S/4 Engineering

SAP S/4 Hana migrations and updates with scarce resources

Mainstream maintenance for core ECC 6.0 and SAP Business Suite 7 applications ends in December 2027, leaving many companies with the challenge of migrating with scarce resources at minimal cost. The pandemic, ongoing supply chain difficulties, and geopolitical changes around the world have in some cases delayed planned S/4 migrations at some companies, as well as further limiting resources. 

Last year's DSAG Investment Report found that of the 198 member companies surveyed, 75 percent still use SAP ERP or Business Suite 7, 32 percent use S/4 on-premises, and a small percentage rely on S/4 private cloud (6 percent) or public cloud (2 percent). Gartner estimated last year that around 70 percent of Business Suite 7 and ECC customers would like to switch to S/4 by mid-2023 and almost a quarter by 2025 at the latest. 

The migration wave resulting from these figures has to be managed within a few years. Each of these migration projects requires, among other things, business process experts for evaluating improvements and added values of S/4, functional experts for configuration, and various technical teams for migrating interfaces, enhancements, and customer-specific content. A survey of DSAG members in June 2022 shows, not surprisingly, that 63 percent of respondents consider internal skills and staff shortages to be by far the biggest challenge in innovation projects.

Deadline 2030

SAP offers a maintenance extension until 2030 at a surcharge of 2 percent. This may be a temporary stopgap for those who cannot implement the migration in time. However, the big disadvantage is competitiveness. For example, those on the last ECC version, EHP 8 of 2015, are using an old core system with no update or new functionality. If this system were not replaced until 2030, the company would be around 15 years behind technologically in the core system.

At the same time, these SAP customers pay annual maintenance without being able to use many of the profitable innovations. From the first S/4 release 1511 to S/4 Hana 2021, a total of 2868 new functionalities have been provided by SAP. With S/4 release 2022, another 873 innovations have been added. Without these innovations, SAP's existing customers are missing out on opportunities for continuous business transformation, increased productivity, and simplification of business processes.

Eight S/4 releases have already been issued since 2015. The next will be S/4 Release 2023, from which there will be a new S/4 Hana version for on-premises every two years in the future. The mainstream maintenance of a release then consists of two phases: the Innovation Line, where new functionalities are provided via the Feature Package Stacks (FPS), and the subsequent Maintenance Line, where changes are available via Support Package Stacks (SPS). On the Innovation Track, one thus only remains with regular updates every two years.

According to the Statista Research Department, around 20,000 customers worldwide are already on S/4 at the end of the second quarter of 2022. The releases S/4 1511, 1610 and 1709 are already no longer covered by Enterprise Support. For version 2022, maintenance will end in December 2027, and for version 2023, the new deadline will then be 2030. Analogous to Extended Maintenance for ECC, SAP offers a maintenance extension for S/4 on-prem customers for a surcharge of 4 percent. Upgrades to S/4 Hana can thus also be deferred. However, in addition to reduced innovation and competitiveness, experience has shown that delaying upgrades to S/4 is also unattractive for companies from a commercial perspective. It can therefore be assumed that the majority of companies using S/4 on-premises will almost certainly want to update within the regular maintenance period of their S/4 version. These required S/4 updates will thus meet the migration wave. In addition, companies that want to remain in the Innovation Line will continue to update to the latest version every other year after 2030.

Options for action

The core of the classic approach is a consulting project. In exceptional cases, when major optimization steps are necessary, this is a new implementation project "on the greenfield" (Greenfield), which is also associated with very large resource requirements on all sides. As a rule, however, a conversion of the existing system into an S/4 system has proven successful (brownfield). In this case, the existing systems are first transferred one-to-one to S/4 Hana, and then the desired optimizations are carried out. Although this approach still means a significant project for customers and partners, it offers the advantage that the innovations of S/4 can be used in some places, even if not all optimization discussions have been completed yet.

If one would now like to optimize the use of resources even further, automation tools such as Mignow are available. On the one hand, this SAP-certified solution uses the Software Update Manager (SUM) and thus enables a true conversion of the system. In addition, upstream and downstream processes are automated to such an extent that the project team can concentrate on the more complex special topics. Viewed over the entire process, this results in automation of over 60 percent, depending on the project, and even 95 percent in the area of custom code conversion (Z namespace). 

In order to get the double burden of migrations and updates under control, it is crucial that this form of automation also covers the regular updates of the Innovation Line. Based on the above and other migration options, it is therefore necessary to check in each individual case with a migration expert which approach and operating option is optimal, taking into account the individual initial situation. 

What is certain, however, is that the sooner companies are aware of how they want to position themselves in SAP S/4 Hana in the future and transform to the cloud, the more room for maneuver they will have. A core system that is largely up to date is ultimately the key to the latest innovations and, as a result, to greater competitiveness. This is also confirmed by the Chairman of the Board of the German-speaking SAP User Group e (DSAG e. V.) Jens Hungershausen, who highlighted in an October 2022 press release that cloud technologies have the potential to "help companies or organizations to better keep pace with change.