Strategy for the transition. [Shutterstock: 381220606, Rawpixel.com]

Strategy for the transition. [Shutterstock: 381220606, Rawpixel.com]

How does S/4 fit into my plan?

With S/4 Hana, SAP is setting out onto new paths. How does this course match industry's priorities? The innovations built around S/4 Hana can purposefully be linked up with a company's internal business strategy, adding lasting value. The right approach is the key to an IT Agenda 2020+ equipped to take on the future.

Globalised markets, growth, and mergers and acquisitions generate a constant pressure to make change happen. For some time now, companies have been standardising their business processes and system landscapes. The trend is pointing towards a One Corporation approach, optimised from the viewpoint of control and set up on a uniform OneSAP corporate platform.

The results of the Corporate SAP Application Management market study, conducted among industrial firms in the D-A-CH region (cbs, 2015), state that 83 per cent of the companies are already using a global SAP system as their central IT platform.

However, this solution has not yet been comprehensively globalised. In many system landscapes, historical, regional and local SAP systems still coexist with the globally conceived SAP.

There continues to be a need for a roll-out in the SAP environment. At the same time, it is on the agenda to consolidate the system’s diversity. Additionally, organisational changes act as a driver for technical restructuring operations conducted on the SAP system environment.

SAP is currently driving forward a paradigm-change at a high rate of innovation. At Hana, the in-house in-memory database is on the way to becoming the de-facto standard for data bases used for SAP application systems.

SAP is currently driving forward a paradigm-change at a high rate of innovation.

SAP S/4 Hana Enterprise Management means that the old tried-and-trusted R/3 system is about to hand over the reins.  The successor is here: S/4 is the future’s ERP. Thus a new generation of the SAP Business Suite on Hana, and new, simplified applications for Finance and Logistics, as well as alternative cloud-based operating models, are fundamentally changing the world of SAP corporate solutions.

This makes it clear: sooner or later every IT manager has to address the subject of S/4 Hana. The only question is: when? Can people be relaxed about this or is urgency the order of the day?

To find that out, the first challenge that everyone faces is to correctly understand the implications that this paradigm change has on their own company, examining the resulting urgent issues raised, the demands made and the opportunities presented from the viewpoint of their own individual corporate reality.

The central questions this raises are: how does S/4 Hana fit into my IT strategy and my plan for formulating a suitable structure for use of SAP? So how do I need to plan and structure my switch-over?

The engine behind the corporate agenda

There is no one-size-fits-all recipe for making the switch-over to the new ERP. It depends too much on the level of development that the existing process landscape and system landscape have and on the companies’ strategic orientation.

The selection of the approach to take is a decisive factor. This approach can be understood and pursued on a purely technical level, as an upgrade or migration of an existing ERP system onto the new S/4 platform. A defined sequence of individual steps then leads to the preparation of that system.

Yet in many cases that approach views the issue too narrowly. The switch to S/4 Hana should rather be considered holistically and structured in a way that is directed towards value-creation. The established SAP customer is well advised to address this subject in the explicit context of overarching strategic goals and requirements, from the perspective of the company as a whole.

The switch to S/4 Hana should rather be considered holistically and structured in a way that is directed towards value-creation.

This is purely a matter of dispassionate calculation. For IT, S/4 Hana presents the opportunity: the far-reaching change of what is surely the most important IT platform can be used to redirect the IT strategy, tailoring it to exactly match the corporate strategy. This is an opportunity worth using in the best way possible. But how?

The consultancy approach ‘cbs S/4 Hana Transition Program’ provides support to globally-active companies in making strategic use of the switch to SAP S/4 Hana, not as an isolated IT initiative, necessary in the short-term or the medium-term, but rather as part of the corporate agenda.

Doing this is all about bringing together the business agenda, the IT strategy and SAP innovations based around S/4 Hana, in a methodical, structured way. S/4 ought to be considered as a corner-stone of the future: as a core of the corporate platform that will sustain tomorrow’s ‘One Global Corporation’ and will move the digital company forward.

Understanding the ramifications

SAP S/4 Hana does indeed bring far-reaching changes. Several levels are affected: IT strategy, BI strategy and BI architecture; new core applications and functionalities, with their consequences for structuring of the process; in addition to a new data model with table structures and data structures changed accordingly, and with these structures having ramifications for Abap coding and in-house developments, database and infrastructure.

All of this demands precise consideration. Here it is important to determine exactly which influencing factor will make itself felt, to what extent and at which level of urgency in terms of timing, so as to position that factor accordingly in the game plan for one’s own company.

Finding the point of entry

The decisive anchoring-point for setting the project strategy’s direction is not tied to software, however; it is company-related: it is the affected companies’ starting point and their future orientation. The question of “When is the right time to make the switch?” can be answered only on a company-specific basis.

On the one hand, the right answer depends on the company’s strategic horizons: on its long-term objective , on its medium-term planning,  and also both on its forthcoming and its ongoing projects. Another influencing factor is the state of the existing process landscape and system landscape in connection with the global organisation’s degree of maturity.

Such current-status descriptions can be viewed as belonging to certain types. The S/4 Hana Transition Program uses a distinction made between three typical development stages. These make clear where a company currently stands with regard both to how well it currently matches its strategic corporate goals and to the IT/SAP support associated with that.

The right point in time

“When is a company ready to renew its process landscape and system landscape?” is just one question. The other is “when is the S/4 Hana software ready to be deployed in my business sector?”. The interface where these development paths intersect in the future is the ideal point in time for the company – the so-called ‘sweet spot’ – for tackling the switch to the new S/4 software generation.

“When is a company ready to renew its process landscape and system landscape?” is just one question.

This cannot be precisely predicted. Yet it lends itself to being predicted well enough for dependable conclusions to be drawn from this for the purpose of planning. The ‘cbs S/4 Hana Transition Program’ makes such a deduction in a company-specific, structured way.

Then, building upon this, the next task is to determine the project approach. The target architecture is derived from this. An implementation plan – the transition roadmap  – needs to be produced.

Green field or brown field?

Must business processes be newly structured, to a very high degree, and standardised? Is it a case of building up a completely new system landscape or is it about using an existing system line, one that is to be raised to S/4 Hana? The basic strategic status dictates the framework for answering these questions.

The specific facility used determines the project character and the project approach to adopt. It determines how strongly the business is to be drawn into the responsibility for structuring the systems; it also determines the extent to which the company is facing a full-scale business and IT project.

The ‘cbs S/4 Hana Transition Program’ uses the M-cbs method; from this it deduces the company-specific project approach in a structured, internally consistent way, one that is coordinated with the relevant stakeholders.

Hybrid future

The entire SAP solution architecture is in flux. The cloud is gaining significance. The classic on-premise business is extended so as to include the Hana Cloud Platform (HCP), Hana Cloud Integration (HCI) and solutions such as Cloud4Customer (C4C), Hybris and Ariba. The future is to be found in hybrid architectures.

Yet functional shifts form part of this. Large process blocks will gravitate into the cloud – e.g. the CRM activity area – or will be shifted within the applications, such as in areas of logistics and in foreign trade. Spanning across applications, how do I integrate the business processes in my hybrid landscape?

In hybrid architectures, the topic of security acquires greater significance.

How do I make it possible to have mobile data access, to link-up my business partners into my supply chain, or to make new scenarios a reality – such as IoT? In hybrid architectures, the topic of security acquires greater significance. So architecture must be planned on a suitably comprehensive basis.

Transition roadmap

If one determines the project approach and (in broad terms) the target architecture, the next thing that needs doing is for the necessary preparation and implementation measures to be defined, allocated into packages, and put into a purposeful timing sequence. How can the projects be presented in a business case and depicted in an overall budget?

Initially, a High-Level S/4 Hana transition roadmap helps the companies in broadly planning out their path; they are then able to further map it out in detail and specify it. Within the framework of a preliminary study, an exact and individual business case is formulated, the company’s ‘S/4 Hana Transition Program’: It is the robust implementation program that the organisation is striving to make into a reality for the new, future platform.

(…) a High-Level S/4 Hana transition roadmap helps the companies in broadly planning out their path.

Finally, the stage reached in developments determines the approach and the extent of the work as explained below:

One Corporation PLAN: These application-user companies find themselves in strategy mode. They wish to effect a change to the process landscape and/or software platform. They have not yet formulated an established strategy. They are in the sounding-out and planning process.
One Corporation BUILD: This category describes companies currently in the middle of change-mode. They are currently bringing company-wide transformation projects to fruition, are converting a newly-drafted ‘target world’ into reality on the basis of SAP ERP & Business Suite, and are rolling out this programme on a global basis.
One Corporation RUN: These are companies in value-creation mode. Their IT strategy conforms with their corporate strategy. Uniform business processes are implemented throughout the company; the SAP system landscape is harmonised and consolidated (OneSAP). Global organisation of their governance ensures that the firm operates efficiently.

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