The Risks of Deploying SAP S/4HANA

Written By: Eric Kimberling
Date: December 16, 2018

SAP S/4HANA is a viable ERP solution

Before discussing the risks, it is important to address the good news. S/4HANA is a viable product, with a very high rating in the top ERP systems of 2019. In addition, there are a number of lessons learned from successful SAP S/4HANA implementations.

SAP has a robust software offering outside of S/4HANA as well. Ariba (supply chain and procurement), Concur (time and expense), and SuccessFactors (human capital management). This is good news for those considering an S/4HANA deployment in the coming year.

Risk #1 of Deploying S/4HANA: The software product is relatively immature

The jump to S/4HANA is a big one – much more so than the jump from R/3 to ECC and other new product updates in SAP’s past. It is essentially a rewrite of the entire platform, with the introduction of entirely new functions like machine learning and artificial intelligence. As a result, the product does not yet have decades of R&D and customer usability behind it, making it a relatively immature product.

Risk #2 of Deploying S/4HANA: Integration to Ariba, Concur, and other systems is still immature

While SAP’s acquisitions of Ariba, Concur, SuccessFactors and other outlying systems were smart moves, S/4HANA still doesn’t integrate well to these systems. Customers in the process of deploying these technologies are in the process of stumbling through how to integrate the systems and are creating much of it as they go. This leaves much to be desired in the way of off-the-shelf and easy integrations.

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Risk #3 of Deploying S/4HANA: The magnitude of change is great

The fact that the platform is a rewrite, coupled with the advanced technologies built into the software, means that the magnitude of change for your organization will be even greater than most ERP implementations. Careful and thorough attention to your people, organizational design, change impact, change readiness, and other key components of change are examples of how to ensure a successful SAP S/4HANA implementation.

Risk #4 of Deploying S/4HANA: Consultant and internal tribal knowledge of the product is weak

Because it is a relatively new product, consultants, system integrators, and your own internal resources most likely have very little understanding of the product. Even so-called SAP implementation experts don’t have more than a small sample of S/4HANA reference points. This makes training and planning even more important than most ERP implementations.

Risk #5 of Deploying S/4HANA: Requires too much focus on technology, with not enough focus on people and process

Technical complexity breeds an overemphasis on solving technical challenges rather than the more important people and process issues. For every dollar and hour spend on figuring out how the technology works, you have one less dollar and hour to invest in organizational change and business process reengineering. It is important to not fall into this trap when deploying S/4HANA.

Risk #6 of Deploying S/4HANA: SAP system integrators still have significant gaps in their offerings

It doesn’t matter whether you are using Deloitte, Accenture, Capgemini or another one of the best SAP system integrators – they are far from the one-stop-shop than many think they are. They typically have important gaps in their offerings that must be augmented elsewhere. Things like organizational change management, data mapping and migration, and training are some of the most common gaps we see.

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Risk #7 of Deploying S/4HANA: The SAP ecosystem is still rigged – and not in customers’ favor

SAP system integrators and partners are masterful sales people. They are adept at convincing organizations that their solutions will solve the most complex needs. Be sure to recognize that these players have vested economic incentives to see you leverage as much SAP software as possible – regardless of whether or not it is the right fit. It is important that you take control of your project and leverage the best technology for your organization.

How to address the risks of deploying SAP S/4HANA

The good news in all of this is that any risk can be managed. It is important to take your time, understand how to plan for an SAP S/4HANA implementation, and control the tempo and direction of your project. This is the best (and only) way to mitigate these risks of deploying SAP S/4HANA.

Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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