The Journey to SAP S/4HANA

Understanding the benefits and challenges of the S/4HANA transformation

The need for a more agile, scalable and value-driven business process chain and IT landscape is high on the agendas of C-Suite members.

SAP's strategic move to migrate customers to S/4HANA is a clear signal of their commitment to advancing business capabilities. It's a call to action urging businesses to adopt S/4HANA to stay in touch with the ever-evolving landscape of digital transformation. By setting a 2027 deadline for transitioning from older software versions, SAP is encouraging organisations to embrace the latest technology and remain competitive. S/4HANA transformation is increasingly seen as much more than a technical conversion, such that the true value of transformation comes from the opportunities to enable advanced, digital business models.

However, transformation with S/4HANA is a complex undertaking that requires upfront, strategic planning before agreeing the S/4HANA business case and kicking off the project.

Organisations have the chance to start assessing the strength of their current operating model and their preparedness to make the move. There are key questions to be answered:

How fully do you understand the benefits of making the move to S/4HANA?
Do you understand the best practices involved with this migration?
What work can be done upfront to minimise disruption, clean the core and tackle the Big Rocks? Big Rocks are key design decision topics that can help inform the following items: Migration Approach and Strategy (Greenfield, Brownfield, PwC Smart Greenfield), S/4HANA Project Timeline and Budget, Target Architecture (Application and Technical) and Custom Code Analysis when an existing SAP customer, etc.

PwC polled SAP clients across South, East and West Africa to determine and analyse the likely outcomes, barriers and readiness work involved in the transformation with S/4HANA. A selection of the most critical findings generated from this process is presented below.

Key findings from our respondents:

S/4HANA transformation roadmap
S/4HANA journey influences
S/4HANA journey benefits
S/4HANA journey challenges

S/4HANA transformation roadmap

The majority of SAP customers have a roadmap for the S/4HANA transformation but have not yet started the process.

Most organisations plan to go live in the next one to three years.
A Brownfield migration approach is favoured for planned migrations, followed by an Undecided migration approach.
Live clients adopted the Brownfield or Greenfield migration approach equally.
The vast majority of Africa respondents are choosing cloud infrastructure as their SAP operational hosting platform.

S/4HANA journey influences

Having simplified processes and improved reporting and decision making are the major influences for beginning the transformation to SAP S/4HANA.

Making processes easier and simpler and improved reporting and decision making are the key benefits sought.
Factors preventing organisations from starting the transformation journey (ranked) are resource constraints (time and people), security/compliance/data privacy risks and cost constraints.

S/4HANA journey benefits

While the transition to SAP S/4HANA is providing benefits, realised benefits are lower than expected.

The top three benefits are improved automation of controls, security and operational risk; the simplification and streamlining of various business processes; and the ability to more easily restructure business operations
The largest disparities in expectation vs. realisation of benefits are in improved reporting, simplified processes and reduction in cost dimensions.

S/4HANA journey challenges

Live organisations are encountering challenges in moving to the new platform.

That it took more time than expected and difficulties to manage ongoing operations of the transformation are the top two challenges experienced during the SAP S/4HANA journey.
Almost half of non-live clients believe that their organisation is not fully aware of the benefits S/4HANA can provide and/or their existing ERP is perceived to be good enough.

Navigating the transition

The impetus for organisations to migrate to SAP S/4HANA extends beyond a technical upgrade or ensuring continued standard maintenance support from SAP. The transition represents a transformative opportunity to set the foundation for a digital platform of the future and can be viewed as a catalyst for rethinking and reshaping business models.

Clients in Africa are at different stages of SAP S/4HANA adoption. The diversity in S/4HANA journeys underscores the importance of tailored strategies. From experience with our clients, approaching the S/4HANA migration as a strategic initiative that aligns with business goals is imperative.

To help understand the preparedness of your organisation to make the move, PwC developed the S/4 Journey Guide, a survey-based assessment that helps clients quickly determine how they can use SAP S/4HANA to reimagine their business's operating model and drive value creation.