Getting the Foundations Right Before an S/4HANA Transformation

By And Bloom Limited

An SAP S/4HANA transformation represents a major opportunity to modernise, standardise, and simplify how your business operates. But like any significant transformation, success depends heavily on what happens before the project formally begins.

Many organisations move too quickly into design and implementation, only to realise later that key elements weren’t properly defined or aligned. This can lead to rework, delays, or failure to realise the intended benefits of the new system.

At And Bloom Limited, we believe in laying strong foundations early. This article outlines the core elements we recommend addressing during a focused pre-project or discovery phase.

1.            Enterprise Structure – Define it Early

The enterprise structure in SAP defines the organizational framework within which all business processes are executed. It represents legal compliance and financial reporting to operational efficiency. It’s vital to have early clarity on how you will define and use.

Element	Description	Purpose
Company Codes	Smallest legal entity for which a complete set of financial statements can be drawn up (Balance Sheet, P&L).	Legal financial reporting.
Legal Entities	The actual registered companies that exist in the real world. Often, each legal entity is represented by one or more company codes in SAP.	Compliance, taxation, statutory reporting.
Controlling Areas	Represent the scope for cost accounting; can include one or more company codes (if using same chart of accounts & fiscal year variant).	Internal management accounting.
Segments	Used for segment reporting under IFRS/GAAP (e.g., by business line or geography).	External reporting and performance analysis.
Profit Centres / Cost Centres	Internal substructures for tracking revenues and costs. Profit centres align to management responsibility, cost centres to functional areas.	Internal performance tracking and accountability.

Each of these decisions has downstream implications. Taking the time to validate and align your enterprise structure at the outset avoids costly changes later in the programme.

2.            Chart of Accounts (CoA) – Standardise Where Possible

S/4HANA is designed to support a streamlined and unified Chart of Accounts. Whether you're consolidating multiple charts or designing a new one, aim for consistency and future scalability.

Considerations include:

• Global vs local statutory requirements

• Future expansion and acquisition scenarios

• Alignment with your reporting strategy

3.            General Ledger – A Clean Start

With the introduction of the Universal Journal in S/4HANA, now is the ideal time to simplify and streamline your General Ledger structure.

You should assess:

• Redundant or obsolete accounts

• Document splitting requirements

• Ledger setup for local and group valuation

This is a rare opportunity to remove legacy complexity and build a structure that supports better financial insight and control.

4.            Cost Centres and Internal Structures

Your cost centre hierarchy should reflect how your business actually operates — not just how it used to. It should support meaningful reporting and cost accountability without becoming overly fragmented.

Ask:

• Is the current structure still relevant and used effectively?

• Are ownership and governance of cost centres clearly defined?

• Does the hierarchy support your future operating model?

5.            Master Data Foundations – Materials, Customers, Suppliers

The integrity of your Material Master, Customer, and Supplier data has a direct impact on process efficiency and reporting accuracy.

Define early:

• Material types and valuation approaches

• Product and customer hierarchies

• Supplier classifications

• Units of measure and naming conventions

Consistent, well-governed master data enables standardisation and scalability across the enterprise.

6.            Data cleansing – start now and keep going

Poor-quality data is one of the most common root causes of delays, rework, and user frustration in SAP projects. The good news is: you can start addressing this now.

Start with:

·        Profiling your core master data (materials, customers, suppliers)

·        Identifying duplicates, gaps, and inconsistencies

·        Assigning data ownership and accountability

👉 Even the best-designed solution will fail to deliver if it’s built on poor data.

7.            Standardisation & Harmonisation – A Strategic Opportunity

S/4HANA delivers industry-standard processes and configurations out of the box. Adopting these can significantly reduce customisation, simplify support, and future-proof your system.

But adopting standard processes requires early education and mindset change.

Encourage early:

·        Business engagement with standard SAP models

·        Discussions about where harmonisation is both possible and desirable

·        Leadership support for reducing unnecessary local variations

This isn’t just a system decision — it’s a strategic change in how the business chooses to operate.

About And Bloom Limited

At And Bloom Limited, we specialise in safeguarding SAP-based transformations. Whether you're at the start of your journey, mid-flight, or recovering a troubled programme, we’re here to support you.

We don’t just deliver systems — we partner with you, working alongside your team to:

·        Define the right foundations

·        Optimise delivery

·        Navigate complexity

·        Secure your transformation outcomes

We’re here to accompany you, ensuring your investment in S/4HANA leads to measurable, lasting success.

8.              Get in Touch

If you're planning an S/4HANA transformation, let’s ensure you start from a position of strength.

Contact And Bloom Limited to learn more about how we can support your discovery and definition phase.