Lessons from a Cancelled SAP S/4HANA ERP Implementation

Our team at Third Stage Consulting Group has spearheaded numerous initiatives that leverage technology to solve complex business challenges. In this article, I delve into a compelling narrative: the journey of an ambitious SAP S4HANA ERP implementation, a path fraught with unexpected challenges that offered profound insights into digital transformation.

I dive into this topic in detail in my new Journey to S/4HANA podcast interview with Mitch Ottoson at Third Stage Consulting. In addition to my summary below, you can also watch the full interview here:

Understanding the Landscape

At Third Stage Consulting, we pride ourselves on deeply understanding our clients' landscapes and crafting bespoke solutions to meet their unique needs. This philosophy is not just about deploying technology but ensuring it aligns perfectly with our clients' unique visions and challenges. Like all of our clients, this one had a number of unique factors that were considered in their digital transformation.

Why Public Cloud and What Went Wrong?

Opting for the public cloud was driven by the client's distinctive business requirements. Unfortunately, the one-size-fits-all nature of the public cloud became a significant obstacle due to the high degree of customization required by the client's operations. The inflexible nature of the public cloud setup meant that the client had to adjust their business processes to fit the software, rather than the software accommodating their unique needs.

Challenges with Public Cloud Implementations

The lack of flexibility in the public cloud was a major impediment, as many legacy SAP users are accustomed to customizing solutions to bridge the gaps between existing processes and system capabilities. This shift led to substantial adaptation challenges, which were exacerbated by the hiring of SAP’s technical resources. Although it seemed advantageous to use resources directly from the vendor, this strategy failed to provide the expected level of project management expertise and nuanced understanding of the project’s specific needs.

The Shift from Legacy Systems and the Ensuing Complexity

Transitioning to a new platform like S4HANA is a monumental task—it's not merely an upgrade, but a complete system overhaul. This client, previously operating on a highly customized ECC environment, found the rigid S4HANA public cloud environment to be a poor fit. The inability of the team to demonstrate the new system’s functionality, especially in areas critical to the client’s operations, highlighted severe misalignments between the client's needs and the system’s capabilities.

Recognizing Red Flags

Throughout the implementation, several red flags emerged. The rigidity of the public cloud clashed with the need for customization, while the expertise expected from direct SAP engagement fell short, particularly in nuanced project management and understanding.

The Power of Reflection and Pause

Faced with mounting challenges, the decision to pause the project was made. This pivotal moment allowed us to step back, reassess our strategy, and realign our approach with the client’s core needs. It underscored the essential practice of reflection in the face of adversity.

Pivoting Towards a Customized Future

Looking ahead, we are considering pivoting to a private cloud solution that promises greater control and customization, aligning more closely with the client's business requirements. This strategic shift aims to leverage the lessons learned to steer the project toward a more successful outcome.

Lessons from the Front Lines of Digital Transformation

This experience has crystallized several key lessons for navigating digital transformation projects.

Flexibility vs. Standardization

It's crucial to understand the trade-offs between the customization offered by on-premises or private cloud solutions and the standardization of public cloud offerings. This balance is pivotal in selecting the right platform for your business needs.

The Crucial Role of Third-Party Integrators

While it may seem intuitive to engage directly with software vendors like SAP, our experience highlights the value of involving experienced third-party integrators. These partners often bring a depth of perspective and expertise that is vital for navigating the complexities of large-scale implementations.

The Centrality of Change Management

Underestimating the cultural and operational shifts required for a new platform can be a project’s undoing. Effective change management is paramount to ensuring user adoption and realizing the full benefits of new technologies. It involves not just training but a comprehensive effort to align the organization’s culture and workflows with the new system.

Looking to the Future with Informed Optimism

As we reflect on this journey, the challenges encountered reinforce the necessity of a strategic approach to digital transformation. It's not merely about adopting new technology but ensuring that this technology serves the broader goals and unique needs of the business.

Embracing a Strategic Mindset

The allure of cutting-edge technology like S4HANA is undeniable. However, successful transformation requires a strategic mindset that deeply considers an organization's unique needs and challenges. It's about crafting a vision that aligns with the technological capabilities and the business's future direction.

Forging Ahead with Insights and Determination

Armed with the insights from this project, we are better equipped to guide our clients through their transformation journeys. Each project, with its successes and setbacks, enriches our understanding and sharpens our ability to navigate the complex landscape of digital transformation.

Conclusion: Next Steps for this SAP Customer

In conclusion, the journey through the S4HANA implementation has been both challenging and enlightening. It has reinforced the importance of alignment, flexibility, and strategic planning in the face of technological change. As we move forward, these lessons will continue to guide us and our clients towards successful transformations, turning potential pitfalls into opportunities for growth and innovation.

You can watch the full interview discussing this case study here: https://www.youtube.com/live/983nHMpIi1E?si=2cYtZjR7aAnSuDcq

Be sure to also check out past episodes of my Journey to S/4HANA and Transformation Ground Control podcasts.