SAP unlikely to see most customers move from ECC before support ends
But those who show willing in S/4HANA upgrade might see existing ERP support extended, says Gartner
SAP is off course in its plan to get customers off its ECC ERP platform and onto its preferred S/4HANA system before the support deadline of 2027, according to Gartner.
The global IT research firm estimates that 70 percent of SAP customers rely on ECC and have yet to upgrade to S/4HANA, even though it was launched seven years ago.
In a research note published this week, Gartner said the enterprise application giant was behind its own timeline in getting customers to migrate to the latest version of its core ERP crown jewels.
"There is little evidence of the acceleration of migrations that would be needed to meet SAP's 2027 target to terminate mainstream maintenance for ECC. After 2027, SAP will offer extended maintenance until the end of 2030 at a 2 percent premium for their software support," the note said.
However, on the back of the latest financial result, CEO Christian Klein said SAP S/4HANA was growing at record levels "demonstrating the confidence customers place in us to support their business transformations."
Gartner said that SAP's strategy is to get customers onto S/4HANA in the public cloud, but it is also likely to "continue to provide multiple options that most complex, global companies require."
In support there is also likely to be flexibility, Ilona Hansen, Gartner vice president and vendor lead analyst for SAP, told The Register.
"It's not the first time that SAP will be somewhat ignoring on deadlines, which is the most feasible scenario. I don't think it will get back on track because too much time has been lost already," she said.
Hansen explained that SAP's board had changed since it committed to the 2027 deadline, such that the current membership might not feel they are responsible for it.
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As such, Hansen said SAP is likely to show some flexibility to customers which have at least started projects or pilots to do with an S/4HANA migration, even if they are a long way from turning off ECC.
SAP launched Rise with SAP, a program designed to accelerate customers' migration to S/4HANA in the cloud by presenting a package in combination with third-party service providers and public cloud hyperscalers.
But as RISE has changed in response to customer requests, it has created confusion over the commercial models available, Gartner said.
"Gartner clients report that SAP's continued introduction of new S/4HANA commercial models can create confusion for existing and prospective customers that do not understand what options are available and the considerations of each," the research note said.
"Many options exist, but the strong positioning of RISE with SAP by account executives obscures other S/4HANA licensing options, such as S/4HANA On-Premise Edition, which will likely cost more as SAP continues to shift its revenue to the cloud."
Hansen said it was to SAP's credit that it had shown some flexibility following the launch of RISE – by allowing direct relationships with hyperscalers, for example – but an inevitable result was a changing commercial model. That change would slow as the RISE offer solidified, she said.
Overall, SAP had reacted well following the market adjustment in late 2020 – which at one time saw €28 billion wiped off its share price – with an appetite to change its culture internally and attitude towards customers, even if progress was sometimes slow.
"Every good thing takes time," Hansen said. "They can take a little longer but they should do it right; they won't have another chance. S/4HANA has been around for seven years in the market and it hasn't done significantly well. In the last 18 months, with RISE, there's a lot of movement coming now, so give them a little more time, but this is their last chance." ®