In the first article of this three-part series, I looked at the global trends that are shaping M&A and the resulting impact on SAP customers, before exploring, in the second article, the relatively recent phenomenon of the SAP carve-out project. A carve-out project is one example of how landscape transformation technology and the landscape transformation concept more generally can help customers drive change in their SAP environments.
In this article, I will examine how landscape transformation can be applied to help customers realise rapid value from the migration to S/4HANA. SAP calls this method Selective Data Transition (or SDT).
Background and history
SAP customers who are on ECC and looking at moving to S/4HANA will know about and understand at least two methods for getting there: a new-build S/4HANA implementation (often known as greenfield) and a system conversion (brownfield). For a while, these were the only two methods that SAP itself promoted to customers.
However, it soon became clear that this was leaving a big requirement gap for many customers – a system conversion allowed little opportunity to deliver wider business change and process improvement, and a new implementation involved companies writing off years of investment in their SAP solution.
I first wrote about this in 2019 when SAP decided to support a more flexible, “hybrid” model for migrating to S/4HANA with the launch, initially in German only, of the grandly named S/4HANA Selective Data Transition Engagement working group.
What is Selective Data Transition?
In my previous article, I wrote that the defining characteristic of a SAP carve-out is the combination of a system clone plus the use of a landscape transformation software to selectively migrate or delete business data. SDT involves taking this landscape transformation approach and applying it to the migration to S/4HANA. First, you create an empty copy of the original SAP ECC application including the technical repository and the configuration and customising of the system but without any application (or business) data; then you move and upgrade this empty shell system; and finally, you selectively migrate all relevant application data.
As with SAP carve-outs, it is this combination of a shell system copy plus landscape transformation software that gives this approach its power and flexibility. The shell copy gives customers the ability to change their SAP solution, and therefore embed business process improvement into their S/4HANA programme, while retaining and leveraging their investment to date. And the landscape transformation software allows customers to migrate fully integrated, historical data to S/4HANA (rather than only master data, open items, open financial balances, etc), transform and improve it in-flight, and exclude obsolete or redundant data.
Selective Data Transition technical approach
Why is Selective Data Transition important?
The SDT approach gives companies the opportunity to strike a balance between reusing and redesigning their existing SAP solution, and plugs the huge gap that exists between system conversion and new implementation. SDT is far quicker and more cost-effective than a new implementation project and significantly more flexible than a system conversion. A Goldilocks option, it is an ideal way forward for companies who want to deliver targeted rather than widespread process change in their SAP environment.
Imagine, for example, a manufacturing business which wants to largely reuse its production and warehousing solution while adopting simplified, standardised finance processes. Or a council which wants to reduce its data footprint from 20 years to 7 years of history as part of a migration to S/4HANA to reduce running costs in a cloud environment. Or an energy business which wants to leave its asset management solution unchanged, retain the full set of historical data in plant maintenance and move to a third-party HR software, all at the same time as implementing a new chart of accounts and currency in S/4HANA.
This last scenario is exactly what we helped West Burton Energy to do as part of their post-divestment carve-out from the EDF SAP ECC environment in 2022 into their own AWS landscape. As well as covering the full spectrum of change which lies between system conversion and new implementation, a major benefit of SDT is that it allows customers to bring together multiple projects into one.
With West Burton Energy, it was a system separation and migration to S/4HANA. With another company it might be the merging of a number of companies from multiple larger SAP ECC system to create one new consolidated business division in its own S/4HANA environment. Or it could involve combining an S/4HANA upgrade with a move to cloud.
One important qualification
Strictly speaking, it is the combination of the shell system copy and the landscape transformation software that defines the Selective Data Transition approach to migrating from SAP ECC to S/4HANA. However, depending on your circumstances and priorities, it might make sense to adopt only a part of the approach. For example, a customer which is currently running its financial processes on SAP ECC and wants to make targeted change as part of its migration to S/4HANA, but which has no real desire to take over any historical financial data, might be better advised to create a shell S/4HANA environment based on its SAP ECC system, but then migrate master data, open items and opening balances using the S/4HANA Migration Cockpit.
Similarly, if your target S/4HANA environment is being created as part of a carve-out of a divestment, you might not want or even be allowed to create that target as a shell of a much larger and more complex legacy environment. In that situation, it might be a better idea to create a new-build S/4HANA environment, taking care to mirror the legacy configuration of the divested companies, before then using landscape transformation software to deliver a full historical data migration for relevant legal entities.
It is not the case that the two core components of a Selective Data Transition have to be deployed together.
So what are the downsides?
As I said earlier, the SDT approach covers a wide spectrum of transformation scenarios but it might not be the right choice for your company. If you are looking to deliver widespread change and standardisation through the migration to S/4HANA, using a model company approach as part of a new implementation might be a more appropriate choice. At the other end of the scale, if you simply want to upgrade to S/4HANA in the quickest, cheapest way without any real change to how your business operates, a system conversation could be a more logical route forward.
There is also the project licence cost of the landscape transformation software to consider. A small number of companies, mostly based in Germany, provide this type of software and make up the SDT engagement community that I mentioned earlier. At Xmateria, we work closely with Natuvion and their DCS technology when delivering carve-out or Selective Data Transition projects for our customers. In our own experience, the project cost of the software is more than offset by the reduction in data migration consulting services made possible by the increased levels of automation.
These caveats aside, while it is not really a drawback, my one frustration with Selective Data Transition is its name! It is both uninspiring and slightly misleading: the term “Selective Data Transition” puts the focus on the purely technical aspect of the data migration and gives no hint at all as to the transformational opportunities it provides to customers. Perhaps this is why technology and consulting firms use a variety of terms in their own literature to refer when talking about SDT. I have heard numerous variants on a theme including Brownfield Plus, Allfield, Bluefield, Rightfield and, from IBM, Rapid Move. All of these terms refer essentially to the same thing and function mainly to confuse the customer.
In summary
A significant proportion of SAP ECC customers are looking for a selective transformation as part of their migration to S/4HANA. The most successful transitions to S/4HANA are those which incorporate real business value which is almost always going to mean some level of change to business process. However, only a minority have the budget and appetite for a completely fresh implementation of their largest enterprise software platform.
The latest research from Gartner estimates that around a quarter of SAP ECC customers will adopt a hybrid model for migrating to S/4HANA. This would mean somewhere between 7,000 and 10,000 SAP customers. Whatever you decide to call it, it looks like Selective Data Transition is here to stay.
