Businesses in Australia and APAC that use SAP Central Component as their main ERP system will soon have to move to SAP’s fresh sky ERP S/4HANA Cloud by 2027, when SAP plans to stop providing popular support. SAP will first request buyers to use its own” Fall with SAP” movement and modernization offering to migrate.
Companies in the region, like another world markets, have not been quick to undertake to the shift to SAP S/4HANA Cloud. Reasons include the required time to make a tactical decision, competing company priorities in a market environment, the price of what could be a very complicated migration, and unhappy previous changes to SAP’s roadmap for on-premises license holders.
According to Luiz Mariotto, world vice chairman of SAP Support at Rimini Street, a possible crunch is coming up for businesses looking to travel by the deadline, or even by an expanded support deadline set for 2030. Depending on how you do things, companies may look into alternatives, such as looking at competing It products or requesting third-party support.
What timeframe has Bark set for the movement of its It customers?
SAP announced that SAP’s SAP ERP Central Component product would no longer support popular support until December 31, 2027, despite initial expectations that customers may be moved to SAP S/4HANA Cloud by that time. Due to customer worries about meeting the 2025 date, SAP recently set a movement date for 2025, but moved this date forward to 2027 in 2020.
Customers of SAP’s cloud product have no choice but to migrate to SAP’s cloud product if they want to pursue SAP’s roadmap because SAP will no longer support mainstream SAP ECC support until 2027. Customers who are unable to move to a final version of SAP ECC 6.0 Enhancement Pack 8 may yet be able to get a superior SAP ECC 6.0 Enhancement Pack 8 support improvement program until 2030.
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An additional issue companies are considering is SAP’s choice to limit a number of goods innovations, including AI, to the SAP S/4HANA Cloud solution. This implies that some on-premise clients does not receive promising new features despite having invested in the migration to the S/4HANA collection, which powers the sky solution.
Are firms transitioning to the S/4HANA Cloud ERP system?
Also though” three years is not a long time to effectively implement a movement,” according to Big Four finance company PwC in an upgrade on the SAP movement in 2024, it had seen “very few Australian and New Zealand consumers migrate so way” to S/4HANA. This sentiment contrasts with the unwillingness of international SAP customers to accept the switch head-on.
There is a general consensus in the market right now that there is little appetite for large size transition plans, according to PwC. It can be difficult to justify investing$ 50 to$ 100 million and disrupting your business for several years to install a new ERP, the company said.
PwC did report” a high level of business action” in the six weeks to May 2024, which it attributed to businesses beginning their movement planning. ” With SAP’s 2027 date unlikely to be extended, we are expecting to see a substantial number of companies across ANZ start their S/4HANA courses in 2025 and into 2026″, the agency wrote.
According to Gartner, SAP does not upgrade clients quickly.
Gartner published similar findings from global markets in studies in October 2023. Only 33 % of SAP consumers who rely on SAP’s tradition ECC system, according to information available at the end of the next quarter of 2023, had purchased or subscribed to licenses to allow them to start moving to S/4HANA.
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Only a second of ECC people had switched to the most recent version of the ERP platform, according to Gartner at the time. According to Gartner’s study,” Gartner also finds much evidence that migrations to SAP S/4HANA are taking place at the rate required to meet SAP’s goal of ending mainstream servicing support for ECC in 2027.”
The approaches of the Asia-Pacific markets to the upcoming improve are different.
Rimini Street, which offers extended third-party support for items including SAP’s ERP, noted various reactions to SAP’s strategy in different areas. Consumer groups in Europe showed a greater willingness to back down against SAP’s plans, especially those that did n’t offer key innovations like AI to those with on-premise S/4HANA licenses, according to Moriotto.
Mariotto claimed that SAP’s American customers have historically had a strong company and product loyalty, but the on-premises license change had put this theory to the test. He claimed IT leaders who had compelled SAP by winning company funding for the S/4HANA database update then needed to create a new company case privately for a second migration to the cloud product.
Meanwhile, in broader APAC, Rimini Street is finding the Japanese market particularly receptive to its extended third-party support offering. Although there are many SAP customers in the nation, Mahatto said, they were more open to “wait and see” rather than to rush through SAP’s migration timeline, which might lead to their choosing.
Some APAC customers are deciding to use SAP, while others are in the APAC region.
Many customers will choose to switch to SAP’s cloud product despite some customers ‘ objections to an urgent SAP upgrade. Some APAC customers are beginning to relocate. SAP’s Q4 2023 results announced new brands that had chosen Rise with SAP included Airservices Australia, Christchurch City Council, Chandra Asri Pacific and Coles Group. The Digital Transformation Agency of the Australian Federal Government renegotiated an AUD$ 152 million three-year, whole of government agreement in June 2024 to assist agencies in improving their ERP systems.
What justifies the unwillingness to switch to SAP’s cloud product?
In PwC’s update, it listed economic pressures, changing business models, disruptive technologies, and margin pressures as some of the factors that might prevent businesses from making the decision to switch to SAP’s cloud product.
Below are some additional reasons SAP customers might choose to delay the cloud migration.
Migration cost and business value: The migration will require investment across a multi-year timeframe, into the tens or even hundreds of millions when factoring in subscription and implementation. Additionally, businesses need to calculate the anticipated value for their businesses.
Timing and priorities: The timing, which has been decided by SAP, may not suit all businesses in all industries, some of whom may be struggling with tough market conditions or seeking to invest funds in other forms of innovation, outside of an ERP upgrade.
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Complexity: PwC noted multiple pathways to migration, including “greenfield”, “brownfield” or “mix and match” approaches. Bottom line: The migration will be very challenging for large organizations because many have created numerous customizations for the on-premises product.
Vendor relationship: SAP customers may be concerned about the vendor roadmap after SAP stated that upcoming innovations like AI, generative AI, and sustainability features will only be offered as a part of the cloud product, especially those who invested in an on-premise license.
What options do customers have for SAP migration before 2027?
Some SAP customers may find the 2027 deadline problematic, with many customers anticipating having to extend support until 2030 in order to finish their migration project. Prior to their migration deadline, customers will be considering a variety of options.
Follow the SAP roadmap
Numerous current customers are getting ready to follow the SAP roadmap. Although it will require customer investment in migration and implementation as well as SaaS subscription costs, SAP could still offer value to customers by offering a cutting-edge ERP in the cloud, with SAP particularly focusing on benefits like the ability to use artificial intelligence.
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Continue to “wait and see”
Gartner’s advice in 2023 was for organisations to take their time, even though time was running out to plan the move to SAP S/4HANA. Many businesses may still be adhering to its advice, which states to “resist the temptation to cut the planning process short” and” consider the larger implications of moving forward to stay in line with the end-of-life target dates.”
Choose alternatives
Some customers are considering their options because SAP’s cloud product needs to be completely upgraded. This includes competing ERPs from Microsoft, Workday, Oracle, and others, as well as extended third-party support services like Rimini Street, which can assist customers in extending the life of their on-premises software while they focus on other strategic priorities.
