Planning Your SAP License Renewal: Timeline, Checklist, and Best Practices

Planning Your SAP License Renewal: Timeline, Checklist, and Best Practices

Proactive planning is critical to a successful SAP license renewal. This article offers a clear timeline and checklist for CIOs, IT asset managers, and procurement heads to prepare for SAP renewals.

It breaks down what to do at 12, 6, and 3 months, as well as other key intervals before renewal, ensuring no surprises when the contract ends.

The guide outlines best practices for internal assessments, stakeholder alignment, engaging SAP early, and building a negotiation strategy in actionable sections.

The goal is to turn renewal from a rushed reaction into a well-orchestrated project that protects the enterprise’s interests.

Read Avoiding SAP License Renewal Pitfalls: Common Mistakes and How to Prevent Them.

Why Advance Planning Matters for SAP Renewals

SAP renewals are not automatic – treating them as such can be costly to your organization.

Many companies make the mistake of waiting until a few weeks before the renewal date to address it, only to find themselves out of time to negotiate or optimize. Planning well in advance offers key benefits:

• Negotiation Leverage: SAP is more willing to discuss terms if you approach them before the eleventh hour. Early planning allows you to shop around for alternatives or build negotiation leverage (e.g., exploring third-party support), which you simply can’t do if time is almost up.
• Avoiding Last-Minute Surprises: Complex license landscapes take time to analyze. Early planning allows you to identify compliance gaps or unused licenses months in advance and address them calmly. Without planning, an SAP quote might reveal you owe more for extra usage, catching you off guard.
• Budget Predictability: Enterprises run on budgeting cycles. Starting renewal planning early means you can feed accurate numbers into the budgeting process and avoid emergency funding requests. If you need additional licenses or support costs, you can plan for them rather than react.
• Strategic Alignment: Renewal time is an opportunity to align your SAP investment with business strategy. Perhaps the business plans to downsize a division or expand into new markets – such changes should inform how you renew (e.g., you may need fewer HR licenses but more for supply chain). Early planning ensures the renewal reflects the upcoming business reality.

In short, treat the renewal as a project, not a task. The bigger your SAP footprint, the more lead time you need. As a general rule, enterprises should initiate the renewal process at least 6-12 months in advance, scaling this timeframe longer for more complex environments.

Renewal Planning Timeline Overview

A structured timeline keeps the renewal process on track.

Here is a high-level timeline for a typical SAP license/support renewal cycle:

This timeline is a template; adjust it based on your organization’s specific needs.

The key is that no major step happens at the last minute. You should be negotiating terms three months before the end of the contract, not starting to think about renewal.

Internal Checklist: Data and Documentation Gathering

One of the first phases (12 to 9 months out) is gathering all relevant data. Use this checklist to ensure you have the inputs needed:

• Current Contracts and Orders: Locate all SAP agreements, order forms, and amendments. This includes the main license agreement and any specific schedules (like a cloud subscription contract or additional license purchase orders). Check their end dates and any auto-renewal clauses.
• Entitlement Inventory: List all the SAP products and license metrics to which you’re entitled. For example, 500 Professional User licenses for SAP ECC, 100 Limited User licenses, and 1 SAP BusinessObjects engine licensed by cores, etc. Also note the annual maintenance fee for each if on support.
• Usage Data: Extract current usage figures:
  • Number of named users consuming each license type (use SAP tools like USMM/Law if on-prem).
  • Usage of package/engine licenses (e.g., peak monthly payroll employees if licensed by employee, number of invoices processed by documents, database size if HANA memory metric, etc.).
  • Indirect usage points – list interfaces and third-party systems interacting with SAP.
• Previous True-Ups or Compliance Issues: Note if you had to buy extra licenses in past years or if any SAP audit issues were raised. This can hint at where to check carefully (e.g., if you purchased extra digital access documents last year, see if usage has grown again).
• Support Incidents and Needs: Check how critical SAP’s support has been over the last term. How many support tickets did you log? Were there any major escalations? If support usage was minimal, negotiating or considering alternatives strengthens the case. If it was crucial, that’s fine, but it’s good to know.
• Business Change Forecast: Gather info from business units about any upcoming changes:
  • Are we adding new SAP modules or functionality (e.g., implementing SAP SuccessFactors or a new geography rollout) that might require new licenses?
  • Conversely, are there any plans to retire certain SAP modules or move a division off SAP (meaning fewer licenses will be needed)?
  • Mergers or acquisitions are on the horizon (which could add new users or bring in another SAP contract).
  • Plans around S/4HANA migration or adopting SAP cloud products in the next few years.
• Budget Constraints: Determine if there’s a mandate to cut costs by a certain percentage or if the budget can accommodate an increase. This will help you determine how much optimization is needed.
• Key Stakeholder Inputs: Get input from application owners or department heads who use SAP. Perhaps they have pain points (such as license shortages) or identify inefficiencies (e.g., “half my team never uses SAP, but we have licenses for them”).

Document all this in a renewal workbook or repository. This becomes your single source of truth for decision-making. It’s much easier to negotiate with SAP (or even internally justify decisions) when you can point to concrete data, like “We have 50 licenses of module X but only five active users – here’s the evidence – so we intend not to renew those.”

Defining Goals and Strategy for Renewal

With data in hand, the next step (around six months out) is to define a “successful renewal.”

Key questions to define strategy:

• Cost Savings Target: Are you looking to reduce SAP spending, and by how much? For example, the goal might be “reduce annual maintenance by 15%” or “keep any cost increase at zero despite some growth in usage.”
• Scope Changes: Decide what licenses/support you might drop. If analysis shows shelfware, plan to eliminate it. On the flip side, list what new licenses or services you need to add. Essentially, define the new scope of the contract that fits your actual needs.
• Contractual Improvements: Identify pain points in the current contract:
  • If you lacked a cap on support fee increases, this renewal goal is to get one.
  • If you were left with surplus licenses after a business change last time, perhaps the goal is to include a clause for better flexibility.
  • If audits are a concern, the goal could be to add a strong audit clause or a regular true-up process.
• Alternative Options Willingness: Decide how far you’re willing to go with alternatives:
  • Is switching to third-party support an option? Under what conditions (e.g., if SAP refuses any discount above X%) would you seriously pursue it?
  • Are you open to shifting some workloads off SAP to reduce license needs? (For instance, replacing a small SAP module with a cheaper niche software if SAP costs too much.)
  • Would you consider a shorter renewal (or conversely, a longer one) to meet cost goals?
• Timeline and Team Responsibilities: Outline the internal timeline (likely mirroring what was described earlier) and assign owners. Who will engage SAP sales? Who will run the internal usage analysis (SAM manager)? Who from Legal will review the terms? Identify these roles so that everyone is aware of the plan.
• Executive Alignment: Crucially, get buy-in from senior leadership (CIO, CFO) on these goals. Leadership must agree on whether your strategy might include hardball moves like cutting support or threatening not to renew certain pieces. Align on the “red lines” (non-negotiables) and “stretch goals” (aggressive asks). For example, leadership might say we cannot risk losing support on our core ERP, so third-party support is only a bluff, not an actual plan. They might say that cost reduction is paramount and that even a temporary risk is acceptable. This consensus shapes how you’ll negotiate.

By clearly defining your strategy, you avoid internal confusion during negotiations. There’s nothing worse than SAP offering a concession and your team scrambling to decide whether to accept or hold out for more. Know your priorities and limits in advance.

Engaging Stakeholders and Communication

A successful renewal involves many stakeholders. Manage communications deliberately:

• Leadership Updates: Keep CIO/CTO and other execs updated at key milestones (strategy set, initial SAP quote received, negotiation outcomes). They hate surprises, so a brief heads-up, such as “we identified $500k in shelfware to drop, aiming for 10% cut in costs” or “SAP came back with an offer, we’re countering next week,” keeps them confident.
• End-User Impact Check: If part of the renewal involves removing certain licenses or modules, inform the business units early. For instance, if you plan to drop an unused SAP component, verify with its owner that it’s truly unused. No one should find out after the fact that something they relied on was not renewed. Early communication prevents costly mistakes in scope cutting.
• Procurement and Legal Coordination: Procurement will likely lead the commercial negotiation, but they must be synced with IT/SAM regarding the needs and legal terms. Set up a standing meeting or channel for the core renewal team to share updates. Legal should review drafts of SAP’s proposed renewal documents, not at the last minute but as they come in, to flag any problematic language.
• SAP Account Management: Around 6 months out, you might inform your SAP account manager that you’re entering a renewal planning phase. You don’t need to show your cards yet. Still, transparency can help schedule meetings or ensure SAP allocates appropriate resources (like a solution architect if you’re considering new products). As negotiation gets going (3-4 months out), maintain a professional cadence with SAP – acknowledge receipt of quotes, ask clarifying questions, but also be clear about timelines (“We need to have this finalized by X date for our board approval” – even if that date is a week or two before actual deadline, to give you buffer).
• Benchmarking and Peer Input: If you have contacts in other companies or through user groups, discreetly gather their experiences and insights. Sometimes, an informal chat with a peer (“Did SAP budge on support fees for you? What was your discount?”) can inform your negotiation stance. Just ensure confidentiality and legal boundaries (no exchanging confidential deal specifics in writing, etc., just general guidance).

Maintain a single repository of communications and documents (for internal use) throughout. This will help when finalizing the deal, as you can cross-check that everything promised verbally by SAP is captured in the contract.

Developing the Negotiation Plan with SAP

As you near the active negotiation phase (~3 months out), detail the approach:

• Opening Ask: Determine your initial request to SAP. For example, you might return their quote with, “This is over our budget. We need a 20% reduction and the following terms improved…” It can be a written counterproposal or a meeting where you outline all your asks. Being specific helps—list each item (price, terms) you want to discuss.
• Underlying Justification: For each ask, prepare reasoning. SAP will push back unless you give them a rationale:
  • “We need a 20% cost reduction because the budget is flat and we’re removing unused licenses that contributed to the cost.”
  • “We request a cap on maintenance increases because we need cost predictability for our CFO; other vendors provide this, and as a long-term customer, we expect it.”
  • “We want the ability to adjust user volumes annually; our business fluctuates, and we cannot commit to a fixed high watermark without flexibility.”
    These justifications might be used directly or kept in your pocket, but they help you convincingly argue each point.
• Concession Planning: Negotiation often involves a give-and-take approach. Plan what you are willing to concede. For instance, you might initially ask for a 20% cost cut, knowing you could settle for 10%. Or be prepared to sign a longer term if – and only if – the price is right. List out: “If SAP gives X, we are willing to Y.” Conversely, identify which asks are must-have vs. nice-to-have. Perhaps a price reduction is a must-have, but a training credit is a nice-to-have. This prioritization ensures that if SAP says, “We can do A or B, not both,” you know which to choose.
• Team Roles in Negotiation Meetings: Decide who will speak on which points. IT/SAM may address usage facts, procurement, pricing, and legal to contract clauses. Having roles avoids confusion. Additionally, consider whether an executive sponsor (such as a CIO) should attend key calls to demonstrate support. Often, joining the final negotiation meeting to either approve or exert pressure can be effective.
• Negotiation Timeline: Map out expected rounds. For example, plan to have an initial discussion with SAP to follow up in 1-2 weeks, possibly a second counter, and aim to wrap up by a specific date. Communicate that timeline to SAP as well (“We intend to finalize by mid-September”). This creates a sense of urgency on their part as well.
• Documenting Offers: After each interaction, it’s wise to email SAP a summary: “Thank you for meeting. As discussed, we are looking for X, Y, Z, and you will get back to us on ABC.” This paper trail keeps everyone honest and avoids “misunderstandings” later. It also helps to double-check that every agreed-upon point is included when finalizing the contract.

When the negotiation plan is solid, you will enter discussions with greater confidence. The SAP team will sense you are organized and have internal agreement, making it less likely they can exploit any disarray or lack of knowledge.

Best Practices During Negotiation and Finalization

Even with great planning, execution matters. Keep these best practices in mind in the heat of renewal discussions:

• Stay Data-Driven: When SAP challenges an ask (“Why do you need to drop 50 users’ maintenance?”), Have your data ready: “We currently have 450 named users active out of 500 licenses; here’s a report. We refuse to pay maintenance on users we don’t use.” This minimizes bluffing from their side.
• Be Polite but Firm: Professionalism Goes a Long Way. Thank SAP for their proposals, but don’t hesitate to firmly state your position: “We appreciate the offer, but it doesn’t meet our requirements in these areas… we need to find a better middle ground.” Balance cordial relations with unwavering clarity on critical points.
• Escalate if Needed: If negotiations stall or SAP’s rep isn’t authorized to give what you want, respectfully request to involve higher management. “Perhaps we should schedule a call with your regional manager to further explore some of these strategic asks.” This signals you mean business.
• Double-Check Contract Language: Once an agreement in principle is reached, review the contract or renewal order form meticulously. Ensure:
  • The pricing is exactly as agreed (some companies have found extra costs or higher rates slipped in the fine print).
  • Any special terms (caps, flexibility, credits) are written. Vague language can nullify what you think you agreed on.
  • The scope of licenses is correct—the licenses you meant to drop are indeed removed, new ones added are listed correctly, and quantities match your understanding.
  • No new onerous terms (like stricter audit rights or notice requirements) that you didn’t discuss.
• Plan for Transition: If the renewal involves a migration (such as to a new license model or the cloud) or any transitional actions (like license key updates or new user provisioning), coordinate with the technical team in advance. Don’t sign and scramble; have a mini “cutover” plan in place if needed, even if it’s just an administrative one.
• Celebrate (Briefly): When finalized, acknowledge the team that worked on it. This will maintain morale for the next time. Then, quickly pivot to communicating any changes to the relevant parts of IT and the business (e.g., “We reduced our licensed users to 800—going forward, please manage to that limit or request more if needed” or “We have a new clause allowing X, which we should take advantage of by doing Y”).

Following these best practices ensures that all the planning effort translates into a smooth, favorable renewal in practice, without last-minute snafus.

Recommendations

• Start planning at least 6-12 months before your SAP renewal date to give ample time for analysis and strategy development.
• Gather all contract and usage data as early as possible. A comprehensive view of your entitlements and actual use is the bedrock of effective renewal planning.
• Align the renewal with business strategy: Know how upcoming projects or changes (cloud migration, organizational shifts) influence what you renew or don’t.
• Set clear goals and walk-away points: Establish what success looks like (cost limits, needed terms) and what you won’t accept. Secure an executive agreement on these boundaries ahead of negotiations.
• Build a cross-functional team (IT, procurement, finance, legal) for the renewal project. Regularly communicate so everyone is on the same page and no aspect (technical or legal) is overlooked.
• Use a detailed timeline/checklist: Break the renewal process into phases (audit, strategy, negotiation, finalize) with target dates. This keeps progress on track and accountable.
• Engage SAP early but on your terms: Let them know you’re preparing, gather their input if needed, but don’t reveal your bottom line too soon. Use early engagements to collect information, rather than making commitments.
• Document everything – from internal analyses to negotiation communications. Having a record prevents confusion and provides a reference if disputes arise about “who said what.”
• Anticipate internal approvals: Factor in time for your legal review and leadership approvals before signing. Rushed internal sign-off can lead to missed details; avoid compressing this step.
• Learn and iterate: After the renewal, conduct an internal debrief. Note what could be improved next time (perhaps start two months earlier or involve a specific stakeholder sooner). Continuously improving your renewal playbook will make future cycles even smoother.

Read SAP License Renewal Negotiation Strategies: A CIO’s Guide to Better Deals.

FAQ

Q1: Our SAP contract includes an auto-renewal clause – do we still need to plan for renewal?
Yes. Auto-renewal simply means that terms may continue by default, but it doesn’t guarantee the best outcome for you. Vendors often include auto-renewal to discourage renegotiation. Check the contract: even with auto-renewal, you often have a window (e.g., must give notice 60-90 days prior) to indicate changes or non-renewal. Plan to exercise your rights in that window. If you do nothing, you may be stuck with the same terms or even price hikes that were already in place. Planning ensures you don’t miss the chance to improve terms or terminate unneeded parts before they auto-renew.

Q2: How do I know if I have shelfware that can be eliminated?
Shelfware refers to purchased licenses that aren’t being used. To find it, compare your entitlements against actual usage. If you have 1000 user licenses but only 800 active users, that’s 200 shelfware licenses – you’re paying maintenance on them for no benefit. Similarly, if you licensed a specific SAP module or engine and no one has logged into it or used it in a year, that’s shelfware. Use SAP’s user reports and usage stats per component. Also, talk to business owners: “Are you fully using the SAP Material Management module?” If the answer is no or minimal, consider dropping it. Once identified, quantify the maintenance cost associated – that’s the savings if you terminate those licenses at renewal.

Q3: What if our usage is above what we’ve licensed? Wouldn’t that hurt us in renewal?
If an internal audit finds you’re using more than licensed (say you have 600 Professional users but only bought 500), it’s better you find it than SAP auditors. Yes, you’ll need to address it. Renewal is an opportunity to purchase the shortfall under negotiation rather than via a surprise audit. Approach SAP honestly: “We’ve grown, and our usage exceeds current licenses. We need to adjust our license count as part of renewal.” By doing this proactively, you can negotiate a fair price for the additional licenses – ideally at your standard discount or as part of a package – and avoid compliance penalties. It’s painful to buy more, but far less painful than an audit scenario where you might pay list price plus back maintenance. Additionally, handling it at renewal allows you to negotiate other savings to offset the cost.

Q4: How far in advance should we inform SAP that we might not renew certain elements (or at all)?
Check your contract for notice periods. Many SAP contracts require you to notify X days before the renewal date if you intend to reduce or cancel maintenance. Commonly, it’s 90 days. It could be 60 or 120, depending on the contract. As a best practice, by the 3-4 month mark before renewal, you should be ready to inform SAP of any reductions. If you’re unsure, err on the earlier side – you can always rescind a cancellation notice if you change your mind and reach a new deal, but you might not be able to give a late notice. For example, some customers send a formal letter stating, “We intend to terminate support for XYZ licenses effective renewal date,” to preserve the option, and then use the next couple of months to negotiate. If SAP offers a satisfying deal, it then withdraws that termination notice. This tactic ensures you’re not locked in past a notice deadline.

Q5: What’s the role of SAP’s account manager vs. our procurement in renewal planning?
Your SAP account manager is the primary point of contact for obtaining quotes and discussing options. They’re motivated to renew you at the highest revenue possible (that’s their job) and keep you as a happy customer. Your procurement team’s role is to drive down the price and terms, ensuring they align with your interests. In planning, you might have informal chats with the SAP account manager to gather info (e.g., any upcoming incentives or changes?,) but generally do not divulge your strategy or budget to them. It’s often wise for IT and SAM teams to prepare everything and then loop in procurement when it’s time to formally negotiate. Procurement can be the “tough negotiator,” while IT provides support with data and rationale. Keep communications professional – if procurement handles talks, IT should still be involved to verify that any solution meets technical needs (e.g., if SAP suggests a different licensing model as a solution, IT/SAM needs to validate it truly covers usage).

Q6: We have multiple SAP contracts ending at different times. How to plan renewals in that case?
This can complicate things. Ideally, you might attempt to co-term them (align their end dates) for simplicity – you can negotiate that with SAP, sometimes by extending one to meet the other or vice versa. If co-terming isn’t feasible, maintain a renewal calendar that lists all the contracts and their notice periods. Treat each with its planning cycle, but leverage insights across them. For instance, if a large ECC contract renews in June and a smaller BusinessObjects contract in November, start the major one 6-12 months in advance and the smaller one perhaps 4-6 months in advance. However, mention to SAP that you’re looking at the entire relationship – you might be able to negotiate the smaller one early as part of the big one (“We’ll renew BusinessObjects now too if you include it with favorable terms”). Planning means more juggling, but the same principles apply: know each contract’s details, don’t miss any deadlines, and use any opportunity to streamline the agreements if possible.

Q7: What if SAP’s fiscal year doesn’t align with our renewal date?
SAP’s fiscal year is typically the calendar year (ending December 31st). If your renewal is mid-year, say June, you won’t naturally coincide with their year-end push. However, you could start negotiations around Q4 of the prior year (when SAP is keen to book deals) and possibly execute the renewal earlier for a better price – essentially renewing a bit ahead of schedule to take advantage of year-end offers. Alternatively, if waiting is acceptable, use SAP’s quarter-ends (they also care about Q1, Q2, and Q3 closes) as minor leverage. In planning, identify those quarter-ends relative to your date. For example, for a June renewal, SAP’s Q2 end is June 30, so you might aim to finalize near that date. You can also ask SAP if they’d like to shift your term to align with year-end; sometimes, they might offer an incentive to co-term with Dec 31 (meaning you do a shorter or longer renewal this time). This can be complex (e.g., prorated fees), but it’s worth considering whether alignment could yield better pricing in planning.

Q8: We lack a dedicated SAM tool; how can we reliably track SAP usage for renewal planning?
You can still gather a lot manually or with SAP’s built-in tools:

• Use transaction USMM in each SAP system to measure user licenses. Consolidate with SAP’s License Administration Workbench (LAW) to reconcile users across systems.
• For engines, work with functional owners to obtain usage statistics (many SAP modules have reports or transactions that display the number of documents, employees, etc., in the system).
• If no tooling is available, at least extract user lists, talk to module owners, and use spreadsheets to compare them to entitlements.
  In the planning phase, if this is cumbersome, consider investing in a one-time license assessment service or a lightweight monitoring script. Some organizations without a SAM tool engage an SAP licensing expert to do a baseline measurement. It may be a bit costly, but it provides solid data for renewal. In the long term, consider this a lesson: implementing some SAM processes or tools will make future renewal planning easier. But for now, leverage what’s available – even SAP’s own EarlyWatch reports or audit reports can be requested to get a sense of usage.

Q9: How can we handle scenarios where our business might change just after renewal (like divestiture or acquisition)?
This is tricky because you’re planning under uncertainty. If you suspect a big change:

• Divestiture (selling a business unit): You might become over-licensed after that business leaves. In renewal negotiations, you could seek a clause that allows you to reduce the licenses proportionally in the event of a divestiture. SAP may or may not agree, but it’s worth trying if the likelihood is high. Alternatively, consider keeping the renewal term short (1 year) if a divestiture is imminent, so you’re not stuck for an extended period. In planning, flag this risk and discuss the approach internally.
• Acquisition (buying a company): You might need more SAP licenses. If you foresee this, consider negotiating favorable pricing for additional licenses or include an option to add several users at the same discount within 12 months. Lock in growth at current rates. Also, consider whether the acquired company has its own SAP system, which could lead to consolidation; in planning, account for the possibility of merging contracts later.
• Major Strategy Shift: (e.g., deciding to leave SAP in 2 years) If known, perhaps negotiate only a short-term renewal or minimal investment now, since you won’t need SAP later. Conversely, if you plan to standardize even further on SAP, consider investing in a multi-year contract to secure favorable terms.

The key is flexibility. In planning discussions, discuss these what-ifs and decide on a course (like going short-term or including specific clauses). It’s better to incorporate some flexibility than to hope for SAP’s kindness after the fact.

Q10: After all this planning, what if SAP still quotes a very high price or tough terms close to renewal?
This can happen if SAP misjudges your readiness to push back. If, despite early negotiation, SAP isn’t moving and you’re nearing the deadline, you have a few options:

• Escalate to higher execs at SAP (if not already done). A last escalation can sometimes bring a fresh perspective.
• Execute your Plan B: If you have third-party support lined up or can drop certain components, be ready. Sometimes, showing the cancellation notice or signing with an alternative in that final month can prompt SAP to come back with a better offer at a very late stage.
• Short-term extension: Negotiate a 3-6 month extension of the current terms to buy more time. Occasionally, SAP might agree to a short extension (especially for support) to continue discussions, rather than lose you. This is not guaranteed, but if talks are conducted in good faith, consider asking for a “bridge” extension.
• Accept and re-optimize later: This is not ideal, but if you have to sign to avoid disruption, you can always sign this renewal and plan to optimize harder next time. Use the next cycle to prepare even more or align things like co-terming to strengthen your position. Meanwhile, try to get a minor win now (any small discount or term improvement to save face and money).

The lesson is that robust planning drastically reduces this scenario, but if it occurs, fall back on the alternatives you’ve hopefully been exploring in parallel.

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