February 12, 2020 | Shawn du Plessis | Vice President, SAP Global Support Services
Last September, I presented a video “SAP’s 2025 Deadline: Real or Not Real?”, wherein I predicted that SAP would very likely move its deadline for its customers on SAP Business Suite 7 and SAP Business Suite powered by SAP HANA. It was an easy bet, and last week, SAP proved me right.
In a widely-covered press release, SAP made two important announcements: (1) a maintenance commitment for SAP S/4HANA until the end of 2040, and (2) mainstream maintenance for core applications of SAP Business Suite 7 software until the end of 2027, followed by optional extended maintenance until the end of 2030.
From 2028 through the end of 2030, customers will have two support alternatives:
- An Extended Maintenance Option: Available with a commitment to S/4HANA and a premium of two percentage points on existing maintenance for core applications of SAP Business Suite 7 for all support offerings.
- A Customer-Specific Maintenance Option: For customers who choose to continue with their SAP Business Suite 7 software, SAP will automatically transfer them to customer-specific maintenance. SAP says: “This includes problem-solving for known issues at unchanged fees.”
No Surprises Here
As I described in the video and will reiterate below, no one who has worked with SAP and has been monitoring their S/4 progress is shocked that SAP was forced to extend its maintenance end dates. SAP customers have not been making the migration as quickly or as confidently as SAP was hoping they would, despite SAP’s active deployment of assessment tools, advisory services, and promotional hype.
The core issue for SAP is that many customers still see no business value to start the process and move away from their customized, stable, and dependable applications. A major upgrade means additional costs, business distractions, and potentially little upside in terms of performance or functionality.
SAP Needs to Show Sales Progress
SAP sees the migration primarily through a sales lens. It has a 2023 revenue target of $35B, which means it needs a 30% increase in the existing customer base. While new customers are adopting S/4HANA from the start, SAP must also push to lock in existing customers to S/4HANA as soon as possible. The new 2040 S/4HANA maintenance commitment is meant to ensure customers that SAP stands behind the product.
But many factors continue to work against SAP, including the high cost (which can be 10s to 100s of millions of dollars), a scarcity of expert System Integrators (Sis) for S/4HANA implementation projects – which can take 18 months on average – and the drag of third-party certification requirements on upgrading to new versions of S/4HANA. SAP appears to be gambling that the new deadlines will relax customers enough to get them to start actively considering S/4HANA.
This may be indicated in the results of the latest ASUG Pulse of the Customer survey, which showed that all survey respondents had some level of planning in progress. Whether that’s towards or away from SAP is unclear. And ASUG members are perhaps the most loyal SAP customers, so the Pulse results are likely not representative of many longer-term and smaller SAP customers.
But Beware: This Isn’t an Unqualified Extension
The experts at UpperEdge have a particularly insightful breakdown of the announcement. They point out that SAP has its own best interests at heart. And why shouldn’t it? According to UpperEdge, a few concerns with the support coverage after the new 2027 deadline:
- You must have purchased S/4HANA by 2027 to take advantage of the Extended Maintenance from 2028-2030.
- In Extended Maintenance, only core applications of Business Suite 7 will be covered, so you’ll need to have migrated to the S/4HANA equivalents of non-core apps or negotiate some other form of support coverage.
- The 2% premium you will be charged for Extended Maintenance is in addition to the 22% you already pay, and that’s actually steeper than it seems – a 9% increase overall.
- Customers who don’t choose to make the move to S/4HANA will go to the “customer-specific maintenance model” and likely pay steep prices for custom support.
This isn’t the first deadline extension we’ve seen, and it very well may not be the last, given the adoption trends I described in my video. While helpful to a small portion of SAP customers, this announcement really changes nothing. There’s no reason to rush an SAP migration (brownfield, greenfield, or bluefield), as they will continue to extend within a few years.
Don’t be forced into a lock-in vendor approach that will allow SAP to have control of your budget and roadmap. And reach out to us to help you understand how third-party SAP support can provide far more value and savings than SAP-provided Extended Maintenance and Customer-Specific Maintenance. As a place to start, I recommend the SAP 2025 video, which is still applicable, it as well as our SAP customer case studies.