What is the SAP 2027 problem? A thorough explanation of migration strategies and points to note for SAP S/4HANA

What is the SAP 2027 problem?

The SAP 2027 problem refers to the end of standard maintenance (mainstream support) for SAP ERP 6.0, mission-critical system, core system used by many companies around the world, at the end of 2027. Previously, it was scheduled to end at the end of 2025, and was known as the "SAP 2025 problem," but the deadline has been extended by two years, and it is now known as the "SAP 2027 problem." Companies using affected SAP products are being forced to make management decisions, such as migrating to the latest mission-critical system, core system package, SAP S/4HANA.

This issue can have a serious impact on a company's IT infrastructure, making it important to develop appropriate migration plans early and prepare for the system changes.

Risks and impacts of end of support for businesses

When maintenance support for SAP ERP 6.0 ends, new security updates and technical support will no longer be available, which could lead to increased security vulnerabilities and a significant decline in system reliability, posing a significant risk to a company's information system environment.

Specific challenges include the increased risk of system outages and unexpected data loss. This could cause major disruptions not only to a company's business operations, but also to its supply chain and customer service. To prevent such risks, countermeasures based on the fundamental premise of continuous improvement in the safety and performance of information systems are required.

Many companies are aware of the significant impact that the end of support will have on their business activities, and are taking measures that take into consideration cooperation with important stakeholders and internal and external agents. As such, it is essential to ensure the stability of system operations through advance risk analysis and preparation of specific countermeasures.

Connection with the 2025 problem and its knock-on effects

The SAP 2027 problem is closely related to the 2025 problem, which Japanese companies will face as the country moves toward a super-aging society. This is because both problems raise issues related to the limitations of legacy systems and bring common challenges, such as a widening skills gap due to labor shortages and a decline in specialized engineers. The 2025 problem poses the challenge of rapidly providing solutions due to the retirement of skilled engineers, while the SAP 2027 problem raises concerns about stagnation in system operations and technical issues due to the end of maintenance for SAP ERP 6.0. It is essential to consider these two issues and develop integrated countermeasures to address them quickly.

Key challenges facing businesses

While the SAP 2027 problem poses a major challenge for companies, many companies will face numerous challenges in overcoming it. This section will explain these challenges in detail. By properly preparing for this problem, companies will be able to build more efficient and competitive business processes than ever before.

Increased costs associated with migrating to SAP S/4HANA

In addition to the initial investment, hidden costs are also an important consideration when migrating systems. Migrating to a new technology environment is likely to incur a wide range of expenses, including licensing costs, data migration costs, employee training, and increased operational costs.

For example, introducing a new system may require the purchase of specialized hardware, and it may also require the hiring of personnel with specialized knowledge to operate and maintain it. When such cases occur, additional costs such as consulting fees that are often overlooked during planning can later put a strain on the budget.

Therefore, it is important for companies to create a comprehensive resource plan and make transparent all direct and indirect costs involved in the migration process. Thorough cost management is required to ensure that the system migration proceeds smoothly and the company's digitalization strategy is smoothly achieved.

Complexity of IT system upgrades

Upgrading IT systems, especially for large enterprises, is highly complex, both technically and administratively. This complexity stems from the need to adapt to new technology stacks and architecture requirements, safely and accurately migrate existing data, redefine customized processes, and engage in multifaceted planning to minimize disruption to existing operations. For example, migrating from SAP ERP to S/4HANA involves changing database technology and adapting a company's unique customizations to the new system. A smooth transition requires detailed current state analysis and planning, as well as the use of appropriate tools and expertise. Advance preparation and an efficient strategy are essential for a safe IT system upgrade.

Talent shortage and challenges in supporting multi-cloud

The IT industry is currently facing a serious talent shortage. SAP engineers are particularly scarce, posing challenges when migrating to new systems. Cutting-edge technologies like SAP S/4HANA require specific knowledge and experience, and supply continues to outpace demand. Many companies are forced to rely on inexperienced staff, increasingly impacting project quality and delivery timelines. Additionally, as companies adopt multi-cloud strategies, a shortage of skilled personnel has been identified. Addressing these dual challenges necessitates an urgent need for talent development and specialized expertise.

What are the benefits of migrating to SAP S/4HANA?

With SAP ERP 6.0 maintenance scheduled to end in 2027, many companies will need to migrate to SAP S/4HANA. While this migration process enables continuous innovation, preparation and planning play a major role in determining success. SAP S/4HANA offers the advantages of high-speed data processing, an intuitive UI, and cloud andon-premiseoptions, helping to improve business efficiency and strengthen competitiveness.

S/4HANA Features

SAP S/4HANA, a new generation ERP system that is attracting interest from companies, utilizes in-memory database technology to achieve high-speed data processing and real-time analysis. This results in improved business efficiency and faster decision-making. It also provides a user-friendly interface that prioritizes ease of use, improving operability. Furthermore, with the option of cloud or on-premise deployment, it can meet a variety of implementation needs. As such, S/4HANA is a future-oriented ERP solution that combines flexibility and modernity.

High-speed data processing and real-time analysis

In today's business environment, where data is constantly being generated, there is a need for fast and reliable data processing capabilities. The benefits of this speed are immeasurable. For example, real-time data processing enables real-time analysis, accelerating business execution and decision-making. This allows companies to quickly change their strategies in response to market fluctuations and maintain a competitive advantage.

SAP S/4HANA's in-memory database technology enables high-speed data processing, facilitating real-time information processing and analysis. For example, data from production lines can be instantly analyzed to detect anomalies and take preventative measures. This will enable companies to significantly improve operational efficiency.

Furthermore, these advancements will also help resolve issues with existing systems and dramatically improve employee work efficiency. By gaining unprecedented analytical speed and accuracy, companies will be able to effectively utilize untapped data assets and increase the added value of their overall operations.

User-friendly UI

SAP S/4HANA features an intuitive, easy-to-use interface. This design shortens the learning curve for employees to become familiar with the system and makes daily operations easier. In addition, SAP's proprietary UI, Fiori, provides a unified user experience from desktop to mobile devices. This user-friendly design encourages employees to actively use IT systems, contributing to improved process efficiency across the organization.

Cloud and on-premise options

Cloud and on-premise solutions each have their own unique advantages and challenges, making the right choice for your company's specific needs and business environment. Cloud environments offer significant savings in initial costs and are scalable, allowing you to adjust resources as needed. On-premise solutions, on the other hand, offer the advantages of giving companies complete control over their systems, high security, and a high degree of customisation. For example, cloud solutions are easier for small and medium-sized businesses to get started quickly and are more cost-effective, while larger companies may find on-premise solutions more advantageous in order to meet their unique requirements. Therefore, carefully considering your options and matching them to your long-term business goals and system operational efficiency is key to success.

How to migrate to SAP S/4HANA

Migrating to SAP S/4HANA is essential to addressing the SAP 2027 challenge. Choosing the optimal migration method is crucial to the success of this project. The main migration methods are greenfield, brownfield, and bluefield, but each method should be adopted based on the unique system state and requirements of each company. This allows organizations to effectively and gradually transition their systems to the new platform environment.

Greenfield (rebuild)

The greenfield approach is a migration method in which the existing system is completely abolished and a new IT infrastructure is built from scratch. This method allows you to utilize the latest mission-critical business systems and the latest technologies, significantly improving efficiency and adaptability. Especially when old systems have become complex and difficult to maintain, it is possible to design a system infrastructure that not only maintains current functions but also takes future business development into consideration.

This method is chosen because it allows companies to renew unnecessary processes and data structures in existing systems, and strengthen their competitiveness by utilizing the latest technology.Companies can obtain a structure that can flexibly reflect new business requirements, which is beneficial in the long term.

For example, one manufacturing company has improved its business consolidation efficiency by 60% by eliminating its old on-premise ERP system and migrating to a cloud-based ERP system. This complete switchover directly leads to the standardization and efficiency of operations, while also providing ample time for preliminary evaluation of the new system and user training.

However, implementing a greenfield approach requires considerable cost and time, and the impact and risks on ongoing business processes must be considered. Therefore, it is important to develop a detailed plan that is tailored to the company's current situation and future goals.

Brownfield (conversion)

The brownfield (conversion) method refers to an upgrade approach that uses the current system as the core. The advantage of this method is that existing settings and customizations can basically be retained, reducing the burden of system migration. Cost reductions can also be expected by partially modifying the existing environment. In fact, in industries where maintaining the current system is important, this method is often chosen, as it allows migration to SAP S/4HANA with minimal changes. However, if the configuration of the previous system is complex, the risk of problems occurring during the operation phase should also be considered. Therefore, a detailed assessment of the current system during the planning stage and identifying areas for improvement are key to success.

Bluefield (selective data migration)

The bluefield approach allows for efficient and flexible migration by migrating only selected data and processes. Benefits of adopting this method include cost reduction and reduced migration risk, as it eliminates the need to migrate everything at once. For example, if a company is considering migrating a legacy system to SAP S/4HANA, it can achieve operational efficiency by migrating only business-critical data and excluding unnecessary information. This method also allows for a gradual migration while retaining the majority of the existing system, minimizing business disruption and reducing the burden on employees. Bluefield is a valuable system migration strategy for companies that prioritize efficiency and flexibility.

Necessary data migration and tool utilization

A planned and phased approach is important to efficiently migrate the necessary data. A failed data migration increases the risk of business interruption and data loss, so safe and efficient procedures are required. For example, migration to SAP S/4HANA involves pre-data cleansing and the selection of appropriate migration tools. Utilizing the right tools and technologies can improve the accuracy and speed of the data migration process.

Utilizing data integration tool

To smoothly transition to SAP S/4HANA and integrate SAP with external systems, it is effective to use dedicated data integration tools. These tools have functions that make it easy to share data between different systems and automate processes. For example, if you select data integration tool that has a dedicated connector for integrating with external systems such as Salesforce, you can use it without detailed knowledge of the data specifications.

EAI（Enterprise Application Integration）

EAI (Enterprise Application Integration) is a technology that aims to seamlessly integrate the many different applications that exist within a company and facilitate data integration. Many modern companies have implemented a variety of applications to streamline operations such as sales, inventory management, accounting, and customer management. EAI provides a wide range of pre-set connectors and an intuitive interface for linking these applications, making it easy to set up even without technical expertise.

▼I want to know more about EAI
⇒ EAI｜Glossary

iPaaS（Integration Platform as a Service）

iPaaS (Integration Platform as a Service) is a cloud-based platform for efficiently integrating different applications and systems. Like EAI, it has a wide range of pre-set connectors and an intuitive interface to connect multiple business systems, various applications, and cloud services.

iPaaS is characterized by its advanced data integration capabilities, which make it easy to integrate with existing on-premise systems and cloud-based services. In addition, many iPaaS services are provided as managed services, which reduces the burden on IT departments by eliminating the need for infrastructure management and maintenance.

Using this platform as data integration platform will make it easier to manage the entire business process, and is expected to reduce operational costs and improve productivity across the organization.

▼I want to know more about iPaaS
⇒ iPaaS | Glossary

Summary: Benefits of early response to the SAP 2027 problem

For many companies, early preparation for SAP's 2027 problem is crucial to maintaining their competitiveness and driving operational efficiency. Migrating to a new system will enable them to utilize the latest features and integrate with the latest technologies, significantly improving their competitive advantage. It will also contribute to strengthening risk management and security measures, ensuring business continuity.

There are success stories of major manufacturing companies that have implemented SAP S/4HANA to streamline their production lines, reduce unnecessary inventory costs, and improve product release speeds. This has resulted in improved customer satisfaction and market competitiveness. While major system changes for companies involve costs and resources, responding quickly to the SAP 2027 issue will be an important step in maintaining and strengthening competitiveness in the long term.

The person who wrote the article

Affiliation: Marketing Department

T.K

After joining Saison Technology, he worked as a development and operations engineer for EDI services, and then gained experience in business development for new services. Currently, as a marketing manager, he explores how our products can solve customer problems and disseminates information.
(Affiliations are as of the time of publication)

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