The SAP S/4HANA Migration Struggle. Why Are Businesses Still Holding Back?
10 years after its launch, the majority of businesses still haven’t upgraded.
The world of enterprise technology is incredibly niche, but few upgrades have caused as much hesitation as the migration to SAP S/4HANA. 10 years after its launch, the majority of businesses still haven’t upgraded. With the countdown on, and SAP’s support for ECC set to expire at the end of 2027, uptake is slowing, despite many successful use cases.
I work very closely with SAP customers across America, and I’ve witnessed the tension between those who want to upgrade and the draw of legacy systems that still do the job. What I’ve noticed is that it’s not just being resistant to change; there’s real reasons why companies have been dragging their heels.
Why Companies Haven’t Yet Migrated to S/4HANA
From the conversations I’ve been privy to, I see five key reasons why businesses haven’t upgraded.
1. Expensive, complex and time-consuming
Anyone who’s in technology will tell you that migration is a huge job, and migrating to S/4HANA is no easy thing. For companies of a certain size, this can take longer than a year to complete, and it’s not unusual for these projects to run over budget. On average, migrations take around 1.5 years, but can be up to 6 years in some instances.
More than 60% of businesses report overruns in cost, timeline or perceived quality when migrating. If you add in custom code and outdated data into the mix as well, you get more complex integrations that add to the challenge. The bigger this issue becomes, the more it starts to feel like you’re reimplementing than upgrading.
2. Business risk is too high
For most businesses, EPR is seen as the beating heart of operations. Swapping this out can cause major disruption, especially if something were to go wrong.
Of all companies that have migrated so far, only 8% have done so to schedule. Many businesses have reported issues with processes or errors after migration, so introducing a huge level of uncertainty to a business could be seen as a deal breaker.
3. Lack of resources and expertise
Even if you’re one of the companies who are ready to make the jump, you could still struggle to find the right people to do it. The world is struggling with a shortage of S/4HANA consultants and system integrators, so internal teams will usually lack the skills for data transformation.
Alongside this, there needs to be knowledge of Fiori UI and the HANA database, so it’s no wonder delays have been met with rising costs and a growing level of frustration.
4. Unclear ROI
For anyone unclear of the business case for upgrading, you might fall into this train of thought. If ECC is currently working well and S/4HANA offers functional improvements, how can you justify the cost and the disruption?
There needs to be a more compelling reason for some boards to sign off on this huge move.
5. Change management
Unlike some upgrades, ERP impacts the entire business. It can be far easier to delay a major change that involves large amounts of time and effort from staff members.
Migration Success Stories
Despite S/4HANA migration considered a major overhaul, it can be done successfully. There are many cases of huge corporations making the change and gaining great benefits from it, including Hallstar and Pfizer.
Hallstar
As a global chemical supplier and reseller, there was little room for expansion capabilities under their ECC system – which itself was 18 years old. They faced issues with currency conversion and consolidation, as well as not having mobile capabilities. The business was very siloed and didn’t have access to analytics, which would help when it came to understanding the bigger picture.
S/4HANA was the answer to all of Hallstar’s problems, so they started the migration process. They gained a global footprint in the technology, which ramped up their finances, production, sales and distribution, and much more. The intuitive and modern mobile platform enabled the facilitation of real-time data, which became a game-changer for them when making data-driven decisions.
Pfizer
The world-renowned pharmaceutical company wanted to ramp up its efforts to achieve net zero by 2040. In order to help this transition, the company wanted to selectively migrate a portion of its 85TB SAP ECC database to S/4HANA. The move was considered to enhance sustainability initiatives and improve IT services at the same time.
Within their ECC database, ageing architecture and accumulated technical debt necessitated a global transformation in order for Pfizer to remain current and to support further growth. The migration to S/4HANA took less than 18 months, with minimal downtime.
Is SAP Forcing This Change?
Whether you’re on the fence or sold on the S/4HANA upgrade, there’s been no shortage of debate about the whole process.
An imposed deadline
You could argue that customers didn’t ask for this change in the first place. SAP could be seen to have created the pressure by announcing ECC support would end in 2025, although this was later extended to 2027.
For a lot of customers, it feels as though the upgrade has been forced upon them with no real benefit.
Mixed messaging
The messaging from SAP has been that the pitch has evolved significantly. With real-time data, AI, sustainability and cloud efficiency just some of the focus point for S/4HANA, the advantages should be clear.
However, adoption hasn’t soared, which suggests that these benefits aren’t compelling enough to bother with the pain of migration in the first place. Some have even argued that SAP’s business model shift has been more important than customer demand.
Cloud-first innovation
There was a lot of backlash when SAP decided to only release new features to cloud-based S/4HANA customers. This was a huge decision for some that SAP has been pushing its own agenda rather than supporting its customers were they are.
Sales pressure
I’ve heard reports of customers being subjected to heavy sales tactics, like having cloud packages like RISE and SAP pushed on them. It also seems as though licensing structures are also penalising those who want to stay on ECC for longer. How are customers meant to win in this scenario?
What Do The Numbers Say?
According to Gartner and Basis Technologies:
• Only 39% of SAP ECC customers have licensed S/4HANA
• Just 57% are live on S/4HANA
• Around 31% of companies have completed their migrations (a jump of 10% from 2024)
This means that the majority of businesses are still operating on legacy systems. It also means that many are in the early stages of planning or have simply delayed their projects entirely.
The looming deadline of December 2027 has brought on a late surge of activity, but experts have warned that starting your migration in 2026 could be too late for a smooth migration. Ultimately, there’s a risk that there will be a bottleneck in the market, with too few consultants and too many late starters.
What Happens After 2027?
To ease the transition period, SAP has offered extended maintenance until 2030, but under one condition: customers must licence S/4HANA by 2027 and pay a 2% premium. After this date, support will then be customer-specific, which simply means limited in availability and expensive.
Although SAP isn’t as heavy handed as you might think. They’ve been quietly offering exceptions. A private edition of ECC, hosted in the cloud, was launched at the beginning of the year, allowing some of their larger customers to extend support until 2033. It’s not a formal extension, but it at least provided acknowledgement about the state of the problem.
I’ve heard some companies are exploring third-party support providers. These companies will extend ECC support, at a much lower cost, but without the official SAP updates.
At the end of the day, one thing is certain: don’t bet on another deadline extension. SAP is painfully aware that many businesses won’t be ready in time, so it is making allowances, just not en masse.
What About Competitors?
When looking at Oracle and Microsoft, there’s been more of a flexibility than SAP’s offering.
Oracle has allowed their Applications Unlimited customers to stay on their existing ERP with ongoing support and new features until at least 2036.
Microsoft has offered extended timelines and hybrid support paths, although this varies by product to 2031.
SAP, as we already know, feels very rigid in its strategy, which had led to more resistance. With many feeling pressure to migrate, it’s no wonder that the numbers are so low.
So, What Should Businesses Do?
We can labour this point until we’re blue in the face, but the message is simple: now’s the time to migrate. The longer you wait, the harder you’ll find it to get resources and negotiate terms, leading to rushed implementations.
I understand the frustrations all too well, so I get why some are still hesitant. For many, ECC is still doing its job (and continues to do so), while S/4HANA feels like an unwanted upgrade.
However, the future of SAP is S/4HANA, which is where all the innovations are happening. Everything from AI integration to cloud analytics is all happening on the new platform, so you’ll need to move over if you want to stay competitive.
Unsure where to start? External partners can help you to build a business case internally. Let’s make sure the move is on your terms.