The Persistent Challenge of S/4HANA Business Justification
More than ten years after SAP introduced its groundbreaking S/4HANA in-memory ERP platform, a staggering 95% of legacy users continue to struggle with building a compelling business case for migration. This ongoing challenge represents one of the most significant transitions in enterprise software history, with industrial organizations particularly affected due to their complex, customized implementations and mission-critical operations.
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The migration dilemma has become so pronounced that industry developments show many companies exploring alternative paths forward. According to recent research from Freeform Dynamics, SAP’s aggressive support deadlines and changing licensing models have created substantial uncertainty among the very customers the company seeks to transition.
Understanding the Support Deadline Pressure
SAP has established what many consider aggressive timelines for its legacy ECC system, with mainstream support ending in 2027 and extended support concluding in 2030. For industrial companies that have invested decades and millions in customizing ECC to their specific manufacturing and supply chain needs, this creates a formidable challenge. The situation becomes even more complex when considering that under special circumstances, support can extend to 2033—but only if customers commit to cloud migration packages well in advance.
This pressure comes at a time when technology supply chains are undergoing significant transformation, adding another layer of complexity to migration decisions. Industrial organizations must weigh their ERP transition against broader operational changes happening across their enterprises.
The Communication Gap and Customer Concerns
The survey of 455 IT leaders and SAP specialists revealed troubling communication gaps between SAP and its customer base. Eighty-three percent of respondents admitted they don’t fully understand SAP’s latest migration policies and deadlines, while 84% expressed concern about how current messaging would impact their operations. This uncertainty makes strategic planning exceptionally difficult for organizations running complex manufacturing and distribution operations.
As companies navigate these challenges, they’re increasingly aware of cybersecurity threats that could impact their migration timelines and strategies. The evolving threat landscape adds another dimension to the already complex migration equation.
The Rise of Composable Architecture Alternatives
Distinguished analyst Dale Vile notes that SAP customers are increasingly embracing the concept of open “composable” architecture, where organizations loosely couple third-party solutions to meet their ERP needs. “This business-led rather than supplier-led approach has been commonplace in other areas of IT for a while as it pays dividends in terms of flexibility, control, and access to new innovations,” Vile explained.
This trend aligns with broader strategic technology investments happening across industrial sectors, where companies seek to maintain control over their digital transformation journeys rather than being locked into vendor-specific roadmaps.
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SAP’s Cloud-First Strategy and Innovation Access
Following S/4HANA’s 2015 launch, users initially had the choice between on-premise or cloud deployments. However, SAP has increasingly shifted toward favoring a cloud SaaS model, stating that key innovations—including artificial intelligence capabilities—will only be available through cloud deployments. This creates a significant consideration for industrial companies with data sovereignty requirements or those operating in regions with limited connectivity.
The company’s introduction of SAP Cloud ERP Private Edition, with pricing based on the new Full-Use-Equivalent metric, represents another shift in approach. This change has prompted user groups like DSAG (representing Germany, Austria, and Switzerland) to call for greater transparency in cloud licensing to facilitate smoother transitions from on-premise systems.
The Customization Conundrum
Perhaps the most significant challenge for industrial organizations is SAP’s recommendation that users eliminate customizations built into their legacy ECC systems and either adopt new standard business processes or rebuild custom functionality in SAP’s cloud platform. For manufacturers with deeply embedded, industry-specific processes, this represents not just a technical migration but a fundamental business process reengineering effort.
This challenge is particularly acute given that AI and automation technologies are transforming industrial operations, creating additional pressure to modernize while maintaining operational stability. Companies must balance the promise of new capabilities against the disruption of changing established processes.
Current Migration Landscape and Future Implications
Recent data from Gartner reveals that 61% of SAP customers using the legacy ECC platform had yet to license S/4HANA software as of March. With approximately 35,000 organizations still running ECC globally—including industrial giants like Volkswagen Group, Siemens, and Airbus—the scale of the migration challenge becomes apparent.
As organizations weigh their options, many are discovering that productivity enhancements from new technologies don’t always materialize as expected, adding another layer of complexity to the business case calculation. The fundamental question remains whether the benefits of migration justify the substantial investment required.
SAP maintains its commitment to “guiding and supporting every step of its customers’ move to integrated, cloud-powered operational excellence,” positioning SAP Cloud ERP Private Edition as “a gateway to a future of limitless potential and unprecedented business agility.” However, for many industrial organizations, the path forward remains unclear, and the business case for S/4HANA migration continues to be an ongoing challenge that requires careful strategic consideration amid evolving market conditions and technological possibilities.
As these industrial computing trends continue to evolve, organizations must balance the pressure to migrate with the practical realities of their operations, making the S/4HANA decision one of the most significant strategic technology choices industrial companies will face in the coming years.
This article aggregates information from publicly available sources. All trademarks and copyrights belong to their respective owners.
