The most important dos and don'ts of an S/4HANA migration

An ERP transition is a challenging operation. If the wrong decisions are made, a migration can become unnecessarily long and costly. However, if you understand where the risks lie, you are more likely to achieve – or even exceed – all implementation and optimization goals, making the ERP project a success.

Unfortunately, the horror stories about ERP transitions that took more time and money than initially planned are well known. Yet the causes of these unfortunate transitions don’t get much attention. People often point to the technology falling short, although such cases are the exception. Other factors are far more crucial in determining whether an ERP transition succeeds or fails. We list the most important dos and don'ts to ensure that S/4HANA is delivered on time and on budget.

The importance of IT is huge in business. A well-functioning ERP system is the beating heart of the company, as IT and business processes are inextricably linked. Business managers placing a list of functionalities on the IT manager's desk, only to watch how the ERP transition takes shape from a distance, is outdated. Today, the IT department and the business need to join forces and together look at how the organization can be moved forward. A successful transition therefore starts by making strategic choices. Make sure you know the direction you want to head in as a company to ensure you are ready for the future. Based on this vision, you can then work with IT specialists within the company and experienced external specialists, if required, to map out what the ERP landscape should look like for the organization.

A clear business case is a prerequisite for a successful ERP transition. Yet it is common for things to go wrong at this stage. Sometimes the affiliation with the strategy may not be strong enough. In other cases, the design for changes in the organization or ERP landscape may not be detailed enough or the time for preparation is too short. This creates the risk of ultimately delivering an ERP landscape that nobody wants to work with or support. After all, a widely supported ERP transition is often the key to its success.

Another useful preparatory step a company can take prior to a migration is to archive legacy ERP data. The migration to SAP S/4HANA offers a great opportunity to give an organization's ERP system a major clean-up. By taking these actions before the migration, you as a company benefit from a lower migration volume, incur fewer costs and spend less time on the migration.

Estimating the duration of a migration process is tricky, as it differs from customer to customer. As a rule, you can set a timeline of six to nine months for the first step of the migration. The overall transition from traditional SAP systems to SAP S/4HANA can take 12 – 18 months, but there are also organizations where the migration to SAP S/4HANA takes much longer. It is important to have the main drivers clear in advance and to have a roadmap. Greenfield projects are usually considered for large companies. Organizations see this technology transformation as an opportunity to completely renew their existing ERP landscape. Another option is to keep the IT landscape intact and implement new technology; this is referred to as a brownfield project. In addition, organizations can also opt for bluefield, a combination of greenfield and brownfield. A realistic timeline can then be defined based on the choices made.

In all cases, it is good to set a target for the ERP strategy. However, it is always a good idea to divide the journey into smaller steps. Doing so will give you the opportunity to make adjustments if changes in the market dictate they need to be made. In addition, you can celebrate success when steps are completed, which will improve motivation.

Every business is different, but that doesn't mean every company needs a completely unique ERP infrastructure. Customization sounds great on paper, but in reality it means investing a lot of money and energy into developing very specific software. However, it is difficult for managers to know when to choose customization or go for a standard solution. KPMG Powered Enterprise offers organizations a helping hand. Based on our insights and best practices regarding organization and process design within various industries, we can support customers in making informed choices for the design of their ERP package.