SAP Restructuring

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.

Restructuring - Reasons and objectives

There are many different reasons that initiate the potential need for re-architecting an SAP-centric landscape. One trigger can be strategic changes in the corporate structure as part of mergers and acquisitions (M&A). Buying a company could result in the need to merge systems (carve-in) whereas the sale or spin-off requires a system split (carve-out). Restructuring efforts can be motivated from inside the organization as well. Such a situation offers an opportunity to redefine responsibilities, data structures, and processes. This unique opportunity allows for implementing new market requirements or adopting technology innovations, such as an SAP S/4HANA transformation.

SAP Restructuring - When the time is right

Execution of continuous innovation plans

Bundling of competencies (Merge, Carve-out, Split)

Optimization of an existing architecture

Preparation for future improvements

The fundamental goal of any SAP restructuring is to reduce complexity and free up resources in the company. To achieve this, business processes must be standardized, data harmonized, and systems consolidated. Although restructuring projects are not necessarily an IT-driven technology effort, their success in the context of the digitalization era is heavily dependent on technology. Therefore, a system restructuring project requires to be managed from the business perspective as well as from the technical and methodology side - as outlined in the following section.

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.

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.

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.

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. 

Consolidation – Reasons

• 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

Standard business process implementation

Data harmonization

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.

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 advantages

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.  

A successful SAP restructuring demands expertise and a supporting technical tool set. Natuvion experts have demonstrated their extensive experience from many SAP projects, understanding the challenges and knowing the pitfalls. They bring the proven necessary tools to your project to execute together with you.

Are you as driven by efficiency and excellence in your M&A program as we are? You have found the right partner! We are excited to hear from you!

Frequently Asked

What is Restructuring?

Restructuring means changing the structure or process organization within a company. These changes can be organizational or business-related in nature.

What do you do when your SAP systems grew historically?

The larger a company is, the larger and, above all, more complex its ERP systems are. The consolidation of the SAP system landscape creates the necessary conditions for the cleansing of the data and the system structure. Natuvion and its proprietary software solutions are ready to support you in managing your historically grown SAP systems.

How do you harmonize SAP master data?

Each system is based on company-specific master data. Depending on the level of the system landscape consistency, this data is typically not well coordinated and not managed centrally. Any data harmonization must begin with master data consolidation, making the data centrally available. In this step, duplicates are cleaned up and inconsistencies resolved. The consolidated data is then distributed across systems ensuring and maintaining master data quality.