Two-for-one SAP Transformation: Deploy and upgrade to S/4HANA in one go
Siemens spun off its healthcare division in April 2018 and formed the new DAX-listed company Siemens Healthineers; this initiated the plan to build a new enterprise resource planning (ERP) system for the Regional Companies to drive efficiency by harmonizing and optimizing the sales, service, and finance processes– a highly complex task.
Thanks to its unified master data, the new system makes transaction data more transparent, optimizes business and production processes, and delivers productivity wins by leveraging regional synergies. Upgrading to the new system also unlocks forward-looking potential for digital business transformation.
The first step was to set up an SAP template mapping all global sales, service and finance processes, before rolling out the system in more than 60 countries. There were already plans in place to upgrade to the next-generation SAP system S/4HANA and harness this state-of-the-art technology to further develop and optimize its processes. The key question – and a serious dilemma for the group’s decision-makers – was which of these two business-critical challenges to tackle first. They ultimately made the very bold decision to deploy and upgrade the system in one go, a feat never attempted before at this scale. With Deloitte as implementation partner, the project with the code name P58 succeeded on all fronts. The teams hit their targets in record time and got the system up and running in 30 countries so far, with more to come soon.
The ERP system is the backbone of any company. No wonder that the underlying software is so complex and that building a new ERP system from scratch is such a huge undertaking. Particularly when you run a multinational corporation like Siemens Healthineers, one of the world’s largest medical technology companies with roughly 71,000 employees and 21.68 billion euros in revenue (2023). There were both legal and structural reasons to introduce a new ERP system during the carve-out. Siemens Healthineers was previously tied to the Siemens Group and its IT infrastructure; so, having a standalone ERP system would allow the enterprise to customize and quickly implement processes that meet the specific needs of the healthcare sector. The SAP project also gave Siemens Healthineers the opportunity to achieve other key strategic objectives, including standardization and digitalization, while allowing the customization of templates to meet local needs and comply with stricter international accounting standards (e.g., IFRS15).
Building photo credit: @Siemens Healthineers https://www.siemens-healthineers.com/de
“Precise planning was the key to the project, but also courage, determination, and trust. Particularly with the teams working mainly remotely during the pandemic, the single most critical success factor was probably ‘having each other's back’. I am really proud to have been a part of this success story.”
Stephan Bode, Partner and Offering Lead SAP at Deloitte
“Tackling the S/4HANA upgrade at the same time as deployment was an ambitious undertaking – and the rollout is a great example of how we live our corporate values at Siemens Healthineers: learn together, step up boldly, and win together! I am proud of the P58 program team!“
Dr. Stefan Henkel, CIO Siemens Healthineers
Prior to upgrading und deploying the new SAP templates in 2021, the company had to decide which of these two sub-projects to tackle first. The best argument for prioritizing the deployment was being able to get innovative templates up and running across the different regions as soon as possible. But upgrading to S/4HANA quickly was a key priority as well, particularly because of the promising technology of this innovative platform. The team decided to resolve the conflict with a completely revolutionary approach: they would upgrade to S/4HANA and deploy the new ERP in parallel; in other words, merging two colossal projects into a single timeline. It was a courageous decision – and one that would pay off in the end.
There were, however, considerable challenges to overcome. The key parameters give an idea of the scale of the project: around 75 satellite systems, more than 275 interfaces and over 750 level-3 processes. Managing a massive number of tasks, systems, as well as available resources and data, in the merged timeline required broad-based experience and expertise. The technical complexity of the ERP upgrade impacted the existing data migration strategy and required modification of the existing ETL (extract, transform, load) tools. And with the many products, business models and far-reaching regulations specific to the healthcare business, the project became even more complex.
The experts at Deloitte and Siemens Healthineers decided to proceed in several “waves” to make this ambitious project a success, essentially industrializing the deployment process by clustering the different country organizations according to their complexity and geography, among other strategies. After tackling two deployment waves simultaneously and the upgrade immediately after, the new template was up and running in a total of 7 countries by October 2021 (wave 1), followed by the S/4HANA go-live in October 2022 and wave 2 and wave 3 deployments in 14 additional countries in January 2023.
The key to the rapid rollout was industrializing the deployment strategy. There was one central team for template configuration working with a series of local hub teams and synergy-building solutions such as parallel and synchronized testing. In addition to the close, trust-based collaboration of the participating teams, another critical success factor was how effectively the project team managed the integration of the Healthineers’ various IT architectures (production landscape, project landscape, sandboxes), the S4/HANA upgrade sequences, the validation test cycles and the system architecture linking production operations with project activities.
The Deloitte team mobilized a wide range of experts from its worldwide network to set up a fit-for-purpose project structure with cross-functional team leads and a global reach (mix of onsite, nearshore and offshore). The creation of an integrated staffing plan for both the deployment and the upgrade leveraged staff synergies, while Deloitte Managed Services were – and will continue to be – used for support and DevOps.
The S/4HANA upgrade reached its first go-live milestone in just twelve months, and now Siemens Healthineers is reaping the rewards of S/4HANA’s enhanced features in 30 countries. The upgraded ERP is flexible, customizable, digitally innovative and able to deliver productivity gains through standardized roles and processes. A number of enhancements were developed and introduced while the upgrade was still in progress, and S/4HANA enables the team to deliver ongoing optimizations as they roll out the system across the production landscape (i.e., DevOps). Thanks to this agile approach, there are more than 1,100 small to medium customizations offering key benefits – even for countries in the earlier rollout waves.
Despite dealing with pandemic restrictions, the team was able to deliver these results eight months faster than a consecutive deployment and upgrade timeline and ultimately came in under budget. Thanks to the new ERP, Siemens Healthineers is ideally positioned for the future.
Real connections. Real impact.
“This was a great team effort that would not have been possible without the perseverance, passion and precise planning of everyone involved. I am extremely proud of the entire team and am looking forward to bringing the innovations made possible by S/4HANA to every country organization in the enterprise.”
Christiane Reich, Head of IT EMEA, Member of the P58 Steering Board, Siemens Healthineers
