Customizations Challenge SAP S/4HANA Finance Adoption

Data from our recent research on SAP S/4HANA Finance and Central Finance shows SAPinsider organizations increasingly recognize the potential benefits of SAP S/4HANA Finance, and we expect to see continued adoption in the coming years. SAP S/4HANA Finance offers many advantages over traditional SAP ERP financial accounting and reporting methods, including improved accuracy, transparency, and efficiency. In addition, SAP S/4HANA Finance can help organizations meet regulatory requirements more effectively and support compliance with generally accepted accounting principles (GAAP).

However, one of the key challenges organizations face when implementing SAP S/4HANA Finance is the need to re-platform or replace existing complex customizations. Any business system is only as good as its ability to adapt to change. As the world around us evolves, businesses must be able to quickly and easily adapt ERP finance systems to stay ahead of the competition. This is especially true with complex customization, where a small change can have a ripple effect on the entire financial system.

Customization is a central part of managing core finance processes in many industries. To meet the specific needs of their customers, partners, and regulators, businesses often need to tailor their products and services. This can be a complex process, particularly if the customized financial system is later updated or changed. The challenge of complex customization is that it can be very difficult and expensive to change the system later on down the line. This is because the customized system is designed specifically for the company’s current needs, and tweaking it to meet new requirements can be daunting and costly. This can lead to frustration for businesses that find they need to make changes but cannot do so due to the complex customization.

Over a third of SAPinsider finance professionals (35%), surveyed say customizations in the current financial system make migration complex, thus preventing a move to SAP S/4HANA Finance. By leveraging a modern technology architecture for real-time data access and processing, SAP S/4HANA Finance runs very differently from traditional SAP ERP finance systems, rendering some existing customizations useless. As a result, organizations must either invest in re-platforming their existing customizations or accept that they will need to start from scratch. It makes sense that most of the survey respondents (54%) challenged by high levels of customizations, said simplifying their financial landscape was the top strategy to support their organization’s current planning for SAP S/4HANA Finance.

Although the benefits of S/4HANA Finance can be significant, the challenges associated with migrating to the platform should not be underestimated. Organizations must carefully consider the costs and risks involved in migrating to S/4HANA Finance before deciding.

What Does This Mean for SAPinsiders?

Based on our research into how SAPinsiders are approaching planning challenges, such as high levels of customizations preventing a move to SAP S/4HANA Finance, SAPinsiders should consider the following:

Have a clear understanding of your long-term business needs to maintain a streamlined financial system. As organizations look to adopt SAP S/4HANA Finance, it’s important to think long-term and anticipate future needs. Trying to cram all of your organization’s business processes into an inflexible model can lead to overengineered, customized systems that are difficult and expensive to maintain.

Optimize what’s available in your current system to streamline your finance processes. Sometimes there is no need to start from scratch if you can buy an existing extension or add-on that meets your needs. This is particularly true for SAP S4HANA, where a wide variety of finance process-related extensions are available on the market. Organizations can save time and money using what’s already available while still getting the necessary functionality.

Work with the right S/4HANA Finance implementation partner. S/4HANA represents a major shift in the way the finance processes are handled.  Organizations should select implementation partners with strong deployment methodologies and tools, as well as experience with similar projects to navigate any potential challenges during a finance transformation.