“CIOs loathe ERP upgrades” is how I opened my question at SAP Sapphire’s press conference after the day two keynote. It’s a sentiment I hear from CIOs and IT leaders, regardless of their organization’s ERP platform.
At the press conference, I asked SAP CRO Scott Russell and head of customer
services & delivery Thomas Saueressig to address the challenges
CIOs face when upgrading last-gen ERP implementations.
Today’s CIOs inherit highly customized ERPs and struggle to lead change management efforts, especially with systems that backbone all of the enterprise’s operations. Many CIOs have succeeded in modernizing applications and developing analytics/ML/AI capabilities, but digital transformation and delivering competitive technologies that drive growth remains a challenging goal.
SAP had several answers for
Digital Trailblazer CIOs
who have struggled with highly customized ERPs and can’t easily upgrade or
move to the cloud.
SAP evangelizes a “Clean Core” ERP
According to Saueressig, 65% of custom code objects [in SAP ERPs] were not
used over the last 12 months. That’s a significant expense to develop and
technical debt to support, but more importantly, it’s upgrading and testing
these customizations that are the massive boulders in ERP upgrades.
During his day one keynote, several SAP executives, including SAP CEO
Christian Klein, promoted the importance of a “Clean Core,” where the ERP
migrated to the cloud is deployed without customizations. SAP recommends
using industry standard business processes wherever possible and building
business process extensions where required.
These extensions are not ERP customizations. Instead, they are developed
outside the ERP in
SAP Business Technology Platform
(SAP BTP) or competing platforms. SAP BTP composes several products,
including SAP Build for developers, the SAP Datasphere data fabric, and SAP
Integration Suite.
In Driving Digital, published in 2017, I recommended that CIOs avoid customizing ERPs. ERPs are expensive platforms to develop on and are not the day-to-day tools used by business and operations teams.”
So, when CFOs required ERP customizations in workflow, reporting, or analytics, a best practice was finding third-party solutions that could integrate with ERPs. SAP is making a compelling case to leverage its solutions, which also integrate with third-party platforms to create end-to-end business processes.
Leverage standards to accelerate migrations
During the day two keynote, the CIO of PureTech Scientific reported that they went live with their ERP upgrade in just 15 weeks. Tropicana Brands Group launched SAP RISE in under a year, and Fresenius pulled off four massive digital transformation initiatives in parallel, including their upgrade to SAP RISE.
“Digital transformation and change management are like white water rafting,”
said Ingo Elfering, CIO of Fresenius. “It needs to be fun, but it can also
be scary.”
Fun and scary aside, I asked SAP executives how some CIOs managed to upgrade such complex environments in record times. SAP demonstrated several products, capabilities, and practices to help CIOs guide their organizations in leveraging standardized business processes and platforms.
- Two versions of the SAP S/4HANA Cloud ERP, RISE with SAP for larger organizations looking for a managed service offering and GROW with SAP, their SaaS offering for midmarket enterprises, provide options to migrate to Clean Core ERP.
- RISE with SAP Migration and Modernization is a standard process that SAP introduced with several validated partners, leveraging best practices to assess and plan migration efforts.
- Standard business processes in seven categories, including lead to cash and source to pay, are built into the SAP ERP, giving organizations options rather than porting over their customized workflows.
- SAP Signavio Process Transformation Suite is a tool for gaining intelligence and insights on business processes and driving standards. Businesses that adopt standard practices can leverage Signavio’s benchmarking analytics to compare their KPIs against best-in-class performance.
- SAP is staffing an enterprise architect to partner with businesses and their validated partners when planning their migrations.
SAP executives acknowledge the efforts required to plan the upgrades, get everyone onboard with standard practices, develop extensions, and train employees. However, they pointed out several long-term benefits of running ERP on SAP S/4HANA, where SAP performs continuous updates requiring less planning.
Ease adoption with Joule and WalkMe
Of course, platforms, standard business tools, customization tools, and
certified partners are only the ingredients for ERP migration and business
transformation. The bigger challenge is change management, and SAP
championed the CIOs who adopt best practices in
change management in digital transformation.
Two tools pave the wave to simplify adoption.
Joule, SAP’s genAI copilot, is built into its core offerings and leverages the enterprise’s data. End-users can use Joule for basic help on using SAP functionality and more advanced prompts to help diagnose and recommend solutions to supply chain and other operational issues. SAP announced a partnership with Microsoft at Sapphire, integrating Joule and the Microsoft Copilot, enabling bidirectional prompting across the two ecosystems.
The other capability comes from WalkMe, a planned acquisition SAP announced at the conference. WalkMe provides guided navigation, which can be useful to help users through their first experiences navigating SAP tools and workflows. Russell suggested that WalkMe would be particularly useful for employees navigating workflows they perform infrequently, such as booking travel and filling out related expense forms.
SAP endorses CIOs as digital transformation leaders
.png "White Paper on 13 Ways to Ease Adoption and Improve Experiences")
Change Management in Digital TransformationSAP CEO Christian Klein
introduced four primary personas during his opening keynote, but most of his
attention and the two days of presentations that followed focused on the
CIO’s role in leading digital transformation. CIOs running SAP and those
considering ERP migrations should inquire about the platforms and services
that enable rapid upgrades and transformational outcomes.
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