The following was originally posted by Jim Lichtenwalter on ASUG.
A successful migration to SAP S/4HANA needs to happen under the right conditions and for the right reasons. The organizations that know why they are moving and have the move mapped out as part of their business case are far more likely to achieve the value and ROI they’re aiming for.
ASUG caught up with Bimal Budhabhatti, senior manager and managing principal of enterprise applications at General Datatech (GDT), a global IT solutions provider. The company has seen some key shifts in its industry leading up to its migration to SAP S/4HANA. Throughout the conversation, Budhabhatti talked about what prompted General Datatech to implement the ERP solution, how it finished its migration ahead of schedule, and what other organizations should consider before making the jump themselves.
Jim: How has your experience been with SAP S/4HANA since General Datatech implemented the platform about six months ago?
Bimal: The market shift to cloud platforms has changed the way customers consume IT infrastructure and applications. IT spend has seen a shift from the CapEx to the OpEx model, and revenue from subscription billing is on the rise. It has impacted our revenue streams and how we engage with our customers. We aligned our business to change, and as the company transformed, we needed new capabilities to run our operations, scale, and grow.
As we built the IT road map to support our business transformation, we learned that new IT investments on our current ERP platform would have had a high TCO. It also would have been difficult for us to integrate new generations of on-premise and cloud applications.
Since the upgrade to SAP S/4HANA, we have been able to successfully deliver several strategic initiatives such as the implementation of SAP C/4HANA Sales Cloud and a rollout of SAP S/4HANA to General Datatech’s global business entities and other group of companies. Overall, from the capabilities perspective, we are now on a modern ERP platform to deliver next-generation integrated solutions.
Jim: How you get executive buy-in for this move? What was said and done to convince your leadership to approve the necessary funds and hours associated with implementing SAP S/4HANA?
Bimal: The decision to upgrade to SAP S/4HANA was a natural choice for us.
Delivering new capabilities on the current ERP platform required an enhancement pack (EhP) level upgrade and an implementation of SAP Multiresource Scheduling 10. We also knew implementing new ERP modules, such as Asset Management, on the existing SAP ECC system would make our future migration to SAP S/4HANA a lot complex.
Software vendors are releasing new features and functions now increasingly in cloud platforms, both SAP and non-SAP. Implementing those would require us to build an integration with our ERP system. SAP delivers out-of-box integration between SAP S/4HANA and its new generation of cloud applications.
We also looked into innovations to automate business processes to scale and grow our business while keeping operating costs lower, such as artificial intelligence, machine learning, robotic process automation (RPA), and web-based interfaces that run on any device. It increasingly became clear to us that we should first build a strong ERP foundation before starting to work on other IT investments.
Jim: General Datatech used a brownfield implementation. Why did you decide to take that approach? Why was that best for General Datatech and its technology environment?
Bimal: We realized, being on a relatively new release of ERP, that the tighter scope of upgrade will minimize change management and help reduce the timeline to delivery. Therefore, we decided to focus on upgrading the platform first.
Other considerations were being able to retain customers and transactions to build and deliver real-time analytics on SAP S/4HANA without possibly needing a business warehouse solution in our landscape. Having done the SAP S/4HANA upgrade successfully, I feel that it was the right decision for our situation and needs.
Jim: Did you encounter any roadblocks during your migration? And what specifically did you do to overcome them?
Bimal: Absolutely. As part of the SAP S/4HANA migration, we chose to move to the embedded SAP EWM that comes with SAP S/4HANA from an add-on EWM. We realized that SAP does not have a path to migrate from an add-on EWM to the embedded EWM. That meant we had to uninstall the EWM from our SAP Instance and reimplement it as an embedded module. That resulted in a significant increase in project scope, taking it from a technical upgrade to a reimplementation of the embedded EWM.
Jim: How much testing did you perform during this process, and what types of testing did you conduct?
Bimal: A brownfield implementation is all about testing existing solutions and processes thoroughly, so we did a significant amount of testing. We did not have an automated testing platform.
We did two things. First, we prepared a comprehensive test plan and ramped up an offshore testing team in the first four weeks of the project. We trained them thoroughly in all of our core end-to-end processes in the first four weeks of the project, which gave us the ability to complete multiple cycles of testing, allowing the on-site project team to primarily focus on the SAP S/4HANA upgrade.
Second, we got an agreement from stakeholders to engage business users in system validation early. Business users begin testing the system immediately after the first successful SAP S/4HANA upgrade cycle in the sandbox. That helped us resolve issues, defects, and bugs right from the development cycle and earn the confidence of our business users in the performance, data integrity, and data quality of the upgraded system.
Jim: What are some of the most significant effects SAP S/4HANA has had on your business?
Bimal: We are now on a platform that is not outdated and does not carry the risk of going out of support. The platform has simplified data models and business processes, built-in innovation, and better integration capabilities with the new generation of cloud platforms.
After our SAP S/4HANA upgrade, we rolled out SAP C/4HANA Sales Cloud. We were able to integrate the customer master between the SAP S/4HANA and SAP C4C systems to simplify customer master creation and maintenance. We are now getting ready to deliver deep integration between SAP C4C and SAP S/4HANA that includes different types of master data and transactional data using the integration content delivered by SAP. We also have started exploring SAP Fiori applications to deliver a better user experience.
Jim: As a company working in the high-tech field, how has SAP S/4HANA addressed General Datatech’s specific needs, and how has it helped you run your business overall?
Bimal: General Datatech has gone through a significant business transformation over the last four years to align to the market shift. We reorganized our legal entities and completed two acquisitions. As the revenue stream is increasingly moving from CapEx to OpEx, our sales team structures and commission models have changed, and our number of employees has nearly doubled. We have added new capabilities in our services portfolios, such as staffing, DevOps, hybrid cloud, cloud migrations, and private cloud hosting.
New business processes required new capabilities to support recurring billing and subscription management, asset management, resource management, resource scheduling, contracts life cycle management, a new CRM system that is integrated to our back-end ERP system, and analytics that can run across platforms. Since the upgrade, General Datatech has made IT investments into several next-generation cloud products to meet our business needs.
With our move to SAP S/4HANA, we are on the most modern ERP platform that comes with out-of-the-box integration between SAP S/4HANA and SAP cloud applications. Now we are in a strong position to roll out new features and capabilities at an accelerated pace. The move to SAP S/4HANA has prepared us for the new economy.
Jim: Did you complete your transition on schedule with your timeline?
Bimal: Yes, we did. We completed the upgrade one week ahead of schedule.
Jim: What factors led you to finish ahead of schedule?
Bimal: First and foremost, the commitment from the leaders and stakeholders to complete the project on time was incredibly helpful. Our SAP S/4HANA upgrade was the most important project for the entire organization while it ran. Resources were aligned to make it successful.
The second factor was General Datatech’s in-house SAP team. We maintain a strong SAP functional and technical team that is deeply familiar with our SAP system and current solutions. Their intimate knowledge helped reduce the ramp-up time for partner resources.
The third factor was the phased project delivery. We broke down the project into three distinct phases. In first phase, we brought our SAP system to an SAP S/4HANA-ready state by completing prerequisites both for our infrastructure and ERP system. We performed an operating system upgrade, HANA database version upgrade, and SAP support pack upgrade. In phase two, we converted our customer-vendor data into business partners. In phase three, our ECC system was converted to SAP S/4HANA. Executing the project in three phases and running them in parallel across system landscapes required some expert project management skills.
Last, and equally important, was our thorough planning for system testing and the early participation of business users in SAP S/4HANA system validation. That helped us make sure the upgraded system was working according to their business needs and all the functionalities worked as expected.
Jim: How long did it take you to get to a steady-state of operations post-implementation? Was that timeline shorter or longer than you initially expected?
Bimal: We completed the upgrade in 16 weeks, one week ahead of schedule and with two weeks of hyper-care. I’m happy to say that there was no disruption to business during or after the upgrade. Our CEO, JW Roberts, described our upgrade project as a nonevent in terms of business continuity. Overall, the transition has been smooth for us.
Jim: What advice would you give your peers in your industry who are either thinking about making the transition to SAP S/4HANA or have decided to make that transition and are about to start implementing it?
Bimal: The SAP S/4HANA upgrade journey will be different for each customer based on their starting points and key factors such as the current SAP version they are on, the scope of the implementation, and the amount of customizations in their ERP system. There are a few initial decisions to be made. First, you need to decide whether to continue with an on-premise or cloud implementation. You may need to look at the possibility of consolidating multiple systems. Then you need to evaluate two options, brownfield and greenfield implementation. If you were to select a brownfield approach, identify the applications and the infrastructure upgrade prerequisites and complete them to bring your system into an SAP S/4HANA upgrade-ready state.
The most valuable insight I could share for a brownfield upgrade is to use tools available from SAP for free to evaluate your current ERP system and identify prerequisites to bring it into an SAP S/4HANA-ready state. Begin working on them now. You don’t have to wait for the SAP S/4HANA conversion project to get started on your SAP S/4HANA upgrade prerequisites. Configure SAP Solution Manager at least six months before your upgrade to capture your usage of runtime execution statistics of custom code, which will help you identify any unused custom code.
Also, consider a phased approach. You could split SAP S/4HANA prerequisites and the Customer Vendor Integration (CVI) migration between separate phases and work on them ahead of time, while still deciding on your SAP S/4HANA upgrade scope and approach.
You should build a comprehensive test plan and prepare for multiple rounds of system testing. Decide whether you need to add more testing resources, and ramp them up into core processes early in the project. Engage your stakeholders in system validation, if it is feasible.
Finally, if your current business processes do not significantly change due to an SAP S/4HANA upgrade, consider doing a core platform upgrade first. Make the rolling out of new features and innovations part of future phases of your SAP S/4HANA upgrade. Getting stuck on the implementation of a new feature or functionality for varied reasons can delay the whole project and significantly increase the cost.