SAP raises on-prem support costs again to drive cloud adoption

For the second year in a row, SAP is raising on-premises support costs. This time, however, it’s cutting innovation too.

First came the carrot of lower costs in the cloud with the bundled Rise with SAP offering. Now here comes the stick.

SAP said Thursday it will raise the cost of support for users of its on-premises software for the second year in a row, just days after announcing plans to withhold future innovations in its products from on-prem customers.

“SAP’s newest innovations and capabilities will only be delivered in SAP public cloud and SAP private cloud using RISE with SAP as the enabler,” CEO Christian Klein told analysts during a conference call to discuss the company’s Q2 results. “This is how we will deliver these innovations with speed, agility, quality, and efficiency. Our new innovations will not be available for on-premise or hosted on-premise ERP customers on hyperscalers.”

Future innovations that on-prem customers will miss out on include new ERP capabilities, sustainability and carbon accounting solutions, and all the company’s new AI innovations, Klein said.

If that alone wasn’t enough to make reluctant CIOs think about moving to the cloud, SAP has another argument too: cost.

After a decade-long price freeze, SAP increased the cost of SAP Standard Support, SAP Enterprise Support, and SAP Product Support for Large Enterprises contracts on January 1, 2023. Prices rose in line with customers’ local consumer price index (CPI), with a cap of 3.3%.

From the start of 2024, it will again increase support prices by local CPI rates—but this time, it’s raising the cap to 5%.

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