SAP’s 2027 deadline to migrate users from its legacy enterprise resource planning (ERP) platform onto the latest version, S/4HANA, may seem like years away, but don’t let the timeline fool you. This will be one of the most time-consuming IT projects any healthcare organization will take on.
Moving to S/4HANA is also a strategic imperative for transforming the healthcare supply chain, making it more resilient and efficient for the future. The platform offers real-time visibility across pharma or medical device supply chains, allowing healthcare organizations to optimize inventory, track drugs and devices and prevent counterfeiting while achieving regulatory compliance.
Making the move from the ERP Central Component system, also known as ECC, represents a major generational shift for SAP ERP users. Nearly 70% of ECC clients have yet to license S/4HANA, according to Gartner data at the end of the third quarter.
Upgrading to SAP S/4HANA can be complex and challenging, but the level of difficulty can vary depending on several factors, including the current state of your IT infrastructure, the scope of the project, the level of customization required, and the expertise of your team.
That being said, with proper planning, resources and support, you can increase the odds of a successful migration. Here are five tips for an on-time, on-budget implementation:
Define clear objectives:
Identify the specific business processes and requirements that you aim to address with S/4HANA and make sure they align with your overall business strategy and goals. Because of the costs and complexity of the migration, the entire business needs to be onboard with the process, including business leaders, IT, and end-users. Be specific about what you hope to achieve with S/4HANA, whether that’s improved productivity, innovation, customer centricity or a combination of all these, and create measurable targets. Having clear objectives in place will provide a roadmap for implementation and ensure that the project stays on track.
Choose the right implementation approach:
Organizations that move their ERP to S/4HANA have a handful of options when it comes to deployment. A greenfield approach is characterized by a clean slate, where all previous processes and data structures are thrown out. This kind of complete overhaul is longer and more expensive than the other approaches. But it also provides the opportunity to choose new technology, such as cloud infrastructure, implement best practices and optimize processes from the start.
A brownfield deployment is built onto existing infrastructure so you can leverage the investments made in the previous SAP system. It requires a more comprehensive approach to migrating existing data and processes, but the upgrade will get started faster. There’s also a hybrid implementation that can provide the best of both approaches by allowing for new business processes and data structures to be defined, while leaving some legacy components behind.
Involve the right people early:
Companies are spread thin across multiple initiatives. They will need access to experience and specific skill sets to be able to push through the migration without hitches. There are many implementation partners, and you don’t have to go with the same one for all the phases of your migration. The project team should include business process experts, IT experts and change management specialists. Everyone should have clearly defined roles and responsibilities. Involve business users early on to ensure that their needs and requirements are considered. They can provide valuable insights into business processes and data structures.
Preparation is critical:
S/4HANA implementation takes a major commitment of time and resources and is not to be undertaken without a clear-eyed view of the entire process. Preparation helps increase understanding of the process and reduces the risk of failure. Here’s an example. One of our clients, a large retail pharmaceutical chain, brought in a team of auditors to document the existing order to cash and procure to pay processes. While validating the data, the team identified that the processes by which the stores were recognizing inventory were ineffective. The inventory process was remedied at the store level so point-of-sale journal entries matched inventory levels. The inventory recognition issue needed to be fixed to prepare the client for the implementation.
Invest in change management:
The migration to S/4HANA is about people, not just technology. Many companies have 20 or more years invested in the legacy ECC, and it’s probably evolved over time and become a bespoke system. But with HANA, SAP seems to have gone back to the drawing board and built an ERP from scratch for today’s digitally-connected business. That means the amount of change that is required as part of the upgrade is an immense undertaking. When asking people to change the way they do their jobs you will be met with a lot of resistance. You have to focus on user adoption by providing ongoing training support. That’s where real cost comes in.
With any major change, there can be a lot of questions and uncertainty about what to expect. IT leaders and SAP consultants can ease the transition by encouraging teamwork and collaboration and checking to see that everyone is on the same page and working together towards a common goal. This can help reduce the risk of project delays and ensure the implementation is successful.
Geoff Coltman is vice president at Catena Solutions, a supply chain consulting firm with deep experience in enterprise software implementation that has helped more than 200 clients with transformative projects, including some of America's largest, most trusted brands.