By 2027, SAP expects that most of its customers run the S/4HANA ERP solution. A transition is inevitable in the long run, although there are more reasons not to put this transition on the back burner. We talk to SAP specialist Ctac about the motivation behind migrating and the things you need to pay attention to as a company.
“The corona crisis and associated lockdown in recent months caused a blind spot in many organizations,” says Natasja van Onckelen, Sales & Account Manager at Ctac. “Companies went into panic mode and were forced to change the way they work. Export became more difficult as they had to approach customers differently and contact with vendors changed.” For many people, the new reality meant that they had to digitalize a lot. “Ironically, the reaction of many was to push the pause button, while the innovations just required applications and modern infrastructure.”
SAP integration specialist Ctac is apprehensive about the 2027 deadline in the face of these hesitations. The intention is that existing SAP installations have been migrated to S/4HANA by then. In concrete terms, this modernization offers a lot of possibilities that perfectly meet the reality of Covid-19 specific transformation and digital transformation in general. After all, a strong digital backbone makes it easier to respond swiftly to changes brought on by factors such as the coronavirus, for example, by approaching customers online. So, regardless of the deadline, digitalization is a solid idea, especially with urgency in mind.
Ctac guides organisations with the implementation of S/4HANA. The company focuses on customers in wholesale, manufacturing, retail and real estate. In these four domains, Ctac has relevant knowledge that enables it to translate the innovations that S/4HANA provides into concrete business cases. “Everyone can look up general improvements themselves via Google,” says Johan Looijmans, Director Portfolio & Markets at Ctac. “We understand what these improvements mean and realise the efficiency that someone can achieve in the warehouse, or see how we can further tighten up an MRP process (production planning).”
When a company makes the crucial decision to make the migration, Ctac first looks at the underlying motivation of the migration. Looijmans: “Does an organisation want to make the migration because of the approaching deadline? Or are the new opportunities offered by S/4HANA the deciding factor?” Based on these strategic goals, Ctac drafts an assessment to see what the best route is to reach the final goal.
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“Sometimes it’s a technical conversion of the existing system,” Looijmans explains, “but sometimes it is not as convenient, and it is better to opt for a new implementation.” The choice between both options depends on a number of factors. “For example, what is the state of the current system? And what have you added to the system in recent years? Most customers have been using their systems for at least ten years and sometimes even 15 or 20 years. Meanwhile, business models have been abandoned, technical solutions have become obsolete and brilliant suggestions have grown into bad ideas.”
The current state of the SAP implementation has a major impact on the likelihood of a conversion. Ctac subsequently assesses the effects of the implementation on business operations. After all, even an upgrade to S/4HANA is not an easy task. “Exactly how long the entire process takes depends on the company”, says Henk Palsma, Business Consultant at Ctac. “At a large organisation, the project often takes longer than a year, but medium-sized companies can be compared to a pregnancy: nine months is a good indication. In smaller companies, it can sometimes be done in four months.”
Palsma, Looijmans and Van Onckelen expect that the tough lead time combined with the approaching deadline will cause problems in the long term. According to Van Onckelen, many organisations are still waiting and have yet to make a decision regarding the SAP ecosystem. In some countries, there’s hardly enough time to complete all conversions and new implementations on schedule. This is also the fear of SAP itself. The deadline has therefore been postponed from 2025 to 2027.
Ctac fears that many companies will realise the urgency of the transition too late with all of the consequences that entails. Saying goodbye to SAP is simply not an option. Looijmans: “Customers have invested fifteen years into SAP knowledge. Their entire company has been built around that data model. It’s not easy to implement an alternative such as Oracle just as quickly. Besides, almost everyone is satisfied with their current system”, Palsma adds.
The important thing is to decide in time. Not only to avoid getting into trouble but also to go along with the digitalization and modernization. You can already take a few steps yourself in advance. “Before we start, we conduct a number of checks on the system’s health”, Van Onckelen explains. “This will result in a number of elements that the customer can already adjust. For example, think of all the customisations. Sometimes a smooth takeover is not a problem, but sometimes it has to be converted. Or maybe it’s redundant and the functionality is now covered by S/4HANA. In that case, the customer can already start with a major clean-up.”
“Many customers have been working with SAP for a long time, and this almost inevitably leads to inconsistencies in the data. For example, customers and vendors with duplicate names in the database, or poorly processed financial bookings. This is a problem, as S/4HANA consists of consolidated elements. For example, customers and vendors are grouped under the heading ‘business partners’, while financial bookings are combined in one large booking account. Ideally, all data should be cleaned up and reviewed before the conversion starts.”
In the end, a big clean-up like that is always interesting and especially now. After all, organisations that quickly launched an online store, or found other digital ways to engage with customers during the corona crisis, did not always do so with a structured back-end in mind. Now that the dust has settled, it is a good time to tidy up things.
Perhaps that way of thinking alone will lead to the conclusion that a switch to S/4HANA is due. “Suppose you want to incorporate new functionality,” outlines Van Onckelen. “Do you do that with the old software? Or is it perhaps a better idea to invest in the new version right away?”