Articles

Effort Estimation 101: 43 factors you must know to estimate the right effort for any SAP S/4HANA Migration Project

Edson Frainlar - 13 Minute read

19-Jun-2019


Summary
  • SAP S/4HANA Migration is the dawn of digital transformation. But estimating the effort required for conversion is still a big challenge for customers and implementation partners alike.
  • SAP S/4HANA empowers enterprise to connect with machines and customers.The effort estimation process of SAP S/4HANA Migration/Conversion is quite different from that of a greenfield implementation. It is completely dependent on the readiness of existing SAP ECC system.
  • There are around 43 different factors which should be considered to estimate the required effort for an SAP S/4HANA Migration.
  • Since the conversion project involves more qualitative factors than quantitative factors, KTern uses a non-algorithmic method of estimating the effort using Machine Learning.

Introduction

According to SAP ECC users, moving to SAP S/4HANA is the first step towards digital transformation. However, the major challenge faced by project managers, solution architects, customers and SAP partners is over-estimation of the effort involved to complete the transition. Having said that, the success of a conversion project will depend on the satisfaction of both the client and the system integrator. So, when will the client and the system integrator be satisfied?

A client will be satisfied when his/her enterprise’s vision towards digital transformation is achieved through the successful completion of SAP S/4HANA conversion.

A system integrator partner is satisfied by enabling the customer’s digital transformation journey and by executing the project within the stipulated time.

Importance of Effort Estimation in a successful project

Effective effort estimation is one of the most challenging and important activities in any project. A conversion project is no different. The major pitfalls that clients fall into due to improper effort estimation are:

  1. Underestimation
  2. Over-estimation

Under-estimating a project leads to under-resourcing which will in turn lead to resource burnout. Furthermore, under-scoping the effort will result in low-quality deliverables. Short schedules have high chances of missing the deadline for deliverables which leads to loss of credibility among the customers.
Over Estimation and Under estimation in S/4HANA Conversion

Over-estimating also brings a negative impact on cost and resources. Long project duration and timelines might lead to loss of opportunity.

An accurate effort estimate can be arrived at through effort estimation models. These models can be algorithmic or non-algorithmic. Non-algorithmic models are based on expert judgement and machine Learning techniques. Algorithmic models are constructed using numerical data and a nominal effort estimate can be calculated using a formula.

Effort Estimation in a Greenfield Implementation Project

The greenfield approach involves a complete implementation of one or more SAP systems and the processes and systems are newly configured. The data from the legacy ERP System is migrated to the new SAP System. For a greenfield implementation, the effort estimation includes four steps:

  1. The existing business process of the enterprise is studied by the consultants and is recorded as the ‘AS-IS’ document. Through design thinking workshops, story boarding and prototyping, the customer’s requirements are recorded as the ‘TO-BE’ document.
  2. The scope with respect to technical, functional, geographical, application, users, and business process items are prepared by the solution architect.
  3. Based on the customer’s requirements and scoping document, the solution architect estimates the duration and resource loading effort. This is done by using either the algorithmic or the non-algorithmic effort estimation model.
  4. The effort is recorded in the ‘Effort Estimate’ document and validated with business stakeholders.

For a greenfield implementation, the effort estimate is estimated based on:

  1. Percentage of ‘Go to Standard’ acceptance based on the customer’s existing business scenarios
  2. Complexity of data migration from legacy ERP to SAP S/4HANA system
  3. Complexity of customizations in the business process
  4. Number of custom programs to be implemented
  5. Number of employees, customers, vendors, and other business partners
  6. Integration with third-party systems etc.,

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Difference in Effort Estimation between SAP S/4HANA Implementation and SAP S/4HANA Conversion

SAP S/4HANA conversion project is not just a technical upgrade like the conventional EHP upgrade. It is a complete transformation of the existing SAP landscape. The conversion from ECC to S/4HANA

  1. Simplifies business without affecting core business process architecture
  2. Leverages the application and infrastructure architectures

In the above section, I have listed the factors which impacts the effort estimation of a greenfield implementation. Those factors may or may not influence an S/4HANA conversion project. This is because an S/4HANA conversion involves the migration from an SAP system (ECC) to another SAP system (S/4HANA) and the migration strategy is formulated by SAP itself.

In order to estimate the effort for an SAP S/4HANA conversion project, the existing ECC system must be analyzed end-to-end to find out the complexities. Many SAP customers misunderstand that the conversion process is analogous to an upgrade project. Lexically both are same but technically both are different.

To find the complexities involved in an SAP S/4HANA conversion project, the customers are advised to undergo an in-depth Assessment provided by KTern, For those of you who are new here, KTern is the Digital Workplace for SAP Projects designed in alignment with Activate, the SAP Approved Methodology for SAP S/4HANA Migrations. KTern helps to automate and manage SAP S/4HANA Conversion from start to finish. This assessment will enable the customer and implementation partner to better understand the implications of a conversion from an existing ECC to S/4HANA system. It identifies the necessary preparation and pre-checks to be done in the current system landscape, long before the real conversion begins. In addition to resource and duration estimation, HANA database sizing and hardware sizing is estimated for an SAP S/4HANA conversion project.

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43 factors you must know to estimate the right effort for any SAP S/4HANA conversion project

In order to estimate the right effort required to successfully complete any SAP S/4HANA Conversion project, the system integrator and the SAP ECC customer must know the 43 factors given below and the subdivisions they are listed under.

I. Enterprise Goals

  1. Existing Enterprise Architecture (Business, Application, IT)
  2. Target Enterprise Architecture with S/4HANA as the digital core
  3. Changes in Virtualization, HA/DR, Server hardware, Data Center, Storage Infrastructure, Backup tool, File System Server, Monitoring Solutions
  4. Permitted business downtime

II. Security and Users

  1. Security and GRC role authorization audit
  2. Number of ERP Users

III. Data Management

  1. Functional Analytics requirement
  2. Handling of Historical data (Business Warehouse existence)
  3. Complexity and number of data sources
  4. Volume of data growth
  5. Amount of resident data in the system
  6. Impact of S/4HANA on BW extractors
  7. Necessity for housekeeping and archival

IV. Quantity and Quality of Table Data

  1. Size of General Ledger (data model is simplified in S/4HANA)
  2. Amount of Business (Finance) data to be converted
  3. Size of general Material Table (MATNR field extension is required in S/4HANA)
  4. Quantity of Open Business Documents (Sale Orders overdue for delivery, Outbound Deliveries overdue for GI posting, etc.,)
  5. Data volume of conversion relevant tables
  6. Data consistency and data diversity of BSEG and COEP

V. Functional

  1. Changes in business scenarios after SAP S/4HANA conversion (Value, Business drivers, Fiori Innovations, Improved transactions)
  2. Adjustments in Business configurations
  3. Compatibility of Business Functions
  4. The complexity of Customer-Vendor Integration process
  5. Impact of New Asset accounting
  6. The necessity of replacing Foreign Trade by SAP Global Trade Services (GTS)
  7. Number of Business Process changes

VI. Landscape

  1. Compatibility of industry solutions, enterprise extensions, third-party add-ons, third-party software vendors, etc.,
  2. Landscape architecture (Number of Systems in Landscape)
  3. Number of cut-overs involved
  4. Number of required interim productive states
  5. The necessity of upgrading central Fiori Frontend servers and depending hub systems

VII. Technical

  1. Readiness of the system with respect to Technical Requirements (Software levels, Single stack system, Unicode, SAP NetWeaver Release)
  2. Interface compatibility

VIII. Custom Object

  1. Number of custom objects impacted by the DB migration to SAP HANA
  2. Number of custom objects impacted by the simplification of the financial data model
  3. Number of custom objects impacted by the change in SAP Software
  4. Customer choice to optimize custom code
  5. Number of WRICEF objects to be developed

IX. Project Team

  1. Experience of the Project Team in SAP S/4HANA Conversion projects
  2. Complexity in Organizational Change Management
  3. Finding the Power Business End users for Training
  4. Finding the Power Testers for End User Testing

How to automate the process of Effort Estimation?

The above-listed factors help to approximately estimate the effort for an SAP S/4HANA Migration or Conversion project from SAP ECC to SAP S/4HANA. However, finding a mathematical method to arrive at an equation to find the effort estimate is a tedious process.

Also, numerical methods will not give accurate effort estimation results since all the factors are not quantitative, there are qualitative factors as well. So, KTern uses its own machine learning technique to train its Effort Estimation engine and give the nearest and accurate effort estimate for SAP S/4HANA Conversion.

KTern uses the SAP ECC system’s assessment results as input to its Effort Estimation Engine. This is done to calculate the effort estimate based on the real-time assessment results of the respective ECC system which is going to undergo SAP S/4HANA System Conversion. Therefore, this assures that the effort estimate generated by KTern will be 100% specific to the respective SAP ECC system which in turn assures that the effort estimate will be accurate in terms of resource and duration.

Curious to learn more about KTern and its role in SAP S/4HANA Conversion? Contact us with your queries or Schedule Demo   for an express session on KTern and its features.

If you would like to know more about the SAP S/4HANA Readiness Assessment program, kindly get in touch with us

Connect with Product Manager

As an existing SAP ECC customer, if you want to know more about the project or about KTern and the SAP S/4HANA Readiness Assessment program, please get in touch with us through our contact form or connect with our product manager on or through .


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