S/4HANA: enabling transformational change

2027 will see SAP withdraw as-is support for ECC6, signalling the beginning-of-the-end for organizations to migrate to S/4HANA. For many people with limited experience in ERP programs, it seems reasonable to assume that doing nothing will mean the cost to support and maintain the current solution stays the same. In reality, this will not be the case. Support for ECC6 will become more expensive after the 2027 deadline, either via SAP or with third parties, may require hiring from a decreasing pool of talent, and the burden of maintaining legacy infrastructure.

A strong business case will demonstrate that the longer the organization waits, the more these costs will escalate. Migrating to S/4HANA ensures your business is fit-for-the-future and avoids the end of life drop off date for ECC6. 

There are potential technical benefits from the move to S/4HANA, aside from just obsolescence risk management. The migration can be used as an opportunity to consolidate disparate ERPs, reduce existing customisations, and simplify the integration landscape – all of which help to reduce environment complexity and maintenance / support burden. It makes the IT estate more efficient.

By speeding up and simplifying the collection and processing of data in real time, S/4HANA can drive the harmonization and quality of master data sets throughout the organization. The immediate access to substantive data that can be trusted will facilitate greater connection across your business – enabling faster, meaningful insights for operational and strategic decision making, a fundamental element of business success.

Best in class processes save effort and provide important KPI improvements. S/4HANA migration allows more effective use of colleagues’ time, so there is less focus on transactional day-to-day activities and more on value-add, such as data and analytics.  

If your organization operates across multiple territories, or has acquired other entities, a key benefit to include in your business case could be the unification of disparate processes. This will depend on the overall strategy and the needs of the business, of course, but the joining and simplification of systems and operations can drive huge efficiencies and synergies. 

Another significant benefit is process maturity and control for the Finance function. S/4HANA migration can help formalize processes and implement best practice, automate previously manual processes or tasks, and help prevent human error. For example, S/4HANA can enable an organization process invoicing and payments more quickly and efficiently, with controls in place to stop things falling through the cracks, providing an opportunity to improve cashflow.

Conversely, simple headcount efficiency is one benefit that can be overplayed. While this can be realized in some specific areas such as procurement or payroll, the benefit across an organization is usually marginal. This shouldn’t be confused with the opportunity to fully transform a business’ operating model, leveraging SAP-recommended best practice, which can yield significant savings.

Your S/4HANA migration will help future-proof your business due to its flexibility. The functionality supports an organization’s expansion into new geographies and the addition of new markets and capabilities as well. Though you might not immediately be seeking this adaptability, it is reassuring to know that the system you buy today will support your business’ function and requirements in the future.

A digital platform’s success often rests on its ease of use. A more intuitive user interface improves the access and experience of both colleagues and customers. Decreasing the cost of customer acquisition and retention and improving employee engagement, productivity and retention can all help an organization become more competitive and add to your bottom line. These elements will contribute to harder-to-quantify aspects such as reputation, brand and loyalty too.

Artificial intelligence (AI) and machine learning capabilities are other prominent S/4HANA-enabled benefits. AI technology has the potential to transform businesses in powerful ways, such as driving innovation, increase productivity and efficiency, and grow revenue. 

Again, staying on ECC6 won’t necessarily stop you from leveraging new AI and machine learning technology, but S/4HANA migration would offer a next-generation foundation. The S/4HANA platform also features its own embedded AI and machine learning capabilities, which some organizations may want to consider depending on their specific use cases.

Some organizations may have unique attributes or characteristics that could lead to direct financial savings. For example, when we partnered with a large media organization on their S/4HANA implementation, we found that the implementation would help control procurement spend in a more effective way. We also identified that S/4HANA could help save revenue leakage of £3m per annum. When building your business case, ensure you leave no such stone unturned.

The upcoming European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive has added another reporting requirement for many businesses. Whether your organization falls within the legislation or wishes to increase transparency around sustainability issues, the S/4HANA platform will make it easier to identify relevant information that holds up to public scrutiny as well as saving effort to access it.

An often-overlooked benefit of S/4HANA migration is the ability to retain talent and grow internal skills and capability, specifically with regard to in-house transformation and technology teams. People who work with SAP platforms want to work on S/4HANA migrations. For most, this represents a once in a career opportunity to work on something truly transformational and develop the digital skill sets to move their business forward. We have seen organizations that have found their hesitation and inertia is driving talented individuals to seek challenges elsewhere. 

Don’t underestimate the negative impact of losing institutional knowledge, as well as the costs involved in backfilling roles, and onboarding and training replacements. This could be a helpful element to include in your business case, depending on your organization’s goals and culture.

Your organization may be looking at adopting other SAP technology solutions, such as Ariba for supply chain management or Fieldglass for external services management. While it’s possible to implement these without S/4HANA, an integrated landscape would enable these ‘satellite’ solutions to operate much more effectively. Potential benefits could include improved workflows and processes, automation, and data and analytics capabilities, including real-time insights.

If satellite solutions are part of your business case, you should emphasize how the solutions complement and enhance each other. Your roadmap should also focus on pursuing the most value-adding elements early as this will demonstrate quick wins and help grow support in the business.