Migrating to S4/HANA can be a major challenge for companies. We examine the pitfalls and identify best practices so you can reap the benefits in full.
SAP S/4HANA transformations in decentralized companies
By Peter Wienand and Christina Gröger
How to overcome the challenges and succeed like the transformation leaders
The transformation to S/4HANA is tough but necessary. Without it, companies will miss a unique opportunity to streamline operations, enhance data visibility and improve decision making. This is especially the case for decentralized companies. We interviewed experts from six decentralized companies that are leading the way in S/4HANA transformations to find out the key requirements for a smooth transition.
"Decentralized organizations face particular challenges in their transformation as they struggle to set up company-wide programs and give up local freedoms."
With today’s economic climate generating a seemingly endless series of micro and macro challenges, from high interest rates to labor shortages, business is becoming more complex. As a result, companies are having to adapt and modernize. Overhauling the ERP backbone is a key focus area.
SAP is phasing out its older ERPs, and most companies have now embarked on their transformation to S/4HANA – SAP’s advanced new ERP product. It offers a unique opportunity to streamline operations, enhance data visibility and improve decision making. However, migrating to S/4HANA is not straightforward.
Transformations often take a long time (up to 10 years), incur significant costs and frequently fail due to the considerable challenges. Decentralized companies face the greatest hurdles. They must set up company-wide programs by integrating diverse, distributed systems and processes, while at the same time convincing disparate business areas to give up local freedoms. For example, aligning diverse strategies across autonomous business units is difficult due to different priorities and timelines. Ensuring also all leaders are committed simultaneously to driving transformation is challenging if they feel their authority is threatened. This makes it essential to understand successful transformation strategies.
To determine how decentralized companies can overcome the challenges and to identify key success factors for effective transformations, we interviewed experts from six decentralized firms that have undergone or are in the process of an S/4HANA transformation. Our study “S/4HANA: How decentralized companies can achieve a smooth transformation” summarizes the results, assessing how each company effected their transformation and deriving key takeaways for companies currently undertaking the process.
Six companies, one common approach
The six companies were selected based on similarities in their organizational complexity, global reach, diversity of IT landscape and transformation experience. We interviewed past and/or present employees of mid-level seniority from each of these transformation leaders. Questions focused on transformation approaches, target architectures and governance model, as well as benefits.
Responses were assessed across six dimensions: standardization; harmonization; rollout approach; governance; benefits; and cost & duration. A significant level of commonality was found within each. For example, decentralized companies are putting a particularly strong emphasis on harmonization and standardization as a key component of their transformation, while tending towards a greenfield approach. The findings for each dimension are discussed in depth in the full study.
"Decentralized companies are choosing a centralized approach as the only viable way to get the most business benefits from their transformation to S/4HANA."
In addition to several other key takeaways, the study makes an important overall finding – decentralized organizations strongly favor a central transformation approach. They employ a top-down strategy across regions and divisions to improve efficiencies and reduce operational costs.
To enable other decentralized organizations to build on their success, the study makes several recommendations to ensure a smooth S/4HANA transformation. These focus on a centralized, top-down approach that balances harmonization/customization and leverages greenfield and cloud opportunities.
For more information, please download the study, or feel free to contact one of our experts.
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