Top challenges SAP users face while migrating to S/4 HANA

Regardless of how advanced your business system is, every software product has a limited lifespan and will eventually become outdated. Whether due to obsolete technology, shifting business trends, evolving needs, or application changes, upgrading, or migrating your current business software by transferring its essential features to new technology will be necessary.

This blog post will list the top technical, operational, and business challenges SAP users face while migrating to SAP S/4 HANA, focusing on data migration issues.

The SAP mandate: Migrate to SAP S/4 HANA by 2027 

Organizations utilizing SAP’s enterprise resource planning (SAP ERP) system know the upcoming requirement to migrate to either SAP HANA or SAP S/4 HANA by 2027. SAP has announced its intention to end support for its legacy ERP applications on the SAP NetWeaver platform by that time. As part of its efforts to promote the adoption of SAP HANA and SAP S/4 HANA, SAP will also discontinue support for other databases, including Oracle, DB2, Microsoft SQL, and MaxDB.

SAP S/4 HANA Overview 

SAP HANA is a game-changing platform that revolutionizes how businesses utilize data for decision-making. It provides a comprehensive solution with an in-memory, column-oriented, relational database management system. This platform accelerates data processing through in-memory storage, enabling real-time analysis, insights, and actions. SAP HANA simplifies IT complexity and facilitates faster data aggregation by adopting a column-wise storage approach instead of the previous row-oriented storage.

SAP HANA can acquire and integrate real-time data from various sources, including the Internet of Things (IoT). It allows users to store and retrieve data as needed. With advanced analytics and ETL capabilities, SAP HANA can process text, graph, and series data, enhancing decision-making abilities. It supports real-time analysis of live data, reduces data redundancy, minimizes hardware and IT operations, and provides a secure modern data platform that transforms business data management.

SAP HANA improves the total cost of ownership for organizations by offering a secure environment for managing large volumes of structured and unstructured data assets. It enables the creation of innovative applications and provides next-generation hybrid transactional and analytical processing to support business intelligence. Organizations can choose their preferred storage option, including hybrid and multi-cloud, to leverage the features, benefits, and capabilities of SAP HANA.

After the 2027 deadline, SAP will cease its support for ECC. Extended support (from 2028 to the end of 2030) will be available at 2% of the existing maintenance cost. While the 2% premium may not be significant individually, it can accumulate over time and divert investments from other areas. Customers who choose not to extend their maintenance support will be transitioned to a customer-specific maintenance model. Both options would result in increased costs for maintaining an outdated system.

SAP has shifted its focus away from ECC and its functionalities, allocating 20% of its revenue to S/4 HANA research and development to enhance functionality. SAP intends to continue these investments and urges customers to transition to S/4 HANA, indirectly signaling that they should be prepared to negotiate ECC maintenance costs.

SAP S/4 HANA migration challenges

Let’s discuss the technical, operational, and business challenges organizations face while migrating to SAP S/4 HANA.

Technical challenges faced while migrating to SAP S/4 HANA

Data migration and integration are arguably the most critical challenges when migrating to a new system. Here we have discussed the technical challenges when migrating to SAP S/4 HANA.

• Data migration: Ensuring the seamless transfer of data from legacy systems to a new platform is crucial for businesses. Minimizing data loss and maintaining consistency throughout the migration process is essential. Data integration challenges and the potential for downtime and disruptions are expected. Therefore, conducting data migration testing and ETL testing becomes imperative. Data migration testing validates the functional and non-functional aspects of the platform after migration. In contrast, ETL testing verifies the data model, metadata, data types, formats, field mapping, referential integrity, surrogate keys, ETL logic, error logic, and boundary conditions.
• Master data cleansing: Master data contains valuable and agreed-upon information shared across an organization and requires cleansing before transitioning to SAP HANA. This process involves validating the data for accuracy and eliminating duplicate records. Cleansing master data ensures sound data quality and enforces healthy master data governance policies and processes.
• Challenges with customized fields: ECC and other SAP legacy applications allow for custom fields with critical business information. However, these custom fields may not be automatically transferable to SAP HANA. To preserve customization, migrating with custom data models and web services may be necessary. Failing to address customized fields during migration poses a risk of data loss.
• Change management for new processes: Users must adapt to new SAP S/4 HANA modules as the fields, screens, objects, and workflows differ from legacy systems. Even if they share the same names, they may function differently. This shift in processes can impact productivity, but proper change management can support the migration by facilitating a smoother transition and encouraging greater adoption of the new technology and processes.
• Custom development for SAP S/4 HANA Updates: SAP S/4 HANA is an evolving product, resulting in regular updates from SAP. This challenges companies with customized solutions, requiring ongoing documentation and development resources to ensure seamless transitions.
• S/4 HANA roles may harbor significant risks related to Critical Segregation of Duties (SoD): These can be extremely challenging to identify and rectify without proper SoD tools. Without adequate detection, the SAP system becomes susceptible to conflicts of interest at the application level, where a substantial amount of valuable data assets is stored.
• Improper configuration of the Fiori interface poses a concern: Serving as the new face of S/4 HANA, the Fiori interface grants access to both traditional and next-generation SAP applications, offering a fresh and modern user experience. However, the potential for external attacks is heightened as the Fiori interface is often utilized beyond the corporate firewall on mobile devices.
• HANA databases security: Ensuring the security of HANA databases has become a direct responsibility of SAP S/4 HANA projects, whereas, in previous versions, dedicated teams from database vendors handled this task. The design of S/4 HANA database security should align with the overall security strategy of S/4 HANA. Migrating from legacy infrastructure to SAP HANA can expose the enterprise to critical security vulnerabilities. Since ERP systems house crucial data, businesses cannot afford such vulnerabilities. Therefore, conducting a comprehensive security assessment of the application must identify vulnerabilities before they are exploited, and appropriate control measures must be developed. Additionally, businesses should diligently carry out pre-and post-implementation analyses and perform timely functional or technical upgrades to ensure the system’s integrity.
• Data Integration: Aggregating large and diverse datasets poses significant challenges. As SAP HANA collects real-time data from various sources, ensuring the cleanliness and reliability of the data becomes crucial for achieving desired business outcomes. Organizations can ensure the constant reliability, cleanliness, and validity of collected data by conducting end-to-end testing of data sources and integrators. Testing and certifying apps and data feeds for live deployment is essential before they impact analytical systems used for decision-making.
• The complexity of custom code: Implementing SAP S/4 HANA from scratch, known as a ‘Greenfield’ implementation, allows for complete process re-engineering and simplification. This approach enables organizations to define migration objects and leverage best practices for faster adoption, which may result in more business disruption. However, a system conversion is preferred when time, cost, or other factors make re-implementation unfeasible. Migrating custom code to S/4 HANA is one of the more intricate tasks during conversion. A thorough analysis should be conducted during the preparation phase of a conversion project to identify and assess the usage of custom code. This analysis determines whether the system can be converted, or re-implementation is necessary.

If there is custom code that resists modification and adaptation, a comprehensive analysis of the source system is required. This custom code may be critical to the flow of information within the organization or serve as the primary code for consolidating information. Neglecting to adopt this custom code can significantly impact the business. It is crucial to analyze these mission-critical custom functionalities before initiating conversion activities. If the existing system has been used for an extended period, it will likely have accumulated many programs or database tables. The complexity and volume of these programs may warrant a separate plan to address questions related to custom code.

Operational challenges faced while migrating to SAP S/4 HANA

Expecting technical challenges while migrating to SAP S/4 HANA is evident; some operational challenges also need consideration.

• User Interface (UI) adoption: Successful data migration to SAP S/4 HANA may encounter resistance from users accustomed to a different system. Adapting to a new user interface can be overwhelming. However, the old interface with S/4 HANA is temporarily an option until users become familiar with the new one. This approach minimizes the amount of change introduced to the organization at once.
• Business process re-engineering and changes in SAP Roles: The transition from SAP ECC to S/4 allows businesses to re-engineer their processes to varying degrees. However, this re-engineering effort will also necessitate restructuring the SAP roles involved.
• Disorganization and Confusion: Many conversion problems can be traced back to the project plan’s confusion. Those responsible for planning often fail to thoroughly detail all the sequential tasks and misjudge the time and effort required for system conversion. Consultants working on conversion projects must understand the source and target system architecture and use their experience executing conversion tools and programs like Readiness Assessment, Simplification Item Checks, and Cross Application.

Developing a comprehensive conversion plan should always be the initial step in any SAP S/4 HANA conversion project. Identifying potential problem areas ahead of time is crucial for effective risk mitigation. Conducting readiness assessments and performing pre-analysis of the source system are critical for application configuration.

• Improper and insufficient preparation of the source system: Lack of preparation often becomes apparent early in the conversion process. Enough time may not be allocated to prepare the system according to simplification and conversion guides perfectly. This oversight can lead to complications later and cause frustration within your organization if processes need to be redone and the project timeline extended. The success of a conversion project hinges on how thoroughly and carefully the source system is prepared, which is closely aligned with the level of preparation and detailed planning.
• The complexity of data transfer in the source system: Adequate preparation is crucial for successfully moving data from SAP ERP (ECC) to S/4 HANA. Transferring millions of records is a complex task that can result in data loss if mishandled. Often, the missing data remains unnoticed until a user or application requires it, only to find it unavailable. Although the data is not lost, it becomes inaccessible in the target system. Apart from extended downtime, data loss can increase your budget and adversely affect performance.
• Lack of testing and validations: Testing should be ongoing throughout the conversion project, with up to 70% of a consultant’s time dedicated to this task. Implementing new functionality as part of the conversion project is not advisable. If the goal is to retain existing functionality, comparing outputs is sufficient to determine the validity of the target S/4 HANA system. New functionality should only be implemented after the conversion activities are completed, and the target system is stable. Even when the functionality remains unchanged, factors such as hardware, operating system, or database changes can result in inconsistent output for the same functionality. These critical factors must be addressed.

Business challenges faced while migrating to SAP S/4 HANA 

Even before thinking about technical and operational challenges, there are more significant business challenges that an organization must consider when migrating to SAP S/4 HANA.

• Time required for migration: On average, the planning phase for migrating to IaaS takes 8.8 months, while the execution phase takes approximately 17.4 months. (Source: IBM)
• Costs associated with migration: The average price of migrating to SAP HANA and SAP S/4 HANA on IaaS, considering third-party consulting, is $1.5 million. Additionally, the cost of business disruption during migration amounts to a similar figure. If businesses also require migrating from a non-SAP database to SAP HANA, the average cost for that migration alone is $4.9 million. Similarly, moving from ECC to SAP S/4 HANA architecture carries a comparable cost. (Source: IBM)
• Challenges in transitioning to production with SAP S/4 HANA: Despite having a proof of concept (POC) for SAP S/4 HANA, the transition to production with the system can be complex and daunting. As a result, only 15.6% of businesses have reached the production stage with SAP S/4 HANA. (Source: IBM)
• Hybrid cloud considerations: Many businesses aim to leverage advanced open-source solutions for hybrid cloud, high availability (HA), and disaster recovery (DR), along with software-defined storage support, rather than opting for S/4 HANA Public Cloud. However, migrating to the cloud is integral to a hybrid cloud strategy and introduces additional complexities.

To Summarize: Overcoming SAP S/4 HANA migration challenges 

SAP customers are enthusiastic about harnessing the innovative capabilities of SAP HANA and SAP S/4 HANA platforms while maintaining their cloud-first approach. However, migrating SAP workloads to the cloud presents significantly greater complexities than migrating general-purpose workloads. Customers encounter various challenges during this migration, including the duration of the process, associated costs, limited availability of migration tools, integration of the SAP landscape, and the intricacies of establishing a hybrid cloud infrastructure.

When migrating to SAP S/4 HANA, the scope often extends beyond implementation, requiring additional analysis to address knowledge gaps and preserve previous functionality. The first step is to engage with a preferred partner who can assist with conducting a readiness assessment and providing recommendations for business scenarios. While conversion to S/4 HANA represents a substantial undertaking, this transformation introduces new value and functionality to the entire spectrum of business processes.