Case Study: Saving $8M on SAP Support with License Optimization and Third-Party Maintenance
A manufacturing enterprise running SAP ECC and BusinessObjects saved $8 million over three years by optimizing its SAP licenses and switching to third-party support.
This case study illustrates how CIOs and CTOs can substantially reduce SAP support costs by implementing proactive license assessments and alternative support models, while maintaining stable operations and compliance.
Escalating SAP Support Costs
SAP’s standard support model is expensive and rigid, often consuming a large chunk of IT budgets.
The company in this case was paying SAP roughly 22% of its original license value every year in maintenance fees for SAP ECC (ERP Central Component) and BusinessObjects.
That translated to several million dollars annually in support costs, with automatic uplifts for inflation. This “support tax” yielded diminishing returns – the systems were mature and stable, yet the fees continued to rise.
The CIO realized that over a typical 5-year span, they could end up paying more in support than the initial software purchase price.
In addition, SAP’s roadmap pressures (like urging a migration to S/4HANA by 2027) threatened even more cost in the form of upgrades.
The organization needed to reduce these ongoing costs without jeopardizing its core business applications.
- High Annual Fees: SAP Enterprise Support generally costs ~22% of license fees per year. For example, a $10 million SAP license deployment incurs approximately $2.2 million per year in SAP support fees. In this case, the manufacturer’s annual SAP support bill was in that range, a substantial recurring expense.
- Limited Value Growth: The company wasn’t receiving equivalent new value for these fees. ECC and BusinessObjects were mostly in maintenance mode – SAP’s updates for legacy systems had slowed, yet the costs remained high. The support contract primarily provided break-fix assistance and security patches, which they rarely needed.
- Budget Pressure: Facing overall IT budget constraints, the CIO and CFO viewed the status quo as unsustainable. They sought ways to trim “run” costs (such as maintenance) to free up funds for “grow” initiatives (new digital projects). This set the stage for a bold re-evaluation of their SAP support and licensing strategy.
Read Rightsizing SAP Support Levels to Optimize Cost and SLA Coverage.
License Assessment Reveals Hidden Savings
The organization engaged an independent SAP licensing advisor (Redress Compliance) to perform a thorough license assessment.
This deep dive into how users and systems were consuming SAP licenses uncovered significant inefficiencies:
- Shelfware and Inactive Users: Dozens of SAP user accounts had not been used in months, and some modules (components of ECC and BI content) were deployed but not actively utilized. Essentially, the company was paying maintenance for licenses that provided no business value. For example, many ex-employees’ accounts remained allocated with named user licenses, and several reporting tools in BusinessObjects were unused after initial trials.
- Misclassified License Types: The audit revealed that a significant number of employees were assigned Professional SAP user licenses, the most expensive category, despite requiring only limited functionality. Many users only ran read-only reports or basic transactions – roles that could be covered by cheaper license types (such as Limited Professional or Employee Self-Service users). This overallocation meant the company was overspending on support for high-tier licenses that weren’t truly needed.
- Overcapacity in Engine Metrics: In ECC, certain engine-based licenses (like SAP modules measured by volume or SAP’s HANA database runtime) were sized far above actual usage. These over-provisions were inflating the maintenance base. For instance, the BusinessObjects user count licensed was significantly higher than the concurrent usage justified.
Armed with these findings, the company took action. They decided to right-size their SAP license portfolio – terminating or reallocating unused licenses and downgrading license types where possible.
SAP’s contracts typically don’t allow for partial support cancellation mid-term; however, at the annual renewal, they can retire “deadwood” licenses (e.g., surrender unused license entitlements) to remove them from the maintenance calculation.
By pruning ~15% of unnecessary licenses and adjusting user license levels, they projected immediate savings on support fees. The license cleanup alone was estimated to cut annual support costs by over $250,000 (by reducing the maintenance base).
Equally important, this exercise improved compliance: the company gained confidence that it was fully compliant with SAP’s license terms, thereby avoiding any future audit surprises. This set a solid foundation – they now knew exactly what licenses they truly needed to maintain.
Read Switching to Third-Party Support for SAP.
Third-Party Support as a Strategic Alternative
With the license optimization underway, the next huge opportunity was to address the remaining support costs.
The CIO’s team explored third-party support for SAP, an increasingly popular option for enterprises running stable systems.
Third-party support means contracting an independent provider (not SAP) to receive software support and updates.
In this case, the company evaluated Rimini Street, a leading third-party support provider for SAP products, as an alternative to SAP’s own support.
Switching to third-party support promised dramatic savings and new flexibility:
- 50%+ Maintenance Cost Reduction: Third-party providers typically charge about half of SAP’s support fee for equivalent (or better) support service. In numbers, instead of paying ~$2.2 M per year to SAP, the company could pay roughly $1.1 M/year to Rimini – saving over $1 M annually right off the bat. Over three years, this alone would amount to more than $3 million saved. Rimini Street and similar firms also offered multi-year fixed pricing, avoiding the annual escalation that SAP was introducing.
- No Forced Upgrades: SAP had announced ECC 6.0 mainstream support would end by 2027 (with costly extended support until 2030), pressuring customers to migrate to S/4HANA or the RISE cloud offering. With third-party support, the company could stay on ECC and BusinessObjects indefinitely without any support cutoff. Rimini Street is committed to supporting ECC 6.0 well into the 2030s. This meant the business could avoid a rushed, multi-million-dollar S/4HANA migration and instead upgrade on its own timeline when a solid business case was in place.
- Support for Customizations: The manufacturer’s SAP system had custom reports and add-ons tailored to their manufacturing processes. Under SAP support, any custom code issues were essentially the customer’s problem (SAP standard support doesn’t cover customizations). Rimini, however, promised full support for custom code and integrations as part of the contract. This was a huge benefit – it meant if a custom interface to a plant machine broke, the third-party support would help fix it, whereas SAP would not.
- Personalized Service Levels: The third-party model provides a more personalized and responsive support experience. Instead of being one of thousands of SAP customers in a queue, the company would have a dedicated support engineer team at Rimini that already supports many SAP ECC clients. Rimini advertises 24/7 support with guaranteed 15-minute responses for critical issues – a potentially faster response than they historically got from SAP. For a manufacturing firm with 24/7 operations, this was appealing to ensure high uptime.
Of course, the CIO had to weigh the risks and trade-offs of leaving SAP’s official support:
- They would no longer receive new software versions or enhancements from SAP. However, this was deemed acceptable – the company wasn’t planning to deploy new SAP functionality and was content with the current ECC feature set. BusinessObjects was similarly sufficient for their analytics needs.
- If a major bug or security vulnerability in the SAP software were to emerge, SAP’s support would normally issue a patch. Off support, the third-party provider would need to develop or provide a fix instead. The company mitigated this by ensuring all the latest SAP patches available were applied before the switch, and confirming that Rimini had processes to deliver critical fixes (including tax/regulatory updates) quickly.
- Future interoperability and innovation might be limited on an old platform. The team acknowledged that by staying on ECC longer, they might miss some new capabilities of S/4HANA. To counter this, they planned to invest part of the saved budget into innovations outside the core ERP – for example, improving their e-commerce platform and analytics capabilities that sit on top of ERP. This balanced the scales by delivering innovation through alternative means while the core remained stable.
- Finally, there was the consideration of vendor relationship: Leaving SAP support could strain the relationship with SAP’s sales team. The organization prepared for tough conversations, but ultimately, cost savings and strategic flexibility took priority. (Notably, SAP attempted to offer a small discount and remind them that rejoining later would come at a price. But even with those factors, the third-party route was far more attractive financially.)
After a careful review of these factors and board-level discussions, the company decided to proceed with the third-party support strategy.
The move was approved as it aligned with the enterprise’s cost optimization goals and did not impede any immediate business requirements.
Transitioning from SAP to Rimini Street Support
Executing the switch required careful planning.
The IT and procurement teams orchestrated a smooth transition to ensure there was no gap in coverage:
- Advance Notice to SAP: The company timed the change with its SAP support contract renewal date. They provided SAP with the required notice of non-renewal (in this case, 90 days before the contract end) to officially terminate the maintenance. This avoided any auto-renewal or penalties. They also confirmed with SAP that they would retain usage rights to their perpetual licenses – they would simply stop receiving support services for them.
- Onboarding Third-Party Support: The deal with Rimini Street was signed, covering support for SAP ECC 6.0 and SAP BusinessObjects software. In the months leading up to the lapse of SAP support, Rimini’s team conducted an onboarding process. They gathered documentation on the company’s SAP landscape (systems, customizations, interfaces, etc.), and archived the latest available SAP support notes, patches, and technical documentation for those products. This knowledge transfer was crucial so that Rimini could step in fully on Day 1 without SAP’s help.
- Final Updates and System Stabilization: Just before the cutover, the IT department applied all pending SAP support packs and patches that were available under their SAP support entitlement. The systems were brought up to a fully patched state. This acted as a baseline – Rimini would handle any future fixes, but at least there were no outstanding known issues at the time of the switch. BusinessObjects servers were also updated to the latest stable patch.
- Cutover and Support Continuity: Upon the end of the SAP contract, Rimini Street officially assumed support. Users continued to use the SAP software as usual, but now, if an issue arose, they would call Rimini’s support hotline instead of SAP. In the first few months, the company closely monitored the quality of support. They found that issues were resolved on time and with a more personalized approach. For instance, when a critical billing job failed, Rimini’s engineers were on a bridge call with the company’s IT staff within 30 minutes, working to resolve the issue. This level of responsiveness met or exceeded the expectations that SAP had provided.
- License Compliance and Audit Prep: The company maintained all proofs of license ownership carefully (SAP license certificates, contracts) in case of any future audit or vendor queries. Even off maintenance, SAP can audit license usage, so the company continued its internal license tracking (especially after the cleanup) to ensure it stayed within entitled usage. They also kept a contingency plan: if in the future they decide to implement S/4HANA or new SAP cloud products, they would negotiate a new contract then, rather than reactivating the old support (thus avoiding back-maintenance fees on the old system).
Overall, the transition was completed without business disruption. Employees and business users noticed no difference in the software’s functionality – everything ran as before.
The only changes were on the backend support process and, of course, the financial outflows for maintenance.
Results: Millions Saved and Flexibility Gained
By adjusting support and licenses, the organization achieved substantial financial savings while maintaining the reliability of its SAP systems.
Over the three years following the transition, the cumulative savings totaled approximately USD 8 million.
These savings came from multiple sources:
- Reduced Support Fees: The switch to Rimini Street resulted in a roughly 50% reduction in annual support costs. For example, if they were paying approximately $5 million over a year to SAP, they now pay around $2.5 million to the third-party. This generated approximately $2.5 million in savings each year, totaling around $7.5 million over three years.
- Lower Maintenance Base: Additionally, the license rightsizing from the audit reduced the total maintenance base (number of licenses/modules under support). This contributed extra savings (~$200–300k/year) because even Rimini’s fee was partly based on the scope of assets supported. By not supporting licenses that were retired or shelfware, those fees were avoided. Over three years, that added up to roughly $0.5–1 million saved.
- Avoided Upgrade Costs: An indirect but huge saving is the deferment of an S/4HANA migration or other major upgrades. The company estimated that immediately moving to S/4HANA would have incurred $10–15 million in project expenses. By postponing this, they essentially freed that capital for other use (this is not reflected in the $8M figure, but it’s a strategic cost avoidance worth noting).
To illustrate the impact, here’s a simplified comparison of the support cost trajectory over 3 years:
| Support Scenario | Annual Cost | 3-Year Total Cost |
|---|---|---|
| SAP Official Support (status quo) | ~$5.0 M | ~$15.0 M |
| Third-Party Support (Rimini Street) | ~$2.3 M | ~$7.0 M |
| Net Savings | ~$2.7 M | ~$8.0 M |
Approximate figures for illustration. The company transitioned from spending roughly $15 million over three years with SAP to approximately $7 million with the new approach, resulting in a 53% reduction in costs. In budget terms, this was a game-changer.
The $8 million saved was redirected to higher-value initiatives: the CIO funded several digital transformation projects that had been on hold.
For example, they accelerated the deployment of advanced analytics on shop-floor data (something they couldn’t budget for previously).
In essence, switching support models “freed up” budget to invest in innovation and competitive improvements.
Beyond the dollars, the organization also gained operational benefits:
- Extended System Life: They comfortably continued running SAP ECC 6.0 well past SAP’s sunset date. With third-party support, they have the option to run ECC through 2030 and beyond without losing support. This takes pressure off the IT roadmap – they can choose when to transition to new solutions, aligning with business readiness rather than vendor deadlines.
- Stable Operations and Support Quality: The feared drawbacks of leaving SAP support did not materialize. Over the three years, critical support tickets were resolved effectively by the third-party team. Routine updates, such as year-end tax and regulatory patches for their ERP and payroll systems, were delivered by Rimini Street in a timely manner (e.g., new VAT changes for one of their European plants were provided as a patch script). Users experienced no degradation in service levels. Internal satisfaction with ERP support improved slightly, as measured by IT service surveys, largely due to faster response and more knowledgeable engineers who understood their custom environment.
- Maintained Compliance: The company remained compliant with SAP licensing throughout. They did not face any license audits in the period, but they were prepared for one. By cleansing unused licenses, they reduced audit risk. Should SAP audit them, the company is confident it would pass with no license shortfall. This peace of mind was a direct result of the earlier license assessment and ongoing governance.
- Negotiating Leverage: Interestingly, once SAP realized the company had switched to third-party support, they later approached with offers to win back the business (including possible discounts on S/4HANA licenses or cloud subscriptions). The customer is now in a strong negotiating position, should they consider future SAP purchases, having demonstrated a willingness to walk away. This leverage may yield better pricing or contract terms in the future.
In summary, the case demonstrates that by rethinking SAP support and licenses, an enterprise saved millions and gained flexibility.
The CIO effectively converted a fixed operating cost into funds for strategic growth, all while maintaining the smooth operation of core systems.
It’s a compelling example for any IT leader looking at a looming maintenance renewal and wondering if there’s a better way.
Recommendations
For CIOs and CTOs considering similar moves, here are key recommendations based on this case study’s success:
- Conduct a License Audit: Start with a detailed SAP license and usage audit. Identify inactive users, duplicate accounts, and overpriced license assignments. Use SAP’s LAW tool or a SAM solution to pinpoint shelfware and misclassified users. This data is the foundation for any cost-saving strategy.
- Right-Size Your Licenses: Optimize your license mix before negotiating with SAP or switching to a new support provider. Downgrade user licenses where appropriate (e.g., swap expensive Professional licenses for Limited or ESS licenses for light users). Eliminate unused licenses by formally terminating them at the contract anniversary. Reducing your maintenance footprint can immediately lower costs under either SAP or third-party support.
- Time Changes with Renewal Cycles: Align any support changes with your contract renewal dates to ensure seamless continuity. Provide SAP with proper notice if you plan to discontinue support to avoid auto-renewal. This timing also provides a natural opportunity to either negotiate better terms with SAP or seamlessly transition to a third-party provider.
- Evaluate Third-Party Support Providers: If your SAP environment is relatively stable and you don’t need constant upgrades, get quotes and references from third-party support firms (e.g., Rimini Street, Spinnaker). Ensure they cover all your SAP products (e.g., ERP, BusinessObjects) and have a strong track record in your industry. Compare not just the cost, but also the support offerings (SLAs, scope of services, such as custom code support).
- Mitigate Risks Proactively: Before switching, apply all final SAP patches and download documentation for your systems. Clarify how the third-party will handle critical patches and legal changes. Also, have an internal plan for any future SAP requirements (for instance, how you would approach an S/4HANA project when the time comes, with the understanding you might need to purchase licenses anew).
- Secure Executive and Stakeholder Buy-In: Communicate the plan and its benefits to senior management and any concerned stakeholders early. Emphasize the cost savings and how you will reinvest those savings (e.g., funding digital initiatives). Also discuss the risk mitigations in place – for example, that operations will continue smoothly and that leaving SAP support is a common, legal practice many Fortune 500 companies have done successfully.
- Maintain License Compliance Governance: Even after SAP support ends, continue to manage your licenses diligently. Assign someone (or a team) to track SAP usage vs entitlements and to enforce policies (like reclaiming licenses from departures and preventing unauthorized use of high-level functionality). This keeps you audit-ready and avoids any unpleasant surprises if you need to true-up licenses in the future.
- Leverage Savings for Innovation: Have a strategy to utilize the freed budget wisely. Gartner-style advice is to “fund innovation with savings” – for example, invest in cloud infrastructure, advanced analytics, or process automation that can drive business value. This not only justifies the switch to your board’s support (they love to see growth investments), but also ensures IT continues to deliver new capabilities even while the core ERP remains unchanged.
- Monitor Vendor Roadmaps: Keep an eye on SAP’s product roadmap and the third-party support roadmap. Your long-term strategy might be to eventually migrate to a next-gen platform or adopt new cloud solutions. By staying informed on SAP’s future offerings (and how long third parties will support your current versions), you can time your next move optimally – capturing cost savings now, but not painting yourself into a corner later.
By following these recommendations, organizations can confidently pursue SAP support optimization while controlling risks.
The key is preparation, clear-eyed analysis of needs, and choosing partners that align with your cost and service goals.
FAQ
Q1: Is it legal and allowable to use third-party support for SAP software?
A: Yes. If you own valid SAP licenses (perpetual licenses), you are entitled to run the software and can choose who provides support services for it. Third-party support is a legitimate option used by many enterprises and is recognized in the industry. SAP’s contracts do not forbid customers from cancelling maintenance and using an independent support provider. There was early legal controversy (e.g., Oracle’s past lawsuit against a third-party provider), but providers like Rimini Street now operate within legal boundaries (e.g., they don’t illicitly copy SAP code; they develop their own fixes for you). It’s wise to have your legal team review the third party’s terms, but in practice, thousands of SAP customers globally have switched to third-party support without legal issues. Just remember, you must remain compliant with your license usage – third-party support does not grant permission to expand use beyond what you have purchased. It simply replaces the support service.
Q2: How will we get software updates, patches, and regulatory changes if we leave SAP support?
A: Third-party support vendors provide their own updates and patches. While you won’t get new feature releases from SAP, most third-party providers supply bug fixes, tax and legal change updates, and security patches as part of their service. In this case, for example, the provider delivered year-end payroll tax updates and fixes for any SAP issues that arose. They typically have a global team that monitors regulatory changes (such as tax codes and financial reporting rules), and they create patches that you can apply to your SAP system to keep it compliant. Security is also addressed through custom patches or workaround solutions if new vulnerabilities emerge. Essentially, the third-party becomes your surrogate “SAP support team,” ensuring your system is current with necessary changes, excluding version upgrades. Many companies also lock down their systems with additional security tools and only apply truly critical fixes, which the third-party will assist with on a case-by-case basis.
Q3: What if we want to upgrade to S/4HANA or go back to SAP support in the future?
A: Switching to third-party support doesn’t mean you can never return to SAP’s ecosystem, but you need to plan carefully. If you later decide to implement SAP’s next-generation products (like S/4HANA or cloud solutions), you would typically purchase those as new licenses or subscriptions, independent of your old ECC support status. Many companies that leave SAP support simply skip to a new product when ready, rather than reactivating support on the old system. SAP may not allow a straightforward “resumption” of maintenance on your old ECC licenses without charging back-maintenance fees for the lapsed period. In other words, if you wanted SAP to support ECC again after, say, 3 years off, they might bill you for those 3 years of missed fees (this is SAP’s policy to discourage leaving). However, customers rarely do that – it’s usually more cost-effective to move forward to a new system or negotiate a swap. In our case study, the company plans to evaluate S/4HANA in a few years and would negotiate a new contract if it goes that route. The savings they’re banking now can help fund that future transition. In summary, you can go back, but it often makes sense to come back to SAP only when you’re ready to leap to a new platform, not just to resume paying for the old one.
Q4: Will SAP audit us or retaliate if we drop their support?
A: SAP’s license audit rights remain in effect whether or not you are on active support. There’s no official “retaliation” for leaving support – many customers do it. However, it’s prudent to be prepared for an audit since you won’t have regular true-up conversations via support. Ensure your usage is within licensed quantities because if an audit finds you’re over, you’d need to purchase additional licenses (and that purchase might require getting back on support for those new licenses at least). In practice, some companies feel less at risk of frequent audits once they are off support, because SAP’s sales team has fewer touchpoints – but this is anecdotal. The key is that if you’ve done a proper license assessment and stay on top of user counts, an audit should not be a concern. As for the relationship, SAP will, of course, try to win back your business via sales efforts (they might offer special deals on cloud products or highlight how new versions could help you). That’s not retaliation, just normal business. Maintain a professional dialogue with SAP – being off support doesn’t make you any less of an SAP customer in terms of license ownership. You may still need them for new licenses or products in the future, so keep your tone cordial but firm in your decision.
Q5: How do we justify the move to third-party support to our stakeholders?
A: Build a clear business case focused on cost savings, risk mitigation, and strategic benefit. Quantify the maintenance fee reduction – e.g., “We will save $X million over three years, which can be reinvested in A, B, and C initiatives.” Highlight that core functionality remains the same; you’re not dropping SAP software, only changing who supports it, so business operations are not adversely impacted. Address risk upfront: explain how you will handle patches and how you’ve ensured license compliance. It’s also effective to share success stories (like this case study or others) to show it’s a proven approach – you might cite that many Fortune 500 firms use third-party support and that analysts (like Gartner) project the third-party support market to keep growing as companies seek more value. From a CFO’s perspective, the ROI is attractive and fairly immediate. For the technical teams and users, emphasize that they’ll receive equal or better support services (perhaps even from named support engineers who are familiar with their system). In a “Gartner-style” pitch, you might say: This move aligns with optimizing IT spend (run costs down by 50%) while freeing capacity for innovation – a win-win for the business. When presented with solid numbers and risk controls, most executive stakeholders quickly see the logic. Ensure that all key stakeholders (finance, legal, operations, etc.) are looped in early so their concerns can be addressed in the plan.
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