5 Reasons Data Governance Is Critical to SAP Modernization

Moving your SAP ERP systems to the cloud is not easy. It may be one of the most significant technological interventions that your company may undertake. However, for many companies, SAP modernization is inevitable. The traditional, on-premises systems that have been crucial for their business are becoming outdated compared to modern cloud-based systems, making it a necessary move.

When considering migrating from SAP ECC, it’s essential to remember that there are several reasons to do so beyond the end of support in 2027. Improved scalability, better performance and cost benefits for real-time analytics and AI use cases also make compelling arguments to start the migration process as soon as possible. Therefore, initiating the migration process earlier rather than later is crucial to take advantage of these benefits.

Most companies have opted for cloud-based solutions to update their ERP systems, with more than 60% already making the switch.¹ Many integrate advanced automation and AI technologies into their modern ERP systems. The future of ERP is cloud-first, modern and intelligent.  

Migrating on-premises SAP workloads to the cloud while keeping business operations running smoothly can be challenging. SAP modernizations are notorious for high failure rates, costly delays and operational disruptions.

Data plays a crucial role in project success. However, many projects fail due to various factors, including inadequate project scoping, misaligned business objectives, lack of readiness and security oversights. The root cause for these issues is often the insufficient attention given to data.

In fact, research suggests that more than 30% of ERP projects get delayed, and 33% of ERP projects overrun budgets because of data issues.²

SAP modernization can be likened to moving into a new house (your new SAP cloud environment). First, you sort through your belongings —your enterprise data — to decide what you keep, discard, donate or sell. Then, figure out the logistics of moving, such as timelines, budgets and resources. Next, you will need to inventory all the items, categorize them, label them, figure out what items need to be together and assess their packaging before you get them ready for shipping. Once your belongings arrive in the new location — the cloud environment — you will need to check their condition, unpack them in order of priority and make them operational to support your needs.

When a company upgrades from SAP ECC to S/4 HANA, it needs strong data management capabilities. This is where modern data governance solutions come in. They help companies accurately plan migration costs and timelines and identify and mitigate risks related to data quality, data security, compliance and data sharing. Automating data quality checks, lineage tracking, and policy enforcement on large data volumes reduces manual handling time and builds trust in data. Easy access to data assets in the new environment ensures compliance protocols have been met, accelerating adoption.

More than two-thirds (66%) of respondents indicate that data management is challenging when moving from SAP ECC to SAP S/4HANA.³ Data governance brings data early into the modernization conversation and helps to ensure all parts of the SAP migration journey are fueled with trusted data.

Let us look at five ways in which data governance helps to get your SAP modernization off to a solid start.

1. Assessing the volume and complexity of the data being migrated completely and accurately.

As you continue to use your customized SAP system, your data landscape becomes more complex and fragmented. To effectively plan for a migration, you need to locate, identify and inventory all enterprise data. That will give you a clear picture of the full scope of the migration effort. Data cataloging allows you to connect, discover and classify data spread across all your enterprise SAP and non-SAP sources. Informatica’s advanced data cataloging solution leverages AI and automation to accelerate the discovery process and prepare for data migration faster.

2. Understanding the data landscape holistically.

A lack of insights into how data flows across your existing systems and the associated dependencies between data entities can severely disrupt migration schedules. As you plan your data outlay in the cloud environment, it is critical that data lineage and relationships are accounted for, and appropriate transformations are applied to replicate the business context and data integrity. Solutions like Informatica’s Cloud Data Governance and Catalog that offer end-to-end data lineage capabilities to provide complete visibility across data flows and intuitive visualizations help data leaders understand, prioritize and plan SAP migration and enable teams to execute efficiently with business continuity in focus.

3. Determining the health and readiness of data.

SAP modernization projects give data leaders an opportunity to reset acceptable standards on data quality. The challenge, however, is assessing the validity of large volumes of data spread across diverse systems and pipelines at speed. Data leaders need to determine the accuracy of data that needs to be migrated, identify data issues and risks, and deploy remediation efforts early to prevent any unexpected delays in migration due to data quality concerns. Integrated data quality solutions can quickly yet efficiently profile enterprise data and combine it with data governance solutions to provide observability on data health as it moves across data pipelines.

4. Ensuring data governance and compliance requirements are met before, during and after migration.

SAP data, whether on-premises or in the cloud, gets widely used across a range of business functions, business users, customers, and third-party vendors. It is business critical that as data for migration gets identified, associated data governance policies and processes are automatically enforced to ensure compliance and mitigate migration risks. With generative AI getting embedded into S/4HANA, companies will need to govern AI models in SAP applications. Manual efforts for data governance cannot scale to meet these needs. Informatica uses AI to automate the deployment of data governance and provides governed data management for AI to help clients drive better AI with trusted data in SAP applications without compromising the responsible use of data.

5. Empowering the organization to achieve desired outcomes with the S/4HANA investment.

To increase the speed of post-migration adoption, data consumers must understand and trust the data they are using. This will enable them to use it more quickly and efficiently. Data leaders should plan to ensure that SAP users have access to trustworthy data that can provide deeper insights. Making high-quality data available through a governed data marketplace will allow SAP users to quickly find, organize and share trusted data assets across the organization, boosting user confidence. To modernize the SAP landscape, it’s important to use solutions that allow users to collaborate on trusted data and offer broad and deep connectivity with SAP and non-SAP applications. This will form the bedrock for your multi-year journey toward modernization.

SAP modernization projects require multiple teams and capabilities for seamless execution. Fragmented data management tools increase complexity and risks.

Informatica Intelligent Data Management Cloud (IDMC) is the only AI-powered data management platform that allows you to prepare, integrate, master and govern all parts of your SAP migration journey from a single platform.

To learn more on how you can accelerate your SAP modernization journey with Informatica, join us for the webinar SAP Modernization: From Strategy to Success