CIOs face a daunting task in migrating their legacy ERP systems to S/4HANA and an entirely new platform in the cloud as the technology vendor鈥檚 deadline moves closer.
With the deadline for SAP ECC end of support nearing, CIOs face major decisions, and likely headaches, as they consider whether and how to transform their core ERP systems for a new era.
At issue is SAP鈥檚 mandate for its customer CIOs: Transition to S/4HANA by 2027 or face extended maintenance fees to remain on ECC. However, the broad install base for SAP鈥檚 flagship ECC ERP system has been slow on its S/4HANA uptake, with almost two-thirds yet to make the leap off ECC as of the end of 2024, .
Even more pressing, CIOs on older versions are staring down end of support as soon as the end of 2025. Despite these pressures, the current rate of migrations will not meet SAP鈥檚 deadline target, Gartner reports, indicating the complexity of the project CIOs face.
S/4HANA, ECC鈥檚 successor, is built on an in-memory database designed to enable real-time data processing and analysis. Available on-prem or in the cloud, S/4HANA promises faster processing times, smarter analytics capabilities, improved user experience, and AI capabilities. Yet transitioning to S/4HANA is far more than a technical migration. The move is a major enterprise transformation with many moving parts, as well as significant implications for data, customizations, and budgets, not to mention cloud adoption where appropriate.
But time may be the biggest factor, and it will become more of a squeeze in the months ahead.
鈥淓ven if you think you have a year until zero day, give yourself adequate time to understand what鈥檚 involved because it鈥檚 not just an IT project, it鈥檚 an entire business initiative,鈥� says , founder and CEO of Cornerstone Paradigm Consulting.
Such a major technology project must consider business needs, customer needs, and employee engagement, and it will require input from internal operations teams to ensure nothing is overlooked. 鈥淐IOs need to work collaboratively and really understand from the outset the direction the business is going and what the needs are,鈥� Russo says.
Panic over end-of-life timelines can cause some organizations to skip key steps such as process mapping and gathering user input. Business-critical features can also be overlooked in the rush to advance timelines.
鈥淏uying software is the easy part. Anyone will sell you anything you want,鈥� Russo says. 鈥淲hat really matters is mapping your processes first and understanding what鈥檚 business critical, not just what the software offers.鈥�
Other common mistakes Russo advises CIOs to avoid include shortchanging their change management plans, underestimating the importance of data cleansing, and failing to establish a phased rollout or rollback plan.
Building the business case
The transition to S/4HANA requires substantial resources and can take several years to complete. Most organizations will need to overhaul business processes as well, further complicating the costs and timeline of the effort.
鈥淵ou need to evaluate the cost to redesign business processes and optimize them according to best practices and the return on investment as a result of new or more effective processes,鈥� says , chief application officer at Interpublic Group (IPG), who is overseeing the advertising services company鈥檚 transition to S/4HANA.
CIOs will also need to consider the costs of change management and any third-party implementation costs, Bilali says, as well as S/4HANA鈥檚 new licensing costs and the extra costs associated with running S/4HANA in the cloud.
For organizations that choose to forego the transition, SAP will charge a premium for ongoing maintenance beyond 2027. CIOs will also need to consider the integration challenges, performance limitations, and compliance risks they may also face by keeping their current ERP systems in place. For this reason, the business case must also weigh in the cost of remaining on legacy platforms, including a lack of innovation from SAP on ECC.
鈥淪AP is not investing in all of the new innovations like AI, machine learning, and automation鈥� for ECC customers, he says.
Although the value of innovation is difficult to quantify, choosing to embrace the latest platform may be a better option than being forced to adopt it later, while not reaping the benefits of the latest features along the way, Bilali says.
鈥淯ltimately, SAP will force you to go to S/4HANA and you will have no choice, with the timing being the only question,鈥� he says.
Still, not everyone is finding it easy to build a business case. Many CIOs haven鈥檛 found a compelling reason to make the move, according to , group VP of global presales at Rimini Street, who works closely with enterprises evaluating their SAP roadmaps. 鈥淎 technical upgrade solely to maintain support is not convincing for most businesses.鈥�
Ideally, the business case should support a strategic decision about the technology ecosystem, with an eye to the future roadmap, according to Mariotto. However, CIOs know technology is changing all the time and this is a transformation not just an upgrade.
鈥淐IOs need to think about the business case right now and understand that the technology and business landscape can change dramatically in the next five to eight years,鈥� Mariotto says.
Migration planning and making the move
Staying on track with such a massive project takes meticulous planning; even then, overruns are common. As such, timing and organizational readiness can鈥檛 be overlooked.
鈥淒on鈥檛 cut short the planning and make sure you鈥檙e allocating enough time for each integration,鈥� says Bilali.
Given the migration to S/4HANA involves a different infrastructure model and possibly lost integrations and customizations, time spent upfront mapping the transition out is vital. 鈥淭here are too many times when somebody says it鈥檚 going to be nine months for a project, but without doing the detailed planning of how to get it done in nine months,鈥� Bilali says.
To wit, almost 60% of companies that have completed their S/4HANA transformation ended up exceeding their planned schedule, according to a . S/4HANA migrations vary also in quality and budget driven largely by the project scope expanding and weak project management, the survey of 200 executives found.
And that鈥檚 not without outside help, as 98% of companies surveyed enlisted an external partner. Still, according to Horvath, professional change management tends to be used too rarely and too late.
Adopting a new platform and shifting from on-prem to the cloud in one move increases the risk of disruptions to the business, Bilali notes. To ease the process, IPG started by first shifting its ECC system to the cloud. 鈥淲e moved to the HANA database and to the Fiori user interface, so we moved all of our transactions to that platform about five years ago.鈥�
It improved the user screens, as well as database speed and performance. Then about a year ago, IPG moved its ECC component to the cloud. It鈥檚 given the SAP technical team experience running a large application in the cloud and how to play in that space, says Bilali. 鈥淲e鈥檝e learned a ton of things about performance, uptime and downtime, and working with a third party that we wouldn鈥檛 have been exposed to if we鈥檇 stayed on ECC in our data center.鈥�
IPG is nearing the point of making the final step, which will involve 鈥渆ssentially changing the plumbing鈥� and should be relatively quick and painless, according to Bilali.
For a variety of business reasons, the exact timing of IPG鈥檚 transition is yet to be identified, but when it does, it鈥檚 expected to take place over an extended weekend. 鈥淚 think we鈥檙e better positioned to transition to S/4HANA,鈥� he says.
Bilali counsels CIOs not to give up ownership of managing the integration and to maintain oversight of any partners through the migration process, even with outside support.
鈥淒on鈥檛 leave it all up to the partner to run,鈥� he says.
Internally, teams will change how they manage their SAP ERP ecosystems, with a new arrangement coordinating cloud and technical services. 鈥淭hey鈥檒l transition into a more oversight role, managing both SAP and third-party providers,鈥� Bilali says.
Customizations, third-party apps, data hygiene top migration challenges
The need to make a clean core migration makes this transition particularly challenging, with a 2025 finding that managing customizations, third-party applications, and data hygiene were high on the list of technical challenges.
SAP says S/4HANA will open the door to simpler, faster upgrades and make it easier to harness innovations in AI and automation. To facilitate this, the standard business processes will be housed in the core system, while customizations will run via APIs, extensions, and SAP鈥檚 Business Technology Platform.
However, with the length of time in the market and application sprawl, many organizations will have heavily customized SAP setups, which can add up to headaches when it comes to clean core.
SAP鈥檚 preference for 鈥渃lean core鈥� means there鈥檚 a substantial amount of work evaluating and removing unnecessary customizations. Adding to the challenge, regulated environments such as pharmaceuticals will need to adapt processes that must be audited and compliant.
Cornerstone Paradigm鈥檚 Russo says legacy features can be deceptively small but business critical. Things such as automatic billing or code assignments may seem minor, but once they鈥檙e gone, the business impact can be huge, especially if they were built into a homegrown work-around, she says.
It鈥檚 critically important that CIOs and their teams ask what features are being phased out with a new system and identify the business-critical features as part of the migration process, but this is often overlooked. In Russo鈥檚 experience, organizations often don鈥檛 realize what features are vital until they鈥檝e already lost them, especially when those functions were supported by shadow IT or Excel-based tools that filled process gaps.
鈥淭here needs to be a plan for it, so you鈥檙e nine months down the line and find out you no longer have this thing and you need it now. It鈥檚 yet another fire drill that could potentially add more bugs to the situation,鈥� she says.
Likewise, aiming to shift existing data without cleaning is not the best approach and can prevent organizations from realizing the full benefits of the new system such as real-time analytics and AI tools.
CIOs will need to consider how many years of data need to be retained, taking into account statutory requirements for different countries, length of time data needs to be held, and what data is no longer required. 鈥淚f you don鈥檛 spend time doing that, you鈥檙e just taking all the poor habits of the legacy systems and you鈥檙e not going to get the benefit of the new system,鈥� Bilali says.
Clean data helps systems run more efficiently and improves performance. With the prospect of harnessing AI tools in S/4HANA, organizations have an added imperative to integrate clean data, but it鈥檚 often fragmented across multiple systems.
Organizational data most likely includes a mix of structured data such as financial records as well as unstructured, non-SAP data that all needs to be harmonized to make the most of new tools.
鈥淎ll that data should come together to really build a whole boosted AI platform. So, that鈥檚 a key decision for the CIOs,鈥� says Rimini Street鈥檚 Mariotto.
Managing integration between core ERP and business applications is another major consideration. These connections require extensive coordination with third-party providers, aligning schedules, testing protocols to ensure they鈥檙e aligned across different systems and organizational cultures.
鈥淵ou have to get that all coordinated and scheduled, and you have to get a commitment on the other end, that when you鈥檙e ready to test, that they鈥檙e also ready and available to test,鈥� Bilali says.
It鈥檚 why Bilali emphasizes spending plenty of time in the planning phase because it can make all the difference to successfully landing the transition to S/4HANA. 鈥淚t鈥檚 like you鈥檙e changing the wheels of the plane when you鈥檙e at 30,000 feet because the business has to keep running,鈥� he says.
