Don't knock the concrete...it won't rot, you can put plant pots on it with no worries and they will benefit from the reflected heat storage. Also great for a barbeque. And besides, it's there already. Do you have any idea how much work it is to demolish a concrete slab? (unless of course you hire someone else to do it....

Camoflauge it with an outdoor rug, and patio furniture and then I would make a raised wall planter (see below) around most of it with a wider, more generous step where yours currently is. Then add either a second level of patio or deck extending out and to the sides of the house from the dormer to the heat pump. Transition into the lawn (which BTW needs some serious work) with wide borders of shrubs, bulbs and ground cover and call it a day.

I built a raised planter bed using this Houzz inspiration photo along the edge of my deck/patio transition. The bottom is pressure treated plywood. I sized it for terracotta pots of a certain standard size and rotate them through the season with bulbs, annuals etc. It wasn't hard to build and makes a nice transition as well as a place to rest a glass of wine while enjoying the deck.

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