Deadline extended for SAP Business Suite 7

More time needed

Committing to S/4HANA long-term while at the same time extending support for SAP Business Suite 7 should reassure customers who want to move to S/4HANA but are wary of the time it takes for the move, said Andreas Heckmann, SAP executive vice president and head of customer success services.

"We had a lot of customer communication and spoke to the user groups, and we saw that we have an ever-increasing wave of customers moving to S/4HANA," Heckmann said. "But customers are saying that they don't just want migrate over to S/4HANA, they have a huge business transformation and 2025 is getting pretty close. So they would be more comfortable if they have a little bit more time to handle this huge undertaking to go through the entire business transformation."

Heckmann cited a recent survey from ASUG, Americas' SAP Users' Group, that indicates the vast majority of SAP customers plan to move to S/4HANA, and another from DSAG, the German-speaking SAP Users Group, indicating that customers' investments in S/4HANA are increasing significantly.

SAP customers now have time to properly plan and manage an S/4HANA migration, said Jan Gilg, SAP senior vice president and head of SAP S/4HANA.

"This is the right time to give customers the security and safety so that they have clarity and know what options they have for 2030 so they can really properly plan," Gilg said. "The feedback that we received from the user groups was that they're actually pretty happy, but they need help with the planning."

Welcome news for customers

The announcement rippled through the SAP ecosystem, with observers seeing upsides and downsides for SAP. Many believe that SAP customers are likely breathing a sigh of relief, while some competitors feel it bolsters their case to abandon S/HANA plans entirely.

"This was to be expected and is good news for SAP, its customers and the ecosystem," said Holger Mueller, vice president and principal analyst at Constellation Research. "It gives customers more time to evaluate migration to S/4HANA, understand the value proposition and decide when to upgrade. For the ecosystem, it is good news, as it gives more time for qualification of consultants and more feasible project timelines."

It also gives SAP time to prove the S/4HANA value proposition and make the upgrade question a "no-brainer," Mueller said.

"It's certainly not a surprise, as customers do not like to be rushed into anything, and 2025 will have been too soon," said Predrag Jakovljevic, principal industry analyst at Technology Evaluation Centers. "SAP risked departures to the likes of IFS, which is angling for that 'viable alternative to SAP' play… As for pledging to work on S/4HANA until 2040, it shows SAP's confidence -- at least externally -- in the product, and customers like certainty."

No excuse to sit on the sidelines

The news should not have been a surprise to anyone who was paying attention to S/4HANA conversion numbers, said Geoff Scott, CEO of ASUG, but it's more of a recognition that there's a lot of work in an S/4HANA migration and that customers will benefit from the extra time. However, customers should also not sit on their hands and miss out on the advantages of S/4HANA's technology.

While the announcement from SAP does provide more flexibility for those who are on the sidelines, I don't see it as a justification to stay on the sidelines.

"The good news is that customers don't have to make a jarring change to pay homage to a date, but the technology revolution we're all living in -- with the digitization of products and services -- shows no sign of slowing down from its dynamic pace," Scott said. "And that's the reality that all companies need to understand. So while the announcement from SAP does provide more flexibility for those who are on the sidelines, I don't see it as a justification to stay on the sidelines."

Scott's perspective was echoed by Ekrem Hatip, senior solutions architect at Syntax Systems, a Montreal-based firm that provides managed services for SAP systems.

"Although SAP extended the deadline for its support for SAP Business Suite 7... customers should not become apathetic," Hatip said. "Migrating mission-critical applications to the cloud can be a complex process, and companies that haven't yet started should use this extra time to solidify a cohesive strategy and timeline to migrate to S/4HANA."

However, the argument that customers shouldn't use the extension as an excuse to stay put on older releases misses a larger point, said analyst Jon Reed, co-founder of Diginomica.com, an enterprise software news and research site.

"Customers shouldn't dillydally on the issue of digital transformation and how to respond to disruption in their industry," Reed said. "How SAP fits into that response is a separate discussion, and SAP has to earn a seat at that table based on the platform, ease of integration, time to value, quick wins, modular steps, and quality partners that get the vision and have the experience, and overall intelligent enterprise capabilities going forward."

Competitive pinch makes extension necessary

The extension of support for Business Suite was needed because SAP was beginning to feel increasing pressure from competitors that see opportunity in customer reluctance to begin the S/4HANA migration process, said Josh Greenbaum, principal at Enterprise Applications Consulting.

SAP was starting to get punished in the field by competitors who were pointing at 2025 and saying, 'We'll take better care of you than this,'" Greenbaum said. "A lot of customers are either doing an upgrade to S/4HANA solely because of 2025, or, more importantly, were finding their CEOs and boards who were questioning whether they should upgrade to S/4HANA or look at a competitor."

SAP customers now have a better way to transition to S/4HANA because there's more certainty, he said.

"Some companies are still running R/3, so it's reasonable to expect that some customers will want to run [SAP Business Suite] after 2027, and at least right now, there's a plan for them," he said. "The real issue was that there was this cliff that looked like everyone was going to fall off of in 2025, and that wasn't healthy for anyone. Now instead of a cliff there's a bridge, and that can make a lot of difference for a lot of companies in terms of long-range planning."

Still, extending support for Business Suite 7 confirms the case some competitors have been making -- that SAP legacy customers have choices and an S/4HANA migration doesn't need to happen if the business case is not there.

The Business Suite support extension provides the illusion of customer concern, but only delays the problem, said Darren Roos, CEO at IFS, an SAP competitor that provides manufacturing-focused ERP systems.

"Even with a two-year extension, there simply aren't the skills or resources available to migrate everyone by that deadline." Roos said. "For many customers, there still isn't real, quantifiable value in S/4HANA, and most of the people who have committed to re-implementation already still don't have a project underway to move away from their existing ECC instance."

 Customers should base their ERP choice on the model that works best for them, not deadlines that primarily benefit the vendor, Roos said.

Adding two more years of mainstream maintenance for Business Suite 7 doesn't address the bigger problem that S/4HANA struggles to provide a quick ROI for many SAP customers, said Eric Robinson, group vice president and general manager for SAP Services at Rimini Street, a firm that provides third-party support services for SAP platforms.

"The Business Suite 7 software has a lot of years of life and value remaining, and many SAP customers will be far better off maximizing the value of their current robust SAP systems with alternatives like third-party support which can offer support through at least 2035," Robinson said. "This enables them to shift funds to innovation initiatives that will more quickly drive competitive advantage and growth at far lower risk. Once S/4HANA and other competing systems are mature, SAP customers can flexibly select the best fit system for their future business platform."