What are the SAP S/4HANA System Conversion challenges?
Enterprises are well on their path towards SAP S/4HANA adoption. They realize that the end of mainstream maintenance for SAP ERP is a massive business disruptor. Most enterprises opt for an SAP S/4HANA system conversion process to carry over their existing system configurations. In this blog, I’ll highlight some of the SAP S/4HANA system conversion challenges which organizations are facing.
(If you know the challenges and looking to help ease those challenges, check out KTern – the all-in-one product designed to automate and manage ECC to S/4HANA Conversions from start to finish.)
New functionalities are always coming with SAP S/4HANA. Business benefits come along with the new functionalities. However, many customers are still concerned about the effort required to convert their existing SAP ERP system to SAP S/4HANA. They often ask questions such as
- What does it mean to move to SAP S/4HANA?
- How long does an SAP S/4HANA conversion project take?
- How much business and IT resource are we going to need?
- What will it cost?
One of the prerequisites for producing a reasonable estimate is to understand the riskiest areas of the project. You’ve probably already heard that conversion to SAP S/4HANA is not just a technical upgrade. Moving to SAP S/4HANA involves changes in functionality and business processes.
The complexities of the tasks in functional areas are much higher than in case of upgrades. Until now, most of the functional changes have been made in the Finance area. Other functional components such as Sales and Distribution and MM don’t require a lot of effort. Changes here are mainly related to data model simplification.
SAP S/4HANA System Conversion Challenges
This will have an impact on all SAP customers going through system conversion. In SAP S/4HANA, business partner master is a single point of entry and maintenance of customers and vendors. As the business partner object offers several advantages over customer and vendor master records, it was decided to go for the business partner as a leading master data object.
Although the decision was made to go forward with the business partner approach as a strategic functionality, it was not possible to get rid of customer and vendor master data model entirely. There are too many ERP applications working with traditional customers and vendor tables and it was not possible to redevelop them to work with business partner. Therefore, the CVI framework is used to synchronize data from business partner data into customer and vendor master data tables.
What does the switch to business partner mean for an S/4HANA conversion project?
- Redesign of business processes related to customers and vendors lifecycles
- Effort to configure new business partner object and CVI framework for synchronization between business partner and customers/vendors
- Effort to migrate data. Existing customers and vendors should be replicated into new business partner master data. Before doing that, you need to cleanse customer and vendor master data. All these steps must be done before the installation of SAP S/4HANA itself.
If you have implemented any SAP Business Suite application using the business partner concept you will save yourself time and effort. In this situation, most of your customers, vendors or both were already replicated into business partners and you have your business partner and CVI configuration in place. Furthermore, your IT and business users are familiar with the concept as well.
Financial Data Migration plays a vital role during SAP S/4HANA System Conversions. During this phase, transactional data is transformed into the new data model of the universal journal. To successfully migrate the existing transaction data, they must be clean and consistent. Unfortunately, no matter how well you manage the integrity of your data, chances are that you are going to have some errors in it. One of the most common errors includes differences between general ledger and subledgers (AA, MM, AR, AP..), differences between general ledger and document tables and inconsistencies in Asset accounting.
How does a company end up with inconsistent transactional data? Well, there are many reasons for that:
- Inconsistent updates made by custom developed programs and interfaces
- Improper customizing or master data changes,
- Direct updates to standard tables
In general, you are more likely to run into problems with inconsistent transactional data if your company has a large volume of data, a lot of custom code and do not reconcile data during the year-end close process
Given that data cleaning is an expensive process, it is very important to identify any data quality problem well in advance before your SAP S/4HANA conversion project starts. Otherwise, you might end up in the situation where a tremendous amount of time is needed to be spent on identification and cleansing of data inconsistencies during SAP S/4HANA conversion.
Financial data migration
After completing all the necessary checks in SAP ECC, you are now ready to install SAP S/4HANA. You can run the Software Update Manager and start executing financial data migration steps from the Implementation Guide. However, before actual migration of tables, mandatory transactional data consistency must be run. In addition, there is a consistency check after each data migration step.
You may end up with error messages that were not detected during initial checks in the source SAP ERP system. You may find yourself in a situation where you spend 1 month trying to figure out what all these errors mean and how to correct them. Due to performance reasons, consistency checks available in SAP ERP system are different from mandatory consistency checks accessible after installation of SAP S/4HANA. These SAP S/4HANA checks are more advanced and able to detect data errors which slip through the standard set of checks in SAP ERP. Unfortunately, it means that some data inconsistencies might be uncovered only late in a project.
During financial data migration, you must
- have clean data
- perform customizing,
- run the migration of transactional and master data
- verify the correctness of migrated data
All these activities need to be done during system downtime.Therefore, financial data migration is the most challenging phases of conversion to SAP S/4HANA.
There are some significant changes to the functional scope of SAP S/4HANA when compared to SAP ERP. For instance, SAP Classic Cash and Liquidity Management has been made unavailable in SAP S/4HANA . They are replaced by the newly developed SAP S/4HANA Cash Management. This is a completely new application which has to be deployed and configured.
SD (FI/AR) Credit Management has been replaced with SAP Credit Management. Again, if you want to use the solution you have to deploy it and configure it. Furthermore, you need to migrate old credit management master data and credit exposures. There is no possibility to use the legacy solution for credit management in SAPS/4HANA and you are forced to move to the new solution..
Also, for components which have not been replaced with new applications in SAP S/4HANA you can expect some extensive functionality changes. In Asset Accounting, it is the introduction of new asset accounting which impacts how you perform accounting for parallel valuations. Activation of new asset accounting is a mandatory step to be performed before or as a part of conversion of Accounting to SAP S/4HANA. Apart from an impact on business processes and users, there are also some technical preconditions to make, which can potentially lead to high effort and additional costs
SAP FIORI UX is the user interface of choice for SAP S/4HANA. It looks completely different from the outdated SAP GUI interface. In addition, the whole UI concept has become role based. This might cause some users to complain about hampering productivity. In addition, the technical configuration of FIORI can be a long and arduous process. Therefore, many companies opt for a phased approach for adopting SAP FIORI.
A high tech manufacturer in the USA recently decided to transform their enterprise with SAP S/4HANA. They opted for an SAP ECC to SAP S/4HANA System conversion. You can read through the details of the project by accessing our whitepaper. KTern was primarily designed based on the challenges and activities done during this project.