Why Business Agility is the Only Business Case for Cloud ERP

In the past the justification for moving to a new ERP system was almost always financial, as CFOs wanted to know how much hardware would be retired and how much maintenance would be saved. While the total cost of operations (TCO) remains important even today, SAP’s recent updates from SAP indicate that TCO is no longer the primary driver. According to SAPinsider research, the biggest reasons behind the decision to move to SAP Cloud ERP Private are:

• Support from SAP in making the move
• The bility to convert existing licenses to cloud credits
• Functionality that wasn’t available in their existing solution
• Together these result in business agility once the move is made

Flipping the Traditional Model

Today, the traditional 12-to-18-month on-premise upgrade cycle is a liability. Here’s why: In the old world, if a new regulation emerged or a supply chain crisis hit, IT would have to plan a significant project to patch the ERP. By the time the patch was live, the crisis or the opportunity had often passed.

However, in the world of cloud ERP, the actual value of SAP Cloud ERP editions lies in its consumption model. Innovation is pushed to the customer. Features like SAP Joule (SAP’s AI copilot) and advanced sustainability metrics are now deployed natively in the cloud.

This innovation, however, is not available to organizations that are still running on-premise systems. They cannot access the AI tools that competitors are already training on because their underlying infrastructure can’t support the data fluidity required.

Therefore, the strategic argument must shift from “How much will this save us?” to “How fast can we react?”

Looking Forward

The SAP Customer Evolution update has reinforced the widening gap between cloud-native companies and on-premise holdouts. The former can pivot business models, acquire companies, and launch new products quickly. The latter are stuck managing server patches.

The latest SAPinsider research also confirms this trend. The RISE with SAP (SAP Cloud ERP Private) survey shows that 70% of those running SAP ECC today are either exploring, planning, or deploying SAP Cloud ERP Private. Additionally, the number of organizations planning on using a cloud-based ERP deployment has doubled in the last year.

Finally, moving to SAP Cloud ERP is a shift in how an organization’s business consumes innovation. It turns SAP ERP from a system of record into a system of intelligence.

What This Means for SAPinsiders

To change the narrative from cost to value, SAPinsiders should take these specific, non-technical actions:

• Audit your innovation lag. Look at the last three major feature requests from the business lines, such as real-time carbon tracking or AI-driven forecasting. How long did it take IT to deliver them? If the answer is “we haven’t yet,” SAPinsiders have their business case. They should quantify the lost revenue or efficiency caused by this delay and present that to the board, rather than a spreadsheet of server costs.
• Map dependencies on AI. The future of SAP innovation is AI-first. SAPinsiders should sit down with their department heads and identify where they expect AI to help them in the next 24 months. They should clearly explain that without a Cloud ERP backbone, those AI expectations are mathematically impossible to meet. This creates urgency beyond IT.
• Review the RISE with SAP Methodology. SAPinsiders planning their SAP Cloud ERP Private (formerly RISE with SAP) journeys should look beyond the contract and consider commercial flexibility as well. They should use the resources provided by SAP Customer Evolution to understand how the RISE with SAP methodology helps an organization in a volatile market.