Like all software publishers, SAP is accelerating its transition to a 100% cloud model. It’s important to remember that most publishers started this process long before SAP, and some of them in a rather brutal way (total ban on selling On Premise licenses, unilateral termination of contracts concerning On Premise products…). SAP remained one of the last publishers to offer some of these On Premise solutions to customers who requested them, with limited pressure until then on its large On Premise customer base.
Some recent announcements from SAP show that things are changing.
SAP’s strategic decision: Separation of the SAP S/4HANA On Premise and SAP S/4HANA Cloud roadmaps
The most important of these is SAP’s decision to separate the roadmaps for the S/4HANA On Premise and SAP S/4HANA Cloud solutions. Until now, SAP S/4HANA On Premise and SAP S/4HANA Private Cloud (RISE With SAP) have been strictly identical (same code and same roadmap). The only difference with the Private Cloud version concerns its contractual model: it is offered on a subscription basis, including hosting, maintenance and administration in addition to the right of use.
From now on, access to innovations and new functionalities will be given priority to customers of the S/4HANA cloud version. And SAP goes even further, announcing that some of these innovations will never be available to S/4HANA On Premise customers. This applies in particular to two major SAP solutions:
- SAP’s generative AI, known as “Joule
- Management of environmental parameters and carbon accounting (SAP Sustainability)
It seems clear that further similar announcements will be made in the coming months.
SAP Removes Hosting Partner Certifications and Increases Maintenance Costs: USF Reacts
In another major decision this summer, SAP has abolished all certification programs for SAP infrastructure hosting partners. The many historical partners offering SAP hosting services can no longer claim any SAP certification for their datacenters, infrastructures and operations and administration teams.
Finally, the announced increase in maintenance costs for On Premise solutions worldwide on January 1, 2024 adds further pressure on On Premise customers (for France, the increase in the Syntec index over 1 year is 6.35%, with a commitment from SAP to cap this increase at 5%). SAP’s Cloud contracts include an annual revision clause for subscription costs, but this is not systematically applied, and is contractually capped at 3.3%. Cost increases for Cloud solutions are therefore more limited and predictable than for On Premise customers.
Naturally, the French-speaking SAP user club, USF, is playing its part in defending the interests of SAP customers, and is calling on SAP to point out that it is unacceptable for maintenance costs for On Premise solutions to increase by 5%, in order to have access only to patches and regulatory changes. Gianmaria Perancin, President of USF, spoke to the press on September 6: Gianmaria Perancin, USF: “If SAP raises the cost of maintenance, it must add more value” (cio-online.com).
Answer from USF President: Gianmaria Perancin
SAP, announcements at the center of Debates at the USF Convention in Nantes :
There’s no doubt that these SAP announcements will be on everyone’s lips at the USF Convention in Nantes on October 11 and 12. Despite the worldwide outcry and the reactions of many major customers, SAP is unlikely to backtrack on its announcements.
More information on RISE With SAP (SAP S/4HANA Private Cloud and SAP S/4HANA Public Cloud):
