Why SAP modernization feels expensive

🚨 𝗡𝗲𝘄 𝗖𝗜𝗢 𝗦𝘁𝘂𝗱𝘆: 𝟲𝟬% 𝗼𝗳 𝗦𝗔𝗣 𝗦/𝟰𝗛𝗔𝗡𝗔 𝗠𝗶𝗴𝗿𝗮𝘁𝗶𝗼𝗻𝘀 𝗦𝘁𝗿𝘂𝗴𝗴𝗹𝗲 𝘄𝗶𝘁𝗵 𝗕𝘂𝗱𝗴𝗲𝘁, 𝗧𝗶𝗺𝗲 & 𝗤𝘂𝗮𝗹𝗶𝘁𝘆 🚨https://lnkd.in/d634FzTJ We’ve all heard it: “Move to S/4HANA🔮 it’s the future of enterprise ERP.” But according to a new study cited by CIO.com, the reality is sobering: 👉 Over 60% of companies face budget overruns, delays, & post-migration quality issues. 👉 Only 8% complete the migration on time. 👉 And 65% report serious functional issues after go-live. This isn’t just a technical issue it’s a strategic & operational alarm bell🔔 Whether you're still on ECC or halfway through your conversion journey, you’ve likely felt the weight of this transformation. ➡️Despite the buzzwords->“modern ERP,” “real-time insights,” “simplified landscape”->the reality on the ground is far more complex. 🧠 After working with several organizations across manufacturing, life sciences, &public sector domains, here’s what I’ve observed &what I believe we need to talk about more openly. 🚧 Top 6 Reasons Why SAP Customers Struggle 1️⃣ Legacy Custom Code Overload Decades of ABAP make migrations risky. Companies fear losing functionality, but re-implementing everything isn’t viable. ✅ Use SAP Custom Code Analyzer early. Refactor only what’s essential. Embrace Fiori & standard processes. 2️⃣ Data Migration Complexity Multiple systems feed SAP,often with duplicates & outdated formats. Poor data derails reporting, compliance, & CX. ✅ Begin with data readiness. Clean & validate before cutover. Use Migration Cockpit & explore SAP MDG. 3️⃣ Underestimated Integration Effort Salesforce, Ariba, &other apps can’t be an afterthought. Delayed integration = delayed go-live. ✅ Treat integration as core. Use SAP Integration Suite & BTP. Involve architects from Day 1. 4️⃣ Change Resistance Users are attached to ECC. S/4HANA’s UI & processes feel unfamiliar. ✅ Run change impact assessments. Offer Fiori sandboxes. Build internal champions. 5️⃣ Skill Gaps Lack of hands-on S/4HANA, Fiori, & BTP knowledge stalls progress. ✅ Upskill with openSAP, Learning Hub. Balance internal & partner support. 6️⃣ Budget Overruns Scope creep turns upgrades into transformations. ✅ Choose the right path (Greenfield, Brownfield). Monitor KPIs, use RISE or cloud bundles to manage costs. 💡 What Successful Companies Do Differently 🔹 View S/4 as a business transformation, not just an IT project 🔹 Involve C-level sponsors & business SMEs from day one 🔹 Prioritize data, integration, & process harmonization 🔹 Invest in change management & user experience 🔹 Don’t rush but also don’t wait too long. ECC support ends 2027. Time is already ticking. ⏳ 🔍 Final Thought: The struggle is real. But so is the opportunity. S/4HANA is not just about systems it’s about building future-ready organizations. Follow me more such information JASBIR #S4HANA #DigitalTransformation #SAPMigration #CIO #ITStrategy

“We need to move off SAP ECC, but we can’t justify the cost.” My CEO friend from Harvard Business School told me this last week. And she’s not wrong. Migration quotes often look scary because many SAP projects: ⚠️ Take years with runaway budgets. ⚠️ Have consultants billing endlessly without clear outcomes. ⚠️ Burn out teams testing the same processes on repeat. But why do SAP migrations become so expensive? Here’s the truth: Most SAP migrations fail the moment they’re scoped. 🛑 They scope everything instead of what matters. ➡️ Every custom report, even if no one uses it. ➡️ Every process variant, even if it’s an edge case. ➡️ Every piece of dirty data, without cleaning it first. This isn’t transformation. It’s expensive duplication. A smart SAP migration is different. It’s a business simplification project disguised as a technical upgrade. If you want to control your migration costs, here’s how: ✅ 1️⃣ Migrate only what you need. Your ECC likely has 20 years of custom code, unused reports, and workarounds that no longer serve you. S/4HANA is your chance to reset, not replicate. ✅ 2️⃣ Fix your data before you migrate. Dirty data multiplies your testing cycles and post-go-live headaches. Good data shrinks timelines, reduces consultant hours, and improves user trust. ✅ 3️⃣ Prioritize the 20% that runs 80% of your business. You don’t need to perfect every exception on day one. Get your core revenue-driving processes live, then iterate. ✅ 4️⃣ Pick a partner who says ‘no’. You need a partner who challenges scope bloat, not one who says yes to everything to grow billable hours. 🚩 Here’s what most never calculate: the cost of staying stuck. – The revenue lost because quotes take days, not hours. – The manual reconciliations your team does every month. – The friction your customers feel because your processes can’t keep up. You’re already paying a hidden cost every day you stay on ECC. You just don’t see the invoice. The difference between an expensive SAP migration and a smart one isn’t technology. It’s strategy. If migration costs are holding you back, maybe it’s time to ask: “Are we planning a migration, or are we copying our problems into a new system?” How are you thinking about controlling cost when you move off SAP ECC? #SAP #S4HANA #SAPMigration #DigitalTransformation #Leadership #CIO #CEO #EnterpriseIT #CloudERP #BusinessTransformation #SAPCommunity #ASARDigital #ERP

My thoughts on the most pressing questions many of my fellow CIOs are facing today (other than AI) Modernizing Legacy SAP ERP: the True Costs/ benefit Large Enterprises The push to modernize legacy SAP ERP systems is at a critical juncture. Large enterprises face a strategic dilemma: should they transition to on-premise S/4HANA or migrate to the private cloud via Azure, AWS, or GCP? While SAP and hyperscalers tout cloud as the inevitable future, does the business case truly add up? Let me share my view: The Case for On-Premise S/4HANA ✅ Data Sovereignty & Control: Mission-critical applications remain in-house, ensuring compliance with regulatory and security needs. ✅ Cost Predictability: No recurring cloud subscription fees; costs remain within IT CapEx budgets. ✅ Customization & Performance: High flexibility for industry-specific configurations without cloud provider restrictions. ❌ Infrastructure Costs: Requires substantial upfront investments in hardware, maintenance, and specialized SAP Basis teams. ❌ Scalability Challenges: Upgrading and scaling require additional CapEx and planning, making agility an issue. ❌ Talent Shortages: Finding skilled SAP Basis and ABAP developers is becoming increasingly difficult. The Private Cloud Argument (Azure, AWS, GCP) ✅ Elastic Scalability: Enterprises can scale computing power on demand, avoiding over-provisioning. ✅ Lower IT Overhead: Managed cloud services reduce dependency on in-house SAP technical teams. ✅ Security & Compliance: Hyperscalers offer best-in-class security, but at an additional cost. ✅ Future-Proofing with AI & Analytics: Easier access to cloud-native AI/ML services for real-time analytics. ❌ Lock-in Risk: Enterprises become dependent on SAP’s RISE program and cloud hyperscalers, limiting flexibility. ❌ Cost Overruns: While OpEx pricing seems attractive, long-term cloud costs often exceed on-premise investments. ❌ Performance Variability: Shared cloud environments can lead to latency and unpredictable performance. ❌ Complex Migrations: Moving from ECC to S/4HANA Cloud is not a simple lift-and-shift; extensive reimplementation is needed. Hidden Costs & the SAP-Cloud Hyperscaler Play • SAP Benefits the Most: The cloud-first push enables SAP to enforce RISE contracts, generating steady recurring revenue. • Licensing & Exit Costs: SAP’s licensing structure and vendor lock-in make moving out of RISE costly. • Unclear ROI Timelines: Cloud cost advantages materialize only after years, making the short-term financial case weak. Therefore, No Clear Winner, but a Cloud-First Hype remains • For heavily customized industries (e.g., manufacturing, defense, pharma), on-premise remains relevant. • For fast-scaling, digital-first firms, private cloud offers agility but at a price. • Hybrid cloud models with selective cloud adoption (e.g., AI, analytics, disaster recovery) may be the best compromise.