With SAP actively encouraging users to migrate to the cloud, NTT DATA Business Solutions has announced that it is offering a plan to repurchase legacy and on-premises SAP ERP licenses from customers to help ease their cloud migrations. But is the bold step helpful enough to change the minds of disgruntled SAP customers?
As reported by The Register, the SAP consultancy will buy back existing perpetual licenses for the legacy ECC platform to “trade in” against new five-year cloud contracts and support agreements for the use of SAP’s RISE with SAP offering.
Justin Brading, executive vice president of Western Europe and MD UKI at NTT Data Business Solutions, explains to ERP Today that the new “credit back” offer aims to provide further value and flexibility in offsetting previous investment in SAP licenses against a new cloud contract and associated “Move” services.
“Whilst every customer’s journey to the cloud is unique, we believe the combination of our capabilities, tooling and experience, along with our ‘credit back’ offer, will undoubtedly reduce the barriers to moving to the cloud, and as such will strengthen the business case underpinning their decisions. The current level of interest in our offer is testament to this,” Brading says.
Landing at a time when some on-premise customers are questioning their licensing costs after SAP stated many future innovations will only be available in the cloud, Paul Cooper, chair of UKISUG, tells us his hope that “NTT Data Business Solutions’ initiative should hopefully help relieve some of the financial burden for on-premise customers who are looking to migrate to the cloud.”
Horsemen of the HANA-pocalypse?
With this latest move, NTT Data Business Solutions explains that, additionally, depending on the customer’s current financial treatment of the license asset and subject to a customer’s audit approval, there may be a further opportunity to derive financial benefit and flexibility to take P&L benefit against their original license value. This could thereby help fund client cloud projects without a substantial upfront P&L investment.
While broadly seen as a move in a positive direction and described as “bold and innovative” by Stuart Browne, founder and managing director of SAP consultancy Resulting IT, he adds to ERP Today: “It’s a shame that a consulting partner has to do this to compensate for a software vendor’s stubborn commercial principles. I’m sure others will follow NTT’s lead, which means that SIs are essentially becoming finance houses to fund a seven-10 year mass migration towards S/4HANA.”
In other words, for some customers, SIs may be turning into horsemen of the HANA-pocalypse. Browne also shares his belief that SAP should be offering something similar as the company is the benefactor, and compared the move from CAPEX to OPEX licensing to paying off your mortgage and then being asked to rent the house you now own.
“If that happened in the bricks-and-mortar world, you’d fully expect the landlord to buy back the asset before renting it to you, right?” Browne says.
While acknowledging that customers would surely appreciate any incentives from SAP, Brading explains that NTT Data Business Solutions is taking this step as a specialist SAP systems integrator. He also says NTT is able to offer such credit back offers as they “can look at the lifetime value of a long-term customer partnership across not only the cloud subscription, but across the wider project and cloud services”.
With the recent SAP push for customers to move to the cloud, spurred by the promise that they will benefit more from it in the long run, CEO Christian Klein has maintained that the company does not plan to “leave any customer behind”.
In this spirit, when addressing the German-speaking SAP user group DSAG at its 2023 Annual Congress in Bremen, Germany, Klein explained that SAP will continue to invest in functions and features for its on-prem customers.
“We will continue to hold more than 200 ERP versions in more than 130 countries. We will localize them and we will maintain them. For that, we will spend several billions of euros to take these customers along,” he was quoted as saying in a translation of his conference speech.
In SAP’s view, the HANA-pocalypse has been canceled – and will be replaced by a cloudy Age of Aquarius.
