Customers Call for Cloud and On-Premise Equality

⇨ Monitor future SAP ERP product announcements closely

⇨ Assess and reevaluate existing ERP plans

⇨ Plan for a cloud-based future

During SAP’s 2023 Q2 earnings call, SAP’s CEO Christian Klein made several statements about how innovations in generative AI and sustainability to be exclusively available in the cloud. Klein also indicated that these new offerings would only be available to RISE with SAP and GROW with SAP customers. While no specific information was provided in the earnings call, it was indicated that these would be available in a “premium edition” costing 30% more than the base offerings.

Although SAP is still to provide details on the new generative AI and sustainability-focused offerings, customer groups have started to react. Some have expressed concerns that Klein’s statements effectively cut-off on-premise customers from innovation, while others state that these statements “shatter the relationship of trust” between SAP and its customers.

The basis of this concern is that many regard Klein’s statements as a departure from SAP’s prior position. In the past, SAP has announced that it does not plan to limit enhancements to cloud-based solutions. However, Klein’s statements indicate a shift in SAP’s stance, which raises questions about future enhancements in general. While these specific announcements may only be about generative AI and sustainability functionality, some consider this as the first step down the path of cloud-only enhancements.

While transitioning to RISE with SAP S/4HANA Cloud may be a choice for some organizations, for others, this is not a viable alternative. Some have already made significant financial investments and do not have the capacity for other changes. Others may be restricted from moving because of the industry they are in. And while SAP S/4HANA Cloud, private edition is the same software as an on-premise deployment, there are some modules that are not yet supported in cloud environments. Until that changes, customers using those modules would be unable to move to the cloud.

In SAPinsider’s 2023 Deployment Approaches to SAP S/4HANA report, more than half the respondents indicated their organizations do not plan on transitioning to SAP S/4HANA before 2025, with a quarter indicating that the move may not come until or after 2027. There are multiple reasons for organizations not moving to SAP S/4HANA, the biggest being the complexity of the existing implementation, the duration of the project, and the value of SAP S/4HANA. These concerns may have been exacerbated by SAP’s recent announcements. However, considering everything happening, what should SAPinsiders do to prepare for the future?
- Monitor future SAP ERP product announcements closely
- Assess and reevaluate existing ERP plans
- Plan for a cloud-based future