As SAP phases out its ECC6 system, more than two-thirds of the top consumer packaged goods (CPG) companies are planning or have begun their migration to the ERP giant’s cloud-based S/4HANA. Many others are considering a similar enterprise resource planning (ERP) modernization effort across various platforms. Rather than regard it as a mandatory check-the-box, IT-led exercise, companies should see it as ripe opportunity to shed legacy issues and reinvent their businesses. Trouble is, most won’t; about 90% of ERP transformations miss their goals due to a reliance on technical outputs alone. We can help you avoid that trap, and instead reimagine this essential migration as an end-to-end ERP-enabled business transformation vs. a mere tech upgrade. The result: 20% more value and 20% lower costs.

ERP systems are the backbone of CPG companies’ operations, responsible for everything from tracking product costs to issuing invoices to paying suppliers. More than ever, they are integral not just to day-to-day operations but to newer frontiers, like developing and scaling generative AI. Investing in a thoughtful, strategic migration can help you increase revenue as well as future-proof your company.  

Where the original model falls short

With so much at stake, why do so many companies miss the mark? From the get-go, a tech- vs. business-led approach can quickly put companies on the wrong foot. While tech-focused programs strengthen technical infrastructure and address software obsolescence, true transformation requires a wider lens: tech expertise, plus the business sponsorship and pragmatism required to tackle underlying business issues and drive meaningful change.

This focus on perfunctory technical outputs, a bastion of conventional ERP migrations, also extends to leadership and talent. The standard model puts a systems integrator (SI) at the helm. Eventually, companies began hiring business integrators (BI) to uncover business blind spots, but their work often resulted in low-value, high-volume outputs, like process documents and trainings. This teaming didn’t enable companies to address the larger business goals or solve problems along the journey. Further, this IT-led model tended to generate countless change requests and misaligned incentives: SIs were rewarded for fixing issues, while bigger opportunities were missed. The result? Transformations that went over budget and fell behind schedule (see Figure 1).

Figure 1

Roughly 90% of ERP transformations miss their goals

Upgrade business, not tech

We craft ERP migration programs that bring your business strategy to the forefront, focusing less on customized IT and more on the bold changes—like integrating AI or pinpointing deviations from standards—that help you increase revenue, reduce costs, and accelerate innovation and decision making. Our track record of successful CPG ERP migrations is bolstered by our strategic partnership with SAP and relationships with SIs across the market. Four best practices shape our guidance:

1. Create a value-oriented migration thesis

As with all transformations, success requires stakeholder alignment on both the ambition and the resources required to achieve it. An ERP migration offers a unique opportunity to resolve operating model pain points. We help you identify and address legacy issues rather than port them over to S/4. Then we assess your program’s scope, teaming structure, expected cost, deployment plan, and governance. Finally, we help you articulate these goals in a compelling migration thesis.

2. Build the right team

The standard SI-BI approach dilutes value, resulting in 80% of transformations exceeding cost and schedule expectations. We suggest augmenting the standard SI and BI roles with a business transformation (BT) position and then clarifying responsibilities to avoid duplication of effort: The SI handles the technical side, the BI manages business processes and leads the SI work, and the BT defines the business case, drives the initiatives that unlock value, and monitors costs.

Appointing a BT as business co-pilot helps shift the program’s priorities from completing rote tasks to building value. We can help you build the right talent pool, one that balances technical and strategic oversight.

3. Avoid business as usual

A large part of the BT role is challenging the ERP migration roadmap, from decisions about process customization to SIs’ ways of working. It’s critical to keep a close eye on “value sink” activities such as legacy process design and excessive customization, as well as pressure-test SIs’ committed deliverables. A laser focus on outcomes over tasks also helps discourage change requests, which controls costs. 

We help your team hone a results-oriented approach that expands the boundaries of the ERP migration program. Data gathering takes a back seat to capability building, and task checklists become conversations about how to deliver real impact. To ensure stakeholder buy-in, change management and leadership alignment aren’t one-off events but areas of continuous engagement.

4. Keep it simple

When it comes to your new ERP deployment, simplicity is key. We recommend keeping your core clean, complementing it with best-in-class or best-in-cost applications while limiting customizations as much as possible.

Leveraging expertise in data architecture and implementation, we help you drastically simplify your processes and technology to make them standardized, flexible, and scalable. We help replace fragmented, local systems with global, best-of-breed platforms, and we consolidate disparate processes across business lines into shared processes aligned with industry best practices. This helps fast-track ERP updates, reduce integration costs, and improve the consistency of data across your organization.

Webinar

Glimpse at the Future of Digital and one of its key foundations, a solid ERP

This webinar will explore long-term implications of today’s emerging digital disruptions for Consumer Products companies and deep dive into the imperatives that underpin successful ERP transformations.

Sizing the prize

Treating an ERP migration as a business-focused redesign vs. a technical upgrade can help you reap rewards such as increased revenue. For example, layering your platform with AI-based forecasting can reduce out-of-stock rates and improve assortment and planning decisions. More broadly, increasing standardization and automation can boost operational efficiency and streamline supply chain logistics, ultimately reducing costs. The ROI for CPG companies is compelling: By challenging business as usual and striving for standardization, we deliver migrations that are 20% faster and cheaper and achieve 20% more value.

Our strategic approach also delivers qualitative benefits. A migration that integrates AI and robotic process automation (RPA) enables hyper-automation, accelerated decision making (thanks to enhanced data), and increased customer satisfaction via more reliable, consumer-focused processes. By eliminating mundane tasks, it can also help you recruit talent. Lastly, by embedding change in every step of the migration journey, from vision to adoption, your employees will be better equipped to adapt to the new platform (whether that’s S/4HANA or another provider’s). The CPG companies we’ve helped report a 12-percentage-point increase in employee Net Promoter Score^SM (NPS®). 

ERP modernization offers many benefits but is no small feat. By blending technical expertise and strategic guidance, we ensure that your migration is not just a hurdle to clear but a path to capturing value from streamlined processes and automation.