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Migrating from SAP ECC to SAP S/4HANA: What are the key challenges for A&D companies?

Mar 06, 2020

by Steve Grimes, Senior Solutions Director, US

SAP recently announced that it will be extending the support period for SAP ECC from 2025 to 2027 which gives existing customers another two years to plan and execute their move away from SAP ECC.

An additional two years will certainly reduce the pressure on many of these companies and provide additional runway to complete this exercise. For most aerospace and defense companies moving from SAP ECC to SAP S4/HANA, this will be a complex activity requiring solution redesign and careful consideration as to how they deploy the new solution across their business.

A&D Companies have a long History with SAP

Many A&D companies were early adopters of SAP and began their solution design in the late 1990s when there were many gaps and much white space to fill. Gaps filled by clients on SAP ECC versions as early as 3.1h included Complex Final Assembly, Parameter Effectivity and Grouping, Pegging and Distribution. These client specific industry-relevant solutions were later improved and adopted by SAP in releases such as 4.0 and 4.5. At this point, a significant number of A&D companies were already live with SAP or well down the path to releasing their earliest solutions.

Some known industry gaps have yet to be addressed and included in the core product; the SAP A&D user group champions the cause for addressing these areas.

As a consequence of this early adoption foundational solution, decisions were often made to address gaps that drove a solution down a path that didn’t always turn out to be in alignment with the direction the core product was developed. This sometimes led to a custom solution that would later have a core SAP equivalent but given the integration of the custom solution, migrating from custom to core was not always an easy task and the core functionality may not be exactly tailored to the specific needs of their business. Moving from a tailored custom solution to a core solution is never an easy sell when there is a perception that the result might be a step backwards.

What is the value of moving to SAP S4/HANA and how do I justify it to the business?

After spending many years getting an SAP ECC solution to the point that it meets the needs of the business, fully deployed and hopefully fully financed, how do I justify now moving to SAP S4/HANA?

At one end of the scale, SAP S4/HANA can be viewed as a necessary complex upgrade with the goal of re-implementing what already exists onto a new improved platform, making only the changes that are absolutely necessary for the existing solution to continue to work and continuing to use the GUI rather than introducing SAP Fiori except where it is the only choice.

At the other end of the scale, it may well be an opportunity to discard a solution that never quite realized expectations and wasn’t fully adopted by the business: SAP S4/HANA provides the ability to build a better process. Deciding where you are on this scale will impact your approach, cost and timeline.

The majority of A&D companies have changed significantly over the last twenty years through evolution, acquisition and divesture, and as a result, the SAP landscape that these companies have isn’t necessarily the one they would have chosen with hindsight. Moving to SAP S4/HANA provides opportunities not only to rationalize the SAP landscape but also to adopt common processes and provide a foundation for shared services.

The primary task for any business considering the move to SAP S4/HANA is to define the reasons for doing it, what opportunities they hope to realize and what challenges and obstacles are to be faced.

In our next blog, we’ll provide more guidance and SAP S4/HANA adoption experiences, as we share feedback from our clients already taking this step.