Postpone S/4HANA migration until later? Expert advises a forward strategy

With the recently announced extension of the maintenance period for SAP ECC until 2033, the pressure to switch to S/4HANA as quickly as possible appears to have eased - but appearances are deceptive. Patrick Sommer, Managing Director of the consulting firm CNT Management Consulting in Switzerland, explains why there is an urgent need for action and what advantages Swiss companies will benefit from after the system change. 

Standard maintenance expires in 2027

According to a KPMG study from 2024, over 70 percent of the Swiss companies surveyed are not yet using S/4HANA productively: a quarter have already migrated, a third are in the process of doing so and 28 percent are planning to switch - although 15 percent have no plans to migrate at present[1]. Now - following customer demands to extend the deadline to the end of 2027 - support for SAP ECC is being extended. "This gives companies with large SAP landscapes in particular more time - but the deadline extension is subject to conditions. A prompt switch to S/4HANA remains the best solution," Patrick Sommer from CNT Management Consulting is convinced. This is because standard maintenance for older ERP systems still ends in 2027, with the more expensive Extended Maintenance not until 2030. "An extension until 2033 only applies to SAP ECC. The systems must run on a HANA database; other databases are not supported. The old Java stack cannot be transferred either," Sommer continues. The new offer is also subject to conditions: Companies must make a long-term commitment to SAP and decide to switch to RISE with SAP. There is also the threat of an extended fee from 2031 to 2033. "In the short term, it may seem sensible to keep old systems running. But in the long term, it costs companies more time, money and innovative strength," the Managing Director is convinced.

The end is approaching - what the first steps are now

With the extension, the software group is primarily creating a transition period for large companies with a complex system landscape. For Swiss companies that work with a single SAP system, a changeover before 2030 should be feasible, according to Sommer. As a first step, he advises communicating the urgency of the migration within the company in order to create awareness. "Companies should also internalize the benefits of S/4HANA, such as real-time data and the optimization and automation of business processes. It also requires not only a clear strategy that takes into account the company's business objectives, but also a comprehensive analysis of the current SAP system landscape," says Sommer. He recommends archiving or deleting data that is no longer required and improving data quality to ensure a smooth migration. The Managing Director comments on the time required: "Generally speaking, the changeover takes between 12 and 36 months, although smaller companies may be able to complete it in up to 18 months. More complex systems in large companies, on the other hand, tend to take up to 36 months." It is important to note that the preparation phase, in which the strategy and inventory are carried out, makes up a significant part of this overall schedule.

Why act now if there is supposedly still time?

Looking at the deadlines, the need for action for Swiss companies does not appear to be particularly great at present, as the KPMG survey also shows. However, Sommer warns: "Even if it may seem sensible in the short term, switching to new systems is always the better decision in the long term. After all, those who opt for a modern solution in good time secure their investment, can use new technologies and benefit from greater automation and more efficient processes." S/4HANA, which is based on the SAP HANA in-memory database, enables lightning-fast data processing. This allows companies to access important information in real time and make informed decisions. Intelligent technologies such as AI, machine learning and IoT make it possible to make predictions and develop new business models. "The optimization and automation of business processes through S/4HANA also leads to greater efficiency, lower costs and improved customer satisfaction," Sommer continues.

Cloud strategy polarizes - recommendations must be made individually

However, according to a DSAG survey, the fact that SAP recommends the cloud variant for S/4HANA is not well received by Swiss companies. Just under a quarter rate this negatively, while 13% of respondents rate it positively[2]. "The question of the optimal strategy - whether cloud or on-premise - is complex and depends heavily on the individual needs and priorities of a company. S/4HANA Public Cloud is suitable for companies that prefer a standardized solution, want to act faster and focus on their core business. The S/4HANA private cloud or on-premise variant, on the other hand, is suitable for more complex business processes, strict compliance requirements and a high need for individualization, for example in production," explains Sommer. There is therefore no blanket recommendation - according to the Managing Director, the decision should be based on a thorough analysis of the requirements. CNT supports Swiss companies in gaining clarity about their migration path at an early stage - be it to the cloud or on-premise. Sommer concludes: "The switch to S/4HANA is more than just a technical update. It is an opportunity for companies to optimize their processes, increase their competitiveness and prepare for the digital future."

[1] https://assets.kpmg.com/content/dam/kpmgsites/ch/pdf/kpmg-studie-wie-gehen-schweizer-unternehmen-mit-der-umstellung-um.pdf.coredownload.inline.pdf

[2] https://dsag.de/presse/dsag-jahreskongress-2024-schweizer-anwender-sehen-potenziale-von-ki-und-saps-cloud-losungen/

Source and further information: CNT Management Consulting

This article originally appeared on m-q.ch - https://www.m-q.ch/de/s-4hana-umstieg-auf-spaeter-verschieben-experte-raet-zu-vorwaertsstrategie/