With the threat of a recession looming, cost pressures increasing, and the deadline to move off SAP ECC swiftly approaching, SAP customers have a lot to consider as they plan for the year ahead.\n\nHere are some of the trends we expect to play out as the year goes on, specifically for SAP customers.\n\n1. SAP will hold firm on expiration of ECC support\n\nThough customers may be looking for an extension, we expect SAP will not extend the expiration of mainstream maintenance for SAP Business Suite 7 core applications beyond 2027. SAP has already extended the deadline once \u2014 in 2020, it extended support from 2025 to the end of 2027. We also expect SAP to position alternative support options, via its extended maintenance option, for an additional 2% on your maintenance base or customer-specific maintenance through 2030.\n\nCustomers will likely continue to believe that SAP has not presented a strong enough business case to upgrade to S\/4HANA. However, it will be difficult to argue that SAP hasn\u2019t provided ample opportunity to plan and execute an upgrade or understand the financial implications for delaying the move to S\/4HANA. Any extension on SAP\u2019s part would fly in the face of its strategic objectives. Customers need to consider this deadline as final and start preparing now if they haven\u2019t already.\n\n2. SAP will aggressively position RISE\n\nSAP\u2019s agenda goes beyond migrating SAP ECC clients to S\/4HANA. Migrating customers to RISE, its cloud offering on a subscription-based model, is of utmost importance. SAP RISE is the cornerstone of SAP\u2019s long-term financial plan to secure increased renewal revenue.\n\nSAP\u2019s motivations and commitment to this offering were made clear back when its predictable revenue, a major factor in overall company valuation, was in the low 70s while other pure-play SaaS providers were in the low to high 90s. In its 2022 year-end earnings call, SAP boasted predictable revenue of 79% with aspirations to reach 85% by 2025. The stakes for SAP are high and customers should anticipate that SAP\u2019s sales and negotiation tactics will reflect that and will include:\n\nCustomers should anticipate the pressure SAP will apply for RISE adoption and prepare their organization to proactively manage SAP executive-level relationships. It\u2019s also advisable for customers to conduct a thorough review of their SAP agreements and commercial protections before assuming a false sense of security with respect to their purchase or negotiation position for additional on-premises licenses.\n\n3. Customer\u2019s will struggle with RISE evaluations\n\nMany clients have yet to come to the realization that the evaluation of RISE is more akin to evaluating a managed services offering than a pure-play SaaS solution. Companies also are at risk of underestimating the complexities and implications related to their existing operations and adjacent partner relationships. For example:\n\nCustomers who anticipate the complexity of their RISE evaluation and proactively develop an integrated sourcing and evaluation strategy will be positioned to make more informed and effective decisions.\n\n4. SAP will target midmarket companies\n\nWe expect SAP to put significant energy into capturing more of the midmarket as these companies are more likely to adopt a single, vertically integrated solution like RISE. Unlike most enterprise-level companies, midmarket companies are nimbler and faster in their decision-making process and more likely to seek a single partner versus a multi-partner strategy. These companies are also more likely to implement SAP RISE faster than an SAP enterprise customer. All these factors present a meaningful opportunity to SAP. Because of this, these midmarket companies should be asking:\n\n5. Consulting firms will invest in \u2018Phase 0\u2019 initiatives \n\nAlthough it\u2019s too early to give up on growth in 2023, we anticipate that the consulting and system implementation community will emphasize growth for 2024 and beyond via continued positioning of Phase 0 initiatives. We view this as an opportunity for companies that are not currently undertaking an SAP ECC to S\/4HANA migration and do not expect the funding to commence their journey to S\/4HANA until late 2023 or early 2024.\n\nThat said, every opportunity comes with a price and potential downstream risks that companies would be advised to consider as they undertake Phase 0 initiatives. We recommend keeping the following questions in mind:\n\nBefore customers take advantage of the \u201ctime\u201d to plan in 2023 and the investments that both SAP and consulting firms are willing to make in Phase 0 initiatives, they should think through the end-to-end decision process and their requirements rather than default to the approach and strategies proposed by any partner.\n\n6. SAP customers will continue to migrate to the cloud\n\nWe anticipate that customers committed to staying on SAP ECC or planning to migrate to SAP S\/4HANA while maintaining their perpetual licenses will continue to aggressively move to the cloud. Some companies will do so proactively, while others may be compelled to do so as a result of changes in the strategy of their existing managed services providers (e.g., Kyndryl and Dell Virtustream).\n\nIn addition, many companies will be making this migration in a context that goes beyond their SAP environment, including other application workloads and non-SAP transformational initiatives with AWS, Google, and Microsoft. As companies consider their overall cloud strategy, they should consider the following:\n\n7. Customers will reimagine managed services relationships\n\nIn conjunction with the cloud migration, we believe companies will continue to reimagine their operating models and existing managed services relationships. The introduction of SAP RISE, the market disruption caused by the hyperscalers, and the continued pressure to reduce operating cost and improve operating scale will serve as the primary drivers in this area. As organizations reimagine their future state, they will be compelled to ask and answer the following:\n\nAlthough SAP may serve as a major consideration with respect to the overall strategy, many organizations have managed services relationships that expand well beyond the boundaries of SAP, including security services, non-SAP AMS, help desk services, field services, etc. Renegotiating these relationships and assuming a partial termination of existing services will also need to be considered as part of an overall strategic sourcing plan.\n\nMany companies are well on their way to tackling these decisions. But the vast majority of SAP\u2019s install base is just starting this journey and are likely to be leveraging the majority of 2023 to develop and execute a strategy to answer these questions.