SAP's maintenance moat is weakening, but the installed base remains defensive

Overview

This report focuses on the European Commission's ruling on SAP's maintenance practices and analyzes how the commercial choices available to SAP customers change when migrating from ECC to S/4 and cloud products. Bernstein argues that the market should not focus only on migration volumes or how much maintenance revenue third-party support providers can take, but rather on how greater customer optionality changes SAP's pricing power in maintenance renewals, cloud pricing, migration incentives, and contractual flexibility.

Core views

The core view is that SAP's maintenance moat is becoming more contestable, but its installed base remains highly defensible. The third-party support market itself is relatively small and is unlikely to replace SAP maintenance revenue at scale; however, its existence gives customers a more credible alternative, thereby increasing their bargaining leverage. The long-term investment question shifts from 'whether customers migrate' to 'when customers migrate, on what commercial terms they migrate, and how much economic value SAP can capture.' The report believes SAP can still rely on cloud, AI, BTP, Business Data Cloud, licensing complexity, and the ecosystem to convert its installed base into higher-value cloud relationships.

Analysis framework

The report uses an analytical approach combining regulatory ruling impact, customer migration paths, the maintenance revenue pool, substitutability of third-party support, ERP technical complexity, and financial forecasts. It first distinguishes direct revenue substitution risk from indirect pricing-power risk, then breaks down the migration and support paths available to customers, and finally evaluates how SAP can preserve its economic moat through migration economics, AI differentiation, support service expansion, and higher per-customer value capture.

Methodology notes

• Event-driven company researchRegulatory ruling impact analysis

  The European Commission ruling changes the feasibility of customer support termination, system unbundling, and adoption of third-party support.

  This framework is used to assess whether regulatory change alters revenue scale, customer behavior, pricing power, and long-term competitive position. The report concludes that revenue substitution is not the main variable; customer optionality and bargaining power are the main variables.

• Business model analysisMaintenance revenue pricing power framework

  High-margin, recurring maintenance revenue may shift from a lock-in mechanism to a negotiable item once customers have alternative options.

  SAP's maintenance business has a gross margin above 90%, so even modest attrition or wider discounting could have a disproportionate impact on profit capture.

• Customer path analysisMulti-path migration framework

  Customers no longer have only one path of migrating linearly from ECC to S/4 according to SAP's deadline.

  The report lists paths including immediate migration, using the ruling to negotiate better migration terms, CSM combined with TPSS, significantly extending ECC usage, and exiting SAP over the long term, and emphasizes that different paths have different effects on migration speed, maintenance revenue, and customer retention.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• SAP.GR

  The report's core covered asset, with an Outperform rating maintained.

  Strengths

  ERP systems are mission-critical, customer switching costs are high, and average lifecycles are long; SAP still controls the timing of ending support for older versions and the product roadmap, and can enhance customer value through AI, BTP, Business Data Cloud, licensing complexity, and the ecosystem.

  Weaknesses

  The European Commission ruling weakens the role of maintenance contracts as a migration enforcement mechanism, giving customers stronger bargaining leverage in maintenance renewals, cloud pricing, and migration terms.

  Comparison

  Compared with SAP's approximately EUR 10.5 billion maintenance revenue, the SAP-related third-party support revenue pool is at most about USD 1 billion. The scale of direct revenue substitution is small, but its indirect impact on pricing negotiations across the installed base may be larger.

  Risks

  Lower maintenance pricing, wider discounts, higher migration incentives, customers delaying S/4 migration, AI monetization lagging the erosion in maintenance economics, and customers taking on compliance or business risks under third-party support that then affect migration timing.

• Rimini Street / Spinnaker Support / Support Revolution / Origina

  Representative participants in the SAP third-party support ecosystem and one source of customer negotiating optionality.

  Strengths

  They can provide cost optimization and temporary support options for some stable or mature SAP ECC environments, improving the credibility of customers' alternatives in negotiations with SAP.

  Weaknesses

  They cannot fully replicate SAP's official roadmap, ongoing upgrades, compliance updates, AI capabilities, and ecosystem value.

  Comparison

  The report believes the directly addressable revenue pool for these third-party support providers is small; their importance lies more in their indirect impact on SAP's pricing power than in their own revenue scale.

  Risks

  If customers rely on unofficial support and extend the use of old systems, they may face legal, regulatory, upgrade, security, and business process risks.

Key data

• RatingOutperformBernstein maintains a positive rating on SAP SE.
• Target price276.00 EURThe SAP.GR target price disclosed on the report's front page.
• Closing price140.70 EURThe closing price as of July 16, 2026.
• Implied upside96%The upside disclosed in the report, calculated from the target price and closing price.
• SAP maintenance revenue base约10.5bn EURThe report states that SAP generated about EUR 10.5 billion in support revenue in 2025.
• SAP-related third-party support revenue pool最多约1bn USDThe report estimates that this market size is far smaller than SAP's maintenance revenue base, implying limited direct substitution risk.
• Maintenance business gross margin>90%The high gross margin means even slight attrition or discount pressure could affect profit capture.
• 2025A total revenue36,800m EURFY25A total revenue disclosed in the financial forecast table.
• 2026E total revenue40,638m EURFY26E total revenue disclosed in the financial forecast table.
• 2027E total revenue46,491m EURFY27E total revenue disclosed in the financial forecast table.
• 2025A non-IFRS operating margin28.6%FY25A non-IFRS operating margin disclosed in the financial forecast table.
• 2028E non-IFRS operating margin31.5%FY28E non-IFRS operating margin disclosed in the financial forecast table.

Impact & implications

For investors, the key variable in the SAP story shifts from migration volume to monetization quality. The European Commission ruling may give customers greater flexibility over migration timing, support models, and contract terms, thereby lowering maintenance pricing, increasing cloud discounts, or raising migration incentives. However, the report argues that this will not eliminate the need for ERP modernization, nor will it weaken SAP's strategic position in core system complexity, compliance updates, roadmap control, AI, and the ecosystem. Therefore, whether SAP can accelerate AI and cloud ecosystem monetization will determine whether it can offset the erosion in maintenance economics.

Risks

• Rising customer maintenance optionality may weaken SAP's pricing power in maintenance renewals, cloud subscriptions, and migration contracts.
• Even without replacing revenue at scale, third-party support may become a negotiating lever for customers to demand discounts and migration incentives.
• The maintenance business has a gross margin above 90%, so even slight maintenance revenue attrition or wider discounting could have a significant impact on earnings.
• Customers extending ECC usage or adopting hybrid support models may slow SAP's conversion of its installed base into S/4 and cloud relationships.
• If SAP's AI, BTP, and ecosystem monetization is not fast enough, it may be difficult to offset pressure on maintenance economics.
• Customers continuing to use older ERP systems after official support ends may bear legal, regulatory, upgrade, and business continuity risks, but these risks may also change the pace of migration negotiations.

What to watch

• Whether future declines in SAP's maintenance and support revenue are faster than expected.
• Whether cloud subscription discounts, migration incentives, and contractual flexibility expand materially.
• Whether ECC customers choose to extend usage, adopt hybrid support, or use third-party support as a transitional solution.
• Whether contract terms for S/4 and cloud migration projects reflect stronger customer bargaining power.
• Whether SAP AI, BTP, Business Data Cloud, and the ecosystem can increase per-customer value.
• Whether third-party support providers evolve from cost-optimization tools into more broadly used negotiating levers.
• SAP's subsequent adjustments to the support end-of-life timeline for older versions, the upgrade roadmap, and customer migration economics.