German optics giant ditches greenfield SAP migration

Zeiss Group has abandoned its plans for a greenfield migration to the latest S/4HANA platform from SAP, following years of difficulties in migrating away from an aging R/3 system. The industrial optics company, with annual revenue of approximately €11.896 billion, is now pursuing a "brownfield" migration approach, which involves moving its existing landscape to the new platform.

SAP has traditionally recommended the adoption of S/4HANA, a completely re-engineered version of its ERP system, which requires the abandonment of old customizations and the adoption of new processes simultaneously. This migration process can be challenging, costly, and time-consuming, as it involves significant business process and technology changes.

Zeiss reportedly invested €200 billion in the project, which began around 2020. A company spokesperson stated that the company continually evaluates large projects and adapts them flexibly as conditions change. The company's spokesperson added that this decision was made to expedite the transformation process and better meet the diverse requirements of Zeiss' segments.

The existing ERP landscape will be migrated to SAP S/4HANA, and then the segments will build upon this with individually configured solutions, resulting in a group-wide core system with segment-specific applications. Zeiss declined to comment on the estimated spending figure for the project. SAP also declined to comment. In 2020, Zeiss' CIO Carsten Trapp had expressed enthusiasm for a greenfield approach in its SAP migration, stating that it was a "once-in-a-lifetime opportunity to clean up" due to the company's "messy R/3 system over the last 30 years."

However, moving to S/4HANA would allow the technology team to set up all processes cleanly in the SAP standard from the beginning. In December last year, Zeiss' CFO Justus Felix Wehmer of the subsidiary Carl Zeiss Meditec mentioned that administration expenses had increased due to higher IT costs, specifically because of the SAP project, which would peak over the next two to three years.