How an SAP system update can be a catalyst for chemical companies

SAP S/4HANA^® is more than an ERP upgrade; it’s a transformative platform that offers real-time insights, artificial intelligence (AI)-driven agility and industry-specific tools tailored for the chemical sector.​

As the CEO of a global integrated O&G company said, “The transition to SAP S/4HANA^® has significantly advanced our operational capabilities. The predictive analytics feature has particularly been a highlight, reducing downtime and enhancing our production efficiency.”

The four key benefits for chemical companies are:

1. Intelligent operations with embedded SAP AI: Predictive planning and automation tools enhance operational efficiency and decision-making, and generative AI (GenAI) can simulate supply chain scenarios to mitigate tariff impacts or optimize formulations for sustainable products. SAP S/4HANA^®’s latest versions now come embedded with AI and machine learning capabilities through platforms such as SAP Business AI; SAP BTP (Business Technology Platform); and the recently launched SAP Joule, a GenAI assistant. These tools are natively integrated to enhance workflows, automate routine decisions and surface real-time, predictive insights — all fuelled by the context of a company’s unique business data.
   
   For the chemical industry, AI is a strategic enabler, not just a technological upgrade. AI adoption in SAP S/4HANA^® deployment is gaining momentum. According to a 2025 SAP Insider survey, around 54% of the 170 surveyed members are exploring its use.⁶ Further, 38% intend to use SAP Joule, while 34% plan on utilizing AI Foundation in SAP BTP. The data highlights growing interest around AI integration in SAP landscapes.
   
2. Real-time analytics: In-memory computing provides instant supply chain and market insights, enabling quick responses to volatility like tariff changes. SAP Business AI enhances predictive order status and sourcing optimization, minimizing disruptions and driving agility and informed decision-making.
3. Chemical-specific features: Modules for batch management, traceability and recipe optimization support safe, compliant product development. Tools for hazardous goods, automated safety data sheet creation, and environmental health and safety integration help manage risk — enhancing agility, compliance and profitability.
4. Cloud and the clean core approach: For companies considering the move to, clean core approach brings additional benefits — namely the simplified upgrades, decreased system complexity and enhanced adaptability. While the “core” of an SAP S/4HANA^® Cloud implementation refers to the processes, data, integration, operations and extensibility, “clean” means those components are up-to-date, cloud compliant, optimized and perfected.

With projections suggesting just 57% of companies using SAP ECC will have completed their migration to S/4HANA^® by the time mainstream maintenance ends in 2027, now is the time for chemical companies to act.⁸ The cost of inaction, and delaying the transition, also carries significant risks.

For example, companies that delay S/4HANA^® adoption risk breaching environmental, social and governance (ESG) mandates (e.g., Corporate Sustainability Reporting Directive) and missing out on circular economy demand. Without emissions tracking and recycled feedstock tools, companies face fines, reputational damage and loss of access to premium markets. Additionally, legacy systems like SAP ECC lack agility and transparency, increasing the chance of compliance failures and restricted market access due to limited real-time traceability.

Competitive disadvantage and loss of market share are also significant concerns as early adopters of S/4HANA^® are gaining a clear edge by using AI-driven demand sensing and sustainability tools to boost efficiency, reduce downtime and respond faster to market shifts. In a margin-sensitive industry where 5%–7% gains can redefine leadership, laggards risk losing ground to digital-first players capturing high-value segments, such as bio-based and specialty chemicals.

Finally, as the 2027 deadline approaches, the demand for skilled professionals to manage migrations will outpace supply, potentially increasing costs and project timelines.​

The opportunity is clear, but how do chemical companies get started? Answering four key questions will help companies kick off their transformations:

1. How far from ready are we? By conducting a digital maturity audit to identify their specific gaps and opportunities compared to their goals, companies can be better prepared to upgrade their systems for their needs.
2. Do we have the right team? By engaging knowledgeable and experienced providers to form a multidisciplinary team, companies are better able to leverage leading practices, speed up execution and drive progress on their specific goals.
3. Are there pilot projects we can start with? By beginning with pilot programs, companies can better quantify and qualify ROI and gain organizational support, then they can refine their approach and strategies before deploying at full scale. Critical functions like supply chain, finance and data are ideal for a pilot launch.
4. Are we prepared to scale strategically? By developing a roadmap for enterprise-wide adoption at the outset, companies are better prepared to scale after pilot implementation. This also creates the opportunity for more enterprise-wide, transformational value and enables alignment with business objectives and market demands.​

The clock is running out on SAP ECC at the same time geopolitical tensions and trade turbulence are ramping up. Chemical companies can reduce compliance risks and gain value from upgrading to SAP S/4HANA^® now.