Research from Freeform dynamics Rimini Street found that almost all of the 455 organizations surveyed were struggling to justify the cost of an upgrade.
A survey of IT and business executives raised concerns about subscription-based licensing of the SAP S/4Hana enterprise resource planning (ERP) product. Nearly a third of business and IT executives surveyed (31%) say they are struggling to generate positive return on investment (ROI) for S/4Hana.
Nearly two-thirds (64%) believe it will take some effort to make the business case for migrating from the legacy ERP system SAP Enterprise Core Components (ECC), which is supported directly by SAP until 2033, if customers commit to migrating to its SAP Rise offering.
The study showed that 29% of respondents whose organizations still use ECC are not looking for innovation in SAP. Instead, many choose composable ERP strategy building on offerings from multiple enterprise software providers to more quickly integrate best-in-class products and services and the latest technologies while maintaining flexibility, cost and roadmap control, and delivering faster business results.
The survey results show that the majority of business and IT executives surveyed do not fully understand the latest SAP migration policies and timelines. Freeform Dynamics also found that 84% expressed some level of concern about current messaging and how it would impact their operations.
An analysis of survey data by Freeform Dynamics shows that SAP's ongoing shifts in timing, packaging options, transition programs and even product renaming are adding to the uncertainty experienced by its customers, complicating strategic planning but also prompting them to seek alternative paths forward.
More than three-quarters (77%) of IT and business leaders surveyed agree in principle with software as a service, but have reservations about SAP's approach. In fact, 92% cited rising and unpredictable subscription costs as a major challenge to their business, while 95% of respondents say that creating a positive ROI case for S/4Hana requires significant effort or is truly challenging.
The survey also found that 83% of respondents see clear value in composable approaches for faster access to new technologies such as artificial intelligence (AI), and 94% emphasize the freedom to choose the most appropriate applications for each business need.
“It's great to see so many SAP customers now fully embrace the idea of open composable architecture and the use of loosely coupled third-party solutions to meet their ERP needs,” said Dale Weil, distinguished analyst at Freeform Dynamics. “This business-rather than vendor-focused approach has been common in other areas of IT for some time as it pays dividends in terms of flexibility, control and access to new innovation.”
In June, Rimini Street announced that it would offer extended support for SAP ECC 6.0 and S/4Hana support to new and existing customers for 15 years.
Discussing the role of third-party support in helping organizations succeed with composable ERP systems, David Rowe, Director of Product and Marketing at Rimini Street, said: “Rimini Street customers use our third-party support and optimization solutions to effectively extend the life and add value to proven existing versions of SAP. freeing up critical funds to accelerate the adoption of new technologies like artificial intelligence, maintain control of your roadmaps, and achieve above-average performance.”
