SAP gives on-premises software customers assurances, even as it pushes the cloud

Business Suite customers will have full control over when they move to the cloud, SAP says

SAP may be trying to become a big player in cloud-based business software, but most of its customers run their applications on-premises and many have no plans to move them into the cloud anytime soon.

In recognition of this, SAP has announced the extension of mainstream support for its flagship Business Suite 7 software as well as an extended price freeze for the Enterprise Support service.

SAP Business Suite 7 will now have mainstream support until the end of 2025, while the cost of Enterprise Support for new purchases will remain at 22 percent of license base until 2025. In addition, SAP won't adjust the cost of existing Enterprise Support contracts upward for inflation until at least 2020, said Jens Bernotat, vice president of strategy, maintenance go-to-market.

Some 1,200 SAP customers have decided to port their Business Suite applications to the company's Hana in-memory computing platform. SAP is also offering a cloud hosting service for the Suite that uses Hana.

Suite customers who want to stay put on other supported databases or keep their implementations on-premises will have that option preserved while they contemplate how to adopt the cloud, Bernotat said.

"We want to bring our customers into the cloud, but we also want to provide them with a choice," he said.

While SAP has begun rolling out Hana-powered applications such as Simple Finance, the core Business Suite will continue to be updated by both larger enhancement pack releases, which ship every one to two years, as well as supplemental updates, according to Tuesday's announcement.

It's not surprising SAP made this announcement now, given that its large customers want assurances they won't be forced to move to the cloud on a timetable that's not of their own choosing, said analyst Frank Scavo, managing partner of consulting firm Strativa.

SAP also wants to keep as many customers on active maintenance contracts as possible, he said.

"For a customer that is not routinely upgrading their system, 22 percent is a very rich payment to SAP," Scavo said. "What they are promising to do is not make it even richer."

SAP is facing pressure from a combination of third-party maintenance providers, customers abandoning maintenance all together, "or the more likely case of customers not making additional investments with SAP, and rather [third-party vendors]," he said.

By freezing maintenance pricing and promising a long stream of additional new features, SAP is trying to show it offers customers value for their maintenance dollars and that it is worth making further investments in its products, Scavo said.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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