Mastering SAP S/4HANA Journey

Mastering Your SAP S/4HANA Journey Selecting the Right Integrator & Crafting a Winning RFP

In the complex world of SAP S/4HANA transformations, an integrator is more than a service provider—they're your strategic compass.

As seasoned consultants guiding numerous successful projects, we've learned that the integrator's role is decisive. They translate your business needs into SAP solutions, configure systems, manage data migration, and shepherd change management.

In essence, they're accountable for delivering a functional, integrated SAP S/4HANA system that propels your business forward.

1. Choosing Wisely: What Sets Great Integrators Apart

Not all integrators are created equal. Our years in the trenches have taught us to look beyond sales pitches. Key differentiators include:

• SAP S/4HANA Mastery: Proven success in your industry.

• Cultural Alignment: They understand your company's ethos.

• Methodology Adherence: Strict followers of SAP Activate.

• Governance Adherence: They understand your company´s governance guidelines.

• Team Composition: Deep bench of certified experts.

• Innovation Edge: Proficiency in AI, machine learning, etc.

Remember, an integrator who excels in retail might stumble in manufacturing. Choose one that speaks your industry's language fluently. 

2. The Power of the RFP: Why It's Your Best Friend

In our practice, we've seen clients transform their SAP S/4HANA journeys by mastering the Request for Proposal (RFP) process.

Here's why it's indispensable:

• Clear Communication: It articulates your vision unambiguously.

• Apples-to-Apples: It enables objective proposal comparisons.

• Detail Mining: It uncovers each integrator's true capabilities.

• Risk Shield: It sets ironclad expectations upfront.

• Negotiation Bedrock: It forms the basis for contract talks.

One client's generic RFP led to misaligned proposals. Their rewritten, industry-specific RFP attracted spot-on responses, saving months of potential rework.

3. SAP Activate: Your RFP's North Star Here's

Many companies falter when they don't align their RFP with SAP's gold-standard methodology, SAP Activate. This phased, agile approach (Discover, Prepare, Explore, Realize, Deploy, Run) is the backbone of successful S/4HANA projects.

Structure your RFP around these phases:

• Discover & Prepare: How will they assess your landscape?

• Explore: What's their approach to fit-to-standard workshops?

• Realize: How do they plan agile sprints?

• Deploy & Run: Detail their cutover and hypercare strategies.

4. The Fixed-Price Trap: A Common Misstep

Now, a critical warning. Many customers feel more comfortable by pushing for fixed-price contracts, touting budget certainty. Our extensive experience shows this can backfire dramatically in SAP S/4HANA projects.

Why? It clashes with SAP Activate's exploratory nature:

• Early phases are about discovery; requirements are fluid.

• True needs only crystallize at Explore's end.

Integrators asked to fix prices prematurely, react predictably:

• Price Padding: They inflate estimates to cover unknowns.

• Change Request Hunting: They vigilantly seek out-of-scope items.

• Scope Shrinking: They interpret requirements narrowly.

We've seen million-dollar budget overruns from change requests alone. One client's "fixed-price" project ballooned by 50% due to unforeseen complexities.

5. Winning the Price Game: Align with SAP Activate

The solution? Match your pricing model to SAP Activate's rhythm and your organization's readiness. We recommend two primary approaches, depending on your internal assessment:

Option 1: Fixed Price Start (for organizations with clear AS-IS understanding)

• Structured Fixed Price for Early Phases: If your team has conducted a thorough internal assessment and has a clear understanding of your current architecture, consider a fixed price for Discover and Explore. This provides budget certainty while still allowing for the exploratory nature of these phases.

• Progressive Pricing: As each phase ends and requirements clarify, price the next phase more accurately.

• Hybrid Models for Later Phases:

  • Fixed price for well-defined, standard modules

  • Capped T&M for initial Realize sprints, transitioning to fixed price as requirements stabilize

  • Outcome-based pricing for transformative changes

Example Approach:

• Fixed price for Discover and Explore, with clearly defined scope and deliverables

• Fixed price for core financials in later phases

• Bonuses for hitting KPIs (e.g., "95% automated order-to-cash")

Option 2: T&M Start (for organizations with less clarity on AS-IS state)

• T&M Early On: Use Time & Materials for fluid Discover through Explore phases. This is particularly beneficial if your current landscape is complex or not fully documented.

• Progressive Pricing: As each phase ends and requirements become clearer, transition to more structured pricing models for subsequent phases.

• Hybrid Models for Later Phases: Similar to Option 1, but with potentially more fixed-price elements as the project progresses.

Example Approach:

• T&M for Discover and Explore, with regular checkpoints and budget reviews

• Fixed price for core financials in later phases

• Bonuses for hitting KPIs (e.g., "95% automated order-to-cash")

For both (options 1 or 2):

• Waterfall Project Phases Approach: Establish clear criteria for phase completion before progressing. This ensures critical topics are addressed before moving to more rigidly priced later phases.

The choice between these options depends on your organization's current state:

• If you have a clear understanding of your AS-IS architecture and business processes, Option 1 may provide more budget certainty.

• If your current landscape is complex or not fully documented, Option 2 allows for more flexibility in the discovery process.

Regardless of the chosen approach, the key is to align the pricing model with SAP Activate's methodology and your organization's specific needs. This balanced approach aims to provide budget predictability while maintaining the flexibility necessary for successful SAP S/4HANA implementations. 

One client's Integrator announced the Realize Phase when they only had achieved 50% of the Explore Phase leading to Change requests and the need to postpone the Go-live of the project for 1 year.

Conclusion: Your Transformation, Your Terms

Selecting the right integrator and crafting a winning RFP aren't just tasks—they're strategic imperatives in your SAP S/4HANA journey. By understanding the integrator's critical role, discerning great from good, leveraging a smart RFP, and aligning with SAP Activate, you set the stage for transformation on your terms.

Most crucially, choose a pricing model that fits your organization's current state and project needs. Whether you opt for a fixed-price start due to a clear understanding of your AS-IS state, or a more flexible T&M approach for complex landscapes, ensure your chosen model allows for discovery and innovation. Our most successful clients use adaptive pricing strategies that evolve as project insights emerge.

Your SAP S/4HANA project isn't just an IT upgrade; it's a business metamorphosis. The choices you make now—in partners, processes, and pricing—will echo through your digital future.

Assess your current state carefully, choose your approach wisely, and structure your engagement smartly. With the right strategy, you can balance budget certainty with the flexibility needed for a successful transformation.

Remember, the key is alignment - between your organization's needs, the integrator's capabilities, and the SAP Activate methodology. By making informed decisions at each step, you pave the way for your vision to become your new reality.