Is there a business case for moving on to S/4HANA?

3 months ago Terry Dawson

Linkedin Post S4 Hana2

“S/4HANA gives organisations exciting new opportunities to transform their ways of working and drive their digital journey, but making a viable business case can be challenge.” This was the consensus of a roundtable of managing directors, finance directors, CIOs and leading programme managers at a recent breakfast hosted by Investigo at the Ivy City Garden in London.

The mood of the roundtable was that many organisations are struggling to justify the cost and the business disruption of moving onto S/4HANA. Not to mention the difficulty of convincing sceptical boards that it is a strategic priority.

However, the lively roundtable discussion provided insights on how to realise the value offered by S/4HANA and how to create a compelling business case. Participants shared “war stories” and practical advice at this breakfast meeting which was led by Neil Lewis and John Carey.

Neil and John, who are experienced business transformation consultants with a wealth of practical SAP implementation experience, framed the discussion using a combination of their own experience and collateral available from SAP. The attendees were able to share views and seek advice from the wealth of knowledge and experience around the table.

Hard-sell of S/4HANA

One typical reason that organisations have started looking at the S4/HANA journey is SAP’s announcement that they will be discontinuing support for ECC. This announcement in combination with SAP’s extensive sales and marketing efforts is putting S/4HANA on the table whether or not companies want it there. In fact a number of the attendees felt that their SAP account managers were pushing S4/HANA too hard.

The benefits of SAP S/4HANA

The view at the table was that S/4HANA could unlock a number of benefits over and above those available from earlier generations of ERP or SAP’s competitors. The roundtable discussed a range of potential benefits such as:

  • The opportunity for real-time decision making, particularly in business scenarios involving supply chain, ecommerce, commodity trading and MRO

  • The ability to improve the customer experience through new functionalities and streamlined ways of working

  • Greater support for innovation through the use of Internet of Things, AI and Machine Learning

  • Streamlining of IT operations and upgrades as a result of a simplified system.

Another interesting consensus was that the move to S4/HANA was not an “IT upgrade” but that the move effectively required the “reimplementation of SAP” in order to fully exploit the S4/HANA benefits. Such a reimplementation also provides the opportunity to:

  • Redesign value chains to better support digital initiatives

  • Tackle the process inefficiencies, design compromises and reporting issues that exist as a result of earlier implementations

  • Utilise new data structures to provide better management insight into KPIs (e.g. ROCE).

  • Making the business case

“With a benchmark cost of £70-£100 million and a three-year implementation period for large companies to move to S/4HANA, it’s not hard to see why preparing a business case is challenging,” was the view from one of the experienced programme directors.

“I’m yet to hear a really compelling case,” said another of the senior programme directors in attendance who is a special advisor to a number of large businesses.

However, it was understood that, once all the ECC support and extended support options are exhausted, organisations will need to migrate to S4/HANA or to another provider. At some point, everyone who wants to be on SAP will be on S/4HANA. It’s a question of when, not if.

Given the likely costs, the disruption and the magnitude of change, the view was that a move to S/4HANA needed to be managed as a formal business transformation programme if the benefits were to be realised and the risks to be mitigated.

The roundtable discussed how best to make the case and some common themes emerged, including:

  • Don’t be rushed. Spend six to nine months understanding the benefits opportunities, the strategic possibilities, the potential new ways of working. Don’t jump straight to the IT implementation costs and plan

  • Study the wealth of SAP collateral available and utilise the free SAP consulting to help you understand the value you could deliver through S/4HANA

  • Think about the options for “on cloud” and “on premise” arrangements and the migration options

  • Carefully consider the costs of interfacing other applications to S4/HANA

  • Build the case for change with stakeholders throughout the organisation.

Conclusion

The roundtable was an enjoyable format in which to share views and opinions on the S4/HANA journey. The conclusion of the morning was that balancing the substantial transformation opportunities and benefits that an S/4HANA implementation offers with the costs and challenges won’t be easy in the short-term, but can offer mid to long-term benefits for SAP’s customers.