December 2027 is the deadline SAP has set for customers to move to S/4HANA from its predecessor, Business Suite, and its digital core, SAP ERP Central Component(ECC), which it plans to stop supporting in 2030. Until now, many ECC customers have remained cautious about migrating to the latest S/4HANA because of the migration costs involved and the relative lengthy and complex project duration, and those reasons will only worsen if they fail to act quickly. SAP legacy customers must undertake their SAP cloud transitionsoon, or they will be at a competitive disadvantage, impacting their digital transformation journey and with that missing out on helping their organizations to make data-driven and profitable pricing decisions. With that a critical question remains for those looking to keep their transitions costs to a minimum – how to mitigate the costs for SAP cloud migration?

For more than a decade, Pricefx has been assisting businesses in successfully transitioning from their legacy systems and maximizing the value of their native-cloud based automated pricing solutions. With the impending deadline for the SAP S/4HANA migration, we understand the challenges of cost and complexity. Our AI-informed pricing tools offer a way to mitigate transition expenses and ensure competitive advantage by enabling data-driven and profitable pricing decisions to offset the costs of migration process.

So, let’s jump straight into a discussion of defining cloud migration and the costs, outlining the benefits of the migration, before we analyze the challenges of transitioning to SAP S/4HANA, key considerations for transitioning from ECC to S/4 HANA and finally, how pricing software can help mitigate the transition costs.

What is Cloud Migration?

Cloud migration refers to the process of moving data, applications, and other business elements from an on-premise s infrastructure to a cloud-based environment. For IT professionals, this involves detailed planning and execution, ensuring that the transition is smooth and secure while maintaining business continuity. Cloud migration also includes the reconfiguration of network settings, data transfer, and the integration of cloud-native services. It is essential to perform a comprehensive assessment of the current IT landscape to identify the best approach and tools for migration, while also considering aspects such as data security, compliance, and potential downtime.

For cost analysts and pricing professionals, cloud migration entails a thorough evaluation of the financial implications and potential ROI. The initial investment in cloud infrastructure, professional services, and training must be weighed against the long-term benefits of scalability, flexibility, and access to advanced technologies. Accurate cost-benefit analysis is crucial, as it provides insights into how cloud solutions can streamline operations, optimize pricing strategies, and ultimately drive profitability. In the context of SAP cloud migration projects, leveraging cloud-native pricing software can significantly enhance decision-making processes and mitigate the costs associated with transitioning to SAP S/4HANA.

How Much Does It Cost to Migrate SAP to the Cloud?

Migrating your SAP ERP to the cloud is a complex process that involves a range of factors, including the size of the enterprise, the specific SAP solutions in use, the chosen cloud provider, and the overall scope of migration.

Taking all factors into account, here is a ballpark guess-timate based on this report from ERP Research:

• Assessment & Planning: $50K - $200K
• Infrastructure: $10K - $100K/month
• Licensing: $100K - $1million/year
• Migration Services: Up to $100K
• Maintenance and Support: 18 to 22% of annual license fee
• Hardware: Up to $500K

Given these estimates: The total cost for migrating SAP to the cloud for a large-scale enterprise business could realistically range from approximately $1 million to over $5 million, factoring in both initial setup costs and ongoing operational expenses over time.

For more detailed insights into specific case studies or further breakdowns by industry sector or company size regarding SAP migrations to the cloud you may wish to refer to SAP’s official resources.

Whichever way you slice and dice it, it is a lot of money.

For those looking for the benefits of SAP Cloud Migration plus methods to mitigate some of those significant cloud migration costs, read on.

Why are SAP Users Migrating to the Cloud?

The Top 4 Benefits of Migrating to SAP S/4HANA

Migrating to SAP S/4HANA offers several benefits that can significantly improve business success. SAP S/4HANA redefines ERP (Enterprise Resource Planning) systems and is considered the most notable update since the introduction of SAP R/3 in 1992. Some of the key benefits include:

1. Real-time data access - SAP S/4HANA enables businesses to access real-time data, providing valuable insights and facilitating better decision-making in a dynamic market environment.
2. Cloud-based flexibility - Moving to the cloud allows businesses to scale their operations easily, adapt to changing business needs, and take advantage of new technologies and innovations.
3. Enhanced efficiency and productivity - SAP S/4HANA offers streamlined processes, improved user experience, and automation capabilities, leading to increased adoption, efficiency, and productivity.
4. Easy integration with native-cloud pricing software systems - S/4HANA transitioned companies can seamlessly integrate their ERP system with cloud-native pricing software, unlocking additional capabilities and improving their bottom-line growth.

With the integration of native-cloud pricing software, businesses can leverage advanced pricing algorithms, real-time market data, and automation features to optimize their pricing strategies. This enables them to stay competitive, respond quickly to market dynamics, and make data-driven pricing decisions that drive profitability. The combination of SAP S/4HANA and native-cloud pricing software offers a powerful solution for companies looking to enhance their pricing capabilities and achieve positive business outcomes.

The Challenges of Transitioning to SAP S/4 HANA

Many SAP users are still transitioning to SAP S/4HANA, with only a small portion having completed the update so far. According to historic SAP and Gartner data, fewer than a third (28%) of the initial 35,000 ECC customers were live by the end of 2023.

According to LeanIX's SAP S/4HANA 2022 Survey, over half (54%) of the participants have the perception that the migration is a mere technical upgrade than a business improvement and transformation. The survey also identified two key challenges faced by companies during the migration process:

• The difficulty in identifying interdependencies between ERP and non-ERP landscapes poses a significant challenge during the migration process. To define an accurate overview of the software landscape within 30 days was a challenge for more than 80% of respondents.
• Defining a target architecture for the migration has been an issue. Without a clear plan and architecture in place, businesses may face difficulties in successfully transitioning to SAP S/4HANA.
• A lack of collaboration emerged as the most significant obstacle for two-thirds of the survey respondents, emphasizing the importance of effective teamwork between business, project, and IT teams to ensure a seamless transition.

Although two-thirds of SAP on-premise customers express these concerns, businesses who are performing successful transitions to SAPS/4HANA are ahead of the curve, experiencing benefits like remaining competitive, quick response to market dynamics, and informing their pricing decisions that drive profitability with data.

The 7 Key Transition Steps from ECC to SAP S/4 HANA

For brevity’s sake (and your convenience), we have provided the transition steps required from ECC to SAP S/4 HANA for you here below in an easy-to-understand checklist format.

For those interested in taking a deep dive into the following SAP cloud transitionsteps, check out this informative article below:

But for a concise overview, here they are:

1. Assess current ECC system - Identify business requirements, goals, and expectations for migration to S/4HANA. This can help determine the best migration strategy, scope, timeline, and budget for the project.
2. Choose migration strategy - Greenfield (new S/4HANA system), Brownfield (convert existing ECC system), or Hybrid (selective migration).
3. Prepare data and applications: Clean up data, ensure quality and custom code compatibility, and resolve conflicts that may arise during the migration process.
4. Utilize the right tools and best practices - Maintenance Planner, Software Update Manager (SUM), Readiness Check, Application Conversion Assistant, Custom Code Migration Guide.
5. Test and validate migrated system - Functional testing, integration testing, performance testing, security testing, and user acceptance testing to ensure that the migrated system meets the business requirements and expectations, and that there are no errors or issues that may affect the system functionality or performance.
6. Go live with S/4HANA - Monitor and optimize following integration: Smooth cutover, training, support, troubleshooting, system enhancement.

How to Save Money on an SAP Cloud Migration

3 Ways an Automated Pricing Solution Can Help You Mitigate SAP S/4 HANA Transition Costs

While it might not be exactly ‘saving money’ on your migration to SAP S/4HANA, there certainly are ways to help alleviate the financial burden associated with the transition.

The cost implications of the transition pose a significant concern for businesses. However, there is a solution to mitigate this challenge: the implementation of an automated pricing solution.

By harnessing the power of pricing software, businesses can achieve the following benefits:

1.        Enhance pricing strategy: By utilizing a SAP-endorsed pricing solution such as Pricefx,  businesses can optimize their pricing strategy in preparation for the migration to the cloud. What’s more, as Pricefx is an SAP Premium App, we also have published integrations by SAP in the  SAP API store. This solution provides valuable pricing agility, functionality, utility, and capability, empowering businesses to make well-informed pricing decisions.

2.        Minimize migration expenses: The pricing solution acts as a safeguard against the costs associated with the migration process. It offers unparalleled pricing flexibility, ensuring that businesses have a viable means to cover the expenses of the migration without incurring significant financial strain.

3.        Drive revenue optimization: Integrating the pricing software with SAP enables businesses to achieve pricing and revenue optimization throughout the lead-to-cash process. This comprehensive approach enhances both top-line and bottom-line performance, contributing to the overall success of the business.

The transition from SAP on-premise s solutions to cloud-native solutions is necessary for businesses to stay competitive and thrive in today's digital landscape. While there are challenges associated with the migration process, the benefits of migrating to SAP S/4HANA are substantial. Effective collaboration between business, project, and IT teams is crucial for a successful transition. Additionally, leveraging a quality automated pricing solution like Pricefx can help mitigate transition costs and provide pricing flexibility during the migration.

And the greatest advantage of Pricefx as a pricing platform for SAP users is the closeness of our relationship with SAP (Pricefx Optimized Dynamic Pricing is now Premium Certified for SAP S/4HANA, adding greater value to the SAP Endorsed App) to help support your transition from the on-premise SAP solution to the cloud. What’s more, by pairing with Pricefx, your organization can benefit from the latest SAP release with minimal modifications and cloud-compliant extensions and customizations as per the excellent SAP ‘Clean Core’ initiative. To dive in deeper to learn more on the Pricefx – SAP partnership, click and read in on the article link below:

On the other hand, if your company already has everything organized to begin your pricing software journey, talk to one of our pricing experts today to get started.

Happy Pricing!