'A lot of confusion': Unpacking SAP's recent changes

SAP and Lemongrass talk S/4HANA migration dealines, RISE and AI

John Leonard
clock • 6 min read
'A lot of confusion': Unpacking SAP's recent changes

SAP has recently announced multiple strategic changes around its cloud-first focus, AI, sustainability and the structure and direction of the company itself.

Customers attending a UK and Ireland SAP Users' Group (UKISUG) event late last year broadly welcomed many of these developments. But several who maintain on-premises versions of SAP's enterprise solutions expressed unhappiness with what they saw as the forced pace of cloud migration, a hard-to-achieve 2027 S/4HANA migration deadline for its ECC ERP, and the fact that new innovations were apparently to be restricted to cloud versions of the software, reneging on a previous commitment.

We asked SAP and, separately, Eamonn O'Neill, CTO of SAP service provider Lemongrass Consulting, to address some of those points. They responded by email.

Extended deadlines?

O'Neill said there has been some misunderstanding over the issue of deadlines. While SAP is keen that customers move to the easier-to-support, standardized cloud model, the 2027 deadline (an extension of the original 2025 cutoff date) is for moving from ECC to S/4HANA rather than from on-premises to cloud.

"There's a lot of confusion around the deadline, and the misconceptions around cloud and S/4HANA is a big contributor. Further confusion is added when you consider that organizations are allowed three years of extended maintenance moving the deadline to 2030."

He added that SAP is aware of the lack of the lack of expertise in the market to help organizations to undertake what can be an extremely complex migration.

An SAP spokesperson said that for customers who need more time to complete their full migration, the company has introduced a SAP S/4HANA Cloud Safekeeper service, which provides two extra years to upgrade while continuing to receive patches and updates.

"It is designed for customers using RISE with SAP [SAP's managed cloud migration service] that enter customer-specific maintenance for older releases of SAP S/4HANA," the spokesperson said, adding that Safekeeper includes "upgrade services and infrastructure optimization while providing business continuity for the customers' current system with updates and patches for two more years."

Notably, though this only applies to cloud customers. Seventy percent of UKISUG members moving to S/4HANA said they plan to move to hosted or on premises deployments.

It seems unlikely that SAP will extend the 2027 deadline further.

Second-class citizens?

According to the company's spokesperson, SAP believes every company needs a cloud-first strategy to harness innovations that only cloud can deliver, such as AI and sustainability solutions that require cross-systems integration. It also believes that only the standardization offered by cloud will allow SAP to deliver at the cadence required to meet the demand.

This approach was echoed by Jonathan Rhodes, global VP SAP S/4HANA cloud solution management, who in an interview with CRN last week said that one of SAP's main challenges right now is changing mindsets from traditional on-prem implementations to cloud and SaaS. "The goal is to help them adapt to a fit-to-standard approach and leverage automation."

But SAP's lack of clarity about new innovations potentially being restricted to cloud users, an apparent reversal of a previous commitment to treat cloud and on-premises customers equally, was the source of several complaints.

The company's spokesperson did not comment on any possible differences, but insisted that "SAP's release and maintenance strategy remains unchanged for our on-premise customers where SAP S/4HANA will be maintained and improved until 2040."

O'Neill, whose company specializes in SAP cloud migrations, said it is not viable for the vendor to support multiple different environments indefinitely.

"It's clear SAP sees great opportunities for innovation with cloud, AI, etc. However, they have the challenge of delivering that to customers who are running on many different platforms."

It was mooted at UKISUG that on-premises customers might justifiably demand lower maintenance fees if they felt they were paying for new innovations that did not benefit them. Not much chance of that swaying the software giant there, said O'Neill.

"SAP has recently increased maintenance fees for on-premises customers so I can't see them reducing it in the near future. SAP are maintaining over 200 different versions of the software every day. This costs billions of dollars in patching and updating, so there's no sign of them reducing maintenance."

SAP said that during the mainstream maintenance phase (ending 2027; optional extended maintenance being offered until the end of 2030), "on-premise customers will continue to receive innovations and functional improvements, generally every six months (e.g., one release, three feature pack deliveries) as well as legal, compliance and security updates."

Planned innovations for on-premises customers are available on the published roadmaps, the spokesperson noted.

Roadmaps on SAP's website are indeed divided into cloud and on-premises migration use cases, although in the publicly available information at least there is little mention of planned innovations or how those might differ across environments.

The pivot to AI

In common with most software companies, SAP is heavily focused on AI, setting out a slew of product announcements last year and with news of a major corporate restructuring breaking last month, with the loss or reassignment of 8,000 jobs, as the company integrates AI into its many product lines.

Underlining this pivot, two weeks ago SAP launched a new Business AI unit under to oversee product development and research through to customer implementation. The company says it already has more than 24,000 customers using AI solutions from its portfolio.

Computing's own research has shown that organizations are taking a cautious approach to AI, waiting for proven use cases to emerge. What are SAP partners seeing?

"The first major AI innovation that SAP has released is around code generation, which is only really relevant for a small portion of people," Lemongrass Consulting's O'Niell said.

"I think a lot of people are waiting to see how to integrate AI with business data in SAP but that's unavailable at the moment and it's unclear when it will open up. I expect there to be more information on SAP's AI innovations this year."

O'Neill was communicating prior to SAP's Business AI announcement.

Endless RISE?

RISE with SAP is the company's managed service to help customers with their cloud journeys. But it is seen by some as a potential lock-in.

As UKISUG chair, Conor Riordan, told Computing in November: "Essentially you're giving away control of your SAP system to SAP rather than a hyperscaler or managing it yourself. That's a big leap of faith. You go RISE and you're all-in with SAP. So what happens in three years time if you say, OK I don't want to be in RISE or with SAP. How do I get out of it? There's no strategy for that."

O'Neill said Riordan's take is "absolutely correct," but argued that most applications and software providers work this way.

"The difference with SAP is that customers are used to using it in a very different way. SAP is trying to fundamentally change how people view the brand altogether, and trying to become a standardized platform with RISE helping to create that standard. There is no post-RISE path but you could argue there doesn't need to be. Organizations just need to be 100% clear in their strategy as they move."

SAP said: "Transformation isn't an end state, it is an ongoing evolution and alongside [SAP's] vast ecosystem of trusted and approved partners, our customers have a wide choice of options when it comes to maintaining and managing their SAP estate."

That may be so, but if UKISUGs finding that 70% of customers prefer on-premises deployments is anything like representative, the company may continue to find mediating between its cloud-first goals and the preferences of a large portion of its user base a hard balance to strike.

This article originally appeared on our sister site Computing

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