July 2020 – The conversion to SAP’s new Business Suite S/4HANA is one of the most trending topics in organizations worldwide. And whether one likes it or not, there will be no way around it: The conversion has a fixed deadline by 2027, and it will not only cost a lot of money, but also capable resources. In addition, length and complexity of the operation varies greatly from company to company. With the Activate framework SAP offers a 6-phase model to give customers an orientation, which is also a basis for many system integrators’ own methodologies.
In this first article of our CH/4NGE series, we take a closer look at the first phase within the SAP Activate model, the Discover Phase. Here, we highlight typical challenges, such as a lack of a digitization strategy, silo thinking in terms of processes or the lack of a people perspective. We also show opportunities on how to have a strong influence on the success of the project already in this first of the six phases.
What actually happens in the Discover Phase?
The Discover Phase serves the technical experts and the management level in particular to make decisions in strategic matters regarding S/4HANA conversion. At first this includes the identification and evaluation of the business value of the HANA database and the corresponding S/4HANA Business Suite. Current and future applications of the system are discussed, and the resulting added value is identified – all under consideration of potential innovative future topics, such as IoT, Big Data / Smart Data or omnichannel business models. In order to develop a suitable implementation strategy, test systems are set up and possible implementation scenarios are simulated – whether the changeover is to take place on the basis of a greenfield, brownfield or hybrid approach, depends among other things on the conversion readiness of the existing ERP system.
Implementation vs. Installation
These technical issues rightly play a very central role in the early stages. However, studies and evaluations, e.g. of ChangeFirst, show that many projects fail because the focus is exclusively on technical installation and too little on sustainable implementation. This is followed by the problem that the underlying business cases are based on the best-case scenario of a complete implementation. Often, however, only the pure installation is carried out. The result: reality falls short of expectations. In order to close this spread, the so-called “value gap”, the factors commitment and behavioural change of the affected persons are the critical success factors.
To take action against the value gap as early as in the Discover phase, it is therefore worth looking beyond the pure technology issues to the people who will be affected by the change and to the potential hurdles that will “cascade” through the project in case they are neglected.
Besides technology – 5 challenges in the Discover Phase
In principle, before a system change of any kind, the question arises as to whether it is in line with the company’s overall digitization strategy. But what exactly does this strategy look like? Some companies do not define a clear target picture. Measures are often only taken if, for example, the old system is no longer supported in the near future and an upgrade is therefore unavoidable. This is also the case with S/4HANA, whose previous versions will no longer receive support from 2027 on. The lack remains unnoticed until cost-intensive and far-reaching questions arise.
Without a strategy, however, evaluation based on a comprehensive business case is only possible to a limited extent. A noteworthy issue in this context is the monetary benefit of the S/4HANA conversion, that is often realized only subsequently. Implementation effort and potential returns are so far apart that they often cannot be clearly attributed to one another. An imprecise Business Case then quickly leads to unrealistic expectations and, in the worst case, to wrong decisions. In order to meet these challenges, it is therefore more important than ever that everyone on the decision-maker level “work in concert”.
Our experience shows that the so-called “Sponsor Alignment” is a particularly important lever in strategic projects – unfortunately not only positively, but also negatively, if it is not successful or is not carried out at all. The latter becomes visible, for example, when (far-reaching) process decisions are made at upper management level, but the directs one level below are not committed to rethinking their processes and behaviours. This slows down or even makes meaningful decisions in the later implementation impossible. It is therefore important to create a shared understanding of the situation right from the start and create a clear target picture for everyone.
Especially when it comes to deciding on one of the above-mentioned implementation scenarios, another core topic is often left out: Process-based analysis of the current state. Thinking through and analyzing processes or scenarios in the organization and system from start to finish and, in this context, checking which transactions and Z codes are actually used. There are often benchmarks from the industry against which one can measure one’s own processes and identify inefficiencies. These analyses are of great importance in order to optimize old processes during the changeover and to define concrete ideas of future requirements. In the further phases, this results in important organizational and management changes, which make these fundamental analyses very important for the further procedure. Breaking through silo thinking rounds off this necessary basis for successful implementation.
Following the above-mentioned value gap between the technical installation of a system and the holistic implementation of a change, the change story needs to be mentioned as an organizational lever and at the same time as one of the central challenges in SAP transformation projects. The factual reason for conversion to the new Business Suite is often the shutdown of the R/3 system or other previous versions. So, does the change bring corresponding added value from a management perspective? – Yes. Do these arguments also apply at user level? – No. In this context, there is often no “burning platform” for the employee that suggests that something must change NOW to avoid negative consequences. Even more demanding and at the same time important is the precise elaboration of a change story, which explains the individual company’s own colleagues,
- why the use of the old system no longer provides long-term added value,
- what the future looks like with the new Business Suite and
- what consequences and benefits this brings for the individual.
Much of the new system looks the same from the user’s perspective at first glance. The advantages of, for example, easier working with Fioris or new technical possibilities in the field of AI or Big Data, only become apparent after some time. Due to the duration and effort of the project, these aspects quickly lead to rejection and resistance in the workforce. A good change story can therefore not only be used for all communication purposes, but above all helps to create a strong commitment across all levels.
The fact that the change to the new S/4HANA Suite is an elaborate and complex process was already described in our last intro teaser. But what concrete actions can you take to prepare for it?
- First of all: S/4HANA will come – there is no way around it. Approach the topic early!
- Start developing a clear digitization strategy to proactively manage the transformation instead of being overwhelmed by it!
- Take a look at the new innovation possibilities of S/4HANA technology in the Business Case! Consider how your business model can benefit from it.
- Bring the right people to the table from the very beginning! Get them on board, involve them and thereby ensure broad commitment across all management and organizational levels.
- Analyse your existing system end-to-end! Get an overview of deviations from the SAP standard and critically question existing processes.
- Take your employees with you! Develop an appealing change story that shows people the way and with which they can identify.
In our next article, we will take a closer look at the Prepare Phase in the SAP ACTIVATE 6-phase model. Now that fundamental decisions have been made, the next step is to raise awareness. Time to set up the project in a well thought-out manner. In the article we will discuss concrete challenges from a change perspective and share possible solutions from our experience.
Do you have questions about S/4HANA Conversion? Please contact us!