SAP S/4HANA: A Tailor-Made Third Option

In making the transition to SAP S/4HANA, most customers are still opting for a fresh start or sticking with the status quo in terms of their processes. Meanwhile, a third option is drawing more and more interest: SAP Services calls it a selective data transition.

Most companies that switch to SAP S/4HANA choose one of the two standard methods. As market researchers at Luenendonk discovered last year, more than 80 percent maintain their existing process and IT architecture and corresponding modifications (brownfield approach) or choose to leave their historical data behind and make fundamental changes to their processes (greenfield approach).

That said, a third option has grown increasingly intriguing – the selective data transition.

“Companies are recognizing the advantages of pinpointing the historical data, organizational units, and processes they want to keep while modifying and innovating other specific workflows and structures,” reports Alexander Rombach, director of Consulting Practices at SAP Services. 

Selective Data Transition: Mapping New Business Models While Retaining Proven Practices

There’s an entire spectrum of individual approaches in between the two standard models. While a system conversion takes place on the basis of established data and processes, a new implementation uses fresh or migrated data and the processes provided by SAP S/4HANA – along with innovations like fast close, finance ledger solutions, and new features supported by artificial intelligence (AI).

“The greenfield or brownfield approach isn’t always a good fit for a given customer’s requirements,” Gregor Staubach, an SAP software architect who oversees selective data transitions on the customer side, points out. He cites a number of examples of why access to historical data might be necessary or required by law, including in connection with product returns, complaints, or warranty claims, or with the documentation obligations common in the aviation and defense industries.

Choosing Between Shell Conversion and Building from Scratch

Companies can therefore tailor the third option to their particular strategic goals. Those that want to gain flexibility and implement new business models will likely tend toward a fresh implementation. Meanwhile, a system conversion is probably the better fit for organizations that prefer to stick with their existing business models and processes. In order to take individual preferences into account, the selective data transition approach includes several different levels. Here, SAP Services uses the terms “shell conversion” and “building from scratch.”

While a shell conversion largely preserves a customer’s particular processes and structures and only comes up with new developments in specific cases, the build-from-scratch approach focuses on redesigning processes and retaining those from the past only when they fit right into the new template at hand. In the real world of business, it is common for companies to carry over around two-thirds of their processes and data while seeking to start fresh with the rest.

“That’s when it’s faster and more cost-effective to go with a selective data transition instead of a full greenfield implementation,” Rombach says.

Typical Scenarios for a Selective Data Transfer

The software architects at SAP Services face an array of common situations in this regard. These include maintaining certain company codes or requirements, converting charts of accounts, and needing to integrate a company in short order. For SAP Services experts in particular, the following areas are important:

  • Redesigning financial accounting
    Companies want transparent business figures, and some of those making the transition to SAP S/4HANA decide to limit their efforts to implementing a modern financial system based on the standard suite. The goal here is to apply the corresponding finance template, which might include the cloud version as well, while preserving all other processes and histories in areas like supply chain and logistics. A redesign project in accounting and controlling could lead to a uniform, ledger-based chart of accounts, for example, or simplified controlling structures and hierarchies.
  • Cleaning up after acquisitions and split-offs
    Many companies have a system landscape that has grown and evolved over the years. Other companies have been bought and sold, integrated new enterprise resource planning (ERP) systems, expanded or adjusted processes, and implemented other systems in parallel. In these cases, it makes sense to identify company codes and data that are no longer needed and exclude them from an upcoming migration to SAP S/4HANA in order to start with a new system that’s streamlined and up to date.
  • Multitasking during preparatory projects
    Those who first need to harmonize systems and start preliminary projects for SAP S/4HANA may end up committing many employees to these activities and losing time they need to move to their new suite. Here, carrying out selective data transition projects at the same time in targeted areas – to modernize a financial system or pare down the data to be migrated, for example – can be a good idea. Preliminary transformation projects involving things like financial harmonization or modernization can, in other words, be completed in the same step while transitioning to SAP S/4HANA.
  • Bringing IT landscape architecture up to speed
    There’s no shortage of companies with landscapes that have grown over time and no longer provide the best possible support for their business models and strategies. In such cases, establishing split architectures during a selective data transition is one way to move on. Doing so involves integrating financial and logistics systems into a central instance of SAP S/4HANA. Consolidating several systems – for specific regions, for instance – into a single SAP S/4HANA installation can also be a very valuable step. “It’s an efficient and streamlined method that combines with the innovations of SAP S/4HANA to bring dynamic growth to a company’s business,” Rombach explains.
  • Utilizing data from acquired companies
    After purchasing another organization, a company has to import its IT into a new infrastructure. At the same time, however, access to business-critical data – figures and trends from years past, which the company’s controlling department will continue to need, for example – should still be ensured after the systems in question have been merged.

Selective Data Transitions: A Catalyst for SAP S/4HANA

In the experience of SAP Services, the ability to use the innovations SAP S/4HANA offers is not enough of an incentive for many companies to make the move.

“When it presents the opportunity to update their architecture, put it in order, and perhaps even harmonize it to provide optimal support to their new business model, however, a selective data transition can act as a catalyst for SAP S/4HANA,” Rombach says.

He compares the transition to renovating a house: There’s no need to rebuild everything from the ground up if you can just replace the heating, but what if that’s not the only issue?

The third option might include new windows, some roof insulation, and maybe even a new addition. “It’s the entire renovation and modernization effort that needs to be consistent and worthwhile,” Rombach continues.

Keep What Fits and Focus On Implementing Specific New Components

For a good example of what the third option might look like in IT, look no further than a paper producer that was already using SAP S/4HANA, but then purchased a company that hadn’t yet made the transition.

“We integrated SAP ERP into the system they were running,” recalls Thorsten Spihlmann, another solution architect at SAP Services. “In another project, we modernized the landscape and proceeded with an incremental rollout, which is also typical of selective data transitions.”

As a positive side effect, the customer is now using only around 10 percent of the old vendor data from its previous heterogeneous system. In this case, the third option proved to be the right one.

Selecting Historical Data for the Transition

A selective data transition is meant to strike an ideal balance and enable companies to choose what historical data and processes they want to keep going forward.

“It’s often the most cost-effective way for companies to switch to SAP S/4HANA, particularly when they plan to retain around two-thirds of their established processes,” Rombach reveals. In other words, it’s about keeping what fits and focusing on implementing specific new components.

The notion that this approach will be a popular one in the future is also born out of Lünendonk’s research. According to its analysts, most companies see “integrating local IT systems into SAP S/4HANA” as their biggest challenge – and it’s one that will probably continue to be very specific to their situation.

Learn more about the possibilities the selective data transition approach offers in moving to SAP S/4HANA during the webinar “Lean Selective Data Transition for SAP S/4HANA.” Register for this webinar and explore the concept behind selective data transitions and the prerequisites for a lean selective data transition.