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The Journey to SAP S/4HANA: Key Lessons from PwC Research

Key Takeaways

⇨ While migrating to SAP S/4HANA is a complex undertaking, organizations that have completed the migration agree that the benefits, such as improved processes and streamlined reporting, outweigh the challenges faced during the transition.

⇨ Common challenges faced during S/4HANA migration include longer-than-expected timelines, higher training needs, increased costs, integration difficulties with legacy systems, and lower user adoption rates.

⇨ Proper planning, readiness assessment, and awareness of potential challenges are crucial for a successful S/4HANA migration, as organizations that have not started the process may underestimate the effort and resources required.

SAP S/4HANA is the latest generation of the SAP Business Suite, scheduled for full migration among clients in 2027. It provides the digital core to propel businesses toward their objectives, helping organizations unlock opportunities, evolve processes and solve their biggest challenges

A look at the key benefits and challenges of migrating to S/4HANA

SAP S/4HANA is the latest generation of the SAP Business Suite, scheduled for full migration among clients in 2027. It provides the digital core to propel businesses toward their objectives, helping organizations unlock opportunities, evolve processes and solve their biggest challenges. However, migrating to S/4HANA is hardly a matter of just flipping a switch. It’s a complex undertaking that requires a substantial amount of planning and forethought before the first tactical steps are taken. Organizations must begin by evaluating the health of their current operating model and their readiness to make the move.

To help understand the context of those questions, PwC developed the S/4 Journey Guide, a survey-based assessment that helps clients quickly determine how they can use S/4HANA to reimagine their business’s operating model and drive value creation. We polled hundreds of clients to determine and analyze the likely outcomes, barriers and operating model component readiness work involved with the transformation to S/4HANA. Here’s a selection of those findings.

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SAP clients are further along in migration than expected

A quarter of SAP clients surveyed are already at the proof of concept stage in their migration to S/4HANA, and another quarter already have the system live and fully deployed. Another 35% of SAP clients say they expect to have S/4HANA live in the next year. Less than 20% of all SAP clients report that they are due to complete their migration in 2022 or beyond.

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Enterprises have extremely high expectations of the benefits of S/4—and S/4 is delivering

Our survey also asked respondents what they expected to gain from their migration to S/4HANA, and, for those businesses that had completed their migrations, whether those benefits had been realized. The overall results showed exceptionally high expectations across the board. Yet almost all respondents agreed that S/4HANA was actually exceeding those expectations.

But challenges remain

Organizations that have not yet completed their migration to S/4HANA can learn from the lessons of those who have. Nearly all respondents reported some measure of challenges in moving to the new platform. The most common issues: The transition took longer than expected, required a higher level of training, and cost more than originally budgeted.

Around a third of live clients underestimated the time, training, costs and customization involved in the S/4 transformation

It took more time than expected

39%

It required more training of staff than expected

33%

It costed more than expected

32%

It required more customization than planned

31%

Difficulties bringing legacy system(s) together with the new system

27%

Difficulties with technology

25%

Difficulties to manage ongoing operations of the transformation

25%

Functionality of S/4 doesn’t meet our needs

25%

User adoption rate lower than expected

20%

Difficulties to respond effectively to changes (e.g. statutory, legal)

19%

Q41. We want to understand what challenges, if any, your organization experienced during the S/4 transformation journey?

Base: 126 (Live clients)

Almost half of non-live clients believe that their organization is not fully aware of the benefits of S/4, and resource constraints are a further expected challenge on the transformational journey

Our organization is not fully aware of the benefits S/4 can provide

45%

Resource constraints (time and people)

43%

Security/compliance/data privacy risks are a concern

35%

Costs constraints (don’t have budget available)

32%

Technology constraints

30%

Our existing ERP is perceived to be good enough

26%

Return on Investment (ROI) constraints (don’t have the evidence to demonstrate a ROI to justify the move)

25%

Requirement to remain with legacy solution

21%

Functionality of S/4 doesn’t meet our needs

18%

We are not clear on our ERP strategy

18%

Q42. Thinking about the transformation journey to SAP S/4, which of the following challenges do you expect to face?

Base: 117 (Non-live clients)

The bottom line

The road to S/4HANA may appear difficult, but in general those who’ve completed the journey agree that it isn’t as difficult as expected. More importantly, real benefits await those who make the move to the latest generation of SAP—including improved and more modernized processes, better operational control and more streamlined reporting operation. All of this can be put to work in your organization, too. With a few years left to make the transition before SAP’s 2025 deadline arrives, there’s plenty of time to complete the job, even if you haven’t taken the first step.

 

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