In February 2015, SAP launched a new generation of enterprise software on its HANA database.
At the time of its release, SAP’s then-CEO, Bill McDermott, claimed this latest unveiling as “[…] our biggest product launch in 23 years — maybe even in the history of SAP” .
This was quite the claim given SAP’s history as one of the big players in the industry.
From the outset of S/4HANA’s release, all focus turned to moving its existing customers away from SAP ECC (ERP Central Component) and onto its new Cloud-based ERP product.
SAP celebrated its 50th birthday in 2022 and knows that it needs to work hard to stay relevant in an industry that champions flexibility, in an economic climate that demands financial frugality.
It’s hoping S/4HANA is the answer. But that hope is built on shaky grounds.
Here are four issues you need to think about if you’re considering a move to S/4HANA…
Moving from SAP ECC to SAP S/4HANA isn’t simply an upgrade – despite SAP positioning it as such. It is a complete ERP reimplementation on a new platform.
This isn’t necessarily a bad thing, but customers need to be aware that this isn’t just a simple upgrade.
It doesn’t matter whether an organisation takes a ‘greenfield’ approach (starting from scratch and adapting your business to its functionality) or a ‘brownfield’ approach (bringing your existing functionality and processes across from ECC), both are going to come at considerable cost and risk.
S/4HANA may be the successor to ECC, but this doesn’t mean it will be appropriate to adopt its successor without a broader ERP review and strategy.
It’s also going to require a host of consultants that specialise in S/4HANA — of which there is a frighteningly short supply!
Frustratingly, turning to the vendor for help may not be the answer to your skills shortages…
The UK & Ireland SAP User Group (UKISUG) found that 92% of its members raised concerns that a lack of skills could slow migration, while over a third (36%) said that SAP doesn’t provide customers with enough technical resources and training to help manage S/4 HANA.
When migrating from ECC to S/4HANA, organisations undertaking the transition are finding progress slow after being faced with data management challenges.
A separate survey conducted by UKISUG in early 2022 showed that 61% were finding themselves troubled by data management difficulties that are slowing business automation and hindering migrations from ECC to S/4HANA. †
A further survey undertaken later that same year found 64% of those that had migrated found integrations a challenge. ¶
Yes, migrations are never easy.
But when most of your customers have notable issues, this is something to take seriously, especially when this starts affecting business operations and continuity.
December 2027 is SAP’s deadline for customers to move to S/4HANA from its predecessor, Business Suite and its digital core, SAP ERP Central Component (ECC), which it plans to stop supporting in 2030.
Moving to SAP S/4HANA is a costly endeavour.
And it doesn’t help matters when SAP’s pricing structure and commercial models create confusion amongst its customers.
In response to the perplexed customer landscape, SAP launched RISE with SAP, in early 2021, designed to aid the migration process (constituting 50% of S/4HANA sales so far).
But this appears to have only muddied the waters over the commercial options available for customers as RISE has evolved.
Gartner® vice president and vendor lead analyst for SAP, Ilona Hansen, told The Register in mid-2022 that, “Many options exist, but the strong positioning of RISE with SAP by account executives obscures other S/4HANA licensing options, such as S/4HANA On-Premise Edition, which will likely cost more as SAP continues to shift its revenue to the cloud.” §
Given the huge costs and risks involved in moving to S/4HANA, organisations might want to think about their ROI when considering the costly and risky move from the reliable and proven ECC to the new S/4HANA.
For those still undecided, SAP are currently offering extended support options for ECC up to 2027 (this has already been pushed back since its first end date of 2025).
It’s worth acknowledging this extension comes at a 2% premium to continue support + any additional inflationary increases.
But the vendor will not keep supporting ECC indefinitely; the time will come when the final deadline date is… final.
What’s more, customers can be forgiven for questioning the ROI on an expensive support package (17% – 22% of their license fee + any annual or inflationary increases) for a system that hasn’t seen any major upgrades in over half a decade.
The last major enhancement delivered was in 2016 with EHP 8 (Enhancement Pack 8).
By 2027, customers could have been paying full rate for their support on an 11-year-old system that wouldn’t have received any enhancements for over a decade, all while SAP pours money into developing its HANA systems.
If you’re in the position of considering an upgrade to S/4HANA, but aren’t convinced of its merits, there is an alternative.
Third-party support from Support Revolution will help you avoid all the above, and unlock:
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