Gearing for the future state enterprise architecture with SAP S/4HANA at the core of the intelligent enterprise
By Vaughn Booyens, Business Lead S/4HANA, Dimension Data
By now, your existing SAP system is probably between 10 and 20 years old, and while it works well enough across your current business, it is not geared towards the intelligent enterprise. The main drivers for moving to S/4HANA are simplification, optimisation and positioning your business for digital transformation through the use of internal and external data by application of machine learning and artificial intelligence.
At the same time, SAP ECC maintenance will reach end of life in December 2027. This, and the ever-increasing demand for digitisation and modernisation, are driving clients to change their underlying SAP architecture. This, alongside business and technology disruption, are driving clients to change their operating models. ICT operations require changes to support these new technologies and business operating models.
This can be a daunting task, as the technology transforming it becomes imperative to rapidly shift and grow new skills in your IT environment. Over the years, the IT environment’s complexity increased dramatically due to the size, diversity and integration of all the applications required to support an ever-changing business. This complexity inevitably brings reduced efficiency, agility and predictability. By moving to S/4HANA at the core of the intelligent enterprise, one can proactively reduce this complexity, enabling a faster time to market, reduced total cost of ownership (TCO) and higher operational stability, to name but a few.
Customers will be able to report on and make informed decisions through real-time data insights and live dashboards by simplifying the enterprise architecture, underpinned by an optimally designed solution.
We need to look at the enterprise architecture holistically by:
- Understanding business strategy;
- Refining operating models (business and IT);
- Understanding the latest technology trends; and
- Understanding the impact of regulatory changes on our business.
With these factors in mind, one can then define the target enterprise architecture and operating models inclusive of the integrated portfolio of projects that will be required to embrace the digital change.
The new S/4HANA core and S/4HANA Cloud Architecture aim to simplify the modernisation journey by reducing the complexity and the integration into third-party (non-SAP) systems, thus reducing operating model complexity.
The previous SAP system was customised to accommodate specific requirements across the entire business, whether it was for finance, HCM, procurement, production planning, plant maintenance, reporting, etc. However, these custom objects and the related master and transactional data can slow down the system and consume redundant database space. This in turn might increase TCO when moving to S/4 HANA.
Once we have run all the system checks, reviewed all the reports available from SAP, run it against the intelligent enterprise and enterprise architecture layer, it normally becomes evident that it is time for modernisation.
Modernisation or digital transformation are such loosely used terms. Let’s look at what the main drivers and considerations are to be able to move to the intelligent enterprise.
- Modernisation might imply a decision to upgrade existing hardware (on-premises), or whether to consider a cloud strategy that might involve re-platforming on a hyper-scaler such as Azure, AWS or GCP.
- What is the cost of my current software licensing based on my existing solution set and what will my future software licensing cost be? It also begs the question: Has the software BOM been optimally defined according to my future state SAP architecture design?
Application managed services:
- Do I have a strong enough in-house team to support the solution moving forward or would I need to outsource, co-source or insource, and what new skills do I need to train into my business?
Destination and deployment approach:
- Always a tough one to define, whether it is on-premises, private cloud, public cloud or a hybrid landscape and needs to align with your infrastructure strategy. What deployment approach will be taken?
- A new S/4HANA implementation, ie, complete business transformation can be done on-premises or in the cloud.
2. Brownfields or conversion
- Also known as a technical conversion of an existing SAP ECC environment with limited input or business change and seen primarily as an IT project.
3. Selective data transformation
- Only selected or partial data sets and selected Z objects will be migrated to the new S/4HANA system, which might be a new implementation or a converted SAP ECC environment.
Deciding which option works best for your organisation requires upfront due diligence, careful planning and taking key design elements into account.
Partner up for a smooth migration
Taking on an experienced partner, can help organisations with their move to S/4HANA. While some of the country’s bigger corporates, with good architectural skills, might be able to carry out the migration themselves, it would still be taking skills away from their daily business and losing out on opportunity cost.
The right partner can offer enterprises a complete end-to-end value proposition for their S/4HANA migration. This includes:
- Consulting expertise – SAP application transformation, infrastructure modernisation, security and operating model re-organisation.
- Data centre infrastructure – A well-established data centre, networking, compute and storage provider is able to provide a cohesive, modern on-premises automated architecture.
- Cyber security – Secure your critical data centre assets to give you governance and control.
- Technical and support services – Your implementation partner will help you design, deploy and support infrastructure solutions.
- Managed services – The right partner will manage your underlying infrastructure, so you can focus on your core business activities.
By taking on a partner and adopting the Phase Zero approach, a happy medium can be found where the customer is involved, while the systems integrator provides the skills that the enterprise does not have. This ultimately leads to a joint customer success.
Phase Zero is an architectural and planning risk mitigation exercise – both for the customer and systems integrator – to ensure all aspects of the system have been looked at, the costs are known, and the right decisions have been taken.
Based on this, organisations can be sure they have chosen the right deployment approach and options to align with their business strategy. This will ensure that organisations get a reduction on their TCO with a good ROI with moving to the intelligent enterprise with S/4HANA at the core, thus enabling their digital transformation journey.
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