Greenfield vs. brownfield: Which strategy for SAP S/4HANA?

There are two variants for the implementation of SAP S/4HANA. In the greenfield approach, the ERP system is completely rebuilt, while the brownfield strategy involves a technical conversion of the predecessor system.

Each of the two variants has specific advantages and disadvantages. What are these? And what points should companies consider when deciding between the two approaches?

What is the greenfield approach?

The greenfield approach refers to a completely new implementation of SAP S/4HANA, in which existing systems and processes are not adopted but redesigned. Companies start on a “greenfield site”, without taking into account existing structures or individual adaptations to the previous ERP system.

As part of this approach, processes and the IT architecture are redefined from scratch, which enables the comprehensive introduction of modern best practices and the use of the standard functions of SAP S/4HANA.

What is the brownfield approach?

The brownfield approach refers to a system conversion from an existing SAP ERP system to SAP S/4HANA. In contrast to the greenfield approach, the existing system landscape, including data, processes and individual customizations (custom code), is largely retained and technically migrated to the new platform.

Like greenfield, the term brownfield also comes from the construction industry. Here, it describes the conversion of an existing structure instead of building a new one. In the IT context, this means that a company continues its tried-and-tested processes while gradually migrating from the old SAP ERP software to SAP S/4HANA.

The third option: selective migration (bluefield approach)

Companies do not necessarily have to make the “greenfield vs. brownfield” decision. The bluefield approach offers a third option that combines elements of both methods. In contrast to complete reimplementation and pure system conversion, the hybrid bluefield approach allows existing systems to be modernized in a targeted manner by transferring only selected processes, data and adjustments to the new SAP S/4HANA environment. Obsolete or inefficient business processes, on the other hand, can be eliminated. This enables a step-by-step transformation without starting from scratch or completely taking over legacy systems.

Greenfield vs. brownfield: What are the advantages and disadvantages of the two approaches?

Both the greenfield and brownfield approaches have specific advantages and disadvantages that affect project duration, costs, innovation opportunities and employee acceptance. The strengths and weaknesses of both strategies are described in more detail below.

What are the advantages and disadvantages of the greenfield approach?

The main advantages of the greenfield strategy (new implementation) are

Comprehensive opportunities for process optimization: the greenfield approach offers companies the opportunity to redesign all business processes from scratch. Existing processes are not simply adopted, but put to the test. This enables the implementation of modern best practices that are supported by SAP S/4HANA. Companies can leave outdated processes behind and align themselves with current market requirements.
Clean IT landscape: A new implementation results in a lean and clean IT structure, as no legacy issues from previous systems are carried over. This applies to both custom code (individual adaptations) and data that has often grown unstructured over the years. By eliminating unnecessary adjustments, the new system is easier to maintain and more scalable.
Maximum flexibility for innovations: The greenfield approach allows companies to take full advantage of new SAP S/4HANA technologies and functions. These include artificial intelligence, machine learning and predictive analytics. This can result in optimized processes and even completely new business models that might not be feasible in a brownfield project.
Future-proof: As part of a new implementation, companies have the option of aligning their processes as closely as possible to the SAP standard. This means that new updates can be easily adopted at any time. In addition, processes close to the standard can be scaled much more easily.

The notable disadvantages of the greenfield method are

High resource expenditure: a complete new implementation requires extensive financial and human resources. This is because the cost of analyzing, planning and implementing new processes is high. However, those who rely on preconfigured ERP systems such as SAP S/4HANA Cloud, Public Edition, can keep the corresponding expenditure within limits.
Longer project runtimes: Compared to the brownfield approach, a greenfield project generally takes more time. The comprehensive redesign of all processes and structures as well as data migration requires detailed planning and in-depth testing, which extends the implementation time.
Need for professional change management: As existing processes are completely overhauled, employees need intensive training to familiarize them with the new procedures. The change can also cause resistance – especially in companies that have relied on their old systems for a long time. Effective change management is crucial here in order to promote acceptance of the new system.

What are the advantages and disadvantages of the brownfield approach?

The brownfield strategy (system conversion) has the following key advantages:

Faster conversion: the brownfield approach enables faster migration to SAP S/4HANA, as existing systems are technically converted. Compared to the greenfield approach, the effort required for analysis and adaptation is significantly lower. Companies can benefit from the advantages of the new platform more quickly.
Cost efficiency: No completely new processes need to be developed; instead, existing adaptations and data structures are used as a basis. For this reason, brownfield projects are often more cost-effective.
Retention of proven processes: The brownfield approach allows companies to continue with their proven business processes. This reduces the amount of training required for employees and ensures greater acceptance of the new system. Companies with highly customized processes and extensive historical data benefit in particular.
Lower risks during data migration: As existing data structures are transferred, data migration in a brownfield project is less complex. Companies can be sure that historical data is fully available in the new system without having to create it manually.

These advantages are offset by the following disadvantages:

Transferring legacy issues: A common problem with the brownfield approach is that outdated processes, inefficient structures, low-quality data and custom code are transferred to the new system. This can make the new ERP system more complicated, maintenance-intensive and inefficient.
Less potential for innovation: The focus of the brownfield approach is on technical migration, not process optimization. Companies often only use a fraction of the new functions of SAP S/4HANA, as they continue to use their existing processes instead of fundamentally modernizing them.
Complexity of the migration: Companies with heavily customized legacy systems in particular face technical challenges with the brownfield approach. This is because existing individual solutions usually have to be adapted or even completely replaced in order to be compatible with SAP S/4HANA. This can increase the time required and lead to unexpected problems.

Greenfield vs. brownfield: the strengths and weaknesses at a glance

The advantages and disadvantages of the two approaches mentioned above are summarized here:

Criterion	Greenfield approach	Brownfield approach
Implementation time	usually longer	usually shorter
Cost expenditure	usually higher	usually lower
Process optimization	completely possible	only partially possible
Data migration	selectiv (manuel)	complete (can be automated)
Flexibility	very high	limited
Technical legacy	none	available
Training effort	extensive	low

Greenfield vs. brownfield: Which strategy suits my company?

The decision “greenfield vs. brownfield” always depends on the individual starting conditions and objectives.

Greenfield is particularly recommended for companies where the following points apply:

The existing ERP solution is to be completely overhauled.
The aim is to comprehensively change and improve processes.
SAP S/4HANA should be introduced gradually.
The existing system is hampering innovation and growth.
A system conversion is not possible for technical reasons.

Brownfield is suitable for companies that have the following prerequisites:

Proven processes and existing master and transaction data should be retained and transferred to the HANA database.
A step-by-step introduction is not required.
A complete overhaul of the ERP environment is not required.
The existing ERP solution enables innovation and is scalable.
The technical requirements for a system conversion are met.

The target system is the most important decision criterion

In addition to the points mentioned above, however, the choice of strategy is primarily determined by the target system being pursued. Companies basically have the following options here:

Transition to SAP S/4HANA On-Premise
Transition to SAP S/4HANA Cloud, Private Edition
Transition to SAP S/4HANA Cloud, Public Edition

As a rule, the brownfield approach for converting legacy SAP systems (usually SAP ECC) can only be used for the first two options. When switching to SAP S/4HANA Cloud, Public Edition, however, greenfield is mandatory. It does not matter whether the previous system was an SAP or a non-SAP product.

A brief digression here: all companies that want to switch from SAP ECC to S/4HANA must choose between one of the above-mentioned variants. The degree of individualization of the business processes plays an important role here. While the public cloud variant works with industry standards that cannot be changed (so-called best practices), a high degree of customization is possible with SAP S/4HANA on-premise and private cloud variants.

In general, however, there are many arguments in favor of the Public Edition, especially for small and medium-sized companies. Firstly, SAP’s strategic focus is clearly on this variant. Accordingly, SAP S/4HANA Cloud, Public Edition is being expanded particularly strongly, while efforts with the other variants are declining. There are also certain advantages to adapting your own organization to SAP best practices. Above all, this allows you to implement lean, highly scalable, modern and future-proof business processes. The absence of modifications (clean core) also ensures full release capability. Furthermore, IT costs are particularly low thanks to the managed SAP Public Cloud. Last but not least, customers of the SAP S/4HANA Cloud, Public Edition automatically receive four new updates per year, which they do not have to worry about implementing. This ensures that they always have access to the latest best practices, functions and technologies, such as AI-supported services and analyses.

Overall, the greenfield implementation of SAP S/4HANA Cloud, Public Edition is the most future-proof option for SMEs. However, companies with very specific requirements and a well-positioned IT team may also be well advised to take the brownfield approach.

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