Users continue to dislike SAP's rigorous cloud course

Even if the tone between the protagonists in Leipzig sounded more conciliatory: this year's annual congress of the German-speaking SAP user group (DSAG) revealed the fundamental criticism of users of the cloud-only policy in terms of innovation, especially AI. However, they are not questioning the cloud per se. "From DSAG's point of view, the cloud and cloud ERP systems are the right way forward for many use cases and industries," said DSAG Chairman Jens Hungershausen, categorizing the user point of view. However, on-premises systems will also remain highly relevant for some time to come, for example in industries with high process complexity or due to legal framework conditions. Simply "Zack to the cloud" is not an option from DSAG's point of view. The future remains hybrid.

The fact that the focus of the AI portfolio is primarily on the cloud has also led to lively discussions between DSAG and SAP. For some time now, users have been calling for AI innovations to be made available to all S/4HANA customers –, regardless of the operating model. The main issue here is the integration or use of AI results in on-premises systems and not the resource-consuming training of an LLM to build generative AI models.

Users continue to fear that on-premises users will be at a disadvantage when it comes to innovation and that the pressure to switch to the cloud will increase. At this point, they are demanding more clarity – also with regard to added value through relevant use and viable business cases. In terms of investment protection, for example, it must be transparent for companies what costs will be incurred as a result of increased cloud use, including any use of downstream services. In the AI sector, in addition to independence from the operating model, the need for appropriate, transparent pricing models is also emphasized, as shown by a survey conducted together with the US sister association ASUG in the summer. According to the survey, 92% of participants from the DACH region consider transparency and clarity about where AI is used and what data it is based on to be very important and important. For 86 percent of respondents, this applies to appropriate pricing models. The fact that AI solutions can be embedded in existing systems was rated as very important and important by 85%. The possibility of being able to use AI independently of the SAP operating model on site was considered very important and important by 65%.

SAP tries to dispel myths

In his comments on the cloud and AI strategy, SAP Executive Board member Thomas Saueressig showed no reservations or willingness to compromise. The manager also made an effort to dispel some of the myths surrounding the Group's product policy. The end of general and extended maintenance for ECC in 2027 and 2030 was by no means arbitrary. Rather, it is technically justified, as back-to-back maintenance agreements would then no longer be possible for important components provided by third-party providers, such as databases or the Java stack.

According to Saueressig, the fact that SAP will no longer support on-premises in the future is also a myth. At this point, he referred to the maintenance assurance for the in-house operation of S/4HANA until at least 2040. Saueressig also refutes the accusation that innovations will only take place in the cloud in future. Since 2023, for example, over 800 innovations, such as e-billing, have been delivered for the on-premises version of S/4HANA.

The SAP manager later made it clear in an interview with the press that GenAI is not included here. In addition to technical aspects, he also provided a business argument as justification. The internet and the cloud had pushed the marginal costs for distribution and storage to almost zero. With GenAI, this would now also apply to content creation.

Saueressig affirmed that SAP wants to take all user companies – into the cloud, regardless of the industry – or simplify the transition. With the "RISE with SAP Migration and Modernization" programme, the Group had already responded to a DSAG request at the beginning of the year and is accommodating on-premises customers with offsetting credits when migrating to the cloud. It was also announced in Leipzig that companies can now also run the private cloud version of S/4HANA, i.e. Rise with SAP, on the Stackit cloud from Schwarz Digits. As the Stackit data centers are located in Germany and Austria, the offering is aimed in particular at organizations that place high demands on digital sovereignty. Incidentally, customer zero of the new offering is the Schwarz Group itself.

(mki)