IBM has moved to RISE with SAP as part of a major ERP transformation project underway at the tech vendor to simplify and streamline operations, and help ensure the business is at the forefront of AI developments.
Since completing the migration from SAP ECC to S4/HANA, IBM says it has achieved a 30% reduction in infrastructure-related operational costs via consolidating its server and data footprint, and increasing process automation.
IBM and SAP have a long history of partnership, and have been working together for 50-plus years. This includes IBM’s finance and quote to cash organizations, which support users globally across many different business units, and a diverse set of industries and markets. To support those businesses, IBM was using a heterogeneous infrastructure that included SAP ECC, as well as some homegrown legacy applications, all of which were running on-premise, which was complicated to manage. David Ackerman, Director, SAP S/4 Platform at IBM, explains:
There were some opportunities for us in reducing manual intervention across these processes as well as customization. So we kicked off our S4 journey to leverage the best of what we believe is out there in the market for ERPs, and in just about 18 months, we were able to deploy S4/HANA in over 175 countries for over 150,000 users.
Progress report
IBM started the project around late 2022, and went live in July 2024. The fact that support for SAP ECC is officially ending in 2027, with extended support only available until 2030, could well have been a factor in IBM deciding to undertake this mammoth task when it did. Although Ackerman says the catalyst for the migration project was infrastructure and process opportunities through running SAP’s ERP technology on the best of IBM. He notes:
The way we implemented this was with Rise on S4 on Power Virtual Server. We used IBM Consulting for technical services, implementation, application management, and we’re running on IBM Cloud on Power and Red Hat to help us manage these workloads. SAP and IBM together we felt was a win-win, and we wanted to be first through the door so that some of the marketplace could feel the same.
As noted, IBM has seen a 30% reduction in infrastructure-related operational costs, due to the combination of S4 on-memory processing and the benefits of a modern ERP system, as well as running on Power and technology that’s able to handle the workloads. The company was able to automate, eliminate and streamline a fair bit of its data storage capacity, and switching some of its custom code from ECC to S4/Hana automated processes for running its infrastructure.
There have been some other significant benefits, including an 80% reduction in invoice cycle time; more than 70% of payments are automatically matched in the new system; and a 40% improvement in contract registration cycle time.
Moving over 150,000 SAP ERP users across 175 different countries sounds like a complex challenge. Ackerman acknowledged there are always lessons learned, particularly for a transformation of that size, and for a company that is three distinct businesses – infrastructure, software and consulting – wrapped into one. He adds:
You have to support all three of those processes in the countries you mentioned, for the users you mentioned, and I’ll add to the fear here, it was a big bang approach. We did it all at once in July of 2024. So how do you start that? You start it by being very intentional about discovery and prep.
In the first instance, IBM Consulting used a process called Rapid Move to assess the landscape and determine the best approach. Ackerman explains:
There’s the brownfield approach, which is just a lift and shift of your existing environment. There’s a greenfield approach, which is take a fresh sheet of paper and start over. Neither of those approaches were best for the complexity of what we wanted to do. So IBM consulting led us down a path of what we would call a hybrid approach. We were able to concentrate on the innovations that were going to move us forward within the S4/Hana platform, while retaining what we already did well from our existing setup within ECC.
Ackerman advises focusing on getting the right design and specifications in place to ensure the architecture is set up to handle the company’s workloads. IBM also did a lot of testing in advance of the official go-live, running tens of thousands of tests, and seven dress rehearsals with full data and portfolio system moves. He adds:
We did pre-implementation audits to make sure we had the appropriate compliance posture. Those were essential for us, just to go through the motions of what it would take to go live in this environment. And test, test, test, rehearse, rehearse, rehearse, because there’s nothing like that go-live day, particularly of an implementation of that size.
The migration to Rise is a vital part of IBM’s future strategy, as it focuses on being a hybrid cloud and AI company. For AI to succeed within IBM’s processes, it requires a data foundation that is readable and adjustable while leveraging the firm’s watsonx platforms, according to Ackerman. He notes:
Implementing S4/HANA Cloud Private lays that foundation for the complex problem-solving and the advanced capabilities with AI. That’s critical for us. It’s also critical for us to move to single global processes to run our company to make that journey successful, and leveraging S4/HANA to get to that single global foundation is critical in that regard as well.
While there’s still work to be done to achieve those single, optimal processes, going live with 175 countries and for over 150,000 business users has moved IBM along a pretty long way. Ackerman says:
We still have room for remaining countries and sunsetting even more homegrown legacy assets, we still plan to move forward on that journey, but we think of global expansion and to global complete, as well as fundamental constant business process improvement, as the two parallel paths for us after this implementation. In terms of the latter, leveraging Apptio for us, watsonx for us, and then some core products from SAP like Signavio and Intelligent Custom Code Management (ICCM) to help us always further refine the implementation that we did is going to be critical.
Underlying IBM’s S4/HANA platform is a combination of Rise private cloud running on IBM Cloud on Power. IBM took on board SAP’s preferred ‘clean core’ approach to the migration, with customers advised to make use of SAP’s standard processes and consider whether or not they really need customizations. Private cloud offers firms more flexibility around processes, but more customized SAP environments can’t absorb new innovations like AI as effectively. Ackerman explains:
[Clean core] was an absolutely essential part of our consideration. Clean core is a journey. There’s not a – you’re not at clean core and you’re at clean core, it’s not a binary consideration. You have to have clean core as your North Star and continue to get there. The tooling including Signavio and ICCM are helping us get there, and we jump-started that journey when we went to S/4HANA.
The move from ECC to S/4HANA led to around a 25% reduction in custom code, which Ackerman says is a big jump for IBM. He notes:
What we now have in place is a management system to continually clean and continually get better and better and better. You can always do it a little bit cleaner, you can always do it a little bit better, and you should constantly evaluate how to do things better within an ERP.
The clean core approach is also helping IBM with its goal of a future-proofed AI data foundation. Ackerman says:
A part of clean core is making sure your data’s clean in addition to your code being clean. When you talk about your code being clean, the less custom codes you have within the central ERP, the more efficiently it runs, the more effectively it runs, the easier it is to upgrade.