Why Automation is the only true answer to address the skill and resource shortage in the S/4HANA transformation market

A huge S/4HANA transformation backlog remains

Independent of the data source you choose, the backlog of SAP customers who have not moved to S/4HANA yet is still huge. Research from German-Speaking SAP User Group DSAG in cooperation with American SAP User Group ASUG, end of 2020 listed 20% of customers to be productive on S/4HANA, 30% actively working on the transformation, 30% in preparation, and 20% not started yet. Taking the 41,500 SAP customers into account and considering that most customers run more than one SAP system, the transformation backlog is enormous, and the end of life of SAP ECC in 2027 gets closer.

Skill and resource shortage is the significant risk for S/4HANA transformations

A lot of customers are concerned about the availability of internal and external skills and resources for the upcoming transformation requirements. Recent research released by ASUG shows that 26% of organizations see “skills in supporting, developing, and upgrading SAP systems” as their number one challenge in working with the new S/4HANA technology. The German Business Newspaper “Handelsblatt” end of 2021 titled: “The shortage of consultants becomes a problem for SAP…”. “Handelsblatt” describes the extremely tight situation in the SAP consulting market now and predicts it to become worse in the future. The impact of this market situation is the same for SAP customers and System Integrators. Resources are scarce or just not available, and labor costs for skilled resources increase massively. Even in former low-cost countries like India, the cost for consultants with S/4HANA experience is exploding, and system integrators are battling for the best resources. The impact of the war in Ukraine on the availability of near-shore resources from that region has not even been considered.

Strategies from the past don’t work

The problems of S/4HANA skill and resource shortage are inherent, but what are the strategies to manage without risking S/4HANA business benefits, project timelines, and cost overruns? S/4HANA projects are usually complex and time-consuming, where the existing SAP systems need to be maintained, and ongoing business requirements need to be met. Compromises on transformation scope and quality are no alternative, as they impact the achievable business value and acceptance within the organization. Companies should not repeat the same mistakes as past SAP upgrades, where huge technical debt accumulated in the SAP systems, leading to today’s slow release cycles, unstable, insecure, and hard to maintain systems. Extending the transformation timelines is also not a good plan, as the time to value gets deferred, and dual maintenance and the double burden just get extended. Utilizing internal teams for non-strategic, one-time transformation tasks is not a good idea either, as these highly skilled teams should focus their in-depth knowledge of the business processes to leverage the full potential of the new S/4HANA digital core.

Do more with less through automation

Which alternatives are left if you can’t compromise on scope and quality, do not have access to unlimited budgets and timelines, and need your internal teams for value-adding work? As a real alternative, you should utilize automation for as many workloads during the S/4HANA Transformation as possible.

Leverage existing assets with automation

Let’s take the example of custom processes and the custom code workstream within S/4HANA transformation programs. According to smartShift’s benchmark, an average SAP ECC System holds more than 25k custom objects and over 3.5 million lines of custom code, from which an average of 60% are still in use. The focus for these systems needs to be on maintaining and modernizing strategic custom applications while getting rid of unused or redundant legacy code. Ideally, even going one step ahead to “SAP Clean Core” – a standard SAP S/4HANA system, running strategic custom extensions decoupled on Business Technology Platform (BTP) or even entirely outside of SAP. With this architecture, SAP customers will be able to consume innovations from SAP more frequently and release new business functionality faster.

Getting your custom processes to S/4HANA or even to decoupled applications outside of S/4HANA involves a lot of tedious tasks. As a first step, you need to identify the strategic applications and apply a risk-free approach to decommission unused code. For the remaining custom processes, you need to identify all technical components and apply compliance and optimization transformation for the new S/4HANA core and data model. That transformation requires addressing thousands of issues in the custom code which can take hundreds of days of manual labor. And with that, you have not even started to address the thousands of legacy security, performance, stability, and maintainability problems in your codebase.

Use best in breed solutions

A fully manual or semi-automated approach with developer tools like SAP ATC Quick Fixes executed by internal or external teams leads to the mediocre outcomes described above: a compromise on scope and quality, budget and timeline overruns, blocked internal resources. And due to the resource and skill shortage, you might not even get the projects staffed with the right skills. Therefore, we recommend utilizing best-in-breed automation, which delivers turnkey solutions and guaranteed outcomes. Real automation provides:

1. Massive acceleration of your transformation journey
2. Superior transformation quality with an impact on test and regression efforts
3. Reduction of transformation risk through guaranteed outcomes
4. Relief to internal resources from mundane manual tasks
5. Optionality to reuse existing processes and assets while still having the opportunity to address accumulated technical debt and modernize your applications
6. Business velocity throughout the transformation journey.

At smartShift, we have been helping customers for 20+ years to modernize their SAP systems using automation. Our approach allows customers to get lean, modern, and secure custom extensions for SAP’s digital core. Our solutions are powered by our proprietary Intelligent Automation Platform™ and support scenarios like HANA & S/4HANA transformations, SAP system consolidations & carve-outs, and modernization & security initiatives for SAP systems. It is a high-quality, consistent, and secure approach for custom code modernization that speeds up transformation timelines and testing cycles, enables technical and business agility, and removes the need for unnecessary manual work for customers.

We recently finished a Brownfield S/4HANA Transformation for Evonik Industries with 69,000 custom objects in scope, where we fixed 350,000 code issues for HANA, S/4HANA, performance, security, cloud-readiness and standardization. The transformation was completed in less than 5 weeks with extremely high quality and less than a handful of tickets in testing. Business velocity throughout the project was maintained due to automated dual maintenance and a lot of the technical debt accumulated over the past years has been eliminated.

For BMW, in the past 3 years, smartShift’s Intelligent Automation™ has been utilized in 80 projects in 39 SAP Landscapes, decommissioning more than 44,000 custom objects with over 8 Mio. Lines of Code, addressing Millions of coding issues and saving Thousands of days of manual labor.

Arndt Hoffmann, Chief Strategist and Co-Founder of smartShift – with 25+ years of experience in the SAP transformation market serving as a Senior Advisor to the global CIO/CTOs looking for SAP business transformation in the coming years.

About smartShift
smartShift Intelligent Automation™ is trusted by global brands to drive innovation. We help customers accelerate the transformation of their SAP systems to next-generation cloud computing environments. Our solutions have delivered thousands of application modernization initiatives, analyzing and converting over 2.5 billion lines of code, eliminating risk, and freeing up strategic resources to focus on growth.

To learn more, please visit: www.smartShift.com