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SAP S/4HANA: Companies Face These Challenges During The Transformation

As a new study by LeanIX on SAP S/4HANA shows, despite the business relevance, only twelve per cent of companies have completed the transformation to in-memory computing. Above all, complexity and a lack of collaboration hinder integration.

In the new study “SAP S/4HANA Survey 2022” by LeanIX, most international IT experts cite business reasons as the driving force behind the change to SAP S/4HANA and hope that this will drive innovation or optimise processes. But despite this excellent business potential, only twelve per cent of companies have completed their transformation projects. The high complexity of the existing ERP landscapes and the lack of cooperation between the different teams prove to be obstacles. Seventy per cent of the companies use several ERP systems, and almost as many states that these are highly individually configured. Two-thirds of the companies describe the coordination of the business, project and IT teams as a challenge in the transformation.

Great Pent-Up Demand For Collaboration

A look at SAP teams and enterprise architects shows a clear need to catch up regarding collaboration. Only in a third of the companies do they already work closely together. As specialists in the software landscape, enterprise architects, in particular, could play an essential role in dealing with the existing complex structures. But many companies leave this valuable resource untapped. This is shown by the results of the “LeanIX SAP S/4HANA Survey”, conducted for the second time in 2022.

Enterprise architects and IT managers from 98 companies from the LeanIX portfolio took part in the survey in April and May 2022. Seventy per cent of the respondents come from Europe and another 20 per cent from the USA. The vast majority of respondents work in companies with more than 2,000 employees.

Business Reasons Speak For Switching To SAP S/4HANA

The end of mainstream maintenance for SAP ECC in 2027 will require a move to SAP S/4HANA. Most companies have recognized the potential of the postmodern ERP approach and cite business reasons as the trigger for the transformation. Twenty-one per cent of those surveyed want to use SAP S/4HANA to drive innovation and change the business. Another 33 per cent see an opportunity to optimise their business processes as part of the transformation. One would assume that most companies have already implemented what can be so significant to their business. However, the opposite is the case, as the present study shows.

The Majority Of Companies Are In The Process Of Transforming To SAP S/4HANA

Even though almost all of the companies surveyed plan to use SAP S/4HANA in the future, only twelve per cent have completed this transformation so far – and just as many have postponed the timing or the decision about the project. The present study shows that three-quarters of international companies are in the transformation process, with most still involved in evaluation and preparation.

How much time did the companies need for the transformation, or are you planning? At 36 per cent, most give a period of more than three years, and another 31 per cent name two to three years. What initially sounds like a comfortable planning horizon up to 2027 turns out to be tight timing at a second glance. Because there is a great deal of uncertainty about the amount of time required: 30 percent of the companies say that the estimated period for the transformation was or will not be sufficient – and at 37 per cent, the majority of those surveyed cannot even assess this. Why is that?

The High Complexity Of Existing ERP Systems

If you start an SAP S/4HANA transformation project, the first step is to deal with the company’s existing ERP landscape. Three-quarters of all companies worldwide use several ERP systems – and in more than half of the companies, at least one ERP system from another provider is in use in addition to SAP. Be it through specialised solutions for different business areas, country-specific features or the acquisition of new subsidiaries with established structures. More than one system and more than one provider: This is how the complex initial situation of most ERP landscapes can be summarised. The complexity doesn’t end there. Over two-thirds of the IT experts surveyed state that.

These structural features are certainly one of the reasons why almost half of those surveyed perceive it as a significant challenge to identify and map the dependencies between the ERP systems and the surrounding software landscape as part of the transformation. Only in 20 percent of companies is such a comprehensive overview available immediately or in less than a month. Most of them take considerably longer: 47 per cent of those surveyed state that they need more than three months to present all ERP solutions and other applications and systems in the company with their interdependencies. However, checking this before the migration is a prerequisite so that the operative business is not only minimally affected during the transformation project.

SAP S/4HANA: The Biggest Hurdle Is Coordination Between Teams

In the transformation, companies are not only faced with a mostly highly complex ERP landscape. Especially in the case of a transformation from a business perspective – as is the aim of the majority of companies – all stakeholders must be involved to help shape and support the necessary far-reaching changes. Not surprisingly, respondents see alignment between the teams involved in the transformation as the biggest challenge. In addition, the coordination of the business, project and IT teams is described as a significant task by two-thirds of the study participants. And it is also noteworthy that not a single one of the IT experts surveyed considers this coordination process entirely unproblematic.

Challenges in a process are initially hurdles that have to be overcome. A look at the essential collaboration between SAP teams and enterprise architects shows that this is currently not working well. In addition, only a third of the companies surveyed report that these teams work closely together.

This is not good news for the SAP S/4HANA transformation. With the help of modern EA tools and a data-driven approach, enterprise architects can make a decisive contribution to creating transparency about the highly complex ERP landscapes and the dependencies on the rest of the software environment. But these experts are often left out: Only 38 per cent of those surveyed consider integrating enterprise architects in their company’s SAP S/4HANA transformation sufficient.

This Accelerates The Transformation To SAP S/4HANA

A high level of complexity in the existing ERP landscapes and the difficulty in aligning the different teams in the company: When migrating to SAP S/4HANA, a few hurdles can be identified that complicate the process and have the potential to delay the schedule to mess up. “Companies are running out of time when switching to SAP S/4HANA,”. Companies urgently need to focus on actions that will speed up the process. The crucial step is effective collaboration between the business, project and IT teams. This not only transforms faster.

Many international companies are currently not using a valuable resource and are relinquishing the expertise of their specialists. The cooperation between enterprise architects and SAP teams, as well as the involvement of those responsible for EA in the transformation to SAP S/4HANA, can be significantly expanded. In particular, they could help to manage the complexity of structures and to create a common language for business and IT. Companies hold the key to a successful SAP S/4HANA transformation in their own hands.

Corporate IT and Product use LeanIX’s Continuous Transformation Platform for transparency and better governance. With SaaS solutions for enterprise architecture management, SaaS management and value stream management, LeanIX helps companies make informed decisions and accelerate transformations.

Also Read: How Necessary Is SAP Knowledge In Your Job?

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