With SAP ending ECC support by 2027 and halting S/4HANA On-Premise innovations, customers face pivotal decisions for their ERP landscape. This article explores the available options, highlighting the benefits and drawbacks of each to help organizations make informed decisions before the deadline.

SAP S/4HANA Deployment Options

SAP S/4HANA offers multiple deployment options to accommodate different business needs, IT landscapes and strategic goals. Customers can choose from the following solutions to align their ERP transition with their organizational priorities:

• S/4HANA On-Premise – Provides full control over personalization, security, and upgrade management but comes with higher maintenance costs and no future innovations from SAP.
• S/4HANA Cloud, public edition – A standardized, cost-effective cloud solution with automatic upgrades, but limited customization and industry-specific functionalities.
• S/4HANA Cloud, private edition – A flexible cloud option that allows for greater personalization, legacy system integration, and controlled upgrade cycles, making it ideal for existing ECC customers.
• RISE with SAP – A fully managed service designed to accelerate cloud adoption, particularly for businesses looking for a simplified migration path to S/4HANA Cloud, private edition.
• GROW with SAP – A fully managed service aimed at helping mid-market businesses adopt SAP S/4HANA Cloud, public edition.

Each deployment method has distinct advantages and trade-offs. Selecting the right option requires careful consideration of factors such as customization needs, cost structure, IT infrastructure, and long-term business strategy.

Remaining on ECC with Third Party Support

SAP will stop supporting ECC in 2027, with an optional extension to 2030. Having been extended from 2025, SAP’s CEO, Christian Klein, has confirmed that there will be no further extensions, leaving customers with the decision to migrate to S/4HANA or explore alternative solutions.

One option is to remain on ECC and opt for Third Party Support, which is support provided through an external supplier. This can extend the lifespan of legacy systems and often reduces annual maintenance costs. By opting for Third-Party support customers can also have peace of mind that their legacy products will continue to receive security updates and bug fixes.

However, customers should carefully consider the implications of taking this route as it also means no access to new features and being limited only to the SAP Notes available at the time of support termination.

To terminate SAP’s Support Agreement, customers are required to provide three months’ written notice before the end of the Initial Term or the start of the next renewal period. However, leaving SAP Support comes with important risks and considerations that organizations must address:

1. Ongoing Risk of SAP Software Audits

Even after terminating SAP Support, customers remain subject to SAP software license audits. This means they must continue to monitor their software usage and ensure compliance with licensing agreements to avoid unexpected financial implications.

2. Licensing Management Challenges

Once SAP Support ends, customers must align their software licenses with their new support provider. This process may involve:

• Renegotiating terms with SAP third-party support providers.
• Reassessing compliance risks to avoid costly non-compliance issues.
• Optimizing license usage to reduce unnecessary costs.

Failure to manage these factors proactively could result in compliance violations, leading to financial implications or operational disruptions.

3. Returning to SAP Support: Hidden Costs

Customers who decide to return to SAP Support at a later stage should be aware of potential costs, including:

• Back-dated maintenance fees – SAP may require payment for the entire period during which support was inactive.
• Reinstatement charges – Additional fees may apply for rejoining SAP Support.

Third Party Support Key Considerations:

✅ Lower costs – Third-party support often provides financial relief compared to SAP support fees.
✅ Ongoing security updates – Ensures continued protection for legacy systems.
❌ No new SAP features – Customers will not receive functional upgrades.
❌ Potential licensing challenges – Customers must ensure compliance to avoid audit risks.

S/4HANA On-Premise (Contract Conversion)

SAP S/4HANA On-Premise provides full control over system customization and maintenance, with SAP guaranteeing support until 2040. However, SAP has shifted its focus to S/4HANA Cloud, meaning no further innovations for the On-Premise edition.

To migrate, customers must perform a Contract Conversion, replacing their existing agreement with a new S/4HANA contract. This allows them to continue using Business Suite/ECC Software during the transition, while repurposing unused software through an SAP offered credit based on the value of the customer’s existing licenses.

Conversion Credit Reduction Trend:

Previously, the credit for the conversion was capped at 90% of the new S/4HANA maintenance base. The maintenance base is the value of all the SAP software owned by a customer. However, in July 2023, SAP updated the credit policy for customers transitioning to SAP S/4HANA On-Premise using the Contract Conversion. The credit limit was reduced to 80% (2023), further adjustments reduced this to 70% (2024) and the trend will likely continue with the credit estimated to be 60% (2025). It is important that SAP customers are aware of the diminishing credit opportunities to plan their transitions accordingly.

• 2023: 80% credit cap
• 2024: 70% credit cap
• 2025 (expected): 60% credit cap

Example Contract Conversion credit calculation (2025 Credit Cap):

• A customer has a maintenance base of $1,000,000 on Business Suite/ECC Software.
• The new S/4HANA contract has a value of $1,200,000.
• They receive a credit of 60% of the $1,200,000 = $720,000.
• The credit of $720,000 is applied towards the purchase, which means the customer only pays the remaining $480,000.

Customers should act promptly to maximize available credit before further reductions.

S/4HANA On-Premise Key Considerations:

✅ Full control over customization – Ideal for organizations with highly tailored SAP environments.

✅ Guaranteed support until 2040 – Provides long-term stability.

❌ No future innovations – S/4HANA On-Premise will not receive new SAP features and diminishing credit opportunities.

❌ Higher costs – S/4HANA software tends to be 10% more expensive than ECC, due to maintenance fees increasing by at least 10% and the upfront migration costs.

Organizations choosing S/4HANA On-Premise can later migrate to S/4HANA Cloud if required.

SAP HANA Database: A Key Consideration in S/4HANA Migration

For S/4HANA On-Premise deployment, customers must transition to the SAP HANA database, which adds time, cost, and complexity to migration.

S/4HANA On-Premise

SAP customers selecting an On-Premise deployment must choose between two database editions:

1. HANA Runtime Edition
   • Included with licensed SAP applications but has data integration limitations.
   • Lower cost but restricted to SAP- only workloads.
     
     
2. HANA Enterprise Edition
   • Supports both SAP and non-SAP applications, allowing greater flexibility.
   • Offers advanced data integration but comes at a higher cost.

S/4HANA Cloud, public or private edition

Customers choosing S/4HANA Cloud do not need to make this decision, as the SAP HANA database is already included as part of the managed cloud service.

S/4HANA Cloud, Public and Private Edition

SAP S/4HANA Cloud provides two primary deployment models—Public Edition and Private Edition—each designed to cater to different business requirements and IT landscapes.

S/4HANA Cloud: Public vs. Private Edition Comparison

* Conversion strategies

1. Greenfield – Rebuilds the ERP from scratch for a fresh start with no legacy constraint.
2. Brownfield – Upgrades while preserving core data and structures.
3. Selective Data Transition – Migrates only essential data with targeted redesigns. Typically offered as a consulting or service package.
4. Lift & Shift – Moves the system unchanged, keeping all customizations and configurations.

** Industries

Manufacturing, professional services, sourcing & procurement, human resources, sales support & financial services.

Choosing the Right Cloud Model

• Public Edition is ideal for companies seeking a cost-effective, rapidly deployable ERP with minimal customization.

• Private Edition suits businesses, which need greater flexibility allowing them to retain configuration and extensions, security, and control over their ERP environment.

A well-planned deployment strategy ensures a smooth transition while aligning SAP’s capabilities with long-term business objectives.

RISE & GROW with SAP

RISE with SAP (introduced in 2021) and GROW with SAP (2023) offer streamlined migration paths to SAP S/4HANA Cloud:

• RISE with SAP → Migrates existing customers (often large enterprises) to S/4HANA Cloud, Private Edition

• GROW with SAP → Migrates small to mid-sized customers to S/4HANA Cloud, Public Edition

These offerings simplify the transition by bundling software, infrastructure, and managed services into a single contract. They are especially suited for companies with outdated technology platforms, fragmented ECC systems, or limited in-house SAP expertise.

SAP’s Commercial Pressure on RISE Adoption

SAP has strategically incentivized customers to adopt RISE by imposing less favorable pricing and stricter terms for On-Premise licensing, positioning the move to S/4HANA Cloud via RISE as the more appealing choice.

With the 2027 end-of-support deadline approaching, SAP has announced that large enterprise customers, with complex system landscapes who commit to a RISE with SAP agreement through the new cloud subscription offering called “SAP ERP, private edition, transition option” (Q2 2025) will have additional time beyond 2030 to complete their transition from ECC to the Cloud. The offering is optional and will be available for purchase starting 2028 and will only be active from 2031 to 2033. If the offering purchase is made in 2031-2033, It will be at an expanded fee compared to the cloud subscription before 2031.

Customers should:

• Evaluate their landscape to understand system complexities to inform the transition timeline in line with SAP’s deadlines.
• Engage third-party expertise to ensure a well-negotiated migration plan.
• Evaluate exit strategies to avoid long-term lock-in with higher operational costs.

By carefully analyzing these factors, businesses can make informed decisions, optimize costs, and secure favorable terms while transitioning to SAP’s cloud ecosystem.

Key Considerations before choosing RISE/GROW with SAP:

✅ Cost Impact & Financial Model – Customers must assess the long-term financial implications, as RISE/GROW shifts costs from a traditional Capex model to an Opex structure with ongoing subscription fees. This could result in higher overall spending compared to maintaining an On-Premise solution.

✅ Skills & Resource Readiness – Transitioning to RISE/GROW may require new skills and expertise to manage cloud-based SAP environments. Companies should evaluate upskilling needs or consider external support.

✅ SAP Services & Scope – Understanding what SAP manages versus what remains the customer’s responsibility is critical. Negotiating clear commercial terms ensures alignment with business objectives.

✅ Commitment & Vendor Lock-in – RISE/GROW requires a long-term commitment to SAP’s cloud model. Customers should assess whether this approach supports their strategic flexibility and long-term IT roadmap.

Conclusion

SAP customers have multiple migration paths, each with trade-offs in cost, flexibility, and long-term viability.

• S/4HANA On-Premise: Provides full control but comes with higher costs and no future innovations.

• Third-Party Support for ECC: A short-term cost-saving measure but limits future SAP functionality.

• S/4HANA Cloud, public edition: Lower cost but limited customization.

• S/4HANA Cloud, private edition: Greater flexibility but requires a more complex migration.

• RISE/GROW with SAP: Simplifies the transition but may increase long-term costs.

Before deciding, organizations should assess:

✅ Their current SAP environment – Customization, integrations, and existing contracts.

✅ Long-term business strategy – Growth plans, security needs, and cost tolerance.

✅ Migration timeline – When to move and how to optimize licensing costs.

Planning and expert guidance are essential for a smooth transition. By selecting the right approach, businesses can maximize their SAP investment and position themselves for future success.

Still unsure about SAP S/4HANA migration? Contact us for a personalized ERP transition strategy today.

About the Author

Kudzai Museve, Licensing Consultant

Kudzai is an SAP Licensing and Compliance Consultant with over two years of experience. Combining her legal expertise and vendor licensing knowledge, she specializes in managing licensing agreements, optimizing assets, and advising on S/4HANA transitions. Her proficiency in S/4HANA cost models helps clients prepare for cloud transitions by evaluating options and identifying cost-efficient solutions to maximize investments.