There is no gainsaying that SAP Advanced Planning and Optimization (APO) supply chain planning system is widely used in nearly every industry throughout the world. However, support for this solution is expected to be terminated in 2027. It may sound frustrating and to some extent, it really is. But at the same time, it’s an immense opportunity to take the bull by the horns and adopt a new technology, such as SAP Integrated Business Planning (IBP) or SAP S/4HANA.
Today, technological advancement is imperative for any business to become or remain agile, forward-thinking, resilient and sustainable. To be ahead of the competition, it’s vital to be at the cutting edge of digital transformation and use the full potential of what technologies offer.
Here, we suggest getting a better vision of all the advantages and pitfalls the process of migrating from SAP APO to SAP IBP or S/4HANA may bring. And how a business can benefit from it, from both the technological and financial aspects.
Why shall you forgo SAP APO?
SAP APO was introduced in the 1990s when advanced business planning systems were mega-projects. For nearly three decades, this solution has been helping various businesses plan and execute logistics processes, including demand and supply network planning, product planning and detailed scheduling, maintaining relationships with customers and partners, etc.
But modern challenges require modern solutions. That is why SAP has introduced many new, more powerful and advanced solutions that continue the legacy of SAP APO but enhance opportunities for more effective supply chain management.
We consider it’s time to forgo SAP APO not only because the developer stops its support very soon (which alone creates enough risks, from security issues to complete failure) but also because the solution cannot respond to the current business needs with the required efficiency.
For instance, SAP APO lacks ML/AI technologies, which is a significant disadvantage in today’s big data reality. It also has limited capabilities for reporting tasks, which means a lot of manual work that takes time and effort and is prone to errors. On top of this, the solution doesn’t have some vital features, such as demand sensing or inventory optimization. All these issues result in an outdated and unsatisfactory user experience and affect the overall supply chain efficiency.
Why do you need SAP IBP or S/4HANA?
SAP IBP and S/4HANA are cloud-based successors of SAP APO. The core functionality of SAP APO is equally split between these two solutions. So, when considering what exactly to migrate to, we recommend starting with revising the crucial features already being used and proceeding to what new technological capabilities you require.
To help you make the choice, we will highlight what SAP IBP and S/4HANA are capable of.
In general, SAP IBP focuses on supply chain planning processes and provides a network-centric approach. At the same time, SAP S/4HANA is meant to be a unified system for enterprise resource planning and provides a plant-centric approach. But let’s have a closer look.
Apart from Demand and Supply Network Planning modules, organizations that choose SAP IBP also get Sales and Operations Planning (S&OP) functionality, Supply Chain Control Tower and Inventory Optimization feature. The first technology enables cross-department collaboration and alignment with plans. In its turn, the Control Tower provides you with built-in analytics and dashboards that can be easily customized. And if you use Inventory Optimization, you can manage your warehouse stock effectively based on the demand-supply balance.
SAP S/4HANA encompasses tools to efficiently manage not only supply chains but a broader set of processes inherent to production and logistics. For example, it has special modules to help you control finance, sales, procurement, production, maintenance, etc.
How to migrate
When a decision is made, and it’s time to start transitioning to a new solution, the organizations face another challenge: choosing the approach that will ensure success.
Brownfield and Greenfield
There are two entirely different ways of settling the issue. One is known as the Brownfield approach, and it presumes that all the data and processes are transferred from the existing platform to a new one as they are. This doesn’t change the workflow, but it can make the planning and management system perform with more speed, responsiveness and flexibility. It’s like buying a new computer to do the same work faster.
The other approach is called Greenfield, and according to it, there is no need to take old data or processes on board while migrating to a new solution. It’s better to build a new platform from scratch. Revolutionary, this option would suit businesses that seek total transformation and admit that their current processes are ineffective. However, with the Greenfield approach, there is always a risk of losing some valuable assets.
Definitely, there can be an in-between option when the gained know-how is upgraded with new technologies to encompass the best practices from the old and new. That is precisely how Axellect prefers to guide its customers through the transition period. Let’s dive deeper in here.
The Axellect way
At Axellect, we segment the migration process into three crucial stages: Assessment of the current system, Fit-gap analysis and Roadmap signoff.
We always start with a thorough assessment of the customer’s current digital solution and business processes, pain points, goals and expectations. It helps both us and the customer better understand:
- if there are any effective processes that can and should be incorporated into a new platform;
- if there is a necessity for data preparation or is it ready for integration with a new solution;
- what nuances can influence the migration process (for instance, a large global manufacturer may have different guidelines and processes at different factories);
- how the company will benefit from this technological transition.
In general, the assessment stage takes three weeks. Then, we pass to the fit-gap analysis. At this stage, we dig deeper into each process, for example:
- how exactly the customer’s planning system functions;
- how it is built;
- what processes and data it incorporates;
- what tasks it allows to fulfill;
- what goals the organization has and what tools it uses to reach them;
- what specific requirements the company has.
We meticulously record all these findings and then compare them with the technological capabilities of new SAP solutions. We’ll likely see discrepancies between “what the customer has now” and “what the customer needs”. This forms the core understanding of how the migration process should be executed and what solution will best meet the needs.
Finally, after two or three months of such a fit-gap analysis, we provide a customer with a detailed roadmap with estimated time and money investment, described stages of the migration process, the expected outcome and benefits. In other words, an organization gets full visibility of a forthcoming transition and, therefore, can make weighed decisions before this tremendous project of SAP APO replacement starts.
Moreover, according to our estimation, such an assessment-based approach to migrating to newer solutions will save up to 30% of the whole cost of a project.
Get in touch with our experts to learn more about the nuances of migrating from one SAP solution to another.