RISE with SAP sinking year on year

The latest figures from Gartner indicate SAP is struggling to convince users of the value of its RISE with SAP package, launched to accelerate users' ERP upgrades and switch to the cloud.

The global tech research consultancy has found that the number of customer wins to the RISE package, which bundles SaaS, systems integration, and cloud infrastructure in one-hand-to-shake deals, has fallen over the last four quarters as a ratio of total sales.

In the calendar third quarter of 2023, RISE with SAP represented 71 percent of sales, in terms of customer numbers, Gartner found. By the second quarter of 2024, that figure had fallen to 41 percent. RISE was first launched in January 2021.

Denis Torii, Gartner enterprise operations group analyst and report author, told The Register that part of the reason for this was sales were divided with GROW with SAP, a separate package launched in 2023 targeting smaller businesses with the offer of a "ready-to-run" cloud ERP based on SAP S/4HANA Cloud Public Edition.

Nonetheless, customer sales of RISE with SAP peaked in the fourth quarter of 2021 with 650 sales, Gartner said. They fell from 615 in the fourth quarter of 2023 to 255 in the second quarter of 2024, the researchers found.

By the end of 2027, mainstream support for SAP legacy ERP system ECC ends, while extended support - which comes at a 2 percent premium on fees - ends in 2030.

Torii said some users continue to resist the RISE with SAP package because they do not want to give up on on-prem licenses in favor of subscription licenses. Some also appear not to feel assured that the RISE with SAP arrangement could handle very complex migrations, a situation even some people at SAP are aware of.

Other exisitng SAP customers also found the new model to be a more expensive way of running ERP without obvious benefits, Torri added.

"This is not comfortable. You change your approach from an on-prem to a cloud environment. You change your approach to subscription licenses. You change who is managing that cloud workload. So, you put a lot of variables on the table. Of course, it's a complex conversation," he told us.

Some customers would rather retain on-prem licenses and use them in the cloud to retain control over which hyperscalers they used, he said.

The paper "SAP S/4HANA Adoption Levels for 2Q24" shows that SAP has continued to struggle to migrate customers from its legacy platform, regardless of whether or not they ultimately move to the cloud. Only 37 percent of ECC customers had licensed S/4HANA, compared with 34 percent in the same quarter last year. Gartner said there was little evidence that migrations to SAP S/4HANA were taking place at the rate needed to meet SAP's target of terminating mainstream maintenance support for ECC in 2027.

One of the hurdles is that moving from ECC to S/4HANA is not just a technology change, it involves a business transformation that SAP maintains will be necessary to remain competitive. But not all customers see it that way.

Torii said: "We speak to customers who say, 'I'd rather sweat the assets. I don't see the need to transform anything. The only reason why we'll do this is because someone is forcing me,' and that's not a great thing to have in front of you," he said.

When the costs for the typical project could run into tens of millions of dollars, users are not comfortable with the way SAP is approaching the end-of-life for ECC and the introduction of S/4HANA. "People are uncomfortable that, to be able to go to S/HANA, which doesn't necessarily bring benefits right off out of the box, they need to invest money to do that," he said.

The Register has contacted SAP for comment. ®

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