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The shifting winds of SAP's cloud strategy

In 2023, SAP's strategic pivot towards cloud-centric innovation produced a wave of discontent among its vast on-premises customer base

SAP’s strategy to prioritise its RISE cloud customers for the latest innovations, was met with widespread confusion and frustration. It represented a departure from the expectations of a loyal user base that had invested heavily in SAP's on-premises solutions.

The decision raised fundamental questions: Why was SAP, a platform on which so many organisations rely heavily, making strategic choices that seemed to sideline a significant portion of its customer base? The answer is not straightforward, especially considering that most organisations using SAP have not upgraded to SAP S/4HANA on-premises or cloud. Those that have migrated to S/4HANA on-premises are now being told they have a reduced innovation road map.

Towards the end of 2023, SAP attempted to mollify its on-premises customers by promising it would prioritise their needs. However, recent developments have seen the company double down on its cloud-first approach. This mixed messaging – oscillating between reassurances to on-premises clients and a clear push towards cloud services – has only added to the confusion and sense of betrayal felt by many customers.

The perception is that SAP is attempting to force customers towards their latest offerings, with the significant migration costs this will incur, leaving long-time, legacy customers behind – regardless of if it’s the right thing for them or their business.

Compounding this tension is the critical issue of SAP ECC support coming to an end. Support for customers on EHP5 and earlier is set to expire on December 31, 2025, with support for EHP6 and later customers concluding in 2027.

Faced with this reality of dwindling support and a pronounced shift towards cloud innovation, many SAP customers have found themselves in a bind. The decisions they face now are critical: upgrade to RISE and embark on a full cloud transformation strategy, migrate away from SAP altogether, or find alternative means to maintain support for their existing on-premises solutions.

As SAP continues its aggressive push towards a cloud-first future, its on-premises customers must weigh these options and decide on their technological and operational strategies.

To upgrade, migrate, or rethink?

Upgrading your environment in this way is a significant undertaking, requiring substantial investment in terms of time, capital, and human resources.

While this option aligns with SAP's strategic direction, it forces organisations to reevaluate their IT strategies and budgets drastically. The migration process is particularly burdensome for businesses operating on legacy systems, relying on heavy customisation and decades of data accumulation.

The cost of moving such intricate systems to the cloud or S/4HANA can be exorbitant, and the perceived benefits simply may not justify the upheaval, risk and costs associated.

Transition to alternative technologies

This option, while radical, is being increasingly considered by many enterprises facing end of support for their current SAP systems. But moving away from SAP entirely requires both a technological shift and a transformation in business processes and data management strategies. It's a decision that goes beyond IT departments, impacting the entire organisational structure and strategy.

A significant concern for many enterprises is that without support for their systems, they may not meet critical security and compliance requirements. These concerns should not be overlooked: data protection, cybersecurity, and regulatory compliance are perhaps the most important thing that IT and operations teams have to get right.

What’s really telling here is how some organisations, faced with support cut-offs and diminishing innovation from SAP, are considering this drastic overhaul to their entire systems.

Surely there’s a way forward that doesn’t require burning your whole environment down to the ground, only to rebuild it?

Rethink support and maintenance

Opting to work with a third-party software support partner allows your businesses to continue using its existing SAP systems, while avoiding forced upgrades. Rather than investing significant resources and revenue in a large-scale migration project to deliver little business value at a time that is not optimal, instead focussing these resources on projects and initiatives that drive business improvement or competitive differentiation. This path can lead to significant cost savings and customised support that is more responsive and tailored to your specific business needs.

As the deadline for SAP support changes edges closer, businesses have some big decisions to make about their SAP environments.

How to manage the future of your SAP environment will depend on several factors, including your organisation's size, industry, existing IT infrastructure, and strategic goals. But – above all – this decision should be driven by your business's unique needs and circumstances and ensure that you’re empowered to leverage technology in a way that supports growth, innovation, and competitive advantage.

SAP licences run from January 1, and require a 90-day notice period for cancellations. So, if your business decides to embark on a partnership with a third-party software support provider to keep your existing infrastructure, enhance your security posture, and work towards your strategic goals together – the decision deadline to move away from SAP’s in-house maintenance and support is fast approaching. You have until September this year.

For business leaders who place a high value on maintaining their strategic direction and operational independence, the recent developments within SAP's ecosystem might be a call to action. The ambiguity in SAP's messaging and the prioritisation of cloud innovations, often perceived as leaving on-premises customers behind, underscores the importance of autonomy in technological decision-making.

Jon Gill is head of sales EMEA, Spinnaker Support.

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