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SAP S/4HANA and HANA Licensing Series – Part I: The Forced “Upgrade”

Current SAP ECC customers have a decision to make, as SAP has announced the end of ECC support effective 2025, in effect mandating a move to its next-generation ERP solution, S/4HANA. This is in spite of sources reporting that the S/4HANA codebase is over 90% identical to the legacy ECC product!

Mandated upgrades by enterprise software vendors are nothing new. The extension of these often artificial deadlines are not new either. In this case, however, SAP is mandating not just the typical upgrade but a net new purchase of the S/4HANA solution. You see, SAP’s legal beagles have designated S/4HANA a “logical successor” to ECC vs. a “legal successor.”

What does this mean in plain English? It means that there is no upgrade path to S/4HANA in spite of the many years and often millions of dollars spent on SAP enterprise support. It means that migrating to S/4HANA requires a net new license purchase. It is critical for SAP customers to become informed of the new aspects dealing with licensing and costs for S/4HANA and HANA before entering negotiations with SAP.

And if that pill wasn’t hard enough to swallow, it is equally important to realize that the only database certified to run S/4HANA is, you guessed it, SAP’s HANA database. This is a deliberate maneuver on the part of SAP to dislodge Oracle (and other DB solutions) off of the SAP ERP technology stack. Essentially, displace the competition while gaining that business for yourself.

SAP tried to drive business at the database layer through their acquisition of Sybase some time ago. Do you know anybody running Sybase? I don’t either. SAP has steadily declined to invest more in that product in recent years. In short, SAP is both forcing a new software license purchase for those customers that want to move to S/4HANA and simultaneously limiting customer choice at the database layer.

Our Take

This is the first in a series of short notes that aim to provide a rapid-fire base of the nuances, license changes, and performance attributes of S/4HANA vs. ECC and will also touch on the HANA database product. The takeaway for now is that a move to S/4HANA should be viewed as a re-platforming event, not an upgrade. As such, organizations should plan to treat this option under the guise of a competitive ERP RFP.

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