SAP customers not sold on S/4HANA ROI

A huge percentage of SAP customers are wary about the company’s efforts to move its customers away from perpetual licenses to subscription pricing, with most worried about future pricing increases, according to a recent survey.

SAP is ending support for its legacy ECC ERP solution, generally sold with a perpetual license, at the end of the year, with some extended maintenance options available from SAP until 2030.

The vendor has encouraged customers to switch to the subscription-based S/4HANA Cloud Public Edition, but many customers have resisted. Nine in 10 SAP customers are concerned about rising and unpredictable subscription costs over time, according to a survey of 455 organizations by Rimini Street, a company offering third-party support for software from SAP and other vendors.

In addition, most of those surveyed have questions about S/4HANA’s return on investment, with 95% saying that making an ROI case for the newer ERP solution is difficult or takes significant effort.

The survey points both to concerns about SAP’s pricing models and to customer questions about the future of the ERP market, says Scott Hays, senior director for portfolio marketing at Rimini Street.

“There’s enough understanding that giving up perpetual licenses and switching to a subscription is something that limits future options for clients,” he says. “It also relinquishes control.”

Nearly half of those surveyed don’t plan to be running S/4HANA in the cloud five years from now, and nearly a quarter plan to stay with on-premises ECC.

“They believe that there is a much longer lifetime value of the software that they implemented than SAP is willing to support,” Hays says. “SAP has announced the end of mainstream maintenance deadlines, and that has created a lot of consternation.”

SAP cloud revenue rises

While there’s a significant percentage of ECC users that have not yet made the move to S/4HANA, SAP says it is happy with the progress toward the SaaS model. SAP reported that cloud ERP revenue increased 31% between the third quarter of 2024 and the third quarter of 2025, according to a statement.

These results indicate “strong uptake of core cloud offerings like S/4HANA,” the statement adds. “These figures suggest that customers are not only subscribing but doing so at scale.”

The questions about licensing don’t appear to be related to the quality of SAP’s solutions. Many SAP customers see the vendor’s ERP software as high quality and, in some situations, irreplaceable, Rimini Street’s Hays notes. At the same time, many see an all-in-one ERP solution as an outdated concept and instead want to deploy best-of-breed solutions for specific ERP needs, he says.

Nearly eight in 10 SAP customers surveyed expect to deploy a modular ERP approach and engage with multiple vendors in the future, according to the survey.

“Innovation is happening very rapidly outside of the big software vendors that we all know of,” Hays says. “Innovation is happening with IT providers, software providers, AI providers and agent builders that we’ve never heard of. Putting all your eggs into the SAP basket is going to limit your future options.”

Staying with SAP

While Hays isn’t alone in predicting that a more modular approach to ERP is coming, there hasn’t been a significant shift in the market so far, says Gartner analyst Mike Tucciarone. While SAP customers have concerns about licensing, relatively few have decided to dump SAP, he adds.

“SAP ERP remains a trusted solution, and while a more composable or fragmented approach is possible as technology evolves, it is still very uncommon among organizations and CIOs today,” he says. “We have not observed widespread movement in this direction yet.”

Concerns about subscription licensing costs also aren’t unique to SAP, Tucciarone says, with many organizations seeing SaaS price increases of 10% to 20% from major software vendors. The rising subscription costs are creating major challenges for CIOs, he adds.

Many SAP customers, however, are happy with the legacy ECC solution, he says.

“In many ways, SAP’s biggest competitor to S/4HANA is its legacy ERP, ECC,” Tucciarone says. “SAP is working with customers to help build business cases and strongly focusing on their AI capabilities as a carrot for making the migration. The challenge with that carrot is that our data shows that adoption of SAP’s AI offerings is still modest.”

A variety of migration options from SAP may also have confused some customers and made it difficult to plan with confidence, he adds.

As a result, many SAP customers are considering a range of options, with only a minority considering alternative ERP vendors, Tucciarone says. Some customers are evaluating how to continue supporting SAP ECC, he adds, while others are looking at next-generation SAP ERP solutions.

“Others are also taking a wait-and-see approach, hoping for mainstream support deadline to be extended yet again,” he says. “Most are focused on carefully assessing the best path forward within the SAP ecosystem.”