SAP 2023 outlook: 7 predictions for customers
With the threat of a recession looming, cost pressures increasing, and the deadline to move off SAP ECC swiftly approaching, SAP customers have a lot to consider as they plan for the year ahead.
Here are some of the trends we expect to play out as the year goes on, specifically for SAP customers.
1. SAP will hold firm on expiration of ECC support
Though customers may be looking for an extension, we expect SAP will not extend the expiration of mainstream maintenance for SAP Business Suite 7 core applications beyond 2027. SAP has already extended the deadline once — in 2020, it extended support from 2025 to the end of 2027. We also expect SAP to position alternative support options, via its extended maintenance option, for an additional 2% on your maintenance base or customer-specific maintenance through 2030.
Customers will likely continue to believe that SAP has not presented a strong enough business case to upgrade to S/4HANA. However, it will be difficult to argue that SAP hasn’t provided ample opportunity to plan and execute an upgrade or understand the financial implications for delaying the move to S/4HANA. Any extension on SAP’s part would fly in the face of its strategic objectives. Customers need to consider this deadline as final and start preparing now if they haven’t already.
2. SAP will aggressively position RISE
SAP’s agenda goes beyond migrating SAP ECC clients to S/4HANA. Migrating customers to RISE, its cloud offering on a subscription-based model, is of utmost importance. SAP RISE is the cornerstone of SAP’s long-term financial plan to secure increased renewal revenue.
SAP’s motivations and commitment to this offering were made clear back when its predictable revenue, a major factor in overall company valuation, was in the low 70s while other pure-play SaaS providers were in the low to high 90s. In its 2022 year-end earnings call, SAP boasted predictable revenue of 79% with aspirations to reach 85% by 2025. The stakes for SAP are high and customers should anticipate that SAP’s sales and negotiation tactics will reflect that and will include:
