Cutting SAP Maintenance Costs
Annual SAP support fees (typically around 20–22% of license costs) can quickly become a significant expense for enterprises. This article provides CIOs and IT leaders with strategies to negotiate and reduce these SAP maintenance costs.
The advice helps contain support spending without compromising essential coverage, from identifying unused “shelfware” licenses to leveraging third-party support and timing negotiations with SAP’s sales calendar.
Eliminating Shelfware to Reduce Support Spend
One immediate way to cut maintenance costs is to stop paying for shelfware – licenses and products you own but aren’t using:
- Cut Out Unused Licenses: Regularly review your SAP licenses and identify any that aren’t being used (including user accounts for ex-employees). Negotiate to remove those from your contract or swap them for needed products at renewal. This stops the 22% yearly fee on idle licenses. Every license you drop frees its value for reuse and saves its 22% support fee in the future.
By cleaning up shelfware, organizations often find immediate savings – every $1 of unused license cost you eliminate saves $0.22 in support fees each year.
Read Optimizing SAP Named User Licensing for Cost Savings.
Considering Third-Party Support Options
Third-Party Support: Consider independent support providers who charge roughly 50% of SAP’s fee. Third-party support can save millions if your SAP system is stable and you don’t need immediate upgrades.
Even if you stay with SAP, having a third-party quote gives you leverage – SAP may offer a better deal rather than risk losing your support business. (The trade-off: you won’t get automatic new version upgrades while off SAP support, but you can always resubscribe later if needed.)
Negotiating with SAP for Lower Support Costs
When dealing directly with SAP on support fees, treat it as any other negotiation:
- Bundle and Bargain: Align support negotiations with license purchases or renewals to maximize savings. For example, if you’re renewing a big support contract, consider any new licenses or cloud subscriptions you might buy. SAP is more flexible if they see additional sales – you could negotiate a year of free or discounted support on existing products in exchange for a new purchase.
- Cap Increases: Push for a cap on annual support fee increases or a fee freeze for a period. Some customers have negotiated a 0–2% cap instead of the standard ~3%, or secured a year or two with no increase. These concessions can save millions over the contract’s life.
Always get any support concessions documented in writing. If SAP agrees to special terms (such as extended support at current rates or a waived increase for one year), ensure that the contract or support renewal order reflects these terms.
Read Key SAP Contract Terms CIOs Must Negotiate (Indirect Access, Price Caps, Flexibility).
Timing Your Maintenance Negotiations
Timing can significantly influence SAP’s willingness to negotiate:
- Year-End Pressure: SAP’s sales teams have targets, and the end of their fiscal year (often December) is when they are most eager to close deals. Time your maintenance renewal discussions for Q4 to maximize SAP’s willingness to deal. A negotiation in Q4 can yield better results than one mid-year when there’s less urgency on SAP’s side.
- Align with Upgrades or Transitions: If you are considering a move to SAP’s cloud offerings or an S/4HANA upgrade, use that as a bargaining chip. For example, negotiate to keep support fees flat (no increase) during an S/4HANA or cloud project, since you’re investing in SAP’s new offerings. SAP may be willing to grant temporary relief or discounts, knowing you will commit to a new platform.
By approaching SAP at the right time and making it clear you have options, you can increase your chances of getting a better maintenance deal.
Recommendations
- Audit Your Support Bills: Know exactly what you’re paying for and cut out anything unnecessary.
- Engage Procurement Early: Treat support renewals like contract negotiations, not just administrative renewals. Set targets for cost reduction.
- Use Shelfware to Bargain: Plan to remove or trade unused licenses and include this in the deal with SAP as part of the negotiation.
- Leverage Competition: Obtain a third-party support quote to provide a credible alternative during negotiations with SAP.
- Ask for Price Protections: Don’t accept open-ended annual increases – negotiate caps or fixed rates in advance.
- Time it Strategically: If possible, align major support negotiations with SAP’s year-end or quarter-end for maximum leverage.
FAQ
Q: What does SAP standard support include, and why is it so expensive?
A: SAP Standard Support (about 22% of license cost yearly) covers access to SAP’s help desk, software updates, patches, and legal compliance changes. It’s pricey because it’s a percentage of your license investment. Many feel the cost is high relative to the value if their systems are stable.
Q: Can we stop paying maintenance on certain SAP modules we’re not using?
A: Not in the middle of a contract – SAP doesn’t typically allow dropping support for individual components mid-term. However, at your next renewal, you can negotiate to remove those unused modules from your support contract. You’ll give up the license but save on all future fees for it.
Q: How do I calculate what I’m spending on shelfware?
A: Add up the license cost of any unused SAP software, then take 22% of that – that’s your annual maintenance cost for shelfware. For example, $500,000 in unused licenses means approximately $110,000 per year wasted on support. Identifying this quantifies your savings opportunity to bring up with SAP.
Q: What are the risks of third-party support?
A: The main risk is that you won’t get new SAP updates or direct help from SAP. Third-party providers support the system you have (including custom fixes), but if you plan to upgrade to a new SAP version, you’d have to return to SAP support (potentially paying back maintenance to cover the gap). There’s also a relationship aspect – leaving SAP support might make SAP’s sales team less accommodating. Many companies use third-party support for years to save money, then revert to SAP support when it’s time for an upgrade.
Q: Will SAP know if we get a quote from a third-party support vendor?
A: Not unless you tell them. It’s often in your interest to mention it during negotiations (“We’re evaluating third-party support options”) as a polite warning. SAP may respond by emphasizing risks or, ideally, offering a better deal to retain your support business. Doing your due diligence is internal, but letting SAP know you have alternatives is useful.
Q: We have a global SAP agreement – can we negotiate support terms country by country?
A: SAP usually centralizes support agreements at the global level. You generally negotiate maintenance terms for the entire enterprise, not per country. If some region uses very little SAP, your best bet is to remove those licenses from the contract entirely at renewal (thus eliminating their support cost). However, you won’t receive a separate regional pricing scheme within a single unified contract.
Q: Can a lower support percentage (e.g., 18% instead of 22%) be negotiated?
A: It’s rare for SAP to outright lower the percentage. More commonly, they’ll give you indirect discounts – for instance, extending your current support rate without increases for a few years (which has a similar effect), or a one-time credit. Pushing directly to change 22% to 18% is usually unsuccessful unless you’re a large customer with a strategic deal.
Q: What leverage do we have if SAP says maintenance terms are “non-negotiable”?
A: Your leverage is your willingness to consider alternatives. If SAP believes you might switch to third-party support, drop some products, or even not expand your SAP footprint, they have reason to negotiate. Additionally, involving higher-level management and notifying SAP about the budget is a serious issue. “Non-negotiable” often becomes negotiable if a big renewal or sale is on the line.
Q: Should we align our SAP support renewal with other contract renewals?
A: Yes, if possible. You have more bargaining power when your support renewal coincides with a big purchase or renewal of SAP software. SAP is more likely to make concessions on support if it’s part of closing a larger deal. If your support is out of sync, you can even discuss a short extension or adjustment to align it with a major negotiation event.
Q: What’s a commonly overlooked tactic in SAP support negotiations?
A: Many CIOs focus on the upfront license discount and forget the long tail of support costs. One tactic is to negotiate a cap on support increases in the initial deal—for example, stipulating that support fees can only rise by 2% per year. Another is regularly cleaning up licenses (shelfware) every year, not just at big renewals. Ongoing diligence in usage and contractual price protections is a key thing often missed.
Read about our SAP Contract Negotiation Service.
