Every SAP customer is different, with its own unique business model, platform, and vision — and its own specific requirements and roadmaps for business software. The most successful software implementations are based on a strategy that takes into account what makes an organization fundamentally different. Doing so helps ensure that the software infrastructure meets the organization’s needs, and can also help businesses make informed deployment decisions — such as whether a cloud deployment is the right option for their particular implementation and, if so, how best to go about it.
This article outlines some key criteria that organizations can use to help formulate a personalized SAP S/4HANA deployment strategy, including whether and how to deploy it on the cloud.
Weighing Up Pros and Cons of Cloud
Overall, IT is trending toward the cloud — Gartner estimates that “by 2020, more than $1 trillion in IT spending will be directly or indirectly affected by the shift to cloud during the next five years.” Despite this trend, out of the 563 respondents to a 2016 survey by ASUG Research, 38% are planning an on-premise deployment of SAP S/4HANA.
So why is this, and what does it mean for your own SAP S/4HANA deployment? As for why so many are going the on-premise deployment route, the usual factors surrounding cloud deployments such as availability, regulatory requirements, cost, and trust come to mind. When it comes to your own deployment, the only factor that matters is what makes sense for your business.
If your organization weighs the pros and cons and decides a cloud deployment is the best choice, you will need to select the type of deployment: software as a service (SaaS), platform as a service (PaaS), infrastructure as a service (IaaS), or business process as a service (BPaaS). This decision should fit with your organization’s overall cloud strategy and be driven by its unique business needs — not by the service provider you are working with.
The Where and How of Using SAP S/4HANA
Another key decision point is determining which processes will benefit most from SAP S/4HANA. While supporting core processes in key regions with SAP S/4HANA is an obvious choice for most organizations, what about non-core processes? And what about operations in smaller markets?
Organizations traditionally rely on Microsoft Excel or smaller accounting and logistics packages to support non-core processes and smaller-scale operations. These alternatives can complicate the organization’s IT landscape and can require costly integration efforts to collect information at the right level of granularity and frequency. In these scenarios, a cloud-based ERP system enables faster time to value, reduced total cost of ownership (TCO), and easier integration with the main ERP system while supporting the business requirements that even small entities demand, without the need for a full-blown ERP implementation.
For some organizations, a “two-tier ERP” approach that combines the flexibility of the cloud with the control and performance of an on-premise deployment can work well — for example, an on-premise implementation of SAP S/4HANA to support core processes and a public cloud deployment of SAP S/4HANA to support non-core processes. Using solutions that come from the same vendor and share the same code base brings additional advantages — it reduces the volume of non-core ERP systems and enables the solutions to easily share the same master data and business processes, reducing the need for manual reconciliation.
One consumer product organization that we worked with selected a cloud deployment for its professional business unit that generates only 5% of total revenue, but preferred an SAP S/4HANA on-premise infrastructure for its core consumer branch. At another project, a high-tech manufacturing company deployed SAP S/4HANA in the cloud to cater to the needs of its professional services division. This option can add value in many scenarios, regardless of the size of the business unit or market for which it is deployed.
Choosing the Right Migration Path
Once you’ve decided what to deploy and where to deploy it, you need figure out how to go about the actual transition to the new solution. When it comes to SAP S/4HANA, do you take a greenfield approach, where you implement the software from scratch and migrate only your master data while deleting or archiving most transactional data? Or do you take a brownfield approach, where you migrate an existing SAP ERP system along with all master and transactional data to SAP S/4HANA? Or does a hybrid, phased approach make the most sense, where you gradually implement the new software and convert the master and transactional data?
There is no one-size-fits-all answer. In a perfect world, all organizations would have a single instance of the latest version of their SAP system, with the most updated enhancement and support packages applied and no custom code to manage, and everyone could follow the same simple migration path. In the real world, the IT landscapes of most businesses are very different, and various factors will determine the path you will need to take when moving to SAP S/4HANA, including the system you are starting from, the technical prerequisites, whether you are deploying on premise or in the cloud, and your reasons for migrating (see Figure 1).
For example, you need to evaluate the feasibility of a direct data conversion of your existing system to SAP S/4HANA (especially if the source system is not Unicode compliant), how much data needs to be converted, and how best to provision for custom code remediation. In addition to the technical aspects, you need to think about how your overall business model may have changed since the implementation of the original ERP system. For instance, if your goal is to move to a digital platform from a system that does not support digitization, a greenfield approach may make the most sense.
Build a Strategy That’s Right for You
A cloud-based SAP S/4HANA deployment is relevant to more than just ERP scenarios, and the same considerations and criteria outlined here can be applied to creating a migration strategy for analytics, integration, big data, customer relationship management, or Internet of Things use cases, for example. The bottom line is that most organizations need more than an off-the-shelf template deployment approach.
Recognizing your unique needs means taking a close look at the type of implementation you need, where you need to implement it, and how to execute it. These considerations can enable you to build a strategy to help your business grow today and lay a foundation for the future.
Bluefin’s individualized approach to supporting implementation projects enables companies to develop an organizational roadmap for SAP S/4HANA implementations that takes into account specific IT constraints, prerequisites, and target solutions. You can benefit from these insights in your own software deployments by requesting a free discovery workshop for your organization. To find out more, visit www.bluefinsolutions.com.