We've seen it happen before and we will probably see it happen again. Within the next two years, it is increasingly likely that SAP will extend the maintenance window for ECC 6/Business Suite beyond 2025.
In 2014, SAP announced that it extended maintenance on ECC 6/Business Suite by an additional five years through to 2025. Most observers believe this change came in response to SAP's customers demanding more time to absorb and assess SAP's change in product direction to HANA and S/4HANA.
Fast forward to 2018: the need for more time to absorb and assess the business case for S/4HANA, which is still a relatively immature product that needs to be built out and proven with established implementations, is still there and has probably increased.
But don't take my word for it. According to Vinnie Mirchandani, CEO of Deal Architect, and the author of Silicon Collar and SAP Nation:
"In volume 2 of SAP Nation, I presented the industry track record on next-gen products — at Oracle, J.D. Edwards, Infor, Microsoft and even at SAP with NetWeaver — and I concluded that a next-gen product takes years of development and maturation. Migrating a legacy customer base takes even longer. Those are just the laws of physics.
SAP may be able to bend these laws slightly with S/4, but will likely not be able to break them. From all signs, the big migration of customers to S/4 is years off. It is functionally incomplete today, especially if you are looking for industry functionality. In the short term, newer, smaller customers are adopting S/4. And even there, customers who want to look for next-gen solutions in multi-tenant clouds will not find S/4 attractive until SAP settles on a coherent data center and cloud infrastructure strategy. Or I expect most to continue to stay on ECC and IS solutions for the next several years."
What the last three years has shown is that the uptake of SAP S/4HANA is slow, and it appears that the majority of S/4HANA sites are green-field scenarios rather than being migrations by the existing installed base. It's hard to find examples of successful large scale complex SAP ECC 6 migrations to S/4HANA whilst it's becoming easy to find examples where such projects have not gone to plan such as Under Armour.
In my recent blog Why It's Not a Good Time to Get on SAP S/4HANA Now, I highlighted how SAP's own customers appear reluctant to move to S/4HANA due to the immaturity of the product and the complexity, cost and length of a transition which would cause additional technical problems and cost blow-outs.
SAP's top 100 largest global customers are in some ways the most impacted by the 2025 "End of Support," but they also have the biggest influence over SAP. Those companies would likely need to start their projects within the next two years in order to meet the 2025 deadline, but the business case to commit to such a project is not stacking up for all except the very brave. They also have the most to lose by being forced off a robust product that more than meets their business needs. This is why an extension of support beyond 2025 will probably be announced within the next few years.
One of the CIOs I've recently met made this comment which sums up the situation perfectly: "We've been married to SAP for over 10 years. Our marriage is strained with issues like indirect access and a high cost of ownership in areas like annual maintenance. SAP is now asking us to reaffirm our marriage vows. I'm not ready to re-marry SAP."
As Vinnie Mirchandani said, most SAP customers are taking a wait-and-see approach when it comes to transitioning to S/4HANA. They are staying on their current core ECC 6 system to see how S/4HANA matures so they can make an informed and educated decision on whether they re-marry SAP or not.
So, SAP now finds itself in a difficult situation of its own making. It appears that SAP has artificially created an "End-of-Support" deadline of 2025 for ECC 6/Business Suite customers to pressure SAP's installed base to re-buy and re-implement on S/4HANA.
If SAP maintains this 2025 deadline then it runs the risk that the installed base will look elsewhere or move to a hybrid application strategy where ECC 6/Business Suite is complimented by "innovation around the edges." Third-party support providers can support ECC 6/Business Suite at a much lower TCO for another 15 years+ so the 2025 deadline is also totally avoided. Under this scenario SAP loses it's highly prized maintenance revenue to the likes of Rimini Street, while customers gain much needed stability, flexibility and cost savings.
Extending the deadline will effectively be an admission that the product strategy, based on the HANA database, is not working as planned. As has happened before, it seems likely that pressure from the largest SAP customers and user groups will mount to a point where they have no choice.
This article was originally published on LinkedIn.
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Andrew Powell, Managing Director, Asia-Pacific and Middle East
Mr. Powell has a long track record building, growing and leading businesses in the Asia-Pacific region, including 15 years of experience helping customers drive success with enterprise software, primarily with SAP software. With proven expertise in the areas of enterprise application architecture, enterprise software licensing, software maintenance and support, and associated global sales and service delivery models, he leads the continued growth and expansion of Rimini Street services offerings across the Asia Pacific region.