Migration to S/4HANA from several disparate ERP systems entails great risk and can take years, requiring many different tools, enormous human resources and large budgets. Master data management (MDM) can not only mitigate that risk but actually allows you to thrive and reap benefits while preparing your data for S/4HANA.
During your S/4HANA migration journey, your organization needs to “keep the lights on” with both your legacy ERPs and your new S/4HANA environment until full deployment. MDM enables this with minimal or even in some cases a reduction in resources.
SAP S/4HANA is a powerful enterprise resource planning (ERP) system designed for large enterprises. It was first released in 2015 and replaces SAP R/3 and SAP ECC. The software package features embedded AI, analytics, in-memory and process automation.
Currently, thousands of companies are implementing S/4HANA to tap into the many benefits of this ERP. However, the implementation of S/4HANA entails some pitfalls concerning processes and the migration of your data from existing ERP instances.
Let’s say all the pieces have come together. You have decided to embark on the SAP S/4HANA journey. Your comparison of ERPs in the market shows that S/4HANA is the best fit for your business. Budget and teams are in place, the organization is aligned, and the teams are appointed. But one piece is still missing: an approach for managing master data along the preparation, conversion, transition and conclusion of the journey.
Any world-class ERP is only as good as its master data, so don’t let that be the weak link in the chain.
Mixed ERP landscape makes master data migration more difficult
S/4HANA is a great ERP system for large and complex organizations with thousands of suppliers, products and customers in their portfolio. Through geographically dispersed organic growth, mergers, acquisitions and divestitures, large multi-national organizations have collected a patchwork of ERP systems and vendors. In addition, different countries and regions might have heterogenous master data management processes, procedures and technologies for various historical reasons. This can make implementation of S/4HANA both difficult and fraught with risk.
Having several legacy ERP instances from different software providers can result in multiple copies of master data records (one for each ERP) at a minimum and often duplicates or inconsistencies for the same supplier, material or customer. Data quality also might be lacking or be inconsistent across the ERP landscape.
Managing master data comes first
These inconsistencies can cause enough problems in your daily operations, hampering your efficiency. The problem is a lack of transparency. If a specific common supplier (or supplier subsidiary) interacts independently with different regions counties or even departments within your company, there’s a great risk that you are not getting the best price. With different supplier numbers in different systems there can be a complete lack of transparency to this problem. If the same part exists with different part numbers in different regions/countries, you could be backordered in one country and scrapping excessive surplus inventory in another. These situations are bad for both the top and bottom line and especially problematic with current global supply chain issues.
Populate S/4HANA with clean master data
Obviously, you don’t want to reproduce these master data issues into your new S/4HANA system. So, managing master data must come first, including data cleansing, building golden records through matching and linking and then transforming it for ingestion into S/4HANA.
Maintain master data in legacy systems
Furthermore, to maintain daily operations during the migration project, you also need to have a process in place to continuously maintain this master data not only in S/4HANA but also in legacy systems supporting businesses or geographies not yet migrated.
Embarking on the journey to S/4HANA without high quality data and a single version of the truth poses substantial risk to project budgets, timelines and successful implementation.
The typical approach to ERP master data migration: static master data conversions
For very small ERP implementations (one language, one country, one plant) a big bang static master data conversion may be feasible. You do a series of mock conversions which take a few days to run and then prepare for conversion over the weekend by freezing the master data typically two weeks in advance. This approach doesn’t scale to a large, multi-regional, or global organization. Freeze, or static conversion isn’t sustainable when you share master data across the enterprise. Your business must continue to operate and master data needs to remain synchronized between both legacy systems and your new S/4HANA environments.
Therefore, in order to keep master data across legacy systems synchronized during the migration project, common static conversion practices require a large dream team of data analysts, architects, developers and business subject matter experts to analyze, develop, cleanse, consolidate and review master data which then is mapped and transformed for S/4HANA consumption. This is a very time consuming and high effort process at the end of which you have a possibly repeatable time-consuming review process for each master data change.
Reduce the number of tools needed for S/4HANA migration
Many SAP S/4HANA migrations follow this model with the typical SAP technology landscape through SAP Data Steward and SAP Data Services with substantial ABAP development.
One large manufacturer of electric tools calculated that they needed more than 30 different SAP tools to manage and migrate their master data to S/4HANA.
Static master data conversion: Data migration teams of business analysts, developers, architects and subject matter experts need to keep master data in legacy systems synchronized while migrating to S/4HANA. Multiple tools and services are needed.
Use configuration instead of coding
S/4HANA MDG (Master Data Governance) can be used to maintain SAP after the migration. However, as one would expect for an ERP software-specific master data management tool, SAP MDG is most often deployed only to support master data for SAP. Supporting additional data models (i.e., legacy systems) requires extensive customization and is rarely, if ever, done.
By using a configurable master data management solution, you can eliminate much of the design and development effort and maintain the master data on an exception basis as it changes.
Master data governance during and beyond ERP data migration
Another problem with the static conversions is: what happens next? New customers, suppliers, materials and new finance master data will keep coming in, and you need to ensure that they are not duplicates of existing data. As business goes on during the migration project, you need to keep consistency across your legacy systems and incremental S/4HANA deployments.
Constant changes in your master data entails a big risk for your implementation, and they require continuous master data governance beyond the migration efforts. This can be done with duplicate data entry across both your new and legacy systems, but this is very labor intensive and prone to error. As previously mentioned, this could be done in an ERP-specific data governance tool but would entail extensive “throw away” code.
A master data management (MDM) solution can mitigate that risk and reduce associated labor costs. MDM can ensure the data quality and enable business value already during the project. You don't need to wait until the implementation is fully complete.
A new approach for ERP master data migration – MDM enabled
Your S/4HANA journey can benefit significantly from a master data management solution for business continuity, because of the incremental migration process that can take years to complete.
During your S/4HANA migration journey, in addition to the project, your organization needs to keep the lights on so your business can continue to function both on S/4HANA and legacy ERPs until full deployment.
An MDM solution that can manage several data domains and data models can mitigate the risk of your data migration to S/4HANA ERP; and it can also help you manage changes of existing data.
Using multidomain MDM to do the hard work and ensure up-to-date information in S/4HANA has several advantages:
MDM facilitates synchronization of existing data and helps you build golden records for S/4HANA. You can leverage built-in data governance workflows to cleanse and deduplicate data records. But most importantly, an independent MDM solution that can support multiple data models through configuration, helping you to manage numerous data models across several systems and vendors. This means much fewer tools and people are needed to handle the migration, and consequently, both costs and time-to-value are significantly reduced.
Enhance business operations during data migration
With a multidomain MDM system as the master data repository, it becomes easier to migrate country by country or individual data sets per line-of-business.
The continuous data cleansing enables you to leverage up-to-date master data and golden records for daily business processes while the migration project is on. There is literally no need to wait for S/4HANA to be up and running to reap the benefits of clean data. Managing master data at the same time means that you can start supplier optimization, and launch compliance and sustainability initiatives ahead of schedule and spin off other projects while preparing for S/4HANA.
MDM provides you with a configurable toolset that permits management of the data after conversion, versus data sitting in an essentially unmaintainable file.
- MDM is a software package that is designed to maintain data quality, link, merge, un-merge, de-dupe etc., which saves you of writing extensive code to manage master data.
- MDM allows you to manage master data for both S/4HANA and legacy systems at the same time, saving you of dual maintenance and duplicate data entry.
- The access to clean master data during the whole migration journey, and not just at the end, enables you to continuously harvest business benefits, such as supplier rationalization, sourcing negotiations and parts visibility.
- Futureproof data maintenance: In addition to building golden records, MDM provides an onboarding capability to ensure that new items are validated and matched against existing data. A flexible data model, logical hierarchies and workflows based on business rules provide support for data governance and ensure that you always have high data quality and up-to-date golden records, also after the implementation of S/4HANA.
MDM-enabled master data conversion: MDM keeps legacy systems synchronized and feeds S/4HANA with golden records.
Continuous benefits of using MDM alongside SAP S/4HANA
Your ERP data migration to S/4HANA can be a hassle. The journey typically requires a lot of tools that need a lot of coding. In most cases, SAP MDG is only enabled at the end of the journey to manage the new data.
A more profitable and less risky approach is to deploy an MDM solution early in the process. The MDM solution is configurable and requires no coding, and it provides a place to land and maintain data throughout and after the migration project.
MDM allows you to manage all data domains, connect to third-party sources for data enrichment, translators and data pools to make your data fit for purpose, e.g., sharing with business partners, sales systems and regulatory systems.