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Adapting to the SAP Clean Core with your S/4HANA Transformation

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  • ERP implementations have traditionally relied on customizations. That was, in fact, one of SAPs primary selling points for ECC. You buy their powerful ERP platform and then customize it, when necessary, to your specific business needs. Over the past decades, organizations have spent significant resources building out custom SAP functionality, processes, and even applications to differentiate themselves from their competitors and achieve competitive advantage.  

    Now, SAP has about-faced. Adopting standard processes and keeping the SAP core clean enables smoother upgrades, improves security, reduces maintenance, and ensures a seamless transition to the next generations of SAP S/4HANA and the out-of-the-box innovations they provide.  

    Businesses moving to SAP S/4HANA are facing significant decisions. Do you keep your custom processes and move them to S/4HANA in a Brownfield migration? Or do you adopt the “Clean Core” approach and take the opportunity to reengineer your business processes, sticking to standard as much as possible and immediately benefiting from S/4HANA advantages.  

    We spoke to Stuart Bierig, Director of Pre-Sales at Panaya, our technology partner, and Kjell Nordstein, our Delivery Director in the Nordics to discuss this.  

    Sometimes you need custom code  

    In an ideal world, you’d be able to go fully Brownfield or fully Greenfield. You could choose to either bring all of your old code with you or completely re-engineer your processes to leverage as much standard code as possible. In practice, that rarely works. Realistically, you’ll often only be able to migrate about 80% of your existing custom code. And SAP S/4HANA has introduced many changes so that certain business processes may not run the same way as they did in ECC. 

    “If you’re moving to S/4HANA, you have to understand what custom code you actually have, and how those processes map to SAP Standard processes. That necessitates assessing whether your custom code is necessary in S/4 or not – going through that process of evaluating al the code you have and seeing if functions are already in standard is difficult” – Kjell Nordstein 

    Greenfield provides organizations with a clean slate to re-engineer what they want to change and standardize where they can. To plan this approach, you have to truly understand the related risk factors before you get started. If you have to invest resources to fix something, the sooner you know, the less it costs. If you’ve made the decision to go Greenfield, you might quickly find that not all of your current processes are easily replaceable. An evaluation could help you to identify risk areas, and to identify which existing processes won’t work as-is in S/4HANA– before you run into the problem during your implementation.  

    “If you choose Greenfield, you’re using it as a catalyst for strategic change, but you will still want to standardize as much of your current business processes as possible. We will proactively provide a deeper and broader analysis of your planned S/4 migration to highlight those risk areas ahead of time. Then, you won’t be surprised when something you thought should work suddenly doesn’t.” Stuart Bierig 

    Custom code is difficult to implement  

    Brownfield transformations are faster, simpler, and more predictable because you don’t have to reengineer the business as part of the transformation. Of course, that could be a missed business opportunity. However, it could also be an opportunity to reduce conversion risks by first moving the infrastructure and operations over to S/4 and then changing business processes as a second step. Even so, it’s important to step back and assess whether you actually need all of your customizations. As Stuart Bierig says, “you might end up going greener than you had initially planned”.  

    “Custom code is expensive, every time you do an upgrade, you have to look into it and make sure it still works, there are a lot of extra costs – that’s a major challenge. If tables have changed, you can use our software partners to repair it or map it to S/4 – but you’ll also have to decide if you actually need the code, and you have to assess it and that requires work. Replacing that code with something standardized, which won’t break your ERP every time there’s an update, will greatly reduce those costs – which is what SAP is trying with the clean core.”  – Kjell Nordstein 

    Even if you use SAP’s Brownfield conversion tools, SAP suggests that you will need 4+ sandbox iterations to get everything right. Every time you run the conversion; you may have things that break. In many cases, you’ll have to fix it in ECC rather than in the sandbox and run the conversion again.  

    “Our system analysis highlights risk factors early, allowing you to see which components are likely to cause problems, what’s deprecated, what’s not supported, etc. We aggregate analysis results from SAP’s tools like the Simplification Item List, ABAP Test Cockpit, SAP Code Inspector, etc. We deliver an accelerated project plan, with downscoping and prioritization based on component usage and likelihood of failure. For example, it’s all well and good that SAP says you have to correct X item of custom code, but if you haven’t used them in over a year, you can safely downscope the tasks and save that much time and cost.”  Stuart Bierig 

    A best-of-both-world’s approach  

    Some companies will convert to S/4HANA, taking as much of their custom code as possible with them.  Others will leverage as much standardized capabilities as possible and customize only what needs to be customized (and what key stakeholders want to be customized). In either case, it’s important to assess risks, prioritize what you have, and identify issues early – when they’re still cost-effective to remediate. The more intelligence you have about risk factors, the faster and cheaper your project will be.  

    If you’re going for a Greenfield approach, you’ll want know what needs to re-engineered before planning what the business wants to re-engineer. On the other hand, if you’re going Brownfield, it’s important to identify what’s deprecated, what isn’t supported, and whether or not your impacted components are still relevant to the business.  

    “I recommend really taking the time to assess processes, especially customizations and code. If you have processes you aren’t using, that have little impact, or that cost more than they deliver, now is the time to reengineer them or replace them with a standardized process”. – Kjell Nordstein 

     

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