March 4, 2024

SAP S/4HANA Migration & Implementations: Overcoming Challenges for Success

Businesses currently using SAP face critical decisions ahead. With a hard deadline of 2027 looming, the imperative to switch to S/4HANA is clear, or they risk operating in an unsupported environment. There is the option to extend support to 2030, but that means an increase in premiums and maintenance fees with an inevitable switch still looming.  

SAP was built without today’s cloud environment in mind. Today, things are rapidly changing, and it’s essential to have a system that can handle advanced technologies, customer expectations, hybrid workforces, and supply chain disruptions.  

Transitioning to SAP S/4HANA represents a significant leap forward in Enterprise Resource Planning (ERP). This migration entails not just an upgrade but a transformation of business processes. SAP S/4HANA leverages in-memory computing and streamlined data models, enabling real-time analytics, enhanced decision-making, and improved efficiency. It also offers the opportunity to simplify complex landscapes, reduce IT costs, and embrace digital innovations like IoT and AI. 

The move involves meticulous planning, data migration, testing, and training to ensure a seamless transition. Although the transition can be complex and resource-intensive, organizations will benefit from a more agile, responsive, and future-ready ERP system that aligns with the evolving demands of the modern business landscape.  

While short-term workarounds may provide temporary relief, they lack the real-time insights and flexibility required to thrive in today’s competitive market. Growth accompanied by increased complexity and data inconsistencies can impair business performance and diminish customer satisfaction, posing challenges in user adoption. 

With a solid plan, strong leadership, and a commitment to adapt and optimize processes, coupled with Oxford’s expertise, organizations can expect enhanced outcomes with heightened business agility, innovation, and competitive advantage. To best prepare for a successful transition, there are implementation challenges to be aware of. Effectively navigating these challenges requires a strategic approach and a focus on mitigating common hurdles. 

OCM Challenges: Engaging the Workforce

Transitioning to SAP S/4HANA brings forth potential disruptions attributed to inadequate change management. A recent study by the Prosci Institute reveals that a staggering 75-80% of projects fail due to the lack of change management, stemming from poor planning, communication, or stakeholder engagement. Pushback is also possible as people resist change or attempt to adjust to new business processes.  

The landscape of organizational transformation paints a vivid picture: the average employee underwent ten planned enterprise changes in 2022, a stark contrast to the mere two changes in 2016. However, this increase in change frequency comes at a cost; employee burnout is on the rise, with support plummeting from 74% in 2016 to a mere 43% in 2022. 

Amidst these challenges, effective change management emerges as the indispensable compass for navigating turbulent waters. Rushing through changes without considering employee well-being can lead to a host of issues. Data indicates that 55% of employees undergoing multiple changes simultaneously experience declining health outcomes, while trust levels dropped drastically, with only 36% expressing strong confidence in their organizations and leaders. 

Furthermore, half of employees struggle to access necessary help or information amid mounting tasks. However, there exists a more efficacious approach: Organizational Change Management (OCM). This methodology prioritizes flexibility, ongoing employee input, and the segmentation of changes into smaller, manageable phases. 

Embracing OCM and engaging employees from the beginning, can preempt burnout and frustration. In fact, Forbes reports that 71% of leaders believe the workforce plays a crucial role in supporting digital transformation. Celebrating small wins along the way improves engagement and empowers employees to champion the main outcome

Data Migration Challenges: Ensuring Data Integrity

Migrating large volumes of data from one system to another demands meticulous attention to ensure data integrity. Without adequate data cleansing and validation processes, there’s a risk of compromising the accuracy and reliability of the transferred data, potentially resulting in costly errors. Research indicates that data migration projects historically have faced challenges, with over 80% exceeding their deadlines or being abandoned altogether, as reported in older data from 2007. While the percentage dropped significantly to 38.3% in 2011, costs remained high, averaging $268,000 per project. More recent findings published by Forbes in 2021 show that only 36% of data migration projects stay on budget, with a mere 46% being completed in a timely manner. 

These statistics underscore the importance of prioritizing data quality throughout the migration process. Data quality deteriorates over time, emphasizing the need for continuous monitoring and improvement. Establishing appropriate targets or key performance indicators (KPIs) before the transition is crucial to achieving successful outcomes and mitigating potential risks associated with data migration. 

By maintaining a focus on data integrity and implementing robust data cleansing and validation processes, organizations can enhance the effectiveness and reliability of their migration projects, ultimately contributing to the success of their transition to SAP S/4HANA.

Mid-Transition Challenges: Ensuring Dual Maintenance

Upgrading from SAP ECC to S/4HANA is a gradual process that can span months or even years to complete effectively. However, during this transition period, organizations must navigate the challenge of maintaining both legacy and new ERP systems simultaneously. This requires ensuring that both platforms are up to date and operating efficiently to avoid disruptions in day-to-day operations. 

Without proper parallel management of old and new ERP systems, businesses face significant risks, including compatibility issues, operational downtime, and a lack of support for the legacy system.

Technology Challenges: Understanding What is Critical and Why?

SAP S/4HANA offers extensive customization and the integration of critical third-party applications to tailor the system to each company’s needs. Its adaptability is a key strength, allowing seamless integration with various technologies within an organization’s technology stack. 

A company’s technology stack typically encompasses hardware, operating systems, databases, middleware, and application layers, each playing a crucial role in supporting various business processes. Understanding the importance of each component and their interdependencies is essential for successful integration with S/4HANA. 

Changes or upgrades to one component of the stack can have ripple effects on others. Therefore, it’s imperative to carefully manage these dependencies to prevent disruptions in business operations. IT plays a critical role in this process, ensuring a coordinated approach to deployment to guarantee that S/4HANA functions seamlessly with the rest of the technology stack. 

Failure to manage these dependencies can lead to compatibility issues, performance bottlenecks, and potential downtime, emphasizing the need for meticulous planning and execution during the implementation of S/4HANA.

Upgrade Challenges: Getting Up to Date Before Migration

When businesses are not using the most recent version of SAP ECC, at least ECC 6.0, before transitioning to SAP S/4HANA, applying updates becomes an additional step or task in the migration process. As the predecessor to S/4HANA, staying up to date with ECC versions is essential for a smoother, more streamlined transition that minimizes potential challenges. 

Updates in the context of SAP ECC are necessary to ensure the existing ERP system runs on a supported and stable version. These updates may include bug fixes, security patches, and enhancements to the software. Businesses must be on a recent ECC version before moving to S/4HANA because of: 

  • Compatibility: S/4HANA has specific technical requirements and prerequisites. Being on a recent ECC version helps ensure the existing system is compatible with the transition to S/4HANA. Outdated ECC versions might require additional steps or transformations to bridge the gap between the old and new systems.  
  • Data Migration: As stated, the data migration process from ECC to S/4HANA can be complex. Having an updated ECC version often simplifies data migration, as it might include features or tools designed to facilitate the process. Older ECC versions may lack these functionalities, making data migration more challenging.  
  • Technical Foundation: S/4HANA is built on a different technical foundation than ECC, utilizing in-memory computing and other modern technologies. An up-to-date ECC system is better positioned to adapt to the new technology stack of S/4HANA.  
  • Long-Term Support: SAP provides support and maintenance for specific ECC versions for a limited period. Staying on a supported version ensures the business receives necessary updates and support until the migration to S/4HANA is complete.  

It’s important to note that updates will continue after transitioning to S/4HANA. Usually, SAP releases annual updates and enhancements to S/4HANA. This ongoing update cycle is part of SAP’s strategy to keep the software current, secure, and aligned with evolving business needs and technology trends. 

Resource Challenges: Budgeting for the Future of SAP

Research indicates that a majority of senior leadership or decision-makers across the UK, US, and Germany recognize SAP as a crucial tool for their day-to-day operations. Despite this acknowledgment, many organizations hesitate to migrate to S/4HANA due to various deployment-related challenges and perceived barriers: 

  • Social influences or employee pushback 
  • Disruption of critical business processes 
  • Costs exceeding established budgets 
  • Time constraints  
  • Lack of current, up-to-date technologies, making a thorough analysis necessary before an upgrade or implementation 
  • Inefficient expertise or workforce to handle the project’s complexity  

These challenges often lead to concerns about resource allocation and the feasibility of undertaking such a significant transformation. Depending on the size and complexity of the business, the investment required can be substantial, with larger organizations potentially facing costs in the millions. Additionally, the timeline for completing such projects can extend to a year or longer, further complicating resource management. 

Despite these challenges, it’s essential for organizations to recognize that settling for the status quo may perpetuate resource deficiencies. Companies that have embraced the transition to S/4HANA are experiencing tangible benefits, including enhanced integration, reduced operational costs, smaller database footprints, improved productivity through automation, streamlined decision-making processes, and increased profitability. 

In fact, surveys have shown that 72% of businesses attributed improved efficiency as their most beneficial outcome of migration, with 61% noting greater user and business satisfaction. While many companies are worried about how the migration process might impede ongoing business, 33% of surveyed organizations were met with minimized downtime during that period. 

Expertise Challenges: Having the Skills to Transition

SAP acknowledges that its landscape is complex—not complicated, just complex. The introduction of S/4HANA aims to simplify this landscape, but the journey towards simplification presents its own set of challenges. 

For companies lacking the requisite skills to transition to SAP S/4HANA, a strategic approach is imperative. Investment becomes key in addressing this final challenge. Equipping existing IT teams with the necessary knowledge to navigate the migration should be a priority, emphasizing training and upskilling initiatives. Without adequate preparation, critical errors and setbacks are likely to occur, potentially leading to roadblocks that are challenging to overcome. 

Moreover, insufficient knowledge and experience aren’t confined to the project’s duration alone. Early errors, failures to identify and mitigate risks, and the inability to customize transition strategies aligned with business needs can result in long-term post-migration challenges. Inefficiencies arising during the implementation or migration process can escalate costs, strain resources, impede adaptation, and disrupt business operations. 

Alternatively, seeking external expertise through the recruitment of SAP-certified consultants or partnering with SAP implementation partners can provide invaluable guidance and support during the transition. Collaboration with experts experienced in S/4HANA can help companies effectively navigate the complexities of the migration process, ensuring a smoother transition and optimized outcomes. 

Oxford Can Help with Your SAP S/4 HANA Transition  

As the countdown to the 2027 deadline for transitioning to SAP S/4HANA continues, the imperative for businesses to navigate these implementation challenges becomes increasingly urgent. At Oxford, we understand the hurdles businesses are facing as they embark on this pivotal project. As SAP partners, we possess the knowledge and expertise required to facilitate a seamless transition to S/4HANA.  

Our comprehensive services encompass organizing your project, meticulously preparing your source system, managing the intricacies of data transfers to ensure data integrity throughout the migration, and navigating the complexities of custom code. 

Additionally, we can excite your company about the many benefits S/4HANA offers. Oxford has a tried-and-true approach to organizational change management (OCM) that benefits every business and person. We believe that OCM doesn’t end with the project, but rather, it is an ongoing process of creating sustainable training programs and a “change climate” that keeps employees engaged in continued innovation and improvement.  

Time is of the essence, and with Oxford by your side, you can efficiently manage resources, ensuring timely, scalable, repeatable, and successful results that ensure a healthy return on investment (ROI).  

The clock is ticking— seize the opportunity to leverage the numerous advantages of SAP S/4HANA. Start your journey with Oxford today.

For more information on how we can help you on your S/4HANA journey, CLICK HERE.

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