SAP makes a tempting AI offer but only if customers move closer to the cloud

SAP is offering limited on-premises AI access

SAP is reshaping its relationship with thousands of long-term customers still relying on the older ECC platform. At Sapphire 2026, the company unveiled a plan to let these customers use some of its Joule AI assistants, digital tools designed to automate and optimize business workflows. But there’s a condition: they can access these AI features only if they commit at least half of their maintenance spending to SAP’s cloud services.

More than 20,000 businesses are operating on ECC systems full of customizations that make migration to S/4HANA difficult. For years, SAP took a strict stance, insisting these customers move fully to the cloud to gain access to new technologies such as AI. Now it’s offering a bridge, limited AI access for those willing to make a financial step toward the cloud. This update recognizes the real-world complexity of digital transformation while protecting SAP’s long-term cloud strategy.

For company leaders, this is a negotiation of value and commitment. SAP’s message is straightforward: innovation comes with participation. The company wants to align customer modernization timelines with its revenue model, meeting enterprises partway to help them realize short-term AI benefits while still guiding them toward eventual full-cloud adoption. It’s a strategic move that positions cloud investment as an essential step toward smarter, more connected enterprise systems.

Geraldine McBride, CEO of MyWave and a former SAP president, pointed out that more than 20,000 companies remain “stuck” on ECC due to complex industry-specific code. SAP’s Chief Strategy Officer, Sebastian Steinhaeuser, later confirmed the new policy during a media briefing and emphasized that Joule assistants are “designed for the cloud.”

The new offer balances customer accommodation with pressure to accelerate cloud migration

SAP’s leadership is sending a consistent message: the future is in the cloud. Yet, with this offer, the company shows a rare degree of flexibility. Customers halfway through their modernization journey can access limited AI assistance, but only if they make a meaningful financial commitment to SAP’s cloud platform. For those already on Cloud ERP Private, the benefits are greater, up to three Joule assistants activated at no extra cost to support finance, HR, and supply chain processes.

The company is treading a careful path, supporting the modernization needs of existing customers while reinforcing its own cloud revenue goals. The conditional AI offer keeps customers progressing along SAP’s digital roadmap, ensuring that both sides benefit: users gain immediate operational value through limited AI-enabled functionality, while SAP strengthens its cloud foothold across its customer base.

For executives, this signals more than a product offer, it’s a shift in engagement strategy. SAP understands that many large enterprises operate within complex legacy frameworks, and full migration takes time, capital, and leadership alignment. By linking AI access to partial cloud participation, SAP effectively transforms modernization from a technical challenge into a business decision with measurable returns.

Manoj Swaminathan, SAP’s Chief Product Officer for Business Suite, clarified this approach, saying, “We want to take every customer along with us.” It’s a pragmatic tone, one that balances optimism with clear strategic direction. The move positions SAP as a partner for gradual transformation rather than an inflexible vendor demanding immediate change.

Customers face operational and financial obstacles that impede their migration to S/4HANA

For many organizations, migration to S/4HANA isn’t slowing down because of technological doubt, it’s the scale and cost of the transition that’s holding them back. Moving from SAP’s legacy ECC platform to the cloud-based system requires integrating complex, customized operations and retraining teams to manage new environments. It’s a process that takes time, people, and money.

Mid-sized companies are particularly affected. They often lack the financial flexibility to re-engineer business processes or maintain shadow systems during changeover. Even when the strategic value of modernization is clear, executives face pressure to justify such investments to boards and shareholders. Many are forced to continue operating hybrid setups, where some data sits in the cloud while critical production or financial data still resides on-premises. These realities slow migration and dilute the benefits of full-scale AI adoption.

Christopher Diaz, Senior Vice President of Finance at Rio2, a Canadian mining company, described this exact challenge. His team plans to use SAP’s Joule assistant once their operational data is fully in the cloud, but today they are still managing key production information in spreadsheets. This highlights the friction many companies face. The technology is ready, but the path to adoption is fragmented.

For decision-makers, this should serve as a clear signal: successful migration strategies require budget and a measured, cross-functional execution plan. Technology cannot deliver impact if the organization isn’t structurally prepared for transformation, and most C-suites will need to treat data consolidation and process redesign as strategic enablers.

Industry analysts view SAP’s AI-linked offer as both a strategic incentive and a pressure tactic

Reactions from analysts show that SAP’s new AI policy has been received with both understanding and skepticism. The technical logic behind SAP’s cloud-first position is solid. Advanced AI tools depend on scalable computing power and continuous updates, which are much harder to maintain in an on-premises environment. By tying AI availability to a cloud commitment, SAP ensures consistent performance across its ecosystem. However, experts also point out that this approach effectively puts pressure on customers to accelerate migration timelines.

Maribel Lopez, founder of Lopez Research, acknowledged SAP’s reasoning and said the company is correct that building modern AI on older, on-prem platforms is difficult. On the other hand, Mickey North Rizza, Group Vice President of Enterprise Software at IDC, described the strategy as “the new carrot and stick,” portraying AI as both incentive and motivator for businesses to invest in the cloud. According to IDC’s data, 31% of organizations are currently moving from on-premises to cloud systems, while 23% are shifting back, showing that digital transformations don’t always progress in one direction.

For executives, these insights matter. The new AI-linked offer is not just a technical proposition; it’s a business mechanism designed to channel customer momentum toward SAP’s strategic goals. AI capabilities are becoming central to enterprise competitiveness, and SAP is aligning its architecture, customer incentives, and pricing to that shift. Companies hesitating to modernize risk facing both technological and strategic disadvantages as software vendors increasingly tie access to innovation with cloud participation.

This is a decisive moment for enterprise leaders. The direction of the market is clear, intelligent, data-driven systems require adaptable cloud infrastructure. SAP’s latest move makes that progression unavoidable for organizations serious about staying competitive.

Third-party vendors are capitalizing on SAP’s slow migration pace

While SAP pushes its customers toward the cloud, other technology providers are stepping in to fill a widening gap. These vendors recognize that many companies are not ready, or willing, to commit large-scale resources to a complete migration. Their strategy is clear: deliver AI-driven tools that work directly within SAP’s older ECC environments without requiring a costly move to cloud infrastructure.

MyWave is leading this movement. The company, led by CEO Geraldine McBride, a former SAP president, offers AI agents that integrate natively with ECC. McBride emphasized that many companies are “stuck” due to heavy customization in their systems, often tied to specific industry processes and “Z codes” that don’t easily translate into cloud platforms. Her approach reframes digital transformation, organizations can modernize their operations first and then migrate when the timing and resources align. This reverses the pattern SAP promotes, giving customers more control over their own modernization timelines.

Ben McGrail, Managing Director at consulting firm Xmateria, believes SAP’s migration deadlines have caused unnecessary resistance. He estimates that around 40% of SAP customers will still be on ECC by 2030, and about a third have no active migration plans at all. The reality is that many companies see limited direct business benefit in an immediate move and would rather wait for clearer value propositions.

For executives, this dynamic introduces competition and flexibility into what was previously seen as a rigid migration directive. Third-party solutions create optional paths forward, allowing businesses to gain AI capabilities immediately rather than deferring progress until a full migration is complete. This fragmentation in the ecosystem also represents risk for SAP, its ability to retain long-term customers could be challenged if alternate providers continue delivering pragmatic solutions faster.

SAP’s conditional AI access underscores a broader strategy

SAP’s current approach sends a firm message: access to next-generation AI and automation capabilities will come only to those actively investing in cloud infrastructure. The company’s leaders are not hiding this intention, it’s about aligning customer modernization with SAP’s business trajectory. Organizations that demonstrate financial and technical commitment to the cloud will gain access to Joule assistants and other AI-driven functions, while those remaining on legacy systems will experience limitations.

This structured access model ensures SAP maintains focus on its long-term goals while addressing customer demand for flexibility. It allows the company to balance innovation delivery with revenue sustainability. For customers, it sets a clear choice between maintaining legacy operations with reduced innovation potential or fully engaging with SAP’s ecosystem for continuous advancement.

From a strategic standpoint, this serves SAP’s broader ambition to unify its user base under a single, scalable infrastructure, one capable of supporting real-time analytics, AI automation, and more predictable service performance. The approach also guarantees consistent customer experience, minimizing technical fragmentation that often arises from hybrid system usage.

Sebastian Steinhaeuser, SAP’s Chief Strategy Officer, explained this clearly when he said that Joule assistants are “designed for cloud.” His comment captures SAP’s direction without ambiguity, the journey toward cloud is essential to the company’s innovation strategy. For executives planning technology roadmaps, this is a straightforward signal that modern enterprise value creation increasingly depends on technology platforms capable of sustaining continuous innovation cycles.

Key highlights

• Conditional AI access drives cloud commitment: SAP is giving legacy ECC customers limited AI access only if they commit at least 50% of maintenance spending to its cloud, aligning short-term innovation with long-term cloud strategy. Leaders should evaluate readiness and budget alignment before committing.
• Balanced support with built-in pressure to modernize: SAP’s offer supports customers in transition but reinforces the push toward full cloud adoption. Executives should leverage this structured flexibility to extract immediate value while planning a clear migration path.
• Operational and financial barriers hinder migration: High costs, integration complexity, and data fragmentation continue to slow S/4HANA adoption. Leaders should build phased modernization plans that link budget prioritization with measurable process efficiency gains.
• AI becomes both incentive and lever for transformation: Analysts see SAP’s policy as a catalyst for cloud adoption, offering innovation in exchange for migration. Executives should frame AI investments as part of a wider efficiency strategy that ensures long-term digital competitiveness.
• Third-party vendors exploit SAP’s migration lag: Firms like MyWave are offering AI for ECC without cloud commitments, giving customers faster modernization options. Decision-makers should assess whether external AI solutions can provide near-term value while maintaining SAP integration flexibility.
• Innovation now tied to demonstrable cloud investment: SAP’s approach signals that future access to advanced tools will depend on active cloud participation. Leaders should treat cloud migration as a strategic enabler for sustained innovation.