With only about one quarter of SAP customers having moved from their existing ECC environments to S/4HANA, it’s clear businesses are looking for guidance on the best way to manage such a transformative migration. This hesitancy is understandable – SAP S/4HANA represents more than a technical upgrade, it’s a major functional change.

That means IT leaders are thinking about more than just the costs of moving and the timing of workload migration. They’re also faced with developing a strategy for taking full advantage of S/4HANA’s radically different, cloud-optimized application and database environments, and using the move as an opportunity to adopt a clean core methodology. After all, the real driver for moving to S/4HANA isn’t a deadline, it’s the business value of modernizing one’s code, data, processes, and infrastructure. Put another way, if customers are going to make a significant investment to migrate to S/4HANA, they want to do it in the smartest possible way.

A clean core methodology can decouple ERP environments from customization that has increased complexity and made such environments much more difficult to upgrade. Specific to SAP, clean core means keeping S/4HANA free of customization, creating a system that’s manageable, easy to upgrade, and extensible to meet unique business needs. Such modernization will enable businesses to leverage new sources of data, more effectively respond to changes in their markets, and innovate at a pace that will delight their customers.

Let’s break down S/4HANA migration into its component parts:

Code modernization

Code modernization – which relies heavily on the clean core methodology – establishes a path away from current monolithic ERP models and custom code, which make integrations across enterprise applications complex and slow innovation. The first step in code modernization is to ensure there is a cloud-native DevOps platform in place to contain the SAP extensions. During migration to S/4HANA, extensions requiring custom development should be done on the cloud-native platform and integrated to the digital core through web service APIs.

Once an SAP ERP digital core is “clean”, SAP version upgrades become significantly less disruptive. Businesses are also better able to use advanced technology native to cloud environments, including machine learning and AI. In addition, code modernization lets businesses incorporate new data sources into their applications. Consider, for example, the impact of adding weather data to a company’s applications for supply chain management, financial forecasting, predictive maintenance, or logistics routing.

When choosing a cloud-native DevOps platform that is inherently able to run your extension workloads on any major cloud provider, the natural choice for SAP extensions is SAP’s Business Technology Platform (BTP).  SAP BTP facilitates the necessary connectivity setup  that needs to exist between the extensions and the S/4HANA core in terms of users, authorizations and access to APIs. Additionally, SAP BTP comes with several modern cloud services for business workflows, integration and analytical scenarios.

In addition, many organizations have already chosen a cloud provider and used the cloud-native services available to create innovative solutions.  Many have a preferred cloud-native DevOps platform, supporting a “develop once, deploy anywhere” capability, such as Red Hat OpenShift, SUSE Rancher, or VMware VCF.  Enterprise-scale DevOps platforms are sometimes selected because they can be used to extend any application across the enterprise, not just SAP.  Also, in addition to being able to deploy workloads to any cloud, a runtime and management tooling is provided to deploy cloud-native workloads to an on-prem datacenter.  Of the enterprise multi-cloud DevOps platforms available in the market, Red Hat Openshift has a strong leadership position with nearly 50% of the top Fortune 100 companies using it.

 Data quality and conversion

As businesses plan their move to S/4HANA, it’s critical to determine if the current state of data supports planned business outcomes, and to automate remediation of data errors to reduce overall data complexity and footprint. One of SAP S/4HANA’s biggest changes is the consolidation of master data and transactional data databases across the various application modules. In previous versions of SAP, for example, there were multiple customer master databases for ERP, CRM, supply chain, and other modules – each of which needed to be constantly synchronized for consistency.

In addition, a migration to SAP S/4HANA provides an opportunity to cleanse and archive data that has accumulated in SAP for years. In most cases, there are duplicate, incomplete, obsolete, and old records that are no longer needed.  Examples could include five different customer record entries for a single customer, or invoice records from 12 years ago.

An S/4HANA migration provides a great opportunity to consolidate and cleanse this data. Because SAP S/4HANA requires the HANA database to run in-memory on the server, reducing the data footprint can provide significant savings on hardware or cloud IaaS subscription costs.

Process optimization

Process optimization offers a way to simplify and optimize business processes to improve outcomes. SAP is traditionally a transaction-driven application, not a process-driven application. SAP has a repository where processes can be graphically designed and documented, but there is no process runtime engine that ensures SAP users follow that process flow as they use SAP. 

A migration to S/4HANA provides an opportunity to analyze whether users are using SAP as it was intended based on the original process design, analyze for potential to improve business processes, and put technology in place that can automate and monitor processes in SAP. That gives businesses the opportunity to gain real-time visibility into active processes and to proactively manage inefficiencies through automation.

 Infrastructure modernization

 Infrastructure modernization involves introducing cloud native capabilities to ERP environments while extending the value of existing investments. When moving to S/4HANA and the SAP HANA database, businesses should look for a cloud provider that can accelerate time-to-value leveraging your existing investments and offer infrastructure capacity that can scale in granular increments. This helps you maintain right-sized environments and pay for only what you need, without being forced to overprovision capacity. 

Organizations have the choice of deploying SAP S/4HANA on-premise or in the cloud.  To deploy SAP S/4HANA on-premise an SAP perpetual software license is needed.  On-premise licenses can also be deployed through an SAP certified cloud provider.  However, most who choose to modernize their SAP environment with cloud IaaS will opt to license SAP as a subscription service.

In order to help smooth the transition of running SAP workloads in the cloud, SAP introduced RISE with SAP at the beginning of 2021.  RISE with SAP is a fully managed subscription service that comes with a pre-defined set of service-level argreements (SLAs) for parameters such as application availability, performance and backup retention.  Organizations can use their preferred cloud provider for RISE with SAP S/4HANA cloud private edition, including IBM cloud.

HANA database sizes, and whether S/4HANA databases need to run on a bare-metal environment, should also be considered, or if there is more benefit in the flexibility of a virtualized cloud infrastructure to run their SAP workloads as part of modernization efforts.  SAP HANA is an in-memory database that works best when the entire database is fully contained in the system’s memory.  Some hardware platform options have limitations of how large of a HANA database can be supported while virtualization is enabled.  When clients hit the memory limits of virtualization on x86 platforms, they are forced to switch to bare-metal environments, which reduce the value/benefits of cloud and can involve a multi-year commitment to the specific bare-metal server.  As an alternative, the IBM Power platform does not have any limitations associated with HANA database size and virtualization and offers better scaling in granular increments as database size grows.  The ultimate goal is to not have to pay for more than what you need in the cloud.