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SAP Restructuring

How to restructure your SAP systems

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SAP Restructuring

How to restructure your SAP systems

Learn more
Challenges Sap Restructuring

When buying or selling businesses re-architect your SAP landscape

Companies rely on SAP ERP and its core capabilities along their entire value chain. Their ERP system controls many business processes across different lines of businesses while processing the corresponding data. Any change, and in particular a system restructuring, often represents a major challenge.

Reasons & objectives of restructuring

The need for restructuring can arise from various factors. One common driver is strategic corporate changes, particularly during mergers and acquisitions (M&A). In the case of an acquisition, a carve-in or system merge is required, whereas a carve-out or split is necessary when divesting a business unit. However, restructuring initiatives can also be internally driven. They present an opportunity to redefine responsibilities, streamline interfaces, optimize data structures, and modernize process landscapes – often in alignment with technological advancements like an SAP S/4HANA transformation.

The primary objective of any SAP restructuring is to reduce complexity, thereby freeing up valuable resources. Achieving this requires process standardization, data harmonization, and system consolidation. While restructuring projects are not purely IT-driven initiatives, their success in today’s digital landscape is heavily dependent on technology. Consequently, organizations must manage these complex projects with a holistic approach – balancing business, technical, and methodological considerations, as outlined in the scenarios below.

Scenarios of an SAP Restructuring

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Carve-out and split

The breakup of companies or the spin-off of businesses are typically the result of a strategic reorientation. In many cases the remaining part of the company is expected to improve its market value and position, refocusing on its core business. This new focus on the core business implies the carve-out or split of IT systems which result in the need to separate data and re-evaluate the process landscape. Follow this link to learn more about carve-out.
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Mergers & Acquisitions (M&A)

A merger takes place when two legally and economically independent companies combine to form one new company. A business acquisition occurs when one company buys most or all parts of another company to assume full control of its assets and operations. Both scenarios require the consolidation of IT landscapes. Given the impacted systems have their own processes, data and structures implemented, overlap and redundancies are to be addressed when the organizations are being viewed as a whole.

An essential part of the M&A strategy must be to gain an understanding of which systems have to be merged and how. The time window for merging project activities for system consolidation and data migration is typically relatively narrow. Businesses have to act quickly in the new reality and justify the investment generating business value.
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Internal reorganization

An overarching corporate strategy change is not the only reason to begin restructuring the SAP landscape. Whether changing company codes and controlling areas, modifying the cost center structure or business location data, these activities require an internal SAP system reorganization.

In addition to organizational reasons, the transformation when switching to a modern business model or the introduction of IoT-based technologies may also cause a restructuring.

While the internal reorganization may happen independently on its own terms, the first two scenarios, Carve-out or Split, and M&A, always include an internal reorganization in the context of changes in the corporate-wide structure.

Consolidating the SAP landscape

Restructuring of an SAP landscape in the context of an internal reorganization or M&A is also referred to as SAP system consolidation. Consolidation has its focus on bringing together data, processes, and systems. The SAP landscape consolidation process starts with an as-is assessment of existing overlapping process goals, data redundancies, and the typically large system inventory. The status quo documents how system landscapes tend to grow over years rather uncontrolled with many companies accumulating significant technical debt. Experience reveals that these problems are primarily addressed by creating isolated solutions which are hard to integrate into the overarching system architecture on a higher level.

On the other hand, such an overgrown landscape may also be the result of a M&A project that combines two originally well-organized and structured companies.

Reasons for consolidation

  • System integration with company acquisition

  • High operating and training cost due to a heterogeneous system landscape

  • Non-standardized interfaces across company and systems

  • Inconsistent, redundant, and decentral master data

  • Lack of real time insight with long processing times

Restructuring or consolidating – same objectives

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Standard business process implementation
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Data harmonization
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System consolidation

Consolidating systems means reducing the number of systems, and with it, the overall cost for maintenance and training. The end-to-end process analysis reduces the processing time by eliminating bottlenecks and increasing consistency. This consistency is primarily ensured through accelerated data processing with standardized interfaces which manage digital data transfer and capture analogue data for its digital conversion.

More effective processes and increased data quality enable processing of information in real-time. Management decisions can be based on the latest, reliable data.

Benefits of a consolidated SAP system landscape

A consolidated SAP landscape is the prerequisite for being able to respond with the necessary agility to future challenges. Clean structures and implemented standards support the ability to spin off or integrate entire company business units. Information is available at a central location for simulation of alternative business models or the analysis of target groups for marketing  purposes.

The top three benefits of consolidation

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Accelerated and consistent implementation of process changes
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Central and fast information processing and provisioning
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Flexibility
and security

The flexibility gained with your SAP system and the security in SAP landscape management are a crucial competitive advantage. The Corona  pandemic as well as the war in Ukraine with the impact on the global economy have shown this in all its extent. The agility of a company to quickly adapt to dynamic requirements and change corresponding processes has thus become a core competency.

The key questions for SAP restructuring at a glance

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