The 2025 deadline for S/4HANA transition is closer than it seems
If you’re using SAP ECC then you’re also no doubt aware that SAP will continue to support the product (at least the more recent versions anyway) until 2025. So, given that as of the time of writing this is over five years away, why is everyone making such a fuss about getting started with S/4HANA migration projects so quickly?
Well, there are several reasons that five years might not actually be as comfortably far in the future as you might imagine…
SAP migrations can take a long time. Irrelevant of whether it is SAP, or another product, an ERP system is, by its very nature, going to be heavily intertwined within your existing business processes as well as any other IT systems and networks you might have to help run your business. Upgrading or migrating such an integral part of your business is going to take a lot of time. Although every system is different, an average of 7 – 12 months is the rough indication from the market as to time required to complete a migration project. The larger or more complex/customized systems are, of course, going to take longer and if you have not already upgraded to one of the more recent SAP releases this will also add to the length of time needed to move to S/4.
2. Project scope
Many companies take the opportunity to perform any number of additional tasks during a major project such as an SAP migration. This could be a decision to consolidate systems, business processes or even re-engineering from the ground up. Following the theory that if you’re going to engage in such a fundamental undertaking, then taking advantage of the unavoidable cost and disruption to address other underlying concerns/issues/topics makes sense. Although it is highly recommended to avoid over-complicating such an already complicated project wherever possible, it is important to consider this aspect when putting timelines together. If you’re going to want to achieve more than ‘just’ a migration, it will naturally take longer.
3. Data analysis/reduction
Since HANA is an in-memory database system it is inherently costly to have large data volumes stored. Many companies take the opportunity of an S/4 migration to rationalize their data storage needs. In almost all cases there is data in any current ECC/BW system which does not need to be migrated to HANA but perhaps only kept for irregular use or regulatory reasons. If you have a large quantity of data it is highly advisable to engage in a selective data migration – this year, SAP created a working group to help customers with exactly this type of scenario. While many companies, including Datavard, have products designed specifically to help identify and offload rarely used data, doing this after migrating to HANA will mean you will have had to invest in an over-specced system in the first place which will increase your costs substantially. In this case a selective data migration is the most efficient approach, but you need to be aware this could mean your overall project timeline is longer than the average migration, especially if there is a large volume of data that needs to be analyzed.
This is more of a business concern than a technical concern but you need to be aware that SAP migration projects by their nature are lengthy and therefore costly. If these are not already being entered into corporate budgeting exercises for the upcoming years then it will become difficult to finance a migration project in time for the 2025 deadline, especially considering the costs are only likely to go up (see next point).
SAP boasts almost half a million corporate customers globally (corporate fact sheet dated July 2019) and although not all of these customers use the SAP ERP product, many do. The same fact sheet indicates that at the time of writing there are only approximately 12k licensed S/4HANA customers. Even at the lowest estimates of the global SAP ERP customer base of around 250k, that’s a huge number of migrations that are going to need to happen between now and 2025. Not to mention the other SAP customers (e.g. BW) who might want to move to S/4 or BW/4. An SAP sponsored IDC study from April 2019 indicated that 54% of ERP customers are planning to migrate to S/4 in the next three years and Gartner is expecting a ‘tsunami’ of migration projects to come by 2023 – there are simply not going to be enough people to get all the migrations done. Not only is it important to start planning and executing sooner rather than later in order to secure the manpower to complete such a major project, it also does not take a crystal ball to foresee consultant rates increasing substantially along with demand the closer we get to 2025 (a Tech Salary report by Dice for the US indicated that the already comparatively high HANA related salaries grew 3.7% between 2017 and 2018).
So, there are five reasons why it is important to look at migrating to S/4 sooner rather than later, despite having more than five years left before you are forced to. Thankfully there are companies out there who have your business interests and your data as primary focus and are ready to help analyze, discuss and implement a migration strategy that works for you to ensure the best possible results.
We are part of the SAP working group for S/4HANA transitions. If you would like to learn more about our selective approach to migrations, fill in this form to download our whitepaper: