Key Benefits and Challenges of Migrating from SAP ECC to S/4HANA | Cloud4C (2024)

Application modernization is a critical element in optimizing business operations and running smoothly. ERP applications are the backbone, timely upgrades of which are essential to continued agility and scalable performance. SAP ERP Central Component (ECC) has a long history serving businesses and streamlining their resource management, but with digital evolution taking center stage, it is time for businesses to upgrade their environments and preferably take the cloud-native approach to gain new capabilities and produce better results.

2015 saw the release of SAP S/4HANA, the ERP giants new flagship solution that boasted native in-memory capabilities and compatibility with cloud, empowering businesses to take the next big step in their transformation journey. However, many companies continue to use SAP ECC, the precursor thinking that upgrading will disrupt the mission-critical core, and the eventual exercise will be costly. However, not submitting to the tide and evolving processes could end up becoming more expensive. With the support for SAP ECC to be discontinued by 2027, it is currently in its sunset phase. A sizable number of businesses have already finished their SAP S/4HANA migration journeys or are in various stages of completion to meet the new market demands, focusing now on agility, flexibility, simplicity, and optimization.

This blog investigates the key differentiators and benefits of moving from ECC to S/4HANA, as well as providing a succinct outline of the obstacles during this transformation. So, lets read along.

Key Differentiators Between SAP ECC and S/4HANA

In-memory processing, which enables SAP S/4HANA to process vast volumes of real-time data at the native device level, is the system's major and most critical point of differentiation between SAP ECC and S/4HANA. Thanks to its in-built capabilities, businesses will be able to lower total cost of ownership (TCO), improve its application speed, and also make it possible for newer applications to operate in a real-time environment. There are several other differentiators, including:

Simplified Data Structure:

Compared to other database types that fetch data from the hard disk, SAP S/4HANA's in-memory computing capabilities ensure that data stays in the main RAM. This speeds up data processing.

Deployments Options:

Organizations have to spend money on physical infrastructure and continuous maintenance for SAP ECC's on-premises deployment. By providing cloud-based choices, SAP S/4 HANA broadens the scope of deployment possibilities. The use of the cloud, still adoptable as private or the more lucrative public and hybrid options, can result in lower initial expenses, simpler scaling, and lessening of IT overhead.

Modern Technologies:

The latest version of SAP's environment comes with integrated Artificial Intelligence and Machine Learning qualities, embedded real-time predictive analytics, conversational user interfaces, and other features that provide business leaders access to unique data-driven capabilities and other transformative possibilities.

Enhanced Mobility:

In a fast-paced corporate environment, employees require seamless access to vital data and resources from anywhere, on any device. S/4HANA allows employees to access critical business data and operations from anywhere, at any time, and on any device with an internet connection. This degree of adaptability helps to remain productive whether at the office, working remotely, or on the go.

Intuitive Front-end:

SAP S/4HANA provides improved personalization features to enable excellent and straightforward user experiences.

Forward and Backward Adaptability:

It provides simple, seamless integration with your current SAP application portfolio and has both forward and backward adaptability. In the context of SAP S/4HANA conversion and migration, forward adaptability refers to the system's capacity to integrate with and support future SAP innovations and updates. It ensures that your existing SAP applications transfer smoothly to newer versions and functionalities. Backward adaptation, on the other hand, ensures that your existing SAP applications continue to perform flawlessly within the SAP S/4HANA environment. It handles older system compatibility and interaction with the new SAP landscape. By streamlining your ERP configuration, it provides a competitive advantage while enhancing company processes.

Benefits of Moving from SAP ECC to S/4HANA

72% of organizations reported that the most significant advantage adopting SAP S/4HANA was increased efficiency, followed by increased satisfaction (61%). Other advantages of SAP S/4HANA migration include:

Improved User Experience: Compared to SAP ECC, SAP S/4HANA delivers a number of enhancements to the user experience. SAP S/4HANA offers a more modern and intuitive user interface (UI), which makes it simpler for users to explore and work with. ECC, on the flip, employs a traditional user interface that could take more training to use than S/4HANA's SAP Fiori UX. With speedier performance, a more straightforward UI, and increased automation capabilities, SAP S/4HANA provides a more contemporary and effective user experience than SAP ECC.

Real-time Analytics:

SAP S/4HANA's in-memory database architecture helps accelerate data processing, enabling real-time data exchange. This means quicker access to data and faster processing times, allowing businesses to make informed decisions based on real-time insights. S/4HANA also lets you analyze large amounts of data in real-time, providing personalized insights and integrated processes.

Adaptive Insights:

This machine learning solution is a great resource for understanding behavioral patterns. Based on encounters with customers, it can produce anticipated results. These behavioral insights can be used to customize your billing and collection procedures.

Improved Reporting Capabilities:

With simplified data structures, imagine being able to slice and dice or scrutinize the data in real-time with the power of the in-memory HANA database. This eliminates the need to generate complex reports and eliminates reconciliation efforts across several business divisions. Add some easy visualization tools, such as SAP Analytics Cloud, and you have correct information at the click of a button.

Increased Flexibility and Integration:

With S/4HANA's database compatibility and ability to interact easily with current IT infrastructure and apps, organizations have additional flexibility to conduct processes without phasing out existing ERP components. It enables the team to upgrade legacy systems with new capabilities, effectively overhauling your systems.

Scalable On-demand:

SAP S/4HANA provides a more malleable data model than ECC, making it easier for businesses to modify their business processes and adapt to changing market conditions. As the company expands, so will its IT requirements. SAP S/4HANA allows to scale the ERP infrastructure in predictable timeframes, ensuring that your business stays unaffected. SAP S/4HANA also lets businesses add or delete modules such as human resource management or financial planning as their needs evolve. This means they can add new users, locations, and business units with less hustle than before as they grow.

Access to the Latest Technology:

SAP S/4HANA is built on cutting-edge technology, including SAP HANA, granting access to latest features and functionalities such as in-memory computing to accelerate data-intensive processes, a unified and integrated data platform that supports many types of workloads simultaneously, including transactional, operational, and analytical all in real time, and much more. SAP S/4HANA also receives automatic updates every quarter, ensuring that businesses always have access to the latest features and functionality.

Streamlined Business Processes:

The standardized platform of SAP S4/HANA offers advanced process automation capabilities and a simplified data model compared to ECC. The most inconvenient aspect of ECC is its complex structure. Businesses are becoming more interested in S/4HANA as a result of its data table layout and data availability. The data is completely automated. As a result, if the business is expanding, it will be easy to develop an acceptable strategy.

Cost Savings:

Companies running on SAP S/4HANA are seeing considerable cost benefits. S/4HANA can process larger volumes of data and also includes transactional capabilities. This means that businesses may accomplish more with less, lowering continuing operating expenditures such as hardware and shortening time-to-value. Cloud, on-premise, and hybrid deployment choices can further help to streamline the IT landscape, avoid superfluous infrastructure investments, and improve total cost of ownership (TCO).

End-to-End and Seamless Security:

S/4HANA offers better security capabilities compared to SAP ECC, with its embedded cybersecurity capabilities. This includes data encryption and role-based access management to help businesses protect their data and prevent unauthorized access. In addition to this, SAP S/4HANA offers a complete security approach, native data-at-rest encryption, standardized security measures, and integrated security. These capabilities assist businesses in ensuring the security of their data and applications, as well as provide them with the agility necessary to respond to constantly changing business needs and consumer expectations.

Challenges of SAP ECC to S/4HANA Migration

While migrating to SAP S/4HANA offers several benefits, there are also several challenges involved in the migration process, including:

Landscape Buildout and Cutover Maintenance:

The requirement to manage the changes made as part of the migration effort is a key challenge for businesses. Because most S/4HANA systems are constructed in stages, the entire landscape will not be available when development begins, and the landscape buildout will alter over the project. SAP change automation can help ensure a smooth and effective transition. Automated change management software can provide thorough insight into every change as well as automatic sequencing and dependency checks, alerting of any potential conflicts, before they become a problem.

Dual Maintenance:

This concept describes managing change across several landscapes at the same time, in this case between ECC and S/4HANA. Dual maintenance in SAP is crucial for businesses that cannot afford to halt critical business innovation throughout the transition to S/4HANA, which will take months, if not years. Dual maintenance is required regardless of which S/4 method you pick, and many firms will need to continue maintaining both platforms concurrently for some time.

Data Migration:

Migrating data from ECC to S/4HANA can be a complex and time-consuming process, requiring careful planning and execution. The issue is that most SAP users are not using the most recent version of ECC, however SAP recommends updating to the recent version (at least ECC 6.0) before migrating to S/4HANA. That implies applying several years' worth of updates, which is a big project in itself, and depending on how long the migration takes, several upgrades may need to be applied across the landscape during the transfer. Also, moving vast data is difficult, and data loss is possible. The missing data frequently goes unreported until a user or program requests it and it is not available. Despite the fact that the data is not completely gone, businesses cannot access it in their target system.

Application Compatibility and Custom Code Complexity:

Some applications that are compatible with ECC may not be compatible with SAP S/4HANA, requiring businesses to modify or replace these applications. Also, while migrating any custom code to S/4HANA, exhaustive research must be undertaken during the preparatory phase to detect and assess the use of custom code. This analysis will play a significant role in determining if the system needs a SAP ECC to S/4HANA conversion, or it needs to be re-implemented. This custom code could be the backbone of an organization's information flow or the main code that consolidates information. Failing to implement this may have major consequences.

Stakeholder Agreement:

Change can be challenging, especially for the estimated 60% of businesses that use legacy systems that are more than ten years old. Then there's the migration cost, potential downtime, and other dangers to consider. Businesses need a dependable, tried-and-true integration partner to instill trust in those who must sign off on the move.

Know-how:

The migration and deployment processes necessitate meticulous preparation, and many in-house teams may lack the skills required to effectively and efficiently perform a whole SAP migration project with the resources at their disposal. For most companies still on SAP ECC, this project calls for outside help, such as SAP Managed Service providers.

Best Practices: How to Migrate Data from SAP ECC to S/4HANA

To ensure a successful S/4HANA migration, businesses should follow these best practices:

• Conduct a Thorough Technical Analysis: Before beginning the migration process, conduct a thorough technical analysis of their existing ECC system to identify any potential issues or compatibility problems.
• Develop a Comprehensive Migration Plan: Develop a comprehensive migration plan that outlines the steps involved in the migration process, including SAP data migration, application compatibility, and integration challenges.
• Perform Data Cleansing and Validation: Businesses should execute data cleansing and validation before moving data from ECC to SAP S/4HANA to guarantee that the data is accurate and complete.
• Test the Migration Process: Before migrating to the production environment, test the migration process in a non-production environment to detect and resolve any difficulties.
• Train Employees and Manage Change: Provide staff with training and support to help them learn the new system and effectively manage the transition process.
• Collaborate with an Experienced Migration Partner: Collaborate with an experienced migration partner, such as Cloud4C, to ensure a successful migration and overcome any challenges that may arise.

Cloud4C: Your Trusted Partner for Seamless SAP ECC to S/4HANA Migration