Dr. Ernst Hagg

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Supply chain management with SAP – switch tools in time

The supply chain management tool SAP APO will be phased out over the next few years. Dr. Ernst Hagg from OBSIDIAN IT.SERVICES explains how to switch systems economically and with an eye to the future.

The supply chain management tool SAP APO will be phased out over the next few years. Dr. Ernst Hagg from OBSIDIAN IT.SERVICES explains how to switch systems economically and with an eye to the future. 

Lots of companies manage their supply chains using the SAP module APO (Advanced Planning and Optimisation). What many don’t know is that this system module is on its way out because SAP is launching a new generation of ERP products into which it will integrate some of the current features of APO.

Since all technical changes have the potential to bring about a business transformation as well as the associated costs, workload and losses in efficiency, we recommend developing a strategy for the switchover in good time. Licensing costs present one area of possible savings, as it may no longer be necessary to keep operating an SAP APO system for a long time after transitioning to S/4 HANA because the features could already be provided by the new software. Another argument in favour of dealing with the issue at an early stage is that failing to look into the matter from all angles may lead to additional costs later down the line. If users only consider the process of switching ERP systems, features may be implemented that have to be changed again once SAP APO is eventually withdrawn from use. Clients should therefore investigate in good time the sustainability of their SAP APO system landscape and take immediate steps today to prepare for the switchover.

Firstly, it is important to understand what SAP has in the pipeline for its modules for planning tasks, such as requirements, network and production planning as well as cross-plant availability checks. As is the case for SAP ERP 6.0 (enterprise resource planning), the general SAP support for SAP APO is being extended until 2025. However, thanks to the development of SAP S/4 HANA, SAP ERP 6.0 has at least had a successor waiting in the wings since late 2015. While this solution is capable of fully assuming the most important features in the SAP S/4 landscape, there is no such successor for SAP APO. The current APO systems must therefore be replaced in the medium to long term. SAP is nevertheless recommending that SAP APO be combined with its new ERP system S/4HANA for the simple reason of avoiding a “double Big Bang approach”. Migration to S/4 HANA should not necessarily mean having to find an alternative for  SAP APO immediately.

A substitute will only become imperative once the support agreements expire and the choice will depend on each company’s specific requirements.

How to devise a suitable transition strategy:

To make your system as sustainable as possible, you need to ask yourself the following key questions:

Which features of the current APO module do you use and which will be important to you in the future? What form does your system landscape take? Do you work exclusively with SAP or do you also use ERP systems from other manufacturers?

Alternative solutions that meet your specific requirements:

There are various solutions to choose from depending on which features you need and the structure of your system landscape.

Simple switch to S/4 HANA: If you only use SAP APO to perform global availability checks (gATP) and to conduct production planning and detailed scheduling (PP/DS), the transition will be extremely easy. The new SAP S/4 HANA generation of products offers both of these features.

Combination with an additional SAP solution: If you also need to use aspects of demand planning and supply network planning (DP & SNP), you can meet these requirements by using SAP Integrated Business Planning (SAP IBP), which was originally designed as a supplement to SAP APO.

Combination with additional solutions: As an alternative to using the SAP IBP system, you should analyse the extent to which it could be worthwhile expanding on the standard option by using customised additional solutions within SAP S/4 HANA.

Consolidation of the systems: The decision is far more complex if you have a heterogeneous system landscape, i.e. a system landscape that uses multiple ERP systems from different manufacturers. In such cases, alternatives should be considered if you are looking to introduce a comprehensive planning system that enables end-to-end planning across all the incorporated ERP systems.

Is your company currently facing a similar scenario? We would be delighted to arrange a no-obligation meeting with you so that we can discuss how OBSIDIAN IT.SERVICES can support you to find and implement a suitable solution. OBSIDIAN IT.SERVICES is an independent company within the mSE Group and focuses on the management and operation of SAP systems. 

This is a guest article.

Dr. Ernst Hagg