Master Data Management in SAP and the Migration to SAP S/4HANA

Every office worker is different: some need a creative chaos of notepads, post-its, writing utensils and mugs on their desks to be productive. Others like it spick and span, with a sharpened pencil aligned paralel to the edge of the desk. As positive as this freedom is for us as humans, it doesn’t apply to computer systems, especially database applications. They need to be consistently arranged, well maintained and cleanly structured in order to optimally support our workflows.

This truism applies in particular to master data management in SAP. After all, functioning master data is one of the most decisive factors influencing the success of digitalization initiatives in an organization. In this context, companies cannot avoid dealing with another transformation: the introduction of SAP S/4HANA. Although it’s true that SAP has extended maintenance of the old SAP Suite until 2027, the migration will finally come and, in our experience, will also generate great added value for companies – provided it is approached correctly.

In this blog post, you’ll discover what companies need to pay attention to when dealing with master data in light of the upcoming migration to S/4HANA, what changes SAP S/4HANA will bring for master data and what options are available when migrating to S/4HANA.

Master Data Management Poses a Permanent Challenge

Although data quality and master data management are at the top of the priority list for decision-makers in many companies, master data management is often neglected. On the one hand, this is because master data isn’t handled in day-to-day operations. On the other hand, the topic appears so complex at first glance that problems are suppressed for as long as possible.

However, the consequences of inadequate master data management are sometimes rather severe. Incorrect material master data can quickly lead to incorrect planning in a company, resulting in delivery bottlenecks or other financial consequences. The sticking point in master data management is relatively easy to identify: the creation of material master data in SAP. There are several reasons for this:

• Entering data into the SAP system is incredibly error-prone. The problem often lies in the cooperation between people and technology. For example, it’s easy to overlook errors when entering data, materials could be created twice or employees are simply not aware of the complexity of the data records because they rarely use the system.
• If errors are discovered, it requires significantly more coordination involving conversations, emails and calls to fix the incorrectly created material data.
• Even correctly created material master data can delay downstream processes due to complex approval procedures.
• If a process comes to a standstill because a process step has stalled somewhere in the system, it’s often difficult for those involved to see exactly where the problem lies and how to solve it.

What Requirements Master Data Management in SAP Must Fulfil

Organizations have to meet the challenges of master data management with a clean process for creating the material master in SAP. It often makes more sense to completely restructure the entire material master creation process rather than trying to patch up a bad process in various places. Businesses don’t have to reinvent the wheel for this, as they can fall back on tried and tested practices that reliably lead to success.

In essence, this is about setting up a process with which you can create the material master in SAP and change it if necessary. In addition, you should set goals on how to optimize master data management as a whole. The following considerations may play a role in this. The creation of master data should:

• Be flexible enough to accommodate material types and other specific requirements,
• Run as automated as possible in order to save resources and minimize errors,
• Increase lead times to accelerate downstream processes,
• Be so transparent that it’s immediately obvious when and at what point a process has stalled and who’s responsible for it.

What the Introduction of S/4HANA Means for Master Data Management

Migrating to S/4HANA offers users a number of advantages in terms of master data management. Overall, the new database software is more efficient and cost-effective to operate and opens up new use cases for companies. The biggest benefit that is immediately noticeable for users is that S/4HANA performs much better in the background than its predecessor, SAP Business Suite 7. The biggest tangible change of S/4HANA is that SAP delivers the software with the newly designed user interface SAP Fiori, for which there’s also an application on mobile devices.

Furthermore, there’s an important development that has a direct influence on master data management, namely the basic distinction between “debtor” and “creditor” is no longer made when creating customer or supplier data. Instead, customers and suppliers are always created and maintained in S/4HANA as “business partners”. This has the advantage that the same master data record can be used for a business partner who is both a customer and a supplier. Different roles can be assigned to a business partner, for example as “debtor” and “creditor”.

In addition, there are other minor changes in S/4HANA that also affect master data management. For example, several currencies can now finally be stored and the material number field can be expanded to up to 40 characters. It’s also important to note that individually developed solutions from the old SAP Suite, known as Z programs, may no longer function properly after migration to S/4HANA.

How Companies Can Shape Their Migration to S/4HANA

When migrating to S/4HANA, companies can choose between three paths. The reason for these choices is that SAP offers its customers different operating models for S/4HANA. These are:

• The cloud solutions SAP S/4HANA Cloud Essential Edition (ES) and SAP S/4HANA Cloud Extended Edition (EX)
• The server-based versions SAP S/4HANA On-Premise managed by SAP (HEC) and SAP S/4HANA On-Premise.

Besides the cost aspect and update management, these four S/4HANA solutions differ mainly in terms of flexibility: while the Essential Edition is the most standardized, the On-Premise version offers companies the greatest flexibility in terms of set-up.

What does this mean for migration to S/4HANA? While the SAP S/4HANA Cloud Essential Edition (ES) can only be migrated with a greenfield project approach, companies can choose between a greenfield, brownfield and bluefield approach for the other versions. In practice, this means the following for master data management:

• When migrating the SAP system according to the greenfield approach, you lose your old data and have to recreate it all. In this regard, businesses must assess whether this opportunity to restart with the option of completely rebuilding many processes outweighs the cost of losing the old data when migrating to the new system.
• The brownfield approach is the opposite of the greenfield approach, since all historical data is kept and migrated completely into the new system. To do this, you have to ensure in advance whether the existing master data is really suitable for this step or must be cleaned up beforehand if necessary. The benefit of this approach is that it gives companies the opportunity to migrate the ERP system to SAP S/4HANA very quickly with all historical data and still be able to make the most of the new system.
• The bluefield approach is a mix of greenfield and brownfield: the historical data is transferred selectively and the new system is rolled out in the company in several go-live phases, which helps to reduce project runtimes under certain conditions.

Data migration to SAP S/4HANA – clean master data from the start

When you decide to switch to SAP S/4HANA, you are faced with the challenge of having to migrate your data to the new system. This is your chance to clean up and start with clean master data from the beginning! Clean customer master data are essential in order to be able to process customer orders quickly and efficiently. Only then can customer orders be handled smoothly across all markets and channels. Satisfied customers are the “cherry on top”.

Benefit from correct customer master data

When you handle customer orders, you rely on customer master data in a variety of process steps – from the customer query to the availability check and delivery and on to payment.

The challenges in the manual creation of customer master data

In practice, new customer master data often come through “chaotic” processes in SAP^® SD (Sales and Distribution), because the necessary information is rarely bundled, but rather usually present in emails and caller records. Therefore, errors can result from the manual transmission of the data to the SAP^® system. In addition, the time and expertise to check if existing customer data can be used or updated are frequently lacking. Instead, employees often create redundant master data. The effort of providing customer master data to the necessary sales areas and company codes should also not be underestimated.

The digitized creation of customer master data increases your performance

With our EASY Customer Creation Process solution, you can digitize your customer master data creation process in SAP^® and control it intelligently. With EASY Customer Creation Process, employees are able to start the customer master data creation process easily and compile all the information in the digital process before it is automatically entered in SAP^®. As a result, it is always possible to document how the new data entered the system. In addition, a duplicate check helps prevent redundant customer master data in SAP^®. An simple interface in which only the fields you actually need are visible increases the satisfaction of both occasional and experienced SAP^® users.

No programming knowledge is needed for the EASY Customer Creation Process. The process can be adjusted in consultation with the employees to meet their needs. Our process supports your SAP^® technology 100 percent and uses the SAP^® Business Workflow, so that no further training is needed. EASY Customer Creation Process requires no interfaces or additional hardware. Our solution also uses the existing privileges or role concepts in SAP^®. Additional features are multiple languages and Unicode-capability.

The advantages at a glance

• Structured creation of customer master data
• Participating departments are automatically included in the workflow
• Easy and adjustable interfaces
• Validation of the customer master data
• Automated duplicate check
• Automatic customer master data creation for multiple sales areas
• Approval history shows the exact process flow
• 360° process transparency: the process statistics show the point at which the process currently is in real time. As a result, bottlenecks can be identified early
• You can adjust the process flow to meet your needs with no trouble

An optimized creation process works this easily

1. Customer data record: A field service employee would like to record a new opportunity and needs a new customer to do so. They enter the basic data and perform a duplicate check.
2. Enriching the customer master data: A field service employee would like to record a new opportunity and needs a new customer to do so. They enter the basic data and perform a duplicate check.
3. Check data quality: In order to increase the data quality, a sales inspection team can double-check the entries before the new customer master data is actually automatically entered in SAP^®.
4. Company code: In order to increase the data quality, a sales inspection team can double-check the entries before the new customer master data is actually automatically entered in SAP^®.
5. Credit rating and dunning: Credit rating, sanction lists, and dunning can be optionally integrated.
6. Data creation in SAP: Credit rating, sanction lists, and dunning can be optionally integrated.

Data migration to SAP S/4HANA

Those who decide to implement SAP S/HANA face a challenge: Each program or version change of a software package is associated with the fact that the master data of a database also has to be exported correctly from the old system and imported into the new system, which therefore includes the material master data. When migrating to SAP S/4HANA, the migration of the master data is associated with particular challenges, as SAP has changed the tables and/or structures for certain master data objects.

Therefore, data migration is a task that cannot be underestimated. After all, depending on the type and size of the company, the amount of data records can be considerable. These records are also the basis for a large part of the business processes. It is therefore necessary to ensure that the data migration is error-free and complete.

At the same time, however, this task also offers the opportunity to optimize the data quality and to streamline processes so that they can work efficiently with the new system right from the start. After all, it is frequently the case that material master data in particular and master data in general aren’t managed flawlessly. The goal should be to get rid of legacy data in advance, and to only transfer correct, complete and redundancy-free data. This can also have a positive impact on the migration work, as the more obsolete material master data you transfer to SAP S/4 HANA, the more costs and resources you require for the migration. It is estimated that poor data quality causes approximately 40% of the total migration project to cost more in terms of both the timescale and budget.

In this respect, a certain amount of preparatory work is required. In the following, we present the four steps of the successful migration of master data to S/4HANA.

1. Data analysis – know your data!

Before you start optimizing your data, it is essential for you to complete a stock-take. Insufficient knowledge of your own data and processes is one of the most frequent reasons for additional costs and time overruns during migration projects. Make sure that you gain an overview of the quantity and quality of your material master data, as this is the only way to correctly estimate the total migration outlay. You should therefore complete a critical check of which data you actually still require. You may have data that is no longer valid or that will no longer be actively used in the new system. If you look at the business processes, it should rapidly become clear what else is relevant. This is an opportunity to get rid of unnecessary ballast, and to keep the new system clear of old burdens right from the start. Therefore, instead of migrating everything, material master data that is no longer required can be archived, for example, if it cannot be erased due to legal requirements.

Duplicates are a frequent source of errors in material master data. In this context, it is necessary to define when data records are considered duplicates. How do I manage two data records that are basically identical, but differ in terms of the spelling of the material description, for instance? Therefore, to identify duplicates, it is necessary to determine the degree to which two records must match in order to be considered duplicates. This can be done on the basis of the material designation, manufacturer part number or both parameters taken together, for example. It is also important to search for fragments of the material designation, as this is the only way to ensure that similar designations are identified. It is also a good idea to shed light on the reasons why duplicates occur. If too many employees have write access to the database, this can encourage the creation of duplicate data. Defining exactly who actually needs access and who should have what level of authorization is therefore worthwhile.

Incomplete data is another common problem. Moreover, data fields are often not maintained consistently. For example, there may be discrepancies in the spelling of country codes, which are sometimes entered as single digits and sometimes as multiple digits. Also, fields are often not used for their intended purpose, but for entering different information. This creates an inconsistent data source that can cause problems with your master data management. For these fields, it is necessary to define which contents are allowed and in which format, and to therefore avoid these problems.

Another point to consider in your analysis is the differences between legacy systems and new systems. As mentioned at the outset, SAP S/4HANA brings in a number of changes. There may be process changes, or the length of the input fields may differ, so that content may possibly be truncated during the migration. These discrepancies and possible solutions should also form part of your analysis.

2. Data cleansing – the basis for a clean start in SAP S/4HANA

Once you have a picture of the quantity and quality of your data, it is time to take the next step on the path to data migration to SAP S/4HANA: cleansing the material master data. In addition to erasing data records that are no longer required, such as duplicates, it is also important to supplement and complete incomplete data records, as only then can you work efficiently with them.

A crucial question is how to carry out the cleansing and data enrichment. This can, of course, be completely manually, but this has the major disadvantage that it is extremely time-consuming. Alternatively, there are ways to automate the cleansing process. However, as this is not entirely without risk, it is often advisable to use a service provider. After all, important data can be lost if the procedure is not carried out correctly.

3. Migration of data to SAP S/4HANA – efficient and coordinated

After the groundwork has been done, the time has finally arrived: Your material master data can now be migrated to the new system. By checking and cleansing the data to be transferred beforehand, old and incorrect data is excluded, and you only transfer high-quality and relevant master data. Here, too, it should be checked in advance exactly how the data can be transferred to the new system and which tools and auxiliary products come into question.

Once the data migration is complete, it is essential to check whether all the data has been transferred completely and correctly. In this way, you guarantee high quality master data as the basis for your business processes.

4. Have confidence in your data!

You’ve done it! Your master data has been successfully migrated to SAP S/4HANA, and you can now make a fresh start with a clean database without legacy data.

A well-planned changeover with cleansed data has several positive developments. These include, for example:

• Improved performance of SAP S/4HANA
• Optimized business processes
• Reduction of duplicates
• Less disk space required after cleanup
• Easy administration of the database
• Lower running costs for space in the main memory
• Fewer resources for the changeover and reduced overall operating costs

Your hard work and advance planning has therefore paid off. To prevent its benefits from fizzling out, however, it is advisable to ensure that the data quality remains consistently high. Even if it seems arduous: take time to complete a regular quality check. Have duplicates crept in again? Are any data records incomplete or incorrect? This not only affects the material master data. Remember that all master data (e.g. vendor or customer master data) can change regularly, due to relocations or changes in company name, for instance.

The time that you spend on quality control and maintenance of your material master data is therefore well invested if you want to work with it to optimum effect.