An SAP S/4HANA migration is likely the most complex and expensive project your organization will ever run - and most SAP customers dont have the skills and experience to do it alone.
So what do you do?
Typically, you’ll choose a Systems Integrator to deliver your SAP S/4HANA migration.
But with so many flavours of SAP S/4HANA migration out there - Greenfield, Brownfield, and the many shades of Bluefield - choosing the right SI can feel like a major project in itself.
As part of our SAP S/4HANA phase zero services we’ve helped numerous SAP customers choose their SI, and typically the decision comes down to four key things:
- Technical Capability
- Referenceability
- Cost
- Cultural fit
To choose an SI you’ll need to assess their offering across these four key areas to find one that fits the bill.
But buyer beware, expectations can exceed reality when talking to SIs and some of these criteria should matter to you much more than others.
Technical Capability
One of the key roles of an SI is to provide the skills you need for a successful SAP S/4HANA implementation.
This can mean two things:
- Increasing the capacity of your team:
There may be people in your existing team with great SAP knowledge, but it's unlikely there is enough of them for the amount of work it takes to implement SAP S/4HANA. - To provide niche skills:
There are activities involved in an SAP S/4HANA implementation that you wouldn't normally perform in your day-to-day operations, so you need to get that capability from somewhere to support your SAP S/4HANA program.
Understanding your unique blend of these different requirements is key to understanding the technical capability you need when choosing an SI.
And, before you can even make that analysis you need to understand what an SI does on an SAP program.
Sometimes it’s less than you think.
While you can expect your SI to cover areas like design, build, testing, deployment, and support in your S/4 program, many of the pure-play off-shore Systems Integrators will do little more than build your system,
You might be left high and dry when it comes to things like building your business case, architecture design, and getting your business ready to use the new system.
While it might be possible to find a single SI that meets all your technical requirements, you could instead choose one SI to design and build the system, and several other independent and boutique consultancies to provide services around the outside.
And if you go down a composable route, you may pick multiple SIs due to their technical capabilities with different software - one for SAP S/4HANA and one for Workday for example.
Suffice to say, there is no right or wrong answer when it comes to choosing an SI for their technical capability.
Give yourself the best chance of success by creating a strong program plan and RACI to clearly scope out your requirements, and work with an Independent Advisor to understand which SI or blend of SIs will have the technical capability you need to support your program.
Referenceability
In layman’s terms, referenceability means “has the SI done a job like this before?”.
Often you’re looking for someone who has worked in your industry before… but not always (hold that thought).
Referenceability is most relevant for “heavy” SAP users: big manufacturers with complex supply chains and warehousing requirements, large multinational retailers, or asset-intensive industries like oil and gas for example.
In the modern-day S/4HANA world of clean core and fit to standard, “light” SAP users - often companies that provide services - may wish to attribute less weighting to referenceability.
Business areas like finance, procurement, and HR should have limited complexity regardless of your industry. These processes should be standardized as much as possible, so any SI with SAP S/4HANA implementation experience should be able to deliver them.
If you are a “heavy” SAP user or you work in a fairly unique industry, referenceability should play an important part in your SI selection process.
But, it isn’t always as straightforward as you think.
Take for example a recent budget airline client whose SI selection we supported.
When we went to market we were inundated with SIs displaying their pedigree working with some of the biggest and best airlines in the world.
Surely they’d be a perfect fit for our client? Well, the devil’s in the details.
These SIs spoke confidently about their ability to deliver airline fleet management and maintenance processes, completely unaware that our client leased their fleet and didn’t have that requirement.
Our client had no interest in an SI’s referenceability when it came to maintaining a fleet of planes. They were interested however in SIs referenceability when it came to lease accounting as this was central to their business model.
The takeaway from this is that the key to accurately weighting referenceability in your vendor selection process is understanding what drives your competitive advantage.
Just because you work in the same industry as another company it doesn’t mean you will have the same differentiators.
Your differentiators drive your business case for change and justify the costs of things like customization or industry cloud within your ERP landscape - these are the things your future SIs need to be referenceable in.
Cost
For many, cost can be the deciding factor in vendor selection - it’s certainly the factor that has the big scary number attached to it
As a rule, our advice would be not to focus on cost solely as the number inked on the SI’s proposal, but rather by thinking about cost in terms of ROI.
An SAP S/4HANA migration project is going to be expensive regardless - likely the most costly project your organization will ever run.
The objective should be to create a strong business case for change that shows how an SAP S/4HANA migration is an opportunity for digital transformation.
This transformation should reduce operational costs and drive competitive advantages that will increase your topline.
Ultimately, you should expect the cost of migration to provide a net profit within the lifetime of the SAP S/4HANA system.
This means your selection process should be about choosing the SI that will best support your digital transformation and help you realize the benefits outlined in your business case.
However, we understand this isn’t always the reality.
You may have been given a budget by the procurement team with the expectation you’ll choose an SI that does the job for that price.
If you’re in this situation our advice would be this - don’t expect the initial prices proposed by the SI to be the final cost of the project.
In fact, we often find that the SI that is the cheapest on paper can cost you more in the long run if the program overruns or you need to make any changes to the agreed scope.
Which conveniently leads us on to…
Cultural Fit
Of the four key areas to consider when choosing an SI, cultural fit can be the hardest to define.
But, it’s the most important.
Cultural fit is vital as it has a big impact on the other three areas we’ve covered, for example:
- Technical Capability
If the culture in your business is highly SAP self-sufficient, this will have a big impact on the technical capability you expect from your SI.
You’ll be able to pick up more of the slack on the program, challenge the SIs thinking, and take an active role in steering the program.
This makes some of the more pure-play offshore SIs a viable option for mature SAP customers.
If you lack SAP maturity, choosing an SI with a deep technical capability is a must as you’ll need a lot of support on your program. - Referenceabililty
The difference in culture across industries can be significant.
Expectations around things like security, flexibility in ways of working, and even things like dress code and conduct are defined by your industry.
Working with an SI with strong referenceability in your industry means they know how to work with people like you, and provides some much-needed confidence in your ability to work well together.
They know if you’re a strict “8 am start” organization or a “flexitime, log-on after you’ve walked your dog” kind of office.
These things may seem superficial, but they matter. These people will be part of your team for years, and having these shared values will make things much easier. - Cost
The biggest unforeseen costs on a program are delays.
Finding an SI who will hold you accountable, raise risks and change requests promptly, and generally attempt to control scope and protect the schedule is massively important - and this largely comes down to culture.
While some SIs get a bad rap for constantly raising change requests, in the long run, it’s better than an easy-going SI that will passively let your program timeline slide off a cliff edge.
The impact of cultural fit on your SAP S/4HANA program runs deep, so why is cultural fit so often at the bottom of the pile when it comes to weighting for SI selection?
The problem with weighting cultural fit
There’s a saying in business - what’s measured gets managed.
Often attributed to management guru Peter Drucker, this maxim means tracking and scoring key metrics will help you reach your desired outcome. This happens during your SI selection process when you weight and score candidates across areas like technical capability, referenceability, cost, and cultural fit.
There’s just one problem - what’s measured gets managed doesn’t always result in the best outcome.
Sometimes, keen scorekeeping and measurement cause people to focus on the things that are easy to measure, not the things that matter the most. This is especially true when it comes to things that are subjective and hard to measure - like cultural fit for example.
Even as far back as 1956 this was understood as evidenced in V. F Ridgeway’s paper “Dysfunctional Consequences of Performance Measurements”.
These dysfunctional consequences are sometimes called “Goodhart’s law” which states “When a measure becomes a target, it ceases to be a good measure.”
Examples of this would be a call center prioritizing quick call times, so operators start providing awful customer service to get people off the phone faster.
Or the famous Cobra effect in Delhi, in which the British government sought to control the pests by offering a bounty for dead snakes. This instead resulted in a booming industry of cobra breeding.
But what does this mean for your SI selection?
It means that because cultural fit is tricky, messy, and hard to define it often gets deprioritized.
However, cost is a nice fixed round number you can easily measure. It’s easy to over-prioritise something clear-cut like cost when it comes to vendor selection.
We define SAP success as a program that comes in on time, on budget, and on value.
By prioritizing cost above all else, you’re very likely to miss the mark when it comes to on-time and on-value.
And to be honest, if your program is late your budget will go out the window too.
So how do you make cultural fit quantifiable in your selection process?
How to score cultural fit in the SI selection process for S/4 migration
The interesting thing about cultural fit is that it’s hard to measure in terms of nickels and dimes, but the first time you meet your SI everyone on your team will instantly get a good or bad feeling about them.
This presents you with two challenges
- How do you bottle that sentiment so you can factor it into your selection process?
- How do you get to know the SI before it’s too late? - i.e. when you’re already signed with them.
We’ll start with problem number 2.
When choosing a systems integrator to deliver your SAP S/4HANA migration we always recommend running a clean room with at least your top two candidates.
During the clean room, key members from your project team will be exposed to the SI and can ask questions about how they would deliver the program.
You’ll get an impression of what it’s like working with them and if your values and management approach align.
At the end of this cleanroom process, your team will have a good impression of what it’s like to work with the SIs you have interviewed.
You might hear things like “I know they’re the best on paper, but…” or “they don’t have all the answers yet, but I really liked how they dealt with…”.
These thoughts and comments can direct you towards the SI with the best cultural fit for your business.
While an SI may have the perfect answer on paper, even the best-laid plans often go awry on SAP S/4HANA programs. Having the sense that you’ve chosen an SI that you can work well with to traverse these hurdles is vital.
So how do you score cultural fit?
It’s as simple as taking a pulse check following the cleanroom process. Ask your team a few questions about how they would feel working with the SIs you’ve met.
And, if you want extra evidence you can get feedback from former clients of the SI as part of the processes. You schedule a call or visit their clients' sites to ask them what it’s really like to work with your potential future SI.
As we’ve already mentioned, there’s no exact measure to this, but by getting some general feedback and out of 5 ratings you’ll very quickly be able to tell who the favorites are amongst your team.
Find the right SI for your SAP S/4HANA implementation with Resulting IT
Choosing the right implementation partner is probably the biggest single decision you will make and it will have a massive impact on the success of your SAP S/4HANA implementation.
We can support your selection process from defining your S/4HANA roadmap to creating a vendor briefing document, providing independent advice about the technical capability and referenceability of the systems integrators, and facilitating your cleanrooms to make sure you choose the right SI for your business and your program.
Click the link below for a chat about choosing your SI.
Download "Fifty shades of blue: the secrets to taking control of your S/4HANA journey" for everything you need to know to prepare for S/4HANA migration.
