According to the ASUG Pulse of the SAP Customer 2020 survey, 16% of respondents are currently live on SAP S/4HANA, while 21% are in the process of starting their journey. Meanwhile, SAP recently announced that it will extend maintenance to its Business Suite 7 through the end of 2027. It also announced a maintenance commitment for those on SAP S/4HANA through the end of 2040.
For those who are live on SAP S/4HANA or are getting ready to go live, it’s critical that they understand how to plan, what to look for, and how to gain the full ROI from their projects.
ASUG sat down with Johnsonville’s VP and CIO Ron Gilson and Senior Director of MIS Lori Plate to discuss the company’s move to SAP S/4HANA, the hurdles their team had to overcome, and how they made the transition a success.
Jim: Let’s start with something everyone talks about. How did Johnsonville develop its business case for SAP S/4HANA, and how did you get buy-in?
Ron: Our project was an SAP ERP upgrade project. There was no financial or business transformation justification. We had a significant road map of functionality we were looking to deploy over a three-year period. That was back in 2015.
We paused and thought about how we wanted to implement that technology. Do we want to implement it on the SAP ECC legacy platform knowing that we would have to migrate that environment? Or do we want to upgrade to SAP S/4HANA—which is the latest version of the SAP ERP platform—and start building on top of that? We knew that the more we piled on top of SAP ECC 6.0, the bigger the project would be in the future. We also knew SAP ECC 6.0 was, essentially, a dead environment and there was no additional investment going on there. We based our business case on that and were able to get buy-in because it made the most sense.
Jim: Johnsonville used a brownfield approach to implement SAP S/4HANA. What were the factors that led to that decision?
Lori: Our existing environment within SAP ECC 6.0 had very few customizations. We were already unicode compliant with the new General Ledger active as well. Our environment was set up to move easily. Our Johnsonville business users were happy with their existing business processes. Johnsonville wasn't looking for a business process transformation.
Jim: How much testing did Johnsonville perform during the SAP S/4HANA project overall?
Lori: We did multiple rounds of testing, including a sandbox conversion, followed by full unit tests in our development environment, and a full integration test in our QA environment. Our users were then brought in, including more than 50 subject matter experts, to complete the full user acceptance testing. We went through every process Johnsonville runs on SAP. Finally, we conducted three mock cycles and tested the conversion process in every mock cycle before doing a production conversion.
Jim: What types of roadblocks did you face during the project and how did you address them?
Lori: We had an issue with third-party certification and making sure all our vendors were certified for the version of SAP S/4HANA we were moving to. Certain components had different license use for SAP S/4HANA. We worked with SAP and our vendors providing the third-party solutions to push through the certification process for SAP S/4HANA 1610. Some of those vendors chose not to do the certification, and in those cases, we were forced to find different solutions for that functionality.
The next issue involved our condition contracts replacing their rebate functionality. The rebates were deprecated in SAP S/4HANA. The condition contracts, at least in SAP S/4HANA 1610, did not fully replace the rebate functionality. We never fully implemented it in 1610. We started to during our upgrade project but realized the full functionality to replace rebates wasn't there and stopped the implementation at that time. It wasn't until after our initial go-live with SAP S/4HANA 1610 that we picked up the condition contract work again and started to work with SAP to get the issues resolved. That has since been fixed, but it didn’t work when we first implemented it.
There were complexities within the U.S. retail-based rebate process that were handled by the rebate functionality and weren’t available within the initial condition contract configuration within SAP S/4HANA 1610. We realized you couldn't do settlement at the material and product hierarchy level, lump sum accruals worked differently, and you couldn't copy condition contracts.
The customer/vendor integration (CVI) conversion was another problem we had to tackle. It took us multiple tries to get that right. It was difficult converting everything to the business partner. The customer was a major integration point between some of the other external SAP systems. So, we had to redo all of those integrations.
There are decisions to be made during this conversion process—it isn’t a process that is done only one way. You need to determine if you are going to keep your customer and vendor numbers or create all new business partner numbers. Depending on what you decide, that has implications on your business processes and integrations downstream. It took us multiple tries because we tested multiple different ways before we figured out which way was going to be best for our business and cause the least amount of disruption.
Jim: Knowing what you both know now, what are some of the things that you would go about differently?
Ron: The one piece of advice I give to customers is if you're doing a brownfield migration, there's work you can do ahead of time to reduce the scope and risk of your project when you get to the migration. You can tackle smaller projects on ECC prior to migrating to SAP S/4HANA—things like migrating to business partners and moving from rebate agreements to condition contracts.
There are other things like custom code and remediation that can be done early. With third-party certified apps, you must understand which partners will be certified for the newer releases and whether you need to find other solutions. Do as much as you can early to reduce the cost, scope, and effort when you do implement.
Lori: I also think having an automated testing tool is helpful. We didn't have one. Additionally, we planned mock cycles and added additional ones just to increase our level of comfort. I like to tell people that you can't plan for enough mock cycles.
Before you ever even engage with your SAP account executive and go through your full bill of materials, make sure that you have all the relevant SKUs in your license. We had to put our project on hold for a little bit to work through that issue.
Ron: The licensing ramifications can be significant. The conversion of SKUs from ECC to SAP S/4HANA versions can be a very expensive proposition.
Jim: Did Johnsonville complete its transition on a scheduled timeline? If so, what helped keep you on track?
Lori: Yes, we did. We also met our original set schedule.
The biggest thing was negotiating for a significant service downtime window. We didn't have a whole lot of flexibility to move it. Either we were going to hit our schedule, or we weren't. Not hitting that schedule would cause a significant delay until we could negotiate another downtime window of that size. We started to negotiate that in January for our October go-live. The schedule wasn't very fluid. Having access to the SAP value management team was significantly helpful to keep us on pace and target.
Jim: Can you talk about any measurable improvements in performance and analytics since implementing SAP S/4HANA?
Ron: Just to set some context here, Johnsonville has a relatively small environment. Our database is under one terabyte. We have approximately 1,000 active users. We implemented SAP S/4HANA using the SAP GUI as the primary user interface—as such we have not used SAP Fiori and the embedded analytics. Generally, most of the transactions are working about the same from a performance perspective.
Lori: We’ve seen a couple of functionalities that have gotten slower. Primarily these have been background jobs we are running or processes and jobs—like top-down allocations—that we run during the close process.
Ron: Given that our ECC environment was running on a compressed Microsoft SQL server database in flash memory, we weren’t banking on any significant improvements in performance. Most of our analytics are done within our SAP Business Warehouse environment.
Jim: Do you plan on deploying more SAP Fiori apps in the future?
Lori: Yes. The biggest reason we haven’t deployed SAP Fiori is because it has some problems when running on SAP S/4HANA 1610. We just recently completed our upgrade to SAP S/4HANA 1809 and now we're actively working toward deploying portions of SAP Fiori. We're doing it on a case-by-case basis as we implement new functionality.
Jim: How has SAP S/4HANA affected your overall business processes?
Lori: Ultimately it hasn't. But that was our goal. We meant for this to be a non-event for our end users.
Ron: Fundamentally, the technology works. There's a lot of concern as to whether SAP S/4HANA is going to be as stable and reliable as SAP ECC 6.0 was. We haven’t seen any significant increase in incidents or downtime.
Jim: How long did it take you to get to a steady state of operations post-implementation?
Lori: We had one authorization issue when we went live. But that was resolved within a couple of hours. Beyond that, we really didn't have any significant issues.
Jim: Do you have any more advice for companies getting ready to make their own move to SAP S/4HANA?
Ron: Get started early. Begin going through the simplification list, which is the list of products that you have deprecated or are removing from the code line. Begin thinking about issues like business partner implementation and custom code remediation. There's so much you can do before even getting engaged in an SAP S/4HANA brownfield environment, so take advantage of the opportunity to do it.
Make sure you find a consulting organization that has actually done a brownfield migration. It's a very different project than a greenfield implementation, so make sure you're vetting your consultants.
Attend the Small and Medium Enterprises Think Tank to hear how other SAP customers are moving to SAP S/4HANA.