How to avoid external dependencies problems during S/4HANA conversions

It can be said that the most cost-effective way to implement a SAP S/4HANA conversion project is to learn from someone else’s mistakes. Perhaps that’s why we all are interested in the juicy details of an implementation story.

Korneliusz Kordus, COO at INT4, the platform provider for SAP API testing and service virtualization, has been a program director in some sizeable S/4HANA projects cross-industry – the good, bad and ugly – throughout his time at INT4, IBM, SAP and beyond. For any company heading into a S/4HANA conversion project, Kordus’ key message is to be wary of external dependencies before you even blueprint your solution.  

In brief, external dependencies are systems beyond the scope of a given project, whether internal or external to an organization, that are critical in its day-to-day operations. 

For example, many companies outsource or collect orders from a non-SAP ecommerce solution using EDI (Electronic Data Interchange) providers. Non-SAP Warehouse systems can also be a big hitter here, usually within the organization, but as a separate, yet highly connected and very vital piece of the IT infrastructure. There’s also a growing tendency to outsource logistics processes to third-party providers. Then, there are mandatory systems, like banking, tax and government reporting that also have to be integrated. 

The common denominator of these systems is that they allow organizations to conduct their daily business activities smoothly, and are separate beasts to consider in any S/4HANA conversion project. Plus, as businesses lean into composable ERP, features like these are becoming all the more common.

For Kordus, the dependencies are a growing risk factor for a project if not addressed early doors. He explained: “As project managers, we care about the time – we are expected to deliver on time, the quality that is expected and within budget. So those external dependencies, you can look at those as risk factors, because you do not have the entire control over it. They may sit within or outside an organization – if sitting within, this may be slightly less of a problem for us. If outside, I’ll have a limited ability to influence the external people running those systems, in the sequence and activities that we need for the project.

“The later you start to think about it, the worse news you’re going to get because if you have to go back to the very first step, try to recreate a defect, resolve it, push it through all the system – that’s not so fast to do.”

To try and circumnavigate these external roadblocks, businesses can ask their vendors, suppliers, ecommerce partners, EDI providers, to help set up some extra environment for the sake of the project, but it’s likely to take up a lot of time for complex cases. 

Kordus warns here that businesses “won’t have very direct control over it, it takes time and resources – it simply costs the organization money.”

Moreover, the risk is larger than just this project – as though integrations are the bread and butter to introducing innovation to a business, when a company then struggles to test and maintain them in a core ERP upgrade scenario, as with big SAP programs, they will more cautious to do any other business initiatives, innovations, and will innovate slower and do less business initiatives because the process is just too complex, expensive, slow and risky. 

At INT4, the team builds a virtual test environment with all a company’s external dependencies and SAP solutions showcased within, to speed up and secure the S/4HANA conversion process. 

“When speaking about S/4HANA, which is usually a very complex, lengthy process that you are doing on top of your regular business, we know the project is going to take up a lot of time; it’s going to be heavily changed and enhanced,” said Kordus. 

“The best time to think about it is before the project: Make everyone aware, provide solutions – checking the general market – because you can’t be the only organization that has thousands of integrated systems that are directly affecting your business –  then you create this as a challenge of the whole organization – so what tools and solutions can I bring to the organization so it can be prepared from the standpoint of skills, procedures, ways of working and tools.”

Global retailer brings S/4 conversion back after double delay

It’s this approach that has helped one very large global retailer in particular with its heavily connected landscape, and a strong dependency on its external systems. It had already failed twice over at undergoing an S/4HANA conversion project, due to a lack of capacity to represent and validate all these crucial external system nuances and differences during the testing phase. Testing one by one was too slow and caused the project to delay and be postponed. 

In this case, the retailer decided to virtualize all those external dependencies with INT4, mimicking the incoming and outgoing messages. Then the company was able to send over 10,000 messages at once this way, essentially cutting the drag of the dependencies, and has now successfully gone live with S/4HANA.

“It proves my point, that the earlier you think about this element ahead of time, you can save yourself a lot of trouble in the project,” noted Kordus. 

With oncoming rollouts across the multinational company, it has continued to use this same approach effectively business-wide.

With any S/4HANA conversion project, it represents a pretty significant investment, and most often a decent complexity for a company to face. But, you can be sure there will be another need down the line, technically-driven, business-driven, if you make a merger, an acquisition, or you enter a completely new line of business, and so on. 

“For the whole organization, it’s just one stop in the whole span of the journey, because the changes in the IT landscape, that are being driven by the needs of the market and the strategy and vision of an organization – they will never stop,” explained Kordus. 

With change inevitable one way or another, especially for SAP users in the coming years, it’s not necessarily possible for companies to put off upgrade projects. Preparing a suitable strategy for implementation, and keeping a close eye on external dependencies early doors, can help avoid the dreaded conversion sticking points later down the line.