Early in 2018, SAP announced that enterprises using an SAP ERP will have to migrate to S/4HANA by 2025—unless, of course, they already have. They’ve revised the date a couple of times since then due to slow adoption and the lack of SAP consultants available to support all SAP customers in the initial timeline.
Today it’s 2027. But why the migration in the first place?
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The main reason is database compatibility. S/4HANA only runs on the SAP HANA database, and all subsequent SAP ERP releases will do the same. Previous versions of their flagship ERP software could run on a variety of databases, the most notable of which is Oracle.
This post explores what the announcement means, the migration options, and how to choose the right path for your business.
SAP S/4HANA Migration Strategy: What Does It Mean?
Jaded observers initially categorized this announcement as part of a number of moves by SAP to throw down the gauntlet at Oracle, Microsoft, and Salesforce. Other industry analysts believe that forcing the hands of its customers might not pay off.
SAP counters that customers will get greater value and more efficiency with SAP S/4HANA. Whatever the reason, the consequences are real and will have lasting impact.
With hundreds of thousands of customers around the globe and over 75 percent of the world’s transaction revenue touching an SAP system, there’s a good chance that SAP is an integral and critical part of your business. However, to continue benefiting from SAP, your enterprise will need to undertake a project that could take years, cost millions of dollars, and that involves:
- Mapping and prototyping critical business processes for migration;
- Analyzing the SAP system and its customizations such as tables, programs, front-ends, mobile apps, and user interfaces to determine what to move and how;
- Adapting legacy applications that aren’t compatible with S/4HANA.
To have a successful migration, you will need to commit your best resources to the critical migration project — for years. That can cripple your organization's ability to innovate as the knowledge of the most valuable teams will be focused on ensuring your business processes are implemented correctly.
In addition to that, SAP 4/HANA has less customizations capabilities than old SAP options, which could mean a major change to your differentiating customized processes.
And as you can guess, there is the risk of business disruption at some point during the process.
This is not good news at this time when your business is demanding innovative business applications and extreme agility.
Before you get too discouraged, however, this migration has numerous bright sides. According to reviews on Capterra, G2 Crowd, and TrustRadius, SAP S/4HANA has a number of benefits for business and IT, such as stability, speed, real-time reporting, and a rich feature set.
And there is more than one option for migration, which means you have a choice of how to make the leap to S/4HANA.
SAP S/4HANA Migration Options
Although experts at SAP and other tech leaders can reel off quite a few ways of handling a switch to SAP 4/HANA, three are more commonly recommended than the others.
1. Greenfield Approach
One option isn’t really a migration option. Instead, it’s an implementation of S/4HANA from the ground up.
“Greenfield” is a term adopted from architectural and environmental engineering that means starting fresh on land that has no previous construction. For S/4HANA specifically, it means either migrating data only or no migration at all. You retire legacy customizations and work to streamline processes.
2. Full Migration
A full migration approach is a complete conversion of an existing SAP system to SAP S/4HANA, a method often referred to as “lift-and-shift.”
This scenario involves using SAP Software Update Manager with a database migration option for any enterprise not using SAP HANA as their database. To address application customization, enterprises can use SAP cloud and SAP partner development tools.
3. Hybrid Migration
In a hybrid migration, organizations need to analyze the current SAP system and identify the customized applications, functionality, and interfaces that are not part of the core.
Before the migration, enterprises can use a low-code platform to develop the non-vanilla pieces and applications used by the system. By doing that work in advance, the SAP core is kept clean to make the migration easier.
Afterwards, your business is using S/4HANA for what SAP does best—enterprise resource planning—and other apps for what it doesn’t do best.
Which Option Is the Best?
The answer to this question is that each option is best for particular types of enterprises and their current SAP systems.
Enterprises With Decades-Old SAP Systems
Prior to the pandemic, if enterprises had SAP systems that were 20 years old or more, greenfield was likely to be the best option due to the complexity caused by age and years of customizing. They could use the shift to technology as a springboard for redefining their processes from scratch.
But due to the issue of remote work, very few have embarked in lift and shift due to the increased risk of not having all the players in the same room to handle issues as they arise.
In addition to that, this approach also involved major investment in a brand new implementation and a complete, usually waterfall, analysis of the existing system and the processes to be reworked. So, although the greenfield option offers the possibility of running the old system while installing the new, business disruption of some sort is likely.
Full migration works best for “SAP houses” that invest in every SAP tool they can. These enterprises like having a full suite of SAP solutions for migration and partner solutions for creating modern applications at their disposal. Why go through the hassle of stitching together multiple vendor offerings and assuring data consistency if they don’t have to?
The downsides are vendor lock-in with no graceful way to exit if technology changes, last-mile UI customization, and narrow parametrization of workflow and data. Also, of the three options, this one has the greatest likelihood of business disruption.
Compose Your New Future
Gartner says the future of ERP is composible meaning, monolythic ERP systems can’t easily meet the agility requirements of our now “new” normal. Breaking an ERP into composable “parts” gives customers new options who want to integrate best-in-class functions, applications, and datasets unique to their business to create perfect-fit solutions and amazing customer experiences. In this case, hybrid migration is best for them because they:
- Do not want to be locked into a single vendor;
- Need to allot finite resources to innovation, not a major system implementation;
- Want the agility to respond to future changes in technology and the market.
Green Cargo was faced with this challenge of a heavily customized SAP and mainframe based logistics system that would have made moving to newer versions of SAP painful. Instead, they learned how to build a scalable microservices-oriented architecture from their legacy systems and create the applications that make a difference.
Just like Green Cargo did, to achieve these objectives, it just takes the right low-code platform, one that is enterprise-grade, is SAP-certified, and offers SAP connectors and integrations.
The minor disadvantage is that migration to S/4HANA is still in the cards. However, because only the vanilla aspects of SAP are moving and not everything tied to it, it’s not a huge undertaking like a complete conversion or brand new implementation. This option also carries the least risk of business disruption.
If Innovation Is Your Thing
If your focus is innovation, not legacy migration or major implementation, and you want to get the most out of S/4HANA, OutSystems can help.
You can use OutSystems to start modernizing your apps to prepare for a hybrid migration so that you continue innovating while preparing for a clean migration that enables SAP to get back to what it does best.
But modernizing doesn’t necessarily mean disrupting the current system as you plan your migration. OutSystems can help you extend your existing SAP apps by adding a new user experience or integrations to your existing business process by using OutSystems certified BAPI or ODATA connections and not touching or customizing the core application. You can learn more about how customers are extending SAP here.
In addition, OutSystems can be part of a greenfield implementation or full migration, enabling innovation in other ways. For example, you can use it to create applications for the new installation or to re-architect customized legacy apps that must be part of the lift-and-shift.
To learn more, join us in our webinar Accelerate Innovation as an SAP-based Company, where we’ll discuss how to transition your ERP system while innovating at the same time.