Exclusive: CIOs push back on SAP upgrade deadline amid cost fears

Leaders in IT are under growing pressure to upgrade their core enterprise systems, but many are digging in their heels.

With less than two years until SAP ends mainstream support for its traditional ERP platform, many businesses are still resisting the move to S/4HANA, citing cost, risk, and lack of a compelling business case.

"Two-thirds of SAP customers are still running ECC," explained Luiz Mariotto, who leads the global solution engineering team at Rimini Street.

"That's according to Gartner. After ten years, SAP still hasn't convinced the majority of its customer base to move," he said during a recent interview.

Mariotto, based in Miami and a 25-year veteran of the SAP ecosystem, recently completed a whirlwind tour of Australia and New Zealand, meeting customers and prospects across Perth, Melbourne, Sydney and Auckland.

He said while the region shares global concerns, some industries are "more aggressively focused on cost-cutting."

"IT leaders are under pressure to reduce cost, optimise their operations, and at the same time, find ways to innovate," he said. "But how do you fund innovation if you've got to reduce both capex and opex, and still run your mission-critical ERP?"

SAP announced in 2020 that it would end mainstream support for ECC by 2027. For many enterprises, the vendor's push to move customers to S/4HANA in the cloud feels less like a choice and more like a mandate. But Mariotto says the business case just isn't there for many.

"Some CIOs go to the board and say, 'There is a risk if we don't get SAP's support,' but the board is pushing back. They're asking: 'Do we really need to spend hundreds of millions and three years of effort just to change software that already works?'" he said.

Mariotto cited examples of global clients who have spent years and millions tailoring their ECC systems to complex processes like finance, logistics, or manufacturing.

"Now SAP is saying, 'Sorry, you have to upgrade,'" he said. "But IT leaders are asking themselves: should my roadmap be driven by a vendor's timeline, or by business priorities?"

Some clients who have started their S/4HANA projects are already pausing due to economic or geopolitical changes, such as trade wars or shifts in global supply chains. "The world is changing. The risks are shifting. And in that scenario, software upgrades drop in priority," he said.

According to Mariotto, customers are increasingly exploring third-party support options as a way to defer expensive upgrades. Rimini Street, which provides independent support for enterprise software, has built what it calls the "Rimini Smart Path" — a three-stage approach: support, optimise and innovate.

"First, we take over support of the ERP and deliver savings of 50 to 90 percent," he said. "Then we help clients optimise their landscape - no more forced upgrades. Finally, they can reinvest those savings into innovation."

That innovation doesn't need to come from SAP either. Mariotto said many customers are turning to vendors like ServiceNow, Microsoft or AWS for AI, automation, and analytics. "Who said your AI must come from SAP?" he asked. "Clients can innovate now, without waiting years for a complex ERP migration."

In a timely development, Rimini Street has also announced it will now offer full support for all SAP ECC 6.0 and S/4HANA releases through 2040 - without requiring customers to migrate to S/4HANA on RISE. This move is significant for businesses weighing whether to accept SAP's cloud roadmap or chart their own course.

The extension means organisations can maintain their current SAP systems, stay in full tax and legal compliance, and avoid the significant costs of vendor-mandated upgrades. "This gives customers a real choice," Mariotto said. "They can buy time, stay supported, and focus their budget on strategic innovation rather than software replatforming."

SAP has tried to soften its stance, announcing earlier this year a programme allowing customers to delay their migration if they commit to moving to S/4HANA Cloud by 2030 or 2033. But Mariotto called it "a ticket with strings attached" and said many customers remain unconvinced.

"The vendor says you can delay, but only if you commit to a cloud subscription now. Clients say, 'Wait a minute - I don't even know what I'll be doing in two years.'"

The complexity of moving to S/4HANA is also a deterrent. For large organisations, the change is not simply an upgrade - it involves changing data models, processes, licences, and infrastructure.

"Even for a simple ECC to S/4HANA migration, you have to convert your general ledger, adapt your customisations, and migrate data into HANA's new structure," he said. "That's not a patch. That's a transformation."

Mariotto added that some clients mistakenly believe third-party support limits future flexibility.

"One of the biggest misconceptions is that you can't move forward without SAP support. But we can handle security, custom code, integrations - everything. And if clients eventually decide to go to S/4HANA, we can help prepare them."

In fact, he said, some customers who delayed upgrading with Rimini Street's support have later chosen to migrate on their own terms.

"We have clients who stayed with us five or six years, and then said, 'Now I have a business case.' In some cases, we even supported their legacy ERP during the transition," he said.

In the era of hybrid IT, many enterprises are already managing a mix of legacy and cloud applications. Mariotto said this "composable ERP" approach - mixing a stable core with best-of-breed cloud tools - is now the norm, not a Frankenstein monster.

"The future of ERP won't be a big box. It'll be intelligent agents, automation layers, and flexible platforms," he said.

"Vendors like ServiceNow and Microsoft see that. They're building tools that integrate everything - not just one vendor's stack."

With CIOs expected to do more with less, Mariotto said the days of vendor-driven roadmaps are numbered.

"Clients are telling SAP: If you're not flexible, I'll find someone else to support me - and someone else to help me innovate," he said.