Why SAP Will Charge a Premium for 2025 ECC Support

Executive Summary

  • SAP previously stated that it would not support ECC beyond 2025.
  • SAP is telling its customers that support beyond 2025 can be obtained by paying a support premium.
  • We analyze what SAP is doing and what it means for customers.

Introduction

When SAP introduced S/4HANA, they violated the terms of the ECC contract by making S/4HANA the not the “logical but not the legal successor” to ECC. This was true even though the HANA database is actually a disadvantage for an ERP system, Fiori is little used by S/4HANA customers and there has been little change to the functionality of S/4HANA versus ECC.

This tactic went without comment as nearly all of the information providers on SAP are financially tied to SAP.

Every policy, every discount offered by SAP, every statement made by SAP has a singular objective, to maximize the amount of money that SAP can extract from their customers. SAP’s entire policy with S/4HANA and its “premium” support model for post-2025 support has this same intent. 

Following SAP’s Approved Path

This policy of pretending/asserting S/4HANA was not the legal successor to ECC allowed SAP to charge customers that had paid their support for ECC for S/4HANA.

  • SAP normally uses support deadlines as a way to push customers down SAP’s preferred pathway.
  • This is true as SAP’s actual cost of providing support is minimal. The reason is that SAP has an 85% margin on support. Therefore it costs them only a small fraction of the charged amount to provide support.

SAP will most likely keep the premium adjustable per customer. So customers, where SAP feels it has the leverage to push them to S/4HANA, will likely receive a higher post-2025 support premium.

This is the same way that SAP has used indirect access against customers, with the price quoted for indirect access transactions varying enormously depending upon the customer situation. In fact, SAP never published a price for indirect access (IA) transactions, specifically so they could adjust the price per customer. However, the price discrepancy ended up being enormous.

Why?

Well, IA (which we cover in the article How to Best Understand Type 1 Versus Type 2 Indirect Access is not really a “thing.” It is just a construct that SAP uses to pull money out of its customers, and because it is not real, it is not connected to any real cost.

A premium post-2025 support charge is much like indirect access, it is illusory. Therefore, it can be negotiated to be just about anything. It all comes down to either meeting SAP’s revenue objectives and or making SAP feel the customer is doing what they want and following the approved pathway. 

The approved pathway has nothing to do with anything outside of the incentives that are created by SAP and communicated to their sales reps.

Who Will Tell SAP Customers the Truth on Post 2025 ECC Support?

Customers can expect no helpful advice from entities like the SAP consulting partners, Gartner, Forrester or ASUG — all who will repeat SAP talking points.

It will fall to the contract negotiation firms, those entities that negotiate on the part of SAP customers and have no partnerships with SAP. Any firm that has a partnership with SAP is obligated to repeat whatever SAP says.

Our Previous Prediction on The 2025 ECC Support Deadline

  • Our S/4HANA implementation study led us to conclude that SAP’s statement around halting support of ECC after 2025 was always a bluff and designed to create a “burning platform” for ECC customers to move to S/4HANA.
  • We previously contradicted all of the other SAP information providers by calling out SAP’s support burning platform as an unrealistic bluff.
  • Now evidence has come in that SAP is changing this messaging on a one on one basis with some customers (although the policy is still the same as published)

The Reality of Post 2025 ECC Support

First, we know that SAP will have to provide post-2025 support.

So the only question is how.

Will it be charged or not charged?

Conclusion

SAP knows that dropping support for ECC post-2025 would lead to a wholesale search for alternative support providers. Our research indicates that most SAP ERP customers will still be on ECC by 2025. SAP would not at all want to drive customers away from ECC support through SAP as it would lead to a great enlargement of the SAP third-party support industry. SAP’s margin is its support, so it cannot jeopardize this income stream, as this would also mean a massive loss of margin for SAP. Support is the easiest money that SAP makes. And their threat to drop customers rings hollow — in fact, this is apparent simply by observing how SAP responds when a customer states they will not be renewing support.

SAP, as our S/4HANA Implementation Study shows, is not in a position to demand a support premium for ECC post-2025. But they will likely convince many customers to hand over a premium for support regardless.

Our Recommendation

  • The premium that SAP will be asking for ECC support is not a viable threat.
  • SAP customers should look at SAP’s statements regarding the post-2025 ECC support as an opening point for negotiation.
  • SAP customers must find advice that is non-aligned with SAP for how to deal with this empty threat on the part of SAP.

The Problem: A Lack of Fact-Checking of S/4HANA

There are two fundamental problems around S/4HANA. The first is the exaggeration of S/4HANA, which means that companies that purchased S/4HANA end up getting far less than they were promised. The second is that the SAP consulting companies simply repeat whatever SAP says. This means that on virtually all accounts there is no independent entity that can contradict statements by SAP.

Being Part of the Solution: What to Do About S/4HANA

We can provide feedback from multiple HANA accounts that provide realistic information around S/4HANA — and this reduces the dependence on biased entities like SAP and all of the large SAP consulting firms that parrot what SAP says. We offer fact-checking services that are entirely research-based and that can stop inaccurate information dead in its tracks. SAP and the consulting firms rely on providing information without any fact-checking entity to contradict the information they provide. This is how companies end up paying for a database which is exorbitantly priced, exorbitantly expensive to implement and exorbitantly expensive to maintain. When SAP or their consulting firm are asked to explain these discrepancies, we have found that they further lie to the customer/client and often turn the issue around on the account, as we covered in the article How SAP Will Gaslight You When Their Software Does Not Work as Promised.

If you need independent advice and fact-checking that is outside of the SAP and SAP consulting system, reach out to us with the form below or with the messenger to the bottom right of the page.

Financial Disclosure

Financial Bias Disclosure

Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

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