If the clean core is now the nirvana - how do you get there?

Over the past six months, SAP has consistently called out the ambition for its clients to achieve a clean core during the journey to S/4HANA. The vision painted points to a new age ERP, without high volumes of customisations and extensions and where data and processes are standardised. The vision is widely accepted by the majority of SAP’s clients- who recognise that the technology, which was once fit for purpose is now, as we enter 2024, holding firms back due to high maintenance costs and inflexibility to change.

Let’s break down the statements above and see how you can achieve this and provide clarity on what it actually means to create a clean core.

What is a modern ERP CORE? The Core, or the functional coverage of the ERP, seems to be leaner and covers less functionality than in current ERP designs. Historically SAP ERP became so attractive due to the ability to cover a broad range of processes in a single application with seamless integration. In turn, this created monolithic ERP’s that became super complex in terms of both country focus and solution functionality.

But today, with modern cloud based function focused technology the Core no longer needs to be as broad. When designing the functional scope for S/4HANA do not start with what you have today - challenge yourself to see if other function focused applications can be plugged in to create rich functionality without high levels of customisation. An example of this - I was talking with a client recently with a bespoke ERP from the 90’s. Their order and quote process is complex and builds that complexity into the core ERP through bespoke code and “Z” tables. Ahead of their move to S/4HANA they are looking at best-of-breed “CPQ tooling” Configure Price and Quotation, where the solution is more powerful and flexible compared to S/4HANA.

What do we mean by CLEAN? When I started out in the world of SAP in the late 90’s - developers were the most important people within a programme. They held the cards through the power of “debugging”, reviewing the code to see when the system was not performing as planned. If SAP ECC couldn’t do what the client wanted it was not seen as a problem; the developers would just make some coding changes and make the fix. This was seen as a good thing and improved the perception that SAP was flexible.? However, over the years the level of code grew and grew until it became restrictive. Back in 2017, I was talking to a frustrated CFO who was bamboozled by the responses from his IT team when a change was required - it was always a minimum of 3 months and many hundred of thousands of pounds to implement. When he challenged his team on this, they confirmed that making a minor change only took a matter of hours or days, but the volume of regression testing and knock on issues caused by the new code meant 90%+ of the effort was protecting the shaky foundation of bespoke code that the business ran on. When they moved to S/4HANA a year later, 95% of their previous coding lines were removed and replaced with cloud friendly code to ensure these historic issues did not occur again.

What do we mean by STANDARD? I hear this word used every day in the office, when talking to clients and hearing my team engage with their counterparts. I have challenged clients and team members to define what they mean by ‘standard’.? The views vary, which is to be expected, and I don’t profess to have the singular definition of ‘standard’ in relation to a clean core.? However, I do have some guidelines that are well received.Standard does not mean doing everything in a single way, as not all business processes can be done in a single way, so there can be multiple options but they should be followed consistently.

SAP provides more than one way to run a process to cope with business, industry and country variations. These can be found in the shape of SAP Best Practices. When someone says “we must follow SAP Best Practice”, please remember there are many standard ways to do the same thing so select the one that is closest to your business’s requirements.

For some process areas there should be a single way to run the process in a standard way.

To bring this to life, I recently supported a large manufacturing client to architect their solution design. A single standard was adopted across a number of process areas by all countries and all business types within the single S/4HANA instance. The easiest example would be the Accounts Payable process.

When we designed the sales order process for the same client, we defined four standards to be utilised. This was due to specific country variations where some countries shipped goods from their own warehouses directly to the client,whilst other countries used 3rd parties to stock and ship products and so required different standards. The client also had different product types, some which required additional quality checks or were sold as a bundle rather than individual products.

Achieving a clean core with standard processes and data can be achieved and numerous organisations have achieved this implementing S/4HANA. In order to achieve this, the mindset of the business must align to this. The? approach needs to have buy-in, with clarity on the rationale behind this and strong governance in place to support this ambition. Investing in Change Management will help business users and the Design Authority understand what the clean core is and how to achieve it will support this.

It’s easy to approve a change request to add some bespoke functionality that has been requested by a Global Process Owner but much harder to say no. But in saying “no”, and sticking to these principles, you will realise the benefits of a clean core and be more agile to changes in your business and adopt new technology that is being released by SAP.

To find out more please visit https://www.pwc.co.uk/issues/transformation/finance.html