SAP’s Cloud coercion

From ‘Rise with SAP’ to the 2027 deadline and favouring Cloud-first over hybrid, it seems that SAP doesn’t believe in the middle ground.  

2020 was an unbelievably challenging year for a great many organisations. Of those still standing, we look at SAP in this article. The German-based ERP software giant saw a significant dip in revenue at the end of Q3. By Q4, SAP had managed to haul itself up again, and ended the year with ‘flat’ revenue. 

Heading into 2021, SAP found itself under immense pressure and under close scrutiny from its customers, competitors, investors, and shareholders. SAP needed to defend itself, and defend itself, it did: 

“The company adjusted short-term revenue expectations for long-term Cloud gain.” 

The Register, 2021

Pro: the vendor isn’t resorting to a desperate, quick fix.  

Con: for there to be ‘long-term Cloud gain,’ SAP needs its customers to be moving to the Cloud. Therefore, any SAP customers that aren’t moving just yet may need to, as it were, brace themselves. 

What are SAP’s methods in moving customers to the Cloud? 

SAP’s marketing is already quite coercive by nature, given that the vendor is trying to get its customers to undergo a massive business change like S/4HANA (one that the customers may not wish to undergo at all) and not presenting them with any other options. To move people towards the Cloud, SAP needs a strong, evidence-based business case to inspire positive reactions in its customers. 

Instead, it feels as though the vendor’s tactics follow an old, familiar, two-part model: the carrot and the stick. 

Carrot: Rise with SAP 

When someone’s unsure about moving somewhere new, what else can you do but offer to help? 

That’s where ‘Rise with SAP’ comes in. It’s a hand-holding approach to help customers towards the Cloud.  

“The goal of Rise with SAP is to help SAP customers who have struggled to migrate from on-premise, legacy ERP systems to the modern, Cloud-based SAP S/4HANA. […] As part of Rise with SAP, SAP takes on responsibility for the contracts, service level agreements, operations, and support, and becomes a single point of contact for the customer.” 

Tech Target, 2021

Our initial reaction is that this might be rather fun to watch. There have already been concerns that SAP isn’t ready to take on everyone moving to S/4HANA all at once. It’s possible the vendor wouldn’t be able to cope. What will be the market’s reaction, then, when the vendor throws open its doors and holds out a helping hand? 

This could be the start of an almighty S/4HANA traffic jam.  

The S/4HANA skill cycle 

Second, it is encouraging – and quite a bit optimistic – for the vendor to put all that pressure on itself. “A single point of contact for the customer,” which, in this instance, means ‘all customers who now decide to move,’ is not a commitment to be taken lightly. 

This is especially true when the world’s primary source of knowledge of S/4HANA sits with the vendor itself. An SAP consultant recently advised: “All things being equal, customers would like to move to S/4HANA, but the number of skilled consultants in the market is low.” 

SAP users, at present, are caught in a rather vicious catch-22:  

  1. Organisations are hesitant to move to S/4HANA because it’s a new product. 
  2. The only way to get S/4HANA experience is to move to it.  
  3. Return to step one. 

Basically, anyone signing up to Rise with SAP is likely coming in with the expectation that the vendor is ready for anything. 

We can but hope that SAP is prepared. 

Helping customers get where they need to be, or where SAP needs them to be? 

We are pleased by this change of pace, and this new offering from the mega-vendor. But not all tantalising offers are completely risk free. There is a dubious whiff in the air. ‘No good deed goes unpunished,’ as they say, and seldom does a good intention come entirely selflessly. 

Yes, Rise with SAP is a program benefiting those who wish to move to S/4HANA but are struggling. 

It also, not coincidentally, gets the customers moving and (eventually) across the finish line. Is SAP really extending a helping hand to lead customers forward, or just hurry them towards an SAP-centred future? 

So ‘Rise…’ is not an entirely selfless act. Whether helpful to its customers or not, the movement to S/4HANA will still require reimplementation, and standardisation to SAP’s own processes and software limitations. It’s a bit like SAP offering to help someone with painting their house, but only if SAP gets to choose the colour. 

SAP’s introduction of ‘Rise…’ does at least prove what the market has been saying for the past few years: the move to S/4HANA is not easy. 

The stick: S/4HANA 2027 deadline 

At the opposite end of the promotion spectrum, we have the stick: SAP’s S/4HANA deadline, and its (rather infamous) announcements (plural).  

Originally set as 2025 but moved to 2027 due to customer complaints, SAP customers who don’t transition to S/4HANA by the deadline will be automatically moved to the customer-specific maintenance model. Any customers still in the transition period after 2027 can purchase extended maintenance through to the end of 2030, at a premium of 2% above SAP’s current support costs of 22%. 

You lose more than just mainstream support 

It’s a fancy end-of-support deadline, and essentially, nothing we haven’t seen dozens of times before (if not hundreds, in the case of Oracle). But once the deadline passes, organisations that haven’t moved to S/4HANA will lose access to more than just support; the deadline is also the end to innovation. From that moment on, all new releases and developments will happen on S/4HANA  only. 

No one is an island, but SAP’s giving it a good go. 

To maintain support, and maintain the latest SAP has to offer, organisations must therefore accept S/4HANA. To get the most of what SAP has to offer, organisations may need to agree to something they might not want to do.  

It’s more than marketing; it’s closer to peer pressure. 

And what of those left behind? What is the reward for organisations defying the vendor’s regime? What’s the prize for (understandably) following their own roadmaps?  

The price goes up, the support comes down – and that’s about it. Years, if not decades, of investment into SAP technology, obliterated. 

SAP’s view on Hybrid Cloud 

Rise with SAP (the carrot) and the 2027 deadline (the stick) work in conjunction and combine into one overall tactic: “Rise with SAP – or else.” 

These are two fairly extreme points of view, but on a more positive note, there are positive changes appearing in the mega-vendor’s attitude. For instance, SAP has at least acknowledged the worth of Hybrid Cloud strategies: 

“More than 90% of enterprises worldwide will rely on a mix of on-premise and Public Cloud environments to meet their IT infrastructure needs within the next two years. […] However, for most companies, moving 100% to the Cloud is the realisation of a multi-year roadmap, not a single digital transformation effort.”

SAP, 2021

SAP has a point. The global pandemic inspired a major uptake of Cloud solutions, as organisations sought to quickly enhance their software. But it’s not as simple as jumping into the Cloud; organisations can’t just switch off their legacy, on-premise technology. The best solution became a mixture of both on-premise and Cloud. 

Almost by default, Hybrid Cloud became the best option for many organisations. 

New strategies, same old SAP 

SAP isn’t the first to realise and admit the worth of Hybrid Cloud. However, perhaps as to be expected, the vendor still presumes that ‘moving 100% to the Cloud’ is a foregone conclusion for all organisations.  

In fact,  mega-vendors such as SAP and Oracle believe that Cloud-first is the way to go; having your whole software estate (or as much of it as possible) in the Cloud. Naturally, that would be their line of advice, because it means more customers joining their respective Cloud models (and scoring more customers/points in the ongoing Cloud war). 

Amidst its ‘Cloud-first beats Hybrid Cloud’ theory though, SAP made an interesting point:  

“The core of every path to Cloud-driven operations is an intermediate Hybrid Cloud strategy that establishes a foundation of intelligence with integrity, continuity, and security.”

SAP, 2021

We ask: why does the Hybrid Cloud strategy need to be ‘intermediate’? 

Choose your own roadmap, not SAP’s 

When SAP specifically talks about a Cloud-first future, the vendor does so as though it is ‘the place’ to be. But remember that it will always give a message that suits SAP. It needs to prove itself in the eyes of investors, and having ended 2020 with flat revenue, it needs to up its Cloud game. 

But here’s a message that might suit you: why keep searching, when you’ve already found what you’re looking for? 

Your organisation might find that a Hybrid Cloud solution is the best fit. Moving critical software to the Cloud enables flexibility and scalability on software where you need it. Older, legacy software that’s on-premise (some of which may be so integral to your operations that you might even be too afraid to go near it) can be left as it is.  

Many organisations are following this ‘middle ground’ model, as they remain in control of what moves to the Cloud and what doesn’t. They aren’t limited by the mega-vendors restrictions. Most customers want to move to the Cloud for security and safety, handing a lot of the responsibilities to the provider – it’s less likely for customers to move purely for SAP’s offering, or for Oracle’s. 

Your move, your way 

Organisations need not subscribe to the all-or-nothing, Cloud-first future that the mega-vendors are selling. Hybrid Cloud is a viable, strategic decision, and there are plenty of collaborative support partners that can help organisations. 

For example, third-party support providers, such as Support Revolution, can help organisations ‘lift and shift’ their estates onto an AWS Cloud platform. No reimplementation, no standardisation, and no coercion of carrots or sticks necessary. Just the benefits of Cloud, without the complications. 

It’s important to consider the options and services available, because it seems as though we are all on a journey to the Cloud at some point. It is inevitable. But how we get there, and how far we plan to go, is dependant entirely on individual needs and goals.  

SAP seems to believe that your needs and goals include being entirely in the Cloud. You can still take the vendor’s advice and start looking at Hybrid Cloud as an ‘intermediate’ solution. 

But you just might find that your destination is not necessarily where you are going, but a better place you find along the way.

For information about Hybrid Cloud, download our guide below:

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