SAP has begun to shift focus away from its failure to hit legacy software and cloud migration targets and onto the latest so-called "innovation" elements of its portfolio, such as AI.

From the beginning of next month, Thomas Saueressig will see his role expanded from chief customer officer to lead the new Customer Value Group to support the expansion of SAP's cloud and AI-powered solutions as part of a board-level reorganization. He was previously head of product engineering.

At the same time, CEO Christian Klein is also setting up a new unit to encourage adoption of AI and introduce a new way of charging for AI consumption, according to reports.

Last week, The Register revealed that five years after launching its rescue plan to lift ERP users to the cloud and switch them to the latest software, SAP is off target by about €2 billion. Mainstream support for its widely used legacy ERP software ECC – still relied on by global manufacturing and industrial companies – ends in 2027 while extended support at a 2 percent premium is available until the end of 2030. Gartner estimates that by then, more than 10,000 SAP customers will continue to run major parts of their business on ECC, with the larger, more complex organizations over-represented in this group. There is also an option to continue to get SAP support for ECC until 2033, provided the customer signs up to a migration plan.

In October 2020, Klein promised a new strategy after cuts to its sales and margin outlook caused a 23 percent share price crash. The resulting plan – RISE with SAP – promised to lift and shift complex SAP environments into public, private, and hybrid clouds. In addition, it planned to move users of legacy ERP software to the latest product S/4HANA. SAP is understood to have ceased publishing figures on ECC migration since the vendor replaced its product RISE with SAP S/4HANA Cloud Private Edition with SAP Cloud ERP Private Edition, creating confusion over licensing.

However, SAP said it expected support revenue for on-prem software – largely made up of ECC and S/4HANA – to fall as it moved customers to the cloud and subscription licensing. In 2022, then-CFO Luka Mucic told investors that for 2025, SAP wanted to see €8.5 billion in support revenues, down from around €11.5 billion in 2021, as users move from on-prem licenses and support to cloud subscriptions. But the 2025 full-year figure for on-prem software support was €10.5 billion, down only 7 percent from 2024's €11.29 billion. That's €2 billion off where SAP wanted to be, or about 24 percent more than it should have been. Between 2021 and 2024, the category only fell 2 percent.

Alisdair Bach, head of SAP practice at consultancy Dragon ERP, told The Register that Saueressig's new role showed the vendor was focused on driving revenue from its established installed base by upselling AI, with a shift in emphasis away from purely moving software to the cloud and upgrading ERP.

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In 2023, Klein told investment analysts that future innovation – including AI – would only be available in the cloud via RISE with SAP. The statement outraged users, who pointed out that Saueressig included no caveats when he said in 2020 that S/4HANA would be "the architecture and platform of the future for our customers."

Bach argues that position is now softening. For example, customers who have moved ECC to the cloud via a dedicated SAP ERP Private Edition subscription could well get access to the vendor's flagship AI platform, Joule, later this year.

"Modernization has come to an end in terms of rip-it-out-and-start-again. You're no better off, and the world has moved on. SAP will morph; that's what they always do. I wouldn't recommend anyone stay on ECC beyond 2033; they don't need to, things are moving so quickly," he said.

Customers with ECC investments could move to S/4 via a brownfield migration, avoiding transformation, Bach pointed out.

With 2033 still seven years away, SAP was more focused on upselling to generate revenue in other ways. "There is a broader focus on upselling the wider product portfolio from SAP. Getting ECC customers into the cloud, it can start upselling AI licensing, Business Data Cloud: upsell, upsell, upsell, in terms of bite-sized chunks of the generic innovation," Bach said.

Last week, Bloomberg reported that Klein had established a unit with hundreds of people to push adoption of its AI products. SAP would also change how it rewards employees, and interact with customers with a new focus on AI. Customers can also expect new commercial models as it shifts away from per-employee subscription licenses, which could be affected as customers automate tasks and employ fewer staff.

"This is a big change in the way you price, the way you commercialize," he told the publication. ®

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