SAP S/4HANA: How to achieve a successful ERP transformation

The modern business world is characterized by a rapid pace of change. The social, economic and technological conditions for companies are changing at an unprecedented pace. Digitalization provides companies with the opportunity to remain competitive and successful even under challenging conditions. For example, a high level of automation frees employees from routine tasks so that they can focus more on value-creating activities. Digital transformation creates scope for optimizing processes, establishing new business models and securing the future of the company.

SAP S/4HANA is a core element of the digital transformation

Digitization provides benefits for every department

Every department of the company benefits from digitization. The management and the Chief Financial Officer find an answer to the question of how they can identify and promote innovations and new business models without neglecting day-to-day business. The Chief Information Officer accesses real-time data from which recommendations for action can be derived and greater agility realized. Sales, service and marketing find it easier to provide the best possible customer experience and increase loyalty and customer satisfaction. And HR managers are interested in using digitization to retain employees more closely to the company and attract new skilled workers.

Top-down approach leads to success

An elementary core of the digital transformation of companies is the ERP system and thus the implementation of SAP S/4HANA. Digitalization has a massive impact on the entire company. Accordingly, successful transformation projects are planned, implemented and managed top-down. Three levels are relevant here: the strategic, the tactical and the operational level.

Strategic level

A decisive prerequisite for the success of the digital transformation is the clear commitment of management to the change. Management must fill the corporate strategy with life and provide a clear target picture. From the top level, the target picture is transferred to the levels below. Important aspects that the corporate strategy should include are the business and operating model, the digitization strategy, the topic of governance or risk management, sustainability and corporate planning.

Tactical level

At the tactical level, the implementation of the objectives formulated at the strategic level takes place. Business process management (BPM) plays a central role here because it is about adapting the processes to the strategic requirements and firmly anchoring them in the organization. The handling of master data is also an important topic in this context. In addition, the question arises as to which IT strategy best fits in with the company’s goals. Where things change, the change should be accompanied by organizational change management. This ensures that employees feel they have been picked up and are ready to embrace the innovations and support the digital transformation. After all, people are a relevant success factor in any transformation project.

Operational level

This is about implementing the transformation at the process level. It must be clarified which prerequisites are necessary for this. For example: in order to be able to prove sustainable investments in the sense of the EU Taxonomy Regulation, the ERP system must have the corresponding functionality to record this information. If this is not the case, an upgrade is required. If companies and their employees embrace digital transformation, valuable competitive advantages can result.

Why transform the ERP system at all?

Key drivers for ERP transformation towards SAP S/4HANA are the desire to harmonize and standardize business processes and master data, and the intention to improve business agility through scalability and flexibility in a seamlessly integrated enterprise architecture. Optimizing costs, entering new markets, and delivering new services all pay into business excellence and strengthen the market position of companies. In addition, an ERP transformation creates the basis for responding more quickly to changing or new regulatory requirements and for providing the necessary information. Companies are increasingly required to meet their social responsibilities. To do so, they must be able to take into account the sustainability goals pursued in their business activities and, for example, document the conformity of the entire supply chain with applicable human rights and environmental standards.

Five steps to the goal

No matter what the motives behind ERP transformation are: Companies should go through five different phases to make the transformation project a success. It starts with the development of a strategy that defines, among other things, goals and responsibilities (step 1). This primarily involves internal clarifications, conducting preparatory discussions and gathering information. All those involved in the project develop a common understanding of where the journey is headed.

This is followed by a status assessment (step 2), which determines where the company currently stands in terms of digital transformation. This quick scan serves to identify and prioritize the relevant preparatory measures for the SAP S/4HANA implementation. The top-down approach is crucial here: Management and the executive board specify the framework parameters and guidelines, which are then carried from the top of the company into the organization. Furthermore, employees must be prepared for the changes (step 3). Change management and people enablement have the task of establishing the transformation in the company and taking all those involved along with them on this journey. Only when there is a high level of acceptance for the project among employees success can be achieved. The implementation of the preliminary projects defined in step 2 runs in parallel.

Now the actual implementation of the SAP S/4HANA project, i.e. the technical implementation, takes place (step 4). People enablement continues to play an important role in familiarizing employees with the new system and its capabilities. In addition, the preparation of planned further optimizations also falls into this phase, which are to be addressed after SAP S/4HANA is in productive operation. Finally, it is important to learn the right lessons from the project and, at the same time, to drive forward the implementation of additional innovations and optimizations so that the added value of SAP S/4HANA can be increasingly exploited (step 5). One realization in particular is important here: the transformation of the company is actually never over, but continues continuously.