Beyond 2027, there will be no new features, support or security patches for organisations still using SAP ECC to help manage and integrate their business processes. SAP ECC customers face a key decision: transition to the new SAP S/4 HANA system, or move to a different finance or ERP system. Not upgrading raises risks around security, manual workarounds and business inefficiencies. If security vulnerabilities are exploited, organisations also risk loss of data integrity and disruption to operations.
There are a number of risks, assurance activities and things to be aware of as you embark on the transition to SAP S/4. Leveraging our experience of reviewing system upgrades and migrations from SAP ECC – whether to S/4 or other ERP systems – we've identified key areas affecting the overall success of transition and implementation programmes, and offer some practical steps to help you achieve a smoother transition.
SAP-specific challenges
There's a misconception that migrating to S/4 will be an expense to the business which doesn't carry proportional benefits. Changes made by the SAP vendor to the underlying database technology and simplification of the data structure are just a couple examples of how the S/4 system can reduce processing times and improve the user experience. A number of potential SAP-specific challenges remain, however:
Legacy customisation
Many organisations have customised their SAP ECC systems extensively to meet their specific business requirements. Migrating to SAP S/4 may require significant rework and testing of these customisations, which can lead to delays in implementation and spiralling costs.
Changes to the data structure
Migrating data to SAP S/4 can be a complex process because of the data structure changes and existing customisations in ECC. If the lessons learned from initial data loads aren't incorporated into future loads, this will lead to data loads being done too many times, delaying the project and having a downstream impact on the success of user acceptance testing (UAT).
Changes to the database technology
Moving to a HANA database, which operates in a different way to traditional databases, has implications for training and upskilling. System administrators may need to acquire new skills or recruit to manage the new database technology.
User access and segregation of duties
The transition to SAP S/4 HANA provides an opportunity to enhance role-based access and eliminate segregation of duties conflicts. There are a number of transaction codes from ECC that have become obsolete in the transition to S/4 HANA, so updates will need to be made to existing user roles to avoid degradation of the user experience.
Other challenges encountered for ERP upgrades
Clarity around the business case
Many system implementation and transformation programmes failures trace back to incomplete steps taken at the planning stage to articulate the business case. With an upgrade to S/4, understanding the business case is just as important, and it should include high-level requirements, assumptions, roles and responsibilities, and expected benefits.
Moving to the cloud
Increasingly, migrations to SAP S/4 HANA include a cloud hosting element, whether on SAP cloud instances or other public cloud environments. This shift means that responsibilities are shared between the cloud vendor and its customer but may also mean that if expectations aren't clearly defined, gaps may be unaddressed. The risk will ultimately sit with the data owner, rather than the cloud vendor.
Integrations and interfaces
SAP S/4 is designed to integrate with a wide range of other applications and systems but integration can still be a challenge. Integration issues can lead to delays in implementation and increased costs. The programme team needs to define and follow a clear integrations development and testing plan.
Insufficient business readiness
Being prepared for change is key to transition to SAP S/4 HANA. If not, users may revert back to using spreadsheets outside the ERP system, impacting on benefits realisation and increasing the risk to data integrity. Organisations need to ensure they have adequate resources, support, and training for end-users to ensure a smooth transition to the new system.
Given the state of rapidly advancing technology, there’s a stronger focus than ever on assurance.
Trends in technology risks 2023
Practical steps to successfully migrate
The following practical steps, alongside the programme activities, will support a smooth and successful transition:
Legacy customisation
As part of the discovery phase, the business should clearly identify the customisations in scope for the migration and the likely impacts to the programme. These should be considered in terms of additional development and testing, but also the opportunity to simplify the new system.
Changes to the data structure
Create a clear data migration plan, which considers data structure changes and customisations, to avoid delays and inconsistencies. Test data dissemination to key interfaces, alongside the main system data loads, to ensure end-to-end processes are set up for success, including satellite systems.
Changes to the database technology
Allocate additional technical training and resources to ensure a smooth transition, especially around any new database and cloud technologies.
User access and segregation of duties
Review role-based access policies and procedures and update them to align with the new system. This is another opportunity to simplify the security design and ensure better alignment to eliminate segregation of duties conflicts. Consider automated tools to manage identity, roles and privileged access.
Clarity around the business case
A clear business case defines the high-level requirement from the business, assumptions for the programme, roles and responsibilities, and expected benefits. This should be a live document throughout the duration of the programme, and updated when material changes to the scope of work impacts on the project requirements, assumptions or benefits.
Moving to the cloud
Review technology standards and disaster recovery plans with a view to include the cloud environment.
Integrations and interfaces
Consider retiring legacy interface technologies in favour of newer application programming interfaces (APIs), to increase data transfer times and reduce maintenance costs.
Insufficient business readiness
Clear plans for communications, business change management, hypercare (post-implementation support and bedding in) and transition to business as usual will help drive through upgrade programme activities.
Migrating from SAP ECC to SAP S/4 requires careful planning, preparation and execution. It's crucial to identify and mitigate the risks associated with migration to ensure a successful implementation. While some of the factors involved in the transition are common across many applications and known to organisations, there are also specific challenges which we have seen for SAP transitions.
At the planning stages of the migration, programmes should set aside a minimum of one to two percent of the total implementation budget for programme assurance activities. These can range from heartbeat assurance – where auditors provide real-time feedback to steering committees and to management on emerging risks for the programme – to technical deep dive reviews including security, segregation of duties, automated controls and configuration reviews.
For more insight and guidance, contact Cristiana Mirosanu or Deepak Madan.
