Timeline for SAP S/4HANA Migration Extended

On Feb 4, 2020 SAP made two big SAP license management announcements which impact the timeline for customers migrating to SAP S/4HANA. In a statement, the software vendor wrote that “it will extend mainstream maintenance on core applications of SAP Business Suite 7 from 2025 to 2027, as well as commit to maintenance for SAP S/4HANA until at least the end of 2040.” Additionally, SAP will offer optional extended maintenance until the end of 2030 for SAP Business Suite 7.

In other words, the 2025 maintenance end date that previously announced by SAP for SAP Business Suite 7, which includes Enterprise Resource Planning (ERP 6.0), Supply Chain Management (SCM 7.0), Supplier Relationship Management (SRM 7.0), Customer Relationship Management (CRM 7.0), and the Business Suite powered by SAP HANA, has now been set to the end of 2027 and 2030, respectively.

More time for SAP S/4HANA migration

Five years ago, SAP unveiled its "Next-Generation Intelligent Suite" and initiated the technology shift. From the software manufacturer's point of view, this was a comprehensible and correct decision on the way to a new age. Not only for SAP, but also for its ERP customers, it's a necessary step to remain competitive in the market.

However, not every SAP customer was, or is, in a position to keep up with this change in a timely manner. Not every customer needs a new business model or is ready to initiate a digital transformation of its business. Others may not be able to invest now or have made investments elsewhere.

For this reason, it is beneficial for customers to now have a reliable date for the end of their Business Suite's maintenance. Now they have the time to look for added business value in changing their ERP system, and plan new processes accordingly.

Keep in mind this is a complex changeover, affecting all areas of the company and most employees. People need time to prepare for the change,like for the new SAP S/4HANA database. They need to be trained and motivated.

What to consider for S/4HANA migration

On the other hand, a change in SAP licensing also offers many opportunities to address so-called "legacy issues". In addition to the outdated processes, companies can now, among other things, set up the authorization concept anew and attach more importance to security and data protection.

The introduction of S/4HANA offers an opening to clean up old SAP contracts. In many cases, an historically grown license inventory no longer matches the actual usage, ao by extending the maintenance period, SAP customers now have more time to:

  • analyze existing SAP contracts
  • investigate their actual use
  • determine which licenses are needed after the transition:
    • SAP S/4HANA
    • Business Suite features for which there is no S/4 successor
    • Third-party applications and their effects on the SAP license situation (Digital Access)
    • In-house developments and
    • Cloud products (SAP and Non-SAP)
  • develop a negotiation strategy for new SAP contracts
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SAP license optimization opportunities

As our experience from recent projects shows, these investigations take time and should be carried out without haste. Determining future and correct licenses also offers great potential for SAP license optimization, especially when it comes to "SAP S/4HANA Enterprise Management for Professional / Functional / Productivity use" licenses.

These investigations have financial implications for future maintenance payments to SAP, which have been extended for SAP S/4HANA until the end of 2040.

Customers who want to use their Business Suite beyond the end of 2027 have two options:

  • Extended Maintenance
    • This is combined with a 2 percent point surcharge on the existing maintenance base for the core applications in question and applies to all support offerings. Extended Maintenance is available for three years from 2028 to 2030.
  • Customer Specific Maintenance
    • This includes problem solving for known issues at unchanged fees.

S/4HANA costs moving forward

"Innovation cycles are getting shorter and shorter", Christian Klein co-CEO of SAP recently said. This fact understandably justifies being unable to guarantee unlimited maintenance for older products. It is very time consuming, he added, to reflect changes in software legislation in all 180 countries and to always have enough qualified specialists available for programming older products.

It remains to be seen whether the 5-year maintenance extension will pass additional costs on to existing customers and not through additional hidden fees again - as was the case in 2015 when S/4HANA was introduced following the sudden and probably unfounded levying of fees for so-called "indirect access".

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