"SAP ramped up efforts to move customers to its latest software in the cloud on a subscription model nearly five years ago and has shifted its sales teams' incentives to encourage sales of SAP Cloud ERP Private subscriptions, but a recent paper from the global IT researchers shows the move has not been without commercial challenges. Meanwhile, SAP's on-prem customers can still negotiate discounts, although this is becoming more challenging."
""By 2030, Gartner estimates that more than 40 percent of current SAP ECC6 customers will still use ECC 6 for key business areas, leading SAP to reconsider its maintenance end date and cloud migration strategy," the paper says. SAP has long maintained that running S/4HANA in the cloud - particularly the private cloud - is the best way to get its latest technology and so-called innovation, such as its AI agent offering, Joule."
"Gartner has reported that SAP customers opting for private cloud have seen price increases of 10 percent or more on renewal proposals if they fail to negotiate a renewal price cap in the original deal."
SAP private-cloud customers have encountered renewal price increases of 10 percent or more when a renewal price cap was not negotiated. SAP accelerated cloud subscription and SAP Cloud ERP Private sales and reoriented sales incentives toward S/4HANA cloud offerings. On-premises customers can still obtain discounts but face declining perpetual license discounting and likely annual support price increases. The combination of discounts and commercial penalties creates mixed signals for upgrades from ECC to S/4HANA. More than 40 percent of ECC6 customers may still use ECC 6 for key business areas by 2030, constraining on-prem upgrade options and timelines.
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