Clarity on Enterprise Resource Planning (ERP) and S/4HANA

Guide your corporate governance into the digital future

Efforts to digitalize operations are progressing at a breakneck pace and SAP S/4HANA software helps businesses not only automate their work areas much more efficiently but also get fit for the future. This is one insight revealed in a new joint study conducted by KPMG and the University of St. Gallen.

Enterprise resource planning, or ERP for short, is the core of a company: Used right, it enables comprehensive management of the entire operational value creation process. Modern ERP effectively supports a company’s internal processes and drives automation in areas such as finance, HR, manufacturing, sales, the supply chain, services and procurement.

German software company SAP launched a new ERP version in 2015. Yet SAP S/4HANA is not just another technical release: According to a recent study published by the University of St. Gallen (HSG), this version is so highly aligned with future developments that a company can use it to create its own "new ecosystem". The study looked at important technological developments.

Clarity on Enterprise Resource Planning and S/4HANA

Clarity on Enterprise Resource Planning (ERP) and S/4HANA

S/4HANA: How are Swiss companies approaching the transition?

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A survey conducted among leading experts

For the HSG study, a survey was conducted among Swiss companies and leading experts dealing with S/4HANA, with the fundamental question being how they are approaching the transition. The valuable experiences shared by these companies and professionals revealed that the greatest output potential can be tapped by using S/4HANA implementation as an opportunity to restructure internal processes and the corporate culture. This approach can make their companies fit for the digital future – and that is what counts.

The specific advantages of S/4HANA were explored together with the University of St. Gallen. The most important change is that information and data can now be analyzed in real time and managed in the cloud. The use of cloud technologies lets businesses continue to take advantage of the latest innovations. A modern user interface also makes it simpler and more intuitive to use. Yet depending on the situation at the outset, S/4HANA’s launch can prove to be a complex undertaking that is quite intensive in terms of the time, resources and investments needed.

The results of the survey reveal that all this effort pays off. Roughly half of the companies surveyed are "satisfied" to "very satisfied" with S/4HANA, with this impression also confirmed in the expert interviews. Most of the companies called in external advisors for the transition in order to take advantage of their wealth of expertise. The input and leading role of these experts was mostly very well received by people within the company as long as responsibility for decision-making remained within the company itself.

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What's new S/4HANA?

Information and data can now be analyzed in real time and managed in the cloud. This lets businesses take advantage of the latest innovations.

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But what is the real reason for the confident sentiment expressed by companies and experts?

It is the potential unleashed by the transition from past ERP systems to S/4HANA.

Not only does it streamline and expedite their processes; more than anything, it enables employees to devote more time to more demanding tasks, creating considerable added value in the process.

Six insights revealed by the HSG survey on S/4HANA

Driving automation

S/4HANA, the latest version of SAP’s ERP system, is driving the necessary automation of business areas such as finance, HR, manufacturing, sales, the supply chain, sales and procurement forwards in a decisive way. The result: Information and data can now be analyzed in real time and managed in the cloud.

A state-of-the-art user interface also makes it simpler and more intuitive to use. What’s more, optional business area solutions can be integrated as needed. It should be kept in mind that, while old versions of SAP’s ERP system were also compatible with third-party databases, that is no longer the case. A data migration has to be performed.

Companies are motivated

The digital future is inevitable – and has actually already begun.

Companies need to do their housekeeping now so they can safeguard the future viability of their internal processes. This is the main factor motivating companies that have already implemented S/4HANA or are just getting started.

Another factor is their need to standardize company processes and master data. That lays the foundation for automation which, in turn, eases the burden on the company’s employees, freeing up time for them to focus on more demanding tasks and generate considerable added value.

Of the companies surveyed in the study, one in four has already completed the transition to S/4HANA, and the transition has been planned or has already begun at nearly half.

No transition without effort

Enterprises need to invest considerable effort if they want to use S/4HANA as a way of getting fit for the digital future. While the process requires a large amount of human and structural resources, these are essential for the transition’s success.

In most cases, the employees dealing with S/4HANA are supported by project-specific external experts. Housekeeping tasks have to be done over the course of the project that have been postponed all too often in the past but without which no future viability can be achieved. The full transition takes around two years and is also cost-intensive. The entire process can be a burden on employees, as well, although providing staff on demand is one way of easing that pressure.

External expertise needed

The transition to S/4HANA represents a major intervention in a company’s IT systems.

Nearly all the companies surveyed in the HSG study relied on external consultants to ensure the success of their transition. When asked why, most indicated that they did not have enough experience in-house.

Three out of four companies were satisfied to very satisfied with their external support. This was especially the case if project management itself was not handed over to the external service provider. Interviewees felt that responsibility for the transition should stay within the company.

Practical insights from the transition

In terms of the concrete approach, the companies and experts agreed on one point in particular: Enough time buffers have to be planned into the schedule for the transition to S/4HANA.

The amount of time needed can be far greater than originally expected, especially if unexpected legacy issues pop up. Otherwise, the practical advantages outweigh the disadvantages by far: Even the transition itself opens up many opportunities for companies to optimize their processes and design them more efficiently.

These are necessary changes that might otherwise only be possible under more difficult conditions if made at a later date. Finally, the companies surveyed in the HSG study stressed over and over again how important professional project organization was for a successful transition.

Driver of organizational change

The long-term advantages emerge once the transition to S/4HANA is complete. Simpler processes lead to greater efficiency and quality, leaving employees with more time for demanding tasks.

S/4HANA offers companies a chance to more clearly define their strategies and develop their corporate culture. Doing so enables them to achieve maximum efficiency and react more flexibly to both changes in the market and changing customer needs.

This also lays the groundwork for all the inevitable automation and digitalization steps that are in store in the future. S/4HANA is therefore proving to be a driver of organizational change and is helping to make companies fit for the digital future.

How are companies approaching S/4HANA?

Digitalization and automation are inevitable, and their impact will be felt in business areas such as finance, HR, manufacturing, sales and services. SAP’s latest resource planning system – S/4HANA – is proving to be a vital tool in efforts to automate processes.

How are Swiss companies approaching the transition to this system?

Researchers at the University of St. Gallen (HSG) explored this question on behalf of KPMG. They compiled the experiences, findings and analyses of the companies and S/4HANA experts surveyed in their current study on S/4HANA.

Their conclusion:

This change, which will be necessary sooner or later, takes time, resources and money – but if a company approaches the transition to S/4HANA as a holistic transformation project, it will be able to tap enormous earnings potential.

Doing so will make the company fit for the digital future.