Decoding SAP Strategy: How CIOs are Taking Back Control
Video summary
As SAP accelerates its cloud-first strategy, enterprise leaders are being asked to make long-term decisions that carry significant financial, operational and architectural consequences. Subscription pricing models, Clean Core constraints and multiyear transformation programs are colliding with flat budgets, rising accountability and growing pressure to deliver results now — not years from now.
In this Rimini Street Talk session, Krista Glantschnig (Product Marketing Director) sits down with Eric Kimberling, industry-trusted independent ERP advisor, and Luiz Mariotto (GVP & GM, SAP Services) to unpack what CIOs are actually doing in response including:
- Avoiding forced migrations and extending ECC and on-prem S/4HANA well into the 2030s and beyond.
- Regaining roadmap independence through a streamlined core, plus intelligent external layers.
- Applying AI and automation now without triggering disruptive rebuilds or vendor lock-in.
You’ll also hear a candid discussion of the economic and risk tradeoffs behind SAP’s strategy — and why many CIOs are prioritizing flexibility, leverage and optionality over irreversible commitments.
This session offers a grounded, experience-driven perspective for leaders who want to modernize on their own terms, align technology decisions with business reality and avoid being forced into timelines that don’t serve the enterprise.
Video transcript
00:08
Krista: I’m super excited about this talk today, as we are diving into what is on top of the minds of CIOs who are running large SAP system landscapes. So, let’s get started. Eric, you talk to CIOs every day — what is the real sentiment that you are hearing from them right now about SAP’s push towards Cloud ERP and the subscription model?
00:36
Eric: That’s a good question. I’d say the common terms that would best describe what most CIOs are feeling as it relates to a potential move to S/4HANA is trepidation and uncertainty. There’s uncertainty in the roadmap for when ECC is going to really be discontinued. “What’s going to happen to our customizations that we created? How long will this really take? How much will it really cost?”
01:01
Eric: So that’s the uncertainty that many CIOs face. The other thing is trepidation, and the reason I say trepidation is because a lot of CIOs are perfectly happy with their ECC environment. It’s working well, it’s not creating any real problems, and it’s been stable for a certain amount of time. They’ve created their own intellectual property and customization in the software.
01:22
Eric: And so they’re really just trying to figure out why do we need to make the move, or do we need to make the move to S/4HANA, and do we need to do it now?
01:29
Krista: Is that about the same that you see, Luiz?
01:31
Luiz: Yeah, definitely. I think the point of the pressure for putting dates on systems is a big issue, because like I said, clients realize what they’re going to do, right? And maybe they needed to do a business case, more detail to understand about the priorities.
01:48
Luiz: And then SAP said, “Oh, you need to do that.” But what’s interesting — they have changed the date already, right? A couple of times. So, I think it’s real proof that the clients are not really seeing the business case.
02:00
Luiz: And on top of that, about the uncertainty, SAP introduced this Cloud RISE contract back five years ago, and that created much more uncertainty. Not only the upgrade itself, it’s the entire model.
02:15
Krista: What’s the moment when the CIOs are rethinking their SAP strategy? What’s the moment that triggers potentially a pivot from what they have been pushed towards?
02:27
Eric: I think the big thing that CIOs see, that causes them to pivot, is the recognition and realization that they don’t fully understand necessarily what the time implementation is going to be. They don’t know how much it’s going to cost, what the time to value is going to be, or what they’re going to do with all this customization and all these capabilities they’ve built in their legacy SAP environment.
02:50
Eric: So usually that’s the pivot point or the turning point where a CIO say, “Hold on a minute. Do I have other options? Do I need to follow SAP’s roadmap? Or should I maybe stop and think about what do I really need? What does our business need, and what’s the best risk‑adjusted approach that we can take?”
03:09
Krista: Exactly, those business needs — they come in the front of it. What about you?
03:13
Luiz: What I think is interesting, because SAP with the SAP ecosystem, they want to make the client believe there is no other option, right? So they say, “Hey, you have to go because this is the path that we are taking. Otherwise, you’ll be left behind on innovation,” for example, right, on support, for example.
03:37
Luiz: I think this is something that the client needs to think about, right? “What are other alternatives?”
03:46
Eric: And in the absence of having understanding of what those alternatives are and what the real options are, there’s a lot of analysis paralysis. So, in the meantime, a lot of CIOs just get stuck in fear because they don’t know what those options are. They hear from SAP that they have to move to S/4HANA and they have to do it quickly, but it doesn’t feel right to them.
04:08
Eric: So a lot of times they feel stuck and they feel like they don’t have options. But the good news is they do have options.
04:16
Krista: Let’s move a little bit into a slightly different area and talk about the push into cloud itself. So most of these clients today are running hybrid environments and are not in cloud only. How does that shape your guidance to the CIOs around their decisions around ERP, cloud or not?
04:38
Eric: Well, I think you alluded to my answer to this in that it’s not an all-or-nothing proposition. Most organizations we work with cannot realistically move their entire operations to the cloud — not because they don’t want to, not because they don’t want to modernize their systems, or not because they’re resistant to change. It’s because cloud systems, by definition and by design, are less flexible than what a lot of CIOs and businesses are used to with their on-premises environments.
05:07
Eric: We, as an industry in the SAP ecosystem, tend to label that as change resistance or not future-proofing your operations or living with technical debts. Those are all terms meant to make you scared and make you feel like you have no choice, and it’s meant to influence your decision. But CIOs need to think a lot more logically about what they’re doing.
05:33
Eric: Just because a vendor wants you to modernize or wants you to be on the bleeding edge of technology, doesn’t mean you should be. And by the way, if you’re a manufacturer or any other sort of business, you might find that there’s a better way to spend your capital. You might find that there’s a better ROI — if I go build a new factory, or I go acquire another company.
05:50
Eric: Because quite frankly, a lot of these big S/4HANA implementations are going to cost you as much as an acquisition or opening a new factory. So that’s the decision that leaders are faced with, which option is best. Do I really have to move to S/4HANA, or can I decide where I want to deploy my capital and figure out how to manage the risk if I do stay partially on‑prem, or maybe even fully on‑prem with ECC or even S/4HANA?
06:08
Krista: Luiz, what about the option of keeping your perpetual license actually and moving into cloud, but on your own terms?
06:16
Luiz: Well, that’s a very good point because there is a lot of nuance when you say, “Hey, I want to move to cloud.” What does it really mean? Right? So recent surveys from the SAP User Group say the majority of the clients already deployed their SAP on cloud.
06:33
Luiz: But not necessarily moving to cloud means they need to change all the contracts, the licensing, everything. So you can run your workloads, SAP workloads, in any hyperscaler, and you keep the relationship directly to the hyperscaler. You keep your costs under control.
06:53
Luiz: I think one of the big challenges from SAP is because they have this “Private Cloud” option and they have the “Public Cloud” option. There are two products, and the reality is most of the clients cannot replace what they have today using the Public Cloud version. So that’s why SAP is forced to offer them this “Private Cloud” version.
07:16
Luiz: But I think that’s caused some confusion in the client. “So I need to go to SAP ERP Cloud.” Okay, but what you’re talking about? We’re talking about the Private Cloud? “Yeah, I’m already doing that. Right?” So I already have my SAP running on any of the hyperscalers.
07:34
Krista: Great insights, Luiz. And that actually brings me to the next question. Let’s talk a little bit about vendor lock-in.
07:40
Eric: So just for those that don’t know, vendor lock-in is when a customer finds itself in a situation where it’s extremely difficult, if not impossible, to move away from that vendor. And for software vendors themselves, like SAP, that’s their dream. Because if they can get you locked in and committed for decades in the future, they have predictable revenue and recurring revenue streams.
08:02
Eric: Their investors will drive up the stock price and the executives will get compensated very heavily. But what that does for customers is it limits your optionality. As your business changes — and it will change — you’re going to find yourself entering new markets, buying new companies, or opening new businesses.
08:16
Eric: SAP itself is also going to change, and it’s not going to evolve in parallel with what you need. You want to know that in the future you’ve got flexibility. And that’s the big hidden cost that a lot of organizations aren’t factoring into their business cases or their roadmaps when they commit to S/4HANA.
08:40
Eric: Because the minute you go to S/4HANA, especially S/4HANA Public Cloud, it becomes extremely difficult to get data out, to get applications out, and to get workflows back into your control. Right now that may not seem like a big deal, but in the future, that’s where you’ll start to see problems with vendor lock-in.
09:01
Krista: Luiz.
09:04
Luiz: Yeah, specifically in the case of this RISE model, I guess one of the issues is the lock‑in with the bundling, right? Because it’s not only lock‑in in the license software, right, because you are terminating your perpetual license. But also, SAP is putting together the hardware and the infrastructure.
09:26
Luiz: So, you are buying hyperscaler workloads, but not from them, you’re buying from SAP. And it’s linked with the software license and some other services in the platform, so it’s all there. So, the flexibility in the future will be very limited once you start doing all these parts of the stack with the same vendor, with a single contract.
09:55
Eric: Especially when you think about the rising costs of any cloud solution in the future. SAP will have the right to increase your subscription costs as time goes on. And in some ways, it may feel to some customers as though they’re handcuffed or constrained because they can’t control.
10:13
Eric: Not only can they not control their data and their applications the way they may want to, but now they can’t even control the cost. SAP can unilaterally decide what they’re going to charge for their software going forward. And I think that’s the real pressure point that is going to be tested in years to come.
10:28
Luiz: The reality, Eric, is that when you sign this bundling contract with SAP, like the RISE model, you are technically shifting the TCO control to SAP. Think about that — if you run your SAP hosted in Azure, and three years from now you want to renew because the cost is too high, you can move to another vendor.
10:56
Luiz: When you are on this RISE model, no, because you don’t have the infrastructure contracted directly from the hyperscaler. It’s all in the RISE contract, so you are not free to select another vendor for parts of the stack. I think this is really tricky, and some clients don’t realize that.
11:19
Krista: This is a really good conversation we are having. And with that in mind, Eric, if a CIO asked you today, “Can I really run ECC and on‑prem S/4HANA confidently into the 2040s?” What would you say?
11:32
Eric: I would say with a resounding “Yes, you can.” Despite what SAP and the SAP ecosystem may tell you, that you can’t reliably run ECC into the 2040s, you can. There is a point in history when you look back at mainframe applications, and we still have clients using unsupported systems.
11:57
Eric: Is that ideal? No, it’s not, and I wouldn’t recommend it. But I’m giving you an extreme example of how companies are still using systems that have been around for 50 or 60 years, and they are doing just fine. The sky has not fallen, and the world has not ended.
12:18
Eric: Even though SAP wants you to move by 2030 to S/4HANA, you have other options. You can navigate this and buy yourself some runway, and it doesn’t mean waiting 50 years. But we can look at ways to extend that lifeline beyond what SAP is willing to provide.
12:38
Luiz: Yes, and we need to remind people that this ECC platform, and later S/4HANA, has been highly adopted by thousands of companies worldwide. They are running their systems today, and the system itself is already proven and it works.
12:54
Luiz: For many of these clients, the only reason they are coming to discuss an upgrade is because of the end of support. We like to say we solved that problem. We can support your system for more than 15 years if you want because the system works.
13:14
Luiz: And then the question becomes, “If I don’t do the upgrades, do I lose access to new features and innovation?” With the composable model, innovation does not necessarily need to come in the core anymore. You can innovate on top of a stable and highly deployed system.
13:34
Krista: Thank you, Luiz. And that brings me into that next topic, actually, and that is innovation. SAP frames “clean core” as essential for innovation. What’s the reality that you see when you talk to organizations who are trying to rebuild this environment of clean core?
13:57
Eric: Well, from a pure technology perspective, I’ll give you two perspectives. From a pure technology perspective, it sounds great, let’s simplify the technology and get rid of customization and technical debt. That sounds like a good idea in theory, and I don’t really have a problem with that concept.
14:14
Eric: In reality, the second question is, what does that do to the business? And that’s where the problems lie. Most of the customization we see was not built because customers had nothing better to do. It was built because there was some unique part of their operating model that needed to be addressed.
14:37
Eric: So while technologists say, “Yes, move to a clean core so innovation and upgrades are easier,” the business may not run properly on that clean core. If your business can’t operate effectively that way, what good does it really do you? That’s where leaders have to step in and make a decision.
14:55
Eric: This becomes a leadership and executive decision about which risk and which cost is more acceptable. Your IT staff may not like a more complex technical environment, but your business might be very happy with it. It might make the business more profitable and scalable.
15:11
Eric: There’s no perfect answer here, it’s always a tradeoff. The problem is many leaders don’t think deeply enough about the business impact and the negative implications that can come with a clean‑core‑at‑all‑costs approach. That’s where mistakes tend to get made.
15:29
Eric: We at Rimini Street tend to agree with SAP on architecture, but we don’t think you need a clean core to innovate. Do you want to develop on that a bit, Luiz?
15:38
Luiz: Yeah, for me the idea of clean core is pretty clear. SAP wants all clients running the core as standard as possible so they can eventually move everyone to the Public Cloud edition. That is the real SaaS model, and SaaS software is clean core by design.
16:04
Luiz: But the reality for most SAP clients is they invested heavily over the last decade customizing and adapting the system. That means those customizations were necessary for their business. Many of them simply cannot run their operations on a vanilla system.
16:18
Luiz: SAP says, “Remove the customizations from the core and redevelop them on the platform.” But when we talk to clients moving to S/4HANA Cloud, most of them are choosing a brownfield approach. That’s because they cannot remove those customizations without significant business impact.
16:43
Luiz: So they do a technical migration and keep their customizations, but then they realize they can’t fully benefit from innovation. Over time, they are forced to remove more and more customizations from the core. Otherwise SAP cannot continue delivering innovation in that environment.
17:12
Luiz: This becomes a big realization for clients. They need to understand what it really takes to maintain a highly customized system while being pushed toward clean core. That decision has long‑term consequences they have to plan for.
17:19
Krista: So, Eric, you have been vocal about composable architectures. What makes that approach work so well in SAP environments, in your point of view?
17:31
Eric: Composable approaches do a number of different things. First, they lessen the dependency on SAP or any single vendor, which helps reduce vendor lock‑in. They also give organizations flexibility that no single ERP system can realistically provide.
17:58
Eric: No ERP vendor can be everything to everyone in an organization. Composable ERP allows you to integrate different systems that handle different needs and have different strengths. Some technologists worry that this makes things messy, especially around integration and data.
18:08
Eric: And that concern is valid, but in many cases the risk of integration is much lower than the risk of not being able to run the business the way you need to. If you can’t differentiate yourself or support your operations properly, that’s a much bigger problem. Composability helps address that.
18:23
Krista: All right, Luiz.
18:26
Luiz: Yeah, I think the composable ERP technology that makes this possible has evolved quite a bit in the past few years. We can now run different niche and best‑of‑breed applications for specific areas of the business. You don’t necessarily need to develop everything in the core anymore.
18:47
Luiz: That frees up clients to decide what is the best application for each part of the business. It’s better when you don’t need everything from a single vendor. Composable ERP lets clients build their ERP platform around what works best for them, not just what one vendor offers.
19:11
Krista: And I love that talk about technology enabling organizations to remain competitive in the market. Making sure they can stay competitive is critical. That leads me to the next question, which is around tech debt.
19:28
Krista: SAP often calls custom code technical debt, while we think about it as business value. How should CIOs think about their customizations in 2026?
19:44
Eric: First of all, I would step back and say let’s forget the negative connotations that the industry has created around the term technical debt. The industry has done a very good job manufacturing fear around customization. If you have customization, you’re told you’re not future‑proof or that you’re resistant to change.
20:04
Eric: Clearly that narrative is driven by technologists who believe they know better how to run your business. I’m being facetious when I say that, but the key is recognizing the business value of customization. In most organizations, customization exists because it solves real business problems.
20:27
Eric: I’ll admit there is usually a mix of different types of customization. Some of it may be tedious and unnecessary. But most organizations also have a substantial amount of customization that is valid, justifiable, and actually drives business value.
20:46
Eric: I would take it one step further and say that customization is intellectual property. It is a competitive advantage. To throw that away just because SAP labels it technical debt is borderline reckless.
21:03
Eric: Leaders need to assess customization objectively. There is no one‑size‑fits‑all answer and no all‑or‑nothing solution. In most cases, the right answer is some kind of hybrid approach.
21:10
Eric: Yes, clean up what you can. Validate what makes sense to remove. But you will be left with some customization that would be extremely painful, risky, and costly to eliminate.
21:24
Luiz: In many cases, customizations make it harder for SAP. SAP cannot deliver new versions or sell new products easily if the system is highly customized. That’s why SAP needs a solution for that problem.
21:45
Luiz: But like you said, customization is not necessarily a bad thing. For many clients, it reflects their specific business needs. Companies like us care about customization and can support it.
22:01
Luiz: So we tell clients, yes, clean up what is not necessary. But for strategic and necessary customizations, we can support those and continue to innovate on top of them. That’s not a problem for us.
22:27
Eric: A good analogy here is Coca‑Cola. Coca‑Cola didn’t become Coca‑Cola by tasting like every other soft drink. They became successful because they have a unique formula that no one else has.
22:49
Eric: There was a time where IT was considered part of that secret formula. But now the industry is pushing toward a more vanilla, one‑size‑fits‑all model for IT. That risks turning IT into a commodity rather than a competitive advantage.
23:01
Luiz: That kind of differentiation will never be reflected in standard software. You need to create it yourself.
23:15
Krista: What is the most important thing SAP CIOs need to understand about SAP’s subscription strategy and pricing right now?
23:25
Eric: If I had to pick one thing, it’s that subscription costs are going to increase at an unpredictable rate. What you’re paying in year one will likely be the lowest price you ever pay. Those costs will go up over time.
23:44
Eric: That’s true even if you don’t add new modules or expand scope. Basic subscription escalation clauses will kick in. On top of that, consumption‑based pricing, like AI agents, can further increase costs.
24:04
Eric: When building the business case, CIOs need to look beyond today’s spend. They need to forecast what they are likely to spend long‑term, even though that can be hard to predict. At least make realistic assumptions.
24:19
Luiz: I would add that many of these migrations take time, sometimes one or two years or longer. During that time, you still need to run your current system. So it’s important to keep your perpetual license during the transition.
24:46
Luiz: We’ve seen clients terminate or reduce their licenses too early. If they need to pause or delay the project, they no longer own the license for their current system. Keeping that license should be part of the negotiation.
25:10
Krista: This has been a really insightful conversation. To wrap it up, if a CIO asked you for the three smartest moves they could take this quarter to regain control of their SAP roadmap, what would you tell them?
25:26
Eric: The first thing I would say is relax and take a deep breath. There is a lot of pressure from SAP to move quickly, and often prematurely. This is your business, your budget, your priorities, and you are the one who will live with the consequences.
25:49
Eric: Second, fully understand and consider all of your options. Make sure you know what is realistic and what tradeoffs come with each path. And finally, be realistic that every option has risk, and that’s okay.
26:12
Eric: Don’t avoid a path just because it has risk. Staying on ECC beyond 2030 has risks, but so does moving too early to S/4HANA. Leaders need to compare those risks honestly.
26:34
Luiz: I completely agree. Don’t rush just because a vendor says they won’t support your software anymore. The vendor should not drive your agenda; your business priorities should.
26:57
Luiz: Build a real business case. Many clients say they’re upgrading just because SAP is pressuring them, even though their system runs well. Make the move only when the ROI makes sense.
27:25
Luiz: And remember, there are alternatives. SAP and the ecosystem often say there are no alternatives, but that’s not true. Rimini Street is one option if you need time and flexibility.
27:52
Krista: I’m confident this conversation has raised a lot of questions for the audience. All three of us would love to continue the conversation with you. Please be in contact with us, and thank you for joining us today.
28:09
Luiz: Thank you.
28:11
Eric: Thank you.
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