Which S/4HANA migration approach is right for my organization?

SAP will offer ongoing maintenance for ECC6 beyond 2027 – albeit at a higher cost – if a migration to S4/HANA is underway.

Let’s look at the different S/4HANA migration approaches in detail.

1. Defer S/4HANA migration and seek third-party support

SAP will discontinue support for ECC6 in 2027 so in theory, organizations can defer decision-making for a little longer. It is also possible to extend support beyond 2027 through third-party vendors, although this would become more expensive over time.

The advantages of this approach would include minimal project cost, resources, risk and time commitments, and there’d be no change to the business status quo. 

But while a 'do nothing' approach to ERP upgrades might be tempting, organizations will need to assess the level of operational risk this presents. Technology and processes would largely stay as-is, leaving organizations unable to respond to new business priorities or regulatory changes. The challenge of dealing with legacy technology would remain, and will require a solution at some point in the future. 

The challenge of dealing with legacy technology would remain and will still require a solution at some point in the future. S/4HANA migrations can be long, with common risks causing potential delays. Organizations would be wise to start their journey sooner rather than later to buy as much time as possible, especially if they want to avoid costly support and falling behind their competitors who will be taking advantage of richer functionality and more efficient infrastructure. 

2. Brownfield: a technical S/4HANA migration approach

With this option, commonly known as ‘brownfield’ implementation, the organization would focus on migrating to the latest technology standard, without considering any process transformation, and adopting the minimal level of change required to accommodate the new S/4HANA functionality and data model. Existing processes are re-implemented in S/4HANA and data is moved across. The impact on the business would be minimal, with limited downtime.

While any existing pain points would remain, the ECC6 support issue is resolved and leaves open the possibility of future changes. 

Organisations should bear in mind that this option will not be available to all and is dependent on specific circumstances. For example, some parts of an organization’s ECC estate may not have an obvious equivalent in S/4HANA, which would mean the right migration approach would require some degree of re-implementation work.  

3. S/4HANA migration with selective optimization i.e. -hybrid

This migration approach pursues the same technical benefits as a brownfield implementation but includes additional innovation goals. Existing business processes remain largely intact, with the opportunity for selective transformation at additional cost. S/4HANA go-live would be followed by incremental improvement projects, building on the new technology platform. These would be determined by business requirements and the opportunities available. 

4. Greenfield: migrating to S/4HANA with a full re-implementation

A ‘greenfield’ migration approach is broadly a wholly new implementation of S/4HANA, typically using an SAP-advocated fit-to-standard approach and minimising customization as much as possible. Existing processes are redesigned to fit best practice, which maximises the opportunity for transformation and wider business benefits. 

As always, greater ambition carries greater risk. Greenfield implementations require the business to have a high degree of ambition and buy-in. They also typically take longer to complete than brownfield, and carry a corresponding increase in required resources and cost. 

But don’t be too quick to balk at the sticker price. Organizations need to bear in mind the costs of any follow-on process optimization after a brownfield implementation. When added together, these can often result in a higher total implementation cost compared to greenfield as well as being more disruptive to the business.

5. Migrate to a new and different ERP

While not actually an S/4HANA migration approach at all, this option is often overlooked but may be worth considering.

In this scenario, instead of upgrading with SAP, an organization would implement an alternative ERP system, such as Oracle or Microsoft Dynamics, or a best-of-breed combination of applications, including choices such as Workday, Peoplesoft or Salesforce. 

It essentially allows the organization to start from scratch, which represents potential for huge business transformation benefits and a very high impact for end users. The organization would be able to shift to best-practice, standard processes and optimise for their business needs.

This option could be a roadmap more suited to their particular technology estate, for example. Other organizations may find that an alternative technology platform better meets the needs of their business.

However, organizations still need to weigh up the risks, costs, duration, and project resources required for what can be a significant change. Be mindful that there could be hidden costs too. For example, if an organization has an in-house SAP team, it will need to invest in re-skilling.

Your strategy organisational constraints will determine the right S/4HANA migration approach

S/4HANA transformations are highly specific to each individual organization and its ambitions, people, and existing technical landscape. There is no single journey that works for all. To determine the right migration approach, organizations need to consider which will suit their unique circumstances and enable the specific outcomes they want to achieve.

Always start with your overall strategy and use this to inform the change. Organizations can too easily become swept up in the ‘art of the possible’ when existing processes and data structures may already serve current and anticipated future needs. If this is the case, then a more straightforward S/4HANA upgrade may be appropriate, rather than starting from scratch. 

Your organizational constraints will also impact your plans for change. Even if your organization aspires to take advantage of all the new functionality S/4HANA offers, attempting a holistic transformation – especially in a single comprehensive program – may not be feasible. Consider the level of funding and resources which you will realistically be able to allocate to the project. 

Don’t forget to keep an eye on what your competition is doing with ERP and how they are differentiating themselves. To set appropriate transformation objectives, start with benchmarking your organization against the market leaders and determine how to maintain a competitive edge. If you can gain a good understanding over S/4HANA migration successes and struggles within your industry, and measure your organization’s maturity accordingly, you will be able to plan your S/4HANA journey and ensure it stays on track.

Assess your readiness for S/4HANA migration 

To assess your organization’s current state and the appetite for an S/4HANA migration, there are a few key questions you need to answer.