Transitioning to SAP S/4HANA is one of the biggest IT projects that many organizations will undertake in the coming years. While the original deadline of discontinuing maintenance for SAP ECC in 2025 was pushed to 2027, with an optional extension through 2030, migration from the older SAP systems to S/4HANA is a hot topic.
Deciding on the approach
Perhaps the biggest questions that companies are facing relate to the deployment options for S/4HANA. Do you move to the cloud? Which cloud? Multi-tenant or single-tenant? How does that impact current processes? As these and many more questions are being debated in organizations, the discussion usually boils down to making a choice between flexibility and standardization.
On one hand, many companies have highly customized processes built into their current SAP environment that are expensive to maintain but are tailored to support the business in an optimal way. On the other hand, SAP – and the whole idea behind cloud computing, for that matter – promotes standardization of processes exemplified by the best practices and the SAP model company to enable efficient maintenance and system updates.
The right choice for each company will depend on their priorities, nature of their business and the ability of the IT organization to partner with business to redesign and evolve current processes. However, it is good to keep in mind that fully leveraging the benefits offered by S/4HANA is likely to require at least some changes in the current ways of working.
Integrations between S/4HANA and other systems – Reconfigure or redesign?
Regardless of which deployment option the organization chooses, the transition itself will require a significant amount of work in connecting the new S/4HANA environment with other business applications and external systems such as suppliers, customers, logistics partners, banks, and others. Integrations that help automate business processes between S/4HANA and other systems will need to be – at the very least – reconfigured, but the migration and the connectivity options provided by S/4HANA also raise questions about redesigning some of these connections.
Both the SaaS (software as a service) and license versions of S/4HANA offer a rich set of REST and SOAP APIs that complement the more traditional SAP interfaces including BAPI, RFC and IDoc. This enables new integration design options that, for example, offer better support for real-time data flows. Real-time business processes being a key area of improvement that S/4HANA touts over the older systems, these new API connectivity options are an essential enabler of the system’s value proposition.
Whether or not it makes sense to completely redesign an existing integration flow will depend on various factors – such as how well the current integration design supports the business process and if the requirements are likely to change – but the sheer fact that the transition to S/4HANA forces companies to work on their integrations can be a major catalyst for change.
S/4HANA transition creates a business case for modernizing integration solutions
In fact, since the ERP system is often integrated with various other systems – both internal and external – the migration to S/4HANA may open a broader business case for modernizing some of the existing integration solutions that companies are currently using.
Many organizations have accumulated several integration platforms and other middleware tools over the years while trying to keep up with evolving business requirements and project deadlines. This has resulted in a situation where the organization’s integrations are split across various platforms with varying levels of documentation and lack of overarching visibility into the data flows.
The IT team may also have limited expertise to work on the different platforms, in which case they must rely on external consultants for things like error resolution and change management. Nevertheless, as these integrations have still gotten the job done, it may not have made sense to “fix what is not broken” even though their performance may not have been optimal and the situation may even be considered a risk for business continuity.
By forcing companies to spend money on reworking a significant number of their existing integrations the S/4HANA transition changes this dynamic. When the switching cost of implementing a new integration solution is compared to the cost of redeploying existing integrations using current tools – as opposed to no cost at all – it improves the business case around replacing legacy integration solutions or consolidating integrations onto an existing or completely new integration platform that offers better performance, governance and visibility of the organization’s data flows.
Seize the opportunity, start now
Integrations are too often an afterthought when it comes to ERP projects. Instead, ERP integration should be a strategic consideration for organizations that is embedded into the planning process.
Not only are they essential to automating processes and realizing the full benefits of the ERP system, modern integration solutions such as OpenText™ Trading Grid™ can even contribute to some of the design choices, offering an alternative layer of data processing that can improve data quality and help avoid customizations in the core ERP system making it easier and more cost-effective to maintain.
With S/4HANA transition, organizations can make integration a strategic element of their IT operations, which can improve the value it delivers. This opportunity should not be missed.
Read our white paper Optimize your SAP S/4HANA integration strategy with managed services to find out more about modernizing your integration operations in connection with transitioning to S/4HANA.