One of our clients is embarking on their S/4 HANA journey. How did they arrive at this important decision? We want to share that with you in a two part series.
In this article, part 1, how did they assess and justify their decision? The second article will focus on how our client planned the project; some tasks – pretty much the same for ECC, other tasks – very different.
Our client leads the global building supplies industry. For years, they were content with single digit growth, but under new leadership, they tripled in size through acquisition.
With these acquisitions, they cobbled together a portfolio that spans 40 years of technology changes: green screens, A/S 400, multiple software vendors and spreadsheets – plenty of spreadsheets. SAP ECC 6 is the foundation of their ERP applications.
In an internal assessment, the company found that one-third of their IT and related costs were from bridging and reconciling multiple hardware and software platforms.
In addition to the costs, the financials still required excessive effort and overtime to gain confidence in the results.
There were three options to fix the problem: 1. Convert all business units to the current ERP platform, SAP ECC; 2. Implement SAP Central Finance to consolidate the various platforms; or 3. Standardize on S/4 HANA.
The company strategically decided to consider only the latest technology to support their global operations. Executives would only discuss Central Finance or S/4 HANA alternatives.
Central Finance was the early favorite. It showed a faster time to results for covering a major pain area: a single database for financial and management reporting.
But it masked the underlying problems with master data, inefficient processes and batch and timing differences. These issues were the real drivers of the high cost of ownership.
The third option, standardize on S/4 HANA, was deemed the best short- and long-term solution. It aligned with the business and IT commitment to be on the best platform for achieving their strategic initiative: growth.
In the assessment, one key factor, tribal knowledge in the acquired businesses, contributed to reconciliation, timing, and consistency issues. Fiori was ideal for standardizing and harmonizing across the new shared functions.
The master data issue was born from the growth by acquisition.
S/4 HANA’s simple data model and in-memory processing would reduce the time to close the books. Harmonized master data would drive less reconciliation, higher reliance on the financials in one ledger and fewer timing differences for financial and management reporting.
Justifying the adoption of S/4 HANA as the digital core requires the same diligence as any strategic initiative. It must align with your business and IT strategy. S/4 HANA’s real-time capabilities reduce or eliminate many current batch processing and reconciliation problems.
Next month, we will present how our client addressed the S/4 project planning. If you would like a snapshot of the specifics changes, contact Warren Norris, email@example.com, 972.679.5183; or contact your Titan Consulting Director. You can see additional information on our Advisory Services page at www.titanconsulting.net.