Five years after launching its rescue plan to lift ERP users to the cloud and switch them to the latest software, SAP is off target by about €2 billion, marking a significant shortfall in one of the software industry's most ambitious modernisation programmes.
In 2022, then-CFO Luka Mucic told investors that for 2025, SAP wanted to see €8.5 billion in support revenues, down from around €11.5 billion in 2021, as users move from on-premises licenses and support to cloud subscriptions. But the 2025 full-year figure for on-premises software support was €10.5 billion, down only 7 percent from 2024's €11.29 billion. That's €2 billion off where SAP wanted to be, or about 24 percent more than it should have been.
The stalled migration reveals a deeper problem. Figures from the end of Q4 2024 showed only 39 percent of worldwide ECC customers – from a total of 35,000 – had bought or subscribed to licenses to start their transition to SAP S/4HANA. The figure was up marginally on the 34 percent recorded for the same quarter a year earlier. The inertia is striking given that S/4HANA was released in 2015 and mainstream support for legacy ERP software ECC ends in 2027.
In response to this reality, SAP is making a strategic pivot. From the beginning of next month, Thomas Saueressig will see his role expanded from chief customer officer to lead the new Customer Value Group to support the expansion of SAP's cloud and AI-powered solutions as part of a board-level reorganization. More telling is CEO Christian Klein is also setting up a new unit to encourage adoption of AI and introduce a new way of charging for AI consumption.
The shift represents an acknowledgment that forcing customers off legacy systems has proven harder than SAP anticipated. When Klein launched the RISE with SAP programme in October 2020 after a bruising 23 percent share price crash, the promise was clear: accelerated cloud migration. RISE with SAP promised to lift and shift complex SAP environments into public, private, and hybrid clouds. In addition, it planned to move users of legacy ERP software to the latest product S/4HANA. But complexity, cost, and customer scepticism have hobbled progress.
There is a broader focus on upselling the wider product portfolio from SAP. Getting ECC customers into the cloud, it can start upselling AI licensing, Business Data Cloud: upsell, upsell, upsell, in terms of bite-sized chunks of the generic innovation, according to Alisdair Bach, head of SAP practice at consultancy Dragon ERP.
SAP is not abandoning migration. Rather, it is extending timelines and loosening the pressure. Customers who have moved ECC to the cloud via a dedicated SAP ERP Private Edition subscription could well get access to the vendor's flagship AI platform, Joule, later this year. This suggests AI capabilities could serve as a partial incentive for delayed migration, offering new value even as the move to the cloud stalls.
The challenge is not technical. The challenge is that enterprise software decisions are business decisions, and the business case for wholesale transformation has never been as clear as vendors hoped. Catherine Jestin, executive vice president of digital at Airbus, told The Register that if you talk to some of the CIOs in Europe who implemented ECC6, most of us will not be finished with the migration by 2030. For companies operating at that scale, years of delay matter less than cost containment and operational stability.
SAP's new emphasis on AI and incremental upselling reflects pragmatism, not failure. The vendor still owns the installed base. What it has learned is that customers will not be bullied into transformation by deadlines alone. They will migrate when the value proposition outweighs the risk and cost. Until then, they will pay for extended support, adopt new tools within legacy systems, and negotiate fiercely over pricing. SAP's job now is to make money from that reality rather than fight it.