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SAP has been touting the virtues of simplicity ever since it unveiled the slogan "Run Simple" in 2015. However, the concept has proven to be a tough sell when it comes to S/4HANA migrations.
Many SAP customers understand the concept of running simply but are cautious about the cost and complexity of an S/4HANA migration. However, the move to S/4HANA seems to be increasingly inevitable, and a growing number of SAP customers have done the work to get to S/4HANA.
Vinci Energies, for example, has completed an S/4HANA migration and has begun to realize the benefits of running a simplified ERP core on S/4HANA.
But simple does not mean easy, and an S/4HANA migration is a complex undertaking that requires strong management, according to Dominique Tessaro, Vinci Energies' CIO.
Based outside of Paris, Vinci Energies is comprised of many companies that install and maintain electrical infrastructure around the globe. The company has grown significantly through acquisition, but one of the byproducts of this is that all the acquired companies had their own IT and ERP systems, Tessaro said. So in 2014, Vinci decided to make things as common as possible on one ERP system.
The various Vinci Energies businesses fell into one of two ERP camps: SAP and Oracle. Tessaro had to decide which would make up the "one ERP" system.
SAP won, and Vinci Energies began the "one ERP" initiative by implementing SAP ECC 6.0 in 2015, then working the various companies onto the single SAP environment and SAP client. In 2016, the company implemented the SAP HANA database, which resulted in improved performance -- although with essentially the same functionality, so it was decided that the time was right for an S/4HANA migration. One reason was SAP's impending 2025 deadline to end support for ECC, but this was only part of the decision to make the move.
Strong project management required
"I knew that the migration would be a pretty heavy lift, and the more we deployed on other systems, the more complex the migration would be in the future," Tessaro said. "The third main reason is that by discussing and looking a lot of the S/4HANA capabilities, we decided to move to S/4HANA to take advantage of these new functions and new capabilities that you cannot find on ECC 6.0."
The migration from ECC to S/4HANA took nine months and required strong project management, system testing and data cleansing.
"In this kind of project, you have to do lots of testing," Tessaro said. "We did many dry runs, and on each dry run we learned a lot from the previous one. You have to stop the production at the time of the migration, so we tried to reduce it the migration window to be as small as possible."
Some new functionality and data structures in S/4HANA required special attention. For example, S/4HANA's simplified financial data model involved scrubbing all the ECC financial data, which resulted in finding many discrepancies that need to be resolved. Other main challenges of the migration included upgrading the technical infrastructure, identifying and managing all the affected custom code (Z programs), and converting integrations with business partner applications.
"After a nine-month project, we went live on S/4HANA in July 2018, and we are currently running about 10 billion euros and more than 700 legal entities," Tessaro said. "All modules are running on a single SAP S/4HANA instance and client."
Embedded BI brings business value
The S/4HANA migration has paid off with several business benefits. S/4HANA's in-memory storage model has led to big performance improvements; new Fiori UI apps have increased user adoption and improved workflow; and embedded business analytics have enabled users to make better-informed decisions based on real-time data.
"[The embedded BI] is really bringing a lot of value for the business; specifically, when you are approaching the end of the month and the managers can now look at the numbers in almost live [time]," Tessaro explained. "It's very valuable to look at the end of the month when we put huge pressure on the project managers to bill the customer to control the project and make sure that they are cash-positive. It's very important for us, because we are a very low-margin business, so we have to be very careful with the project management."
Building for future functionality
The company is also looking to add functionality in the future that will improve productivity. One is a project that will connect S/4HANA with SAP Leonardo machine learning to improve monthly invoice matching with customer invoices. Tessaro said he expects that the machine learning integration will clear 70% to 80% of invoices with discrepancies automatically, leading financial people to do more controlling, rather than spending time on reconciliations.
An S/4HANA migration is a major undertaking that should be approached carefully and not oversold, according to Tessaro. In general, one of the main lessons learned is to expect the unexpected and try to plan for it. For example, all the technical and infrastructure prerequisites should be anticipated and tested to avoid unexpected circumstances. On the data side, it's better to take the time to identify and cleanse old Z program custom code.
"You have to be very cautious about a migration," Tessaro said. "It's a huge project, and you have to put big effort and good people on an S/4HANA migration project."