SAP Pivots to AI Growth After ERP Migration Targets Miss by €2 Billion
- What: SAP is restructuring its executive board and commercial strategy to prioritize AI-driven growth.
- Why: The company missed its 2025 goal for reducing legacy on-premise support revenue by €2 billion, signaling a slowdown in cloud migrations.
- Key Change: A new "Customer Value Group" led by Thomas Saueressig and a dedicated AI adoption unit under CEO Christian Klein.
- The Stakes: Over 10,000 customers are estimated to remain on legacy ECC software by 2030, despite looming support deadlines.
SAP has shifted its strategic focus toward AI-driven growth and restructured its executive board after internal data revealed the company missed its legacy cloud migration targets by €2 billion. The enterprise software giant is launching new commercial models to monetize AI consumption as it pivots away from a strictly "cloud-first" migration agenda that has faced significant resistance from its global customer base.
The €2 Billion Revenue Gap
The strategic pivot comes on the heels of financial data showing that SAP’s "grand cloud escape plan" is significantly behind schedule. In 2022, former CFO Luka Mucic informed investors that SAP aimed to reduce on-premise software support revenue to €8.5 billion by 2025 as users transitioned to cloud subscriptions. However, full-year figures for 2025 show that on-premise support revenue remained at €10.5 billion—roughly 24 percent higher than the company's internal target.
According to reports, this €2 billion discrepancy suggests that the "RISE with SAP" initiative, launched in 2020 to move complex ERP environments to the cloud, has not achieved the rapid displacement of legacy systems the vendor anticipated. Between 2021 and 2024, legacy support revenue fell by only 2 percent, highlighting the difficulty of moving large-scale industrial and manufacturing organizations off their aging ECC (ERP Central Component) systems.
Board Shake-up and AI Adoption Unit
To address the stagnation in core ERP migrations, CEO Christian Klein is reorganizing SAP’s leadership to focus on "innovation elements," specifically artificial intelligence. Beginning next month, Thomas Saueressig—previously the Chief Customer Officer and former head of product engineering—will lead the newly formed Customer Value Group. This unit is designed to support the expansion of AI-powered solutions across SAP’s portfolio.
Simultaneously, Klein is establishing a dedicated unit to accelerate AI adoption. This group will be tasked with introducing new ways of charging for AI consumption, moving beyond traditional seat-based licensing into usage-based commercial models. This shift indicates that SAP is looking to generate new revenue streams from its existing installed base rather than relying solely on the financial gains of cloud migration.
The Looming 2027/2030 Deadline
The pivot to AI occurs against a backdrop of increasing pressure for legacy customers. Mainstream support for SAP’s ECC software is scheduled to end in 2027, with extended support available at a 2 percent premium until 2030. Despite these deadlines, Gartner estimates that more than 10,000 SAP customers will still be running major business operations on ECC by the end of the decade.
The complexity of these migrations has created a bottleneck. Larger organizations, which represent the bulk of SAP’s revenue, have found the "lift and shift" process more difficult than promised. While SAP previously ceased publishing specific figures on ECC migration—leading to confusion among analysts—the persistence of on-premise revenue confirms that many of these organizations are choosing to pay premiums rather than undergo a full-scale cloud transformation.
Impact: From "Rip and Replace" to AI Upselling
For developers and enterprise users, this shift represents a change in SAP’s tone. While CEO Christian Klein previously told analysts in 2023 that future innovations—including AI—would only be available to customers in the cloud via "RISE with SAP," that hardline stance appears to be softening.
Alisdair Bach, head of SAP practice at consultancy Dragon ERP, suggests that SAP is moving toward an "upsell" strategy. "Modernization has come to an end in terms of rip-it-out-and-start-again," Bach told The Register. Instead, SAP is expected to offer "bite-sized chunks of innovation," such as its flagship AI platform, Joule, to customers who have moved to Private Edition cloud subscriptions without requiring a full S/4HANA transformation.
"SAP is more focused on upselling to generate revenue in other ways," Bach noted. "Getting ECC customers into the cloud, it can start upselling AI licensing."
This strategy allows SAP to claim "AI-driven growth" even if the underlying ERP infrastructure remains legacy-adjacent. It also provides a roadmap for customers who are wary of the risks associated with a total system overhaul but are eager to leverage generative AI for productivity gains.
What’s Next
The industry will be watching the rollout of SAP's new AI consumption models later this year. A key milestone will be the availability of the Joule platform for SAP ERP Private Edition customers, which is expected to launch in the second half of 2026.
For the thousands of organizations still on ECC, the 2033 final support cutoff remains the ultimate horizon. However, SAP’s recent moves suggest that the next seven years will be defined not by the push for cloud infrastructure, but by the race to integrate "Business AI" into existing workflows. If SAP can successfully monetize AI at scale, it may be able to offset the revenue stagnation of its delayed ERP migration program.
Sources
All technical specifications, pricing, and benchmark data in this article are sourced directly from official announcements. Competitor comparisons use publicly available data at time of publication. We update our coverage as new information becomes available.