SAP announced it will end support of the SAP ERP Central Component, or ECC, in 2025. It wants existing ECC customers...
to transition to the next-generation ERP business suite, S/4HANA.
But companies are not rushing to begin an S/4HANA migration the way SAP might have hoped. And, indeed, many CIOs of enterprises with over $1 billion in annual revenue are taking a wait-and-see approach.
Here's a look at why and three of the clearest obstacles to S/4HANA adoption.
No S/4HANA business case
CIOs are unable to create a compelling business case for an S/4HANA migration due to pressing questions. What are the licensing and infrastructure costs associated with S/4HANA migration? What are the concrete business benefits of using S/4HANA? What are the S/4HANA capabilities in terms of software choices and functionality? What cost reductions will a company achieve?
Because S/4HANA is a new ERP suite, there aren't a lot of S/4HANA case studies that CIOs can use for their research.
Confusion about choices
Both HANA and S/4HANA require decisions about deployment. Companies can choose to have a HANA database on premises, or in a public cloud or private cloud. Companies also need to decide whether the S/4HANA application layer will be run on premises, or in a public or private cloud.
Companies also need to decide whether they will choose a brand-new S/4HANA implementation, a conversion from an existing ECC to S/4HANA or migrate the existing underlying databases to SAP HANA databases.
Fear of business disruption
An S/4HANA migration is a major undertaking. Disparate databases must first be migrated to SAP HANA to lay the foundation for the S/4HANA conversion. Preliminary work is also required to subsequently convert ECC to S/4HANA.
In addition, ECC and S/4HANA have different architectures. Companies will need to conduct the necessary groundwork in their existing ECC in preparation for an S/4HANA migration to make it compatible with the new system and to prevent business disruptions. For example, customer and vendor master records in ECC will need to be grouped as "business partners" in S/4HANA. This means that becoming S/4HANA-ready requires reworking the existing customer and vendor master records in ECC to ensure the master records correctly migrate into S/4HANA as business partners.
And that's just one example of the pre-S/4HANA migration prep work required. Until companies and their CIOs hear more user experiences and gains from moving to S/4HANA, the wait-and-see approach is likely to continue.
Still, some companies aren't shying away from embarking on S/4HANA migration, as they realize S/4HANA is the digital core they need to embark on a digital transformation journey.
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