“At current rates, only 31% of ECC customers will be fully live on S/4HANA by the end of 2027” – David Lees, CTO, Basis Technologies
Last year, I estimated that more than 89% of the S/4HANA transformation was still to be done by SAP’s 2027 deadline. Let’s look at how that figure stacks up in 2023 using the latest data from Gartner and my own calculations.
S/4HANA by the numbers in 2023
By the end of 2022, SAP reported that around 20,000 customers had licensed S/4HANA. Considering Gartner estimates that around 35,000 existing ERP customers are running ECC, that figure doesn’t sound bad.
But what does that number of S/4 licensed customers really mean? If we take it at face value, that suggests more than half of SAP’s ERP customers are now on S/4. Unfortunately, it’s not that simple.
For starters, those 20,000 customers are simply ones that currently have a license for S/4HANA and of those, Gartner’s latest estimate is that 56% are net new customers, meaning they’re not part of the original 35,000 ECC customers. The remaining 44% (11,200) are pre-existing ECC customers with a license for S/4HANA.
According to an article from Brightwork Research, some of those customers may not have required S/4HANA at that point in time. They found that quite a few of those customers were forced to get a license as part of a settlement for the whole “indirect access” issue from a few years ago. That number also does not specify how many licenses were bundled as part of other package or contract deals.
Looking at a recently published Gartner presentation on the adoption of S/4HANA and their research gives a bit more detail into what those numbers really mean. They found that at the end of 2022, of those with an S/4HANA license, approximately 65% were live in at least one system.
They may well be live in one system, but most large customers have more than one ECC system and therefore their S/4 journey has not finished. By my estimation, based on Gartner’s research and my experience planning S/4 migrations at large enterprises like Procter & Gamble, a further 65% of those who have a license and are live have fully replaced their ECC system with S/4HANA, and that’s probably a generous number.
If we do the sums, that would put the number of customers who have FULLY migrated to S/4HANA from ECC at around 4,750, or around 14% of the original 35,000. This has increased by about 3% from last year.
Essentially, the data shows us that since it was launched in 2015, eight years ago, SAP customers have completed around 14% of the transformation to S/4 with another 7% being in-flight.
Extrapolating the progress from the last few years suggests that, by the end of 2027, only 31% of existing ECC customers will be fully live. By the end of 2030, that would only rise to 43%. That is unless there’s a rapid uptick in the adoption rate.
A warning for early adopters and compatibility packs
It’s also important to understand that even for customers who have already migrated to S/4HANA, there are pressing deadlines to prepare for. All customers who went live on versions of S/4 released prior to 2020 will be unsupported from the end of 2025, requiring an additional, although much more manageable, upgrade effort.
Early adopters of S/4HANA who rely on Compatibility Packs to plug functional gaps in their version of S/4HANA also face an expiration date before the end of 2025, requiring an additional transformation (and most likely an S/4 upgrade).
End of ECC support by 2027
In order to encourage customers to adopt S/4HANA, SAP has announced it will stop supporting ECC officially at the end of 2027. However, it is possible to buy extended support for a higher premium through to 2030 on a case-by-case basis. This date has been pushed back before and it’s possible it will be delayed again considering the backlog of transformation highlighted above. When SAP finally ends support, companies will either have to use third-party maintenance services or switch to another ERP platform if they haven’t made the shift.
Regardless of when SAP does finally end support for ECC, that only applies to the ECC application itself, not the database it runs on. Even assuming SAP does delay the end-of-life date for ECC, companies might still have to migrate to Suite on HANA.
Many SAP users currently run their ECC landscape on a non-SAP database like Oracle or IBM’s DB2. At the time of writing, neither company has said it will extend support for these databases beyond 2027. Oracle is ending support for standard maintenance in April 2024 and extended support in April 2027. For customers who purchased maintenance through SAP for IBM’s DB2, they will be supported until April 2027. This may be different for customers who purchased maintenance services directly through IBM.
That means even if you choose to “play chicken” and just wait to see what SAP is going to do regarding ECC support, you’ll still either have to use third party maintenance services or move your database to HANA in order to keep using ECC (unless Oracle or IBM announce extended support).
Therefore, customers are left with, at minimum, one year before they might have to begin a large-scale transformation project. However, companies will be hard-pressed to find the talent and resources required just as the need for technical resources and expertise begins to spike.
Let’s not forget about SolMan
The third piece of this puzzle involves SAP Solution Manager (SolMan). As with ECC, SAP has stated they plan to end support for SolMan at the end of 2027, and of course, customers who move to third-party maintenance before then will lose support for SolMan when they leave their SAP contract. There’s also no official word on extending support beyond 2027 but we can assume that if they do offer the option, it will cost more.
For customers wanting to stay with SAP for managing change delivery, they’ll need to migrate to Cloud ALM as part of their S/4 migration project, which adds yet another layer of complexity. The challenge with Cloud ALM is that, at the moment, it doesn’t offer nearly the same functionality or capability as SolMan, so again, customers will need to look to third party change management solutions.
Something’s gotta give
This leaves SAP and their ECC customers in a challenging position. S/4HANA migration projects already promise to be extremely time-consuming and complex but every delay in beginning the project could lead to more complexities, which means more time and costs. It’s not unforeseeable for companies to find themselves in a situation where they simply won’t be able to begin their migration project when they want to. Resources will become a key constraint and automation will be a necessity.
My assumption is that SAP will be forced to push their end-of-life dates back again, but I wouldn’t expect that to happen immediately. Most likely they will wait as long as possible to push it back in order to put pressure on as many customers as possible to begin their upgrades.
It’s been eight years since SAP launched its latest flagship product and while it claims that the adoption rate for this new software is more than 50%, the truth is that most likely only about 14% of existing customers have FULLY migrated to the new platform.
For those who remain, the path to S/4HANA is a bit more complicated than you might think. If you haven’t yet begun your migration to S/4, I wouldn’t wait any longer. If you’re ready to start your project, our Change Automation & Governance solution for SAP, ActiveControl, should be part of the toolset for managing the complexity of an S/4HANA transformation and beyond.
Contact us today to find out how automation can help accelerate and de-risk your move.