Every SAP customer is on a different stage of its cloud modernization journey and those who haven’t yet started the discussions (and that could have happened due to a variety of reasons) must go through this blog.
At SAP Sapphire 2026, the conversation changed significantly.
SAP made two important announcements that together create a compelling—and urgent—case for customers running ECC On-Premise (ECC OP), S/4HANA On-Premise (S/4HANA OP), and ERP Private Cloud Edition (ERP PCE) systems to accelerate modernization toward Cloud ERP Private.
The message is becoming increasingly clear: customers who commit to modernization early will gain faster access to innovation, AI, and long-term supportability.
AI Innovation Is No Longer Reserved Only for Full Cloud Customers
One of the most impactful announcements at Sapphire 2026 was SAP’s decision to extend selected AI capabilities to ECC OP and S/4HANA OP customers.
Traditionally, many of SAP’s newest AI-driven innovations—especially those powered through Joule and cloud-native business processes—were positioned primarily for cloud ERP customers.
Now, SAP has opened a new path.
Customers running ECC or S/4HANA On-Premise systems who commit at least 50% of their on-premise maintenance base toward cloud adoption can gain access to selected AI scenarios, even while still operating their OP environments.
Based on the above, it is pertinent to share that cloud systems get all AI capabilities and on-premises systems will get a sub-set. It requires customers and SAP effort to make agents work on-premises, driving our cloud and on-premises differentiation. Note this applies to agents running on ERP systems, not migration agents.
To help accelerate the impact of AI to our customers’ businesses, SAP experts will help enable agentic AI for our new and existing Cloud ERP Private customers by activating up to 3 Joule Assistants in their ERP at no additional cost. Customers can select Joule Assistants that are available in their environments which will support common workflows such as finance, HR and supply chain.
Lastly, it is important to state that there is no change in SAP’s AI policy as AI agents require standardized systems to operate reliably, and the cloud is where SAP can guarantee this foundation, so the cloud remains our strategic focus. The activation of agents on on-premises systems requires services and engineering resources which we are offering to customers that commit to convert at least 50% of their current maintenance fee to the cloud. For those customers, we’ll provide strategic AI use cases so they can begin using and getting value from AI faster. Capabilities may vary based on technical requirements, level of customizations on existing systems, and may require underlying application as required by the agent. Please reach out to your SAP contact for more information.
Essentially, the SAP announcement acknowledges an important market reality:
- Customers still need to derive innovation value during transition years.
- AI adoption cannot wait for the “final phase” of ERP transformation.
However, there is an important nuance.
These AI capabilities will still come with boundaries and limitations compared to fully cloud-native environments. The deepest innovation velocity will continue to happen in Cloud ERP Private and public cloud solutions. Which means this announcement should not be interpreted as a reason to delay modernization indefinitely.
Instead, it should be seen as a bridge. A bridge that allows customers to start realizing AI value while they accelerate toward their longer-term cloud ERP architecture.
The ERP PCE Transition Option May Not Apply to Everyone
Another major development shaping customer strategy is the upcoming SAP ERP, private edition, transition option service expected around 2028.
This service is intended to help ERP PCE customers transition more smoothly toward Cloud ERP Private.
At first glance, this sounds reassuring for customers who believe they have more time but there is a critical detail that organizations should not ignore:
The transition option service is expected to include a 2 TB database size criterion.
That means not every ERP PCE customer may qualify and that changes the planning equation entirely.
Organizations that assume they can “wait until 2028” may discover later that:
- Their system size doesn’t reach the system eligibility criteria
- Their landscape complexity requires longer preparation cycles
- Data reduction and archiving activities take years, not months
- Skilled transformation resources become increasingly constrained as deadlines approach
In other words, the later customers begin, the fewer options they may ultimately have.
ECC and S/4HANA OP Customers Should Treat This as a Strategic Window
The Sapphire 2026 announcements create an interesting transition period.
SAP is effectively giving customers:
- Early AI access during the transition journey
- A modernization path toward Cloud ERP Private
- Incentives to begin cloud commitment now rather than later
Modernization Is No Longer Just About End of Maintenance
For many years, ERP modernization discussions revolved around maintenance deadlines.
That framing is now outdated.
The real differentiator moving forward is innovation velocity.
SAP’s Sapphire 2026 announcements signal a future where AI, automation, and cloud-delivered capabilities become central to enterprise competitiveness—even for customers still operating hybrid landscapes.
But hybrid access is unlikely to be the destination.
It is the transition phase.
And for ECC OP, S/4HANA OP, and ERP PCE customers alike, the smartest move may be to use this phase not as a reason to delay transformation, but as an opportunity to accelerate it thoughtfully and strategically.
