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SAP Enhancement Pack Upgrade vs. SAP S/4HANA …

Nov 22, 2021



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Cheryl Bogenschutz Cheryl is the Vice President, Advisory Services for NTT DATA Business Solutions and has been in IT leadership positions for over 30 years. Her IT career has spanned a variety of industries including Paper, Automotive and Retail, where she worked on both operational and strategic initiatives to leverage technology to transform business processes impacting the operations of the company and sometimes the industry. She currently serves on the IT Advisory Boards for the University of Cincinnati, Xavier University and Miami University and is an Adjunct Professor for Masters in Information Systems students at the University of Cincinnati.
Although SAP S/4HANA has been out for several years, some technology leaders are not yet ready to migrate to the new platform, for a variety of reasons. Some just don’t think that S/4HANA brings enough business benefit, while others believe there’s still plenty of time before the projected ECC end-of-life in 2027. But one of the biggest reasons for not migrating now may simply be that it’s not currently in the budget.
We understand. Information technology departments generally operate with a 3-5 year roadmap (and budget) that focuses on keeping existing systems current. The plan may have been approved by the executive committee a few years ago – and S/4HANA may not have been a consideration at that time. So – for now – the capital plan may only provide budget to do an enhancement pack upgrade to the existing ERP system.
Don’t assume that you need to do an enhancement pack upgrade.
From case studies we’ve done with a few customers, NTT DATA Business Solutions has found that if you compare the effort and cost to go straight to S/4HANA vs. the enhancement pack upgrade, there is not that much difference.
There is still some misinformation out there that says enhancement pack upgrades are required before moving to S/4HANA. And since an enhancement pack upgrade may require multiple production outages and require you to retest everything again, wouldn’t it be better to put your business on the future path with S/4HANA, a strategic platform that will allow you take advantage of embedded analytics and new technologies when you’re ready?
A Step in the Right Direction
Some customers think that S/4HANA conversion is a much bigger endeavor than doing an enhancement pack upgrade. However, when we show them the effort and costs to move straight to S/4HANA, and show them what is involved with their custom code and business partner clean-up, they reconsider.
We’ve found that – while most customers understand the importance of new technologies like AI, machine learning, Fiore and embedded analytics – they’re really focused on fixing near-term issues in the existing environment. Their concern is that a direct conversion to S/4HANA will only perpetuate (or worsen) those issues, so they’ll just get bad data a lot faster and a lot more visibly across the business. But, oddly, they are not as worried about those same issues when they’re thinking about an enhancement pack upgrade.
NTT DATA Business Solutions can help take the complexity out of running through a complete evaluation of an enhancement pack upgrade vs. a move to S/4HANA. Based on customer cases we’ve studied, there are minimal differences in terms of timeline, effort and cost – and, with S/4HANA, you’re moving to a strategic platform that will position your business for the future.
If you’re still convinced that an enhancement pack upgrade is the best move for your business, our advice is to STOP for a moment and consider the data from analysis of actual customer cases before making a final decision. We think you may find it compelling.
The effort to move straight to SAP S/4HANA may be less than you think.
The Analysis
NTT DATA Business Solutions has a data segmentation report that compares the impact of doing a service pack upgrade vs. an ECC 6.0 EHP upgrade vs. an S/4HANA conversion in terms of effort, downtime, project duration, cost and several other factors. The report is based on real customer data, and clearly shows that there is minimal difference in terms of timeline, effort and cost when you look at an enhancement pack upgrade vs. S/4HANA conversion.
Let’s take a look at a subset of that data, based on a complete “lift and shift” implementation that only brings up essential S/4HANA functionality, but does not leverage all of the new functionality of S/4HANA.
Project Timeline There’s a perception that conversion to SAP S/4HANA is a much bigger effort than doing an enhancement pack upgrade, but that’s not necessarily true. In this customer analysis, we found that, with an extra four weeks in the timeline, you could skip the EPH8 upgrade and move directly into S/4HANA.
Downtime Impacts There is also a perception that moving to S/4HANA requires more downtime than an enhancement pack upgrade. In this customer case, EHP8 required three production outages (48/24/48 hours) vs. only one for an S/4HANA upgrade (48 hours). In addition, the difference in freeze period, for the landscape method chosen, is not all that different, with EHP8 requiring two seven-week periods of freeze, for a total of 14 weeks, vs. a 22-week freeze for S/4HANA.
Costs Taking a look at an EHP8 upgrade vs. S/4HANA, the high level cost estimate* is not significantly higher, so there is not a significant cost savings from just doing the enhancement pack upgrade. If you have already budgeted for the cost of an enhancement pack upgrade, it might make more sense to move directly to S/4HANA if you can find some incremental budget to apply.
After all, you can only spend the budgeted dollars once. We have yet to hear an IT leader say that it’s easy to justify multiple upgrades to meet the out-of-maintenance deadline.
Crawl, Walk, Run
As mentioned, the data above represents a complete lift and shift implementation, activating only essential new S/4HANA functionality. Additional S/4HANA functionality would be available to activate when your business is ready. The goal is to get your business on the new platform so that you’ll have much better tools to fix some of the inherent issues you’ve been facing with your existing systems and to have modern-day services available to satisfy business-user requests to use new technologies not available in SAP ECC 6.0.
You will also have the capability to address more strategic items if you choose, like user interface improvements, robotics and embedded analytics. We would work with your team to figure out how much risk you want to take, how much timeline impact you want to take on, and how much organizational change management you want to do – so all the metrics we’ve compiled could slide a bit, depending on how much you want to change the scope of your conversion.
For example, if you want to launch Fiori or embedded analytics for the entire enterprise during the initial conversion, the freeze would not change, but the project duration might extend by a few more weeks.
It’s Time to Think Differently
For years, IT departments have focused on doing system upgrades, and every time the considerations are the same: what’s the effort, how much outage, what’s our downtime? They’re trying to plan the project, figuring out how many weeks of testing, when can the window be fitted in, when will there be budget to do it.
Don’t keep marching down that path.
Consider this: if you do an enhancement pack upgrade now, your move to S/4HANA will likely be delayed by another 3-4 years – and that pushes you against the SAP ceiling. The longer your company waits to move to S/4HANA, the more the conversion is likely to cost, for two important reasons:
1. The closer you get to the end-of-life date, there will likely be a rush of activity to move to S/4HANA. When that happens, resources are going to get scarce – and resource scarcity means that prices will increase and quality levels could drop.
2. You’ll delay benefiting from all the new functionality and investments SAP is making on the S/4HANA platform. And over time, the gap between your existing SAP solution and the S/4HANA platform will widen, potentially increasing the effort and cost of conversion.
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However, if you decide to upgrade to S/4HANA in 2022, you would have four years on that platform before you would need to cycle again. And that means cost savings, as well as positioning your company for the future.
In addition, once you’re on S/4HANA, you can benefit from additional functionality included on that platform – like Production Planning and Detailed Scheduling (PP/DS), Commercial Project Management (CPM) and Extended Warehouse Management (EWM) – that used to cost extra, with additional hosting costs, service implementation and license fees.
Is It Time to Move to the Cloud?
If you’re like many CIOs, this could also be your opportunity to move to a more secure cloud environment. NTT DATA Business Solutions offers hosting in our own data centers, as well as with cloud partners like Amazon Web Services (AWS) and Microsoft Azure.
If you are considering a move to the cloud, it is important to first understand which options are available and how each model works. A good cloud provider will offer advanced backup, failover and disaster recovery capabilities to ensure business continuity. SAP and AWS, for example, provide comprehensive information about their data protection policies and cloud data centers.
Your company should closely evaluate whether a provider’s security measures fulfill your specific requirements before making a choice. If you are interested in moving to the cloud, your company will need to evaluate the various solutions and providers on the market and determine what you want to achieve from your cloud strategy.
Your Next Steps
If you’re interested in taking a deeper dive, we’d be happy to walk you through a more detailed analysis and provide a formal estimate of what it would take to move your business to S/4HANA.