Set up to deliver: realizing the full value from your S/4HANA investment

Migration from SAP ECC6 to the new S/4HANA can typically cost from £5 million up to more than £100 million depending on your ambition and appetite for business transformation. With so much investment at stake, how can you maximize the payback?

The move to SAP S/4HANA is an opportunity to deliver key strategic objectives and implement industry best practice processes right across your operations. But the upfront costs for this kind of ‘greenfield’ transformation will be significant. To give some indication, the migration spending for an $18 billion annual turnover global corporation we’re working with is likely to be around $700 million. Even less ambitious programs targeting selective optimization in areas such as procurement or finance could run up a migration bill of £30 million or more. 

Given the costs, you’ll want to deliver your business case and realise a return on investment. Key questions include how can we develop a deliverable and effective solution design? And that in turn demands the right program team and capabilities in-house, along with the ability to procure, manage and incentivize the program partners you’ll need along the way. But success doesn’t just depend on the program delivery team. Experience of previous enterprise resource planning (ERP) migration underlines the vital importance of organizational buy-in right through delivery and beyond.

As ERP consultants, we have learned much about creating value from ERP program delivery, both on S/4HANA and previous migrations. Five priorities stand out: 

1. Map SAP S/4HANA benefits to strategic objectives and value creation 

As we outlined in a previous article, every part of the migration should reflect your ambition for change. But there will inevitably be constraints on resources – people and investment. So it’s important to work with business teams to define what good looks like and then identify and prioritise the biggest prizes that you would want to achieve. 

Some of the priorities will be directly deliverable through S/4HANA implementation – cutting order fulfilment or invoicing time, for example. But others are indirect, such as using S/4HANA migration as an opportunity to improve the timeliness, completeness and correctness of the data within your business and its value chain, enabling better insights and decision-making

2. Put your best people in charge of S/4HANA delivery

It’s clearly important to choose the right systems implementation partners and functional specialists to support your program. But it’s equally important to have the right people defining the priorities, designing the solutions and leading the workstreams internally.

Given the scale of the investment, benefits to realize and risks if you don’t, you would want to second your best people to plan and manage S/4HANA program execution, even if this requires some temporary backfilling in their usual roles. 

Similarly, the better the talent you hire and more effective the upskilling of existing employees, the more return you can generate from your S/4HANA investment. 

An effective approach is to assign a single individual to ‘own’ the delivery of specific benefits, while developing a plan to hand over to business-as-usual once the gains are bedded in. 

3. Define your S/4HANA KPIs

Identifying the value levers for realizing your return on investment in S/4HANA and creating key performance indicators (KPIs) to measure delivery will help you to track progress and intervene where necessary. Examples might include how much less time you’re spending on invoicing compared to your target.

The feedback loop from these value levers and KPIs will help to boost organizational buy-in. Demonstrating and communicating early gains can in turn help build support and momentum for further S/4HANA roll-out and deployment.

In addition to identifying the most relevant value levers and KPIs, it’s important to define the data required, measurement methodology and materiality to track progress.

4. Take an outcomes-led approach

As you move through implementation and into embedding and value realization, it’s not only important to articulate the benefits through KPIs, but also strategic outcomes.

SAP S/4HANA is an opportunity to tackle pain points and boost capabilities. Being clear about what these outcomes are and when they will be delivered is one of the keys to securing support from business stakeholders and leadership. 

Everything that counts can’t always be counted. An important part of this outcome-led approach is being able to articulate and manage the qualitative and non-financial benefits of moving to S/4HANA in areas ranging from faster and more effective analytics to reduced operational risk from clearing away legacy systems.

5. Make it personal 

To secure business buy-in and mobilization, your S/4HANA migration ultimately needs to answer the question: “what’s in it for me, personally?” The possibilities range from time freed up to focus on work people really enjoy through to higher bonuses from faster order realization and customer experience. 

Persona analysis can help you to identify, articulate and communicate particular benefits that would appeal to different sections of your workforce.

And if one member of the team is won over to S/4HANA, they can start spreading the word to colleagues – the best mobilizers for S/4HANA implementation and process optimization are ‘champions’ within operational teams.

Clearly, the stakes are high when looking to migrate to S/4HANA or other ERP platforms, following the phasing out of ECC6 support. However, obtaining business value is possible when careful consideration of desired outcomes is allowed upfront and those outcomes are placed at the heart of decision-making and communications.