SAP data strategies for S/4HANA and the Cloud

Many people are seeking clarity on the changes that occur as they upgrade their systems during their digital transformation, whether it involves transitioning to S/4HANA or moving operations to the cloud. There's a dynamic pace at which organisations are advancing, compelling them to reassess their technological infrastructure. Let's unpack this further:

1. Location: One aspect is whether your systems are setup in the right place. In today's regulatory environment, with strict data compliance laws, determining the ideal location for your systems is becoming increasingly complex.
2. Process: Enhancing your systems often leads to a reevaluation of your business processes. SAP has long emphasised the importance of streamlined business processes, particularly those that span the entire organisation. This period of transformation is an excellent chance to ensure that your processes are not just efficient but also enriching - aiming to enhance the experiences of your customers, suppliers, partners, and employees, rather than solely focusing on cost efficiency.
3. Experience: Furthermore, it’s important to consider the user experience your systems deliver. Are they providing the necessary tools for your employees or customers, and do they empower them to make decisions that benefit both themselves and your business?
4. Data: The most significant aspect, however, is data management. As you update your systems, it’s essential to question the fate of your data. We often discuss with our clients the importance of having a robust data strategy. While many strategies prioritise the value and potential of data, they may not fully account for the costs and potential liabilities. An important consideration is whether all the data you currently hold is essential, and if it will remain necessary after your systems have evolved and migrated to the cloud.

In this article, we explore these questions, offering insights into data management and more.

What are the concerns around digital transformation?

What exactly worries people about moving towards digital solutions like S/4HANA? Interestingly, the concerns aren't about seeing no value or the transition being too daunting. Rather, they are more grounded in everyday operations. A major area of concern is data migration and the ability to maintain what we often call custom processes - those unique operations that differentiate a company and enhance experiences for employees, suppliers, and most critically, customers. Whether it's optimising the hire-to-retire journey for employees or streamlining the order-to-cash cycle for customers, the focus is on refining these interactions. Other apprehensions include issues around security and privacy, or the fear of unexpected downtime due to misconfigured systems or misplaced data.

Yet, the overarching theme we often hear from customers is centered on data transfer. The real advantage lies in how migrating your data can significantly improve your business model, offering a more robust digital core and enhancing both operational and transactional experiences across your business. From an SAP viewpoint, the S/4HANA suite is designed to support these enhancements. It offers comprehensive analytics, various automation options - including robotic processes and smarter decision-making, and supports next-generation business processes, all dependent on reliable data. In essence, data stands as a pivotal element throughout the digital transformation journey.

Preparing for your S/4HANA or Cloud journey

As you contemplate transitioning to S/4HANA or the cloud, it's important to take a close look at your current technology and deployments to see if they are up to the task. You'll want to consider whether your data is in the right size and shape to support your goals. Often, businesses find their existing systems struggle with the amount volume and speed of the data they need to handle.

It’s also vital to ask if your processes are ready to support any new business models you plan to introduce. Launching a new business model is great, but if it's operationally clunky and doesn’t drive the business in the right way, it might not deliver the results you are aiming for. This realisation often leads to the understanding that adopting a new business model requires a fresh approach to managing data.

This means you should evaluate your existing SAP systems to determine their readiness for this shift. Part of this preparation involves a standard readiness check to see if your systems are primed for a move to S/4HANA. You should also assess whether your business processes are performing at or above industry standards and identify any potential improvements. Lastly, consider the types of transformations that could be beneficial as you transition to a more advanced system landscape. The ultimate goal here is to advance your technology footprint, and embracing S/4HANA is a key step in that journey. Recognising that your data needs will evolve during this process and planning for an efficient transition is essential.

A focus on data can remove many of the obstacles to success

This article zeroes in on how to move forward as efficiently as possible by removing potential and existing hurdles in your path to your future state. A sensible first step could be to conduct some data analytics and data quality analysis. This means getting rid of any data that's incorrect, irrelevant, or incomplete, and tidying up what remains so it's more useful moving forward. It’s also wise to archive any data that isn’t needed for the future. You’ll find plenty of resources and webinars available on data archiving.

This is also a prime opportunity to consolidate and decommission legacy systems. Take, for example, insurance companies or car manufacturers with systems that have been running for decades. Now can be the time to evolve these systems, while preserving their inherent value, which is often deeply embedded in their data. It’s crucial to decommission these systems correctly to retain valuable data.

Moreover, you should aim to migrate only the data that is necessary for the future. This approach not only makes the migration process smoother, quicker, and easier but also reduces the data footprint you carry forward. As you move to a hyperscaler, which might charge based on data size or transfer, this will also help in keeping costs down. Additionally, your system’s performance will improve without the burden of unnecessary data.

While these ideas might not be brand new, we aim to synthesise various strategies into a coherent approach. Something we often hear - similar to moving house - is the idea of 'lifting and shifting' only the desired data. While there's truth to that, it doesn’t address what happens to the data that isn't moved. Some data sets might need to be retained for legal, regulatory, strategic reasons, or possibly in an anonymised or condensed format for analysis.

It's essential to focus on the data that will be operational in the cloud going forward, but equally important is a comprehensive data strategy that accounts for all aspects of where your data might end up. From the start, your data strategy should balance the value, cost, and liability of data. Addressing these aspects early on facilitates a smoother evolution to the cloud, to S/4HANA, or to whatever your future state may be.

Adopting data management tactics as part of your data strategy

A common theme we often encounter involves tackling the challenges associated with moving to S/4HANA or Business Suite on HANA, and transitioning to a hyperscaler. Interestingly, about eight out of every ten customers that approach us face one of these challenges. The primary issue is straightforward: large volumes of data can significantly prolong migration times. For those opting for on-premise solutions, the costs can be substantial due to the sheer volume of data involved.

Then there's the shift to using hyperscalers. Over the past four years, there’s been a common perception that moving to hyperscalers is far cheaper than on-premise solutions. While this can be true, it also has the potential to be more costly, especially if it's not managed correctly and your databases continue to expand.

In this discussion, we aim to focus on these two particular challenges and illustrate what Proceed has achieved and can do to help navigate these complexities.

Migrating your ECC6 system to S/4HANA using a brownfield approach

Migrating your ECC6 system to S/4HANA using a brownfield approach means you are not starting from scratch; instead, you are performing a technical upgrade and migrating your system as is. In your database, you will typically find a mix of data - current operational data from the past couple of years and older data that is complete from a business perspective but only required for audit purposes.

Many organisations, especially those with SAP systems over 20 years old, face significant data accumulation without sufficient housekeeping or archiving. When transitioning to a brownfield setup, a common question arises: "Do I need to carry all 20 years of data into my new system?" The clear answer is no.

To manage this efficiently, we utilise SAP Information Lifecycle Management (SAP ILM). SAP ILM helps assess whether old data is necessary for daily operations. The term "archiving" might unsettle business users who fear losing access to their data permanently. However, our approach ensures that while archived data is removed from the main database to save space and improve efficiency, it remains accessible and secure, stored in a way that it can be easily retrieved for audits or legal needs.

The next step involves migrating essential current operational data to HANA and reattaching the archived data. This ensures that only necessary data is moved, maintaining efficiency and manageability.

A typical concern during migration is the change in data structures within S/4HANA, which differ from those in ECC. SAP ILM addresses this by recreating the old structures within HANA, enabling seamless access and reporting on archived data.

If your SAP system contains more than four years of data, moving it all to HANA often doesn’t make sense from both cost and migration standpoints. Adopting this brownfield approach allows for a manageable, efficient transition, ensuring that you only carry forward what is necessary and maintain operational continuity.

Migrating your ECC6 system to S/4HANA using a greenfield approach

Now, let's discuss what's known as the greenfield approach. This is where you start afresh with your ECC6 system and set up a brand new S/4HANA system. In this scenario, you might carry over some master data and open items, but largely, you are looking at redesigning your chart of accounts, sales orders, purchasing groups etc.

But what about the old ECC6 system? After all, regulatory requirements globally dictate that you retain data for a specific period. For example, in the UK, Her Majesty's Revenue and Customs may require access to seven years of data for tax audits. Meanwhile, in China, the government mandates permanent retention - meaning keeping data for over a hundred years.

So, what do we do with the old system? Essentially, we decommission it. We extract the data and store it in what's called an ILM retention warehouse. Once all the data is safely moved, we can shut down the old SAP system. However, the good news is that we can still access and report on this data. Although it's heavily compressed, all the original schema remains intact, allowing us to retrieve and view the data as needed.

Migrating to S/4HANA as a new SAP customer

So, what about new SAP customers? A business that has never used SAP ECC6 and is entirely new to SAP. We encounter such customers, who are freshly navigating the complexities of HANA. For these newcomers, managing the HANA system is crucial because, being an in-memory system, it naturally grows in size. We’ve seen instances where customers who adopted S/4HANA a few years ago have had to upgrade their on-premise hardware several times to manage this growth. It’s essential to control this expansion, and fortunately, there are strategies to do so.

One effective method is called data tiering. This involves categorising data into three types: 'hot' data, which is in your memory and used frequently; 'warm' data, which might be in extended memory and accessed less often; and 'cold' data, which is essentially archived. For managing growth, you can archive data from your S/4HANA system into SAP ILM and still access this archived data when needed directly from your S/4HANA system.

For net new customers, this tiered approach to data management is very beneficial. It provides a way to manage data while keeping system performance optimal.

Migrating to a hyperscaler infrastructure

We also work with customers who are transitioning their existing infrastructure to a hyperscaler - not immediately moving to S/4HANA, perhaps still using Oracle, DB2, SQL Server, ASC, and so forth. This scenario is similar to a brownfield migration because it’s important to consider the volume of historical data you really need to transfer to a hyperscaler, especially when operating on a consumption-based model.

What we often recommend is archiving this data using SAP ILM, where it’s heavily compressed. Hyperscalers like Microsoft Azure, AWS, and Google Cloud offer cost-effective storage solutions that are not only economical but also provide easy access to the stored data. We’ve seen customers who have moved to Azure or AWS save significant amounts of money by archiving their old, non-operational data. They store this data securely on the hyperscaler's infrastructure, yet still manage to seamlessly access it through their ECC6 system, pulling data as needed from the archive.

How do we archive SAP data?

Let’s focus on how we actually handle SAP data archiving. One key observation is the longer a customer has been operating their SAP system - especially if it’s over two years - the more we can potentially save them. We’ve managed to reduce data storage for our clients by anywhere from 33% to a staggering 90%. For those moving to hyperscalers, the savings can be profound, even reaching over a million pounds per terabyte in some cases.

It’s important to remember that it’s not just the production system that moves to the hyperscaler. You've also got to consider your disaster recovery setups, pre-production, quality assurance, test development environments, and possibly some sandbox environments as well. Across this entire landscape, the consumption costs can add up significantly. We've helped customers save over a million pounds per terabyte per year, and remember, in a consumption-based model, these costs are ongoing. Over the last five or six years, we’ve helped our clients save more than 18,000 terabytes of space, whether transitioning on-prem or to a hyperscaler.

How do we achieve these results? At Proceed, we specialise solely in SAP data management. Our team, primarily composed of consultants who possess at least five years of SAP experience and an additional two years focused on archiving. Archiving isn’t just about the technology - it’s about how you communicate with the business. For instance, you wouldn’t want a technical specialist explaining archiving to a financial director. Instead, one of our FICO consultants would handle that discussion, reassuring them about data retrieval and security.

Our extensive experience spans over two decades and includes various sectors like chemicals, pharmaceuticals - with its stringent FDA regulations - and the public sector. This diversity in experience gives us a robust understanding of different business processes, leading to a tried and tested approach to archiving. Additionally, we encounter common challenges, such as clients wanting to archive data that hasn’t been properly closed off in their SAP systems. Over the years, we’ve developed tools and programs that not only close these transactions but also ensure the data is clean and ready for archiving, which significantly streamlines the process.

How do we decommission legacy systems?

When we discuss moving to a greenfield setup, especially when transitioning to a hyperscaler, many customers initially feel great - they're all set up on the hyperscaler with S/4HANA. But soon, they realise they're still operating numerous systems, either in their own or someone else’s data center. This leads us to ask why they continue to maintain these older systems - be it ECC, CRM, SRM, or even non-SAP systems. They are still incurring costs for software and hardware maintenance, and likely still employing staff to manage these systems.

What we aim to do is help these customers transition away from maintaining these cumbersome setups. We create environments where the data remains intact and accessible for reporting, but without the ongoing operational risk. Often, customers hesitate to decommission because they believe they need to retain data for extended periods, like 10 years, and opt to keep these systems running in some virtualised state. But what happens when, years down the line, they try to activate these systems and face hardware issues, especially when they're no longer under maintenance? This poses a significant risk, especially if data needs to be accessible for external agencies like tax authorities.

The cost and environmental impact of running numerous legacy systems can be substantial. We've seen instances where customers are managing upwards of 50, 100, or even 800 legacy systems in a single data center - all still active and consuming resources. This is not only financially burdensome but also environmentally unsustainable.

To address this, we've helped numerous customers with decommissioning - either directly managing the process ourselves or setting up a decommissioning factory to enable the customer’s System Integrator to handle it.

Thank you for taking the time to read our article. We hope you found the information useful. If you have any questions or would like to discuss your specific scenarios or business needs, please don’t hesitate to contact us. We'd be happy to help.