Five years after launching its rescue plan to lift ERP users to the cloud and switch them to the latest software, SAP is off target by about €2 billion, The Register can reveal.

Users reliant on SAP's legacy ERP software – including global businesses such as Airbus and BMW – are facing the end of mainstream support in 2027, but the German software giant has already changed its stance on support deadlines. As it misses migration targets, some experts see a change in emphasis.

In October 2020, SAP CEO Christian Klein promised a new strategy after cuts to its sales and margin outlook caused a 23 percent share price crash.

Speaking to investors, he said it would involve "accelerated technical migration of our customers' most important business applications to the cloud" in a platform powered by SAP S/4HANA, the in-memory database.

The following January, SAP introduced customers to the new plan called RISE with SAP. For starters, RISE with SAP promised a lift-and-shift of complex SAP environments into public, private, and hybrid clouds. In addition, it planned to move users of ERP software older than S/4HANA onto the latest in-memory platform launched in 2015. Third parties signing up to the plan included Accenture, Atos, Capgemini, Cognizant, and Deloitte Consulting, as well as cloud providers AWS, Microsoft Azure, and Google Cloud.

Early last year, it emerged that SAP may have strayed off target. Figures from the end of Q4 2024 showed only 39 percent of worldwide ECC customers – from a total of 35,000 – had bought or subscribed to licenses to start their transition to SAP S/4HANA. The figure was up marginally on the 34 percent recorded for the same quarter a year earlier.

These are the most recent figures available on ECC migration. Last year, SAP replaced RISE with SAP S/4HANA Cloud Private Edition with SAP Cloud ERP Private Edition, creating confusion over licensing. The move also made it more difficult to compare like-with-like in terms of reported migration figures.

On-prem support revenue shows cloud migration behind schedule

However, since SAP bundled cloud migration and ERP upgrades together, on-prem software support revenue – which relates almost exclusively to ERP with a small chunk of data warehouse software – acts as a proxy for cloud adoption. As cloud revenue goes up, on-prem software support goes down because support is included with cloud revenue. SAP already knew this.

In 2022, then-CFO Luka Mucic told investors that for 2025, SAP wanted to see €8.5 billion in support revenues, down from around €11.5 billion in 2021, as users move from on-prem licenses and support to cloud subscriptions. But the 2025 full-year figure for on-prem software support is €10.5 billion, down only 7 percent from 2024's €11.29 billion. That's €2 billion off where SAP wanted to be, or about 24 percent more than it should have been. Between 2021 and 2024, the category only fell 2 percent.

In fact, Mucic, who left SAP in 2022, told investors in 2020 the company would be "arriving fully in the cloud come 2025." With €8.5 billion in on-prem software support revenues for that year, SAP is a long way from where it said it would be, whichever way you measure it.

As well as the carrot of an in-memory database, and promise of "innovation" only with S/4HANA in the cloud, SAP has the stick of ending software support. Mainstream support for ECC ends in 2027, while extended support is available at a two percent premium until the end of 2030. Signing up to a cloud migration deal gives customers a stay of execution until 2033 in some circumstances.

Business case still a barrier for legacy users

The question is why are some customers so reluctant to give up on their ECC software? The most straightforward answer is that they don't see the value. Last year, Freeform Dynamics' survey of 455 CIOs, senior-level IT roles, SAP specialists, and business managers found 95 percent of legacy users say building a positive case to migrate requires a big effort or is genuinely challenging. The research echoes concerns shared by user groups and individual users over the last five years.

This may be down to the mantra that this is not a software upgrade. Ideally, SAP expects users to rid their ERP software of any customization built for ECC and move to S/4HANA and the cloud with a "clean core" on which they can build extensions using the cloud-based Business Technology Platform (BTP).

In a sense, users are damned if they do and damned if they don't. Organizations that take too many of their ECC customizations to S/4HANA will struggle to keep pace with mandatory software upgrades and won't have sufficient agility to access SAP innovation, limiting benefits. But users going for the "clean core" approach face re-engineering processes that might have been habituated among thousands of end users for a decade or more, which can take as much work as the technical migration, adding to costs and timelines. Either way, it's difficult to get the justification to add up.

Kingfisher – which operates 2,000 European retail stores including UK brands Screwfix and B&Q – has rejected SAP's migration plan. The company told a Gartner conference last year that it had moved its ECC system to the cloud, with third-party support from Rimini Street. It is building automation, AI, and data analytics around the ERP system through partnerships with Google and Databricks.

Gartner has predicted that by 2030, more than 10,000 SAP customers will continue to support major parts of their business with solutions based on SAP ECC, with the larger, more complex organizations over-represented in this group.

Speaking to The Register, Jens Hungershausen, chair of German-speaking user group DSAG, said: "The main problem is a business case of moving to S/4HANA. There are a lot of customers who just waited and hoped that there would be some kind of change in the maintenance strategy from SAP."

A survey by DSAG, which represents users in German, Austria, and Switzerland, found that of ECC users, about half would continue investing in the legacy system beyond the support 2027 deadline.

"The point here is that a lot of members actually have a plan," Hungershausen said.

ECC users will migrate in the end

Some, he suspects, will take advantage of the option to get ECC support until the end of 2033, signing up to the deal announced in January last year.

Hungershausen says most of the ECC users who are yet to start their migration to S/4HANA would do so with a so-called brownfield migration, which preserves existing processes, data, and custom code.

"It won't be a real transformation."

However, some organizations relying on ECC were waiting to see if SAP would extend the maintenance again to allow time to transition to the new software.

"Clearly, there are no other options available to the customers. SAP made a maintenance commitment to support S/4HANA until 2040. They extended ECC maintenance until 2027, so that's almost 12 years of time to move to adopt a new version of the software. I think that's good," Hungershausen said. The reason migrations are off-track could be down to economic and geopolitical uncertainty.

However, Hungershausen says DSAG continues to take issue with SAP's stance on "innovation," which largely means bringing new features such as AI to its ERP platform.

In 2023, SAP boss Klein told investment analysts that future innovation would only be available in the cloud via RISE with SAP. The statement outraged users, who said a 2020 remark from product engineering lead Thomas Saueressig – that S/4HANA would be "the architecture and platform of the future for our customers" – included no caveats about the cloud.

"We keep calling out SAP for that, because I strongly believe that even if you look in the direction of AI adoption, it would be beneficial to at least make also the innovations available to S/4 and, explicitly, S/4 customers on premises," Hungershausen said.

SAP shifts focus from migration to 'innovation'

With SAP so dramatically missing targets for ERP migration, its attitude to customers may be changing.

Alisdair Bach, head of SAP practice at consultancy Dragon ERP, told The Register that SAP is more focused on upselling products to meet demand for innovation, particularly with AI, rather than simply pushing its ERP modernization agenda.

"Modernization has come to an end: the world has moved on. The conversation around S/4 is quite an old conversation now," he said.

Customers with ECC investments could move to S/4 via a brownfield migration, avoiding transformation. For those staying with ECC, SAP offers a dedicated SAP ERP Private Edition subscription for ERP ECC systems, currently available until the end of 2030. The SAP ERP Private Edition Transition Option, introduced last year, is available until 2033.

By that time, the migration may be easier for customers to consume, given the application of AI in migration planning and execution, Bach says. In the meantime, SAP is more focused on generating revenue in other ways. "There is a broader focus on upselling the wider product portfolio from SAP. Getting ECC customers into the cloud, it can start upselling AI licensing, Business Data Cloud: upsell, upsell, upsell, in terms of bite-sized chunks of the generic innovation."

Bach argues that the only way SAP can fulfill its promise to investors to start driving more revenue from agentic AI is to sell to its legacy install base that has moved to the cloud. As such, he is predicting that Joule, SAP's agentic AI platform, will come to ECC in the cloud later this year.

Another example is SAP Agent Builder. Although it is part of Joule Studio, it is not exclusive to RISE, and is available to on-prem customers under SAP Build Developer licenses on BTP.

RISE with SAP was the vendor's multibillion-euro response to its investors' lack of faith. If it raises enough revenue from so-called innovation products, then they will be happy and stay silent about SAP falling behind its ERP modernization plan. If not, the ball will be in SAP's court once again.

SAP declined to comment. ®