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September 15, 2020

Five Biggest Challenges of SAP S/4HANA Conversion

By Dr. Ravi Surya Subrahmanyam, PhD  – Director, SAP

Abstract

No matter how cutting-edge your business system may be, every software product has a finite lifecycle, becoming obsolete sooner or later. Whether it’s outdated technology, changing business trends, evolving business needs, or a change in business applications, it will become necessary to upgrade or migrate your existing business software by converting its key functionalities to a new technology. For SAP customers who are currently running on different versions of SAP ERP, they will need to consider a migration to an SAP S/4HANA system by 2027. Proper planning for this big organizational change reduces risk during your conversion process and can pave the way for smooth transition into your new ERP system.

During a SAP ECC system conversion, SAP’s previous generation of ERP, customers should look at take advantage of some of the new capabilities SAP S/4HANA offers, not necessarily just transitioning the current system functionality, to ensure a greater ROI on your technology investment.

Let’s look at the five biggest challenges your organization may face during an S/4HANA project, along with key strategies to ensure your company is prepared for a smooth S/4HANA conversion.

SAP System Conversion
Established ERP or business systems usually have well-defined functionalities which are worth preserving in new software after system conversion, to combine already proven functionality with the benefits of new and advanced technologies. SAP ECC customers can move their SAP ERP Suite to the next-generation business suite, SAP S/4HANA through a conversion path that retains all the proven functionalities and custom code of their existing implementation. This approach is suitable for customers who meet basic system requirements for conversion.

Conversion Challenges
System conversions, from one technology into another, often cause great anxiety to users and corporate leadership. Understanding common conversion problems will not only help organizations better prepare for an ERP conversion projects but any other IT platform changes as well.

Here are just five common challenges:

  1. Disorganization and confusion;
  2. Improper and insufficient preparation of the source system;
  3. Complexity of data transfer in the source system;
  4. Complexity of the custom code; and
  5. Lack of testing and validations.

 

1. Disorganization and Confusion

This is not truly a technical issue. But most conversion problems can be traced back to confusion surrounding the project plan. People responsible for making those plans often fail to fully detail all the tasks to be performed sequentially and incorrectly assess the time and efforts it takes to convert the system. Consultants working on the conversion projects must have clarity on a source and target system architecture and should also have experience in executing conversion tools, programs like Readiness Assessment, Simplification Item Checks, as well as Cross Application.

Preparing a comprehensive conversion plan should always be the first step in any SAP S/4HANA conversion project. Potential problem areas should be identified ahead of time to effectively mitigate the risk. Readiness Assessments and pre-analysis of the source system are a critical part of application configuration. Consultants must understand the state of the existing application configuration, transactional and master data in the source system to develop a conversion plan that will be the least disruptive to the business. People involved in this analysis must have the appropriate skills set. Make sure you have a trusted partner that can provide strong referrals and proof of this expertise before hiring them for your S/4HANA project.

 

2. Improper and Insufficient Preparation of the Source System

Often, lack of preparation is evident early on in the conversion process. Your conversion partner may not find the time to prepare the system perfectly as per the simplification and conversion guides, or overlook some steps. This can come back to haunt you later, and lead to frustration within your organization if you have to re-do processes and extend the project timeline. The success of a conversion project is dependent on how thoroughly and carefully the source system is prepared, and that is closely aligned with the level of preparation and detailed planning your partner and project manager have done. Your conversion partner should provide you with a step-by-step checklist to work through and understand all necessary actions. SAP Help documents, SAP Simplification Guide, SAP S/4HANA Conversion guides, SUM Help documents are also important resources that your project partner should follow in order to avoid hiccups in the conversion project.

 

3. Complexity of Data Transfer in the Source System

A Migration Monitor is a tool which helps you to perform and control the unload and load process during the system copy procedure. This tool will help you migrate Financial Accounting data from a source system to the SAP S/4HANA target system without disrupting or disabling existing business functionality. The process of transferring data from a source system to a target system is a core task for any conversion project. This activity must be completed effectively to assure data integrity.

Moving data from SAP ERP (ECC) to S/4HANA is challenging if you don’t properly prepare for conversion. Moving millions of records is complex and data loss can occur. The missing data often goes unnoticed until a user or application calls for it – and it’s not there. Although the data is not truly lost, the business cannot access it in their target system. In addition to extended downtime, lost data may also increase your budget and ultimately result in poor performance. Many companies decide to do a conversation project in-house to save money. “Do-it-yourself” is rarely a good strategy as conversion is a risky activity with major business implications and requires expert attention. During the Preparation Phase, all the sub ledgers must be fully reconciled. If you detect errors during reconciliation, they should be cleaned up.

Many organizations have high volume of records system that have to be transferred during your move to S/4HANA. It’s never as simple as moving data from one disk to other. If you expect to move more than 300–million records, SAP and Answerthink recommend partitioning your data.

 

4. Complexity of the Custom Code

A new implementation of SAP S/4HANA, also known as a ‘Greenfield’ implementation, enables complete re-engineering and process simplification. This approach lets organizations predefine migration objects and best practices. This will provide faster adoption but may come with more business disruption. In a situation where re-implementation is unacceptable because of time, cost, and or other parameters, a system conversion would be the best course of action. Migrating any custom code to S/4HANA is one of the more complex tasks in the conversion. During the preparation phase of a conversion project, an intensive study needs to be conducted to identify and assess the use of custom code. This analysis will be a major factor in deciding if the system can be converted or if it should be re-implemented.

If you find custom code that significantly resists modification and adaptation, then the source system must be analyzed. This custom code might be the backbone of information that flows within an organization or the main code that consolidates information. So, failure to adopt this custom code may have a serious business impact. These mission-critical custom developed functionalities are extremely important to analyze before starting conversation activity. If your existing system has been in use for a long time, chances are that it has accumulated large amounts of programs, or other database tables. The complexity and volume of the programs in question may be enough to justify a separate plan of its own, addressing questions on custom code.

Procedure:
An overview to perform Custom code

  1. Golden client is the checked system. To install the ATC remote infrastructure, Implement SAP Notes 2485231 , 2270689 and 2190065 sequentially.
  2. Log on to Central Check system with user ID. Implement SAP Notes 2436688 and then 2364916
  3. Download the Simplification Database from the SAP Support Portal by following SAP Note 2241080
  4. Upload the Simplification Database with your user ID.
  5. Create an RFC connection for the Code Inspector Check.
  6. Import check variants via transaction ATC.
  7. Perform the configuration for the Remote Code Analysis in ATC.
  8. Schedule a Run Series for the Remote Code Analysis in ATC.

Then, Evaluate the results of the Remote Code Analysis in ATC via transaction SE80.

 

5. Lack of Testing and Validations

Testing must be an ongoing process throughout the conversion project. Up to seventy (70%) percent of a consultant’s time should be spent on testing. It is not advisable to implement new functionality as part of the conversion project. If the goal is simply to retain existing functionality, comparison of outputs is enough to determine the validity of the target S/4HANA system.

New functionality should be implemented only after conversion activity is completed and the target system is stabilized. Even though functionality has not changed, factors such as a change in the hardware, operating system, or database, may result in inconsistent output for the same functionality. All these important factors need to be addressed in the testing process.

 

Conclusion

An SAP S/4HANA Conversion is not an easy task. Many times, this is broader than implementation, as they tend to require additional analysis to fill in knowledge gaps and retain the previous functionality. Your first step should be to contact your preferred partner to help facilitate a Readiness Assessment and provide business scenario recommendations. While a S/4HANA conversion is a major undertaking, the transformation will introduce new values and functions to your entire business processes.