In recent weeks, SAP has introduced a series of important announcements regarding pricing and strategy for future innovations. We first heard about some of these updates during this year’s SAP Sapphire and ASUG Annual Conference, and others were discussed in part late last month, during SAP’s Q2 earnings call with investment analysts.
We have since received questions from ASUG Members, analysts, and journalists, and seen several articles published in response to these announcements. Our members make up the world’s largest network of SAP customers, and as your trusted community, it is our responsibility to seek further clarification on these announcements on your behalf and provide our guidance once we fully understand the intent and potential impact of these updates for our members.
We will continue to keep you updated as our understanding evolves through conversations with SAP, fellow community members, and various partners that are currently underway. At this time, here is what we can share:
Insights into SAP Cloud Solutions and Strategy
SAP Cloud Strategy
- SAP's direction is the Cloud, offering SAP cloud solutions as a part of its business transformation as a service (BTaaS) and SaaS solutions, and its intent is for all customers to come on this journey as well. This is not news, but we understand the importance of continuing to discuss new developments in this strategy with members of our customer community who have yet to upgrade from SAP ERP Central Component (ECC) or currently operate in on-premises environments.
RISE with SAP is SAP's business transformation program for existing customers migrating to the Cloud; it offers both private and public cloud options for SAP S/4HANA. The public cloud option, GROW with SAP, is designed to accelerate adoption of SAP’s Cloud ERP for net-new customers and small-to-midsize companies; it is built on SAP S/4HANA Cloud, public edition.
SAP is actively working to move non-RISE customers to RISE. SAP plans to deliver future new solutions, like Green Ledger, to RISE and GROW customers, and non-RISE or GROW customers looking to adopt future SAP innovations should understand that SAP sees these programs as key enablers for quickly delivering new innovations and capabilities. ASUG's current view is this may be a soft line from SAP, given sufficient customer demand for specific innovations.
- Future artificial intelligence (AI) and generative AI innovations will be embedded within "premium" editions of SAP solutions and priced accordingly. ASUG does not have any further information at this stage as to the specifics of these innovations, and generative AI is an especially fluid space at the moment. More information and discussion will be forthcoming on this front, but we ultimately believe that your decision around adopting these premium offerings will be based on the business value you will derive from such SAP SaaS innovations.
Based on SAP’s cloud strategy, what might these announcements mean for our customer community? Here is one way to break this down:
How SAP Cloud Strategy Should Impact Your Business Transformation
Consider Adopting RISE with SAP
- If you are an SAP ECC customer, you should be actively considering RISE with SAP, which was launched to enable your migration to (first and foremost) the public edition of SAP S/4HANA Cloud, followed by SAP S/4HANA Cloud, private edition.
- If you are an SAP S/4HANA customer not on RISE, you should understand RISE’s role as the future enabler for leveraging all SAP innovations. For SAP S/4HANA on-premises customers, SAP will still develop innovations and patches, but must deliver more recent innovations, such as those related to generative AI, in the cloud, where its “clean core” ERP strategy—keeping systems manageable, extensible, and easy to upgrade—will enable maintenance, process standardization, business network integration, and security while ensuring such innovations remain relevant, responsible, and results-driven.
- If a customer is considering a greenfield deployment of SAP S/4HANA Cloud as part of the move to RISE, SAP S/4HANA Cloud, public edition, should be considered first due to its lower total cost of ownership (TCO) and speed of new innovation delivery. Depending upon factors such as industry, business process requirements, or regulatory restrictions, customers can alternately select SAP S/4HANA Cloud, the private edition.
- The ease of adopting future innovations from SAP will be highly dependent on the level of customization in a customer’s technology landscape, and this will especially hold true for those in on-premises environments.
- If you are a brand-new SAP customer, rather than part of its installed base, we view GROW with SAP as the best entry point into the SAP product ecosystem.
- It’s important to separate maintenance from innovation. ASUG’s interpretation is that large innovations such as Green Ledger (and others that follow) will only be available for customers on RISE and GROW. Maintenance updates and patches continue forward as they always have.
Ultimately, all of these announcements and your responses to them will come down to business outcomes, value, cost, timing, and negotiations. The price you are willing to pay for SAP cloud solutions is measured by your ability, as a customer, to realize value from them. At ASUG, our objective is to help you get the most value out of your existing SAP investments by regularly communicating and continuously clarifying the details of these announcements as they emerge. We will continue to keep you updated as we learn more in the weeks and months ahead.
If you have questions or comments, we are here to listen and respond for your benefit. Please get in touch through news@asug.com.
Geoff Scott is CEO and Chief Community Champion at ASUG, the world’s largest SAP user group.