SAP’s sales and audit teams are known for hardball tactics, so CIOs must be equally shrewd. Whether you’re buying on-premise licenses, evaluating RISE with SAP (cloud), facing an audit, or renewing support, preparation and a firm strategy are key.
This expert guide offers blunt, insider advice in four critical areas:
SAP On-Premise License Negotiations
SAP’s on-premise license deals can be a minefield. SAP often monopolizes its software, so it exploits that leverage in negotiations.
Common tactics include inflated “list” prices, bundling extras you didn’t ask for, and high-pressure quarter-end sales pushes. As a CIO, you must counter these moves with clear-eyed strategy and never lose sight of your business’s needs.
- Tactic: Bundling and Upselling. SAP sales reps frequently offer “package deals” to drive up license volumes. For example, if you request additional ERP user licenses, they might suggest adding a cloud product like Concur “for a special discount” on the users. This tactic pads SAP’s sale with products you hadn’t planned on.
Counter: Resist unnecessary bundles. Separate “needs” from “nice-to-haves” and insist on pricing only the licenses you require. Remind SAP that any extra shelfware is wasted spend. You can entertain add-ons later, on your terms – don’t let them hijack your immediate licensing needs. - Tactic: Artificial Deadlines and High-Pressure Deals. If you sign by quarter-end or year-end, SAP often dangles extra discounts, trying to rush your decision. They know their sales quotas; you can use this timing to your advantage. One company aligned its contract signing with SAP’s fiscal year-end and secured a 15% deeper discount than earlier offers.
Counter: Leverage these deadlines instead of being victim to them. Signal that you’re prepared to sign only when the terms are right. As the deadline approaches, SAP’s eagerness will grow – hold your ground and watch their “best offer” improve. Just ensure you don’t cave on critical terms in the rush to meet their timeline. - Tactic: “Standard” Discounts and Monopoly Pricing. SAP might claim their pricing and discount policy is fixed (e.g. “standard 10% off”). They bank that you have few alternatives if you need SAP licenses. This mindset can lead to complacency, with customers being grateful for a modest discount.
Counter: Challenge everything. Research what similar companies pay; SAP’s initial quotes often have plenty of wiggle room. If you’re expanding an existing deployment, mention competitive options for new functionality (even if swapping out SAP entirely is unlikely, hinting at it can unsettle the sales team). Most importantly, be willing to say “no” and delay the deal. A month or two of postponement can compel SAP to return with a better price rather than lose the sale. - Tactic: Fear, Uncertainty, and Doubt (FUD). SAP reps may play on your fears to close a deal. Common examples: “ECC support ends in 2027 – if you don’t buy S/4HANA licenses now, you’ll pay more later,” or insinuating that not accepting their offer could trigger a license audit. This is scare tactics 101.
Counter: Stay rational. Verify claims independently. End-of-life timelines are public knowledge – don’t let SAP’s salesperson inflate their significance for your situation. If they hint at audits or compliance issues as pressure, recognize it as a bluff (and ensure your house is in order on compliance, as we cover in the audit section). Always base your decisions on factual business roadmaps, not SAP’s FUD-fueled urgencies.
Internal Preparation: Before any SAP license negotiation, get your shop together. Assemble a cross-functional team (IT asset managers, procurement, finance, and legal). Inventory your current SAP licenses and usage: Are you under-utilizing some licenses or nearing limits on others? Conduct a “license position assessment” to identify shelfware and real needs – you may find unused licenses that can be terminated or repurposed.
Set your budget and walk-away points. If possible, benchmark SAP’s pricing (via peer insights or consultants) to know what discount is reasonable to target. Also, decide on must-have contract terms (like flexibility to swap license types or caps on maintenance fees) so you can negotiate those alongside price. Walking into negotiations armed with data on usage and a clear wish list removes much of SAP’s power to dictate the terms.
Example: A mid-size manufacturer needed 50 additional SAP user licenses. SAP’s first offer was $500k for the licenses, “heavily discounted” from a $1M list price. The catch: this price included an Analytics module the company didn’t ask for.
The CIO pushed back, dropping the unwanted module. Eager to book the Q4 deal, SAP eventually agreed to $400k for just the 50 licenses and even threw in a 6-month payment deferral. The CIO’s preparation was key – they knew the fair market value from an independent benchmark and didn’t fall for the bundle trap.
Ultimately, the company avoided $100k in shelfware and met its user needs at a ~60% discount off list. The lesson: Stick to your requirements and make SAP work on your timeline and terms.
Common Traps to Avoid: Don’t let these pitfalls snare you during on-prem negotiations:
- Overbuying “for future growth”: When SAP offers a volume discount, it’s tempting to buy extra licenses “just in case.” You’ll pay maintenance on idle licenses (shelfware) unless expansion is imminent. Purchase for known needs; you can always negotiate more later, ideally under similar discount terms.
- Vague License Metrics: Ensure the contract defines license metrics unambiguously (users, cores, revenue bands, etc.). SAP has been known to change definitions or interpret them in its favor if terms are fuzzy. Get it in writing now to avoid fights later.
- Verbal Promises: If the sales rep promises something (“Sure, you can swap those licenses next year” or “This discount will apply to future purchases”), get it documented in the contract. If it’s not in ink, it’s not real.
- Ignoring Indirect Access: Plan for indirect access usage even in license sales. If you know third-party systems will interface with SAP, address it upfront. For instance, negotiate a reasonable metric or a flat fee for indirect use now, rather than leaving it open and risking an audit claim later. An upfront negotiation is almost always cheaper than a post-audit settlement.
- Losing Control of the Narrative: Maintain a single negotiation channel. SAP will often involve high-level execs or send multiple teams (sales, technical “advisors”, etc.) to sway different stakeholders. Unite your team with a consistent stance. Mixed signals from your side (“the CFO is anxious to sign, but IT still has concerns”) can weaken your position dramatically.
RISE with SAP (Cloud) Contract Negotiations
RISE with SAP is SAP’s all-in-one cloud offering for S/4HANA, and SAP’s salesforce is laser-focused on pushing it. A RISE deal bundles software, infrastructure, and services into a single contract, which means you’re negotiating a complex package of licenses, cloud resources, and support simultaneously.
SAP will position RISE as a no-brainer for “digital transformation,” but CIOs should approach RISE contracts with healthy skepticism and a sharp pen.
Here’s how to handle RISE negotiations:
- Understand SAP’s Motivation: SAP wants customers on RISE badly – it’s recurring revenue and lock-in for them. They often dangle incentives: for example, in 2024, SAP offered hefty migration credits (up to ~60% of first-year fees for S/4HANA customers) to sweeten RISE deals. Use this to your advantage. If you’re coming from ECC or Business Suite, insist on credits for the licenses and maintenance you’ve already paid for. Ensure the contract explicitly credits your past investments (e.g., “trade-in” credit for unused legacy licenses or prepaid support). SAP’s programs prove they can be flexible – don’t let those benefits slip by without a claim.
- Negotiate Key Terms Relentlessly: With RISE, pricing is just one piece. Insist on clarity and protection in the following areas, not just the subscription fee:
- Pricing & Discounts: RISE pricing can be negotiated just like on-prem deals. SAP’s quote will be an annual subscription for a certain number of Full User Equivalents (FUEs). Push for an aggressive discount on that. Ask for a breakdown of components (software vs infrastructure) to benchmark if it’s reasonable. If SAP wants your business, they have leeway – some organizations have seen RISE TCO come in ~20% lower than on-prem by negotiating hard. Also use timing leverage: aligning your deal with SAP’s quarter-end could yield additional price cuts (as mentioned, one firm got ~15% off by signing near SAP’s year-end). In short, don’t accept list price subscriptions – SAP often expects to haggle on RISE.
- Renewal Caps: This is arguably the most critical term. RISE contracts are typically 3 to 5 years. If you don’t bake in renewal protections, SAP can jack up the price later when you’re dependent. Negotiate a cap on renewal increases (e.g. no more than 5% increase year-over-year, or a fixed percentage over the term). Some savvy CIOs even lock subsequent renewals at the initial rate – SAP might resist, but even a moderate cap is far better than an open-ended renewal. Without this, that great first-term deal could double in cost later, blowing up your IT budget. Make sure it’s in the contract now.
- Flexibility (Scaling and Changes): Despite “cloud” branding, RISE isn’t very flexible by default – you commit to several users/resources and generally can’t reduce mid-term. Try to negotiate some ability to adjust. For example, pre-negotiate rates for adding users beyond initial FUEs (so if you grow, you’re not paying full list for extra capacity). Likewise, discuss scenarios for downsizing. SAP will resist any mid-term reduction, but you might secure rights to reassign licenses or get service credits if your needs decrease. At minimum, negotiate that any additional purchases during the term inherit the same discount and pricing terms – preventing SAP from charging you a premium later. If your business is volatile, consider requesting a one-time adjustment window or the right to swap some RISE services for others (e.g., trade some S/4HANA users for equivalent value in another SAP cloud service). They may not grant full flexibility, but asking signals that you won’t accept a completely rigid contract.
- Service Scope and SLAs: Scrutinize what’s included in the RISE bundle. Does it cover Dev/Test systems, disaster recovery, networking, etc., or are those extra? Don’t assume – explicitly confirm each component. Fill any gaps now so you don’t get hit with surprise add-on costs later. On SLAs, SAP’s standard uptime might be ~99.5%. If your operations need higher performance or specific uptime guarantees, negotiate it. Also, meaningful remedies, such as credits or termination rights, should be negotiated if SAP fails to meet the SLA. Don’t accept toothless SLAs. And clarify roles: RISE shifts some responsibility to SAP, but your team will still handle certain aspects (data, configurations, etc.). Ensure the contract delineates who handles what (especially around updates, custom code, and integrations) to avoid finger-pointing later.
- Exit Strategy: Plan your escape hatch before you sign. RISE inherently means giving up some control (and in many cases, giving up your perpetual licenses for a subscription model). Negotiate provisions for end-of-term transition. For example, ensure you can extract your data in a usable format and get assistance for a move off SAP’s cloud. You likely won’t get a free termination-for-convenience clause, but try to secure the option to purchase a perpetual S/4HANA license at contract end or have a pathway back on-prem if needed. The goal: avoid being a hostage. If the relationship sours or economics change, you need a way out that doesn’t cripple the business. Even an extended read-only access period after termination (so you can still access data) can be crucial.
- Common SAP Tactics on RISE: Expect SAP to push hard on the “one contract, one hand to shake” sales pitch. They’ll highlight ease and fast time-to-value while downplaying limitations. A common tactic is rushing the cloud decision – e.g., “If you sign RISE now, we can start migration next quarter, and you won’t miss the innovation boat.” Another is bundling incentives with tight deadlines (special migration credits that “expire” soon). Recognize these as pressure tactics. Counter by slowing the pace: Take the time to evaluate RISE vs running S/4HANA in other ways. Make sure SAP knows you have alternatives – staying on-prem or using a hyperscaler directly is still on the table. This will keep them more reasonable in negotiations. Also, watch for omissions: if SAP isn’t volunteering details on things like how custom enhancements work in RISE or how licensing changes, ask explicitly. It’s on you to uncover the fine print.
Internal Preparation: A successful RISE negotiation starts long before you sit with SAP’s reps. Do your homework thoroughly:
- Assess Fit: Internally evaluate if RISE meets your needs. Inventory your current SAP landscape and what a move to RISE would entail. Are there heavy customizations that might not port over easily? What about integration with other systems? Knowing your technical requirements helps you pinpoint critical contract terms (e.g., needing a private cloud edition for customization versus a cheaper public edition).
- Crunch the Numbers: Calculate the 5-year or 10-year TCO of RISE versus staying on-prem (including infrastructure, SAP support, hardware refresh, etc.). SAP will likely show you a rosy TCO where RISE saves money; counter with your model. Include potential cost of lock-in (what if prices rise after term?). This analysis allows you to challenge SAP’s cost claims and justify your board’s negotiation stance. If RISE is only marginally better or even more expensive, you have a strong footing to demand better pricing or terms.
- Team and Stakeholder Alignment: Bring in procurement and legal early. RISE contracts can be dense, and cloud contracts may have terms your team hasn’t encountered in SAP on-prem agreements (like cloud service descriptions, data protection clauses, etc.). Identify must-haves (data residency or security requirements) and deal-breakers. Align with your CIO peers or architects on what you will not compromise (e.g., you might decide that without a decent exit clause, you won’t go RISE). Having management’s backing on such red lines prevents SAP from dividing and conquering by appealing to a CEO’s desire for “cloud first” at any cost.
- Leverage Points: Figure out what leverage you hold. Are you a large ECC customer paying hefty maintenance? That spend can be converted to RISE, so make SAP compete against their status quo – “If we move to RISE, we expect at least the same level of service for equal or lower cost than our current on-prem model.” If you’re evaluating other cloud ERPs (Oracle, Workday, etc.), discreetly let SAP know; nothing motivates them like real competition. Even if you aren’t, mention that staying on ECC until 2027 is an option – it’s not ideal for SAP if you delay, so they’ll work harder to make RISE attractive now.
Example: A global retail CIO was considering RISE to move off an aging ECC system. SAP’s proposal looked good on the surface—a single fee including S/4HANA, hosting, and basic support. However, the CIO’s team discovered the fine print didn’t include a disaster recovery environment and allowed SAP to raise fees after three years. In negotiations, the CIO insisted on adding a full DR instance at no extra charge and a strict cap of 3% on any renewal increase.
SAP pushed back initially, but the CIO was prepared to walk away and continue on ECC. Faced with a potential lost cloud deal, SAP conceded: they added DR into the contract and wrote in a 3% cap on renewal hikes. Additionally, the company negotiated a clause to extend the term by 1 year at the same price if needed, giving them flexibility at the back end.
The CIO also made SAP spell out which responsibilities it would handle versus the company’s IT—from uptime monitoring to applying patches—to avoid the common misunderstanding that “SAP will handle everything” (a dangerous assumption explicitly addressed in the contract roles and responsibilities).
Ultimately, the business got the cloud benefits without giving up all control. The lesson: every aspect of a RISE deal is negotiable if you come prepared and show SAP that you’re not afraid to consider other options.
Read our SAP Rise Negotiation FAQs.
Common Traps to Avoid: RISE negotiations are rife with potential pitfalls:
- Focusing Only on Cost: An attractive upfront price is great, but you’ll pay dearly later if you ignore terms like renewal caps or scope details. Don’t trade a short-term win for long-term pain. Balance negotiating both cost and conditions.
- Assuming “All Inclusive” Means Everything: Many CIOs think RISE means SAP does it all – wrong. If it’s not in the contract, don’t assume it’s included. For instance, are system integrations or future upgrades of custom code included? Probably not. Document every expectation. Nothing is obvious – if you care about it, get it in writing.
- Surrendering Perpetual Licenses Lightly: When you move to RISE, typically, you end your on-prem license agreement. That’s a one-way door; you’re betting on SAP as your cloud provider. The trap is doing this without an exit strategy. If you have no plan B and give up your existing licenses, SAP knows you’re completely dependent at renewal time. Avoid this by negotiating an ability to transition off if needed (even if it’s just getting data and a few months of overlap to re-install an on-prem system). And keep some leverage by reminding SAP throughout the term that you have options (even if mostly theoretical).
- Underestimating Internal Effort: RISE is marketed as SAP taking over your operations. Your team will still be deeply involved in application management, testing, user support, and more. If you underestimate this, you might not budget resources and end up in a bind. Clarify roles and ensure you have the right internal skills (or partner support) to manage what SAP doesn’t. Don’t let SAP’s “we run everything for you” sales line leave you understaffed and unprepared.
- Not Testing the SLA: A 99.5% uptime sounds good until your critical month-end close falls into 0.5% downtime. Consider your business calendar and see if the SLA meets your needs (e.g., maybe you need 99.9% or faster response on Sev-1 issues). It’s much harder to get SAP to improve an SLA after signing. And if they breach, know what you get. Too many customers accept an SLA with paltry service credits that don’t motivate SAP. Push for meaningful penalties or remedies upfront.
- Forgetting Data Ownership and Access: Ensure the contract clearly states that you own your data and can retrieve it at any time in a usable format. Also, clarify how long SAP retains backups and how you’d get your data if you terminate. It’s your ERP data—don’t leave its fate subject to vague terms.
SAP Audit Defense Strategies
A few things strike fear into a CIO’s heart, such as an unexpected SAP license audit. SAP license audits (often every 2-3 years) review your usage to ensure compliance, and if they find you overusing, the bill can be staggering.
But an SAP audit doesn’t have to be a disaster.
By knowing SAP’s audit tactics and preparing to counter them, you can defend your organization and even turn an audit into a manageable negotiation rather than a blind-sided attack.
Common SAP Audit Tactics: SAP’s license auditors and compliance team often use a playbook of pressure and leverage:
- Surprise Audits and Broad Scope: Audits can come with little warning and will cover your entire SAP footprint – all users, engines, and indirect access. SAP knows an unprepared customer is likely out of compliance somewhere. They’ll run scripts and LAW (License Audit Workbench) data to fish for any compliance gaps.
- Complex Licensing Models to Confuse: SAP’s licensing is notoriously complex (Named Users, Professional vs Limited, engines, indirect/doc-based access, etc.). SAP’s team might exploit this complexity by presenting findings over-complicatedly or assuming the worst-case classification for your usage (e.g., counting all users as expensive professional users even if some only need a limited license). The complexity itself is a tactic: you’re at a disadvantage if you don’t understand it.
- Indirect Access “Gotcha”: This is SAP’s favorite hammer lately. If any third-party systems or interfaces touch SAP data, SAP may claim you owe licenses for that “indirect use.” For example, if a CRM pulls customer info from SAP, they might call it unlicensed access. The audit report often includes a shockingly large fee for indirect usage, which SAP knows is a gray area that many customers struggle to quantify. It’s a prime negotiation lever for them.
- Pressure to Settle Fast: Once they present the audit findings (usually with a big compliance gap dollar figure), SAP often pressures for a quick resolution. They might say you must purchase the shortfall licenses within a few weeks or imply delays will incur penalties or legal escalation. This is designed to fluster you into signing a deal before you’ve had time to verify their claims or consider alternatives. It’s essentially a sales tactic wrapped in compliance clothing – they want to convert the audit into a license sale ASAP.
- Friendly Facade, Serious Consequences: Sometimes audit notifications are sugar-coated as “license optimization reviews” or a courtesy check-in. Don’t be fooled—whether friendly or formal, the end goal is finding compliance gaps. SAP might also send in its sales team alongside auditors to propose solutions even as the audit is ongoing. This mix of carrot and stick can throw companies off: one arm of SAP offers a new deal while the other threatens non-compliance fees. It’s orchestrated to maximize their advantage.
How CIOs Can Counter Tactically:
- Stay Calm and Demand Clarity: Don’t panic or rush to comply with every request blindly when an audit notice arrives. Review your contract’s audit clause – SAP is entitled to certain data, but you control the timing and scope to what the contract stipulates. Open a dialog on scheduling to ensure you have time to prepare your data. SAP should provide detailed evidence for each compliance issue when findings come in. If they say you have 100 extra users, have them identify which ones. Vague statements aren’t good enough.
- Conduct Your Own Analysis: Ideally, you’ve been doing internal audits regularly. But if not, as soon as an SAP audit looms, mobilize an internal task force. Run SAP’s LAW reports yourself and see what they’ll see. Cross-check user lists with HR records (to remove ex-employees or duplicate users) before you submit data to SAP. One company did this and discovered that 20% of users were inactive accounts they could clean up, drastically reducing the apparent overuse. By the time SAP got the data, that issue had been resolved, saving them a huge compliance charge. Also, analyze indirect access points in your environment. Document how external systems interact with SAP – you might find that what SAP could label “indirect access” is read-only or very limited, strengthening your case that additional licenses aren’t needed.
- Challenge the Findings: Do not accept SAP’s audit report at face value. Treat it as the starting point of a negotiation. If they claim you’re over by X licenses, verify that. It’s common to find errors or overestimation in audit reports. For instance, SAP might list 50 “Professional” users over your entitlement, but on closer look, 30 of those users only use basic functions and should be categorized as “Limited” users. That drastically cuts the shortfall cost. Push back with data: Provide SAP with a revised user classification or usage evidence. If indirect usage is flagged, argue the case – not all indirect scenarios require a license. If challenged, SAP can be flexible here because they know the rules are not black-and-white. Be prepared to escalate within SAP if the auditors are inflexible; involve your SAP account executive or even higher-ups to revisit contentious points.
- Convert the Audit into a Deal – on Your Terms: In many cases, the simplest resolution is negotiating a purchase of additional licenses or moving to a new model (like SAP’s Digital Access document licensing) to cover the gap. But don’t just buy what the audit report says at the listed price. This negotiation is like any other purchase: you should seek discounts, concessions, or package deals to offset costs. For example, if you truly are over on users, perhaps it’s time to migrate to a newer license model or even consider whether transitioning to RISE could absorb these costs (if on the roadmap). You have leverage too – SAP wants to maintain a good relationship and not have you consider abandoning the software. Emphasize your commitment to SAP and your expectation that compliance issues be resolved “fairly.” Often, SAP will agree to waive back-maintenance or penalties if you agree to purchase some licenses to become compliant moving forward. You might negotiate a mix: some free-of-charge licenses to cover past use and a discounted purchase for future use. The key is negotiating the audit settlement like a business deal, not a penalty. Focus on forward-looking solutions – SAP prefers that over punitive approaches, as it results in ongoing revenue rather than a one-time fee.
- Use Time to Your Advantage: Despite SAP’s push to settle quickly, take the time you’re allowed. Depending on the contract, you typically have a window (often 90 days or more) to respond to audit findings. Use it. Consult with independent licensing experts or outside counsel if the exposure is big; their fees may be small compared to the potential savings they find in the report. Internally, use the time to get executive buy-in on the approach – e.g., if you need budget to true-up licenses, it is better to socialize that cost early than to surprise the CFO with an unplanned half-million dollar spend because you rushed.
Internal Preparation (Proactive Defense): The best audit defense is year-round preparation. Set up processes so you’re never caught completely off guard:
- License Management Discipline: Maintain a central record of all SAP licenses you’ve purchased and the current allocations. Track changes – when employees leave or change roles, have a process to reassign or free up their license. Proactively manage user accounts to avoid the accumulation of idle users consuming licenses.
- Regular Internal Audits: At least annually (if not continuously), run SAP’s measurement tools (like LAW) and see your compliance position. If you find issues, address them before SAP does. This could mean buying a few licenses to cover growth or reclassifying users properly. Doing this outside the pressure of a formal audit is much cheaper and less stressful.
- Indirect Access Tracking: Map out all systems that interface with SAP. If your e-commerce platform reads stock levels from SAP, document that. There are often ways to license such scenarios (like SAP’s Digital Access license) that you can plan for. Also consider technical solutions: sometimes a non-SAP system can be redesigned to cache or limit calls to SAP, reducing what SAP might count as “access.” Keep an eye on SAP’s evolving rules – they introduced a Digital Access model a few years back; stay informed so you can choose the most cost-effective compliance route.
- Audit Clause Negotiation: While SAP’s standard audit rights are broad, during contract negotiations (for new purchases or renewals), you can try to insert some audit-related terms to protect yourself. For example, audits should be conducted no more often than X years, you should get 30 days’ notice, and results should be discussed in good faith before any formal claim. SAP may not grant much, but even a little process can prevent ambushes. At the very least, you’ll signal to SAP that you’re a customer who watches compliance closely – they may handle your audits with a bit more care knowing you’re not a soft target.
- Build an Audit Response Team: Identify who in your organization would be involved if an audit occurs. Usually, IT asset managers, someone from IT operations, someone from finance/procurement, and legal. Have a playbook for roles: who gathers the data, who interfaces with SAP’s auditors, who reviews the findings, and who leads the negotiation. If everyone knows their part, you won’t waste time scrambling if that audit letter arrives.
Example: An SAP customer in the automotive sector received an audit report claiming ~$ a $2 million license shortfall, largely due to indirect access from several shop-floor systems. The SAP audit team categorized each shop-floor device as needing a full SAP user license—an exorbitant interpretation. The CIO pushed back hard: the team compiled evidence showing these systems only queried a few data points and never initiated transactions in SAP.
Armed with this, the CIO had a frank discussion with SAP’s global compliance manager, arguing that SAP’s own rules for indirect use were being misapplied. The result? SAP agreed to reclassify the usage under a cheaper “read-only” license category, slashing the compliance cost by 70%. The remaining gap was resolved by purchasing a few licenses and SAP dropping any back maintenance claims as a goodwill gesture for swift resolution.
What could have been a $2M hit turned into a ~$300k true-up. The lesson: Even in an audit, everything is negotiable. When you come with data, a solid understanding of SAP’s licensing, and a willingness to push back, you can defuse SAP’s heavy-handed tactics.
Common Traps to Avoid: When dealing with audits, beware of these traps:
- Capitulating to the First Number: SAP’s initial compliance number is often inflated. Don’t internalize it as what you “owe.” It’s a starting point. Too many teams see a giant figure and go into panic-buying mode. Instead, treat it as one version of the truth and work it down.
- Arguing Without Evidence: Emotion or anecdotal pushback (“I don’t think this is fair”) won’t move SAP. You need hard evidence – user logs, contract language, etc. Failing to gather proof for your stance turns your counterarguments into a he-said-she-said. Always back your claims (like “those 50 users should be licensed differently”) with solid data or contract references.
- Being Unprepared in Meetings: SAP’s audit team may set up calls to discuss findings. Don’t walk into those without a plan. Have your questions ready, and know which points you concede and which you contest. Bring your licensing expert to those calls if possible. If you wing it, you might agree to things inadvertently. It’s okay to say, “We will review this and get back to you,” rather than answering on the spot. Take time to formulate responses.
- Over-Sharing Information: Provide SAP only the data it is contractually entitled to in an audit. Oversharing (like system architecture diagrams or non-required usage data) can inadvertently expose more areas for SAP to question. Stick to the script—answer what you must, nothing more. If SAP asks for something unusual (e.g., a detailed list of all third-party tools connected to SAP), consult your legal team before complying; that may not be required and could open new cans of worms.
- Forgetting the Relationship Aspect: While an audit feels adversarial, remember that SAP ultimately wants you as a long-term customer. Use that to frame the discussion: You want to stay compliant and continue a good partnership with SAP but need a fair and reasonable outcome. If SAP’s auditors are stonewalling, loop in your account manager or even an executive sponsor at SAP who values the relationship. Internal SAP teams can advocate to reduce a ridiculous compliance ask if they see it jeopardizing future business. The trap is treating the audit purely as a legal/finance issue and not leveraging the broader partnership. Sometimes, reminding SAP of the bigger picture (“We’re evaluating S/4HANA investments – but this audit issue threatens our confidence”) can prompt them to soften their stance.
SAP Support Renewal Negotiations
Annual SAP support and maintenance bills can feel like a tax – every year- 20% + of your license investment, like clockwork. Many CIOs simply sign the renewal and pay up, assuming it’s non-negotiable. Think again.
While SAP fiercely protects its support revenue (nearly half of SAP’s revenue comes from maintenance fees), CIOs have options to push back, save money, and avoid falling into support traps. Negotiating support doesn’t mean SAP will gladly slash the fee, but with smart tactics, you can reduce costs or extract more value for what you pay.
Understand the Status Quo: SAP typically charges a percentage of your net license value (22% for Enterprise Support) annually. If you bought $10M of licenses (net after discounts), you’re paying about $2.2M/year in support.
That fee gives you access to updates, patches, and SAP’s help desk. SAP’s tactic is to treat this as untouchable – they’ll remind you that support is mandatory for “full” use of the software and that you can’t partially drop support on certain licenses (they often say things like “the maintenance base must carry forward at 100%” and you “cannot partially terminate” support) They want you to think you have no choice but to keep paying for every single license forever.
Strategies to Counter SAP’s Support Tactics:
- Right-Size Your License Estate: The easiest way to reduce support costs is to reduce the licenses on which you pay support. Remember, you pay support on whatever licenses you own, used or not. If you have shelfware – licenses you don’t use – you’re burning money on maintenance for them. SAP won’t volunteer this solution, but you can terminate unused licenses and stop paying for them. Yes, SAP reps will claim you can’t, but that’s misleading. If you properly surrender licenses (meaning you give up the right to use them), they are removed from your maintenance base, despite what SAP might tell you to dissuade you. For example, one company realized it had ~$1M worth of unused SAP modules in its estate. By formally decommissioning those systems and telling SAP it was abandoning those licenses, the company cut its annual support bill by around $220k. This requires planning (you usually must give SAP notice 3 months before your renewal date to drop licenses, often by Sept 30 for a calendar-year contract), but it’s doable. Action item: Audit your license usage well before renewal. If certain modules or user licenses are not needed, consider retiring them. Work with legal to send the proper notice to SAP by the deadline. SAP may protest or “object”, but they cannot force you to keep paying for software you don’t own anymore. This is the single most effective way to stop paying maintenance on shelfware.
- Consider Third-Party Support: In the past decade, a credible alternative to SAP support has emerged: third-party support providers (like Rimini Street, Spinnaker Support, etc.). These firms provide support for SAP products, often at 50% of SAP’s fee (or less), and can cover you even after SAP’s official end-of-support dates. SAP hates this competition – it undermines their cash cow. But that’s exactly why it’s powerful leverage for you. Even if you don’t ultimately switch, getting a quote from a third-party support provider and letting SAP know you have it puts real pressure on them. As one SAP customer noted, “The vendor didn’t take our negotiations seriously until we mentioned we had a proposal from Rimini Street”. Suddenly, SAP may show a flexibility you never knew existed – perhaps a discount on support, free additional services, or assurances of extended support for older products – all to keep you from jumping ship. If your organization is stable on current SAP releases and doesn’t need SAP’s upgrades in the near term, third-party support can be a viable option to save millions. (Be aware: if you leave SAP support, you lose rights to new software versions and official SAP fixes, and re-joining later can be costly – you might have to pay back support to return. So weigh this carefully as a strategic move, not just a bluff.)
- Negotiate Value-Addeds or Discounts: SAP’s official line is that they don’t offer discount support. In practice, while rare, some large customers do negotiate modifications. If you renew a big support contract, push SAP for a multi-year commitment with incentives. For instance, you could ask for a freeze on support fee increases for the next 3 years or even a slight reduction in percentage. Instead, SAP might offer a one-time credit or add-on services rather than directly cutting the fee. Example: If you’re paying $5M/year in support, ask SAP to include free consulting days, training credits, or SAP Business Technology Platform usage that would normally cost extra. Those have value and effectively reduce your total cost. Also, if you’re in process of buying new SAP products, try to tie that negotiation with support – you could say, “We’ll sign this new license deal, but we want 2 years of support for it at no charge,” or “we want a 1-2% reduction on our existing maintenance as part of the loyalty for investing more.” It won’t work for everyone, but if you don’t ask, you don’t get.
- Extended Support and Negotiating Deadlines: SAP’s standard support for older software (like ECC 6.0) has official end dates (2027 mainstream, optional extended to 2030). If you’re on these, SAP might charge a premium beyond 2027 or pressure you to migrate. You can negotiate here, too. For example, if you need to stay on ECC longer, talk to SAP about locking in standard support rates through your transition in exchange for a concrete plan to move to S/4HANA. SAP may prefer to grant you an exception or a discount on extended maintenance rather than lose you to third-party support during that interim. Always remember, SAP’s goal is to keep you in the fold; use that as leverage to get more favorable support terms during your renewal.
- Timing and Process: As with license deals, timing your support discussions can help. SAP knows you have a cancellation window. They’ll take notice if you start signaling dissatisfaction (or worse, deliver a cancellation notice) ahead of that deadline. A common approach is to issue a formal notice of cancellation of support (to preserve the right to leave), which gives you about 90 days to evaluate your options. During those 90 days, you can continue negotiating with SAP and comparing third-party offers. If SAP returns with a better proposal, you can always rescind the cancellation before it takes effect. This is a strong move – essentially playing chicken – and should be done only if you’re serious about walking away. But it’s a real option to force a dialogue on support costs that otherwise would never happen. Many customers are too afraid to pull this lever; those who have often end up retaining SAP support but at improved terms or with unwanted licenses shed.
Internal Preparation: Optimizing support costs requires diligent prep work and executive alignment:
- Usage and Needs Analysis: Thoroughly review what SAP products you’re paying maintenance on and whether you still use them. It’s common to discover you’re paying support on some module you implemented 5 years ago and replaced with something else, yet never formally terminated. Identify these opportunities.
- Business Case for Alternatives: Build the case if considering third-party support. Understand the implications: Can your business run on the current SAP version for several years without upgrades? Do you have the internal capability or partner to handle regulatory updates or any minor enhancements that SAP normally provides? Third-party vendors often cover tax and regulatory patches, but you should verify them. Build a scenario of 5-year costs staying with SAP vs going third-party. The savings are usually large (50% cut in annual fees, plus avoiding forced upgrades), but ensure your leadership is aware of trade-offs (no automatic access to S/4HANA features, etc., while off maintenance).
- Risk Assessment: Evaluate the risk of any support negotiation tactics. For instance, if you threaten to leave and SAP calls your bluff, are you prepared to leave? Ensure that the IT leadership and maybe even the board support the strategy if you use it as leverage. Also, if you drop certain licenses from support, confirm those systems can be shut off or managed independently. The last thing you want is to remove something from maintenance and later find someone in the business still relies on it.
- Contract Review: Dig out your SAP support contract and policies. Check the notice period (almost always 3 months before renewal). See if there are any contractual barriers (some large enterprise agreements might bundle support in weird ways). Knowledge is power – you don’t want any surprises from SAP legal if you decide to make changes.
- Engage Finance and Procurement: Because support costs hit annually, CFOs are interested in reducing them. Frame your negotiation in terms of multi-year savings. If you can show a plan to save X million over the next 3-5 years on support, finance will back you strongly. Ensure they also understand the dependencies (like staying on an older version or using a third party). This backing will be useful if you need to play hardball with SAP; it means top management won’t undercut your stance out of fear.
Example: A services company was paying about $1.2M/year in SAP maintenance, even though a chunk of their SAP licenses were for a division divested two years prior. They never reduced the licenses, so they kept paying support as if nothing had changed. When the CIO realized this, he was determined not to waste another dime. Six months before renewal, his team identified $300k worth of unused licenses tied to that sold-off division.
They archived and shut down those systems. Then, formally, they notified SAP that those licenses were terminated – well before the 90-day deadline. SAP’s account team was alarmed and set up meetings with the CIO to “discuss their support needs.” The CIO was blunt in those discussions: “We’re overpaying for support by at least $60k a year on software we don’t use. Either adjust our maintenance base, or we’re moving everything to a third-party support provider who already quoted us 50% of what we pay you.” Faced with losing the entire account’s support, SAP relented.
They reduced the maintenance base to remove the retired licenses (something they initially claimed they “couldn’t” do, but ultimately did once pressed), and as a gesture, provided a one-time credit equivalent to 10% of one year’s fees to acknowledge the years the customer overpaid. The CIO opted to stay with SAP support for the active licenses, satisfied that he had eliminated the waste. The lesson: Don’t assume your maintenance bill is fixed and automatic.
By proactively cleaning house and forcing SAP to the table, you can eliminate deadweight and get concessions that standard customers never see.
Common Traps to Avoid: In support renewal talks, watch out for:
- Missing the Notice Window: This is critical. If you plan to terminate any portion of your support or switch to third-party, you usually must notify SAP 90 days prior to the renewal date (often by Sept 30 for year-end). If you miss it, you’re locked in for another year. Set a reminder well in advance. Even if you’re undecided, you can give notice and later retract it – but after the window closes, your leverage drops to zero.
- Believing “All or Nothing”: SAP likes to frame support as all or nothing – either keep everything on SAP support or leave entirely. In reality, some companies do a mix (e.g., keep critical systems on SAP support and move older, stable systems to a third party). SAP contracts often prevent splitting within a single license agreement, but if you have separate license agreements (perhaps from acquisitions), you might split support by agreement. Or you might drop a particular product completely and use a third party for it while retaining SAP for the core. Get creative; don’t let SAP’s absolutism box you in.
- Assuming Quality is Equal: If you move to third-party support, ensure you understand the differences. SAP’s support might not feel great, but third-party support is a different model (often more personalized, but they rely on you staying on current software with no new enhancements). The trap some fall into is jumping for cost reasons and later realizing they needed an SAP upgrade for a new business requirement – which becomes complicated off support. So align the decision with your IT roadmap.
- Not Exploiting SAP’s Desire for Product Sales: SAP will be more flexible in terms of support if you’re considering spending money elsewhere in their portfolio. A common mistake is negotiating a support renewal in isolation. Instead, time it with any new initiatives. For example, if you’re evaluating purchasing SAP Ariba or SuccessFactors, let that be part of the conversation: “We might invest in these new products, but our maintenance costs on the old stuff are eating our budget. What can you do to help?” SAP sales teams can sometimes transfer budget from one pot to another (discount new stuff heavily or give a credit on support) if it means overall revenue retention. Use that internal wallet flexibility to your benefit.
- Automatic Renewal Mindset: The worst trap is treating SAP support renewal as a passive, administrative task. Many companies just pay the invoice each year without a second thought. Don’t do that. Each year is an opportunity to reassess and renegotiate. Even if you don’t plan a major change, have a yearly meeting with SAP to review the support value you’re getting. You might be able to negotiate small upgrades (maybe get access to SAP’s premium support advisors for the same fee, or gain entry to their customer connection programs) just by asking at renewal time. SAP won’t proactively offer any sweeteners – you must initiate the conversation.
Final Advice: Negotiating with SAP is not for the timid. CIOs must approach SAP with facts, a clear strategy, and a willingness to push back. SAP’s representatives – whether selling licenses, pitching RISE, conducting audits, or renewing support contracts – are trained to maximize SAP’s revenue. Your job is to protect your organization’s interests and budget.
That means understanding their tactics and countering with savvy negotiation and thorough preparation. Remember, SAP needs its customers as much as customers need SAP. Use that mutual dependency to demand fair terms.
By applying the candid advice in this guide, CIOs can turn SAP negotiations from a daunting battle into a balanced discussion – one where they can secure better deals and avoid costly mistakes and traps others fall into. In every interaction with SAP, stay assertive, stay informed, and never be afraid to say “no” until you get the deal you deserve. With that mindset, even a behemoth like SAP can be negotiated on equal footing.
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