Gartner has reported that SAP customers opting for private cloud have seen price increases of 10 percent or more on renewal proposals if they fail to negotiate a renewal price cap in the original deal.

SAP ramped up efforts to move customers to its latest software in the cloud on a subscription model nearly five years ago and has shifted its sales teams’ incentives to encourage sales of SAP Cloud ERP Private subscriptions, but a recent paper from the global IT researchers shows the move has not been without commercial challenges.

Meanwhile, SAP’s on-prem customers can still negotiate discounts, although this is becoming more challenging. Gartner said it expects SAP’s on-premises customers to face annual support price increases for the foreseeable future as the ERP vendor tries to persuade customers to move to the cloud.

In a situation that includes discounts and commercial penalties for cloud and on-prem customers, SAP has created “mixed signals for those considering” the upgrade from legacy ERP platform ECC to the latest S/4HANA solution, either in the cloud or on-prem.

Gartner has also given its strongest indication yet that it believes SAP will extend its support for ECC.

“By 2030, Gartner estimates that more than 40 percent of current SAP ECC6 customers will still use ECC 6 for key business areas, leading SAP to reconsider its maintenance end date and cloud migration strategy,” the paper says.

SAP has long maintained that running S/4HANA in the cloud – particularly the private cloud – is the best way to get its latest technology and so-called innovation, such as its AI agent offering, Joule.

For organisations wanting to keep their ERP system on-prem but upgrade to the latest software, there are limited options, Gartner says.

“Gartner has observed a steady decline in perpetual license discounting and expects this pattern to continue as SAP drives customers toward SAP Cloud ERP Private,” the paper says. “While it is still possible for customers with strong leverage to achieve competitive S/4HANA perpetual license discounting similar to levels previously seen, this will not be the case for all.”

The German software giant has also become less willing to offer price protections, exchange rights, and other terms and conditions that were routinely negotiated in past perpetual license deals, Gartner notes.

“If a customer can obtain compelling discounts now but will be charged a much higher price for any future purchases, this results in S/4HANA perpetual becoming difficult to budget for, plan for, and scale,” the paper adds. “In addition, SAP has introduced annual support increases for ECC 6 and S/4HANA customers since 2021, including a 5 percent increase in 2025. Gartner expects on-premises customers to face annual support price increases every year for the foreseeable future.”

With SAP Cloud ERP Private customers’ renewal proposals also hit with double-digit price increases, Gartner recommends customers “ensure that they negotiate flat subscription fees for the initial agreement period and renewal price caps while leverage is still high.”

Earlier this year, SAP introduced a Cloud ERP Private package to replace a package offered under RISE with SAP, its lift-shift-and-transform migration plan.

At the same time, it introduced a new Full Use Equivalent (FUE) license measure, which differs from on-prem and public cloud metrics. German-speaking user group DSAG argued the changes introduced complexity and threatened to delay projects for customers trying to define the commercial strategy for upgrading and/or moving to the cloud.

The European Commission has launched a formal investigation into SAP’s behaviour in the aftermarket for maintenance and support services in Europe.

Following a preliminary investigation, the executive branch of the European Union said there were grounds to consider whether the enterprise application behemoth may have distorted competition in the lucrative aftermarket for on-prem software support.

In a prepared statement, Teresa Ribera, EC executive vice-president for clean, just and competitive transition, said: “Thousands of companies across Europe use SAP’s software to run their business, as well as its related maintenance and support services. We are concerned that SAP may have restricted competition in this crucial aftermarket, by making it harder for rivals to compete, leaving European customers with fewer choices and higher costs.

“This is why we want to have a closer look at SAP’s potentially distortive business practices, to make sure that companies that rely on SAP’s software can freely choose the maintenance and support services that best fits their business needs.”

An SAP spokesperson said that the new proceedings are based on maintenance and support policies that follow well-worn standards that are common across the global software sector. “SAP believes that its policies and actions are fully in line with competition rules. However, we take the issues raised seriously and are working closely with the Commission to resolve them,” they said.

SAP said it did not expect its engagement with the EC would result in material impacts on its financial performance.

“As a major European player in a very dynamic global industry, SAP is committed to open competition. We trust the European Commission will aim for a quick and fair conclusion to these proceedings,” the spokesperson said.

The Commission’s concerns, resulting from the early investigation, include SAP’s requirement that customers seek maintenance and support services from SAP for all their SAP on-premises ERP software, and choose the same type of maintenance and support under the same pricing conditions for all their SAP on-premises ERP software. The EC argues that this may stop customers from “mixing and matching” services from different suppliers at different prices and support levels.

The EC also said that SAP prevents customers from terminating maintenance and support services for unused software licenses, which it argues could result in customers paying for unwanted services.

SAP also systematically extends the initial term of on-premises ERP licenses without allowing termination of maintenance and support, the EC said.

Additionally, the Commission took issue with the fact that SAP charges for reinstating maintenance deals and allegedly for back-maintenance if customers take a break from SAP support arrangements.

“In some cases, these fees correspond to the amount customers would have paid if they had stayed with SAP all along,” the EC said.

Valued at about €275 billion, SAP is the dominant supplier of enterprise software in Europe, with many of the continent’s largest manufacturers and industrial companies relying on its ERP systems. Since early 2021, it has been pushing a strategic initiative to move customers to the cloud and Software-as-a-Service. The company has said it will not offer mainstream support for widely used legacy ERP system ECC beyond 2027 and only offer extended support – at a 2 percent premium – until the end of 2030.

While third-party support is available for SAP systems, German-speaking user group DSAG said recently that users should be aware they might lose out on discounts should they wish to rejoin the vendor’s upgrade path.

SAP’s licensing policies are top of mind at the conference of the German-speaking SAP User Group (DSAG) this week.

While the cloud is the right way forward, DSAG members need transparency from SAP to allow them to make the move, DSAG chairman Jens Hungershausen said in a pre-event post.

“For cloud transformation to succeed, you need a consistent and harmonised architecture, uniform operating models, clear migration paths, and transparent licensing and discount models that can be scaled up and down,” he said.

For many organisations, the journey into the ‘new’ SAP cloud world still begins with SAP ECC or the ‘old’ Business Suite, and sometimes with S/4HANA On-Premises. When SAP discontinued its RISE with SAP package in April, replacing it with the similar but not identical Cloud ERP Private, subtle but significant changes in licensing and product components meant that CIOs faced increased costs and more complexity navigating that journey.

Gartner VP Analyst Mike Tucciarone said at the time, “With Cloud ERP Private, organisations receive nearly twice as many bundled SKUs compared to RISE with SAP Premium. While there are strategic additions like LeanIX, it’s important to note that some capabilities, such as SAP Datasphere, are no longer included.”

The largest enterprise application vendors are using their entrenched positions among customers to end discounting and push high-margin AI products, an analysis by Forrester Research has warned.

A study of recent Q2 2025 earnings announcements by the tech research biz found the message from major enterprise software players was clear: “The era of experimentation is over, and the era of monetisation has begun,” the report states.

Vendors under the microscope in the study include Oracle, SAP, Workday, Microsoft, ServiceNow, and Salesforce. The analysis found that the promise of weaving AI agents into user workflows – a plan common among vendors – would only be fulfilled if organisations are also willing to invest in “the unglamorous work of process redesign.”

“The barrier they create is less about the AI’s intelligence and more about the monumental organisational effort to retrain your workforce on new workflows,” Forrester adds.

But it comes at a cost. Adopting such a strategy “dramatically increases vendor lock-in and the strategic risk of your choice,” the analyst warns. Vendors are attempting to “re-bundle” their products as they encourage customers to view their collection of products as a “platform of platforms.”

For example, SAP told investors that it was shifting from a supplier of on-prem enterprise applications to a suite of SaaS and cloud services. In 2020, then CFO Luka Mucic said the move was “increasing customer lifetime revenue” with the subscription model and not only providing software and support services, but also the IT infrastructure and operational services in many cases. “We are effectively expanding our share of the wallet,” Mucic said.

Forrester has warned tech buyers that the bundling process is standard among enterprise software vendors of SAP’s scale.

“This is a vendor-led campaign to capture the highest percentage of your technology budget,” the report says. “While consolidating to a primary platform can yield efficiencies, it also concentrates risk and neuters your negotiation leverage. Your next major software decision is a bet on a single vendor’s security posture, pricing model, and innovation capacity for the next decade.”

The research found that Oracle’s most recent results showed Big Red was winning with its strategy of pushing both Oracle Cloud Infrastructure (OCI) and its Oracle Cloud Applications business, under the Fusion branding.

“Oracle’s focus is to tighten the integration between OCI and Fusion Apps, enabling customers to run mission-critical workloads and AI services in a secure, high-performance environment. The narrative of a complete, integrated cloud from infrastructure to applications is compelling for CIOs who seek to reduce complexity. However, this ‘one-stop shop’ approach represents a strategic trade-off,” the study adds.

“Before committing to a wall-to-wall Oracle stack, you must perform rigorous due diligence on data portability and multi-cloud integration capabilities; most importantly, you must negotiate contractual protection against future uncompetitive pricing and commercial inflexibility.”

Observers might note that the latter part is easier said than done. Across the board, enterprise software vendors are trying to embed AI agents in their products. But it comes with a commercial trade-off.

For example, last year, while mulling the charging model for AI, Salesforce CEO Marc Benioff answered investor concerns that the number of per-seat licenses might fall as the CRM giant’s customers use AI to cut headcount. As he mooted charging $2 per AI agent conversation, he assured investors it would be “a very high margin opportunity” for Salesforce.

Forrester says it saw a similar trend across enterprise application providers. “Vendors are leveraging their entrenched positions to end discounting and push high-margin AI SKUs,” the report claims. “A best-practice response to this is implementing a rigorous FinOps practice to manage consumption, demand transparent pricing, and build business cases based on tangible outcomes, not vendor promises.”

It’s not just software vendors that see AI as an opportunity to skew commercial arrangements. In February, distributor data from research firm Context showed Microsoft Copilot+ PCs were priced 57 percent higher than the average price of a notebook across Europe in the final three months of 2024. That’s €1,120 ($1,160) versus €712 ($738). The research also noted weak demand for AI-enhanced PCs.

Recent changes to the way SAP licenses and charges for its ERP software and associated AI features will mean more work for CIOs looking for the best value.

SAP recently rebranded its Rise with SAP Premium package of hosting and managed ERP application services as Cloud ERP Private and discontinued Rise with SAP Premium Plus with its additional green ledger, AI assistant, and supplier portal functions. The company now uses “Rise with SAP” more generally to describe the process of modernising its on-premises ERP software.

With the rebranding, though, came more subtle changes in licensing to trip up the unwary, such as which services are included in the package or how additional fees for consumption of AI services are calculated.

“With Cloud ERP Private, organisations receive nearly twice as many bundled SKUs compared to RISE with SAP Premium. While there are strategic additions like LeanIX, it’s important to note that some capabilities, such as SAP Datasphere, are no longer included,” said Gartner VP Analyst Mike Tucciarone.

In a research note published this month, Tucciarone and co-author Calum McDonald explained changes in the components, pricing, and other details that could impact CIOs’ budgets and business cases for Cloud ERP Private.

“It significantly impacts negotiations for existing RISE with SAP package customers and net new customers desiring a private cloud ERP option. This change is driven by modifications to existing packaged components and entitlements previously found in RISE with SAP Premium package,” they wrote.

SAP S/4HANA customers who rely on functionality in Compatibility Packs have just a few months to transition to native capabilities as the termination of licenses for the decade-old packs looms.

SAP released the Compatibility Packs in 2015 as a bridge to ease the pain for customers migrating to S/4 HANA from the legacy SAP ECC (ERP Central Component). They enabled customers to retain capabilities from ECC when the modules would have taken time to migrate to S/4HANA, or where their functionality was not in the initial S/4HANA releases.

The company has imposed a hard deadline of December 31, 2025, for most customers to stop using the packs, and will treat their use after that as “commercial non-compliance — a breach of contract.”

The majority of the packs are now redundant, though, said SAP’s SVP of ERP Product Marketing Maura Hameroff. “With our [S/4HANA] release of 2023, we delivered all of the scenarios. … We removed all of the technical blockers that were slowing customers down,” she said.

With those blocks removed, SAP made it clear in a 2022 blog post updated in February 2025 that both the right to use Compatibility Packs, and all support for them, will expire at the same time, regardless of the S/4HANA’s system’s maintenance status.

“Compatibility Scope use rights expire automatically December 31, 2025, for all SAP S/4HANA versions independent from their release date,” it said. “So irrespective of the SAP S/4HANA version, customers no longer have a contractual right to use Compatibility Scope functionality after that point in time even if the affected SAP S/4HANA system release is still in mainstream maintenance. Furthermore, support stops for Compatibility Scope items with the expiration of the usage rights.”