The 2022 SAP S/4HANA Cloud release is a next-generation technology that gives organizations the ability to evolve into intelligent organizations. But some businesses hesitate to transition from their legacy enterprise resource planning (ERP) platforms. While all aspects of any major transition should always be considered, it’s not uncommon for organizations to decide against upgrading based on evaluations that miss the mark—and cause these businesses to miss out on the opportunities that come with upgrading.
30% of businesses that invest in an ERP do so with the primary goal of supporting company growth — making it the top reason for implementation.1
A successful evaluation looks past traditional business decision drivers, like total cost of ownership (TCO), to also consider the capacity to support business agility, create value faster, and ultimately build a sustainable competitive advantage. Businesses that don’t fully understand these benefits miss out on new technologies their collaborators and competitors are harnessing.
62.7% of organizations now choose cloud-based ERP systems over on- premise software.2
Hitachi Vantara helps organizations think outside the box to achieve a true business transformation that puts customers at the forefront and allows enterprises become futuristic organizations with SAP S/4HANA.
Enterprises want to upgrade but fear commitment
Most enterprises would like to use a data-driven framework to make critical decisions. However, many only use analytics and intelligence sporadically, leaving room for potential operational inefficiencies like inventory overproduction or customer delivery mismanagement.
SAP S/4HANA offers a single gateway to all data resources by integrating third-party and eCommerce applications into one system. This unified platform enables real-time data aggregation and results in actionable intelligence organizations can use across all enterprise functions, such as marketing, operations, and finance.
Yet, the technical and business complexities of upgrading to a cloud ERP solution often prevent enterprises, especially small and mid-sized companies, from migrating to the more extensible and scalable solution.
Common barriers to implication include:
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New skill sets beyond the company's existing ones
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Changes to organization IT strategy
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Extensive planning and orchestration to avoid operational disruptions during data migrations and new user onboarding
There are also fears about cloud data security resulting from misconfigured settings and architecture, and lingering trust issues with SAP after struggles with the original implementation of legacy products. General security concerns can result in missing that key upgrade opportunity. And, making matters worse, there is pressure in knowing that technical support for the older platforms will cease in 2027. Unfortunately, these concerns are causing enterprises to miss out on native SAP integrations, upgradable functionality, and valuable modern-day tools.
25% of SAP S/4HANA adopters say that user training is the biggest barrier to platform acceptance.3
Hitachi Vantara helps small and midsize businesses overcome adoption hesitation by acting as a trusted guide throughout the entirety of the S/4HANA migration process — from selection and planning through implementation and beyond. With experience across more than 1,000 transformation projects--where more than 150 involved cloud upgrade projects--Hitachi Vantara knows where the pitfalls are—and how to avoid them.
With our experts in the field and extensive, current SAP technology certifications and credentials, Hitachi Vantara helps bridge the gap between envisioning the process and what is successfully planned, installed, cut over, and then evolved to improve business results. Hitachi Vantara enables enterprises to make better decisions, with action-driven intelligence, to act in real-time, and outperform competitors.
Misconceptions of business value result in missed opportunities for growth
There is a disconnect between how enterprises evaluate the SAP S/4HANA Cloud transition and the reality of the full business value of a complete transformation — leading to an inability to see the bigger picture. For instance, many firms treat the system migration as a purely technical upgrade, a relatively expensive process that prevents them from being able to justify the total adoption cost.
Additionally, some fail to grasp the full potential of the transition. S/4HANA Cloud isn’t just a financial and analytics solution: its potential application spans other vital business areas, such as strategic planning, supply chain management, marketing, and sales. As a result, the return on investment (ROI) appears significantly lower because there is no consideration for the other departmental use cases.
ERPs reduce IT costs by 40%, optimize/reduce inventory by 38%, and shorten cycle times by 35% — earning businesses a significant ROI.4
Hitachi Vantara brings outside perspective and skills to an enterprise while supplementing customers' existing knowledge — enabling all business functions to become fully aligned and realize the true value of S/4HANA Cloud. With Hitachi FastTrack to S4/HANA services, we conduct deep explorations across your environment, systems, and performance implications to generate more financially justifiable reasons to make the transition.
Enterprise considerations for transitioning to SAP S/4HANA Cloud
Enterprises need to contemplate long-term driving factors when looking to transition to S/4HANA Cloud. Working with implementation partners who can address their unique challenges with relevant expertise can help to evaluate all available transition options. In addition, the most beneficial partners will leverage pre-configured solutions to accelerate the adoption process and provide purchasing insights that look beyond the solution price. Here are key considerations we recommend to get started:
1. Establish key migration benefits
Everything about the major SAP transition is about the long game. Enterprises must realize that obtaining a competitive advantage today starts with data-driven decisions and harnessing advanced solutions, including artificial intelligence (AI), machine learning (ML), Internet of Things (IoT) technology, and embedded reporting to provide better analytics.
For instance, manufacturers using SAP's embedded analytics can leverage decades' worth of data to rapidly uncover previously hidden trends and patterns essential for improving production planning, scheduling, and supply management — all without pushing information out to external business intelligence (BI) platforms. Now, they can carve out a sizable competitive advantage by deploying insights that help to produce optimal product quantities delivered to the right location at the right time—avoiding costly stockouts or languishing inventories that plague their competition.
2. Analyze costs vs. benefits
Small and midsize enterprises considering transitioning should weigh quantitative and qualitative ramifications that may arise, including the unpredictable. Organizations must consider all the scenarios, mitigations, options.
ROI assessments with realistic timetables are ideal for objectively justifying the decision. The holistic evaluation should also consider other essential elements of a migration project, such as operational downtime, top-down management support, and potential user engagement with the platform, etc.
65% of organizations go over budget because their ERP systems need modifications for better usability. This can be avoided by selecting the right software provider and implementation experts who understand an enterprise’s interface and system functionality requirements.5
3. Gain a 360-degree perspective
Organizations must consider their entire current infrastructure and technology environment before upgrading to SAP S/4HANA Cloud. Because it's a shift from an on- premises solution, enterprises have to make critical decisions on whether to retire the on-prem environment entirely or significantly reduce its footprint while methodically migrating into the cloud over time.
SAP cloud transition done right – Practical steps
Committing to and adopting SAP S/4HANA Cloud isn’t simple or easy. It's a total business transformation rather than just one simple IT exercise. To derive the most business value from the transition, enterprises must commit to a path of discovery, planning, and strategic implementation steps.
1) Define the starting point
Through a comprehensive overview of an organization's IT and business landscape, it is critical to understand whether the current ERP solution is serving necessary intelligence requirements, customers’ needs, and whether a change is necessary. It'll also help decipher preferences for a cloud, on-premise, or hybrid solution, which will, in turn, will determine where in their complex landscape to start and when to begin the migration process.
2) Employ the latest technologies
Though employing next-generation technology such as IoT, AI, and ML may require a significant IT strategy adjustment, it’s a business imperative that unlocks incredible capabilities for collecting information, gaining insights, and making data-informed decisions. SAP S/4HANA is the digital core to becoming an intelligent enterprise after enabling all its advanced tools and modules.
For instance, automotive businesses invested in SAP S/4HANA can use data collected from IoT devices to help avoid workplace injuries, reduce workers’ compensation claims, and improve team productivity and safety. By tracking data on human movement for how workers should lift objects, the system will alert management for remediation after improper physical motions — reducing the risk of lower productivity caused by worker displacement.
3. Determine data requirements for a competitive advantage
Identifying the data types needed to build a sustainable competitive advantage will dictate the right time to transition into an on-premise or cloud S/4HANA platform. Using an analytical focus, Hitachi works with organizations to select the SAP solutions to fit their unique business needs based on industry-specific data.
4. Partner with the experts
Top-performing organizations know better than to take everything on themselves. This is particularly true given that cloud transitions require new skills and talent beyond what is internally available and in short supply industry-wide. Instead, industry-leading enterprises work with expert migration partners that understand the future of ERP technology and the mechanics and uses of innovative IoT, AI, and ML solutions. They have the expertise and systems to guide any business through a successful S/4HANA transition.
87% of companies seek guidance for ERP implementation.6
SAP S/4HANA Cloud is the catalyst for a competitive advantage
Adopting SAP S/4HANA Cloud with guidance from expert partners like Hitachi Vantara unleashes a multitude of business-defining capabilities for small and midsize enterprises. It allows organizations to grow their intelligence utilizing an arsenal of IoT, AI, and ML for data collection and advanced analytics tailored for each unique business case.
With SAP solutions from Hitachi Vantara, firms of any size, in every industry and location can:
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Create flexibility in their value chains when developing products and services
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Increase business agility to make faster yet insightful decisions
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Improve business processes that deliver superior customer experiences, inspire customer loyalty, and drive revenue
Enabling an intelligent enterprise
Enterprises need to widen their perspective on SAP S/4HANA Cloud to understand that it’s more than just a routine software upgrade: it's a chance to separate themselves from other industry players to become change-resilient, improve operational efficiency, and maximize the customers' experience.
The key to this transformation is aligning with a knowledgeable implementation partner who will supplement and support their customers' existing skill sets, objectives, and resources. As the industry leader in helping enterprises with digital transformation projects, Hitachi Vantara can help organizations implement their SAP S/4HANA transition to build capabilities for futuristic enterprises.
Kimberley Reid is Vice President, Digital Enterprise - SAP Solutions, at Hitachi Vantara; Matt Montgomery is Director, U.S. SAP Practice, at Hitachi Vantara.
For more information, visit Hitachi Vantara and learn more about all of their solutions for digital modernization.
Hitachi Vantara, a wholly owned subsidiary of Hitachi Ltd., delivers the intelligent data platforms, infrastructure systems, and digital expertise that supports more than 80% of the fortune 100. To learn how Hitachi Vantara turns businesses from data-rich to data- driven through agile digital processes, products, and experiences, visit hitachivantara.com
ASUG is the world’s largest SAP user group. Originally founded by a group of visionary SAP customers in 1991, its mission is to help people and organizations get the most value from their investment in SAP technology. ASUG currently serves thousands of businesses via companywide memberships, connecting more than 130,000 professionals with networking and educational resources to help them master new challenges. Through in-person and virtual events, on-demand digital resources, and ongoing advocacy for its membership, ASUG helps SAP customers make more possible.
1What 1,384 ERP projects tell us about selecting ERP. Softwarepath.com. January 2022.
2 Roul, Rajendra. 60 Must-Know ERP Statistics Before Making a Buying Decision. G2.com. January 2021
3 Scott, Geoff. ASUG Pulse of the SAP Customer 2021 Results. ASUG.com. January 2021.
4 Bennett, Steve. Project-Based ERP Statistics 2022. Webinarcare.com. May 2022.
5 45 ERP Statistics for the 2021 Market. TrustRadius.com. July 2021.
6 Roul, Rajendra. 60 Must-Know ERP Statistics Before Making a Buying Decision. G2.com. January 2021