintenance Strategy
SAP Readiness Check
SAP Activate
SAP Signavio Process Navigator and SAP LeanIX
SAP Central Finance
