Learn more about the most common risks you’re likely to encounter with S/4HANA migration, and how to mitigate them.
A mitigation plan for S/4HANA migration risk
With ECC6 support ending in 2027, S/4HANA migration is necessary for various organizations but understandably, many will find the prospect daunting. Enterprise resource planning (ERP) transformation is famous for being one of the most complex and challenging projects that an organization can undertake.
While some risks may be unavoidable, it is possible to anticipate and mitigate some of the most common challenges.
Data cleanse and migration to S/4HANA
Data cleanse and migration is always a challenging part of any ERP project. Each organization will have its own unique set of legacy data and needs to take the necessary steps to make it fit for purpose.
However, S/4HANA migration presents a particular data challenge, even when compared to other ERP transformations. S/4HANA features significant changes to the data model compared to ECC6, such as the finance and business partner data structures and validation rules.
Consequently, migration will be a larger undertaking and require longer lead times. Early data profiling is crucial for understanding the potential scope of the challenge and determining how to proceed. This step always takes longer than you think so plan accordingly.
Ultimately, the key to overcoming this challenge is to clearly prioritise data cleanse, analysis and testing. Using a risk-based approach, testing needs to be thoughtfully scoped to cover both breadth and depth of data scenarios, with data an integral part of the test preparation phase. Start early, and leave plenty of time (and budget) for this critical phase.
Sticking to standard S/4HANA functionality
S/4HANA migration represents an opportunity to transform current business processes, removing inefficiency and switching to best-practice processes. Organizations would be wise to aim for zero customizations and keep to the technical standard as much as possible i.e. adopting the SAP ‘clean core’ principle.
Any deviations during design, development and testing will lead to increased costs, and make future maintenance more complex.
However, organizations also need to remain realistic, recognizing that some level of customization is likely needed. For example, ‘out of the box’ reporting may be missing fields that the business considers critical. Standard workflow and individual notifications have their limitations and may not work for the end user. Every business has its own unique way of doing things and sometimes the right solution is to flex to meet that need.
Projects can easily go off track when trying to balance these competing considerations. To mitigate this risk, organizations should apply a few key principles:
- Ensure the system integrator (SI) has experience across functions and is able to give good advice
- Provide an appropriate process for the in-house team to challenge the SI on design options and decisions
- Define rules for approval over customizations and gain senior business buy-in over this messaging.
Organizations which adopt greenfield re-implementation as their S/4HANA migration approach can use this as a way to ‘force’ compliance.
Building S/4HANA skills and experience
New skills will be required on both technical implementation and S/4HANA specifically, but there is a short supply of people with experience in either of these areas. It takes time to recruit the right people and train them up.
There are a few critical actions that can help prevent insufficient skills and experience becoming the barrier to successful S/4HANA migration:
- Through contracting, ensure experienced SI personnel are retained and that resources can be swapped out in the case of poor performance
- Consider new hires or specialist augmentation to bolster in-house solution expertise
- Plan to provide functional, data and technical training to staff.
The operational risks of S/4HANA migration
Delivery risks are not the only factors that can jeopardize S/4HANA migration. Organizations need to think about the operational risks too.
A successful S/4HANA transformation is not just about reaching go-live, but about embedding change for the long-term and achieving the anticipated benefits.
Each implementation will have its own operational risk profile linked to the migration scope and organizations will need to make a thorough assessment. Plan beyond go-live and put in place the necessary support for end-users. This could take the form of ‘early life support’ mechanisms immediately after go-live or formalised business-as-usual support over the longer-term.
There’s a balance to be struck between in-house and third-party support, including potentially through the SI given their knowledge of the solution. This balance needs to be carefully tailored to the organization; there is no one-size-fits-all.
Whatever the approach chosen, it should be thoroughly documented in the program’s transition plan.
Keep S/4HANA migration focused on ambition and outcomes
We’ve discussed some of the major risks that organizations can expect on the road to S/4HANA migration but perhaps the biggest risk of all is losing sight of the big picture. It’s very easy to get lost in the technology when the organization needs to first focus on what it wants to get out of the project.
Any organization needs to think carefully about the outcomes it wants to achieve and what’s currently holding it back. It should then treat S/4HANA migration as an opportunity to address those issues and transform the business.
Only then will the organization know what choices it needs to make and how to shape the right delivery model. If an organization is ambitious, it will need to plan for greater risks and allow enough time to mitigate them. It will need to ensure consistent senior sponsorship at the C-level to drive real progress.
Ultimately, organizations need to understand the specifics that are unique to them, and should take the time to assess this early. Leaning into that understanding is the way to ensure S/4HANA migration stays on course and realizes the benefits promised.
