In a changing world with geopolitical tensions, the SAP of the future requires a new and balanced approach: On-prem, cloud, or hybrid?

When the world came to a standstill during the corona pandemic, one thing became clearer than ever before: supply chains and production systems are only as strong as the digital foundation they are built upon. For many companies, that foundation is SAP. The organizations that managed to keep production running, get goods distributed, and customers informed were typically those that also had flexible, integrated, and modern core systems.

Today, we once again find ourselves amidst uncertainty – geopolitical changes, economic volatility, and an increasing focus on digital sovereignty. Nevertheless, one thing is entirely certain: SAP ECC is nearing the end of its lifespan when mainstream maintenance expires in 2027, and the window to complete a transformation to S/4HANA is closing fast.

ECC’s end date is approaching

SAP has made it clear that support for ECC ceases by the end of the decade. Many organizations are planning their transformation between 2025 and 2027, while others are stretching all the way to 2030, when extended support expires. But the message is the same: change is coming – and it is not optional.

The challenge is not just technical, but strategic. S/4HANA is not merely a new version of SAP; it is a fundamentally different platform designed for a world with real-time data, integrated processes, cloud-based innovation, including not least the opportunities to radically overhaul business processes and applications using artificial intelligence.

The cloud discussion has changed

When we speak of S/4HANA today, the question is no longer if one should go to the cloud – but how. SAP’s Cloud ERP solutions (formerly known as RISE with SAP) clearly show that the company’s strategy points toward the cloud. But this does not mean that all organizations should uncritically choose a public cloud model. The discussion has evolved: the choice between on-premise and cloud is no longer black and white.

Geopolitical tensions have naturally reignited the debate on data sovereignty and digital control. In a very short time, we have gone from a world order where the Western world's technology offerings from leading tech companies and trust across the Atlantic were great enough that the known hyperscalers were those many comfortably looked to – to now, where the global agenda has forced European and thus also Danish organizations to look differently critically at cloud solutions that do not belong in Europe. Many decision-makers therefore lean toward on-prem solutions, which can seem more secure and independent. But that choice also has consequences: slower development, more complex upgrades, and heavier maintenance.

For many companies, the realistic way forward is a hybrid setup – where one combines on-prem infrastructure for critical systems with the cloud’s scalability and innovation speed.

Cloud sovereignty and trust in technology

In Europe, SAP’s work with EU sovereign cloud initiatives shows that there is a balanced way forward. It is possible to utilize the cloud’s innovation power while simultaneously maintaining control of data, governance, and compliance with European regulations.

We are already seeing examples of this: SAP recently launched collaborations with both Microsoft and AWS, which initially address the need from public German customers to be able to adopt SAP Cloud innovations and specifically OpenAI in a European context. This shows that even in sensitive sectors, there is trust in combining global technology with European sovereignty. It underscores that cloud and compliance can indeed go hand in hand, and that innovation does not stop at the border.

Therefore, planning must begin now

It can be tempting to postpone the transition from ECC to S/4HANA, especially in uncertain times. But if the corona period taught us anything, it is that resilience belongs to those who prepare in time. The companies that fared best during the crisis were those that had invested in flexibility, automation, and insight.

A well-planned S/4HANA transformation is therefore not just about following SAP’s schedule – but about building the agility needed to react quickly to future challenges, whether regarding supply chains, sustainability requirements, or new AI-based processes.

Uncertainty must not become an excuse for standstill

In times characterized by unrest, it is natural to hesitate. But precisely the uncertainty is the reason why now is the time to act. The transformation to S/4HANA is not merely a technical upgrade – it is a strategic opportunity to modernize, simplify, and strengthen the company’s digital backbone.

Regardless of whether the choice falls on cloud, on-prem, or a hybrid solution, the most important thing is to have a clear plan – a plan that unites technology, business, and strategy, and which makes the company ready for the next decade of digital development.