SAP S/4HANA transformation: Ready to take off?

How companies successfully shape their future business models and value creation using SAP S/4HANA

10. May 2023Marcus Flohr

Securing tomorrow's business success today

Volatile markets, fragile supply chains, or ever more critical customers: companies in many sectors are currently facing major challenges. Transformation is required to keep up with the social and economic changes. This is best done using SAP S/4HANA. So why not use an upcoming SAP S/4HANA migration to futureproof one's own value creation and use digital transformation as an opportunity?

SAP transformation: keeping up with change

Men looking at a display

The good news: most company SAP users are versatile. They already use digital technologies to quickly adapt their processes on demand and to make them more resilient – this help get their enterprise through difficult times. A survey among international SAP user groups shows that more than 70 percent of companies in the German-speaking region are able to keep up with digital transformation to some extent. Only 15 percent of those surveyed feel left behind. At the same time, only 14 percent can keep up without problems. This is because there is often a lack of speed, a lack of expert and personnel resources as well as a resistance to change. But it is the high complexity of the business transformation, concerning data-driven business models, more agile business processes, and new requirements with regard to security, which is thwarting the capability of many companies.

SAP S/4HANA is making room for innovation

Mechanical engineering and production companies are facing profound transformation. Sooner or later, they will have to rethink their business processes. For example, unstable supply chains lead to changes in ordering rhythms, in particular in the supply industry. While “just-in-time” production previously dictated  precise order cycles, warehouse stocks are being built up to overcome possible supply bottlenecks. At the same time, digitalization topics are being driven forward and companies need to reposition themselves on the market. They now face the decision about whether to redefine their business processes for the coming 15 to 20 years, taking into account future requirements, or whether to gradually adapt their existing processes in small steps in response to new requirements.

Getting off to a start with the new SAP landscape

One option is to embrace the switch to SAP S/4HANA as an opportunity to successfully introduce new business models. Companies can use the functionally necessary SAP S/4HANA migration as an excellent opportunity to modernize or set up new business processes using powerful software.

This works best with an SAP S/4HANA transformation from scratch, using a greenfield approach. This means launching the new SAP landscape with newly defined processes. Existing SAP processes are first checked, enabling businesses to say goodbye to inefficient processes and instead set up improved processes. For mechanical engineering companies and those in manufacturing, this means that they are digitalizing  production, enabling them to optimally support future business strategies and new areas of business.

SAP S/4HANA transformation: the clock is ticking

With so much groundwork to migrate to SAP S/4HANA, time is short. Prepare for your transformation with our expert guide.

Keeping tried-and-tested business processes

But companies don't always have to reinvent themselves and their value creation in order to be successful in the future. One example is the automotive sector. After the difficult pandemic years, it is now recording a clear upwards trend. According to a forecast by McKinsey, rising sales are expected within the next ten years. McKinsey states that by 2030, the global sales of vehicles is expected to turnover around USD 3.8 trillion, compared to 2.8 trillion in 2020.

With such prospects, it's no wonder that many automotive manufacturers' order books are filled for years to come. They are required to continuously deliver components or parts with extremely high levels of quality. In so doing, the vehicle manufacturers expect the ordered materials to arrive at a specified point in time. If a supplier is able to fulfil these requirements and if production and distribution have so far been running smoothly, there is surely no need to dispense with the tried-and-tested.

Brownfield accelerates the switch

What exactly does this mean for the supplier's SAP S/4HANA transformation? During migration, they can transfer the existing processes one-to-one to SAP S/4HANA and only adjust what is necessary for a speedy launch. Behind this is the brownfield approach in which data and settings from the old SAP system are carried over into the new IT landscape. The migration is  more like a system upgrade. However, ahead of the migration, there are important tasks that need to be carried out. Companies need to bring the migrating SAP solution to an up-to-date release level. Or they must clean their ERP system data to create an optimal foundation for intelligent data analyses.

Bringing sustainability and new processes together

Furthermore, a third scenario for a successful SAP S/4HANA start is conceivable. Companies in heavy industry make a considerable contribution towards climate change. According to the International Energy Agency (IEA), the direct CO2 emissions from heavy industry amount to around six billion tons per year, which equates to more than a sixth of the total CO2 emissions of the global energy system. This will change in the future: in Germany, the steel industry is on the verge of a transformation, in which production is to be switched to more climate-friendly processes, for example through the use of green hydrogen. The objective: produce climate-neutral steel by 2045. Hence, the companies in the steel industry will face new regulations with regard to sustainability. As part of your SAP S/4HANA transformation, you can now set the course for doing business in a more resource-efficient way. While some can retain fundamental production processes, others are modernized and directed towards greater sustainability. For example, by steel companies reducing their CO2 footprint in the supply chain or introducing recycling measures to incorporate the production of steel into a circular economy. The mix of tried-and-tested and completely new processes works thanks to a selective migration to SAP S/4HANA, i.e., a mix of brownfield and greenfield.

Challenges of the SAP S/4HANA transformation

14 %

of SAP users in the German-speaking region cannot keep up with the economic changes.1

> 60 %

of companies have a lack of internal SAP capabilities and personnel.1

Value consulting for the SAP transformation

If the companies have set the goals they want to achieve with their switch to SAP S/4HANA, it is necessary to determine the right migration route. The SAP experts at T-Systems design the SAP transformation together with the customer, if they know they want to proceed from scratch (Greenfield), using the existing processes (Brownfield), or a middle ground of both (selective migration).

As part of value consulting, T-Systems draws up a customized project plan with important milestones for the introduction of SAP S/4HANA. To do this, T-Systems caters to the companies at each point along the SAP transformation and accompanies them along the journey to SAP S/4HANA. The SAP team at T-Systems has many years of ERP system and software experience from more than a thousand SAP projects with more than 600 SAP customers of different sectors around the world. The expert teams work globally and are able to fall back on extensive development resources in both nearshore and offshore areas.

Process templates accelerate the introduction

Value consulting by T-Systems helps companies receive answers to questions like: Are your business organization and IT environment ready for SAP S/4HANA? Which functions deliver added value? What is the business case – and will this work successfully in the future?

In order to quickly and easily implement business cases, T-Systems has created a process template for the production industry with MAX4SAP, which allows complete processes to be adapted end-to-end. The advantage: companies don't need to reinvent the wheel but, thanks to the process template, can map their whole value creation: including order and procurement, material management and production, and delivery and logistics.

SAP in the cloud brings many advantages

Furthermore, for SAP projects, T-Systems always has an eye on the benefit of current technologies such as the right cloud mix. If companies implement SAP S/4HANA in the Cloud, they can guide resources in line with what is needed and respond more quickly to new requirements in order to remain competitive. In so doing, T-Systems enables the seamless integration of various cloud solutions – for example, if companies would like to pursue a multi-cloud approach.

The SAP experts also support the management of cloud-based SAP landscapes and ensure a secure, reliable operation.

When it comes to integration, the SAP Business Technology Platform (BTP) is a game-changer. T-Systems, as one of the earliest partners of SAP, is now backing the new certification called "SAP BTP Operations". The aim is to leverage various tools to develop innovative applications and services on SAP BTP that can seamlessly integrate with SAP S/4HANA. This integration helps optimize business processes and ultimately gives companies a competitive advantage.

About the author
Picture of Marcus Flohr

Marcus Flohr

Program and portfolio manager SAP S/4HANA migrations, T-Systems International GmbH

Show profile and articles

You might also be interested in

Do you visit t-systems.com outside of Denmark? Visit the local website for more information and offers for your country.