SAP introduced a new program that offers services and incentives to entice its on-premises customers to move to S/4HANA Cloud. The Rise with SAP Migration and Modernization program, available now, was designed to address two migration barriers: costs and dubious outcomes.
To address issues of costs, the new program includes limited-time incentives where on-premises customers get a one-time, upfront credit based on their annual contract value with SAP that can reduce migration costs by up to 50%, according to the vendor.
Until the end of 2024, customers that commit to a migration through Rise with SAP or Grow with SAP can access credits that they can apply to maintenance costs, cloud services or cloud subscription costs. These apply to on-premises customers on SAP ERP Central Component and those who have migrated to S/4HANA.
To improve S/4HANA Cloud migrations outcomes, the new program employs the Rise with SAP methodology, designed to help customers keep track of migration progress and adhere to specific processes. This is handled by SAP services and partners that have been trained and validated in the Rise with SAP methodology, according to the company.
SAP is also introducing the S/4HANA Cloud Safekeeper service, aimed at customers that need more time to complete a full migration. The service extends the maintenance windows for existing implementations for two more years.
The intent behind the Rise with SAP Migration and Modernization program is to help on-premises customers move into a "clean core" system, which includes standardized processes and best practices to makes a successful S/4HANA Cloud business transformation possible, according to SAP.
The approach to S/4HANA Cloud moves
The new program appears to be a recognition that Rise and Grow need further incentives to persuade reluctant on-premises customers to the cloud, analysts said. Rise with SAP was originally designed to remove cloud migration complexity but has been slow to gain traction with customers since being launched in 2021.
The Rise with SAP Migration and Modernization program is more of the same enticement offering, an approach SAP has used for years to move legacy customers first to S/4HANA and now to S/4HANA Cloud, said Liz Herbert, an analyst at Forrester Research.
The new program offers reward rather than consequence -- an approach SAP took at the end of 2023 when it told customers that cutting-edge capabilities such as AI and sustainability would only be available to Rise with SAP customers, she said.
"It's all part of the same broad story for SAP that they're not getting customers over to S/4HANA Cloud at the pace and speed that they want and that they believe investors expect. So this is layering on more incentives for customers to do so," Herbert said.
Liz HerbertAnalyst, Forrester Research
The financial incentives could help customers make a better business case for a migration, which can run into tens or hundreds of millions of dollars, she said. If customers that are on the fence can save on costs, it might push them into making the move. But it likely won't affect those who remain uninterested or are already in process.
Technical capabilities and innovations like AI in S/4HANA Cloud are not enough of an incentive, especially for companies with established ERP systems, Herbert said.
While they might know that S/4HANA Cloud would be a better alternative, these customers do not want to pay the high costs, suffer from the potential disruption a migration could cause or face the inherent risk of ERP implementations, she said.
SAP wants to show that S/4HANA Cloud adoption has momentum, so it's putting out incentives to its customer base, said Holger Mueller, an analyst at Constellation Research.
"This is not the first time this has happened in enterprise software and will not be the last time," Mueller said.
While it remains to be seen whether the financial offering is set at the right level to entice customers to migrate, the gap between on premises and as a service remains wide, he said.
"It certainly helps customers who are going or planning to go. But we shall see if it motivates the ones who are not planning to upgrade," he said. "What is clear, though, is that SAP acknowledges that it cannot get customers to upgrade to S/4HANA Cloud by the merits of pure product innovation. It's not like it was with R/2 to R/3."
Jim O'Donnell is a senior news writer who covers ERP and other enterprise applications for TechTarget Editorial.