S/4HANA Greenfield vs Brownfield: Which system is better for your business?
By now, I’m sure many companies that use SAP ECC have started thinking about S/4HANA in terms of what it is, and whether it makes business sense for them to move to S/4HANA by looking at the timing, cost, and overall effort needed for such a move.
I can confidently say more than 95% of companies that have SAP are looking for a magical wand to make this process easy. The first and foremost question is, “Will S/4HANA make my organization better?” If the answer is YES, then they are challenged with determining the ideal approach for the transition to S/4HANA.
This leads them to the second question, “Do I start all over again, or can I just take an easier path and upgrade to the new suite – S/4HANA?”
Here’s a quick guide to answer these questions and more.
Why is S/4HANA Right For You?
The first step each company needs to take to discover why S/4HANA makes sense for their organization by analyzing their current pain points and look at the key business drivers.
For example, business drives could be any of the innovations in S/4HANA, new architecture, and data models, better user interface, in-memory database to improve performance, or the new embedded analytics.
Considering S/4HANA Greenfield vs Brownfield
The next step is to identify which transition scenario makes the best business case.
Transition to S/4HANA can be a “greenfield” approach, which means a new implementation of S/4HANA, or a “brownfield” approach, which means converting the existing SAP ECC systems to the new S/4HANA using standard SAP tools like Software Update Manager and Data Migration (SUM) and Data Migration Option (DMO).
A third approach could be a hybrid version where a new and vanilla S/4HANA system is created from the shell copy of the existing ECC system with all innovations and pre-requisites met. Then historical data is transitioned from the old SAP ERP system to the new S/4HANA system.
Key Questions About System Transition
There are several key sets of questions you need to answer to determine the best strategy for your system transition:
Business Process Optimization
- Do my business processes reflect industry best practices?
- Are they optimized?
- Do I need to overhaul any or most of my business processes?
- Do I need to redesign or re-engineer any of them?
Disruption to my Business
- How much can I afford to disrupt the existing businesses?
- How much time do I have to move to a new system?
- Do I need to go for a phased approach to minimize disruption?
- How important it is to preserve historical data?
- How much of historical data do I need to move to S/4HANA?
- Is my business ready to handle the impact of changes in business processes and/or systems?
System Compatibility and Protecting Investments
- From an IT perspective, is my current SAP system compatible enough for a conversion?
- How much I have invested in custom developments and enhancements that I cannot afford to throw away?
Let’s look at different possibilities for each of the above questions and why we might choose one over the other:
If a company has no need to redesign or re-engineer business processes, and if they perceive their processes are close to industry best practices, then system conversion is the right method—a clear brownfield approach.
However, some companies may want to use this opportunity to redesign age-old processes, introduce some new innovations, and automate some of their heavy manual and custom processes for a better future.
These companies should look at S/4HANA projects as a new implementation, also known as a greenfield approach.
If a company has limited time and resources for their S/4HANA project, they have to first look at a brownfield approach, assuming their existing SAP ERP system meets all the prerequisites for system conversion. In general, a system conversion takes less time compared to new implementation, if all other things are the same.
System conversion also helps companies start with mandatory business innovations first, and in less time, ensuring there is business continuity. Then, they can slowly introduce other innovations in a phased approach.
Some companies might be running their plant operations 24/7 and cannot afford to have any disruption, or the impact on their customers could be significant. In addition, their critical business users might be spread thin due to busy schedules. It may not be possible for such users and other critical business people to find availability for a lengthy new implementation.
In such cases, after handling all the prerequisites, it might be prudent to look at converting the existing SAP system to run the basic operations. After that, start introducing different innovations in a phased approach.
Do You Need Historical Data?
Many companies may want to keep their years of historical data in one system. As part of the new SAP project, if they don’t want to deal with converting historical data and preserve them in one system, the best approach would be to go for system conversion.
Alternatively, with Selective Data Transition approach, they can decide to migrate select historical data using SAP-certified third-party software tools
Preparing for the Big Switch
Since a new implementation may come with many changes to business processes, organization roles, and responsibilities, it is important to analyze and take change management into account in the overall project planning.
If the organization is not ready for changes, or if they do not have the right people to handle them, it is better to take another look into the ‘new implementation’ approach.
Before deciding to go with either the greenfield or brownfield approach, it is extremely important to see if your existing SAP ERP system along with all other integrated SAP and non-SAP systems is compatible with add-ons, industry solutions, and business functions.
If the existing system is not compatible and the pre-requisites cannot be met, then the obvious choice is to go for a fresh implementation. If the amount of customization and custom development is significant, that can be a criterion for decision making as well.
Some companies would have made significant investments in their existing SAP systems for enhancements, extensions, custom coding and custom interfaces to some other SAP systems. To protect these investments, then, we should take a closer look at system conversion.
Make the Switch to S/4HANA Today
The transition approach decision must be carefully taken, only after looking into several factors, evaluating the pros and cons of S/4HANA greenfield vs brownfield enterprises before deciding.
In some cases, it can be a hybrid approach, where the main ERP system could be converted to S/4HANA, and other functionalities could be redesigned as a new implementation.
The switch to S/4HANA will take your business to the next level, so don’t delay!
Contact R3D International today!
Raj Krish, Global SAP Practice Director
Phone: (248) 630.5852