Key decisions on your road to SAP S/4HANA

In 2027, SAP will end its support for SAP Business Suite 7, which includes SAP ECC 6. For IT teams who have spent years honing their ECC skills and customizing their systems to perfectly fit their business needs, this poses a conundrum. Do they stay on the ECC system they know and trust or do they choose to modernize to SAP’s latest version – SAP S/4HANA? In this series of three posts, we will outline the different options you have, reflecting on the advantages of moving to SAP S/4HANA and providing some first recommendations on how to best prepare for this move.

1. ECC end of life – what are your options?
2. 5 compelling reasons to move to SAP S/4HANA
3. Key decisions on your road to SAP S/4HANA

SAP ECC 6.0 is approaching its end of life. Despite being fully supported until 2027, with the option to extend until 2030, the technology is already outdated. Users of ECC 6.0 are unable to take full advantage of the intelligent technologies that can improve and automate business processes, system performance, and the agility and innovation that cloud-based S/4HANA offers.

This shift to modernize and move critical workloads to the cloud will separate the leaders from the laggards, particularly as the pace of change escalates. But those who have made the big decision to move to SAP S/4HANA must now face a few choices as they build their SAP S/4HANA roadmap.

Let’s look at the big 4:

1. Licenses

If you choose to move to SAP S/4HANA, you will need a new license. There are several conversion options available depending on an organization’s particular circumstances and what terms were negotiated in your current ECC or Suite on HANA license agreement. The conversion options may be an entire contract conversion or a line-by-line software component conversion. This is a complex exercise that presents opportunities to leverage unused previously purchased licenses (shelfware) or to optimize contract negotiations with SAP.

In addition, organizations will face a choice of the traditional perpetual license model or a subscription, which bundles infrastructure, software, and managed services together. RISE with SAP is an example of this.

What is Rise with SAP?

RISE with SAP simplifies contracts, support, and SLAs (Service Level Agreements). For smaller, less complex organizations, it may reduce the burden on the IT team having to negotiate and manage separate contracts. However, the RISE with SAP contract lasts at least three years. Your existing perpetual licenses will be replaced by this subscription model. Regardless of whether you are using the full extent of that license or not, you are stuck with it. This can cause unnecessary spending.

2. Infrastructure

You know you want to move to SAP S/4HANA, but where do you want to host it?

SAP S/4HANA can run on-premises or on a private or public cloud. Organizations may choose to remain on-premises if they have special sensitivities around their data or specific performance requirements not compatible with hosting to the cloud, while a private cloud may be chosen in cases where geographical location is a priority or special aspects of the agreement negotiated makes it more attractive.

Public cloud allows organizations to reduce their own IT effort, scale flexibly and save money. Business case calculations also show that infrastructure and operating costs can be significantly reduced by relocating the SAP landscape to public cloud providers like Microsoft Azure, Amazon Web Services (AWS), or Google Cloud Platform (GCP), all of which are SAP S/4HANA certified.

Whether Azure, AWS, or GCP is best suited depends on the individual case and business requirements. Anyone who is already working successfully with a specific cloud provider might want to place their SAP there as well, making it easier for them to integrate the SAP platform with the rest of the application estate and share the data. On the other hand, a multi-cloud strategy can be desirable to avoid excessive dependency on a single provider and to combine the advantages of different providers.

With any of these cloud providers, customers will be able to customize and optimize the infrastructure, and the ability to scale the infrastructure up and down. SAP also offers hosting on its own data centres, which is another alternative. Customers will need to decide between all these options before landing on the best infrastructure solution for their needs.

3. Implementation approach

One key aspect to define is what implementation approach you will follow for the move to SAP S/4HANA. Will you go big bang or take a phased deployment? Read our previous blog on greenfield, brownfield or selective data transition options to get more detail on these.

In contrast to the most aggressive big bang approach, in which an organization tackles a migration to Cloud and a conversion to SAP S/4HANA in one go, a phased deployment takes a more cautious and less risky approach. This could mean moving to cloud first and converting to SAP S/4HANA later or performing a pilot in advance of the full project, to be better prepared for the actual conversion and which can reduce its costs and duration.

Steps typically taken include:

• Creating a business case: this captures an organization’s current pain points, identifies areas of improvement, and provides a business case
• Engagement with business: Using the business case output, you convey the benefits of moving to SAP S/4HANA outlining As-Is and To-Be scenarios as well as advantages of business modernization to bring people on the journey with you
• Streamline your environment: Confirm your roadmap and evaluate upgrades to be done before the conversion, as well as rationalization and preparation of custom code.
• Data: Address master data issues identified during the pilot and archive redundant master data
• Testing: Here you test the impact of the conversion on external interfaces with end-to-end testing of business processes
• Transformation office: Establish a transformation office spanning the business case, architecture & design authority, change management and business engagement.

The approach you take will typically be driven by your business transformation agenda and the outcomes you want to achieve, both in the short and longer term.

4. Services and skills needed

Moving to SAP S/4HANA is a big undertaking that may prove a challenge to your team, both from a capacity as well as from a skills perspective. Most organizations battle to do this on their own and will typically need an implementation and/or support partner to provide the professional guidance needed and to help spread the workload before, during and after the implementation.

It’s important however, to find a partner with the specific skills you need. Things to consider:

• Do you want a large system integrator to do everything – meaning there’s one throat to choke and a breadth of skills but not necessarily the depth of specific skills specific to SAP S/4HANA or the cloud platform – or do you choose several specialist service providers who can give you the exact expertise required? Put another way, imagine having a single teacher to cover a full array of subjects for your child vs having individual subject specialists who can go deep and ensure a better results per subject. Which is likely to give you a better outcome?
• Do you want just an implementation partner to do the heavy lifting, leaving you to manage the new solution once it’s in place, or would you prefer a partner who can help you with both the implementation and the ongoing management to maximize the benefit of the new system? As this is a new system, having help to maintain it and ensure it is working optimally is more likely to ensure you see an ROI on the investment made.
• What role do you see SAP Services play in your project? SAP typically offers quality assurance services, and increasingly offer their services for implementation and technical managed services

Unlike some of the large systems integrators, SoftwareOne focuses specifically on SAP S/4HANA on cloud. We can help with licensing, cloud migrations, SAP S/4HANA pilot conversions on cloud, complete conversions, and help you maintain and innovate your cloud estate. We go deep on SAP S/4HANA rather than broad on SAP. It’s important to know what outcome you want when selecting your partner to ensure you choose well.