ERP life is change

Global markets with a high degree of individualization of customer demands, combined with breathtaking acceleration of technological developments through big data and platform technology, with a disruptive effect on conventional business models, provide pressure for action in companies. An increase in innovative capability is necessary, but not sufficient.

It requires new business models and a new way of working in companies and creating value for customers. This requires a strong focus on customers, whose demands are changing ever faster and in less predictable ways. With the increasing importance of entrepreneurial innovation, development and sales partnerships, the economic interdependencies and thus the overall dynamics and complexity of the markets are rising.

SAP plays a key role in this, as more than half of German companies currently use SAP products. At the same time, the product landscape continues to grow and, depending on the industry, generally maps 50 to 80 percent of corporate processes. This means that SAP will remain one of the dominant topics in most German companies in the future, and successfully mastering the projects will be one of the success factors for a successful digital transformation.

SAP has earmarked a key role for S/4 and Hana in the future. This is the core system (Digital Core or System of Records) with which SAP is making the leap into the digitalization of the 21st century. The question is often asked about the measurable added value of S/4, but in order to make a reliable analysis of the benefits, the consideration must be extended to the entire IT landscape. Only in the combination of S/4 and Hana as the core system with other products such as MES for production, Ariba for purchasing or CRM applications such as Salesforce or SAP's C/4 for sales and marketing do the actual benefits become apparent.

Rise and Roadmap with SAP

Against this background, choosing the right S/4 implementation strategy and a smart roadmap depending on the initial situation is of great importance. According to our estimate, about one third of companies opt for a greenfield approach, another third for a conversion (brownfield), and often we also meet the mixed variants, for example selective migration (bluefield), depending on the maturity and efficiency of the affected business processes.

If a conversion, which is often chosen by companies with already optimized business processes, represents a primarily technical measure and is associated with manageable investments and risks, other forms of S/4 migration can represent a huge tour de force for the company. The greenfield strategy in particular often leads to challenges in three areas: technical and especially process-related, implementation-related, but also strategic. Here, the effort required for an S/4 migration is quite comparable to a new implementation.

Such a project must be understood from the outset as a strategic step on the part of business and IT and requires a conscientious elaboration of the IT strategy and - in advance - of the digital strategy and a common understanding on the part of the board, the CIO or CDO. This requires a review of the company's core competencies, something many companies struggle with, especially when it comes to weighing the effort against business benefits in the midst of economically uncertain times.

Complexity and dynamics

It is primarily the complexity of the change that gives the S/4 release change a daunting effect. It is the structural, cultural and technological interactions that, together with a highly dynamic market environment, lead to confusing circumstances. The benefits of digital products and new technologies are also not predictable from the outset. Investment decisions must be made on a risky basis. The only thing that is certain is that even before the start of preparations, considerable resources are tied up in business and IT, which are then lacking in day-to-day business. All of this leads to a certain unease among decision-makers and all other employees.

Most German CxOs are therefore right to ask themselves what the value case is behind the use of S/4, what the business impacts are, and what the alternatives are. SAP does not always provide sufficient information on this, and in economically uncertain times it often leads to long decision-making paths. In some cases, managers may feel pressured by the powerful technology provider to make decisions worth millions.

Gerhard Göttert, former board member for application portfolios at the German-speaking SAP user group, formulated: "From DSAG's point of view, the fact that customers will basically be enabled to make a gradual transition from the existing ERP world to SAP S/4 Hana is pleasing. In this context, we expect that customers will be accompanied by SAP during the necessary transformation process. Here, as in other areas, it is important that SAP vividly presents the business added value of S/4 Hana. [...] According to its own information, DSAG represents more than 3,500 companies and is therefore an important contact for Germany's IT showcase. The criticism weighs all the more heavily. 30 percent of the DSAG members surveyed have little or no confidence in SAP as a digitization partner. The majority are unsure, they say. According to the survey, only just under a quarter trust SAP's strategy." (See chart regarding current figures from ASUG and DSAG).

In this uncertain environment, prudent but also consistent transformation support takes a central place. After all, success is achievable when key success factors are taken into account. A sustainable consideration of future IT is carried out: how the company can keep up technologically, what role SAP plays in this and what a roadmap for the next three to five years looks like.

Technological transformation requires the development of new competencies in business and IT. This cannot be achieved with frontal training alone, but with a long-term learning concept in the sense of a learning organization. Here, different and individually effective methods are used that enable learning and sharing of experience in the team across divisions and on an ongoing basis. This is the only way to enable the effectiveness of the S/4 transformation and increase work efficiency.

Does it have to be SAP?

A successful transformation takes the success factors into account at an early stage of the project and identifies measures in the form of a roadmap that divides an S/4 transformation into clearly defined development phases and result expectations and thus - not only with an eye on the technological implementation - makes resource efforts and costs plannable. The question remains: When should you start?

Both the urgency and the timeframe of the transformation depend on the individual strategy and status quo. Nevertheless, it doesn't hurt to start thinking and to move slowly into action. The right timing includes rough planning, necessary preparations such as an analysis of the existing system landscape, consideration of the project portfolio, outlining the strategic requirements and also, if necessary, preselection of the suitable ERP system - does it even have to be SAP?