Why Master Data Management is the Key to a Successful SAP S/4HANA Transformation

Many organizations are currently transitioning from SAP ECC to SAP S/4HANA. Those with successful transitions can simplify data management. The good news is that this leads to streamlined workflows and more accurate data-based decisions.

However, implementing a new ERP (Enterprise Resource Planning) system is a complex process. Inaccurate, redundant, and missing data in the old system will carry over to the new one, negating many of its benefits.  

Businesses that lack proper master data management (MDM) find that the S/4HANA transformation does not solve their asset management problems. In many cases, their expensive digital transformation only leads to more. 

In this article, we will discuss what organizations should know about S/4HANA and how master data plays a key role in the success of this transformation. You’ll discover how master data can help you maximize your operational efficiency and ROI of your S/4HANA system.


Overview of S/4HANA Transformation 

S/4HANA is based on SAP HANA, an in-memory database. It enables your business to perform digital transactions while conducting real-time data analysis. S/4HANA makes modern digital transformation possible. However, successfully rolling out new operational models often relies on how well businesses can implement them.  

Many organizations have transitioned to S/4HANA since its launch in 2015. At that time, Forbes called it “the biggest update to SAP’s Enterprise Resource Planning (ERP) platform in over two decades.”  

Using S/4HANA, enterprise resource planning is faster, easier, and more streamlined. The latest S/4HANA solutions implement machine learning, AI, and advanced analytical models to improve data collection methods and solve previously complicated management problems.  

S/4HANA can be deployed as an on-site system or a cloud version. They are also both real-time solutions for reliability-centered maintenance, risk-based assessments, asset performance metrics, and more.  

In most instances, deciding to move to SAP S/4HANA is a top-down decision that maintenance teams are required to adapt to.  

Fortunately, when implemented correctly, S/4HANA can make it easier for maintenance teams to improve the ways companies can leverage their data to enhance asset management processes.  

As SAP ECC's deadline approaches, businesses still reliant on the previous model (SAP ECC) will fall further behind as time passes. 


Importance of Master Data for Enterprise Asset Management 

Master data serves as the cornerstone of effective asset management within a business. It encompasses crucial information about various assets, including equipment, facilities, vehicles, and infrastructure. Proper management of this data is essential for optimizing asset utilization, minimizing downtime, and ensuring regulatory compliance.  

In the realm of asset management, master data includes comprehensive lists of assets, their specifications, maintenance schedules, service history, and depreciation values. As businesses accumulate data from various sources, such as maintenance logs, purchase records, and inventory databases, discrepancies and inconsistencies may arise, posing challenges to efficient asset management.  

                                                                                                                                                                                                                                                                      Inaccurate or incomplete master data can lead to costly errors and operational inefficiencies. For instance, imagine if maintenance personnel rely on outdated equipment specifications, leading to improper servicing or repairs. Similarly, inaccurate asset location information could result in delays or disruptions in operations.  

Master data management plays a crucial role in resolving these issues by organizing and reconciling asset data into a coherent and accurate record. This involves tasks such as identifying and rectifying discrepancies, eliminating duplicate entries, updating asset information in real-time, and ensuring data integrity across all systems.  

By leveraging master data management tools, businesses can streamline asset management processes, enhance decision-making capabilities, and maximize the lifespan and value of their assets. Ultimately, effective management of master data in the context of asset management is vital for driving operational efficiency, reducing costs, and maintaining a competitive edge in today's dynamic business environment. 

The Role of Master Data in S/4HANA Transformation 

For SAP ERP systems like S/4HANA, master data is crucial for successful deployment. Cleaner, more accurate data sets prepare a business for efficient asset management. The opposite is also true. As master data management wavers, inaccuracies snowball into a loss of operational efficiency and client confidence.  

MDM optimizes data-based workflows while S/4HANA streamlines operational functions. They work in tandem to produce the touted benefits of digital transformation strategies.  

Though S/4HANA strives to streamline your business’s workflow, incomplete master data management can impede it. Outdated systems with redundant or inaccurate data entries can make S/4HANA adoption difficult. Instead of reaping an improved ROI from streamlined systems, many businesses lose profits due to unoptimized implementation.  

Master data management enables S/4HANA to streamline operations based on a vast database. You may worry that it can't handle your unique assets. However, other than the serial numbers, S/4HANA can recognize any equipment and materials you use. Anything customized for your business can be added manually.  

When working from a consistent, unified data set, S/4HANA helps companies avoid inconsistencies and unneeded labor during their digital transformations. 


Benefits of Master Data Management Software for S/4HANA Transitions 

When successfully implemented with proper MDM, S/4HANA provides exciting benefits. These include:

  • Increased operational efficiency  
  • Quantifiable ROI on operational processes  
  • Improved S/4HANA user experience  
  • Enhanced data governance  
  • Streamlined data change request processes  
Versatile master data management solutions enable top performing businesses to successfully transition to SAP S/4HANA and maximize their ROI, while also allowing them to better inform their strategies with accurate data in 2024 and beyond. 


Solving Data Redundancies  

In the absence of MDM tools, different departments often maintain separate datasets using incompatible applications. For instance, your maintenance team might rely on specialized software for tracking equipment maintenance schedules and performance metrics, while your asset management department utilizes a different system for managing asset lifecycle data such as acquisition, utilization, and disposal.  

This fragmentation leads to redundant asset information across systems, making it challenging to maintain data integrity and accuracy. Moreover, managing multiple datasets increases operational costs. By implementing MDM solutions, businesses can consolidate asset data into a unified, standardized format, reducing redundancies and improving overall data quality. This consolidation results in cost savings and enables more effective asset monitoring and decision-making processes.  

Improving Data Accuracy  

Inaccurate data can be as damaging to your operational workflow as redundant data. Data collection or record creation starts when an asset is constructed by an EPC and additional asset information is collected over time usually during the maintenance and operations processes.

However, data collection is only the first part of using an MDM resource planning solution.  

Data quality management ensures accurate, complete, and unified data sets. This includes the disposal of outdated records concerning your customers, transactions, products, and more. This data can then sync between systems, whether they are on-premise or cloud-based.  

Fewer Consulting Fees  

Without MDM tools, the labor-intensive process of deduplicating large master data sets requires expensive consultants. These consultants can refine the data, but they cannot manage it in real-time. As a result, businesses that rely on consultants to manage data have to rehire them to re-cleanse and standardize their data every 3-5 years.  

Many organizations have a false sense of confidence in their data after having a consultant fix their data once. These organizations then use incorrect or outdated information to make decisions based on incorrect or outdated information and run into issues in their processes; unexpected asset failures, unnecessary costs, and safety issues. Using MDaaS or Master-Data-as-a-Service solutions, businesses can optimize databases and sustain them.  

Sustainable Records  

Sustainability efforts are far easier to verify when using MDM solutions. They can compile accurate sustainability data across all departments within your organization.  

Improving Compliance  

In addition to proving sustainability, proper data management also drives industry compliance. MDM tools can enable you to align your master data with industry standards, including ISO 14224, PIDX, UNSPC, and more.  

In short, MDM improves your enterprise resource planning by enabling your teams to answer important questions about your company’s data, including:  

  • Which equipment maintenance records correspond to the same asset?  
  • How can maintenance schedules be optimized based on asset usage patterns?  
  • Which permits are required for specific operations or facilities?  
  • Are there any discrepancies in permit expiration dates across different systems?  
  • Which assets are due for inspection or renewal of permits?  
  • How can maintenance data be integrated with asset lifecycle information to improve decision-making?  
  • What is the overall compliance status of assets and facilities?  

MDM is about consistency and organization. All your company’s data will be integrated with S/4HANA, including material classes and other asset distinctions. Integrating the latest ERP helps businesses cut unneeded expenses like manual preventative maintenance and consultations and achieve operational excellence. 

How to Successfully Migrate to S/4HANA Using Master Data Management Tools 

Supporting your S/4HANA transformation with master data tools enables you to unlock its benefits. Solutions like Prometheus Master Data as a Service (MDaaS) help you maintain a standardized taxonomy and structure for your data. This ensures a clean and sustainable master data source for all your operational decisions. Your infrastructure may seem unique, but a taxonomy can be applied with very little tweaking to provide a functional, tested optimization method.  

Using a standardized taxonomy, Prometheus MDM software creates categories for functional locations, equipment, and materials. In asset maintenance, a BOM (Bill of Materials) is used to plan and execute maintenance activities effectively.  

By listing the components and parts needed for maintenance tasks, such as inspections, repairs, or replacements, the BOM ensures that maintenance technicians have access to the right materials and can perform their work efficiently. Once itemized, you can see how closely the standardized taxonomy matches your unique situation. You can then make any changes to how your MDM is applied, enforcing the hierarchy that fits the standard you are trying to align with.  

Not using a technology like our master data solution can be costly. Many companies hire consultants to standardize and cleanse master data one time with no governance standards applied for the future. This means that data quickly becomes incorrectly entered since users are not required to enter and remove items in a standardized fashion. 


Risks of S/4HANA Migration and How Master Data Can Help

Despite the benefits of successful S/4HANA migration, you should be aware of potential risks to your processes.

As with any new ERP, you may experience lower efficiency during the transition, especially without MDM software. S/4HANA can be used with manual master data methods, but a dedicated MDM solution ensures you get the most from your transformation. S/4HANA can use accurate master data sets better than SAP ECC, but if your data was inefficient before, it will still be so after the transition.  

S/4HANA may also be expensive to implement, particularly without the support of enterprise resource management solutions. You may need to hire data consultants to clean your master data for use with S/4HANA. Training costs may also come into play.  

To avoid undue costs or missed deadlines due to training deficiencies or unoptimized data, top-performing companies deploy master data management solutions to help standardize, cleanse, enrich, and migrate data for their transition. When combined with S/4HANA, MDM solutions raise maintenance productivity, supply chain efficiency, asset availability, and regulatory compliance.  

Contact Prometheus Group to learn more about our Master Data as a Service solution. We can assist your business in its transition to S/4HANA while future-proofing your systems for the next era of digital transformation. 


What are the types of master data?  

Master data can be broadly separated into four groups: customer data, product data, financial data, and maintenance data. When combined, they form the core of a business’s operational records and strategies.  


What is maintenance data in master data?

Maintenance data is the data within your ERP system that provides useful context about assets required to locate them and manage their maintenance history. This type of master data includes functional locations, equipment, measurement points, bill of materials, material masters, work centers, task lists, and maintenance plans. Without complete and accurate master data, organizations run the risk of performing maintenance on the wrong asset or not performing maintenance on an asset that does not have an accurate master data record. Effective management of maintenance data is essential for minimizing downtime, extending asset lifespan, and optimizing operational efficiency. 


What is master data in SAP?  

Master data is the core data record that defines your company’s operations. It includes customer data, product data, location data, and asset data. SAP centralizes master data on a unified platform to provide analytics for your operational decision-making.  


Should I keep using SAP ECC?

 SAP ECC will be discontinued in general use by 2025. It will no longer receive maintenance by 2027. Companies invested in their digital transformation should transition to S/4HANA to avoid unnecessary costs and operational issues.  


How does MDM aid in S/4HANA migration?

With incorrect or improperly structured data, the full benefits of S/4HANA cannot be utilized. The Prometheus Platform MDM solutions eliminate redundancies and correct inaccurate data. This helps businesses improve their decision-making and take full advantage of S/4HANA.  


How can I make S/4HANA migration successful?  

By defining data mapping, standardizing taxonomies, implementing master data governance, and preparing your personnel for the change, S/4HANA migration can go smoothly. Dedicated MDM solutions provide these features and more to ensure a smooth transition.  


How can Prometheus Group help?  

Prometheus offers master data management solutions to assist your business in its migration to S/4HANA. Our clients report tangible ROI improvements in their operations due to cleaner data sets, more accurate analytics, and more efficient operational procedures.