DIRECTOR ADVISORY SERVICES
Alan Demir is a Director at Grant Thornton based in the Detroit office, specializing in Risk Advisory. His role spans from system implementation risks to broader business risk management. Serving primarily publicly traded U.S. companies, he ensures compliance with reporting standards, particularly the Sarbanes-Oxley Act (SOX). Alan's expertise lies in bridging operational risks with regulatory compliance.
From your observations, many companies are behind in their transition from SAP ECC to S/4HANA. Why is this a concern, given that SAP’s official deadline is 2027?
Indeed, while 2027 might seem distant, one must realize that these migration projects can span up to 3.5 years. So if companies start late, they risk not completing the migration before SAP’s support for ECC ends. And, with dwindling support for ECC, existing system issues could aggravate over time if not addressed through migration. As we get closer to the 2027 deadline, there will likely be a surge in demand from companies looking to migrate to S/4HANA. If businesses delay initiation of their migration projects, they may find it difficult to partner with a reputable, skilled implementing firm given the high demand. This could significantly impact the success and efficiency of the migration effort. Beyond that, there's a very real risk that some companies may not be able to finalize their S/4HANA transition before ECC support is terminated by SAP if they delay too long.
If businesses delay, they might find it challenging to collaborate with a reputable firm, endangering the success and efficiency of their migration.
Some people believe SAP might extend its support deadline or that companies can simply pay extra to get continued assistance on ECC even after the deadline. What are your thoughts on these kinds of approaches?
It's a valid consideration, and certainly a possibility that SAP provides some further flexibility on the cut-off date or allows extended paid support. However, in my opinion, companies are better served by taking a proactive approach and migrating to S/4HANA on a timely basis rather than relying on potential deadline extensions or spending extra funds to maintain outdated ECC systems beyond the deadline. While those options may buy more time, they are shortsighted strategies. It is generally wiser to channel those energies and funds into proactively transitioning to the more advanced and sustainable S/4HANA system.
Transitioning to S/4HANA is like implementing an entirely new system. It brings about vast technological changes and requires revamping of business processes.
In your experience advising companies on SAP migrations, what are some common misconceptions they have regarding the S/4HANA migration process?
One of the most significant misconceptions that companies often have is viewing the S/4HANA migration solely as an IT project or initiative that is disconnected from the rest of the business. The reality is that transitioning to S/4HANA is much more transformative and cross-functional than just a typical IT system upgrade. It requires comprehensively revamping and optimizing business processes, integrations, data flows, and technologies across multiple departments. For instance, core finance and accounting areas will undergo major changes in day-to-day operations, data analysis capabilities, and reporting protocols, which can have downstream impacts on SOX compliance controls and procedures in publicly traded companies. Similarly, supply chain and manufacturing modules see enhanced integration and automation capabilities with S/4HANA that necessitate workflow redesigns. To be successful, companies need to take a holistic, cross-functional organizational approach from the early planning stages when migrating to S/4HANA. Taking an integrated view across IT, finance, accounting, supply chain, and other departments is critical.
Automation is a major trend as companies migrate to S/4HANA. How should organizations approach automation to maximize benefits and minimize risk?
Automation presents an exciting yet challenging opportunity for companies in accounting, finance, and manufacturing as they transition to new systems like S/4HANA. While there is increasing pressure on these functions to leverage automation and new technologies, organizations need to take a measured, holistic approach. The migration should be viewed as a chance to completely reassess and redesign processes end-to-end, then judiciously automate based on those process optimizations. For manufacturing firms especially, concepts like hyperautomation and leveraging AI for operations are becoming indispensable to significantly boost productivity, decrease overhead costs, and facilitate competitive pricing flexibility. However, it's critical that companies bring on experienced external consultants and advisors for certain periods during the transition to ensure successful implementation of automation. Trying to change too many processes too quickly can be disruptive. With the right phased strategy and integration expertise, automation can truly transform landscapes for accounting, finance, manufacturing and other functions. But organizations must invest time upfront to carefully map out how to maximize benefits while minimizing business disruption.
With the right phased strategy and integration expertise, automation can truly transform landscapes for accounting, finance and other functions.
Grant Thornton is one of the world's leading organizations of independent audit, tax, and advisory firms. Founded in 1924, the firm has since expanded its presence globally, with offices in over 130 countries. Committed to providing top-notch solutions to clients across diverse sectors, Grant Thornton combines the expertise of its talented professionals with a personalized approach, ensuring high-quality service. Rooted in its core values of collaboration, leadership, agility, respect, and responsibility, Grant Thornton is dedicated to making a difference for its clients, colleagues, and the broader community. With a legacy of trust and a forward-thinking approach, the firm continues to empower its clients to achieve their growth potential.