S/4HANA: Have We Hit the Adoption Inflection Point and the True End of ECC?

Author: Chris Botha

On the cusp of next big on-prem 1809 release of SAP S/4HANA and with a shrinking window of support for the ECC ‘war horse’, let’s reflect on why this matters and why now. We will spend some time to help you understand what to look out for and how to make this a success based on our hands-on customer advisory efforts and peer research experiences to date.

Many SAP run companies, and their prospective SI’s, are faced with major questions if S/4HANA is now mature enough to run their business, how will it work, and why now? One challenge is that there is not a long track record and comparable live references are limited. Especially if you whittle it down to comparable scope, leverage of Activate methodology, greenfield versus brownfield, logistics and manufacturing scope etc.

We do need to remember, the 1610 version arguably put S/4 on the map for companies focused on more than just finance business operations and that 1709 has made major strides covering the full suite.

Words of advice: Don’t just ask to speak with live refences on the latest release. Look for companies that have gone through the due diligence and selected S/4HANA. Also look at companies that are in the process of implementing. What are the lessons learned? We find they are very open to share.

Our perspective: When looking at the maturity of the full functionality, our findings showed that even 1709 is ready, with a few minor callouts. Exceptions include:

1) aATP (Advanced ATP) functionality not supporting basic functionality that SCM-APO GATP delivers, including Multi Level ATP, Capable to Promise and Rules Based location substitution. But this can be overcome by keeping GATP plugged into S/4HANA and migrating to aATP down the road as it gains maturity
2) aVC (Advanced Variant Configuration) brings some nice user experience, type matching for products that are ‘close enough’ and analytics improvements but falls short in supporting multi-level configuration (prior to 1809) and the use of function calls in object dependencies. But this can be overcome by leveraging LO-VC as part of S/4HANA in a way that it would scale to a later aAVC solution

Although traditionally more of a small to mid-size company play, we see large corporations considering using this opportunity to do a Greenfield implementation. Their systems have been implemented 15 to 20 years ago and have been highly customized. It’s all about adopting best practice standard processes and taking the opportunity to shed the technical depth while getting on the newest architecture to support scale, growth and differentiation.

Words of Advice: There is no silver bullet. Regardless of the approach taken, the fundamental outcome and objective is the same: simplify and standardize the core and only retain the customization that is truly needed and that differentiates the business. For a Brownfield approach that means de-customizing and simplifying, and for a Greenfield, it would mean re-customizing what’s needed

The first thing you will likely hear in an S/4 pitch is the productivity improvement through the Fiori interface, the simplification of data structures, and of course, there is the performance gains. But what are some of the other valuable additions that are not making it to the top of the discussion and evaluation criteria (although they should)? 

  • Although not just for S/4HANA rollouts, SAP’s Activate Methodoloy allows for a hybrid-agile alternative to the traditional ASAP waterfall methodology. This comes with a lot of structure, accelerators, and built in approaches to ensure you test and vet results much earlier in the process
    • Agile and Activate training & org impacts are important. Having or hiring certified SCRUM masters and agile coaches are key and working with your SI to determine how your PMO tools fit into the approach and Solution Manager toolset is important
  • One of the major functional constructs and benefits are based on embedding technologies and functionality into the S/4HANA core. From self-help embedded analytics to including previously decentralized offerings like EWM, GTS, ML and MGD. This strengthens the seamless S/4 footprint
    • But be aware: S/4 Pricing is not straight forward. You pay for embedded features so make sure you work with your independent advisor to ensure you really need these in your MVP (Minimum Viable Product) and where they may fit into your roadmap
  • Huge benefits can be achieved by leveraging functionality that was formerly included in the ECC industry solutions, now incorporated in the core. For companies in the CPG and High-Tech industry, two that come to mind include:
    • Segmentation (from the Apparel & Footwear Industry Solution) where product attributes can be tracked from Planning to sales to supply planning and inventory management, thereby driving traceability, visibility and SKU reduction
    • Product Substitution, allowing alternate material tracking from Sales, planning, procurement and inventory management through FFF Groups (Form Fit & Function), formerly part of the Discrete & Mill Product Industry Solution
  • You may have heard talk about S/4HANA being the ‘Digital Core’. Although there is a bit of a marketing flavor to this, this is an understated truth. With all S/4 transactions being API enabled and the SAP Cloud Platform supporting Cloud Foundry based Digital apps, true two speed IT and Digital Transformation can be accomplished with S/4 as foundation

Is S/4HANA ready? After extensive evaluation with one of our leading S/4 Strategic partners, our hands-on experience, and subsequently endorsed by SAP, we have concluded that even 1709 is mature and 'mostly' ready.

  • The next debate will be if you start with 1709 and upgrade as soon as the Model companies are brought up to 1809 or if you wait for the new release to be more stable. There are many new features coming but it comes down to your tolerance for adopting new technology. Are you an early adopter benefitting from the extra handholding from SAP, or do you want to be on 1709 while others sort the new bugs out? Either way, make sure you stay current with the latest support packs

There is no doubt that S/4HANA will be the enabler to take your business to be next level and help your business to stay competitive in the new world of innovation and Digital transformation. Just go into this with eyes wide open. There are a few important points that will help to make this a success:

  1. Defend and protect your MVP. Follow up with Agile Roll-ins but do not fall in the scope creep trap. Ideally have an independent advisor to keep the software BOM small and manageable
  2. Change management is important and seriously consider pulling in some millennials to help adopt the new UI while building the next generation workforce. Yes, the old t-codes are still there for the most part, but our users are getting old and set in their ways. Productivity and efficiency objectives will not be achieved without embracing the new Fiori UI designs
  3. Make your business case, measure performance of relevant KPI’s and build tracking and monitoring into the design. And most importantly, measure, refine and improve on an ongoing basis. Make sure you focus on Business process. Striving for adopting that 80 – 90% standard best practices and develop that 10 – 20% differentiating ‘special sauce’.
  4. As always, accurate Master Data is a very important component for success. Start a Master Data management & standardization sub-project early to ensure it does not delay playback and prints.
  5. And last but not least, as with all Transformation programs, this has to be a Business Owned and funded program

In conclusion, you really should look at it through a different lens. It is not just a question of replacing your legacy ECC system. By considering the above and as always, by leveraging the right team and approach, S/4HANA will deliver and exceed your expected business value. There is a new Sherriff in town so get ready to put the ECC ‘war horse’ out to pasture...

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