In continuation of my previous blog post (SAP S/4HANA Assessment Framework)
In this blog post I will cover various available SAP S/4HANAmigration strategies. These are explained at high level with their pros & cons. Also, in the later part of the blog post, comparison between On-Premise & On-Cloud is depicted with their key attributes. There is no “one size fits all” solution when it comes to SAP S/4HANAmigration. Each journey is unique and depends on the current state of client readiness to migrate involving multiple factors (covered in my last blog post)- Link : https://blogs.sap.com/2019/10/31/s4-hana-assessment-framework/
Migration strategy (Greenfield/Brownfield/Hybrid)
SAP S/4HANA Adoption Option 1 – Greenfield (New Implementation)
This includes starting with afresh SAP S/4HANA Box, complete re-engineering of process with required process simplification.
- Benefits of New innovations: Implementation of SAP S/4HANA comes along with some great benefits like In-memory HANA Database, simpler Landscape, advance ATP, Fiori (just to name few)
- Industry Best practices (Model company reference): SAP S/4HANA incorporates the best industry practices which assists the companies to improve & optimize their processes
- Scope for Process re-design /optimization: Since it is implemented from scratch it opens the whole world of opportunities to re-design and correct the past glitches of the system. In short it offers an opportunity to implement the “lessons learn” from past projects
While above are the clear advantages of doing a Greenfield implantation on the flipside following points are listed below
- Change Management: Substantial Change Management Effort as people will be reluctant to come out of their comfort zone (of knowing the system) and adopt new changes.
- High Implementation Cost: greenfield approach is more costly and with longer implementation timelines
- Longer Timelines: Gestation period is high as compared to other migration approaches.
SAP S/4HANA Adoption Option 2 – Brownfield (Re-Use)
This approach reuse of existing (as-is) processes with minimum business disruption, System Conversion with required SAP S/4HANAsimplification/mandatory innovations.
- Pick what you want: It migrates your ECC version to SAP S/4 HANA platform with selective picking of the components (TM/EWM/AATP etc) from SAP S/4HANA.
- Minimum business disruption– Since current processes are adopted, minimum impact is felt as far as end users and business transition is concerned
- Shorter Timelines: Usually can be implemented much faster as compared to Greenfield approach
- Old flaws Die Hard: Limited scope for process re-engineering as existing processes are adopted without giving much emphasizes on best practices or process reengineering
- Compatibility: Less compatible to future facing technology. More cost will be incurred later to adopt to standard processes and moving “Back to Standard”
- Technical impediments: will be more as compared to GF approach
SAP S/4HANA Adoption Option 3 – Hybrid (Mix & Match):
Combination of Greenfield & Brownfield includes Client Consolidation, process Reuse for whole existing ERP customizing as baseline & build new customizing on top which will include SAP S/4HANA simplification/mandatory innovations (perhaps few new innovations as well)
Landscape Transformation (LT)
It is an offshoot of Hybrid approach. This approach gives a flexibility/opportunity to modify current landscape. It can be either consolidation of multiple clients (with business process harmonization) OR it can also be leveraged to migrate the business in in parts.
SAP S/4HANA Adoption – Central Finance Option 4
SAP Central Finance is a classic example of leveraging benefits of Landscape Transformation. In many cases, clients wish to derive the benefits of SAP S/4HANA without disturbing their present set-up and without any downtime on business operations. In such cases CFIN is recommended. Here a central SAP S/4HANA box is introduced in the client’s landscape which pulls data in Realtime basis, from different ECC and non-SAP systems within the client’s landscape. The Central Finance box then processes this data and facilitates consolidation and management reporting.
Once identification of the migration scenario next critical factor would be whether to go for “On Cloud” or “On Premise” option.
On-Cloud versus On-Premise option
As mentioned earlier there is no “One fit to all” formula. In order to take an informed decision client shall be clear what is more important for their business. One the migration strategy is finalized, another critical factor to consider whether to go for “On-Premise” or “On-Cloud”. To help the customer and to provide impetus to their decision-making vendors can highlight various Pros and Cons of both the option. There is no right or wrong in any of the deployment strategy.
While in On-Premise everything is managed by the implementing organization including security, servers, HANA DB, networks etc (more details below); On- Cloud is can be leveraged without any additional hardware installation. It is Software as a Service (SaaS) wherein everything is managed by the vendor
Below table depicts a quick comparison & highlights the key differences between the 2 options
|Deployment Timelines||Longer timelines since it involves installation of physical servers & involves customizations as well||Pretty quick since customizations are minimal. On-cloud is usually delivered as a template solution|
|Expenditure Nature||Usually priced under one-time license fees. It is treated as a Capex||Monthly or annual subscription cost. treated as an Opex|
|Customizations||More customizable as compared to On-Cloud. More flexible to accommodate customer’s “not so standard” processes.||Less customizable with industry best practices embedded already|
· Initial Cost is high
· Hardware Installation required (server, SAP S/4 HANA box, network set up)
· Upfront expenses are lower as compared to On-Prem
· No additional installation needed
|Total Cost of Ownership||Since major investment is done in the initial stages, TCO can be lesser than cloud option||Even though initial investment is less monthly/yearly subscription cost might shoot up the TCO|
|Data Access, Security & Privacy||High. Suitable for industry wherein data is highly sensitive like Healthcare /Finance. Access is given to the authorized users only and mitigates the risk of hackers||Controlled by vendor|
|Upgradation||Organization can update at their own pace. No need to upgrade immediately to the latest version||Upgraded automatically every quarter|
|Scalability & Integration||Comparatively less scalable, but can be integrated easily with SAP Ariba, Hybris, Fieldglass||Scalable with all components and one of the strong reasons to opt for On Cloud option|
|Infrastructure||Organization responsibility. They decide upon the server’s capacity, network setup, security levels||Usually vendor’s responsibility. No hassle of updating the system for the organization implementing it|
Migration to SAP S/4HANA is a quite an investment (primarily because of Cost & Change Management) for any company and is definitely one of the top priorities of the leadership (when to take that leap).We all know migration to SAP S/4 HANA is inevitable as organization will need to close the innovation gap, sooner the decision made better the competitive advantage organization will get. The latest update on SAP support specifies that SAP will continue support for SAP Business suite till 2027 and extended support till 2030 (if needed). Erstwhile SAP announced that ECC support will be ended by 2025.This decision was made to support the client business as most of them would need some more time before they can dive in SAP S/4HANA and reap its benefits.
I hope you enjoyed the read, request your valuable feedback which will assist me to improve my future blog posts.