The decision to move forward with an SAP S4/HANA implementation project is a big one. The stakes are high, potential business benefits are even higher, and there are significant risks to be mitigated.
One of the biggest challenges with S4/HANA implementations is that they can be expensive. Even more so if you don’t have a solid plan and structure in place. Every extra day it takes your company to make decisions can be very costly when the meter is running on dozens (or in some cases, hundreds, if you’re a larger organization) of consultants from your SAP system integrator.
To avoid these pitfalls and to ensure a successful SAP S/4HANA implementation, your team should keep the following in mind:
Develop a realistic view of time and cost
Unrealistic expectations are some of the biggest mistakes you can make early on. If your expectations are misaligned, you will end up making poor decisions later on. For example, organizational change management is one of the first things to be eliminated from scope – even though it is one of the most critical success factors you can invest in.
I’ve studied several hundred SAP implementations over the last 10 years, and here are a few benchmark metrics to determine if your estimated time and cost is realistic:
- The average SAP implementation costs 3-5 times the investment in software, and
- The average SAP implementation costs 3-4% of a company’s annual revenue
These metrics might go up or down based on a number of complexity factors. This initial implementation time and cost estimate should be refined based on the factors below.
Define a phasing strategy that aligns with your culture
Some companies intend for changes to happen quickly, but then they end up phasing the transformation in a way that dilutes that intent. Things like availability of internal resources, willingness to push team members to do whatever it takes to meet timelines (or not), and risk tolerance all factor into how appropriate your implementation strategy might be.
Your phasing strategy should ultimately align with your culture. This alignment is more important than any decision you make. Make sure that the phasing strategy you put in place
Understand the magnitude of process change you’re willing to take
There’s no doubt that S4/HANA will enable business transformations beyond your wildest expectations. But, that doesn’t mean you should tackle too big of a change all at once. Instead, it makes sense to:
- Define how much you’re really willing to change – in actuality, not just what sounds good in theory
- Ensure that this project vision is consistent with your corporate strategy and vision
- Define an effective global change management strategy to manage that change
- Adjust your phasing strategy and project scope as needed
Once you have addressed this component, you can shift to executing, managing change, and ensuring overall alignment.
Develop your internal and external resource plan
Offering up sufficient internal resource support is one of the biggest challenges you will face on your SAP S4/HANA implementation. Most companies we work with are fairly resource constrained, so pulling the best ones out of daily operations is a real challenge.
These steps will help you accomplish these things:
- Define clear roles and responsibilities between your organization, your SAP system integrator, and other third parties
- Define the gaps between the resources you need and the ones you currently have
- Define the appropriate mix between internal and external roles (including onshore vs offshore development resources)
- Hire the internal and external resources you need to support the project
- Adjust your project strategy and plan accordingly
- Hire resources to backfill your project team as needed
If anything is going to slow you down and cause budgetary overruns, lack of resources is one of the most likely. Your effective resource plan will help mitigate this risk.
Develop an organizational change management plan
The organizational changes required to enable an S4/HANA implementation will be great. The technology will be much easier to change than the people or business processes. With this in mind, you will need to define an effective global organizational change management strategy to enable the overall transformation.
Your change strategy should include:
- Organizational readiness
- Organizational design
- Executive and stakeholder alignment
- Benefits realization
- Workforce transition
- Cultural transformation
An effective organizational change and operational transition plan is the most important thing you can do to ensure project success.
Define your IT transition strategy and plan
Don’t forget about your IT department. Even though this should be a business initiative rather than an IT-driven one, your IT department will be as impacted as anyone. They will require new skills, physical architectures, and training to effectively support the project in the long- and short-term.
Here are some of the things that should be addressed as part of your IT transition plan:
- System architecture and integration points
- Application decommissioning plan
- Skills migration and training
- Reporting roles and responsibilities
- Project and post-go-live support processes (help desk support)
- Longer-term Center of Excellence plans
Remember that this is group that will manage the environment long after the SAP consultants and project team members are gone.
Build for SAP S4/HANA sustainability within your organization
Your transformation to S4/HANA is a journey, not just a one-off project with a definitive start and end date. You need to plan and act accordingly. This should be addressed as part of your SAP S4/HANA project quality assurance work stream.
Address this risk by developing and executing an SAP S4/HANA center of excellence strategy. This will ensure that you have the appropriate factors in place:
- SAP S4/HANA knowledge transfer between your system integrator and your internal project resources
- A clear support plan going forward
- Better integration between your business operations and IT staff
- A clear transition plan for your IT staff
- A clear upgrade strategy and plan in the future
If you’re in this SAP transformation for the long-haul, then you’ll need to build a sustainable organization to support that vision. The video below provides some tips on how to do so (please note that this video was recorded before I spun off from Panorama Consulting to form Third Stage Consulting, so please disregard the contact information outlined in the video):
SAP S/4HANA implementations are no easy feat. These planning steps will ensure that your implementation doesn’t get off track, take more time and money than expected, and fail to deliver the expected business benefits.
You can learn more by reading about our 20 Lessons from Over 1,000 SAP Implementations.