Six steps to the S/4 future

For a long time, trends in information technology in the corporate sector were mostly more of an option, but with the digital transformation everything is suddenly different - companies have to jump on this bandwagon in order to remain competitive.

This development is being driven in particular by the further acceleration of digitization in all areas of society. Building on this, people have developed new expectations of communication as well as of shopping and service experiences - an on-demand world of the highest dynamics. This applies to both the B2C and B2B sectors.

This progress is forcing companies to rethink their existing processes and develop new, digital business models. A prerequisite for the successful digital transformation of companies is an ERP system that is capable of mapping these requirements. SAP provides such an environment with S/4 Hana.

It forms the "digital core", the center of all processes in a consistently digitally oriented organization. Based on a new architecture, it simplifies and accelerates existing workflows and enables the implementation of new types of processes.

Supporting new digital business models was also one of the four key arguments for implementing S/4 Hana, according to a study conducted last year by market research firm IDC.

Other reasons cited were improved employee productivity, real-time access to information, and lower costs.

According to the study, two-thirds of SAP customers are planning the future of their company with SAP S/4 Hana. One very pragmatic reason for switching to S/4 Hana is SAP's decision to discontinue maintenance and support of the Warehouse Management (WM) component at the end of 2025.

This schedule may seem relaxed at first glance - but it should be a wake-up call for complex environments, for example in global corporations with many branches and/or subsidiaries.

Challenge S/4 Conversion

S/4 Hana, which is based on Hana, differs from SAP R/3 in very significant ways. Particularly noteworthy are the in-memory database provided by Hana and the convenient HTML5-based Fiori user interface. In addition, accounts payable and accounts receivable are now ostensibly managed generally as harmonized business partners.

Significant simplifications of the data structure are essential. In the process, existing transactions and functionalities merge with other elements or find themselves in a new solution and architecture. SAP provides information about the not inconsiderable scope of these changes in comprehensive "Simplification Lists".

All of this must be carefully considered when converting existing SAP environments to S/4 Hana. A project as complex as the conversion of holistic business-critical business process systems must be planned in detail in order to achieve implementation that is as fast as it is secure.

With the Factory approach, Arvato has developed a clearly structured process that enables the industrialization of such conversion projects. The detailed step-by-step plan outlines the tasks as well as the clearly defined goals for each phase of the process - from an initial inventory to "go-live". Possible exit points are also described just in case.

Each conversion is managed by Arvato Systems' experienced team with specific expertise and comprehensive functional knowledge in areas such as finance, logistics, production and warehouse management.

The team uses a library of best-of-breed tools that enable a fast and secure transition and identify targeted optimization potential.

The team on the customer side should include the technical and specialist contacts for the SAP environment. In addition, the SAP user base should be involved at an early stage, at least informatively.

The six S/4 steps

1. Orientation:
   The process is divided into six logically consecutive steps. In the first step, the orientation phase, the complexity of the systems of the respective company is first assessed on the basis of a standardized questionnaire. Then the existing systems are recorded to determine the status quo in terms of the hardware and software used. If required, this can be supported by process mining - digital traces in the IT systems are used to reconstruct the business processes and visualize the process landscape. Based on this, recommendations for the target architecture are made on the basis of a portfolio of state-of-the-art technologies. In the area of finance, this could include IFRS 16, the new international standard for accounting for leases, TIS (Treasury Intelligence Solutions GmbH from Walldorf), a cloud platform for transparent management of group-wide payments, or crossinx (crossinx GmbH from Frankfurt am Main), a network for financial business collaboration including e-invoicing, EDI and supply chain finance.
2. Fitting:
   The orientation phase is followed by the so-called fitting phase. This involves an initial summary of the project in terms of time, budget and possible challenges. The S/4 Hana Readiness Check, a cloud-based tool, provides an essential basis for this. An S/4 Readiness Check provides answers to questions such as the necessary size of the Hana database, which add-ons used to date are compatible with S/4 Hana, which current business functions and transactions will be affected by S/4 Hana, and much more.It also provides information about the scope of the simplifications and thus enables the effort involved to be estimated. It also provides an overview of which applications of the SAP Fiori interface should be made available to users.
3. Vrbereitung:
   The results of the fitting phase flow into the next step, the preparation of the conversion. Using experience from other projects and conversions, the team creates a detailed plan for the individual conversion - a roadmap in which the necessary actions are described for each simplification element, taking into account all dependencies.The plan also optionally includes specifications for parallel data cleansing and archiving of the old system. This is highly recommended - since S/4 Hana uses Hana's fast in-memory database, this can save a significant amount of RAM memory.Archiving is also very valuable for the process mining aspect of analyzing historical data.
4. Validation:
   The last step before the actual conversion is validation. It includes activities upstream of the conversion, such as the migration of the business partners and the period-end closing and document closing in the financial area.Existing individual developments are analyzed and tested, and the optional cloud-based system copy is converted to S/4.In this phase, the training of the most important users also begins, and the user base also gets to know S/4 Hana.
5. Conversion:
   Now the actual conversion takes place using the SAP Software Update Manager (SUM). Changes to the real environment are checked with the help of delta analysis, which allows errors in processes to be systematically investigated and their causes identified and eliminated. The readiness check is also carried out in the productive environment, providing additional security. Arvato Systems also provides tools and approaches for automated tests. In this phase, a list of tasks that may need to be completed after conversion is drawn up based on the experience gained from validation and conversion.
6. Innovation:
   Finally, the sixth and last step focuses on the future - together, the teams define the next steps to develop and implement innovative processes and business opportunities based on the new environment.

This "factory" strategy currently relates primarily to the step-by-step conversion of existing SAP systems. However, Arvato Systems is also currently developing a comparable approach for the complete reimplementation of all SAP systems using the greenfield approach.