By Stephanie Born and Prav Ram
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While an Enterprise Resource Planning (ERP) system roll-out is not for the faint hearted, a successful implementation can revolutionise your organisation. That is also true for all the inflight and upcoming SAP S/4HANA implementations. Here’s some of the lessons we’ve learned from guiding numerous clients through the process.
Embarking upon an ERP transformation is a daunting prospect for any finance or technology leader. SAP S/4HANA transformations are no different. Looming ahead of you is a giant wave of cost, scale, risk and complexity. But when you get the delivery right, the results can be truly extraordinary.
By making some informed choices before and during the implementation project, your new ERP system can not only improve your technology and financial performance; it can also enable the wider organisation to adapt and thrive for years to come.
Across our global network, we have guided many clients through the process of implementing SAP S/4HANA transformation projects. The outcomes have included better decision-making, simplified processes, operational efficiencies, cost savings, improved controls and better risk management. We’ve also seen genuine behavioural change, because colleagues across organisations gain clearer visibility of who is doing what, how, where and when.
Furthermore, an effective SAP S/4HANA transformation lays the groundwork for the future; providing organisations with the agility to embrace new opportunities presented by automation, Internet of Things, data and other technology.
One of the ways that SAP S/4HANA broadens your horizons is through its new database, HANA. This is faster and more flexible than anything we’ve seen before, allowing you and your colleagues to efficiently run analytics, create data insights and do real time management reporting.
In short, the benefits massively outweigh the costs – if you get the implementation right.
Based on our combined experience of SAP S/4HANA transformations, we have identified several factors that will set you up for success. Many of these hold true for other types of ERP transformations too. Here are five of them:
1. Lead change from the top
Think of your S/4 transformation as a large wave that picks up your entire organisation. The wave touches every process, every system and every department. To surf that wave, your organisation will need steady hands and a clear sense of direction; and that’s where leadership comes in.
Your organisation’s leadership team needs to govern the transformation from start to finish which often includes selecting a change champion from among them with authority, accountability and carriage of the project. That individual should be surrounded by other key people from across the organisation who – armed with hard data – can make decisions on the program of work.
At the outset, we cannot overstate the importance of securing buy-in from your leaders. They need to go in with their eyes open: knowing how the organisation will navigate the wave of change, what the long-term gains will be, and what the short-term pain might be too.
When your leaders are clear on these things, they will be advocates for the transformation – even during the hard times. They will show their people why and how SAP S/4HANA will change the way work gets done, and what their colleagues can do to support the implementation process.
2. Fix your data from day one
Few things are more likely to throw you off your ERP wave than poor data – and the bad news is that most organisations’ data is questionable at best.
The good news? If you tackle data quality up front, you can avoid a lot of the delays and bottlenecks experienced by others during their ERP transformations. This starts with an assessment of your data across your organisation, and working to cleanse, enhance and understand data flows. As part of this exercise, it’s essential to identify any data objects that are missing. From here, establish data owners and/or data stewards as early as possible.
Once the transformation is underway, you should include checks and balances for your data and conduct trial migrations, to reconcile and understand the whole data migration process. That will help ensure everything goes smoothly later on, when you go live across the wider organisation.
3. Think ahead to identify risks associated with moving to the Cloud
The majority of organisations move their data into the Cloud during S/4 implementations. There are numerous reasons why that may be a prudent and logical move but, like any other Cloud environment, this also comes with risks.
Make sure you are crystal clear about where your information assets are hosted and how the data will be managed. Who will operate the system? Who else has access? What disaster recovery plans should be prepared? Does the Cloud environment meet my organisational policies?
4. Resist the temptation to customise
Any ERP transformation comes with complexity, as you’re rebuilding from the heart of your organisation outwards. One way you can simplify matters is with the out-of-the-box SAP S/4HANA product itself. Wherever possible, we recommend you resist the temptation to customise systems and processes, especially when implementing a Cloud-based system. (Many organisations aim for approximately 90% out-of-the-box.)
This will not only make your transformation process smoother, faster and more affordable, but also help minimise ongoing maintenance and operating costs too. Furthermore, the less customisation applied to SAP S/4HANA, the easier it will be to adopt product enhancements and other new technology in the future and integrate into other systems where required.
Many vendors are incentivised to add customisation, which is one reason we recommend you team up with an independent adviser who has prior experience of SAP S/4HANA transformations. Another reason is that SAP S/4HANA transformations are everywhere in the market right now – and that means a scarcity of vendor teams with the requisite skill sets.
5. Get on the front foot with control design
No-one likes receiving an internal or external audit report saying that, while implementing your new ERP system, you actually weakened the control environment and now a number of controls are no longer in place. We’ve all been through a program where a subsequent phase is required to provide additional reporting, switch on automated functionality to avoid manual work arounds, and/or remediate segregation of duties and sensitive access risks. Untangling those sorts of issues is costly and time consuming.
To avoid this happening to you, we recommend reviewing your existing control environment from the outset. Consider any areas where controls could be automated. Think about where predictive or preventative controls could be introduced, or where the new technology/processes introduce new risks or change controls design. This will help you strengthen – rather than weaken – your controls during the life of your SAP S/4HANA implementation, placing you well in the post go-live environment.
Further insights coming soon
Later this year, we will publish further reflections and guidance for those implementing SAP S/4HANA systems. Having guided many of our global and local clients through such transformations, we’re well positioned to support you to achieve project success.
Director, Enterprise Process & Technology, PwC Australia
Tel: 0437 640 733
Senior Manager, Transformation Assurance, PwC Australia
Tel: 0474 187 089