There is no single solution when it comes to SAP S/4HANA migration, and each organization is in a different stage of SAP S/4HANA readiness. Some have chosen to start clean by implementing a new system, or the greenfield approach. Others choose to perform a complete system conversion, or the brownfield approach, because it doesn’t disrupt their existing business process. And for those who want to consolidate their current system landscape into SAP S/4HANA, they can opt for a landscape transformation.
As each methodology has its advantages and challenges, you have to take a look at the database, platform, and configuration before making a decision as to which route may be most suitable for your given situation. Here below, we analyze each methodology to help you do just this.
The Greenfield Approach – New Implementation
The greenfield approach requires a new implementation of SAP S/4HANA. This can be a tiresome and time-consuming project, especially on the change management side, since you have to start everything from scratch. The upside to this path is that you can redefine and simplify the business processes and take full advantage of S/4HANA capabilities. This does not guarantee that the new implemented system will actually work on the operational side, but there will be time for adjustment.
Going through this re-implementation route can be unnerving because there will be radical changes in the way you operate the system. So if you want to go down this road, make sure that you are ready for the whole re-engineering process.
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The Brownfield Approach – System Conversion
With all the repercussions of the greenfield approach, there is an alternative way: the brownfield route. This is SAP’s newest recommendation for existing customers who are operating on SAP ECC and want to migrate to S/4HANA but still keep their investment in the current system.
With system conversion, you will move the whole system and business process to a new platform of S/4 HANA. This approach can offer a better solution if you don’t want any changes in the operations of your business process. It essentially allows you to run your business with less disruption since it’s more of a technical system conversion. The downside is that possible issues on the technical side can arise, but SAP has provided conversion tools and guidelines for this. Therefore, the risk can be mitigated.
The focus of landscape transformation is not on the whole system conversion, but rather on selective parts of the business process that you want to migrate. Using SAP landscape transformation, you can perform selective data migration to SAP S/4HANA or consolidate your business landscape into one global system. This means that you can first select the process that gives you the best—and fastest—ROI to be migrated to S/4HANA. Customers may choose to go down this route, for instance, when adopting S/4HANA capabilities for Central Finance.
Use Case: Central Finance
The components architecture surrounding S/4HANA allows customers to implement a stand-alone business process linked to S/4HANA’s ERP core system. One example of this is SAP Central Finance. With landscape transformation, you can utilize SAP Central Finance by migrating your financial postings to the HANA database. It uses the single database table called Universal Journal for all data from General Ledger, Profitability, Management Accounting, Asset Accounting, and Material Ledger. This new architecture allows you to produce a multidimensional financial reporting structure by incorporating the data from your legacy systems into Central Finance without any data duplication.
Using this function of Central Finance, you can still perform the financial postings in your legacy system while the data is being replicated into the Universal Journal entry database via the SAP Landscape Transformation Replication Server. This means that you can gradually move the process piece by piece into the new SAP S/4HANA before completely turning off the old system. This reduces the risk of replacing many different systems all at once.
The Bluefield Approach/Shell Conversion
This is a new approach that is somewhat of a combination of both greenfield and brownfield. This approach starts with creating a shell system, an empty target system using Business Suite client with no data. Using various SAP service provider’s tools you can perform any transformation activities and upgrade your target system to S/4HANA. This approach claims to be non-disruptive, however, as the approach is fairly new there is not enough data to provide a cost, risk and efficiency analysis.
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How to Choose the Right Approach?
Choosing the right approach requires that an organization performs extensive analysis and evaluation of both technical and functional sides. The existing system landscape, business function, and user readiness are a few things that need to be taken into consideration. More importantly, you should take a look at your own roadmap for digital transformation. That is, identify where you are and where you want to go in the upcoming years.
Here are the key points to help you decide which path you should take for your S/4HANA migration.
What are you looking for?
Path to Take
What Are the Steps to Execute?
Once the path has been decided upon, it’s time to prepare for the actual migration by planning the exact steps that will be needed for a successful implementation.
If your decision is to perform a new implementation via the greenfield approach, there is an entire methodology called SAP Activate that explains each step required to do so.
- Discover: The first step is to identify the value of your business and then develop the roadmap and strategy to be used in the implementation of the project.
- Prepare: In this phase, you initiate the project and start working on your final project plans as well as preparing your team. Choosing the right people for your team is essential to ensure the project will run optimally.
- Explore: SAP S/4HANA offers a wide range of solutions for your business, especially for a new implementation. In this phase, the scope evaluation process will be performed, and Fit/Gap analysis can be adopted—instead of traditional blueprint requirements—in order to ensure a more efficient and faster implementation.
- Realize: This phase focuses on the realization process of the business requirements that have been defined in the previous phase. These include system configuration settings, integration scenarios, and data migration.
- Deploy: The production environment is set up in this phase. When it’s ready, cutover activities will be performed and business operations are moved to the new system.
- Run: Now, you’re ready to adopt the new solution and run on the new system.
Brownfield & Landscape Transformation
On the other hand, if you decide to do a system conversion or landscape transformation, there is a sequence that you have to follow to ensure a smooth deliverable. The process is divided into two phases: preparation and realization.
- System Requirements & Planning: This assessment should be conducted to analyze the existing system and then define the best possible solution to execute the migration.
- Conversion Pre-Check: A compatibility check of any add-ons or business functions that are active in the current system is required to ensure they can technically be converted into S/4HANA. SAP has provided the Simplification Item Check to identify the mandatory steps before converting your system.
- Custom Code Migration: This step will check your custom code against S/4HANA compatibility. This is essential, especially if there are enhancements in your current system.
- System Installation: After the preparation phase, you can start the conversion to SAP S/4HANA. This step includes database migration and data conversion.
- Follow-On Activities: After the technical conversion, all relevant customized settings must be migrated.
- Data Consistency Check (especially for financial data): Since SAP S/4HANA collects all relevant components from Financial Accounting (FI) and Controlling (CO) into one data pool, called the Universal Journal, it is imperative that you perform reconciliation between your accounting components. In this way, the data can be merged correctly into the Universal Journal.
- Iteration Testing: When all customizing has been performed and all data have been migrated, you need to perform test iterations to make sure that the system runs correctly.
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Migrating to S/4HANA is inevitable for every SAP customer. It’s not a matter of “if,” only a matter of “when.” However, the migration process can be daunting for customers because they don’t actually know what to expect from the process. This is why choosing the right approach will be essential for your business transformation.
Whatever path you choose for your organization, Panaya S/4HANA Discovery Pack provides the solutions you need to start your journey to S/4HANA migration, including valuable insights and a detailed report. Read Discover the Optimal Path to SAP S/4HANA to gain insights into understanding the business case and route that is best for your organization.