System

Migration
Report
11 strategy-defining stats for
S/4HANA, Salesforce, and more
System migration report

Introduction
For any big enterprise, continuous business transformation is a must.
Companies merge or acquire other companies. Processes get more complex.
Technology evolves. Inevitably, the systems underpinning your business will
struggle to meet your needs.

To stay agile and remain competitive, you’ll have to upgrade or replace existing
systems by migrating their business processes to a new system landscape. And
you don’t need us to tell you that system migrations are challenging (especially
the one to S/4HANA).

That’s why we’ve sifted through dozens of benchmark studies, customer surveys,
and independent vendor reports so that you don’t have to.

The result?
11 strategy-defining stats you should know that all system migrations have in
common, plus a few about S/4HANA in specific — highlighting the risks, costs,
and challenges many IT leaders are sure to face. But, you’ll also learn about the
incredible opportunities that evolving your IT landscape can unlock. Learn about:

  The common pitfalls businesses face in starting the journey

  Why many system migrations fail
  The key ingredients for a successful migration
  And the business value successful system migrations can create

Let’s get started.

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System migration report Table of contents

01
6 stats you should know
about system migrations
p4

02
5 stats you should know
about S/4HANA migrations
p14

03
Next steps for accelerating
your system migration
p22

3
System migration report

Section 1

6 stats you should

know about system
migrations

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System migration report

01 More than half of system migrations fail

IT migrations are like a house of cards. One wrong move can bring
the whole thing down — whether it’s poorly defined processes, the
wrong business users in a workshop, or inflexible employees clinging
to old workflows.

Gartner estimates that 60% of ERP

investments are perceived as
60% having failed because they are
believed to have compromised the
business in some way.

The reasons for this can be as diverse as the systems themselves. Maybe
the new ERP has poor usability, the project had the wrong scope, your
data is corrupted, your technical integrations don’t work, or your users
just don’t know how to use the new system. The list is endless. But it all
comes down to the following core problems companies face these days:

Source: Gartner, 2019 Strategic Roadmap for Postmodern

ERP, Paul Saunders, et al, 31 May 2019 5
System migration report

1. System migrations are the “ugly duckling” no one wants to do

On the business side, system migrations are often seen as a
necessary evil (or a technical upgrade at best) — when they’re
actually a great opportunity for strategic improvement. On the IT
side, leaders struggle to demonstrate the business value a system
migration can bring. But when expectations and roadmaps aren’t
aligned, how do you expect to keep your migration on track?

2. Low process visibility makes it hard to really improve operations

Process complexity is at an all-time high. According to a recent
Forrester study commissioned by Celonis, 71% of employees use 10
or more applications to execute a single business process. And yet,
only 16% of leaders say they have complete process visibility. But
without end-to-end process visibility across systems, businesses
often end up migrating inefficient processes to their new system.

Process Lack of Disconnect Lots of

complexity visibility between IT challenges
and business

Sounds like you should throw in the towel? Not quite. Yes, there are
costs and risks. But a system migration can and should — if executed
well — deliver real business outcomes: improved agility, better process
visibility, higher productivity, and lower costs.

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System migration report

02 Majority of system migrations struggle with

ballooning scope

Moving your business from one system to another is like building an

airport. It requires extensive planning, timing, and most importantly,
budgeting. If you don’t get it right from the start, your transformation
project can easily end up like the infamous Berlin Brandenburg (BER)
airport. The German airport turned out to be catastrophic in every
aspect, running billions over budget and 8 (!) years behind schedule. So
why do so many migration initiatives face the same faith?

60% of ERP programs

suffer delays

Although aware of the risks and teething problems that come with a
project of this scope, both IT departments and system integrators often
lack a detailed plan for challenges that can hit the company’s bottom
line. The result: More than half of ERP migrations fail to stay on schedule.
“A major reason being that system integrators sometimes take a
cookie-cutter approach to program management, using point-in-time
information”, criticizes Boston Consulting Group.

Source: BCG, An ERP Strategy for a Postpandemic World, Neveen Awad, 7

Anmol Pareek, Zeeshan Shah, and Karsten Schott, 3 September, 2020
System migration report

You wouldn’t build an airport without a highly detailed blueprint and

timeline. Same goes for system transformations. That includes vital
preparation steps like:

 Identifying all cross-functional interdependencies (How do

your process changes in Order Management affect Accounts
Receivable?)

 Defining change management (How can you ensure successful

adoption?)

 Developing testing scenarios before go-live

 Accounting for potential challenges (security challenges, slow data

migrations, longer downtimes) and laying out how you plan to
resolve them

 Including some leeway (in terms of schedule and finances) for

additional requirements that may crop up unexpectedly.

In a nutshell: If you want to avoid ballooning timelines (and costs),

you need an airtight back-up plan for any worst-case scenario — and,
better yet, 100% objective process insights to guide your decisions
along the way.

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System migration report

03 Few system migrations generate ROI

System migration is a means to an end. You don’t re-engineer your

technology landscape just for fun, you’re striving for a better customer
experience, new functionalities, agile processes, and greater business
value. You simply can’t afford to spend hundreds of millions of dollars
into a project that doesn’t recoup your investment.

Unfortunately, that’s a fate many companies share. They either struggle

to measure whether the project delivered on their business case or, in
the worst cases, don’t see any ROI at all.

Two-thirds of ERP
transformations have
a negative return on
investment.

But if system migrations have little to no guarantee of delivering on the

business value they promise, why do it? In our experience, the problem of
low value realization is rooted in the early requirement phase.

All too often, companies are desperate to address their immediate

IT pain points or rush the migration process in order to sunset legacy
tools. IT teams, on the other hand, struggle to get or keep management
buy-in because they can’t tie process and system improvements to
business outcomes.

Source: McKinsey, Agile in enterprise resource planning: A myth no more, 2019 9

System migration report

“It’s not just the ERP migration. If

your processes aren’t optimized,
you will have a problem with
whatever ERP you’re using.”
— Markus Ochsner, CFO at ABB

The thing is: Understanding processes and their impact on business

outcomes is easier said than done. IT landscapes are complex, with
processes spanning across multiple systems — some SAP, many non-SAP.

To keep business goals in focus, a data-driven approach is essential. Not

only when assessing your current process landscape to build a strong
business case, but throughout the entire migration cycle.

Only if you measure the business impact of optimizations at every stage

of the migration, from assessing the value of current customizations to
designing the right solution during fit-gap analysis to driving adoption
after go-live, will you be able to ensure value realization and ROI.

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System migration report

04 Demand for experts is rising fast

Whether you’re upgrading, consolidating, harmonizing, or switching

vendors, system migration is a huge strategic project that comes
with major business implications, and therefore requires extensive
expert attention.

More and more companies are acknowledging the urgency of

optimizing their system landscape. They also realize they need to get the
right people on board sooner rather than later, because the demand for
experts is rising fast.

In 2021, ERP cloud enterprise

application implementation
labor rates increased by 60%
due to high demand and a
lack of skilled resources.

A poorly executed system transformation project without clear guidance

from experts can cause a cascade of problems — from extended
downtime to data loss, budget overruns, and subpar performance. In the
worst cases, it can disrupt entire operations and affect your bottom line.

Source: Gartner, 2019 Strategic Roadmap for Postmodern

ERP, Paul Saunders, et al, 31 May 2019 11
System migration report

05 Integration is key

Imagine a company where no one speaks the same language. No

one knows what the other departments are doing, even though
they’re working on the very same project. To make matters worse,
each department is using a different system, and even within those
departments, everyone has their own way of doing things — because
there’s no communication.

Sadly, this is a reality for a lot of companies. Why? Because they

underestimate the interdependencies between their processes
and departments.

40%
Through 2025, 40% of
ERP implementations
will underachieve as a
result of underinvestment
in integration.

As a result, their systems are too often disconnected from each other,
causing process inefficiencies like manual rework, increasing error rates,
and communication blocks. What should have helped them speed up
actually ends up slowing them down.

Source: Gartner, Magic Quadrant for SAP S/4HANA Application

Services, Worldwide, Fabio Di Capua, et al, 30 April 2020 12
System migration report

06 Ignoring SaaS leaves value on the table

In the digital era, your ERP needs to perform faster, handle more data,
and support new capabilities like AI, bots, or machine learning. All while
staying 100% reliable and agile.

As a result, a growing number of companies are considering migrating

or have already moved their ERP to the cloud. This move can not only
save implementation costs — but also bring greater business value in
the long run.

By 2022, organizations
that continually improve
their SaaS ERP will realize
60% more business value
through adopting the
latest best practices in
frequent vendor releases.

The benefits go far beyond quicker implementation: It future-proofs

your IT landscape to be flexible, scalable, and cost-efficient. Rather than
waiting for an update every few years, companies with an ERP in the
cloud can be sure to always be up to date with new releases.

Source: Gartner, 2019 Strategic Roadmap for Postmodern ERP,

Paul Sanders, et al, 31 May 2019 13
System migration report

Section 2

5 stats you should

know about S/4HANA
migrations

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System migration report

01 Businesses embrace digital transformation — will

their ERP follow?

To drive digital transformation and better business outcomes, upgrading

or replacing your legacy software will become inevitable at some point.
After all, you can’t support the business models of tomorrow — on-
demand, digital, mobile-first, global — with yesterday’s technology.

So will every company running on SAP move to SAP S/4HANA? Maybe

not every company. But this is a watershed moment for SAP customers.
Many of them are haunted by the same doubts and questions: Can they
stay competitive with their current SAP ERP system? And if not, will the ROI
outweigh the risks and efforts coming along with the move to S/4? If they
decide to migrate, when is the best moment to start?

In a recent survey of nearly 150 companies using SAP, SAPinsider asked

about their plans to migrate to SAP S/4HANA. This is where they stand.

40%

30%

20%

10%

0%
No plans yet Currently Running PoCs Currently Already using
evaluating the or pilots implementing SAP S/4HANA
business case SAP S/4HANA

2019

2020

2021

Source: SAPinsider Benchmark Report, SAP S/4HANA Migration Benchmark Report,

March 2021, 2019. 15
System migration report

02 The entire business needs to be on board with your

migration process

No IT leader, CFO, or CIO will jump for joy when they embark on a system
migration initiative. Complex projects like an S/4Hana migration come
with a hefty price tag and serious risks. Some never get off the ground at
all, like Lidl. The German retailer spent €500M ($580M) and seven years
migrating to a new company-wide inventory management system,
before giving up and reverting back to their old ERP.

61%
61% of IT decision-makers say
that they struggle to gain or
retain management support
for SAF migration to the cloud

Since horror stories like these are not uncommon, it’s no wonder that
61% of IT leaders in a 2019 Frost & Sullivan Global Cloud User Survey said
that they struggle to gain or retain management support for an SAP
migration to the cloud. At the same time, 62% said that they don’t have
sufficient budget to complete their cloud implementation plans.

Source: Frost & Sullivan, Global Cloud User Survey 2019, 2019 16
System migration report

The problem: These initiatives often arise out of necessity rather than
strategy, be it new vendor requirements, changing business needs,
or mergers and acquisitions. As a result, both IT and business leaders
often treat them as a tactical IT project rather than an enterprise-wide
strategic initiative, resulting in under-planning and then missing out on
significant opportunities to deliver business value.

Using the data in your source systems to get an end-to-end view of your
processes across all systems, is therefore the first step to success. Only
with an objective understanding of the status quo can you start defining
your IT requirements for a system transformation, build a compelling
business case for migration, and draft a clear roadmap that both IT and
the business side can get (and stay) behind.

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System migration report

03 Most companies can’t — and shouldn’t — do it alone

There’s no doubt that migrating to S/4HANA comes with a host of IT-

and process-related challenges. Since companies often lack the right
migration expertise in-house, a large number of businesses will decide
to engage with expert partners. They usually offer support at several
stages throughout the migration, from workload assessment to putting
together a migration plan, to process mapping, deployment, and
ongoing management.

77% of SAP customers will

rely on a partner for their
S/4HANA migration

Getting support for your IT team is a great idea. But greater business
value is not a given, even if you bring in a team of external consultants.
Why? Because typical methods of process mapping — like workshops,
surveys, or time studies — are often subjective and incomplete.

That’s why the most forward-thinking companies and consultants

themselves often draw on additional technologies to get a data-driven
picture of their processes. Only with 100% visibility across your process
landscape, can you fully understand the downstream impact
of changes.

Source: IDC, SAP Customers on the Move to SAP S/4HANA, 2019 18

System migration report

04 Most companies configure S/4HANA from scratch

When switching from ECC to S/4HANA, SAP-run businesses have to

decide on their approach very early on. Should they rip and replace
all their systems (greenfield)? Should they “lift and shift” their legacy
system’s configuration onto the new system (brownfield)? Or should
they cherry-pick what they migrate and where they stick to the standard
(bluefield)?

According to Gartner, the greenfield implementation still continues to

be the approach of choice for more than half of the market. However,
Gartner expects brownfield conversion and bluefield migrations to
flourish in the next few years, when SAP clients who still “watch and wait”
will eventually migrate from SAP ECC to S/4HANA ahead of the end-of-
support deadline in 2027.

of current S/4HANA
57% projects deploy a
“greenfield” approach

At first sight, it seems only logical that companies want to preserve

their existing investment and the customization of their processes. And
sure, it looks like the easiest, least disruptive path forward. But a net-new
S/4HANA implementation gives you the opportunity to free your existing
systems and processes from the baggage accumulated over the years
(or even decades).

Source: Magic Quadrant for SAP S/4HANA Application Services, Worldwide

Allan Wilkins et al., June 2021 19
System migration report

It’s a complex operation, yes, but a more standardized, connected,

and modern landscape can boost your business efficiency
and flexibility in the future. On the other hand, those kinds of
implementations require bigger organizational and structural changes,
since you’ll have to work without internal best practices and might
struggle with slow user adoption.

Every strategy has its pros and cons, and what works for your
organization heavily depends on what your processes look like today.
That’s why data-driven insight into your as-is process performance is so
crucial for revealing the complexities and best practices that will inform
your roll-out strategy.

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System migration report

05 The top drivers behind S/4HANA migrations

Every company’s process landscape is unique. It may encompass

everything from highly-customized applications essential to your
business to decades-old processes and a bunch of homegrown,
disparate systems that don’t play well together. Some of them you need,
some of them you don’t.

Indiscriminately heaving all of your processes into your new IT landscape

is like moving into a new house without decluttering your attic and cellar
first. Especially when moving to S/4HANA, you should think about which
customizations you actually need and which are just inherited. Highly
customized processes and code can hinder adoption and your ability to
take full advantage of the latest SAP functionalities.

Consequently, in SAP Insiders’s 2021 Migration Benchmark Report,

respondents name reengineering or correcting poor processes and
configurations from a previous ERP implementation as the top driver for
their S/4HANA migration.

Top drivers for SAP customers to migrate to S/4HANA

45% 42% 31%

The opportunity to End of maintenance and A business mandate to

reengineer processes support for core SAP ERP better support business
to better fit operational releases users with innovative
needs or correct poor solutions
processes/configurations
from a previous ERP
implementation

Source: SAPinsider, SAP S/4HANA Migration Benchmark Report, 2021 21

System migration report

Section 3

Next steps for

accelerating your
system migration

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System migration report

5 steps to ensure success

This report focused on stats and numbers that can be strategy-

defining for your own system migration. To complete the picture and
get you inspired for your own migration initiative, we’ve created this ERP
migration checklist.

1. Get your stakeholders on board.

For the longest time, system migrations have been primarily the
province of the IT department. But system migrations often touch
every line of business. That’s why it’s only logical that they should
be a strategic priority, championed by both IT and Line of Business
executives. With a long project timeline and far-off ROI, you need a
champion in every corner, be it in production, sales, accounting, IT,
or supply chain.

But it’s not only your management who needs to understand

what’s in it for them — your users do too. It may sound simple, but if
your users don’t see the value in your new systems, either through
increased sales, or more efficiency in their day-to-day, they just
won’t make the switch.

2. Start with a clear picture of your as-is processes.

 Knowing exactly what your IT ecosystem looks like before you decide
on which elements to migrate is key. Traditional process mapping
techniques, like workshops or surveys, can be a helpful tool to get
valuable input from your business users, but shouldn’t be your single
source of truth. Why? Because they are often based on subjective
opinions and idealized process models, rather than on how users
actually behave. Only with a data-driven approach to process
mapping will you be able to re-engineer them for the better.

This goes for both greenfield and brownfield migrations —

even if you are implementing from scratch, you need to fully
understand your business requirements before you can design
something better.

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System migration report

3. Set timelines for key milestones.

 Hold your stakeholders accountable for the success of each migration

phase by setting timelines and KPIs for key milestones. Creating a
structured roadmap will not only help each member understand what
tasks are expected and in which sequence, but will identify gaps where the
necessary skills or budgets are lacking.

4. Leverage technology.

Choose the right technology to plan and execute migration projects but
also monitor their success. Powerful technologies like process mining,
artificial intelligence, machine learning, and automation (or an Execution
Management System that brings all of them together) can support you
in mapping your processes objectively, identifying process deviations,
testing your new processes, proactively solving inefficiencies, and
monitoring user adoption.

5. Monitor success and communicate regularly

All too often, system migration initiatives are a black box to both business
leaders and end-users. That’s why establishing check-ins during key phases
of the migration and tracking progress towards business outcomes is
critical to managing expectations and maintaining leadership buy-in.

Use process performance metrics to compare legacy and new systems

and measure the impact of your optimizations. Regular status reports,
fireside chats, FAQs, newsletters and user workshops can keep your
employees engaged along the way.

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System migration report

System migration benefits everyone, not just IT

We understand why you would be hesitant to embark on a system

migration initiative. You’ve made significant investments in your legacy
systems. You might even feel the pressure of cutting costs.

But, if planned and executed properly, system migrations can bring

tremendous business value.

 Drive better business outcomes.

Optimize key KPIs like working capital, customer satisfaction, and on-
time delivery.

  Achieve millions of dollars in savings each year.

Improve your bottom line by eradicating inefficiencies and boosting
productivity.

  Deliver better customer experiences.

Breed loyalty, and realize growth opportunities.

The prerequisite for all that is to understand that a system migration is

about more than just updating your legacy software. It’s an opportunity
to consolidate your IT landscape and harmonize legacy processes,
modernize the business, and create continuous value far beyond go-live.
This is how you turn a system migration into a system transformation.

What are you waiting for?

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System migration report

Want to learn more about system transformation?

Knowing about the costs, challenges, and benefits that come with a
system migration is key to success. But that’s just the beginning.

With the right resources, helpful tips from other IT experts, and valuable
learnings from world-class transformation projects, you’re ready for your
own transformation journey:

Learn from our customers

Learn how Sysmex used Celonis to gain 100% visibility into their S/4HANA
requirements, discover process variants even their consultants didn’t
find, and prioritize initiatives based on data and outcomes.

Watch their success story

Read the Road to Go-Live Handbook

Read in detail about some of the major challenges experienced by
IT leaders throughout their system migration and how the Celonis
Execution Management System can help at every step of the way.

Download the free eBook

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Celonis helps businesses everywhere run a data-driven
system transformation — see how an Execution Management
System can help you too at every step of the way.

For more information get in touch.