The Future of ERP in 2026: How SAP Cloud ERP Enable Resilient Enterprises

Executive Strategic Overview: The 2026 Convergence

The U.S business technology industry is expected to hit an inflection point in 2026. Cloud ERP will no longer be considered “just” a modernization approach; instead, it’s being established as a key component to build digital resilience through real-time intelligence and the ability to make real-time informed decisions. Hybrid cloud usage continues to grow through 2027. In addition, current trends in regulatory expectations regarding supply chain transparency and carbon disclosures are driving changes in enterprise models, while legacy on-premise ERP systems cannot compete with the pace of emerging AI technologies within a rapidly changing marketplace. As a result of this convergence of regulation/technology/speed, organizations have an increasing number of opportunities to leverage the expertise of experienced transformation partners, such as Emergys, to execute and implement their cloud ERP strategies for resiliency and future-readiness.

Cloud platforms will be included in ERP modernization strategies versus being considered an ancillary piece of an enterprise infrastructure. Changes in industry practices and policies have also greatly impacted how businesses must disclose their supply chains and Carbon Footprint (Climate Change).

In the SAP ecosystem, this sense of urgency is heightened by two forces that are coming together: the need for a clean core to support ongoing innovation and the rise of agentic AI, which is when autonomous software agents do complicated tasks with little help from people. It will be crucial for businesses to implement cloud-native and AI-friendly enterprise resource planning (ERP) solutions to optimize the full potential of agentic AI. SAP has publicly reiterated its commitment to continuing to provide mainstream maintenance services for the SAP ECC suite until December 31st, 2027. However, extended maintenance options will usually incur significantly higher costs, do not support innovation as an on-demand service, and so are becoming increasingly less desirable as businesses look for alternative strategies for deploying ERP solutions with the goal of achieving greater levels of innovation. Therefore, it is critical for all organizations considering an ERP implementation to evaluate either SAP’s CLOUD ERP (Whether Private or Public) by 2026-2027 or their alternative strategic options to help position themselves for success in the years ahead.

The Cloud Mandate: From Option to Operational Necessity

The ERP market’s trajectory signals a clear shift away from on-premises models. According to Statista’s industry projections, almost 1.4 million businesses will spend about $183 billion on ERP solutions. At the same time, the cloud ERP market is expected to grow from $72.2 billion in 2023 to $130.5 billion by 2028. This shows that businesses are shifting their IT investments toward cloud platforms (Statista).

The shift towards cloud ERP can largely be attributed to companies’ realizing that custom built ERPs lack agility, scalability and ability to innovate in a rapidly changing business landscape.

• Cloud ERP is better than custom-built ERP because it can innovate faster and is less complicated in the long run.
• Built-in AI, analytics, and automation are built in, which speeds up business process intelligence.
• Upgrading on-prem ERP takes longer and is riskier, and it costs more to test and regress.

The Cost of Technical Debt and Delayed Migration

For decades, U.S. companies’ decisions about customizations to their ERP systems have been influenced heavily by the amount of technical debt accumulated through those customizations over time. The fact that there is so much custom code on these systems is creating a structural obstacle when trying to implement an upgrade, increasing the amount of time and money spent on those implementations, as well as decreasing the availability of new ideas. As the time draws closer to the 2027 deadline for SAP ECC, demand for qualified SAP Migration and S/4HANA consultants will significantly increase beyond the actual number of such consultants working in the marketplace; thus, causing higher implementation costs and increased probability of project delays for companies who choose to delay their projects until closer to the deadline.

Two-Tier ERP Strategies for the US Enterprise

Many major U.S. multinationals are adopting Two-Tier ERP strategies to balance governance with agility. In this model, a Tier 1 system (e.g., SAP CLOUD ERP Private Edition) is utilized at the corporate headquarters for financial consolidation, compliance, and overall enterprise governance purposes. The organization’s subsidiaries, regional organizations, and high growth business units utilize SAP CLOUD ERP Public Edition as their Tier Two system. Having a Tier Two public edition allows the business to implement its business processes more rapidly, develop solutions to market specific challenges in less time, and integrate newly acquired companies more quickly than would normally be required to implement an entire corporate ERP system.

This method fits with IDC’s overall view of the market, which says that by 2027, 75% of companies around the world will switch from monolithic applications to modular, composable architectures. This makes Two-Tier ERP a practical and future-ready strategy.

Architectural Divergence: SAP CLOUD ERP Public vs. Private Editions

SAP CLOUD ERP solutions are an integral part of any Emergys client’s overall strategy in terms of technology and business processes. Both editions provide the same functionality and will allow for evolutionary upgrades throughout the lifetime of the application. Ultimately, it will be up to the client to decide which solution best aligns with their desired operational model as well as their investment strategy for continued innovation and improvement.

SAP CLOUD ERP Public Edition: The Standardization Engine

A multi-tenant SaaS solution that SAP fully manages and is made for businesses that want to follow SAP’s best practices and put speed, scale, and constant innovation first.

Key Characteristics:

Infrastructure: SAP runs a public cloud environment that is shared by many tenants.

Updates: Automatic and required updates that make sure you always have access to new features and AI improvements.

Personalization:

• No changes to the core code
• You can add features to the app (Key User Extensibility) or side by side on SAP BTP.
• Makes sure that the Clean Core is followed strictly

Deployment Speed: The fastest time-to-value with processes that are already set up

Best Suited For:

• Businesses of medium size
• Subsidiaries in a two-tier ERP system
• New or “greenfield” implementations
• Companies that can make processes the same

Strategic Implication:

• Allows for quick growth and new ideas
• Great for U.S. mid-sized businesses and fast-growing industries like tech and professional services
• GROW with SAP uses this version to help speed up go-lives.

SAP CLOUD ERP Private Edition: The Flexibility Hybrid

A single-tenant cloud deployment that has the same depth and flexibility as traditional S/4HANA and is offered as a managed cloud service, usually through RISE with SAP.

Key Characteristics:

Infrastructure: a dedicated environment for one tenant

Updates: Customers can choose when to upgrade within SAP-defined windows.

Personalization:

• Full access to the backend, including changes to ABAP
• Supports brownfield conversions and keeps customizations that are already in place
• Clean Core was encouraged but not required.

Control: More options for testing, validation, and managing changes

Best Suited For:

• Big businesses with complicated ways of doing business
• Industries with a lot of rules (aerospace, life sciences, and industrial manufacturing)
• Companies moving from ECC landscapes that have been heavily customized

Strategic Implication: For many of our large manufacturing and life sciences clients in the US, the Private Edition is the pragmatic path. It serves as a bridge between the customized past and the standardized future.

Comparative Analysis: Decision Matrix for 2026

The following table summarizes the strategic trade-offs between the two editions, guiding our advisory services:

Feature	SAP CLOUD ERP Public Edition	SAP CLOUD ERP Private Edition
Primary Value Proposition	Speed, Standardization, Innovation Cycle	Flexibility, Control, Legacy Compatibility
Update Cycle	Mandatory, Frequent (e.g., Quarterly)	Customer-Controlled (Annual/Bi-annual)
Extensibility Model	Strictly Side-by-Side (BTP) & In-App	In-App, Side-by-Side, & In-Stack (Legacy ABAP)
Implementation Approach	Greenfield (New Implementation)	Greenfield, Brownfield (Conversion), Bluefield
Total Cost of Ownership (TCO)	Lower initial TCO, predictable subscription	Higher TCO due to dedicated resources/management
Ideal Use Case	Standardized service industries, subsidiaries	Complex manufacturing, highly regulated sectors
AI Feature Availability	Immediate access to latest features	Potential lag due to customer-controlled upgrades

The “Clean Core” Paradigm: Prerequisite for the AI Era

In 2026, one key trend has been the transition of “Clean Core” from a technical best practice to an essential business strategy. Clean core is defined as keeping the ERP system as much as possible in its base vendor or original condition, while accommodating custom changes and enhancements with extensions in the cloud, as well as other technologies that operate parallel to the ERP system.

Technical Debt as an Innovation Blocker

Historically, U.S. companies have adapted SAP ECC to suit their needs, but this practice has created quite a lot of technical debt. Today, companies are experiencing many challenges due to their “dirty cores,” such as slowed upgrade processes, increased risk, and inability to access SAP’s rapid innovation cycle, such as its quarterly AI and regulatory updates that are critical to 2026.

Emergys takes a different approach by using the re-platforming methodology to clean out the dirty core rather than simply lifting and shifting. The Emergys methodology uses comprehensive validation techniques that will allow customers to distinguish between truly differentiating customizations and extract legacy habits from their core system, resulting in a clean core technology that can support customers’ continuous innovation process.

The Mechanics of Clean Core

The Clean Core strategy relies on decoupling customization from the core application logic. This involves three primary pillars:

• Standardization: SAP standard processes now take precedence over customizing the ERP system to meet a company’s specific needs. As a result, companies will use proven industry practices to guide them in their operations instead of relying on the ERP system as it relates to customizing the software.
• Extensibility through SAP BTP: Any custom-developed logic/applications/integrations must be built on the SAP BTP, eliminating any future technical debt associated with the ERP system. By doing this, a company can receive more rapid innovation without having the increased burden of supporting an outdated system.
• Governance: Companies must implement effective control mechanisms for custom-developed applications to preserve the ability to upgrade and achieve visibility into what has been developed by their employees.

Emergys Alignment:

Our SAP Cloud ERP conversion and GROW with SAP methodology makes Clean Core work by using SAP Signavio to make sure that standard processes are being followed and only the most important changes are being made. This was built on BTP. This method gets clients ready for modular, future-proof ERP landscapes that meet the needs of enterprise architecture in 2026–27.

The Age of Agentic AI: Redefining ERP Interaction

In 2026, AI will perform specific activities and execute decisions without the need for human intervention. This will fundamentally change the way users interact with their business systems.

Industry Projections by Gartner:

• Adoption: AI agents will be used by 50% of enterprises by 2027, up from 25% in 2025
• Decision Making: By 2028, 15% of day-to-day work decisions will be made autonomously by AI agents.
• Workforce Impact: 40% of all G2000 job roles will involve working with AI agents by 2026. This shift will require a massive reskilling effort, but it also promises to double knowledge of work productivity.

SAP Joule: The Copilot of the Enterprise

SAP’s response to this trend is Joule, a natural-language, generative AI copilot embedded throughout the SAP cloud portfolio. Joule is not just a chatbot; it is an agent capable of navigating the semantic layer of the enterprise.

Capabilities in 2026:

• Contextual Understanding: Joule is able to identify roles, permissions, and the specific context of a user’s business using the Knowledge Graph feature of SAP.
• Cross-Module Orchestration: Joule can execute tasks across finance, supply chain, and HR. For example, a “Post vendor invoice” command triggers a transactional flow directly within Fiori apps.
• Developer Acceleration: Joule uses ABAP AI to help developers generate new code, test existing code, and analyze legacy code. (NOTE: Code generated, tested, and analyzed on SAP BTP.)

US Industry Impact Analysis: Manufacturing

The United States manufacturing sector is undergoing a renaissance driven by reshoring, the CHIPS Act, and the need for supply chain resilience. However, this growth is constrained by acute labor shortages. Cloud ERP acts as the critical enabler for overcoming these constraints.

Reshoring and the Skilled Labor Gap

US manufacturers are actively moving production closer to consumers to improve agility and reduce geopolitical risk. However, this “reshoring” is colliding with a severe labor shortage. Immigrant workers filled nearly one in four US manufacturing jobs in 2024, and shifting immigration policies coupled with an aging workforce are straining this further.

The ERP Solution:

• Automation as Labor Augmentation: SAP CLOUD ERP leverages AI and robotics integration to bridge the talent gap. By automating routine tasks (invoice matching via SAP Invoice Management or NetSuite Bill Capture equivalents) and integrating with robotic warehouse systems, manufacturers can maintain output with leaner workforces.
• Digital Manufacturing: SAP Digital Manufacturing on the Public Cloud offers a scalable, “manufacturing-as-a-service” model. It supports 24/7 operations with 99.9% uptime and integrates IT (Information Technology) with OT (Operational Technology) on the shop floor. This allows real-time visibility into Overall Equipment Effectiveness (OEE) and quality metrics, enabling proactive rather than reactive management.

Supply Chain Resilience and Transparency

The disruptions of the early 2020s have made supply chain visibility a board-level priority. In 2026, manufacturers must manage not just efficiency, but resilience against “shocks.”

• Risk Analysis: Modern ERP systems include built-in risk simulation capabilities to model “what-if” scenarios for tariff changes, supplier bankruptcies, or natural disasters.
• California Transparency in Supply Chains Act: Major retailers and manufacturers doing business in California (with >$100M gross receipts) must disclose efforts to eradicate slavery and human trafficking from their supply chains. Compliance requires deep visibility into supplier practices. SAP S/4HANA, integrated with SAP Ariba, enables this by maintaining a digital audit trail of supplier certifications and audits, ensuring that compliance is embedded in the procurement process.

US Industry Impact Analysis: Pharma & Life Sciences

The US pharmaceutical industry faces a unique “double cliff” in 2026: the technological migration to S/4HANA and the rigorous regulatory deadline for the Drug Supply Chain Security Act (DSCSA).

DSCSA and the 2026 Stabilization Period

The DSCSA requires full unit-level traceability of prescription drugs moving through the US supply chain. While the initial enforcement deadlines have shifted, the “stabilization periods” extending into 2026 require trading partners to finalize their electronic, interoperable systems. This is not merely a labelling exercise; it is a massive data challenge.

ERP Implications:

• Serialization: SAP CLOUD ERP (specifically Advanced Track and Trace for Pharmaceuticals) handles the massive data volume required for serializing every saleable unit. It generates, tracks, and reports unique identifiers for millions of units.
• Interoperability: The regulation demands electronic data exchange between manufacturers, wholesalers, and dispensers. A Clean Core ERP integrated via BTP ensures that these data exchanges adhere to the latest GS1 standards (EPCIS) without requiring hard-coded, brittle interfaces that break up with every update.
• Compliance as a Service: Cloud ERP ensures that as FDA guidance evolves (as seen with the exemptions for small dispensers), the system logic is updated centrally by SAP, reducing the compliance burden on the manufacturer.

Managing Compliance in the Cloud

Historically, Pharma companies resisted the cloud due to “validation”—the need to prove to the FDA that the system works exactly as intended and has not changed unexpectedly. However, SAP has evolved its cloud offerings to support validation. The Private Edition is particularly strong here, as it allows Pharma companies to “freeze” their code base during critical production runs and validate upgrades in a controlled sandbox before applying them to production. This capability bridges the gap between the ;need for cloud innovation and the rigidity of GxP compliance.

The Nexus of Compliance and Sustainability

In 2026, sustainability data ceases to be a marketing metric and becomes a financial one. This shift is driven by investor demand and regulatory mandates like the SEC’s Climate Disclosure Rules.

SEC Climate Disclosure Rules

Starting in 2026 (for fiscal year 2025 data), Large Accelerated Filers (LAFs) in the US must provide narrative disclosures regarding climate risks and financial statement notes. Scope 1 and Scope 2 GHG emissions disclosures will follow. This mandate forces companies to move beyond spreadsheet-based carbon accounting, which is prone to error and lacks auditability.

SAP Sustainability Control Tower: The Green Ledger

SAP’s strategy is to treat “carbons like money.” The Green Ledger concept integrates carbon accounting directly into the financial ledger.

• Transactional Granularity: Instead of estimating emissions at year-end using averages, S/4HANA Cloud calculates the actual emissions of every transaction. When a raw material is purchased, its carbon footprint is recorded alongside its financial cost.
• Auditability: Just as financial data must be auditable, the SAP Sustainability Control Tower aggregates this data to provide the governance and lineage required for SEC filings. It allows CFOs to sign off on sustainability reports with the same confidence they have in their financial statements.
• Strategic Decision Making: By embedding carbon data into the ERP, executives can simulate the environmental impact of supply chain decisions (e.g., sourcing from Supplier A vs. Supplier B) in real-time, allowing for “carbon-aware” optimization of operations.

Risk Management: The Cost of Waiting vs. The Complexity of Moving

For CIOs and SAP Division Heads, the decision to migrate involves balancing the risks of a complex project against the increasing risks of obsolescence.

The Cybersecurity Imperative

Cybercrime cost organizations $12 trillion approximately in 2025. Legacy on-premises systems, often patched irregularly and sitting on aging hardware, represent a significant vulnerability.

• Shared Responsibility: Moving to SAP Cloud ERP shifts the heavy lifting of infrastructure security to SAP and its hyperscale partners (AWS, Azure, Google Cloud).
• Automated Patching: The cloud model ensures that security patches for zero-day vulnerabilities are applied rapidly, shrinking the exploit window that attackers rely on. For Private Edition, while the customer controls the schedule, the underlying infrastructure is managed and secured by SAP.

Licensing and Contractual Complexities

Migrating to the cloud introduces new contractual dynamics that must be navigated carefully.

• “Use” Definitions: Modern contracts define usage to include access by bots and AI, not just human users. If an AI agent accesses the system 10,000 times a day to optimize inventory, does that count as “indirect usage”? Contracts in 2026 must explicitly address the rights and costs of non-human access to avoid unexpected billing.
• On-Premise Rights: Resolving legacy maintenance credits and converting licenses to cloud subscriptions requires careful negotiation. The “RISE with SAP” offering simplifies this by bundling software, infrastructure, and services into a single contract, but the transition details regarding shelf-ware and historic discounts must be managed precisely.
• Renewal Protections: Given the dependency organizations have on their ERP, locking in renewal caps is essential to prevent price gouging in future years. The uncertainty in the geopolitical and economic landscape makes securing these rights a critical element of deal-making.

Conclusion: A Strategic Roadmap for the SAP Division

For SAP customers in the United States, 2026 will be a pivotal year due to the approaching 2027 SAP ECC deadline, the development of agentic AI, and increased regulatory enforcement. Because legacy on-premise models lack the agility, intelligence, and governance necessary for autonomous, compliant, and sustainable enterprise operations, cloud ERP is no longer an option. The right execution partner, one who is aware of SAP’s changing cloud portfolio and can match it to business realities is just as important to navigating this shift as the appropriate technology. As a seasoned partner for SAP solutions, Emergys assists businesses in building cloud-native ERP foundations that are built for ongoing innovation and long-term resilience.