The UK and Ireland SAP User Group has praised SAP’s latest announcement that on-premise customers can now reallocate elements of their on-premise licences to the respective cloud solutions.

The news comes after months of lobbying from the User Group over licensing complexity, where one recent survey found that 97% of its members didn’t believe that SAP had effectively explained the migration path of moving from on-premise to cloud.

However, in a swift U-turn, SAP has said that customers can now replace on-premise licensing and maintenance with a cloud subscription. But it is worth noting that SAP also said that the transaction “assumes an expanded investment with cloud solutions from SAP”.

SAP has a number of public cloud offerings, which have been bolstered by the acquisitions of Ariba and SuccessFactors.

Robert Enslin, president of global customer operations at SAP, said: “SAP is delighted to offer this tremendous opportunity to customers, allowing them to redirect existing investments to new innovation areas in the cloud.”

The UK and Ireland SAP User Group said that the announcement is one of the ‘first tangible changes’ SAP has made to addressing customer concerns over trading in on-premise licences.

“This should help customers move towards the hybrid strategy that SAP has been evangelising and that so many organisations see as the future of IT. SAP is clearly demonstrating that it is listening to customers who simply could not justify investments in cloud when they had already spent significant sums purchasing on-premise software,” said Philip Adams, chairman of the User Group.

“They are really taking a lead by allowing customers to partially terminate their on-premise software licences and therefore the associated maintenance costs. Furthermore it appears SAP will be offering discounts on subscription fees depending on the level of past on-premise, and future cloud, investment.”

He added: “Overall, this announcement is great news for existing customers and good news for SAP. It is creating a win-win situation by making it much easier to take advantage and drive business benefits from the innovations SAP is delivering via the cloud.”

SAP has also revealed that it will be losing its current co-CEO model, where Jim Hagemann Snabe will be stepping down and joining the software vendor’s supervisory board, leaving Bill McDermott as sole CEO.