SAP: From migration deadlines to migration economics

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SAP: From migration deadlines to migration economics

s becoming more contestable, but its installed base remains highly defensible. Following the

European Commission’s ruling on SAP’s maintenance practices, we revisit a debate that has largely focused on migration volumes

and third-party support disruption. Our key conclusion is that investors are asking the wrong question. The primary risk is not

maintenance revenue displacement, but increased customer optionality and negotiating leverage. While the ruling incrementally

shifts bargaining power toward customers, we remain Outperform, as SAP’s long-term value creation should depend more on cloud,

AI, and ecosystem monetization than on maintenance lock-in.

The real risk is pricing power, not revenue substitution. Investors often focus on whether third-party support providers can

materially erode SAP’s maintenance revenues. We believe the direct revenue opportunity remains modest relative to SAP’s c.

€10.5bn maintenance base. However, the presence of credible alternatives strengthens customers’ hand in negotiations short-

term, not only on maintenance renewals but also on cloud pricing, migration incentives, and contractual flexibility. The debate

should therefore move from revenue disruption to pricing power.

SAP still controls when they end-of-life their software. While customers could shift maintenance temporarily, SAP decides

when they will cease to support and upgrade the older versions of their software. This means that while a customer could

temporarily shift ECC support to a third-party provider, once SAP ceases to support ECC the customer has the decision of using

software that will no longer be upgraded or enhanced by the developer. This means that the software will age out relatively