Over the last several years, many SAP customers have asked us, “Do you think SAP will move its 2025 date for supporting Business Suite 7?” Yesterday, to the satisfaction of these companies, SAP moved its 2025 date to 2027 with some “options” to have support until 2030. While the market seems satisfied, more skeptical customers have taken out their SAP decoder rings to read between the lines because they know — the devil is in the details.
What Did SAP Announce?
In response to customer pressure for a stronger commitment to Business Suite 7 applications, in October 2014 SAP extended support from 2020 until 2025. What this meant is that SAP prolonged mainstream maintenance for Business Suite 7 until 2025. As time passed, customers have questioned whether this date would move.
Over five years later, SAP has announced that the date would in fact be moved again. More specifically, they claim that despite strong adoption of S/4HANA, mainstream maintenance for core applications of Business Suite 7 software will be extended until the end of 2027. In addition, customers hanging on beyond 2027 will have two alternatives:
- Extended Maintenance Option: Customers can leverage the proven Extended Maintenance offering for a premium of two percentage points on existing maintenance for core applications of SAP Business Suite 7 for all support offerings from 2028 through the end of 2030.
- Customer-Specific Maintenance Option: Those customers not leveraging the Extended Maintenance option but carrying on with their SAP Business Suite 7 software will automatically be transferred to customer-specific maintenance.
What Are the Details I Am Overlooking?
When we read the announcement quickly it appeared like SAP was simply satisfying the market, but taking a closer look, you can see SAP is also satisfying its own strategy. We have taken the opportunity to highlight what they said and didn’t say:
Extended Maintenance Details
- Requires S/4HANA Purchase by 2027 — While SAP positioned post-2027 as an option, it is clear the SAP Extended Maintenance offering is only available for “customers needing support for their applications in longer conversion phases to SAP S/4HANA.” More simply put, only customers in a conversion to S/4HANA will be able to leverage Extended Maintenance. SAP’s interpretation for “conversion” is likely to mean that you have already purchased S/4HANA by 2027 to take advantage of Extended Maintenance.
- Only Core Applications are Covered – SAP was very specific in its statements regarding Extended Maintenance, stating that only core applications of Business Suite 7 will be covered. While we know from our experience with SAP that they have announced no longer supporting certain non-core applications in the past, Extended Maintenance will not be a full solve for your entire existing Business Suite 7 landscape. You will likely have to negotiate customer-specific maintenance for non-core applications or already have migrated to the S/4HANA equivalents.
- 2% is A Big Premium – Mentioned just once in SAP’s announcement was the fact that you can leverage Extended Maintenance for a premium of two percentage points on the existing maintenance base. While 2% doesn’t seem like a lot, it is when you look at it on a relative basis. When you take your Enterprise Support factor of 22%, this equates to a 9% relative uplift. Similarly, for those on Product Support for Large Enterprises at 17%, this equates to an 11% relative uplift. It turns out that 2% is actually a big premium — especially when our analysis of existing on-premise footprints indicates an underutilization of 30% on average.
Customer-Specific Maintenance Offering
- Default for Non-S/4HANA Conversions – SAP was very clear that those customers who do not decide on Extended Maintenance support by the end of 2027 but choose to carry on with their Business Suite 7 software will automatically be transferred to the Customer-Specific Maintenance model. This means that if you don’t purchase S/4HANA and take advantage of Extended Maintenance, you are defaulting to Customer-Specific Maintenance and you don’t have much of an option.
- Pricing is Noticeably Absent – While SAP was very transparent on the premium of two percentage points on Extended Maintenance for those customers purchasing S/4HANA, Customer-Specific Maintenance pricing is noticeably absent. It appears that SAP customers won’t get the predictability they are looking for if they don’t make a commitment to S/4HANA. This appears to be SAP’s play to compete against the 3rd-party support providers like Rimini Street who are chomping at the bit to provide support to those customers planning to continue in maintenance mode on Business Suite 7.
- Core, Non-Core or Both – Also absent from SAP’s two sentences on Customer-Specific Maintenance was coverage. Is Customer-Specific Maintenance for core, non-core, or both? Our expectation is this will likely be up for negotiation with SAP. Not only do we expect SAP to negotiate on what is covered, but we also expect them to negotiate the premium here, as well as the length of time they are willing to cover you post-2027.
In summary, SAP has provided some much-needed clarity and satisfaction to the market as part of its most recent announcement. However, SAP is also incenting customers to make the migration to S/4HANA in order to have predictability or to be prepared to negotiate what your SAP Business Suite 7 maintenance will look like in the future. For those considering a move away from SAP maintenance, we know from SAP’s Luka Mucic’s recent statement, you will be in the minority as SAP has a 93% maintenance renewal rate.