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Dec. 9, 2024
Navigating the Future of SAP Architectures: The Uncertain Journey Toward S/4HANA
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Dec. 9, 2024
The impending end of maintenance for SAP ERP Central Component (ECC) is pushing enterprises to rethink their SAP strategies. With deadlines looming in 2027—or 2030 for those opting for extended maintenance—businesses face critical decisions about their future ERP landscapes. Yet, according to a survey by the German-speaking SAP User Group (DSAG), a significant portion of users remain undecided about their next steps.
This article unpacks the challenges and opportunities ahead for SAP customers, emphasizing the shift to hybrid architectures and the strategic imperatives of planning for S/4HANA.
A recent survey conducted by the Financials subgroup of the German-speaking SAP User Group (DSAG) sheds light on where organizations stand in their SAP journey. The survey, encompassing 267 representatives from sectors like financial services, energy supply, and real estate, reveals a landscape dominated by hesitation and uncertainty:
47% of organizations still operate on on-premises ECC.
42% have migrated to on-premises S/4HANA (Classic Edition).
Only 11% have embraced S/4HANA Cloud, split between Private Edition (8%) and Public Edition (3%).
Despite years of promotion, SAP’s cloud migration efforts have yet to convince a majority of its customer base, with on-premises solutions remaining the dominant choice.
1. Complexity in Licensing and Security
One of the biggest obstacles for organizations is navigating SAP’s licensing structures. With less-than-transparent policies and concerns about the cost of cloud migrations, many businesses are wary of committing to new SAP solutions. Compounding this challenge is the perception of insufficient investment in on-premises security enhancements, leaving organizations hesitant to shift their financial systems into new architectures.
2. Lack of Clarity on Innovation Strategies
SAP’s roadmap for innovation—particularly in areas like sustainability reporting, AI integration, and compliance with emerging regulations—is another area of concern. Without a clear vision of how these innovations will impact on-premises versus cloud deployments, businesses struggle to plan for the future confidently.
3. Questions About the Business Technology Platform (BTP)
SAP has identified BTP as a cornerstone of its software architecture. Yet, 44% of survey respondents—even those who have migrated to S/4HANA—remain undecided about adopting BTP for financial processes and applications. The lack of detailed, actionable insights into BTP’s capabilities has left many organizations in a state of indecision.
1. Hybrid Architectures as the Future
The survey highlights the hybrid nature of SAP’s future. With 39% of respondents targeting on-prem S/4HANA and 24% leaning toward S/4HANA Cloud Private Edition (RISE with SAP), it’s clear that a one-size-fits-all approach is no longer viable. Organizations must assess their unique needs, balancing cloud benefits with the control and familiarity of on-prem solutions.
39% plan to migrate to on-prem S/4HANA (Classic Edition).
24% favor S/4HANA Cloud Private Edition via RISE with SAP.
5% are considering S/4HANA Cloud Public Edition under GROW with SAP.
This hybrid model reflects the need for flexibility, allowing organizations to modernize incrementally while preserving legacy systems.
2. Planning for Uncertain Timelines
The extended maintenance window for ECC until 2030 offers breathing room but should not delay decision-making. Companies must prioritize creating a roadmap that accommodates potential delays in migration while ensuring business continuity.
3. Focusing on Strategic Benefits
Migrating to S/4HANA isn’t just a technical upgrade; it’s an opportunity to rethink business processes. From real-time financial reporting to enhanced regulatory compliance and AI-powered analytics, the benefits of modern SAP systems are manifold. Companies must shift the narrative from cost to strategic value.
SAP has a critical role to play in alleviating its customers’ concerns. The company must double down on efforts to provide:
Transparent Communication: Clear guidelines on licensing, cost structures, and the comparative benefits of on-prem versus cloud solutions.
Comprehensive Education: Initiatives like DSAG’s planned webcast series on BTP implementations are a step in the right direction. SAP should partner with user groups to ensure customers have access to practical, implementation-focused insights.
Balanced Innovation: While SAP continues to innovate in the cloud, it must not neglect its on-premises customers, ensuring they benefit from advancements in areas like AI and regulatory compliance.
1. Define a Strategic Roadmap
The extended maintenance window for ECC provides time but should not encourage complacency. Businesses must develop clear migration timelines aligned with strategic goals.
2. Evaluate Hybrid Models
Hybrid architectures offer the flexibility to modernize while leveraging existing investments. Evaluate the balance of on-premises and cloud solutions that best fits organizational needs.
3. Focus on Business Outcomes
Migration is not just a technical decision; it’s a chance to improve operational efficiency, compliance, and decision-making. Prioritize solutions that deliver measurable business value.
For organizations still pondering their SAP future, the clock is ticking. Whether the destination is on-prem S/4HANA, a private cloud deployment, or a public cloud journey, the path forward requires proactive planning, strategic investment, and a willingness to embrace change.
SAP customers have the tools to make informed decisions, but the onus is on them—and SAP itself—to bridge the gaps in knowledge and readiness. By aligning their technological roadmaps with business objectives, companies can transform uncertainty into opportunity, setting the stage for a hybrid future where agility and resilience reign supreme.
