S/4 HANA by 2027? A golden opportunity to target true business transformation

Mar 09, 2020

by Richard Pinder Director, PwC United Kingdom

Email +44 20 7212 4895

SAP is pushing back the deadline for ending their maintenance and support for existing ECC systems from 2025 to 2027. If you’re an SAP user who just sighed in relief, you’re not alone. This additional two-year window is great news… but only if you make full use of it. 

This looming deadline and the implications for adopting S/4HANA were already causing some sleepless nights. Migrating or implementing a new ERP is never a task to be taken lightly or rushed. And the move to cloud requires much more than just re-platforming. To get this right requires a more fundamental approach to aligning processes and technology with a company's strategy and future operating model. 

So whilst some companies may understandably use the shift in deadline to refocus their priorities away from such programmes, this would be a big mistake.

Why? Put simply, those companies that have either adopted or are on their journey to S/4HANA are beginning to realise just how much value their programmes can unlock when approached as true transformations. Whether it’s 2025 or 2027, the question leaders should be asking is, why wait?

Any explanation needs to start with what makes S/4HANA so ground-breaking.

Transforming rather than just upgrading

In days gone by, an ERP implementation was a massive, multi-year project to deliver a monolithic, complex, highly bespoke system. S/4HANA is different: more flexible, more standardised and more powerful. But to fully harness that power, you have to drive a real focus on ‘simplification’ throughout your business.

That’s why the best way to approach the adoption of S/4HANA is not to treat it as a technology upgrade, but as a true business transformation enabled by technology. 

Most SAP users – and certainly the clients I speak to every day – get this. The problem? The 2025 deadline meant some were starting to think about whether to simply deliver the tech upgrade element for now, and worry about the business transformation later. Which, as we all know, means it will probably never happen.

Use this time to focus on the transformation benefits

Now SAP has given another two years’ leeway. The result? Companies looking at S/4HANA as a tech upgrade now have the space and opportunity to zero in on reshaping, future proofing and transforming their business. This is an opportunity that companies mustn’t pass up.

Take those organisations who are currently shaping their transformation programme. The extra two years means they can ask some searching questions and act on the answers. How confident are they that their current plans will really deliver the level of business transformation needed? Can they adjust the scope of their programmes to deliver even more value?

And what’s the key to success for companies who aren’t yet out of the blocks? They mustn’t waste this additional breathing-space by putting their programme on the back burner until the time pressure builds again. Instead, they must capitalise on it by moving quickly to plan their S/4HANA-enabled business transformation.

The three things everyone should do now

What’s clear in every case is there’s no time to lose – and even if 2027 seems a long way off, it really isn’t. In this context, I think there are three things that every business can do now to maximise its chances of success.

  • First, clarify and align on the future operating model: spending time now to define the strategic direction of the business and the operating model needed to support that strategy will make a huge difference in securing and maintaining support for a true business transformation.
  • Second, get a firm grip on the data model: working to align the enterprise data model and data structures with the future strategic insights needed to steer the business will mean these programmes positively impact commercial performance.
  • Finally, take steps to optimise and simplify processes: streamlining and smoothing out differences in core processes - for example between different geographies and business units - will reduce the change challenge many companies will face.

The message is clear. The two-year delay to the S/4HANA deadline is great news for SAP users… but only if they now make full use of it.

 

by Richard Pinder Director, PwC United Kingdom

Email +44 20 7212 4895