Greenfield vs. Brownfield: the right strategy
There are different ways to SAP S/4HANA: Greenfield, Brownfield or even a selective migration. To find out where the differences lie and the advantages and disadvantages of the respective strategies, read here.
When companies want to implement SAP S/4HANA, there are two main strategies available to them: the greenfield approach (New Implementation) and the brownfield approach (System Conversion; Re-use).
The greenfield and brownfield approach thus represent different options for converting an SAP ERP system to S/4HANA: With the greenfield approach, companies undertake a completely new installation of the SAP S/4HANA system. The brownfield approach stands for a software upgrade that preserves all data and settings.
There is also selective migration - a middle course between greenfield and brownfield (formerly: landscape transformation). Experts also speak of the color field approach or a hybrid strategy.
Selective migration is a strategic approach based on brownfield. If companies go down this route, SAP experts copy the old system without data and convert it to S/4HANA. This empty system is then filled with legacy data via data migration. The migration can be controlled individually: For example, the specialists migrate only a defined section of data or recode data.
The challenge for companies when introducing S/4HANA is to find the right strategy for implementation in the first step.
What does Greenfield mean?
The Greenfield approach stands for a complete new beginning, a new start with SAP S/4HANA "on a Greenfield site". This means complete reengineering and the possibility of comprehensive simplification of processes. This is based on the latest technological innovations. With the Greenfield approach, the new implementation is always close to the SAP standard and best practices.
All processes and systems are completely reinstalled and configured during the implementation. In the course of this, all environmental systems will be reassessed and replaced if necessary.
The new implementation gives companies the opportunity to put existing in-house developments and third-party systems to the test and to investigate whether these functions are not already available in the SAP S/4HANA core and best practices.
Classical in-house developments in the core system are no longer up to date. Today they are being replaced by new architectures. However, these architectures can only be achieved with the Greenfield approach.
In addition, the new architectures allow a piece of the software to be permanently modernized through regular and rapid updates.
Where large parts of the software used to be renewed by major upgrades, today the focus is on continuous updating of subareas. This means that basically no large new installations are necessary, as the software is completely renewed every few years.
Current business processes will not be affected by this strategic approach, because the existing SAP system - for example SAP ERP 6.0 - will continue to operate parallel to the changeover until the new S/4HANA system is go-live.
The Greenfield approach is suitable for both new and existing customers. Especially when the existing systems are very heterogeneous and complex, companies should consider the Greenfield approach. Only he makes the transition to the "new world" of S/4HANA with SAP Best Practices possible. It also enables the elimination of old workarounds and gives companies greater flexibility for future requirements.
Advantages and disadvantages of the Greenfield strategy
The Greenfield strategy is the way for everyone who wants to exploit the full potential of SAP S/4HANA and increase data quality.
SAP S/4HANA is the basis for new business models and the technologies of the future. Those who rely on Greenfield are looking for more flexibility, a higher degree of innovation, higher data quality and fast, lean processes.
The advantages at a glance:
- Completely new, uniform, lean system landscape
- Removal of contaminated sites and reduction of complexity
- Use of the SAP standard and best practices (thus also access to functional enhancements)
- The potential of SAP S/4HANA can be exploited (new analysis options, more easily scalable processes, ...)
- More flexibility through standardization
- Advantages through fast access to innovations ("cloud first")
- Protection of innovation through permanent updating of the product
- Standardized, cleansed master data base
- Possibility of optimising operating costs
- Cloud usage possible (as well as on-premise)
The disadvantages at a glance
- Comprehensive testing of the new processes required
- Usually somewhat more time is required (analyses in advance, simplification and transformation of processes, comprehensive data cleansing)
- More intensive change management may be required
- More extensive user training may be necessary
- Possibly higher costs of reimplementation
What does Brownfield mean?
Those who follow the brownfield strategy convert the existing SAP system to S/4HANA. This is therefore an upgrade.Existing processes, data and individual developments are transferred to the new SAP S/4HANA system. There is therefore no complete reconstruction "on a greenfield site".
The big disadvantage is that the complexity of the existing, often heterogeneously grown system is preserved. The status quo is thus cemented. The full potential of S/4HANA cannot be exploited.
The path to S/4HANA best practices, for example, remains blocked. But if companies do not move into the world of best practice, they will not participate in new functional enhancements. In reality, this leads to a situation where the maintenance contract, which also pays for functional development, is only used to consume bug fixes.
The brownfield approach is best suited for companies whose existing systems are still comparatively new and not very heterogeneous and are still close to the SAP standard. It is also suitable for those who want to get to the new SAP S/4HANA system particularly quickly.
Advantages and disadvantages of the brownfield strategy
One of the advantages of brownfield is that the implementation effort is lower than for Greenfield projects: brownfield projects are usually somewhat cheaper and sometimes go faster. In addition, existing structures can be preserved.
For companies with heterogeneous and complex IT system landscapes, however, this usually has disadvantages in the long term: Since the complexity remains, today's challenges with the IT environment remain (for example, also with regard to the implementation of new business models) and cannot be corrected within the framework of such a project.
The advantages at a glance
- Faster implementation is more likely to be possible, as the effort required is lower
- Preservation of historical data and individual developments
- Reduced effort for change management and training
- Possibly somewhat lower implementation costs
- Reduced disruption of processes
The disadvantages at a glance
- Complexity is retained, old burdens are also taken over
- Few opportunities to fundamentally improve and simplify the company's own business processes and functional scope
- Higher maintenance effort
- Potential of SAP S/4HANA is not fully exploited
- No access to best practices
- Cloud usage not possible
Which strategic approach suits my company?
Which strategy is best suited for the introduction of SAP S/4HANA cannot be answered in general - it must be decided individually.
Because technically all paths are possible in most cases, companies should therefore include a variety of factors in their decision. In the end, they can find a solution that suits the company.
The factors to be considered include systemic, strategic and organizational aspects. However, companies should also take into account the current skills of their own employees or the costs of the changeover.
The following guidelines and tips will help you make the right decision.
In these cases, the decision is more in favour of Brownfield
- If the IT environment is in the foreground and the initial and planned target architecture are identical, then technically oriented strategies are more likely to be considered.
- This also applies if solution extensions are to be retained or if the entire history of the transaction data must necessarily be retained.
In these cases the decision is more in favour of Greenfield
- If the existing processes are to be modernised, made more flexible and standardised, then the Greenfield approach is more likely to be considered - and the economic use of the technical approaches is rather unlikely.
- The greater the operational risk for companies when commissioning in one step (for example, in multinational groups with very heterogeneous systems), the more likely it is that partial commissioning in the form of intermediate stages will be considered.
- The later a decision is made about a conversion project, the greater the tendency for differences between the source and target system architecture, because technological progress under SAP S/4HANA is extremely rapid - another reason in favor of Greenfield.
- If the existing IT landscape consists of many different ERP systems and is to be unified and consolidated, brownfield and selective migration are not an option.
- If the expenditure is seen as an "investment" in the future of the business (with a transformation of the core areas of the business and the development of new, digital business models), then companies should consider the Greenfield approach.
Meinolf Schäfer, Senior Director Sales & MarketingYou prefer the way to contemporary architecture with the Greenfield approach, but still have questions? I am at your disposal.
+49 2241 8845-623