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  • Johan Steenstra, Partner |

Key facts

  • Companies shy away from converting their ERP system to S/4HANA.
  • It is more than just an IT project - it is an opportunity to digitalize the company and its processes and make them future-proof.
  • There are good reasons not to wait too long with the transformation to S/4.

SAP already launched its latest ERP generation in 2015 and is phasing out support for the current ERP 6 system. SAP announced that maintenance is to be discontinued at the end of 2027, with the possibility for an extension to the end of 2030 at the latest at a surcharge (for more on this, also read our last article on the postponement of this deadline). Companies currently using SAP for their Enterprise Resource Planning will therefore have no choice but to look at its successor: S/4HANA. This shift will affect a majority of medium to large-sized companies.

Transform and save money?

The year 2027 still sounds a long way off, and 2030 even more so. Does it make sense to start thinking about the implementation or to start it already now? And should one even switch to S/4HANA? This is a hard decision to take because the transformation to S/4HANA is a complex task that companies will have to undertake in the coming years.

The reason is simple: ERP systems affect almost all areas of a company, from the tax function to sales, procurement, finance, HR and corporate governance. The switch to S/4HANA is therefore more than just an IT project. And, of course, daily business should continue to run smoothly and error-free during the entire transformation.

So, what to do? Wait and see first? One of the main arguments often heard in the market is that a changeover to S/4HANA will not provide any financial savings.

The focus is not on financial aspects

However, this argument is probably based on a false premise, because a decision to introduce S/4HANA is not driven purely by the business case but was triggered by the support stop announced by SAP. So, in this respect, the implementation of S/4HANA is an infrastructure investment that is not aimed at immediate financial benefits. Instead, it must be tackled sooner or later.

Two lines of thought to be considered:

First: The introduction of S/4HANA offers companies the opportunity to clean up organically grown structures and processes and to carry out further clean-up work. This includes in particular:
 

  • Standardizing processes
  • Identifying systems to be decommissioned
  • Identifying structural measures, such as the bundling of services, processes and employees
  • Implementing measures that improve the agility and scalability of the project organization

This enables the creation of effective governance structures to ensure improved data quality – key for a successful digitalization. However, this work takes time, which argues in favor of an early introduction. At the same time, it helps to sharpen the focus of the transformation.

Secondly, a system with standardized processes, as a uniform "digital backbone", provides the long-term basis for a digital business transformation. Once developed, applications can be rolled out later across all local units.

These two arguments are good reasons to start looking into the topic now. The decisive factor here is to approach the transformation correctly and with foresight. After all, if mistakes are made during the introduction, these can have an impact on many operational processes later on.

This blog article is the second one out of a series featuring multiple topics around SAP S/4HANA. The first blog focused on the right timing for switching to S/4HANA.

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