Thread regarding SAP layoffs

RISE is proving to be so expensive, so rigid, and so difficult to manage that the word is out. Your customers are talking, and it isn't good, you think S4 migrations are a hard sell, just wait. It's shocking, but it seems SAP has no idea how to actually run the software they sell in real world scenarios.

Maintenance was the "cash cow" for decades for SAP. Average cost for ERP customers was 19-22% of Total Software License Cost.

So basic math would tell you that every 5 years Customers were paying 100% of what they paid for the Total Soft. Lic. to begin with - in 20 years they paid 4x of the original deal. Yes, Customers were complaining left and right about such costs ( I know this from first hand experience) but what could they do? Year after year after year..... they paid and paid Maintenance. It was without doubt the float that enabled SAP to make acquisition after acquisition. Who in their right mind would give up such a business and just "give it away" to hundreds of third parties who cannot wait to take this over.

Yes many of our support people are already jumping ship, they know what is coming .

Getting out of ERP and Maintenance and trying to force customers into S4 Hana may likely be the straw that broke the camels back.

Look who is at Rimini Street, Spinnaker - all ex-SAP maintenance go to market employees...and if the only way to retire the maintenance on shelfware is to accept RISE, no wonder people are going to third party support/maintenance providers.

@ev

Afraid not.... support ends 2027 - ERP and Business Suite accounts. This is quite clear directly from SAP.

SAP offers 'OPTIONAL" 3 years ( at a price) for those switching to S Hana AND provided the switch is completed by 2030.

https://www.cio.com/article/3809226/deadline-for-sap-users.html

Maintenance is till 2040

@e1 You’ll have to ask the great McKinsey Minds, or Bain, or BCG, or Kearney wizards behind the Oz curtain for that answer. Do you really think SAP’s board could construct and stand by a strategy that shifts their earth’s tectonic plates? No, the named firms provide (at a very steep price) built-in blame-fixing.

A large portion of our customers, especially the larger enterprises, are running ERP systems which were "customized" to some extent to fit their processes.

Many of these have been on their systems for decade or longer. They went through the switch (painful and expensive as it might have been) to come off of all their legacy systems and convert to SAP's ERP platform. They have been paying Maintenance fees year after year.

In mid 2019 Maintenance revenue accounted for 45% of our total revenue. Clearly then an enormous amount of money which must be protected. Yes, this revenue stream has been decreasing because SAP has been making it clear that it will exit both the ERP and related Maintenance biz and therefore customers have been switching to other providers.

Just do a very quick search for companies who provide maintenance support on SAP systems - you will find the list to be extensive. Fact is all those companies who have been on our legacy systems have no intent of switching to something else.

And yes, fully agreed, the portion of our business dedicated to ERP and Maintenance employs tens of thousands of employees and so the downsizing of this operation is another reason why our leadership wants to exit.

Question is, what else will replace this significant amount of revenue?

wow, didnt hear this before. Maintenance is probably the most profitable revenue in the company. And the easiest to predict for budgets etc. Seems mad. If this happens wouldn't be surprised for a new leader to launch a "Maintenance is the Life Blood of SAP" Strategy in the future.

So cloud revenue is maintenance revenue plus the actual software sale. Its the same recurring revenue that was there before. It will only go down if our cloud products are so poor nobody wants to transfer to them and sit on the existing on prem or competitors products instead.

@bz you and CK fan are complete bell–ends that ruin what could be an informative and reliable platform for discussion.

We should follow and accept the strategy.

The board knows what they are doing. They know best.

Looks that it will be a slow roll out the door for all system and software support teams. So slow that SAP won't have to provide any public announcement of the RIF

Anybody know how many total people are in the various global teams responsible for providing this support?

The issue is what company shuts down ( not sell off) its most and continuous stream of income ? SAP publicly states that is has 480,000 customers globally, including 90% of the Fortune 500. These customers came onboard and stayed with SAP since it's founding in 1972 - the overwhelming majority of these are running ERP systems which require maintenance.

For the 2024 fiscal year, SAP's annual revenue from software support was €11.29 billion. That is by itself about 1/3 of our overall total revenue. Seems like a lot of money to me just to shut it down ( not even thinking about the possibility of selling it off so we could make some money on it).

Look, let's be honest here. SAP is getting rid of the Maintenance support for only one reason - it is very people intensive. And people means money, and benefits cost and overhead expense...etc....all of which eat up profit.

So be prepared, the story isn't just that SAP will exit the maintenance biz by 2027, but rather as we begin to wind down the business and current customers who want to protect their systems look pronto for other providers, we will see the exodus of thousands of employees who are in any way connected to the Maintenance biz.

@OP The strategy of focusing on innovation and convince/force customers to follow only makes sense if you're in dominant position: SAP isn't Microsoft, when Microsoft says that it will stop support of a version customers have no other choice but to follow.

For SAP there is Salesforce, Oracle...and they're accelerating innovation with AI and big layoffs.

SAP is entering a depression phase where employees lost trust in Management, the consequence is either Silent Quitting or work with no motivation just to pay the bills which is just a matter of time until it impacts product quality and release...