Peter Sayer
Senior Editor

SAP offers faster updates, longer maintenance for S/4HANA in private clouds

News Analysis
Oct 11, 20235 mins
Enterprise ApplicationsERP SystemsPrivate Cloud

SAP is offering free migration consultations, more frequent feature releases and two years’ additional maintenance to entice customers to update to S/4HANA Cloud private edition and, ultimately, adopt Rise with SAP.

SAP logo on building
Credit: Nitpicker / Shutterstock

SAP is doubling the time between major releases of S/4HANA Cloud private edition from one year to two — at the same time promising to release new feature packs every six months or so to keep up the pace of innovation. It is also extending maintenance to seven years, from five today.

The changes will take effect with the 2023 release of software, which is now generally available.

The good news for SAP is that many of the customers adopting its cloud-based S/4HANA offering are net-new, meaning more market share. The bad news is that many of them are net-new, meaning that the mass of customers still using its legacy ECC system, or running its modern S/4HANA system on-premises, are not migrating as quickly as the company would like to cloud offerings such as Rise with SAP, its subscription package of licensing, hosting, and application management.

Slowing the pace of major releases for the private cloud edition of S/4HANA to once every two years, so that CIOs experience less disruption in keeping their systems up to date, is one of the ways SAP is seeking to make it more tempting.

This change alone would have sent a mixed message after SAP’s CEO Christian Klein’s recent pronouncement that only customers buying the cloud editions of its products through its Rise offering would see major innovations, particularly in the generative AI space. The promise of six-monthly feature packs in the intervals between platform major releases will go some way to reassuring customers that the cloud is the place to be.

“A feature pack is less disruptive than an upgrade, because you’re just adding it right into the current release,” said Eric van Rossum, chief marketing and solutions officer for SAP Cloud ERP.

Capability gap

SAP has also — finally, eight years after the launch of S/4HANA — closed the capability gap between the private cloud edition and its legacy ERP Central Component (ECC).

“There’s really no functional reason not to move now,” Van Rossum said.

That’s just as well, as SAP is only promising mainstream support ECC through the end of 2027.

The biggest remaining difference in capabilities between the two platforms is around service management, enabling companies to track and bill for things like subscriptions or contracts for service or maintenance.

“We closed the gap on all the functional capabilities, what you would require from a service management process, and modernized it to better reflect how a services business is run today,” Van Rossum said.

More help with modernization

Getting customers onto the public or private cloud editions of S/4HANA is SAP’s first goal; its next is to sign them up to Rise with SAP.

This can be a tough sell for enterprises that bought a perpetual license for their ERP system years ago, and have the cost of maintenance indexed to that, as moving to Rise involves giving up that license and taking out a subscription. Customers who subsequently become dissatisfied with Rise will need to buy back their perpetual license if they want to stay on SAP’s platform.

David Lees, CTO at SAP service provider Basis Technologies, warned, “SAP is not going to make it attractive in terms of reselling them that perpetual license that they gave up, so you’ve got to be very confident around Rise being right, long-term, and SAP having the customers’ best interests at heart, which for me is one of the biggest risks with Rise.”

Basis recently polled 200 enterprises using SAP in Europe and the US about their upgrade plans, and found that 50% of them were putting off migrating to S/4HANA because of a perception that the 2027 end-of-life deadline for ECC is still some way off. In reality, though, four years is not all that long to plan and execute a migration from one system to another, while simultaneously moving into the cloud.

Alongside the change in update schedule for S/4HANA Cloud private edition, then, SAP is giving itself a few new levers to overcome such doubts and to enhance Rise adoption. One is the introduction of a new adoption framework to help companies plan their conversion, backed up by use of its Signavio process insights tool to help build the business case for change. Another is what it calls the “Customer Evolution kit,” including sessions with SAP experts to quickly build a personalized transformation plan.

The additional help will be available to customers still using ECC, or already using S/4HANA, but on premises.

“We’re going to be working with our customers in one-to-one workshops to really see where they are, so that we can get a specific offer and roadmap for them to move,” Van Rossum said.

Generative AI to the rescue

SAP is also looking into how AI can help reduce the time and cost of the migration process, he said, particularly with tasks such as test automation or document creation.

“Generative AI can help a lot there,” he said.

That technology is the focus of another big change for Rise with SAP: the arrival of a new price tier, Premium Plus. This will give customers access to new capabilities such as the automation of goods receipts for transportation management, he said.