Silicon Labs builds a future-ready SAP strategy

An interview with Radhika Chennakeshavula, CIO and vice president of Silicon Labs, explaining the company’s decision to select Rimini Street as its strategic partner to maximize the value of its SAP ECC 6.0 investment. This collaboration provides the US-based semiconductor manufacturer with long-term SAP maintenance and professional services to accelerate modernisation without costly upgrades or business disruption. The project went live ahead of schedule and has delivered significant savings which have enabled ‘frictionless’ investment in AI innovations across the organisation.

In an era when enterprise IT strategies are increasingly shaped by vendor roadmaps, cloud-first mandates and aggressive modernization timelines, Silicon Labs has taken a deliberately different path. Rather than rushing into a wholesale platform migration, the semiconductor company has chosen to extend the life of its SAP ECC 6.0 environment through a strategic partnership with Rimini Street - freeing up significant cost savings to invest in artificial intelligence (AI), data platforms and innovation at the edge.

This approach reflects a broader shift underway across parts of the semiconductor industry: a move away from transformation for its own sake, towards more measured, value-led decision-making that balances operational stability with forward-looking capability.

Beyond vendor timelines: A strategic decision
At first glance, changing SAP support providers could be perceived as a tactical move. However, Silicon Labs’ leadership makes clear that the decision was rooted in long-term business value rather than short-term operational convenience.

The core motivation was to decouple IT strategy from vendor-driven timelines - particularly as SAP customers face pressure to migrate away from ECC systems in line with evolving support policies. For Silicon Labs, the question was not whether modernization would happen, but when it would deliver the greatest impact.

“We didn’t want to change our business processes driven by vendor-imposed deadlines,” explains Radhika Chennakeshavula. “Instead, we wanted to ensure our critical systems remained fully supported while giving ourselves the time to move into a modern environment when it genuinely makes sense.”

This perspective proved particularly prescient in a period of corporate evolution. The flexibility gained from extending ECC support has allowed the organisation to reassess its roadmap in light of external developments, including significant strategic activity. The underlying philosophy is clear: modernization should follow business readiness, not compliance deadlines.

Why not RISE with SAP - yet?
Many SAP customers are pursuing RISE with SAP as a pathway to cloud transformation, but Silicon Labs has taken a more selective approach. The company has not rejected RISE outright; rather, it has chosen to delay adoption until it aligns more closely with its operational needs and business priorities.

Experience across the semiconductor sector has shown that RISE can deliver strong value in manufacturing-intensive environments, particularly where sustainability initiatives, production optimisation and supply chain integration are central concerns. However, Silicon Labs operates under a fabless model, meaning many of these benefits are less immediately relevant.

At the same time, the company’s existing environment remains stable and fit for purpose. A migration undertaken purely for support reasons would have delivered limited near-term return on investment. By postponing the transition, Silicon Labs has preserved both flexibility and focus, ensuring that any future move is driven by opportunity rather than necessity.

Preserving value while enabling innovation
A central challenge in delaying large-scale transformation is maintaining the value of existing systems while continuing to innovate. Silicon Labs has addressed this through a dual strategy that stabilises its ERP core while unlocking funding for new initiatives.

By transitioning SAP support to Rimini Street, the company achieved approximately 50% savings on annual support costs. Rather than absorbing these savings into general budgets, Silicon Labs has redirected them into innovation.

This financial shift has enabled the organisation to launch a broad set of AI pilots and proofs of concept, while also beginning the development of a unified enterprise data platform. These initiatives are laying the groundwork for more advanced analytics, automation and machine learning capabilities.

Radhika emphasises that while AI is now essential, it must be implemented in a disciplined way. New technologies cannot simply be layered onto existing operations without clear purpose and planning. By funding experimentation through operational savings, Silicon Labs has created a controlled and sustainable pathway to innovation.

Stability, support and operational confidence
The move to Rimini Street has also delivered significant improvements in operational stability and support experience.

SAP ECC environments are both complex and mission-critical, particularly in finance functions where compliance and regulatory requirements are stringent. Maintaining reliability in these systems is therefore non-negotiable.

Through its new support model, Silicon Labs has achieved a more predictable cost structure with a fixed multi-year contract, eliminating the annual cost increases typically associated with vendor support. The partnership also provides comprehensive coverage across the entire SAP landscape, rather than limiting support to specific components.

Equally impactful has been the responsiveness of the support service. Issues are addressed rapidly, often within minutes, reducing downtime and easing the burden on internal IT teams. This has translated into a more confident and less reactive operational posture.

There is also a cultural dimension to this shift. The leadership team challenges the assumption that older systems are inherently obsolete, suggesting instead that well-functioning platforms should be viewed as valuable assets. In this context, SAP ECC is not a legacy system to be replaced at all costs, but a “heritage” platform that continues to deliver business value.

Accelerated implementation and risk mitigation
The transition to third-party support was executed ahead of schedule, facilitated by a carefully structured overlap period that minimised risk.

Rimini Street aligned its billing to begin only after existing SAP support ended, allowing Silicon Labs to operate both support arrangements in parallel for several months without incurring additional cost. This dual-support period provided an opportunity to validate service performance, test responsiveness and ensure operational continuity.

As confidence grew, the organisation was able to complete the transition smoothly and ahead of plan. This phased approach eliminated many of the traditional concerns associated with switching support providers, including potential downtime or service gaps.

Self-funding innovation: A new financial model
One of the most notable aspects of Silicon Labs’ strategy is its adoption of a self-funding model for innovation. Rather than seeking additional budget for new initiatives, the IT organisation has committed to generating the necessary funding through cost optimisation.

The savings achieved through the SAP support transition have played a central role in this model, but they are part of a broader effort to rationalise the company’s technology landscape. Reducing tool sprawl and eliminating redundant software has further freed up resources.

This approach has made it significantly easier to invest in new capabilities. By keeping initiatives within existing budget envelopes, the IT team can move more quickly and with greater autonomy. At the same time, the model aligns closely with financial leadership priorities, as it combines innovation with fiscal discipline.

“Save at the core, innovate at the edge”
Silicon Labs encapsulates its strategy in a simple but powerful principle: “save at the core, innovate at the edge.”

The ERP system represents the operational backbone of the organisation, ensuring that business processes run smoothly and reliably. However, it is not a source of competitive differentiation. Customers do not choose semiconductor suppliers based on ERP platforms; they choose them based on product innovation and performance.

By reducing expenditure on core systems and reallocating those resources to edge innovation, Silicon Labs is aligning its IT strategy with its business objectives. Investments are focused on areas that directly enhance product development, engineering productivity and customer engagement.

This includes the deployment of advanced development tools, generative AI platforms and sales enablement technologies. It also extends to enabling experimentation, allowing teams across the organisation to explore new ideas and capabilities without being constrained by budget limitations.

Enhanced monitoring and operational agility
The partnership has also driven improvements in system monitoring and operational visibility.

Previously, the organisation lacked proactive monitoring capabilities, relying instead on users to report issues after they occurred. This reactive model created inefficiencies and often left global teams - particularly in different time zones - dealing with problems before IT was even aware of them.

With the introduction of RiminiWatch, Silicon Labs now benefits from real-time monitoring, automated alerts and proactive incident management. IT teams are able to identify and address issues before they escalate, improving both system reliability and user satisfaction.

This shift has been particularly valuable for international operations, where time zone differences previously created delays in response and resolution.

Exploring agentic AI in ERP environments
Looking forward, Silicon Labs is exploring the potential of agentic AI to fundamentally reshape how users interact with ERP systems.

Traditional SAP interfaces can be complex and difficult to navigate, often requiring specialised training and reliance on detailed reports. These reports themselves can become unwieldy, presenting users with large volumes of data that are difficult to interpret quickly.

The company’s vision is to introduce AI-driven agents that enable natural language interaction with ERP data.

Instead of navigating menus or analysing reports, users would be able to ask questions and receive immediate, context-aware
responses.

This concept has broad applicability, from querying demand forecasts to accessing supply chain information or analysing customer activity. The goal is to make ERP systems more intuitive, accessible and responsive to user needs.

While SAP’s native AI capabilities are primarily focused on cloud-based platforms, Silicon Labs is exploring ways to bring similar functionality to its ECC environment through partnerships and innovation. This includes working with third-party providers and emerging technology firms to develop agent-based solutions.

A vision for the future
The long-term vision for Silicon Labs is an ERP environment where complexity is abstracted away and users interact with systems through intelligent, conversational interfaces.

Rather than forcing employees to adapt to rigid software structures, the organisation aims to create a more natural and efficient user experience. This involves reducing reliance on traditional interfaces and reports, while enabling real-time access to data through AI-driven tools.

Importantly, this transformation does not require immediate system replacement. By layering new capabilities onto existing platforms, Silicon Labs is extending the value of its current investments while preparing for future evolution.

Strategic flexibility in a changing industry
The semiconductor industry is characterised by rapid technological change, supply chain complexity and evolving market dynamics. In this context, maintaining flexibility is essential.

Silicon Labs’ decision to extend its SAP ECC environment has preserved that flexibility, allowing the organisation to respond to new opportunities and challenges without being constrained by rigid transformation timelines.

Recent developments, including significant corporate interest and valuation uplift, further highlight the importance of maintaining strategic agility. By avoiding premature commitments, the company remains well positioned to adapt its technology strategy as circumstances evolve.

Conclusion: A pragmatic blueprint for modernisation
Silicon Labs’ approach to ERP strategy offers a compelling alternative to conventional transformation models. By focusing on timing, context and business value, the company has created a balanced roadmap that combines operational stability with innovation.

The decision to extend SAP ECC support has not been about delaying progress, but about enabling it under the right conditions.

By reinvesting savings into AI and data initiatives, Silicon Labs is building a future-ready foundation without compromising current performance.

In doing so, it demonstrates that digital transformation does not have to be a binary choice between legacy and modernity. Instead, it can be a continuum - one in which organisations maximise existing assets while selectively embracing new capabilities.

For many in the semiconductor industry and beyond, this pragmatic, value-driven approach may provide a more sustainable path forward in an increasingly complex technological landscape.