2020 taught IT professionals that the near future will be mobile, cloud-based, and digitally transformed.
Or will he do it?
While there is ample evidence to suggest that some organizations have accelerated digital transformation projects in 2020 to deal with the fallout from the global pandemic, others have slowed down transformation work at a breakneck pace due to a lack of of certainty.
Since the introduction of SAP S / 4HANA in 2015, SAP customers know they will one day have to leave SAP ECC. Until SAP extended its support deadline for ECC a year ago from 2025 to 2027, that day was important.
If you are a current ECC customer, you might think you have more time to wait. I suggest you do not do it. In my opinion, you will need to make one of three choices in 2021:
- Sit well with ECC for now.
- Make plans – if not take action – to migrate to S / 4HANA.
- Consider options, including SAP alternatives.
Here’s a closer look at the realities of each option and why I think you’ll need to make a decision sooner rather than later.
Stay on ECC
Despite SAP’s messaging, conversion programs and migration tools, a significant portion of the SAP installed base remains firmly rooted in ECC. However, at the start of 2021, the number of S / 4HANA subscribers was around 16,000.
From a certain point of view, it is perfectly understandable that some customers are delaying in making the decision to migrate. Many have made significant investments in their existing ERP software. In addition, they were told at the time of purchase that their investments would provide them with “a version of the truth.” They were told that SAP ECC would be a single digital system that would provide accurate information on operations, including sales, purchasing, manufacturing, distribution, service, quality, and accounting.
No one would give up on this if they didn’t have to, and companies that primarily focus on processes within their own four walls don’t have to. They can continue to use SAP ECC for now. In other words, they can walk on water safely.
However, if your company is dealing with a significant number of external suppliers, contractors, business partners and customers, there are many areas that you need to take into account. For example, automakers are going through their biggest transition in a hundred years due to rapid advances in battery and autonomous vehicle technology. Retailers are massively reorganizing to offer omnichannel experiences. Healthcare providers are dealing with more drugs, regulations and customers than ever before.
Workers in each of these areas need greater visibility into product inventory, pricing, sales and compliance, and similar changes are underway for millions of people working in other industries. . The world has become smaller, faster and more integrated thanks to Zoom, cloud hyperscalers and applications like SAP Cloud software. Business leaders everywhere need to define strategies that reflect business trends and advancements that weren’t there when SAP ECC was first designed.
Yes, ECC is still strong, functional and able to manage the business within the four walls of the clients. But it’s not optimized to take advantage of the new realities that millions of us face in 2021.
Go ahead with a conversion
Today’s businesses are doing their best to manage their investments in uncertain times, but the world continues to change. Having a competitive advantage leads to lots of income opportunities.
Consider the other tradeoffs that ECC customers make: For most of them, custom code plays a role in their SAP landscape. Over time, the value of custom code erodes as systems, tools, and standards change. There is also the ongoing cost of maintaining old technology that offers little value.
Other considerations for ECC customers include third-party applications and interfaces. Today, many companies use third-party applications such as Vertex or specialized interfaces for shipping. Others depend on custom EDI platforms. The developers of these technologies are constantly updating their software in order to gain competitive advantages and new sales opportunities. In some cases, the updates are very convincing.
Staying in place limits your ability to take advantage of new features and capabilities. Take operational reports. Although ECC is good enough for operational reporting, it has not been optimized for business analysis. In contrast, S / 4HANA provides integrated analytics and access to new tools. It also adapts to Fiori and other interface options that offer a real change in functionality.
If you are one of those struggling with a conversion plan, it is worth considering a new option available from SAP called SAP RISE. SAP RISE unites S / 4HANA and advanced technologies into a single cloud offering. You can realize the value of their investment sooner with SAP RISE, with projections of up to 20% reduction in total cost of ownership over five years for the SAP S / 4HANA Cloud Private Edition compared to a plus ERP deployment. traditional.
Plus, you don’t need to move to the cloud when converting from ECC to S / 4HANA if you have hardware in your data center capable of supporting the application. However, most customers migrate to the cloud at the same time to save money and reduce organizational stress.
Considering how quickly economic conditions and industry dynamics change, conversion can also protect your organization from competitive challenges and business obsolescence. As the saying goes, if you are not a leader in your field, you could soon be left behind.
Look for alternatives
A third option you might want to consider in 2021 is completely swap platforms.
Each SAP ECC customer will need to manage costs and change before moving to another platform.
Sticking to SAP usually gives you a lower initial conversion cost. You can save on maintenance costs if you use SAP HANA as the underlying database rather than using Oracle database technology.
However, a base maintenance cost is actually cheaper when you use Microsoft SQL instead of the HANA database. Obviously, this is a questionable issue if you upgrade to S / 4HANA, which requires the use of SAP’s HANA database.
You also need to consider managing organizational change. The move to S / 4HANA may require some minor changes to existing processes, but a global change in an organization’s ERP application can have a significant impact.
Before any move, you must consider the total impact on your organization. You need to think about your existing business processes that tie into existing ECC capabilities and limitations, your sunk investments in models, best practices, and talent.
Ask yourself the following questions:
- How much will it cost to retrain our employees on a new software platform?
- How many business processes will need to be redone to conform or comply with new software standards or limitations?
- How many of our suppliers, business partners and customers are using the new platform?
- Will I have the required level of support from internal constituents for a successful major platform change?
- Will a move provide a real competitive advantage and how long will it take to achieve that advantage?
If the answers to these questions are not clear, ask yourself why you are considering a platform change.
If you still believe that a change is in the best interest of your organization, then do your homework and fully assess other applications against S / 4HANA improvements. These enhancements include an open architecture, familiar and powerful APIs, and a thriving partner ecosystem. S / 4HANA also has a proven track record, vertical market expertise, an understandable and realistic product roadmap, and a successful history of acquisitions and alliances.
Something else to keep in mind: you need to choose a partner with a commitment to diversity, inclusion and economic success. Today, these qualities matter more than ever.
Why should you think long term
I started my career in the era of the mainframe, I experienced the client-server phenomenon and I am now taking advantage of the great migration to the cloud that mobile technologies have made possible. If I’ve learned one hard-hitting truth about technology, it’s this: Always think long-term. It may seem counterintuitive in an era when product cycles, budget periods, and economic booms all seem compressed, but it is nonetheless true.
For example, those who feel comfortable “sitting pretty” on ECC Enhancement Pack 6 today are actually behind nine technology releases. Soon they will not only be late but overwhelmed. No one can afford to operate like this for long.
About the Author
Brad Hiquet is an accomplished ERP strategist and SAP integration architect. He is Vice President of Customer Engagement at Dickinson + Associates, where he is responsible for the company’s S / 4HANA Movement program.