SAP S/4HANA Migration in Retail: 10 Week Roll-Out Strategy

A new service from SAP can provide clarity on the effort involved in a migration to SAP S/4HANA Retail for merchandise management and on the functions that generate the highest added value – all within a matter of weeks.

Gin is in. Monkey 47, The Duke, or Windspiel: They’re all available from various manufacturers, discounters are selling them for under eight euros, yet for half a liter of a good drop you’re likely looking at over €50. This should be good news for the retail trade, but so far, it’s been a “challenge to connect assortments that are only available for limited time periods,” says Hans-Hermann Kittler, lead architect for Digital Business Service Trade at SAP.

While the fashion industry has always offered its collections on a seasonal basis, the food trade mainly thrives from the sale of dairy products, fruit and vegetables, and candy — stable assortments that can be purchased the whole year round. In the future, SAP wants to better support seasonal business with the constantly changing flavors of gin. This is one of the innovations in the current 1709 release of SAP S/4HANA Retail for merchandise management.

Three Retail Benefits of SAP S/4HANA

A solution based on SAP S/4HANA has three major advantages for retail:

  • User experience: The data object-based representation gives way to role-oriented screens. Many sub-screens and fields are no longer required. SAP Fiori apps display information focused exclusively on tasks and roles.
  • SAP HANA: The solution uses the benefits of SAP HANA, simplifies data structures, and increases performance and throughput.
  • Primary data: Analyses can support decisions as they run on primary data, which simplifies predictions based on predictive algorithms and simulations.

The specialization for the retail industry, SAP S/4HANA Retail for merchandise management, is technically structured on the same instance as the SAP S/4HANA equivalent for the fashion industry. Colors and styles in the fashion industry then correspond to the various tastes and preferences in the food industry.

“It is becoming increasingly important to react flexibly to customer wishes and preferences,” says Kittler, who regards this as one of the strengths of the new solution.

Standard Service: Valid Estimation of Implementation Effort

In the past year, Kittler and his retail consulting colleagues have observed an increasing demand for SAP S/4HANA but also uncertainty about the effort involved in migration. To counteract this, SAP is now offering a standard service that helps customers find a suitable migration scenario, filter out the relevant functions from the 900-page simplification list, and weigh the benefits and complexity.

Concrete SAP S/4HANA Strategy in Four Steps

One: Preliminary Considerations (Approximately Three Weeks)
Digitization is currently high on the agenda of many companies. For Kittler, SAP S/4HANA is the “forward-thinking platform.” It keeps core processes stable, but also offers the option of innovative, digital business models via SAP Cloud Platform and SAP Leonardo.

Once this decision for SAP S/4HANA has been made, there are three possible migration scenarios. The suitability of the system conversion, re-implementation, or landscape transformation depends on how radically a company wants to leave the past behind, how the organization is structured, and how the IT landscape is set up. The system conversion involves converting the existing IT landscape to SAP S/4HANA, converting the entire history, and harmonizing it with the new system. The new implementation carries no dead weight from former implementations; it only involves the data — the master data, open documents, balances, and stock levels. The concept of landscape transformation aims to reduce the number of instances and thereby improve processes between business units and international locations. With these options in mind, it’s time for the readiness check.

Two: Readiness Check (Approximately One Week)
The aim of the readiness check is to find out on which topics from the 900-page simplification list a company should focus. Existing business processes and add-ons are automatically compared with the functions contained in the current list for the 1709 release. Generally, retailers are not also manufacturing companies, so these specific functionalities would not be relevant. Over time, the problems companies are facing begin to disappear.

“There are ultimately only about 20 topics remaining, the relevance of which we then discussed on an individual basis,” says Kittler, speaking from personal experience.

Three: Value and Implementation Strategy (Approximately Three Weeks)
The next phase involves workshops where the relevant topics are brought together. Experts from purchasing, inventory management, and store management work exclusively with the new final list, which only contains those functions that need to be addressed. What is special about it is that each function is assessed in terms of its expected complexity, potential benefits, and urgency.

“The value-implementation summary provides clarity about what can be done, what needs to be done, and when exactly it should be done,” explains Kittler.

Yet the past and the future don’t always go hand in hand, and this can lead to incompatibilities between old and new systems. “There are functions that are no longer available, or which need to be relocated,” explains Kittler. For example, SAP S/4HANA requires business partners. While suppliers and customer bases were separated in the past, they are now combined in SAP S/4HANA. This is an absolute must if the new system is to be “SAP S/4HANA-ready.”

Another possible stumbling block is if SAP partners introduce add-ons that are not certified for SAP S/4HANA. This can bring an implementation to a halt. These possible obstacles are currently being identified.

Custom Code Impact Analysis

Alongside the readiness check and the value and implementation strategy, SAP also inspects the company’s own custom code. This is important to be able to estimate how much work is required to bring existing solutions into the new world. During the impact analysis phase, SAP provides a rough estimate of the effort required for a “syntactic change based on existing business processes,” as Kittler explains, provided that the same functions will continue to be used in the future and that no further ones will be added.

Four: Derivation of Rollout Strategy (Two Weeks)
The value implementation summary clarifies how much effort is required for a system conversion. “We alleviate companies’ fears and concerns when tackling the topic of SAP S/4HANA,” says Kittler, confidently. For example, a large retail group recently decided to interrupt its ongoing international ERP rollout and instead convert to SAP S/4HANA. The question was whether to put the ERP roll-out on hold, whether to retain the rolled-out ERP systems and roll out the new systems on SAP S/4HANA, or whether to implement a full SAP S/4HANA migration. The company ultimately opted for the latter — a decision that only took nine weeks.