What’s involved in this complex and strategic update?
While the advantages of S4/HANA are many, from cost effectiveness, faster reporting and ease of use to enabling organisations to be ready to work seamlessly in a digital economy, we’re seeing hefty examples of failed S/4HANA implementations from heavyweight companies. What lessons can organisations learn from these troubled migrations. A large proportion of organisations cite estimating cost and building a solid business case as the main challenges for moving to S/4. That’s before they even begin.
For those organisations that have already started, complexity seems to be at the heart of challenges faced.
The reality is, even the most proactive organisations kicking off their migration well in advance of the proposed 2025 deadline have realised, to their detriment, that cost is not the only barrier to success.
WHAT TO LOOK OUT FOR
For HARIBO, it was the largest IT project in its history. The conversion to an SAP installation to replace the old merchandising management system.
As each manufacturing operation apparently uses different software systems, it appears that the biggest challenge may have been the organisational change management required to adapt to a standard SAP business application. Different applications combined with integration of all the data is similarly complex. It would be interesting to know if people directly involved in the original implementation of their merchandise management system were involved in the SAP one.
For Lidl, the German retailer, abandonment of the €500m SAP project was the net result back in August 2018. That is an expensive lesson. The company implemented the SAP system to replace its in-house developed legacy merchandise management system (sound familiar?), which was reaching its limits for enhancement.
Lidl’s refusal to adapt to SAP’s standard inventory management based on retail price, versus Lidl’s method of basing on purchase price shows how it’s the details that can cause discord between software functionality and business operations. Then there’s the executive turnover throughout their transformation. The introduction of new people increases challenges to maintain alignment and momentum, as executive priorities change.
Possibly it’s the amalgamation of all these reasons namely, organisational change management, changing executive priorities and customisation, that influenced the abandonment of this project.
The commonality with both these cases is that organisational change management is one of the most important ways to reconcile unavoidable differences that ERP projects face. And that comes down to people.
A survey from Uncovering the factors that drive success for SAP customers study by SAP advisory service, Resulting IT found that failure of SAP projects to meet expectation is a surprisingly common problem.
The survey across 105 companies found that only 36% felt their SAP project kept to its original plan. Just under half said their project failed to achieve business objectives and 52% of the businesses surveyed said their project was over budget.
Speaking previously to Computer Weekly about the failure of SAP projects, former Gartner SAP analyst and Non-Exec Director of Resulting IT, Derek Prior stated that a common theme among businesses that failed to realise benefits from their SAP implementation is that they fail to match up the SAP implementation with the business case.
Not having the right level of business engagement and not having the right people to measure business outcomes, means the business case is left on the shelf and never looked at again.
Let’s be clear, this is not an SAP-slamming competition. These hurdles apply whether you are implementing SAP S4/HANA, Oracle Cloud ERP, Microsoft Dynamics, or any other ERP software. There are thousands of organisations that are successfully operating on SAP S4/HANA and other legacy versions of the software. Simply put, the software works.
No one wants to be the example test case for what not to do. There is no mythical creature to ensure smooth transition either. On top of this, organisations are often unwilling to change the way they need to.
Looking at these extreme cases of ERP implementation failure really highlights how critical it is to have a strong implementation team to help you through the S/4HANA implementation process. But that team must have three vital ingredients:
- Involvement by some of your best business process experts
- A clear focus on delivering measurable business value
- Inclusion of at least one S/4 functional consultant has has actual experience of a previous successful S/4HANA project
That's where RED come in. There are multiple SAP S/4 transition journey options but whichever way you slice it, moving and upgrading your ERP is a major project, particularly for large, established organisations that trust their current and robust landscape.
To get the most benefit from the journey to S/4HANA, companies need to understand what’s involved in this complex and strategic upgrade.
Regardless of your migration option, isn’t it time to leverage RED’s extensive network or at the very least, speak to a consultant to see how we can support your successful migration?
At RED, we’re seeing the expected acceleration of demand in the market for S/4 expertise. If you’ve got S/4 expertise or transferable skills, why not join our extensive network for access to the best opportunities? Get in touch with a RED consultant today.
To view the article on RED´s website, click here: Is your SAP landscape ready?