When SAP S/4HANA was introduced in 2015, until now, some businesses are still reluctant to embrace the latest version of SAP. There are many reasons, in which the most common ones include three: High cost, time-consuming process, and complexity of the custom codes.
The cost barrier
One of the primary reasons to why businesses might hesitate to adopt SAP S/4HANA is its associated cost. SAP S/4HANA system requires significant investment in licensing, hardware, implementation, customization, and training. A report by Forrester revealed that the cost of SAP licenses accumulated to USD 4.6 million over 3 years. In the same report, Forrester estimated that designing, building, and transitioning could cost USD 9 million [1]. Besides, businesses have to cover human resource costs, including: highly skilled IT professionals (to manage in-house operations), system programmers (to update software and firmware patches), specialized workers (to perform capacity planning), and support staff (to maintain networks) [2]. While long-standing organizations have the resources to carry out these projects, such costs can be prohibitive for small and medium-sized businesses.
One key approach with S/4HANA implementation projects is to leverage cloud-based deployment options, which reduce upfront hardware and infrastructure costs. Since incorporating additional customizations results in an increase in costs, it is advisable to only implement the functions needed. Businesses should also explore financing options and seek the expertise and guidance from SAP partners to ensure a smooth and cost-effective migration to SAP S/4HANA. In the long run, businesses can expect a decrease in overall expenses and a boost in a company's revenue. In a survey of 110 SAP S/4HANA customers conducted by Forrester, 37% reported the system increased revenue and reduced customer turnover by 4% per year [3].
Read more about how SAP S/4HANA can leverage operational procedures here: Streamlining International Operations with SAP S/4HANA for An Automotive Company.
A time-consuming process
In 2015, SAP announced to stop supporting SAP ECC and legacy systems by 2025. While SAP's ECC application support deadline has been extended to 2027, businesses are advised to leverage their systems to S/4HANA. As ECC ages, it becomes progressively challenging to integrate with contemporary SAP cloud-based infrastructure and software. Notably, the fact that ECC is two-decade old can exacerbate this difficulty, making it less viable for businesses to continue relying on it.
However, the migration process could be time-consuming. The process may require customization or adaptation, leading to project delays. Due to the complexity of S/4HANA, businesses also need extended time for their employees to adapt their existing processes to the new S/4HANA system. This means companies would need to invest time in providing extensive employee training.
Businesses need to develop a roadmap for SAP S/4HANA migration, including identifying the right deployment option and determining the required hardware and software. Notably, SAP Business Technology Platform (BTP) are equipped with preconfigured modules, which can facilitate the integration process. The survey by UKISUG found that 28% of respondents agreed that BTP is a useful tool to quicken this process [4].
Depending on the size and scope of ERP implementation projects, on average, enterprises usually spend 6 months to 2 years upgrading to S/4HANA [5]. Thus, they need to start the project as soon as possible and evaluate their current change management processes. If businesses renovate timely, they can catch up with the technology pace. New systems are introduced continuously, which enables businesses to adopt advanced technologies to stay ahead.
The 3C: Custom Code's Complexity
The reason for SAP's dominant position in the market can be largely credited to its flexibility, which was made possible through the use of the built-in ABAP programming language. SAP S/4HANA brings a cutting-edge approach to data storage, management, and analysis that involves a custom ABAP code-writing method. As new versions of SAP software are released, some of the previous custom code may become outdated or incompatible with the new system. Potentially, this could disrupt the current business system.
Over the years, developers have authored a substantial amount of custom code, resulting in a significant portion of incompatible codes with S/4HANA. A survey revealed that 94% of software development professionals' workflow is affected due to a large volume of codes, with 62% acknowledging the decreased productivity [6]. Incompatible custom ABAP code can cause significant performance degradation or fatal system crashes. Data inconsistencies and corruption could occur, increasing downtime during the migration process. Furthermore, custom ABAP code not optimized for the new platform may not fully utilize the new SAP S/4HANA features.
When migrating to SAP S/4HANA, businesses must thoroughly check their codebase to identify any problematic ABAP code. Understanding that code complexity can drastically impact software's reliability, businesses need to perform a comprehensive check of the existing codebase. With ABAP Test Cockpit, Code Inspector, and SAP Readiness Check, a detailed report is created for organizations to scan the entire SAP system landscape and identify problematic codes. By doing so, businesses can avoid costly system crashes and ensure a smooth transition to SAP S/4HANA.
S/4HANA: A necessity to remain distinctive
With SAP S/4HANA, businesses can unlock the potential for optimizing operations, driving growth, and maintaining competitiveness in today's dynamic market. As per Statista's projection, the global ERP software market is set to exceed $100 billion by 2025 [7], underscoring the need for businesses to embrace digital transformation. Leveraging the flexibility and scalability of SAP S/4HANA, businesses can make data-driven decisions and foster collaboration among employees, enabling smoother workflows and enhanced productivity.
For a successful migration, businesses need to develop a financial management plan to keep a tight rein on their budgets. Regarding code complexity, businesses should utilize tools such as ABAP Test Cockpit, Code Inspector, and SAP Readiness Check to rectify code complexities and errors. Organizations must also provide appropriate training to their employees and perform testing steps before integrating S/4HANA. Finally, having up-to-date systems in place is critical to guarantee a seamless transition and capitalize on its benefits.
To sum it up, SAP S/4HANA presents businesses with a chance to optimize their operations, embrace digital transformation, and maintain competitiveness in today's fast-paced market. By implementing effective strategies and measures, businesses can pave the way for a successful migration and unlock the full potential of SAP S/4HANA.
