S/4HANA Summit 2023 Part 3: How do S/4HANA Customers plan to migrate?

Categorically, there are three types of SAP-prescribed S/4HANA migration methods.

Brownfield - A re-use of existing of existing processes, configuration, and data. You can almost think of this as a lift-and-shift of all your existing SAP stuff from ECC into S/4HANA. The benefits of this are a shorter implementation window and minimum disruption to the business as most business processes will remain unchanged. You can also pick and choose which of the newer capabilities to use in S/4HANA now versus implementing them at a later date. For example, maybe you want to use EWM now but are not ready for Transportation Management. You could implement EWM now and then TM at some point down the road.

The downside can be the carrying over of possibly cumbersome, outdated, or difficult-to-maintain processes and configurations. Organizations also are unable to realize some of the benefits of newer technology or improved business processes.

Greenfield - A fresh start in which you implement a brand-new application. There is no migration of configuration, customization, or even historical data from your previous SAP instance. Yes, some transactional data is migrated, but is limited to only open items, i.e. open balances, in-process orders, etc. But the intention is to try to cut ties with as much of your previous system as possible so as to start with a fresh, clean instance.

A Greenfield migration requires a lot of up-front effort in planning and cleaning up data, closing as many open items as possible, and really good Organizational Change Management to prepare an organization for a fresh, possibly different system. This oftentimes leads to a longer migration timeline.

The advantages of a greenfield are a fresh start in which you can start with a clean digital core, take time to adhere to industry best practices and potential process improvements, and cut times with years of customizations that may not be needed or fit your business anymore. Setting up for an easier-to-maintain ERP going forward.

Selective Data Migration - Sometimes referred to as a Bluefield migration is where you separate the components of SAP you want to carry into the new S/4HANA system and the ones you want to leave behind. This could include moving only some business units onto S/4, some configuration from ECC to S/4 but using mostly fresh configuration, and it also means bringing only selective data over to the new system. There are some nuanced ways to you accomplish this, but the concept is the same: you bring over some stuff from your old system and start fresh with other stuff in S/4HANA.

The downside to this is that it requires proper planning and prep phases of your project to determine what will come over and how, what will stay behind, and why. Key business decisions will also need to be made here, thus requiring input from the business.

The benefit is a hybrid of both worlds where you can leverage some new functionality and have a clean-ish start but also allow some familiarity with data and business processes from the old environment. It can also reduce some migration efforts because you're not starting from scratch everywhere. It can also help to mitigate business disruption and risk by allowing phased rollouts.

There has been a small trend over the last few years of organizations using system conversions to more new implementations and/or selective data transitions. However, we are seeing a leveling between all three deployment methods as each organization needs to consider their own unique situation and determine which method is suitable for them.

The factors to determine are many and varied, from business drives like digital transformation and process improvements to more IT-focused factors like project cost, effort, and timeline.

For example, when asked about the factors most impacting the deployment timeline for SAP S/4HANA the complexity of the existing data landscape (67%) and customized code that needs to be replaced or re-engineered (54%). The third largest factor is the need to secure budget approval (42%).

Why make the move?

When we look at the reasoning for making a move to S/4HANA, almost two-thirds (64%) of those deploying SAP S/4HANA reported that they are doing so as part of a broader transformation within their organization. This difference is much more pronounced in large organizations, where 75% report that the move to SAP S/4HANA is part of a broader transformation compared to only 59% of small organizations. It's all about selling more than just the value of upgrading from an IT perspective, it's about selling business value too.

Speaking of Timeline...

The following data is how long the survey respondents expected their migration to take, not actually how long it did take.

• 22% expected their transition would take between 6 and 12 months, an increase from last year (18%).
• 35% of respondents indicated that they expected their transition to SAP S/4HANA to take between 12 and 18 months.
• 20% expected their transition to take between 18 months and 2 years (down from 25% in 2022)
• 13% expected their transition to take more than 2 years (down from 18% in 2022).

Does Size Matter?

Looking at the data comparing small and large organizations we see some differences as to their migration method. 41% of small organizations used a new implementation compared to only 29% of large organizations.

This could be because large organizations have a complex existing landscape, data, and significant customizations which make it harder to adopt a new implementation. A selective data transition, while still the least-used deployment model for SAP S/4HANA, is actually favored by large organizations because it helps to address the complexity concerns above but also helps shorten the timeline compared to a new implementation or brownfield system conversion. Supporting this idea, 29% of respondents from large organizations indicated that they were considering or had used a selective data transition when deploying SAP S/4HANA, compared to just 11% of respondents from small organizations.

Stay tuned for the final installment of this blog series, where we'll look at where SAP customers are deploying S/4HANA.