ERP Modernization

SAP introduced five line-of-business software bundles to simplify migrations to S/4HANA cloud-based ERP, the company said at its annual SAP Sapphire conference in May 2025.

The Business Suite packages are customized for finance, supply chain, human resources, procurement and customer experience. Each bundle integrates the S/4HANA ERP system with the SAP Business Data Cloud analytics platform, SAP Business AI tools and the SAP Business Technology Platform control plane, the company said in the announcement.

The move marks a shift in strategy as the company moves closer to ending mainstream support for its on-premises ERP Central Component systems in 2027. “This is a massive simplification,” Jan Gilg, chief revenue officer and president, SAP Americas and Global Business Suite, told CIO Dive. “It's no longer the customer’s job to integrate those things together anymore.”

SAP’s singular focus on moving its massive ECC base to S/4HANA has evolved into a multipronged effort to lure customers to the cloud.

In January 2025, the company extended business continuity support for some customers who are planning a migration to 2033. SAP partnered with Databricks to deliver the Business Data Cloud analytics platform the following month.

In 2024, SAP added migration credits to the RISE with SAP incentive program, armed its Joule AI assistant with agentic tools and rolled out industry-tailored integrations for manufacturing and retail businesses. To help ease cloud transitions, CEO Christian Klein pledged to provide a dedicated enterprise architect to every RISE customer in July 2024.

“For a lot of our installed-base customers, especially the large customers, it's really difficult to move core ERP in one step to a full SaaS model,” Gilg said. “Often they have customizations from decades ago.”

Incrementally untangling accumulated technical debt through smaller, line-of-business migrations is an easier lift, he added.

IT services firm Kyndryl prioritized the finance function to ease an 18-month RISE with SAP migration as it decoupled its tech stack from former parent company IBM. Kyndryl has since built a RISE consulting practice around the experience.

“If you peel back the onion and you look into the finance premium package, you will see it's basically an administrative ERP,” Gilg said. “You have core finance capabilities, operational procurement, sales order management, project management, Sales Cloud and Concur for travel and expense entitlements — everything a company that's not manufacturing anything needs to run their core processes.”

As SAP rolls out the bundled offerings, it is also severing the RISE migration framework from SaaS-based ERP products.

“You cannot buy RISE anymore,” Gilg said. “We really look at RISE as the methodology. What you buy is either the SAP Cloud ERP private package or you buy those business suite packages.”

The terminology can be confusing, Gilg acknowledged. S/4HANA Private Cloud runs on public cloud infrastructure, but SAP is also helping customers with a large installed base shift from ECC to S/4HANA via a hybrid private cloud option that leads to public cloud.

“This is really a change that we have done this year, which I believe will take us some time to communicate,” Gilg said. “We look at it as an alternative for those who either don't want to go all SaaS or cannot go all SaaS. Once customers are in an S/4HANA on-premises system, to move them to cloud is more or less a technical task.”

EY and DXC joined the growing ranks of IT service providers offering engineering assistance to SAP customers migrating to S/4HANA cloud-based ERP systems in May 2025. Both vendors rolled out new SAP service bundles as the clock ticks down toward the end of mainstream support for legacy SAP Enterprise Central Component ERP systems in 2027.

EY launched a service to help SAP customers manage their ERP deployments across finance, payroll, human resources and other core functions, the company said in an announcement. The consulting firm also joined the SAP PartnerEdge ecosystem as a managed services provider with a focus on software and business processes.

DXC bundled its SAP engineering expertise into a migration support and management service, the company said in a separate announcement. DXC Complete with SAP and Microsoft provides SAP customers with an ERP migration roadmap that can be completed in as little as one year, Keith Costello, global managing director and SAP lead for DXC consulting and engineering services, told CIO Dive.

SAP ramped up efforts to drive its business to cloud in 2024, investing more than $2 billion in an overhaul of its business that prioritized migrating customers from ECC on-premises ERP to S/4HANA.

ERP migrations can be a lengthy, arduous process, challenging engineering teams to cut away technical debt, reformat data and cultivate cloud management skills. EY and DXC are among a bevy of high-profile IT service providers that have rallied to help SAP customers make the move before mainstream support ends.

“The end-of-support deadline is driving a Y2K-like moment in the SAP ecosystem,” Costello said. “A lot of clients want to migrate finance first because the CFO cannot go to an auditor and say that next year they’re going to be on an unsupported version of SAP — that's an existential threat.”

Kyndryl built an SAP migration services practice around its own S/4HANA adoption, which began with the finance function in 2024. The IT services company rolled out an SAP cloud services suite after completing an 18-month migration that leveraged the RISE with SAP incentive program in April 2024.

SAP is leaning on its channel partners to bring its ECC customers to cloud, particularly in the mid-market.

“We have a huge mid-market, where we can massively grow,” SAP CEO Christian Klein said during a Q3 2024 earnings call. “We are expanding this highly profitable sales channel and pushing our future growth.”

DXC’s service bundle builds on SAP’s existing partnership with Microsoft to guide customers through the RISE program on Azure cloud infrastructure, which deployed globally in January 2025. AWS announced a similar RISE with SAP partnership in December 2024.

The EY partnership focuses on helping enterprises overcome post-migration hurdles to deliver a return on cloud ERP investments through leveraging SAP’s business suite and AI capabilities.

“Well-structured enterprise functions are critical to scaling and sustaining success, but without the right support, it can become a distraction from the strategic priorities that drive real value,” Raj Sharma, EY global managing partner, growth and innovation, said in the announcement.

Sponsored content

By Vertex Inc.

In today's rapidly evolving business landscape, IT professionals are increasingly recognizing the importance of integrating tax automation solutions when transitioning their Enterprise Resource Planning (ERP) systems to the cloud—and why it makes sense to do it early in the process.  Reasons include:

• Compliance assurance: Implementing a tax engine during an ERP migration ensures that your financial system is compliant with tax regulations from the start, reducing the risk of non-compliance issues later on.
• Accuracy: Early tax integration allows for thorough testing and validation, ensuring accurate calculations and reducing the chances of errors in tax reporting.
• Efficiency gains: By incorporating tax processes early, you streamline workflows and minimize the need for manual interventions and rework later.
• Cost savings: integrating a tax engine during the ERP migration can improve tax accuracy and reduce audit penalties and fines due to non-compliance.
• Smooth transition: Early tax integration facilitates a smoother transition to the new financial system, minimizing disruptions in operations and preventing potential bottlenecks.

In addition, implementing a tax engine during an ERP project can be a source of significant ROI and cash savings that can actually help pay for the integration since it’s possible to reduce tax operation costs by leveraging automation as part of the ERP/Finance transformation.

“A good playbook provides a vision to both the IT group and the CFO as to where Tax wants to go and how it will get there. Ultimately, Tax wants to get to a place where it’s managing risk effectively, improving tax accuracy, meeting compliance deadlines and has a continuous improvement process around the data and activities used to meet its regulatory obligations,” says Michael Bernard, Vice President of Tax Content and Chief Tax Officer, Vertex Inc.

That playbook is important, because with tax regulations constantly evolving, staying compliant with the latest changes can be a daunting task—maintaining rate tables in an ERP can be time-intensive, and delays can be costly to an organization. IT professionals recognize that tax automation solutions are equipped to handle these dynamic regulatory requirements seamlessly, and without IT intervention. Third party tax engines are designed to automatically update tax rules and rates, ensuring that businesses remain compliant with local and national tax laws—they can also provide industry-specific content, such as lease or communication services taxes. By integrating tax automation with cloud-based ERP systems, IT professionals can help future-proof their organizations and eliminate the need for time-consuming and error-prone tax content updates in ERP systems.

Cloud-based systems also offer unparalleled scalability and flexibility, allowing businesses to expand and adapt to changing market conditions—including challenges with latency during peak processing times that can lead to delays in tax-related operations and reporting.  Integrating tax automation solutions further enhances this scalability by providing a robust framework for managing tax processes across multiple jurisdictions. In particular, IT professionals appreciate the ability to scale tax operations effortlessly, whether the organization is entering new markets or experiencing rapid growth. This flexibility ensures that tax management remains efficient and effective, regardless of the organization's size or geographic reach.

In addition, the integration of cloud-based tax automation solutions with cloud-based ERP systems can lead to substantial cost savings and a higher return on investment (ROI) by lowering the total cost of ownership since the tax vendor handles the tax content updates, system maintenance, infrastructure and security.  And by automating the tax processes, organizations can reduce the need for IT maintenance of tax content in the ERP systems, including software updates, patches and system compatibility issues, which helps minimize errors—and makes it possible for their teams to focus on strategic, rather than tactical, issues.

Finally, since the ERP system is highly dependent upon accurate, timely data from the tax engine, implementing a tax engine offers a “frictionless” solution—helping ensure the right data is in the right format with the right connectivity within the system.  Not to mention, getting things right the first time is going to be cheaper—and less burdensome—than fixing it later.  Finally, it provides a bulwark against missing the types of optimization opportunities that can hinder an organization's efficiency and growth potential.

Conclusion

The simultaneous integration of tax automation solutions during an ERP cloud migration is a strategic move that offers numerous advantages for IT professionals and their organizations. Enhanced efficiency, improved accuracy, seamless compliance, scalability, data security and cost savings are just a few of the compelling reasons driving this trend—with IT professionals playing a crucial role in ensuring that tax processes remain efficient, accurate and compliant.

SAP expanded its partnership with Microsoft to help drive enterprise adoption of the ERP provider’s Business Suite bundles for finance, supply chain, human resources, procurement and customer experience functions, the two companies said late May 2025.

The joint migration acceleration initiative complements extensive platform integration plans unveiled along with the Business Suite offerings during SAP’s 2025 Sapphire conference.

The integrations announced May 20 connect SAP’s Joule AI assistant with the Microsoft 365 suite of productivity tools, including Copilot, Teams, Outlook and Word. Microsoft also extended its Sentinel, Defender and Entra security tools across SAP’s cloud ERP and aims to launch SAP Business Data Cloud and SAP Databricks on Azure analytics services later this year.

SAP is counting on technology partners to guide customers to its S/4HANA cloud-based ERP as the company prepares to terminate mainstream support for on-premises ERP Central Component deployments in 2027.

“By combining forces, we provide partners with proven frameworks, shared resources, and scalable tools that address complex challenges,” Karl Fahrbach, chief partner officer of SAP, said in the Tuesday announcement.

The bundled offerings are designed to ease migrations by targeting function-specific business processes with traditional ERP capabilities in combination with data pipeline, analytics and AI services.

While Microsoft is the first hyperscaler to offer the Business Suite Accelerator program, SAP recently expanded existing pacts with AWS and Google Cloud to ease the flow of ERP data across clouds.

AWS and SAP launched a generative AI development initiative to help Accenture, Deloitte and other ecosystem partners build agentic tools using ERP data and the hyperscaler’s Bedrock platform, the companies announced on May 20, 2025. Initial use cases include identifying financial anomalies in real time and mitigating supply chain disruptions, according to SAP CTO and Chief AI Officer Philipp Herzig.

In addition to integrating the Databricks-powered Business Data Cloud on Azure, SAP connected the data pipeline to Google Cloud’s BigQuery data warehouse to bring together data stored in ERP and third-party repositories. SAP Business Data Cloud will be deployed in three Google Cloud regions later in 2025, according to a May 20 announcement.

SAP was among the first cadre of providers to sign on to Google Cloud’s Agent2Agent open protocol for multi-agent AI orchestration in April 2025. The two companies gave SAP customers access to Google’s Gemini family of large language models through SAP Business Technology Platform’s generative AI hub and opened SAP data to the hyperscaler’s Agentspace tool-building platform in May 2025.

“Our objective is to enable all enterprises to streamline data integration and data science, enhance their analytical workflows, and accelerate their transformation into an AI-driven enterprise,” the companies said in the announcement.

 

Technology executives raced to refine spending strategies in the face of economic uncertainty stirred up by President Donald Trump’s sweeping tariffs regime announced last month, according to Boston Consulting Group. The firm surveyed more than 300 senior IT leaders across North America and Europe for a report published in April 2025.

Nearly two-thirds of respondents ranked cost management as a top priority, BCG found, and more than 2 in 5 said they had deferred discretionary IT projects. While nearly one-third of respondents hoped to restart paused projects within six months, close to half expect delays to last up to a year.

A sharp shift in CIO sentiment since a similar December 2024 survey was evident, BCG Managing Director and Partner Clark O’Niell said. “Everyone went into January expecting this to be a year of heavy investment in AI, cloud and security,” he said. “We've now seen the uncertainty around tariffs in the macro cycle force people to rethink their priorities.”

Despite the specter of global trade conflict and supply chain slowdowns, enterprises are banking on technology to drive efficiency gains and growth. Project delays and discretionary spending cuts have thus far been partially offset by ongoing investments in cloud and AI.

“We’re seeing clients pull back on more mature technologies and lean into emerging technologies,” O’Niell said.

The recalibration reduced expectations for technology spending increases rather than triggering across-the-board reductions. Prior to the tariff announcements, more than three-quarters of IT leaders were planning to grow their budgets by an average of 4%, BCG found.

The April 2025 picture was less rosy, with 56% of respondents anticipating larger budgets than 2024. The average expected year-over-year increases declined to 2.4%.

Technology purchases that companies can put off until 2026 will be on the chopping block in 2025 as CIOs protect investments with potential for immediate returns, O’Niell said.

More than 4 in 5 respondents said they intend to maintain or increase spending on productivity-boosting AI and machine learning tools, and 3 in 5 aim to invest in automation technologies to mitigate the tariff impacts over the next 12 months.

Vendor consolidation in core areas, including server and storage infrastructure, IT operations management and communications platforms, is another tactic CIOs will lean on if economic uncertainty persists, according to BCG.

IT leaders have different plans for cloud services, AI and other categories of spending tied more directly to efficiency gains. Half of respondents said they plan to expand their roster of AI vendors, and more than one-third were looking to diversify cloud provider portfolios.

The fluid situation calls for contingency planning based on how the economy responds to shifting geopolitical forces.

“You can invest in a downturn, you can invest in a growing economy, but it's really hard to invest in an uncertain world,” O’Niell said.

 

Costly software outages are endemic across industries, due largely to a disconnect between IT leaders and developers, according to a May 2025 Tricentis report. The quality engineering tool vendor commissioned Censuswide to survey over 2,700 CIOs, CTOs and IT engineering professionals in March 2025.

Two-thirds of companies expect a major disruption over the next year, with nearly one-quarter of respondents characterizing their organization’s level of risk as “extreme,” the report found.

“Severe outages are the ones that tend to get noticed,” Lee McClendon, chief digital and technology officer at Tricentis, told CIO Dive. “People in IT know that when a significant executive knows about a problem and is breathing down their neck, it’s a big deal.”

As businesses turn to the latest technology to accelerate innovation and drive growth, leaders are telegraphing mixed messages to software development teams, prioritizing speed over quality.

Nearly two-thirds of respondents acknowledged their organization regularly deploys untested code, either accidentally or to meet expedited release schedules. More than three times as many developers felt pressure to accelerate delivery rather than enhance software quality, Tricentis found.

The downstream effect of misaligned incentives can be costly.

Outages caused by faulty code strain IT resources, cutting into productivity and profits, McClendon said. Costs tied to software outages surpassed $1 million annually for 2 in 5 organizations surveyed, and nearly half of financial services reported losses exceeding $5 million.

“An outage that affects how you make money is always the easiest one to see,” said McClendon, pointing to consumer-facing website and app failures.

Enterprises scrutinized software engineering practices and bolstered incident response and recovery plans in 2024 in the aftermath of the global outage caused by a faulty CrowdStrike Windows systems security update. Direct losses among the Fortune 500 were estimated at $5 billion and Windows system crashes left airline passengers stranded as carriers canceled thousands of flights.

Outdated systems can hamstring remediation efforts. More than one-third of respondents to the Tricentis survey said services technical debt hinders software development. Nearly the same proportion pointed to poor communication between developers and testers as a major hurdle.

“There’s a disconnect between leadership and the people responsible for quality,” McClendon said. “In the quest to be faster, we have to constantly remind our teams that we also want quality.”

The emergence of generative AI assistants trained to test code and perform other time-consuming tasks can help elevate quality and cut through tech debt. AI coding tools can also turn the heat up on developers to deliver software faster, according to a March HackerRank report.

Technology executives are looking to agentic automation to speed delivery processes. More than 4 in 5 CIOs, CTOs and software delivery professionals expect the technology to yield productivity gains by taking over repetitive coding tasks, according to Tricentis. Nine in 10 respondents said they trust AI to make critical software release decisions.

The impetus is on leaders to set a tone that prizes quality and efficiency, said McClendon. “If you focus on speed and you're not considering quality as well, we know that bad things are going to happen,” he added.

Enterprises are turning to generative AI tools to drive modernization and cut through technical debt, according to Publicis Sapient. The digital consulting firm commissioned HFS Research to survey more than 600 IT and business leaders for a report published in May 2025.

Four in 5 respondents expect generative AI coding assistants to help them break free from managing outdated systems by documenting legacy applications, rewriting old code and automating software testing, the report found.

Technical debt is an expensive headache, accounting for $1.5 trillion to $2 trillion in spending among Global 2000 companies, according to HFS Research. “Tech debt isn't just a weight — it's a ticking time bomb that’s threatening the future of global enterprises,” Chief Analyst and CEO Phil Fersht said in the report.

As coding assistants rose to the top of a heap of generative AI use cases with ROI potential, vendors mobilized to deploy tools trained to decipher and refactor decades-old applications.

IBM taught watsonx more than 100 programming languages and trained its open model to translate COBOL applications into Java. AWS trained its AI assistant, Amazon Q Developer, to build applications and set the tool loose on mainframe modernization last year.

As cloud and enterprise software vendors rolled out similar capabilities, banking became a proving ground for the technology, according to Accenture.

Goldman Sachs saw its army of 12,000 developers achieve efficiency gains of roughly 20% with GitHub Copilot, the company’s CIO Marco Argenti told CIO Dive. Bank of America and Citigroup saw similar returns on AI investments.

Enterprises across industries can cut years off of modernization initiatives by harnessing the technology, according to Sheldon Monteiro, Publicis Sapient EVP and chief product officer.

“AI really is a jackhammer,” Monteiro said in an interview. “CIOs need to be thinking about this in terms of some pretty major concrete breaking.”

Publicis Sapient inked a five-year partnership with AWS to build AI-powered modernization tools in March 2025. In addition to leveraging the hyperscaler’s cloud-based services, the alliance aims to expand the reach of the Sapient Slingshot software development platform.

The modernization opportunities are vast, according to HFS Research. A $1.5 trillion IT industry has grown up around servicing rather than eliminating technical debt, the firm estimates.

Enterprises spend an average of nearly 30% of IT budgets maintaining legacy technologies, the report found. Yet, fewer than one-third of respondents said their organization has modernized core applications.

“Something’s broken in the way clients are buying IT services and the way the service industry has been incentivized,” Monteiro said, pointing to a tendency to see staff augmentation as a means of containing technical debt.

Monteiro added, “If modernization is going to take 10 years to complete, what CIO is going to look at that with any sense that it can get done within their tenure?”