5 Steps For ERP Transformation To SAP S/4HANA

ERP Transformation to SAP S/4HANA is about far more than just a software upgrade. Discover five key steps for ensuring success in your transformation.

Enterprise resource planning (ERP) transformation to SAP S/4HANA can be a daunting task. While the technical effort is enormous, it's important not to forget the other vital elements of the process.

A holistic approach to ERP transformation will consider the construction of a strong business case, stakeholder engagement, and change management, as well as applications and IT components. To support you, we've listed five steps to take to drive the organic elements of your ERP transformation along with the technical ones.

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WHITEPAPER: Getting It Right - A Holistic Approach To SAP S/4HANA Transformations

S/4HANA Step 1: Needs Assessment

Any enterprise resource planning (ERP) transformation to SAP S/4HANA, or other ERP system, must begin with establishing the reasons you're doing it in the first place. You'll have already raised a business case for the project, so you'll be able to re-use that content.

A proper ERP Needs Assessment, however, will go into far more detail. You'll have to assess all the customizations and manual processes that have been attached to your current core ERP system over the years, and ensure feature parity for key capabilities.

Of course, some of these manual features and customizations can be replaced by new core features, and others can be put aside. Either way, each will need to be accounted for in your needs assessment.

Wherever possible, it will be best to maintain a clean core without customizations or manual processes. This will maintain your agility and make it easier to migrate or upgrade your ERP system in the future.

Once you have your needs assessment, you can break it down into migration tasks you'll need to accomplish to achieve feature parity. You'll also have documentation to support you in case any users object that your new system is missing key capabilities.

All this will establish that you won't be losing anything in the migration. The next step is to identify how moving to SAP S/4HANA will improve on your current estate and offer value.

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S/4HANA Step 2: Identify Value Drivers

The purpose of an enterprise resource planning (ERP) transformation to SAP S/4HANA is to leverage the powerful features of that new ERP tool. As such, documenting and showcasing those features is key to achieving stakeholder buy-in.

At the initial stage, it's helpful to utilize a combination of blue-sky, ideal-world thinking and real-word practicality. This will allow you to align your vision for your ERP architecture with the reality of what can be achieved.

Start by establishing the capabilities that your organization needs and the ones that your users dream of having. Use this as a wish list to compare to the capabilities of S/4HANA and establish how much of your vision the new ERP system can realize.

This will give you a magazine of silver-bullet selling points that you can use to convey the value of ERP transformation to even the most hesitant stakeholder. It will also, however, show what desired features might remain just a vision for your organization.

No system is perfect. Identifying any 'nice-to-have' features that can't be initially supported with S/4HANA allows you to prepare a change management plan for dealing with any objections.

Here, you can also employ your wishlist to showcase that ERP systems with non-essential features that might be desirable for your stakeholders lack key capabilities that S/4HANA has. Alternatively, you can highlight other negatives, such as cost or complexity.

All of this will establish a solid mission statement and business case to support your decision to transition to SAP S/4HANA. You can then begin the transformation process in earnest.

S/4HANA Step 3: Engage Stakeholders

Just as the first step in starting a company is to hire your staff, the first stage of enterprise resource planning (ERP) transformation to SAP S/4HANA is to onboard your stakeholders and project team. Begin, of course, by compiling a list of each.

You should already have identified your stakeholders and interviewed many of them when putting together your Needs Assessment. Don't assume that you've covered everyone, however, as there may well be users that you haven't taken into account.

This is where SAP LeanIX can help you in logging details of users against each application. You can even use our product to automate surveying them about their needs and behavior.

Once you've identified your stakeholders, you can approach them with your business case for the transformation, highlighting the added value that the new system will offer them. Listen to their objections and involve them in your project planning to encourage them to engage with and take ownership of their part of the transformation.

During your conversations with stakeholders, identify those that are technically savvy and enthusiastic about the project. These may be the right people to recruit into your project team.

Your core team should focus on the technical implementation of your new ERP system, but your steering committee needs to be a mix of individuals with different skills and points of view. Your team should include:

an executive sponsor to liaise with your leadership team
a project manager to take responsibility for final decisions
technical specialists to ensure the feasibility of your plans
business analysts to align your ERP changes to your processes
change management experts to consider the needs of your users
quality assurance and testing representatives to ensure project goals are realized

Getting all of these stakeholders aligned and collaborating will require a single source of truth to inform their decision-making. The SAP LeanIX repository integrates with SAP Signavio to help you map your ERP system and collaborate on transformation.

To find out more about our out-of-the-box integration solution for SAP LeanIX and SAP Signavio, download our white paper:

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S/4HANA Step 4: Change Management

While an enterprise resource planning (ERP) transformation to SAP S/4HANA can be complex, it is a relatively straightforward technical process. The real challenge of ERP transformation comes from the change management process of aligning your users and other stakeholders, which you need to do simultaneously with the technical transformation.

In any change management process there are three key factors to consider:

Context
Consistency
Communication

You need to ensure that your stakeholders understand the context of why you're going about the ERP transformation in the way you are; you need to ensure that your project plan is rational and organized, and stays on track as much as possible; and you need to ensure that you keep your stakeholders informed about the project throughout.

None of this can be done from within a silo. You need to engage with stakeholders in order to understand their point of view, and also ensure that your message is being repeated by people they trust.

That's why it's key to utilize your steering committee and engaged stakeholders. By informing them and letting them engage with their close peers, you're able to communicate your message in the context of each stakeholder.

SAP LeanIX allows you to create custom dashboards with unique viewpoints on data relevant to each stakeholder. This allows you to present a narrow viewpoint focused on just what each user group needs to know to help them navigate your transformation.

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S/4HANA Step 5: It's Not Over

ERP transformation to SAP S/4HANA is a long-lasting process that doesn't end with the launch of your new system. Even after you've completed the technical implementation and succeeded in change management, you will still need to continue to prove the value of the project.

Continue to track your key metrics and report back to the business on the value you've achieved to show that it was worth all the effort. This will cement the reputation of the new system, and of your implementation team.

Not to mention, no implementation goes faultlessly, and remaining available for troubleshooting after the process is complete will build user confidence and prevent negativity. Meanwhile, continued change management will empower your team to get the most out of S/4HANA.

SAP LeanIX will track your performance data and user feedback to enable continued oversight of your ERP estate, long after your transformation is complete. To find out more, book a demo:

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