CONTRIBUTOR
When it comes to your IT budget and software strategy, who’s really calling the shots? Is it your team, or is it your software vendor?
Many ERP customers feel that they have increasingly less control over the direction of their own IT environments. Why? Because major software vendors – like SAP and Oracle – have huge sway and influence over fundamental aspects of an enterprise’s IT infrastructure.
How are software upgrades released and managed? That’s up to the vendors. What enhancements and customizations are supported? The vendors control that, too. Want to implement a cloud or digital transformation initiative? Your vendor will exert considerable power over these plans.
These enterprise-vendor relationships have come to represent a ‘lock-in’ – and it’s become a significant pain-point for many CIOs relying on Oracle and SAP ERP systems and software packages. A restrictive relationship where you’re bound to the vendor’s terms and conditions – and subject to ever-increasing fees – leaves little room for independent decision making.
Maybe, as an ERP customer, you’re happy with your software infrastructure, but you’re looking to optimize the substantial investment made in your ERP systems. Or perhaps you’re looking to move to a fully-cloud ERP system, alongside a digital transformation program. Well, wherever you are on your ERP journey, here’s what you need to know:
Staying Supported, Stable, and in Control
Many CIOs – perhaps yours included – will be familiar with the following scenario. You’re being pushed into upgrading your ERP systems because support for your existing version is due to end. Take support for SAP’s ERP Central Component (ECC), which will end in 2027. This support deadline is a huge driver for SAP to get its existing customers off their on-premises environments and upgraded to their newest, cloud-based ERP platform, S/4HANA. For many enterprises, this means upgrading before they are ready or willing.
Your vendor might try to get you to upgrade your technology stack components to the latest levels, too, citing interoperability issues that will require intense internal resource allocation. The vendors simply don’t provide these interoperability services for enterprises using older technology stack components. Instead, they benefit by licensing new tech stack components that you pay a significant fee for. But are these really adding value to your stable, legacy system?
While the allure of new features in upgrades like S/4HANA – improvements in analytics and user experience – or ‘solutions’ to fix interoperability issues, might seem beneficial, or even a quick win, the reality often falls short of expectations. The complex migration process and substantial retraining required with such upgrades and updates can leave a big hole in your anticipated ROI, leaving many CIOs questioning the true value proposition of these transformations.
While advocating for continuous innovation and upgrades, ERP vendors often overlook the depth and functionality of existing mature enterprise software, which in many cases is more than adequate for organizational needs. This drive for upgrades rarely translates into significant improvements in top-line revenue or OPEX savings for you.
This push towards upgrades highlights a key dilemma for CIOs managing stable, established ERP systems: the need to balance vendor-imposed “innovations” with the actual ROI and strategic fit for their organizations. Oracle and SAP, in their bid to keep customers within their ecosystem, often encourage legacy customers to migrate to newer versions. Yet these migrations can lead to a loss of control and independence over your enterprise’s infrastructure and environment.
So, You Do Want to Upgrade?
If you are ready to upgrade or transform your environment, you may find yourself on a path marked by your vendor’s dictated support timelines and upgrading cycles.
This model, where application upgrades and technology stack changes are driven by Oracle and SAP, is characterized by high maintenance fees and a continuous rollout of new products. This lock-in isn’t just a matter of technology but also of strategy and finances, as maintenance fees paid to vendors do not necessarily grant access to new innovations.
Critically, your core needs for business process improvement and IT innovation are frequently overshadowed or forgotten.
The vendors have fully embraced cloud-hosted systems as the future of their enterprise technology. It’s a strategic move to boost their revenues rather than a genuine effort to advance technological innovation that aligns with the needs and plans of your individual enterprise.
You’ll also find that your vendor will typically take a stance that discourages customization. Their reasoning is straightforward yet restrictive: Customized code complicates the upgrade process to newer versions of their software. As a result, these vendors do not support modified code in their standard support programs. But how can you build and maintain a system that fully meets your unique needs if you’re stuck on the vendor’s roadmap?
This approach by the vendors is part of a broader strategy to keep their customers aligned with their ever-evolving software versions, ensuring continuous revenue streams from upgrades and associated support fees.
For CIOs looking to upgrade or transform their systems, the message is clear: Consider your options before relying solely on your vendor for transformation guidance and support. There is a growing need for CIOs to assert control over their ERP strategy, to deviate from the vendor’s roadmap and chart a course that is more aligned with your organization’s unique needs and strategic objectives. This approach involves a careful evaluation of the true value and ROI of proposed upgrades and transformations, ensuring that any changes made are not just technologically sound but also financially and strategically beneficial. You know your environment and upgrade aspirations better than anyone – don’t let your vendor tell you otherwise.
The Case for Independence and Strategic Flexibility
You can stick with your stable environment, keep your customizations, upgrade on your own terms, move to the cloud, or even operate a hybrid environment – all with the strategic flexibility to manage your ERP system according to your own timelines and needs.
It requires breaking free from the ‘lock-in’ with your software vendor.
No, this doesn’t mean finding a new software vendor. But it does mean finding a new software support partner. And remember, both Oracle and SAP acknowledge the right of their customers to choose their own partner to maintain and support their systems.
Working with a third-party software support partner means keeping your independence. And this independence translates into substantial time and cost savings, breaking the cycle of expensive and often unnecessary updates and upgrades. These immediate cost-savings can be diverted to the IT projects that your team really cares about.
The foundational principle of third-party software support is that your enterprise knows best how to navigate your own innovation and budget maximization plans effectively. Freed from the constraints of vendor-dictated roadmaps, you can optimize costs through selective cloud solutions, retain core enterprise applications where extensive changes are unwarranted, and invest in technologies and services that truly align with your strategic growth and innovation plans.
A third-party software partner doesn’t just facilitate this, but they’ll support, advise, and work closely with you to get the most out of your systems and to realize your innovation goals. You’ll reclaim control over your technology future, making choices that are in your best interest rather than being swayed by the upgrade and maintenance agendas of your software vendor.
Regaining control of your ERP roadmap is about more than cost savings; it’s about empowering your enterprise to steer its unique technological journey towards innovation, transformation and growth.
