What are the biggest challenges to large scale ERP upgrades? Learning from SAP S/4HANA projects

Kris Turner Profile picture for user Kris Turner November 8, 2023
Summary:
Most SAP customers need assistance to fully realize SAP S/4HANA benefits like improved performance and faster access to analytics, ASUG research reveals. Kris Turner digs into the findings.

Blue arrow finding a way through a grey maze. Finding solution © D3Damon - Canva.com
(© D3Damon - Canva.com)

Large scale ERP upgrades are challenging in any economic environment. In today’s tight economy, customers want to have a well-thought business case in place. They also need to anticipate any problems they might face during the migration. Everything from migration tooling to skills and resource planning warrants consideration. 

One of the best ways to prepare for ERP migrations is to learn from peers – but too often, those lessons are not quantified. In the case of SAP S/4HANA upgrades, ASUG’s latest round of research should give customers an important source of benchmarking, prior to making an SAP S/4HANA move.

In the case of SAP customers, the SAP S/4HANA migration journey has become a pivotal undertaking for organizations seeking to modernize their ERP systems. With the potential of enhanced performance, streamlined processes, and improved innovation capabilities, SAP S/4HANA presents an opportunity to take a  business forward. A successful migration, however, is contingent on a deep understanding of the benefits SAP S/4HANA offers, the associated risks and costs, and the support and planning required, ASUG research reveals. 

The current state of SAP S/4HANA migrations

SAP customers are at various stages in their migrations to SAP S/4HANA, reflecting a dynamic landscape. According to ASUG research, 33% of organizations have completed their migrations, while another 10% are actively in the process of moving. Another 5% plan to begin migrating within six months. 46% of organizations will begin moving after seven months.

SAP S/4HANA migration status © ASUG Research 2023
© ASUG Research 2023

Breaking down the data further, we find that half of organizations (50%) plan for swift migrations in which most processes are moved onto the new system. Slightly more than one third (35%) said they plan to undergo gradual transitions, moving a few processes at a time onto SAP S/4HANA.

The rewards of SAP S/4HANA migrations

Top benefits of SAP S/4HANA Migrations © ASUG Research 2023
© ASUG Research 2023

Does the migration to S/4HANA bring benefits to SAP customers? We asked those who have completed their migrations this question. Here’s what we learned.

Improved performance

One of the most tangible advantages is the substantial improvement in system performance. According to ASUG research, 55% of organizations report significant enhancements. This boost in performance not only accelerates day-to-day operations but also empowers organizations to handle larger workloads efficiently.

Faster access to analytics

Access to real-time analytics is a game-changer. The data underscores that SAP S/4HANA provides 46% with faster access to critical analytics, facilitating data-driven decision-making. With timely insights, businesses can respond swiftly to changing market conditions and customer demands.

Optimization of business processes

A fundamental outcome of migration is the optimization of existing business processes for 52% of organizations. Leveraging the advanced capabilities of SAP S/4HANA, organizations can streamline workflows, reduce complexity, and enhance overall efficiency. This optimization leads to a reduction in support needs from IT staff, allowing resources to be reallocated to more strategic initiatives.

Innovation enablement

SAP S/4HANA paves the way for innovation for 41% of SAP customers, who said that their business can adapt more readily to evolving market conditions and harness cutting-edge technologies like AI and ML. Moreover, the platform supports continuous improvement through regular updates and enhancements, ensuring that organizations remain at the forefront of technological advancements. Organizations also are leveraging automation for data (37%), testing (37%), and automation of SAP operations (25%), among a host of other automation benefits.

Navigating risks and costs of SAP S/4HANA migrations

While the benefits of SAP S/4HANA migrations can be compelling, these journeys are not without their challenges, risks, and costs. These issues are exacerbated by gaps in planning and migration support.

Migration timelines and downtime

The average duration of migrations falls in the range of 1.7 to 1.8 years, signifying a considerable time commitment. During the transition, organizations often experience some degree of downtime, ranging from less than one month to six months. However, it's crucial to note that some projects can extend beyond the expected timelines, resulting in higher costs and operational disruptions. Here are perspectives from three senior technology executives with experience leading digital transformation on SAP S/4HANA implementation journeys, key business drivers for transformation, success factors for digitization, and lessons learned:

Unforeseen expenses

Top benefits of SAP S/4HANA migrations © ASUG Research 2023
© ASUG Research 2023

Unanticipated expenses emerge during migrations for one third of customers (32%). The data underscores that organizations incur unexpected costs related to consulting fees (53%), hiring additional staff (48%), and integration-related costs (40%). Other things such as cloud-associated expenditures, licensing fees, and training and upskilling initiatives also increase costs. In certain cases, organizations had to extend their go-live dates, thereby further impacting costs.

Top migration risks

Too many customizations within old instances is the number one risk factor organizations experience while migrating. SAP customers also report complications from a lack of clear process documentation (45%), the amount of time required to complete a project (45%), and the support needed while diverting teams from their primary responsibilities (45%).

Access to clear documentation and resources plays a pivotal role in migration success. Organizations must create a well-defined business case for migration, ensure consistent support from SAP, and provide clear documentation and resources. Engaging both internal and external resources, including training and upskilling initiatives, is vital for a smoother migration experience. ASUG Tech Connect, taking place this week in New Orleans, is a great opportunity to engage, train and upskill.

Challenges in SAP S/4HANA migration planning and support

Comprehensive planning and robust support are integral components of successful SAP S/4HANA migrations. ASUG research, however, suggests that organizations encounter challenges at various stages of their migration journeys because of ineffective planning and inadequate support.

Migration support issues

Support deficiencies are highly dependent on where respondents are in their SAP S/4HANA implementation journey. For those already live, optimizing use is the top area lacking support (39%). For organizations that have begun to move, implementation planning (35%) and learning and training need (35%) the most support. For those not yet live or moving, implementation planning (35%) and implementation (35%) require more support.

No matter the SAP S/4HANA implementation stage, permanent staff are relied on most to handle support. When external support is used, working with partners is the most common option, especially for business case development, implementation planning, implementation, and rollout.

Migration support remedies

SAP S/4HANA cost management © ASUG Research 2023
© ASUG Research 2023

Leveraging SAP for training, materials, workshops, or solutions (51%) is the top way organizations are upskilling their internal staff for migrations. Given the substantial reliance on internal teams, organizations also are using other training methods (35%). Additionally, SAP customers are relying on SIs, consultants, and partners for knowledge transfer (20%). A few organizations (15%) note they are learning on-the-job, or their organization did not have any upskilling initiatives in place.

The importance of planning

ASUG research clearly shows that organizations need ample support in the early stages of SAP S/4HANA migrations, emphasizing the need for comprehensive planning when it comes to implementations. To achieve success, organizations should work with the right implementation partners, involve all levels of the business from the outset, and implement change management practices early in the migration process.

SAP S/4HANA migrations can be a  transformative journey for organizations. To help guide you and your organization through the challenges and into the benefits, visit ASUG Member Pathfinder. Understanding the current state of migrations, the potential benefits, risks, and costs, as well as the significance of robust planning and support, is instrumental in achieving a successful S/4HANA transition.  

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