A New Look at Phase Zero of the SAP S/4HANA Journey

At this point, almost all SAP customers are at some stage in completing their journey to SAP S/4HANA. A large project like this, whether transformational or technical, has inherent risk and a poorly executed project can create risks such as negative impacts to financial performance, damage to brand, loss of customers and goodwill and loss of talent. But a well-planned and well-defined comprehensive program greatly reduces these risks, improves overall project outcomes and achieves business case objectives. A proper Phase Zero assessment helps clients gain clarity by including key workstreams to deliver a comprehensive solution design and project roadmap that enables organizations to execute on SAP® S/4HANA initiatives.

A Phase Zero approach should focus on business processes, including mandatory change impact, solution design, data and data migration and deployment strategy. Use the outputs of each workstream to establish a plan and build proper alignment with key stakeholders to finalize scope, approach and the roadmap for implementation, including the associated business case. One key decision that helps to inform the focus of a Phase Zero assessment is determining whether the organization is looking for business transformation, a system conversion or something in between.

Deployment strategy

When considering a deployment strategy, an organization should look at several different aspects, as each area provides a key piece of the overall program. First and foremost is determining whether the organization will take a greenfield (new implementation) approach, a brownfield (system conversion) or a select data transition (hybrid approach). There are several factors that help to inform this decision (see chart above for a subset of considerations). Both are completely different paths to complete the S/4HANA journey.

Organizations that select a greenfield conversion are often moving from a highly customized environment that has likely become more complex over the years, to a simpler more standard environment. On the other hand, a brownfield approach may be more appropriate for organizations that have much more stable environments. This would include organizations with enhancements that are strategic and still working within very well-maintained landscapes, businesses that have stayed relatively consistent or systems that have been managed well through change, or that simply have a low risk tolerance.

Other key areas include establishing a governance structure that is functioning effectively before the program kicks-off (including supporting Phase Zero decisions and other pre-work activities) and developing a resource strategy to ensure that the right people can commit time to the project. This should include backfilling of key resources as well as identifying and planning for unique skills that the organization may need to bring on during the engagement (including SIs and other third-party support), and organizational change management to support user adoption.

Process

There are several considerations when looking at processes as part of a Phase Zero assessment. Depending on the overall approach identified above. At a minimum an organization should determine the strategy for fit to standard vs design and build as well as the impact of mandatory changes and optimization opportunities. Each of these areas help to bring clarity to the overall scope of the program and help to inform resourcing and overall level of effort. SAP has several readiness tools that can help to provide some guidance here, but additional analysis is often needed to make plans executable.

It’s all about the data

Pulling data into Phase Zero helps to align, not just the data conversion and migration, but also the reporting strategy and what the data structures need to look like to support the future desired reporting strategy.

We cannot emphasize enough how important it is to understand the data current state well before getting to the data migration stage of the project. As part of this process, ask: What data are we using? What state is it in – how clean is the data? How much history do we have/need? Organizations should also look at their analytics and reporting needs, reviewing both current reports and issues with those reports, as well as what future reporting needs might be. This is a great opportunity to clean up customers, vendors and materials that are no longer active and to archive that data so the migration will only involve what is needed and relevant. Implement a master data governance (MDG) framework so that once data issues are remediated, there is a good process in place to keep data clean and relevant.

Solution design

Key activities here include assessing the overall application architecture, including SAP applications to be deployed (e.g., group reporting) or upgraded (e.g., BW or other SAP solutions) and determining where simplification opportunities exist. For example, are there bolt-ons or other third-party applications that can now be replaced with standard SAP S/4HANA functionality? In addition, it is important to confirm that all applications that are integrated with SAP are compatible with the latest release of S/4HANA. If issues are found, it is best practice to remedy these prior to kicking off the larger program to minimize risk.

Security, internal controls and compliance requirements are additional areas that, in the heat of battle of implementations, tend to get left behind. The idea of including these areas, even though not necessarily a deep dive, is to make sure there is ample consideration given to the workstream and that the organization is set up to go live with security and internal controls that work. Without this consideration, many organizations end up having to come back after going live and make additional (and sometimes substantial) investments to try to remediate these areas.

Bringing it all together

Phase Zero is critical as it helps clarify and define scope, data requirements, deployment approach and future state solution design. It also helps to identify pre-work activities such as third-party application upgrades, data remediation activities and resource backfilling that can help to reduce overall program risk. With clarity around these items, it is possible to put together a comprehensive roadmap, resource plan, project estimates and the overall business case often necessary to initiate programs of this scale.

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