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. Why? 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 SAP 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.
Looking Into a SAP S/4HANA Migration Strategy: What Does It Mean?
Jaded observers have 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 4/HANA. 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. To continue benefiting from SAP, your enterprise will have to undertake a project that could take years 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
The migration process could take several years, cost hundreds of millions of dollars, and require additional skilled resources from a relatively small pool of talent. And there is the possibility of business disruption at some point during the process. This is not good news at a time when demand for innovative business applications is very high, and 65% of most application development projects are already for the purpose of maintenance.
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.
What Are the 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.
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.
In this video about S/4HANA migration, Roy van de Kerkhof, Senior SAP Architect at NovioQ, calls this option “the SAP way.” It’s 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.
Roy mentions this option in the video, as well. He describes it as analyzing the current SAP system and identifying 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-core pieces and applications used by the system. By doing that work in advance, the SAP system is cleaned of the parts that make the migration tricky. 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
If enterprises have SAP systems that are 20 years old or more, greenfield is likely to be the best option due to the complexity caused by age and years of customizing. They can use the shift to technology as a springboard for redefining their processes from scratch. The aim is to rework or refresh them so they are leaner.
The drawbacks are the major investment in a brand new implementation and a complete, usually waterfall, analysis of the existing system and the processes to be reworked. Although the greenfield option offers the possibility of running the old system while installing the new, business disruption of some sort is likely. Nonetheless, a 2018 survey from LeanIX and PwC indicates that a handful of enterprises have chosen this route.
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.
“Pulverizers,” as described by OutSystems CEO Paulo Rosado, are enterprises who want to integrate best-in-class parts, functions, applications, and datasets unique to their business to create perfect-fit solutions and amazing customer experiences. 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
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 core 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.
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, visit our SAP page.