With the maintenance deadline for SAP ECC 6 on the horizon, companies are looking to migrate, but which is the right way forward? Don Valentine, commercial director at Absoft, explains more.
ERP implementation has changed. And for those companies facing the 2027 maintenance deadline for SAP ECC 6, that is good news. In today’s cloud-first, ‘adopt not adapt’ model, there are no more white boards. No more consultants offering to customise software to meet any business need. And no more long-drawn implementations followed by expensive and disruptive upgrades and a complete loss of commitment to using technology to accelerate change.
Instead, SAP is leading a push to ‘protect the core’, advising companies to avoid customisation, use Best Practice Scenarios to define processes and embrace the six-monthly product enhancements. But this is a significant cultural change for everyone involved; companies need to look hard at their SAP consultants, ensure they are on board with standardised implementations and have the skills to support a different approach to innovation and competitive differentiation.
Ready to move
Companies are gearing up for the move to SAP S/4HANA, with research from the UK & Ireland SAP User Group (UKISUG), revealing that 70% of companies planning to move to S/4HANA will do so in the next 36 months. While the 2027 maintenance deadline for SAP ECC 6 is, of course, a key driver in migration plans, new functionality (49%) and wider business transformation (47%) were also cited as key considerations.
But while companies are getting ready to migrate, how many are comfortable about the right way forward? SAP’s cloud-first model has fundamentally changed the approach to software implementation. Wherever possible, SAP is advocating a ‘no customisation’ strategy, pushing an ‘adopt not adapt’ model. With this approach, companies can not only fast track implementation but also avoid the costs and complexities associated with upgrading customised solutions.
And yet, the UKISUG survey revealed that 72% of organisations say existing customisations present a challenge when moving to SAP S/4HANA. This is down on last year’s results (92%) and 24% of organisations plan to remove customisations entirely – replacing them with standard functionality – compared to 12% in 2021. While this suggests the standard model is gaining traction, more clearly must be done to provide SAP ECC users with understanding of what a move to S/4HANA in the cloud offers and entails.
Three options
S4/HANA is only available to companies in the cloud – but that doesn’t mean there is no choice. Businesses have a range of options to explore. The first option is Software as a Service (SaaS) S/4 HANA, where companies use the standard product in a public cloud. There is no need to think about customisation or choice of hosting location and product enhancements are automatically available with every new release, providing a route to continuous improvement.
The second is the Private Cloud Edition (RISE) of S/4HANA, where companies can choose a hyperscale – Google, AWS or Azure – to provide the hosting service. This approach can appeal to companies with concerns about the security of a multi-tenanted cloud model – as well as those wanting to control when upgrades and enhancements are deployed.
A third option is to replicate an on-premise model, but in the cloud: essentially a business opts to maintain its own SAP system, with complete customisation flexibility.
Business differentiation
Both the public and private cloud editions of S4/HANA are appealing to the growing numbers of companies that are questioning the level of customisation in existing ERP deployments. Why incur the cost and complexity of customisation, especially when the core functionality meets a business’ needs? Avoiding the upheaval and investment associated with creating, maintaining and upgrading customisations completely changes the total cost of ownership associated with an ERP investment.
With SAP’s Best Practice Explorer, companies can quickly gain access to a range of best practice scenarios across several areas, such as purchasing or procurement. It is the way the business uses the ERP and the information that enables business differentiation, rather than specific customisations.
Of course, not every company will find all the features it needs in any ERP. For those companies with specific requirements – such as field services support – the private cloud approach with RISE provides customisation options. But even here, the advice is clear: avoid customising the core, and instead use SAP’s Business Technology Platform to support the creation of specific apps that can be integrated with S4/HANA. With this approach, companies can successfully add functionality without adding the cost and complexity of testing every single change in the core product.
New consultancy attitude
A cloud-first ‘adopt not adapt’ model is very different. But it provides a fast-track route to innovation. There are no long drawn-out implementations; no hugely expensive and disruptive upgrades. Indeed, with smooth, faster deployment, companies should never experience that ‘post ERP’ hiatus, when planned investments and changes are not achieved because the business needs to recover from months of upheaval.
Consultants will, therefore, play a different role in the implementation – and that is key. How many SAP partners are actively changing their consultancy skills and mindset to support the cloud-first, standardised approach? From Fit to Standard workshops that demonstrate the power of the core product to ensuring the business remains on standard implementations, a good consultant can shorten implementations and reduce costs.
Plus, of course, by streamlining the approach, a consultant can help the business to create a commitment to continuous improvement, leveraging tools such as BTP to create business differentiating apps and explore other cloud solutions such as analytics that can add value.
Conclusion
Growing numbers of businesses are embracing this cloud-first ‘adopt not adapt’ approach. Very few are opting to convert their existing ECC systems, with their existing customisations and data, into S4/HANA. Instead, they are embracing the chance to simplify, to move away from complex and unnecessary customisations and achieve a streamlined, effective and manageable ERP deployment.
They are embracing a standard model, in the cloud, to create the foundation for seamless, incremental change that should give a business confidence to innovate and achieve continuous improvement. Through partnering with the right SAP consultancy, they can ensure that they choose the most appropriate model with the best migration path to achieve the optimal results as quickly and cost-effectively as possible.