In the News:

1. Accelerated Cloud Growth
   • Financial Performance: In Q3 2024, SAP reported a 25% increase in cloud revenue, reaching €4.35 billion. The Cloud ERP Suite revenue grew by 34% to €3.64 billion.
     SAP News
   • Market Position: SAP has become Europe’s most valuable technology company, surpassing ASML, with a market valuation of €269 billion.
     MarketWatch
2. Emphasis on Artificial Intelligence (AI)
   • Integration: Approximately 30% of new cloud contracts in Q3 2024 included AI functionalities, highlighting SAP’s commitment to embedding AI across its solutions.
     Welt
3. Strategic Restructuring for Scalability
   • Operational Efficiency: SAP announced a company-wide restructuring program expected to affect 9,000 to 10,000 positions, aiming to enhance scalability and focus on strategic growth areas, particularly business AI.
     SAP News
4. Enhanced Financial Outlook
   • Revenue Projections: SAP has raised its 2024 outlook, now anticipating cloud and software revenue between €29.5 billion and €29.8 billion, and operating profit between €7.8 billion and €8.0 billion.
     SAP
5. Sustainability Initiatives
   • Green Transformation: SAP continues to invest in solutions that help businesses achieve their sustainability goals, integrating carbon tracking and resource efficiency tools into its offerings.
6. Focus on Customer Success
   • Client Adoption: The “RISE with SAP” program continues to gain traction, enabling customers to drive end-to-end business transformations and migrate to the cloud efficiently.
     SAP News

Behind the Scenes:

Whilst these news bites are pushed and accessible in the media – there is a significant amount of change happening behind the scenes.

A) The partner ecosystem is changing 

• There should be an increase in demand for skilled SAP resources by +- 10-15% globally during 2025-2030 when compared to 2023-24. SAP have expected this and have permitted many more partners into the PartnerEdge program over the last 2 years, by some counts the number of SAP partners globally has increased from 18,000 in 2018 to 25,000 in 2024.
• In 2025 the SAP Partner Ecosystem is undergoing a significant transformation. SAP is moving away from the traditional Platinum, Gold, and Silver partner tiers toward a model that promotes competencies and specialisations.  We see this as a leading initiative as it will showcase partners and service providers with expertise and experience in specific areas. However it comes with challenges – it relies on a significant number of consultants to be certified at a cost, in addition to the competencies and specialisations not covering all components of the SAP ecosystem. Due to this, it is expected SAP will use both the new and old partner tiers for some time.

B) Customers on SAP ECC are facing increasing complexities

SAP ECC enhancement pack timelines are critical for IT leaders planning their system migrations or upgrades. These timelines dictate the level of support available for various versions of SAP ECC, directly influencing upgrade strategies and deadlines.

Support Timelines by Enhancement Pack:

• Enhancement Packs 6 to 8: These versions of SAP ECC are supported until 2027, providing organisations more time to plan and execute their migration to S/4HANA.
• Enhancement Pack 5 and Earlier: Support for these versions ends in Q4 2025, with no option to purchase extended maintenance. Customers have the option to upgrade to a higher support pack and extend their support by 2 years and possibly purchase extended maintenance to 2030 if available (on a case by case basis).
• There is an additional section of customers already on S/4HANA whom have their own upgrade issues – we deal with this in another article (S/4HANA and SAP Compatibility Pack Challenges).

Impact of Expired Support:

• Without support, systems may no longer receive critical updates, including security patches and bug fixes, increasing operational risks.
• Businesses may face higher costs for extended support or risk non-compliance with regulatory and security standards.

Upgrade Options:

1. Upgrade to a Later Enhancement Pack: Moving from older enhancement packs (e.g., Pack 5 or earlier) to Pack 6 or beyond can provide an additional two years of mainstream support.
2. Migrate to S/4HANA: Transitioning to S/4HANA ensures a modernised system and aligns with SAP’s long-term vision, avoiding future upgrade pressures.

Strategic Considerations:

There are a number of factors and considerations, there are also a number of programs and reports “readiness assessments” that can be run, to provide advice. Emphasys has proven experience in providing detailed fact based advice for companies seeking independent direction in this area. There are a number of factors to consider including solution availability in your target version, downtime for upgrades and maintenance in addition to complexity when dealing with global vs local instances of solutions and latency and cost in system integration and performance.

However at a high level one can start with a consideration of:

• System Complexity: Organisations with heavily customised systems may face greater challenges in upgrades and migrations, requiring more planning and resources.
• Clean Core Systems: Businesses maintaining “clean” ECC setups with minimal customisations will have more flexibility in their upgrade or migration paths.

The reason why 2025 is a pivotal year for SAP, is it is the year in which we discover:

1. 1. How many customers remain on unsupported versions of SAP?
   2. How large a shortage of skilled resources is in the marketplace?
   3. How many customers will enter or exit the SAP ecosystem during this period of forced introspection and transformation?

IT leaders should assess their SAP ECC enhancement pack version and support timelines, develop a migration roadmap aligned with business needs, and leverage Emphasys’ expertise to plan their transition to S/4HANA. Proactive planning is essential to avoid resource shortages and ensure business continuity.