Comprehensive software reviews to make better IT decisions
SAP’s 2025 Support End of Life Date Delayed…As Predicted Here First
The math simply did not add up for SAP to realistically sunset license support for legacy ECC/Business Suite 7 clients, as we predicted. I have fielded numerous client calls over the past year asking a recurring question: “Will SAP hold firm on its 2025 date to end support for ECC/Business Suite 7?” We finally have our answer from SAP, and it is a resounding “NO.”
While SAP cites statistics from some SAP User Groups that indicate a general intent to eventually migrate to S/4HANA, there are plenty of SAP User Group surveys that show the direct opposite. SAP touts that 13,800 customers are already making the journey to S/4HANA. However, this is a distorted statistic, as no more than half of these customers have gone live on S/4HANA, and those that have are mostly partial implementations, not wholesale migrations. The reality is that for most SAP Business Suite clients, the business case cannot be made to justify the millions of dollars and the months, if not years, involved in migrating their core business processes away from a solution that works perfectly fine today.
The story from SAP is that the end of legacy support has been delayed, allowing their clients to plan appropriately for their digital transformation. SAP finally realizes that a business-as-usual ERP migration to S/4HANA will not suffice.
Enterprises must be able to transform their business models and do things on S/4HANA that they simply cannot do on the current platform. ASUG CEO Geoff Scott stated, “It’s not just about acquiring the SAP S/4HANA licenses—it’s about what you’re going to do with those licenses. The move should be about eliminating technical roadblocks and barriers of the past, and then fostering a climate where companies can take advantage of new business opportunities as a result of a nimbler technology backbone.”
Source: Enterprise Resource Planning at SoftwareReviews.
CIOs across the globe are breathing a sigh of relief as SAP has formally announced that mainstream support for SAP Business Suite 7 software will be continued through the end of 2027, with options for extended support through 2030. SAP also affirmed its support of S/4HANA through 2040 at the same time.
SAP Business Suite 7 core applications covered through 2027 at no additional charge include:
- SAP ERP 6.0
- SAP CRM 7.0
- SAP Supply Chain Management 7.0
- SAP Supplier Relationship Management 7.0
- SAP Business Suite powered by SAP HANA
Extended Support Post-2027 is a Mixed Bag
One must look all the way back to 2014 to find the last time that SAP announced they would continue supporting Business Suite 7 beyond 2020 and through 2025. Six years later, they are moving the mainstream support date out once again, although for a shorter window of two years through the end of 2027. What about after 2027? SAP has outlined two support options for customers that intend or need to stay on the legacy ERP stack.
- Extended Maintenance Option
- Specific customers can opt for the well-established extended maintenance option for an additional fee (two percentage points) tacked onto their existing maintenance. This option will be available through the end of 2030.
- To opt for the extended maintenance option, SAP customers must commit contractually to an S/4HANA conversion, likely by 2027, to qualify.
- SAP has also limited its announcement to include core applications for Business Suite 7 in this support extension. If you are running SAP applications not part of the list noted above, start working with your SAP account rep now to get clarification on any potential exclusions.
- Customer-Specific Maintenance Option
- Customers not meeting the extended maintenance criteria will only have the customer-specific maintenance option.
- This support option is limited in nature, including support for known issues but excluding critical path items such as legal updates.
- The cost for this option is unknown at this time, as well as the scope of coverage (core and/or non-core). In all likelihood, both the pricing and the coverage may be topics for negotiation with SAP rather than entailing programmatic pricing.
The Support Increase is Two Percentage Points, Not 2%
Many a consultant will tell you that adding two percentage points to your annual support bill is a ludicrous increase. They are probably trying to, instead, win your business for migrating to S/4. The actual percent increase for most SAP customers will be 8%, an uplift from 22% of SAV to 24%. The larger enterprises on Product Support for Large Enterprises (PSLE) priced at 17% of SAV will increase to 19%, an 11% jump. Of course, all of this is predicated on SAP not increasing their enterprise support rates higher than the current 22%.
An annual support increase of between 8-11% is not trivial. However, it must be placed in the proper perspective. SAP has not raised its support rates in several years. Many agreements do have a rider in place that allows SAP to raise support and retroactively impose annual CPI increases on those agreements, but this has not yet occurred. The increased cost of extended support will also pale beside the cost of migrating a legacy ERP platform to S/4HANA or switching platforms altogether; both options will cost millions of dollars for most enterprises.
- Use this two-year support extension from SAP wisely. IT leaders now have plenty of time to plan appropriately for their long-term ERP strategy. With mainstream support now extended through 2027, CIO’s should avail themselves of all ERP options.
- Third-party support is a real option. For enterprises that are satisfied with their current state ERP solution, consider third party support options from vendors like Rimini Street or Spinnaker. In many use cases, these solutions can further extend support for around 50% of the cost of SAP’s support options.
- Decide early if S/4HANA is in the cards. The option to adopt the extended maintenance option carries a requirement to contract for an eventual S/4HANA migration. If S/4HANA is not a viable option, enterprises need to plan their ERP RFP now or take a gamble on the price premium and limited coverage that accompanies the customer-specific maintenance option.
SAP has given CIOs a long-awaited breather by allowing mainstream SAP Business Suite support through 2027 vs. the previous 2025 deadline. While many a consultant may be cringing as their high-pressure, high-dollar S/4 migration engagements have the pause button pressed, this is not a license to be complacent. CIOs should take this reprieve as a call to action and develop a robust plan for their ERP environments.
Want to Know More?
Thinking about choosing a new software vendor but don't know where to start? Narrow down your shortlist by focusing on software that has received an Info-Tech Research Group award. New data from SoftwareReviews shows that organizations reported higher satisfaction when they switched to software that had received an Info-Tech award.
The impact of COVID-19, as it became a global pandemic in Q1 of 2020, has affected user sentiment toward software during a growing period of fear, uncertainty, and doubt. To analyze the impact, SoftwareReviews compared Satisfaction (willingness to recommend to a peer), ability to deliver Business Value (fair cost to value), and Likeliness to Renew prior to March 10 and post March 10.
An enterprise application selection or implementation has most likely been heavily impacted by COVID-19. Do not hit the brakes; stopping and restarting projects increases the risk of failure. Slow down or speed up? Which is the right strategy for your organization?
SAP customers seeking to move to S/4HANA must navigate four distinct license models, each tied to a separate deployment model (perpetual license, subscription via HEC, S/4HANA Cloud Single-Tenant, or S/4HANA Public Cloud). This note explores the license characteristics and commercial options available when choosing to procure perpetual licenses for S/4HANA.
SAP’s native-cloud play through S/4HANA dangled the hopes of a simplified license structure to SAP customers. Instead, SAP customers now must navigate four distinct license models, each tied to a separate deployment model.
SAP S/4HANA and HANA Licensing Series – Part IV: ECC End-of-Support Date in 2025 Looms Large for CIOs
SAP continues to claim robust adoption of S/4HANA while cajoling customers to migrate. Should ECC customers cave into the demands and promises of S/4HANA? Or should they stay the course and call SAP’s bluff on the looming end-of-support date?
Oracle reported slightly better-than-expected Q2 FY20 results, but despite substantial revenue numbers and high growth areas such as Oracle Cloud, Fusion ERP, and Autonomous Database, it’s unclear when these market segments will accelerate revenue growth materially.
Infor doubles down on better implementations with Signavio’s process mining and intelligence technology. The partnership will leverage the Signavio web-based business process modeling and intelligence tool to further accelerate the decision-making process.
Artificial intelligence continues to fuel the arms race among ERP vendors. Earlier this year, Oracle announced that it has extended the AI (machine learning, to be more precise) capabilities within the ERP Cloud and EPM Cloud products.