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And the beat goes on - the SAP S/4HANA upgrade debate

Den Howlett Profile picture for user gonzodaddy August 29, 2019
The debates around SAP S/4 as an upgrade or fresh implementation continue. Here's the latest among those debating the topic.

SAP S/4 business case

My SAP S/4 story from earlier in the week continues to draw people into Twitter fights debates which are at once comical and deadly serious. Right now, the focus of the conversation is about whether SAP S/4 is an upgrade or a new system. Twitter spats aside, it is an important issue. 

On the one side of the debating aisle you have people like L Foster saying

SAP S/4 migration

She is right but that's not the end of the story. On the other side of the debating house, John Appleby contends:

SAP S/4 upgrade

Can both be right? That depends on who you choose to listen to or what you find.

I ran a Google search for SAP S/4 migration. It returned 16.7 million results. Run the same search for SAP S/4 upgrade and you get 19.1 million results. If you run a search on sap s/4hana conversion and sap system upgrade you'll get 1.74 million results. Included in those third set of results is a link to ADM328 SAP S/4HANA Conversion and SAP System Upgrade, a piece of SAP Training. In fact, there's a truckload of training materials from SAP Training on this exact topic. 

In this reading, an SAP S/4 project is therefore both an upgrade and a migration. While SAP is correct to say that S/4 is a new product the hard reality, as Appleby points out, is that many customers do not see it that way. This is because any SAP shop that's used to SAP product releases from R/3 and through S/4 is used to an upgrade cycle, not, as implied, a fresh implementation cycle. For those companies, it is likely that they are carrying considerable technical debt and will see significant benefit from viewing S/4 as a fresh product. But...

As SAP has said time and again, many things have been simplified in S/4, (and no - Simple isn't it, Simpler is more accurate) redundancies eliminated, and yes, in some cases, choices removed. But when perception equals reality then it becomes very hard to build a business case for a solution that the technical teams see as a technical upgrade. That's because when those folk look at S/4, they see it through the eyes of their ECC experience precisely because to them S/4 looks remarkably similar to what went before. Yes, there are massive changes that bring value but reimplementation has 'risk' writ large over it. It's also a gift to competitors. 

Build the business case

In what circumstances might you see SAP S/4 as an opportunity to completely refresh your SAP landscape. One consultant I spoke with provided some recent example use cases:

  • A new CFO arrives only to find that there is spreadsheet sprawl and a clunky BW in operation. Net-net, business siloes are trapped and cannot operate effectively.
  • A CEO undertakes a strategic review and determines that the company needs to pivot to a services business model that operates in real-time.
  • The corporate strategy is one of acquisition fed by asset rationalization that requires shifting large numbers of people from location A to location B. How can it quickly roll out common processes?
  • Multiple business unit operations have different SAP instances and there is no efficient way to consolidate the close let alone operate a common data model for business comparison purpose.

There will be many more examples. All of these are business first cases and SAP would prefer that its customers consider S/4 as a business-led initiative. That is more likely to lead to a fresh, greenfield implementation and not the brownfield upgrades that Appleby describes.

The problem is that business consultancy is not SAP's skillset. SAP is a sales-led technology company and its supporting content reflects that. Cue consultants with broad business and technology competencies who are the ones in the driving seat. They are the ones who will encourage landscapes that look like this: SAP S/4 for core ERP financials, Workday (or maybe SuccessFactors/Employee Central) for HR and Salesforce for CRM. Anything else is up for grabs although SAP wants to be in the mix for CX. 

None of this comes cheap and there is always a risk attached to large scale projects and yes, some of the largest projects will run multi-year. But increasingly consultants are asking a simple question: Do you want to be a forward-thinking business or are you looking to improve the past? If the former then some are offering fast track tools and fixed price implementations because savvy buyers have figured out that ensuring the consultant has skin in the game is more likely to lead to a good outcome. 

My take

There are many ways to skin the SAP S/4 cat and, depending on your business model, the extent to which change is required and your appetite for an extensive reworking of systems that may have been chugging along quite happily will all play into the final decision as to your greenfield, brownfield or do nothing decision. The most important thing though is not to be pressured into making a hasty decision. Therein lies the road to ruin. 

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