ERP (Enterprise Resource Planning) systems form the backbone of corporate IT today and are used as a central datahub for the uniform planning, control, and documentation of a company's value chain. The pressure on companies to prepare for digital transformation and the era of "Industry 4.0" does not stop at ERP systems. More than ever, they must become smarter, faster, more flexible and more integrated.
What is SAP S/4HANA?
Companies worldwide rely on ERP solutions from SAP. S/4HANA is SAP's answer to the challenge of making ERP systems fit for the future. As the latest generation, S/4HANA promises nothing less than the transformation of customers' business processes with the help of artificial intelligence. The "S" stands for Simple, "4" for the fourth product generation and "HANA" is the name of the database technology on which the system is based ("High Performance Analytic Appliance"). SAP’s announcement to discontinue the support for the existing SAP R/3 and ECC systems after 2025 has put additional pressure on companies to decide whether, when and how to migrate to S/4HANA.
This rarely results in a pure system upgrade for the companies. Rather, these companies strive for more: to advance the digital transformation as a whole, to improve decision-making processes, to modernize the business and to guarantee its future competitiveness. Practical experience shows, that converting to S/4HANA is rarely a pure IT project, but affects all areas of a company, including corporate processes, the collaboration between departments and corporate culture in equal measures. Organizational transformation management is becoming a central success factor.
Challenges in S/4HANA projects
The introduction of S/4HANA generally affects a large number of business areas. Accordingly, numerous challenges have to be tackeled simultaneously.
Missing awareness of necessity and urgency
SAP offers support for the older ERP systems R/3 and ECC until the end of 2025, which, at first glance, seems to be a long time away. Accordingly, many companies do not have a strong awareness of the urgency of switching to S/4HANA yet. In addition, the advantages of the new ERP system are difficult to grasp. As a reuslt, we have observed our clients clinging to their old system.
Practical experience shows, however, that to reap the benefits of the implementation of S/4HANA, reorganization and restructuring measures, and in some cases even new business models are necessary. Combining different topics quickly leads to "change fatigue", which makes openness to S/4HANA even more difficult.
Lack of company-wide standards
Replacing historically grown heterogeneous systems and process landscapes is often a major goal when introducing SAP S/4HANA. In addition to the fact that previous SAP versions are inherently characterized by a fragmented architecture - which is also reflected in a diverse process landscape - various corporate divisions have sought their own "paths" in SAP over the years in order to do justice to local individualities. However, in order for S/4HANA to play to its technological advantages, it is important to harmonize the process landscape and ideally follow the SAP standard. As a result, the various corporate divisions are often faced with the challenge of having to replace "their" processes with a company-wide global standard.
Frequently, this leads to resistance in the affected company areas and people. They are concerned that local individualities and optimized processes, which have been laboriously mapped in systems and processes over many years, will only be insufficiently covered by the new standard. As a result, there is little support in the affected areas of the company, often even direct rejection of the project. Project managers in S/4HANA projects must actively counter this resistance and be able to dismantle it step by step in order to ensure sustainable implementation.This is key for the company to reap the benefits and added value of S/4HANA's implementation.
Changed user interface (GUI becomes Fiori)
SAP S/4HANA also fundamentally changes the user interface of SAP. Yesterday, it was the infamous SAP GUI (Guided User Interface); with S/4HANA, the new Fiori user interface is the new benchmark. It differs considerably from the familiar SAP GUI in its structure and functionality, as well as in its graphic formatting and availability on mobile devices. While some consider it a major breakthrough to design the user experience of SAP in a contemporary way, others see proven and practiced user behavior in danger. The fundamental question is: Do I have to learn SAP from scratch with Fiori? Broad acceptance and use of the new Fiori user interface is an important criterion if S/4HANA is to exploit its digitization potential.
New behaviors will be required
S/4HANA requires different user groups in the company to learn new skills and behaviors for the company to reach the potential synergies that S/4HANA promises. For example, with S/4HANA it is possible and also desirable for managers to access reports in real-time independently, which eliminates the time-consuming manual creation of PowerPoint presentations. In particular, the real-time dashboards based on the new Fiori user interface can be used for this purpose.
Regular employees can also expect numerous changes, for example in the fulfillment of maintenance orders. While in the past, order fulfillment documentation was often still paper-based with manual entry and scanning, in the future maintenance teams will work with mobile end devices, on which SAP-based apps transfer order documentation directly into the system. This makes all historical data directly available at the push of a button.
Communication across many locations and corporate functions
S/4HANA is based on the idea that with a uniform data core, business units can exchange data virtually in real-time and that integrated business processes that are mapped in an ERP system bring about considerable efficiency gains. Accordingly, the introduction of S/4HANA affects virtually all departments along a company's value chain - with the fundamental need to standardize an often very heterogeneous data landscape.
If these stakeholders are also distributed globally, companies that want to introduce S/4HANA are confronted with a high degree of complexity since a very large number of stakeholders need to be involved. These stakeholders have very different information and participation needs based on the type and degree of involvement.
Transformation Management for S/4HANA Projects
In order to master the challenges described in S/4HANA projects, we consider eight critical success factors in S/4HANA implementation projects:
- Establishment of a strong transformation office
- Systematic and detailed analysis of the change impact
- Design of a change architecture, consisting of centrally and decentrally organized interventions
- Build up and support a global change network
- Development of an appealing overall change story
- Design and implementation of effective communication measures
- Implementation of interactive and diverse qualification measures
- Establishment of change controlling measures tailored to specific change goals
1. Establishment of a strong transformation office
The Transformation Office is the linchpin for all change measures in a S/4HANA transformation project. It is responsible for analyzing the change impact, building up the change network, promoting communication and qualification measures and carrying out change controlling.
Based on our extensive experience from change projects and the background of your individual needs and framework conditions, we create effective structures for a powerful Transformation Office that efficiently and effectively implements the right change measures at the right time and can react flexibly to changing framework conditions. With us, you keep the overview and can make prioritized decisions.
2. Systematic and detailed analysis of the change impact
The foundation of a solid change architecture in S/4HANA projects is a comprehensive change impact analysis. The effects of the conversion to S/4HANA on different stakeholder groups can be very different and also vary in strength. Thanks to structured interviews with sponsors, project managers and representatives of the affected groups, which are supplemented by standardized surveys if necessary, we help to gain a sufficiently deep understanding of the actual change impact (necessary process adjustments, missing skills, effects on the business model, etc.). This is an important success factor for creating custom-fit change architectures, developing an appealing change story and maintaining an overview of the dynamic day-to-day project work.
3. Design of solid change architecture, consisting of centralized and decentralized interventions
Based on the change impact analysis, a comprehensive change architecture is created for the program. We analyze which stakeholder groups are affected by which changes and to what extent, how they are currently reacting to the changes and how they should perceive the changes in the target state. From this, we derive tailored communication, qualification and involvement measures, which are provided with concrete milestones and integrated into an overall plan. The result is a systematic approach that also provides orientation for the program management and sets a clear direction.
4. Building and supporting a global change network
S/4HANA conversions usually affect large numbers of users, who are also distributed worldwide. An exclusively centralized approach often does not do justice to this fact. Therefore, we use multipliers as a critical success factor and build up a global (change) network with our customers. For setting up our change network, we use blueprints for target operating models, integrating project work and change management activities. In addition, we provide coordinated qualification measures and extensive toolboxes for the members of the change network.
The network consists of coordinators (e.g. for regions or corporate divisions) and change agents, whose responsibilities and interfaces are clearly defined with dedicated role descriptions. While the coordinators for transformation management and program management are the extended arm of decentrally organized corporate structures and implement locally specific change measures, the change agents are close to the end-user and maintain an informal relationship at eye-level in order to identify and solve challenges at an early stage. The goal is to ensure that all locations, corporate functions, and divisions are sufficiently involved in the change process.
In addition, we collect feedback from the network in order to find out how the change measures are received by the various stakeholder groups. This enables agile adaptation of the change measures over the course of time.
5. Creation of an appealing change story
Another important success factor is sending a clear message in the form of a consistent change story. The change story highlights the need for transformation and provides a clear picture of the opportunities, which the introduction of S/4HANA offers to the organisation.
Accordingly, the Change Story should answer the following questions:
- Why is the introduction of S/4HANA necessary?
- What great opportunity does the introduction of S/4HANA offer?
- What steps need to be taken to implement the change?
The change story forms the basis for the implementation of targeted communication measures.
6. Design and implementation of effective communication measures
Communication is a central building block. It enables end-users to understand what the introduction of S/4HANA means for them, to build acceptance for the new solution and to stay informed about the current progress of the project.
The conversion to S/4HANA usually affects all business areas in various cultural contexts. Therefore, targeted communication measures are a key critical success factor. Our portfolio of measures ranges from holding worldwide townhall meetings, creating extensive print media and public Q&A sessions, to building communities of practice in social intranets or programming mobile apps.
In addition to these centrally planned measures, we encourage all member of the change network to perform own change measures, in order to do justice to local individualities in an agile way. In order to do this with ease, we offer change tool boxes which have proven themnselfs in varius projects.
7. Implementation of interactive and diverse training measures
If S/4HANA is to reach its full potential, employees need to develop new skills and often a new mindset. Accordingly, we see a customized qualification concept as a central success factor that meets the needs of the various target groups. We know from experience: Learning is successful when end-users have the opportunity to experience the change directly and realistically, in order to develop the new skills. At the same time, the training measures should remain cost-effective.
We recommend a systematic blended learning approach, in which the contents are conveyed virtually or in-classroom training sessions in a practical manner. We make sure that the learning content remains permanently available so that end-users can refresh the content if necessary and also qualify newcomers to the company accordingly.
8. Establishment of change controlling tailored to the change objectives
We use extensive change controlling measures to check the progress of the achievement of change goals. First, the desired change goals are provided with corresponding KPIs. With the help of the change network and other quantitative and qualitative feedback channels, these KPIs are then monitored and appropriate countermeasures are initiated, if necessary.
All KPIs are included in an overarching Change Cockpit. At a glance, this Change Cockpit provides an overview of the status of the change objectives along various stakeholder groups. It ensures transparency towards important stakeholder groups such as program management, the sponsor or a steering committee.