SAP’s on-premises support costs rise to increase cloud adoption

SAP, for the second year, has increased the cost of on-premises support. It announced this on Thursday following its decision to withhold product innovations. 

Just days after announcing plans to withhold future product innovations from on-premises customers, SAP announced on Thursday that it will increase the cost of support for users of its on-premises software for the second consecutive year.

According to Klein, new ERP capabilities, sustainability and carbon accounting solutions, and all of the company's new AI innovations will be unavailable to on-premise customers in the future.

If that wasn't enough to convince hesitant CIOs to consider switching to the cloud, SAP also has a financial justification.

On January 1, 2023, SAP raised the price of its contracts for SAP Standard Support, SAP Enterprise Support, and SAP Product Support for Large Enterprises after a ten-year price freeze. Prices increased by a maximum of 3.3%, in line with the local consumer price index (CPI) for customers.

Starting in 2024, it will once again raise support prices in line with local CPI rates, but this time with a 5% cap.

SAP attributed the increase from the previous year to rising costs for labor, energy, and outside services. This time, it made a vague allusion to the current state of the market, which is marked by persistently high inflation rates.

But while consumer prices are still rising globally, the rate of increase is actually declining in many nations, raising doubts about the decision to raise the cap on price increases.

Although price increases for support are typical in the software industry, Henzler said SAP is giving users enough value for their money.