Navigating the challenges of SAP ECC 6.0 end of support during carve-outs

The impending end of support for SAP ECC 6.0 in 2027 presents a significant challenge for companies undergoing divestiture. These organisations must not only manage the complexities of separating their systems but also align their SAP upgrade strategies to transition to SAP S/4HANA. This dual challenge requires careful planning and strategic decision-making to ensure business continuity and future readiness.

The dual challenge: system separation and SAP upgrade

For companies being carved out, the need to separate their IT systems from the parent company is a critical task. This process involves creating a standalone IT environment for the new entity. Simultaneously, these companies face the necessity of upgrading from SAP ECC 6.0 to SAP S/4HANA, as the former will no longer be supported after 2027. This dual requirement can be daunting, especially when both tasks need to be completed within the same timeframe.

Clone and go: a double-edged sword

One common approach to system separation is the “clone and go” strategy, where the existing SAP environment is duplicated for the new entity. While this method can expedite the separation process, it also means that both the parent and the new entity will have to manage separate SAP upgrade projects. This duplication can lead to increased costs, resource allocation challenges, and the burden of maintaining heavily customised legacy systems. The new standalone entity may find itself struggling with an upgrade project or, worse, stuck with an unsupported, heavily customised system post-2027.

Challenges for sellers

Sellers, or parent companies, also face significant challenges. They must support the divestment process and manage Transitional Service Agreements (TSAs) while progressing their own SAP upgrade roadmaps. TSAs are temporary agreements where the parent company continues to provide certain services to the divested entity, adding another layer of complexity to the separation and upgrade process. Balancing these demands can strain resources and delay strategic initiatives.

The risk of limited system integrator availability

As the 2027 deadline approaches, the demand for system integrators — experts who assist with SAP upgrades — is expected to surge. This increased demand could lead to a scarcity of available resources, making it difficult for companies to secure the necessary expertise for their upgrade projects. The risk of limited availability underscores the importance of early planning and engagement with system integrators.

Strategic recommendations

To navigate these challenges effectively, companies should consider the following:

• Early planning. Begin planning the system separation and SAP upgrade processes as early as possible. Early planning allows for a more comprehensive assessment of needs and the development of a detailed roadmap.
• Cost considerations. Factor in the cost of extended support for SAP ECC 6.0 in your financial planning, including the potential need for extended support contracts if the upgrade cannot be completed by 2027.
• Resource allocation. Define and plan for both internal and third-party resource requirements, identifying key personnel within the organisation and securing external expertise from system integrators.
• Risk management. Develop a risk management strategy to address potential challenges, such as resource scarcity and project delays, including contingency plans and flexible timelines.
• Stakeholder engagement. Engage all relevant stakeholders, including IT, finance, and business units, to ensure alignment and support for the transition process.

By addressing these considerations, companies can mitigate the risks associated with the end of support for SAP ECC 6.0 and position themselves for a successful transition to SAP S/4HANA. Early and strategic planning will be crucial in navigating the complexities of system separation and SAP upgrades, ensuring that both the parent company and the new entity are well prepared for the future.