Introduction
Brownfield upgrades in SAP S/4HANA involve updating existing systems to the new platform without major changes to business processes. While this approach can be cost-effective and less disruptive in the short term, it often misses the opportunity to leverage new capabilities that SAP S/4HANA offers, such as real-time analytics and improved user experience. Companies should carefully weigh the benefits of maintaining current processes against the potential gains from a more transformative Greenfield or hybrid Bluefield approach. Understanding these trade-offs can help organizations make informed decisions about their ERP upgrade strategy.
Of course it is understandable why companies do Brownfield upgrades. Sometimes, there is no choice.
Being currently involved in some of these journeys, I nonetheless cannot avoid the melancholy feeling of an opportunity of a generation being passed by.
In case you are not familiar with these colours:
Brownfield means taking your existing enterprise IT configuration and technically upgrading the underlying platform — essentially a lift-and-shift to a newer system that does the same things it did before.
Greenfield means starting fresh: treating the new software as genuinely new, working backward from its latest capabilities and best practices, and adjusting business processes accordingly.
Bluefield is a kind of hybrid of the two.
According to a recent SAP survey, just under half of upgrades from SAP ECC to SAP S/4HANA are Brownfield, just under half are Greenfield and the small remainder are Bluefield.
Whenever I hear which path a customer has chosen, Brownfield is the one that makes me sigh a little. Not because it doesn’t work — it absolutely does — but because it often represents a big investment of money, time, and organizational disruption with limited business benefit.
If you don’t use a once-in-a-generation platform upgrade to clean up, modernize, and extract maximum value, when do you modernize?
It’s a bit like moving to a new house.
Those moves were the only times our family ever truly cleaned house: clearing out the attic, throwing away old junk, and rethinking how we wanted to live. Was it stressful? Absolutely. Was it worth it? Absolutely.
I guess we could have done a Brownfield move: telling the movers, “Please carefully pack everything exactly as it is, move it all, and unpack it the same way.” I’m sure it would also work — but I’d arrive to find all the old clutter faithfully preserved.
Knowing myself, I would never get around to decluttering later. Without a compelling event, there’s no urgency. Enterprise IT is similar. If you don’t leverage major platform changes to modernize, it’s hard to imagine a future moment that will suddenly feel urgent enough.
In the days of SAP R/3 and ECC upgrades, Brownfield migrations sometimes made a bit more sense because the underlying changes in the software were not so significant.
But with SAP S/4HANA there is something more fundamental at play.
Aside from the fact that 15 years of intense development (i.e. a few million man-years) has gone into S/4HANA development, a lot else has changed since the days of R/3 and ECC.
I spent 3 decades at SAP, and observed many customer project approaches and also saw first-hand how SAP tried to learn from those. Many decades and many thousands of developers all led up to what is today S/4HANA which was released in 2015. (A decade ago). In fact, it was already being developed for many years before 2015 and since then has been fine-tuned and in full-blown development of updates.
It feels a bit like a new era in ERP along multiple dimensions:
- Cloud – both Public and Private. This more than just about ‘where’ the software runs. But more about how it is consumed. Cloud is more about a mindset than about infrastructure.
- In-Memory computing resulting in brand new data architectures and much faster performance to allow work to now happen in real time rather than batch processing
- This has caused many typical customizations that customers had built in R/3 or ECC to become obsolete
- Web-based User Experience frameworks (Fiori) allowing users to work differently and roles to change and new graphic capabilities visualize process flows, product hierarchies, designs, and more
- Embedded real-time Analytics calling the separation of Transactional and Analytic systems into question and requiring less Business Warehouse rescue workarounds.
- Role-Based Business partners instead of separated Master Data for Vendors, Customers or intermediaries
- The SAP Business Technology Platform allowing among many other things side-by-side extension allowing you to more easily…
· …enable a Clean Core in SAP S/4HANA
· …integrate to neighboring systems in more dynamic ways
· …incorporate Business AI.
- Universal Journal bringing all financial and cost accounting data together making detailed multi-dimensioanl Profitability and Margin Analysis much easier
- Material Ledger for more flexible material valuations
- Real-time MRP rather than just in batch
…and much more.
Forgive the gushing … the amazing thing about SAP S/4HANA is not that it is technically the most powerful and modern ERP system ever built, it is also the distillation of decades of learning, input and Best Practices from thousands of companies across 24 Industries representing more than 75% of commercial transactions worldwide. Not to mention that it was built on a legacy of learning which goes back half a century. It is a treasure trove of standardized business processing.
Saying Brownfield means ignoring much of that and using S/4HANA as if it were the old SAP ECC . It is a bit like moving from a Blackberry to the latest iphone but restricting yourself to only using the functionality that the Blackberry had.
A common rebuttal to all this is: What’s the big deal? ERP is ERP. Accounting is Accounting. S/4 is essentially the same thing as ECC, R/3, or R/2. Our back office has been running stably for years, we don’t need anything new. SAP S/4HANA still does the same thing.
Yes, that’s correct. A Model T Ford and a Tesla are also the same thing – cars with four wheels that take you from point A to point B. But when you take a real test drive, you notice there is a difference.
The more I work with SAP S/4HANA, the more I appreciate every day the thousands of small adjustments here and there that together make big differences.
If ever there were a time in SAP’s ERP history to consider Greenfield (or at least Bluefield) it is now.
The system you put in place now will determine the backbone of your company’s processing for the next decade and maybe more.
Brownfield upgrades are of course (usually) faster, cheaper and less disruptive. But that is only true in comparison to Greenfield. In absolute terms Brownfield projects are neither fast, cheap nor non-disruptive.
Brownfield projects can consume millions of dollars, many months and often years and put the company through test, acceptance and change management stress only to have the same old wine in newer wineskins.
Obviously, these days companies have bigger worries and priorities than switching out their ERP systems. Companies only upgrade when they really have to. For example, when they have a burning platform, maintenance runs out, M&A or due to other extenuating circumstances.
It is not easy to take a business case for an ERP upgrade into a Boardroom these days. Mainstream SAP ECC Maintenance is running out soon and so thousands of boardrooms around the world are compelled to make a decision.
Part of the challenge for the board members making this decision is that there is nothing wrong or broken in SAP ECC. It runs most of the world’s business very smoothly. SAP ECC has been a phenomenal, bullet-proof system. It’s the silent hero running much of the global economy. Our modern lifestyles where we order whatever we want from our sofa and expect it to be delivered to our home within days or even hours is thanks to thousands of ECC workhorses galloping along tirelessly. Global supply chains, depend on a vast number of ECC systems that are chugging along very reliably. Obviously, no one feels like throwing a working system away. (I still love our amazingly reliable 1995 Mitsubishi family van.) But alas, they need to move on, and so boardrooms are faced with alternatives that don’t actually look that pretty.
Imagine being a Board Member, and you are faced with the following choices:
A Brownfield
· Replace a system that is not broken
· Replace it with the same capability you have today
· Pay for a new license
· Pay for the implementation project
· Invest a lot of time, effort, testing and disruption
· For little apparent new business value
· But hey, then at least we get back into standard SAP maintenance
· Hmmm…☹
B Greenfield
· More cost, effort and disruption
· Can we really handle a big project?
· Reminds us of that chaotic monster implementation years ago
· But it gets us closer to standard and the state of the art and future-proof
· But this may need us to reengineer our business processes
· …meaning more organizational disruption
· Hmmm…☹
C Bluefield
· Sounds nice but…
· … if it is half-half….then which half?
· Hmmm…☹
D Do Nothing
· Keep hoping SAP extends maintenance
· Or just bite the bullet and pay more for extended maintenance until 2030
· Or pay a 3rd party external maintenance company to keep servicing the system.
· Kick the can down the road and pass the problem on to our successors.
· But then, what if all these AI, Cloud, Cybersecurity, UX revolutions really gain traction, will our platform be ready?
· Hmmm…☹
It is not an easy call to make. There is no silver bullet.
Sometimes one hears about a compromise that sounds like a silver bullet. Here is a familiar dialog:
CIO: We’re going Brownfield, but will do improvements later.
Consultant: Great! So you have two budgets?
CIO: What? No. Only for the brownfield, of course.
Consultant: If you go back to the board after your Brownfield Go-Live, will they approve another project for improvement & more budget?
CIO: I doubt it. We will just have to make do with the time and budget we then have.
Consultant: If you have enough time and budget for later improvement, I guess there is no problem.
CIO: We will do our best.
Consultant: But if the improvements are significant, you have to do projects, testing and change management again.
CIO: Of course!
Consultant: Will the organization accept that? And without additional budget? Or a sanctioned project?
CIO: We will try our best.
Consultant: Wouldn’t it be easier to just try and do those improvements at the same time while you are upgrading? Continuous Improvement after go live is something everyone aspires to, but rarely is it done in reality due to the challenges of everyday business and a lack of resources. Once the system works, usually people don’t want to fiddle with it. A bit like that naked light bulb hanging from a wire in my pantry ceiling waiting since our last move 5 years ago for a lampshade. (Never urgent enough)
CIO: Listen, of course most CIOs I know would love to go Greenfield but our Board just can’t stomach the idea of Greenfield. They have too many horror stories from the past. It’s not ideal but it is reality. Also, we have customized so much over the years that it will be so hard to refactor and rebuild all that code.
I often wonder, if there is a better way to think about whole projects in colours: Brown, Blue or Greenfield,… etc.
If you have 100 processes running in your ERP system today, and you had:
- 30 of those processes go to the heart of your business and are differentiating from most other companies. This is where the lion’s share of heavy customization happened over the years and might actually be necessary again in the new system.
- 70 of those processes are fairly standard but were also customized over many years for convenience, usability, management requests, or simply brought forward from older (sometimes ancient) brownfield migrations where they were not cleaned out.
Instead of throwing the baby out with the bathwater and making the whole project either Brownfield or Greenfield, why not take the effort of differentiating those processes and going Brown with the 30 and Green with the 70. (This is sort of the essence of Bluefield although the word Blue is more often used in other contexts. )
In general, if you treat each process as a mini project, (i.e. 100 mini projects) and just make the decision for each process whether it is Fit-to-Standard (Green), Fit-to-Past (Brown) or Fit-to-Design (or hybrid Blue) you might find that there is a middle of the road that is both manageable and provides more business value.
Many will counter that that is a lot of extra work and that if you do all that work you might as well go Greenfield. Well, in any case, you have to make test cases for all the processes so you will be investigating them in detail anyway. Why not try to improve at the same time.
Thankfully there are techniques today that allow companies to do this in a low-cost and pragmatic way. The question is putting one’s mind to it and convincing the board that there is a pragmatic alternative.
At least it provides more business value for not so much extra effort and it avoids throwing the poor baby out with the bathwater.
