S/4HANA Migration: Is Selective Transformation the Answer?

The last big market survey carried out by Freeform Dynamics on SAP migration was completed back in 2020 and it revealed no real consensus on either the appetite for migration to S/4HANA nor preferred migration paths.

A common story we heard at that time was of customers ending up in a state of limbo following eye-watering cost estimates from consulting partners to essentially re-implement their SAP system using the so-called ‘Greenfield’ migration approach. Many told us there was no way to get this approved – the disruption would be too great and the business case just wasn’t there.

We also heard quite a few tales during the research from organisations considering an in-place ‘Brownfield’ migration or a ‘lift-and-shift’ of their ECC environment to the cloud. Again, the case for acting was often judged to be unclear, this time because it was hard to see the benefits when all you were doing was switching the underlying architecture without transforming or optimising the process and data layers.

Not long after this, one of our vendor clients approached us to write a paper on a migration style dubbed ‘Bluefield’. This represented a middle ground between the familiar Greenfield and Brownfield methodologies. The idea was to speed up and simplify migration to S/4HANA using a ‘software-accelerated’ approach. In practical terms, smart analysis and automation tools allowed customers to transform where necessary, while preserving existing logic and data structures, e.g. when transformation wouldn’t yield significant business value.

The paper went down well, but by this time we were in the middle of the pandemic and actual migration activity out there in the SAP customer base was still relatively slow.

So where are things today? A recent briefing with IBM shed some light on this.

That was then, this is now

IBM is now offering a migration service called ‘Rapid Move’ to help customers get to S/4HANA in a way that delivers business value while keeping cost and disruption to a manageable level. In addition to its own best practices and tooling, IBM leverages migration software from the SNP Group, a company with which we were already familiar because it featured in our previously mentioned paper. Indeed, it was SNP who originally coined the term ‘Bluefield’, though IBM itself refers to this as the ‘hybrid migration’ approach.

During the briefing, Andrew Worsley-Tonks, SAP Leader EMEA at IBM Consulting, explained the alternatives in his own words: “It’s important to understand the various S/4HANA migration approaches and how they differ. Greenfield can make sense if you have an older SAP system that’s heavily customised and is no longer aligned with business needs, and Brownfield is fine if your existing system is clean and up-to-date. The hybrid migration approach sits in between”.

On the business rationale for Rapid Move, Worsley-Tonks elaborated: “The approach is looking to use the existing SAP investments of our clients where they should, where it’s important, where it counts. Many organisations have spent a lot of time and money investing in a strong foundation, and with Rapid Move we protect these investments. We only transform where it makes sense and where there’s value in doing so.”

One of the key components of IBM’s approach is a thorough ‘Rapid Discovery’ phase upfront leveraging smart discovery and automation tools. Worsley-Tonks commented: “Whether it’s mergers, carve-outs, moves or transformation of selected key processes, you can set goals and objectives freely without constantly having to worry as much about the impact on cost, risk, and delivery times. The ability to set up proof-of-concept environments much more quickly is also extremely useful.”

As part of Rapid Move, IBM has embraced the modular approach to defining and executing projects. Clients can choose from a menu of options or ‘building blocks’ to incorporate depending on their specific needs and appetite for change. This provides a head start with activities such as process transformation, data transformation, test data management, and so on, and implicitly encourages the use of proven best practices along the way.

So where is the SAP customer base now?

During the briefing, we asked the IBM team what they were seeing in terms of current trends, noting that awareness of the hybrid (software-accelerated) migration approach was limited when we last looked closely at activity in this space. Were the debates on Greenfield versus Brownfield versus lift-and-shift to the cloud still ongoing, or has the community now reached some kind of consensus?

Worsley-Tonks responded, “You still see some going with Greenfield or Brownfield, but more and more, the hybrid approach is the direction for existing SAP customers. As for the ‘lift-and-shift to the cloud’ approach, while it’s not completely off the table, it’s becoming less common. The complexities of moving customizations, integrations, and data to the cloud often outweigh the benefits, especially if there’s no clear roadmap to S/4HANA afterwards.”

Picking up on that last point, Worsley-Tonks added: “More customers are using the S/4HANA migration as an opportunity to rethink their ERP strategy holistically. They’re looking at where SAP fits into their broader application landscape, what processes could be standardised or automated, and how to build a foundation for future innovation.”

This aligns with our own research findings – the majority of SAP customers see S/4HANA as more than just an upgrade. Most say it’s easier to define the value and make the case for migration if you think in terms of strengthening your foundation for digital transformation.

Bottom line

As we listened to IBM, much of what we heard sounded very familiar. Whichever words you use to describe the approach – ‘Bluefield’, ‘Software Accelerated’ ‘Selective-Transformation’ or ‘Hybrid-Migration’ – the fundamentals haven’t changed significantly since we wrote our paper entitled ‘Software-Accelerated S/4HANA Migration’ back in 2021. If you’re interested in a structured walkthrough, this is a good starting point to get yourself up-to-speed.

In terms of partners to work with, IBM is clearly not the only game in town. That said, we found Worsley-Tonks’ briefing very credible, and his insights from real-world customer engagements really useful. And zooming out, despite its focus on services nowadays, IBM retains considerable software prowess. Across data management, integration, analytics, AI, automation, security, cloud platforms and more – IBM has a range of solutions that are all potentially relevant given that no SAP system exists in a vacuum.

So is selective transformation the key to balancing the value, cost and risk triangle? Well, even though Greenfield and Brownfield migrations are not going away, IBM’s assertion that the middle-ground approach is becoming the most popular makes sense to us.

Dale Vile

Dale is a co-founder of Freeform Dynamics, and today runs the company. As part of this, he oversees the organisation’s industry coverage and research agenda, which tracks technology trends and developments, along with IT-related buying behaviour among mainstream enterprises, SMBs and public sector organisations.