According to SAP’s December 2021 financial report, only 18,800 (<5%) S/4HANA licenses have been sold out of 4,25,000+ SAP customers. One way to understand this data could be that even after seven years of S/4HANA launch, the SAP legacy customers base has been slow to migrate to SAP S/4HANA and still relies heavily on SAP legacy ERP platforms. The legacy platforms are hindrances to digital maturity and operational optimization. Latest platforms and digital capabilities are critical for business resilience and competitive advantage.
- Legacy SAP customers have their own reasons for not initiating an S/4HANA migration, including cost, lack of a business case, lack of vision and strategy, migration challenges (customized application and data storage models), lack of talents, and change management challenges. Customers remain largely in observation mode or are still building a business case.
- However, on the flip side, given the 2027 deadline, legacy customers have only five years remaining for the SAP legacy support, and the prolonged support from SAP may come with a considerable cost. Delaying further will not solve any talent shortage or cost challenges. Instead, it places them at a disadvantage. Although legacy customers use a two-decade-old system, competitors may have the system’s latest version, which puts competitors at the edge. Eventually, legacy SAP customers will have to move to S/4HANA. It appears almost certain that a last-minute surge in migrations will increase demand for S/4HANA projects and place enterprises in a less advantageous position during negotiation with services providers. So, early migration could be beneficial for customers, as services providers can provide their undivided attention to migration.
- Enterprises that delay will lose valuable time and slowly lose advantages, such as processing speed, scalability, flexibility, simplified process, and decision-making abilities, to businesses that have migrated to S/4HANA or digitally mature solutions. Enterprises should leverage the early-mover advantage to stay competitive.
- The pandemic taught us the benefits of being digitally mature, resilient, and staying current. With the clock ticking, it is wise to initiate the migration process now. Among many benefits, it helps customers intelligently plan resource allocation, identify service provider support, and get a handle on cost.
The Bottom Line: Customers can no longer afford to stay in legacy SAP platforms. Competition has never been as acute as it is today around. the globe. Since the pandemic started, how we operate and consume things has changed drastically. Staying in legacy ERP Platforms puts customers at a significant disadvantage. Together, business and IT leaders must build a strong business case for S/4HANA migration.
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