Microsoft joins SAP, Oracle in setting sunset date for legacy ERP support

Microsoft will end product support and updates for Dynamics GP, its legacy enterprise resource planning (ERP) product for small and medium businesses, on September 30, 2029, the company announced on Tuesday. Security patches will continue to be provided for another 18 months, until April 30, 2031.

Customers have had plenty of warnings about the product’s retirement. In 2022, Microsoft announced the “end of innovation” for Dynamics GP, and in 2023, it said that no new licenses would be sold after April 2025.

Mike Morton, VP of Microsoft Dynamics Business Central, is urging Dynamics GP customers to move from the on premises product to cloud-based Business Central, and provided an overview of the process.

“Microsoft is committed to ensuring we offer robust and innovative solutions to meet these needs. Dynamics 365 Business Central is Microsoft’s flagship SMB ERP product, optimized to help businesses thrive in a new world of cloud and AI computing,” Morton said in a blog post announcing the end of support.  

In a separate post explaining the change, Microsoft said, “We are encouraging customers to transition to Dynamics 365 Business Central, which offers advanced AI tools and robust security features to help businesses thrive in the new era of cloud and AI computing.”

Microsoft isn’t the only company attempting to lure its legacy customers into the cloud. In 2020, SAP announced an innovation commitment for SAP S/4HANA until the end of 2040. This means that until 2040, there will always be at least one release of SAP S/4HANA in maintenance.

However, SAP will only provide mainstream maintenance for legacy SAP Business Suite 7 core applications until the end of 2027. What it calls an “offboarding phase” will be followed by optional extended maintenance until the end of 2030. After that, customers have choices in the type of extended maintenance they can buy, at a significant price premium.

Oracle, too, is attempting to wean customers off its legacy on-prem products, but at the same time promises customers 10-year rolling support for their Peoplesoft products. “Oracle continues commitment to a rolling 10 years of support for PeopleSoft. We have extended support annually for the last six years, and will continue to do so until Oracle’s strategy and support for PeopleSoft changes,” the company said in a blog post in March.

Peoplesoft will now receive support through at least 2035. At the same time, Oracle is encouraging customers to consider migrating to Oracle Fusion Cloud Applications. Its FAQ noted, “The primary advantages of migrating from PeopleSoft to Oracle Cloud Applications include a lower total cost of ownership (TCO) and ease of staying current with software, security, and technology.

“Unlike on premises PeopleSoft systems, there is no hardware to purchase or maintain,” the FAQ noted. “Maintenance tasks, such as applying security and technical patches as well as maintaining the operating system and applying updates, are all performed by Oracle. This reduces overhead costs across IT resources, including hardware and services provided by system administrators.”

Carrot and stick

“The writing has been on the wall for CIOs for a few years now,” noted Scott Bickley, research practice lead at Info-Tech Research Group. “The message from ERP vendors is clear: get on our cloud now, or else. ‘Or else’ has taken different meanings, however, the most common approach taken by the Tier 1 providers is to present CIOs with a 1-2 punch.” 

“First, pull the legacy software support rug out from under their feet with a hard deadline a la SAP’s 2027 end of support for SAP ECC. Second, present incentives, including heavy discounts, migration credits, and flexible commercial terms to varying degrees, to pull enterprises into the cloud.  The carrot and stick approach is seeing mixed results. The latest data show that 2/3 of legacy SAP clients have not made the migration to S/4 HANA, as an example,” Bickley said.

Vendors that have announced end-of-support dates appear to be adamant about keeping these intact, noted Gartner VP analyst Greg Leiter. “It does not mean that a vendor will not offer further extensions, but one can expect if they do, it will come at higher costs for the customer. This will also introduce risks as well, particularly around areas such as database and server infrastructure that run legacy ERP. These may go out of support as well exposing customers to a variety of security and operational risks.“

However, Liz Herbert, VP and principal analyst at Forrester pointed out, that some CIOs are happy with their current ERP, and will pay extra for extended maintenance so they can upgrade on their own timeline.

Do the math

For some companies, the transition to an updated system can be extremely expensive and time-consuming, Herbert said. “If you look at SAP, for some of our clients, they are looking at a billion dollars of investment between the data migration, the software, the consulting services, the training, all of it. So there also are some hefty disruptions to the business and hefty price tags that go along with it.”

She advised CIOs to do the math and weigh the trade-offs. “For most companies, it will make sense to go to these modern ERPs,” she said. “But the big question is, when is the right time to do that, and to figure out that they need to understand how well the current system is meeting business needs.”

Bickley agreed, noting, “CIOs need to proactively plan for the ERP shift from legacy perpetual, on-premises licensing models to the new cloud subscription model, coupled with re-architecting for running in a cloud environment. …. Moving a core system of record to the cloud not only raises technology challenges but also raises questions about data privacy, security, and trust in the vendor. All of this is stacked atop the change management, project planning, data migration, integration, testing, and implementation processes that have to occur. These projects generally take years of planning; this is now being forced upon CIOs in a matter of months.”

Fundamental shift

Leiter observed that Gartner is seeing a fundamental shift in applications that is, he said, “as significant as the introduction of cloud computing more than a decade ago.”

Although AI and generative AI are currently over-hyped, he sees their promise in enhanced process automation, connected data, and a significantly improved end-user experience, and vendors are not adding these features to their legacy on-prem products.

“Our advice is, this is as good a time as any for CIOs to re-evaluate their ERP strategy and plan for the announced end of life, not only in a risk-mitigated approach but also in an approach that is tied to an organization’s overall strategy,” Leiter said.

Resistance, as they say in the movies, is futile. “For CIOs resisting this movement to migrate ERP to the cloud, they should prepare for the worst,” Bickley said. “Providers will be charging a premium for an on-premises option if one is even available, and these solutions will not be the beneficiary of the latest features and innovation breakthroughs (such as SAP Joule, MSFT Copilot) and will also suffer from declining support as the best resources are shifted to support the newest generation of products.”