While an S/4HANA project results in a significant business transformation, it also creates large-scale implementation initiatives that require the buy-in of various business functions across the organization. Such an implementation calls on us to ensure that the project risks are defined and addressed across all tasks and implementation timelines.
An S/4HANA implementation project affects the system architecture, security, user experience, financial reporting, process consolidation, and more. The project team must identify certain risks to track and address as the project progresses.
– System infrastructure changes are always in play whether you opt for cloud, on-premise, or hybrid. Such changes can lead to system instability or data integrity issues. There needs to be an understanding of the new risks and the controls required to monitor the system’s new infrastructure.
– Security risks are introduced by changes in system design and may lead to inappropriate access to sensitive data and systems and infrastructure weaknesses. The IT team needs to be prepared to manage a more complex security model that monitors new cybersecurity risks.
– Data quality risks lead to poor reporting, financial misstatements, or impaired decision-making. A well-defined and documented data strategy, including real-time analytics and data visualization, would benefit from centralization and standardization. And the data conversion and reporting process need full business support.
– OCM has to be included in this list of potential risks as ineffective communication and change management processes can fail to engage the organization and result in poor system design and low adoption. The project team must inform the end-user community about the project’s objectives, timelines, and changes. Plus, changes in business processes and will result in new skill sets and required training.
– Project Management risk, similarly, is not to be understated. The right level of sponsorship is to be secured, and the implementation team (including the PM) must have the right functional and technical S/4HANA skill sets.
– Business Process re-design is often accompanied by an S/4HANA implementation and will therefore result in potential risks to be managed. Ineffectively designed business processes may fail to meet stakeholder objectives and not generate the expected efficiencies. Business objectives and operational priorities regarding reporting, growth, and scalability must be kept in mind when designing the S/4HANA solution. Process optimization benefits must be realized and tracked via internal control frameworks to achieve the expected benefits.
Organizations embarking on an S/4HANA transformation would be well advised to consider all risks and establish a plan of action to proactively address each to identify and mitigate risks around their S/4HANA projects. Some of those plans should include –
- Sound methodology and approach to assessing project readiness, OCM risks throughout S/4HANA migration.
- A strategy for data readiness, governance, and reporting around S/4 data models
- Identify tools to assess and build application security and automated controls.
- A comprehensive business process and security design, including new requirements around Fiori and database security
For more information on common challenges encountered during an S/4 transformation, see the blog here and see this blog on how to plan an assessment to address those challenges.