Standard, Enterprise Support, PSLE and the third party alternatives. Three knowledge checks along the way, and 4 clips from a senior licensing analyst.
This is a taught session, not a talking head. The instructor works through analyst grade slides, and three times the video stops on a question with four options on screen. Pause, commit to an answer, and the next slide explains which option is right and why each of the others is wrong. 4 times in the session the frame splits and a senior licensing analyst gives the view from inside real SAP negotiations, and the instructor picks the clip apart when the slides return.
The full narration of this session, section by section, for reading and reference. Guest analyst clips are marked.
Welcome back. Session thirty six, and this opens module eight, which takes us through negotiation, support and the capstone. Today is support, and I want to start with a claim I will spend the session defending: this is the largest recurring line in most SAP estates and the one renewed with the least scrutiny. Partly because it arrives as a percentage rather than as a price, and a percentage does not feel like a number. Today: what the tiers actually include, how the bill is calculated, the third party option assessed fairly, and where the levers genuinely are. Three knowledge checks. Let's begin.
Five objectives. First, know what you are buying, meaning incidents, legal and regulatory updates, patches, tools and the right to new versions, because not all of it matters equally to you. Second, understand the calculation, since support is charged on licence value rather than usage, which is why shelfware carries an annuity. Third, assess third party support fairly, at roughly half the cost, giving up new versions and vendor delivered regulatory updates. Fourth, make the decision on evidence, because a stable estate, no imminent S four move and manageable regulatory exposure are the three answers that decide it. And fifth, know the levers that exist, most of which operate at purchase rather than at renewal, which is the uncomfortable part.
Four things to frame it. About twenty two percent, which is Enterprise Support as a share of licence value, charged annually and uplifted over time. The licence again, because over roughly five years maintenance totals something close to what the licences cost. On value rather than use, so it is charged against what you bought, and shelfware pays maintenance exactly like production does. And rarely examined, since it renews automatically, arrives as a percentage, and nobody itemises what it delivers. Let me start with what it actually is, because the number is large and most people have never itemised it.
Guest analyst clip.
Which is which for your estate. That is the question the whole session turns on, and notice that answering it requires information about your own consumption rather than an opinion about vendors.
So, the tiers, and four of them, with the caveat that names and inclusions change over time so verify the current offering against your own agreement. Standard Support: the lower tier where still available, with longer response commitments and fewer services, and increasingly not the default. Enterprise Support: the standard offering for most customers, with faster commitments, mission critical handling, tools and advisory content. PSLE and premium engagements: named engagement resources and tailored service plans, priced on top, and worth it where you genuinely use the people rather than where you like the idea of having them. And cloud subscriptions, where support is bundled into the subscription rather than charged separately, which changes the whole conversation and is one of the quieter arguments in the migration business case.
First knowledge check. You hold licences worth ten million and use roughly sixty percent of them. What do you pay maintenance on? A, the sixty percent you use. B, the full ten million, because support is charged on licence value. C, whatever you negotiate each year. D, the sixty percent, provided you declare the rest as inactive. Pause here and pick an answer before you continue.
B. Maintenance follows what you bought rather than what you switched on, so the four million of shelfware is costing you roughly eight hundred and eighty thousand a year in support on top of the original purchase. A and D both assume a usage based mechanism that does not exist here, and there is no inactive status that suspends maintenance. C describes the uplift, which is negotiable, rather than the base, which follows the licence value. This is the strongest financial argument in the entire course for not buying licences you do not need.
Now how the number actually moves, five drivers. New purchases raise the maintenance base with every licence added, so buy what you will deploy, when you deploy it. The annual uplift adds indexed increases on top of the base, so cap it in the agreement and ideally at purchase. Shelfware pays maintenance identically to used licences, so review it before renewal and read the termination clause. Partial termination is often restricted to whole contracts or systems, so read that clause before assuming you can drop individual lines. And cloud migration folds support into the subscription, which means the maintenance saving belongs inside the business case. Notice how many of those are decided at purchase rather than at renewal.
Right, third party support, five points. Roughly half the cost, and that headline saving is real, typically around fifty percent of your current maintenance. The service is generally good, with named engineers, strong response times, and support for customisations the vendor will not touch. You stop receiving new versions, so enhancement packages and upgrades end and your upgrade path closes while you are on it. Regulatory updates change hands, built by the provider rather than by SAP, which is workable in many jurisdictions and worth verifying carefully in yours. And returning is expensive, because reinstatement typically means paying for the period you were away, so it is a door that closes behind you. Let me be even handed about this, because the topic attracts advocacy.
Guest analyst clip.
Neither answer is a moral position. I would stress that, because this subject generates more heat than almost anything else in SAP licensing, and the heat is not useful to you. It is an arithmetic question about your estate, and the arithmetic is different for different organisations.
Second knowledge check. You plan to start an S four HANA programme in eighteen months. Is third party support a good fit? A, yes, since the saving funds the programme. B, poor fit, because you need the upgrade path and version rights the programme depends on. C, yes, provided you return before the programme starts. D, it makes no difference to a migration. Pause here before you continue.
B. A transformation needs current versions, vendor patches and a supported path, and third party support is designed for the opposite situation, which is a stable estate you intend to run as it is. A is seductive and inverts the logic, funding a programme by removing what the programme requires. C underestimates the cost and friction of reinstatement, which is rarely as simple as resuming payments. And D ignores that your migration position and your support position are the same question asked twice. Third party support suits stability, and a migration is the definition of the opposite.
So, five questions that decide it. Is the estate stable, meaning no major change for three or more years, which is the profile third party support was built for. What is the roadmap, honestly, because an S four plan with a date is a different thing from an S four plan that has been eighteen months away for four years. How much regulation do you consume, since payroll and tax in multiple countries changes the answer considerably, so count the updates you actually apply. What do you use support for, which means pulling the incident history for volume, severity, and how many were resolved by the vendor rather than internally. And what does returning cost, modelled as a real number, because that is the price of changing your mind. There is a related point about the base the percentage is charged on.
Guest analyst clip.
Every licence you add is a maintenance commitment for as long as you keep the agreement. That reframes a purchase decision quite sharply, because the sticker price is roughly half the story over five years.
Which brings me to the levers, and there are five. Buy less, which is the only one that works permanently, because every unbought licence saves its purchase price and its maintenance forever. Cap the uplift at purchase, since support increases compound quietly and a cap is worth more than a discount on year one. Handle shelfware before renewal, reading the termination clause early because partial termination is usually restricted and always slow. Price the alternative properly, with a real third party quote and a real loss analysis, done as analysis rather than as a threat. And fold it into a bigger deal, because support terms move inside a transformation negotiation far more readily than they move on their own.
Five traps. Renewing without itemising, so paying a percentage every year without anybody listing what the organisation consumed for it. Using a quote as a bluff, because a third party quote you never seriously considered is seen through, and it costs credibility you need later. Ignoring the reinstatement cost, which is treating a two way decision as though it were one way. Buying support for shelfware, meaning the maintenance annuity on unused licences renewed indefinitely because the clause was never read. And forgetting the cloud comparison, since subscription pricing includes support, so a like for like migration case must net it off.
Last knowledge check. When is your support cost most controllable? A, at the annual maintenance renewal. B, at the moment you buy the licences. C, when you threaten to leave for third party support. D, during an audit settlement. Pause here, and think about what the percentage is charged against.
B. The percentage is charged against licence value, so the base is fixed by the purchase and everything afterwards is an argument about the rate rather than the amount. A is where most attention goes and where least is available, since partial termination is usually restricted. C works occasionally and only when the alternative is genuine, and it spends relationship capital. And D is a real opportunity that arrives on the vendor's timing rather than yours, as session thirty four covered. One thing I would encourage regardless of what you conclude.
Guest analyst clip.
You stop paying twenty two percent out of habit. So, five things for running support deliberately. Report support as its own line rather than buried in the licence total, because if nobody sees the annual figure then nobody questions it. Track incidents against cost, so volume, severity and resolution route once a year, which is the value evidence you will never have otherwise. Review shelfware maintenance annually, since unused licence value multiplied by the support rate is a number worth putting in front of finance. Cost the alternative every few years, not necessarily to move but to know, because the exercise informs every maintenance conversation you have. And model support in every migration case, because cloud subscriptions include it and the comparison is simply wrong unless the maintenance saving is netted off.
Three sentences. Enterprise Support at around twenty two percent of licence value is the largest recurring line in most estates, it is charged on what you bought rather than what you use, and shelfware therefore carries a maintenance annuity for as long as you hold the agreement. Third party support saves roughly half and costs you new versions and vendor delivered regulatory updates, which makes it a serious option for a stable estate and a poor one for an organisation heading into a transformation. And almost every real lever operates at purchase rather than at renewal, so buy what you will deploy, cap the uplift in the same signature, and cost the alternative as analysis rather than as a threat. Next session is SAP negotiation itself: the fiscal calendar, discounting, and how deals are actually structured.
Homework before session thirty seven, about ninety minutes. One, find the annual figure, meaning what you pay in SAP maintenance this year as one number, because many people have never seen it separated out. Two, calculate the shelfware share, which is unused licence value times the support rate, and that is what you pay annually for nothing. Three, pull the incident history, twelve months of tickets by severity, and how many genuinely needed the vendor. Four, read the termination clause, asking whether you can drop part of the estate and what notice it requires, and find out before you need to know. And five, check the uplift terms: how does your maintenance increase each year, and is there a cap, because if not then that is your next negotiation's ask.
Five guides, all on redresscompliance dot com. SAP support options compared covers Standard, Enterprise and PSLE with what each tier includes, which is the reference version of today. Third party support for SAP goes into the savings, the trade offs, and how to run the analysis honestly. Shelfware and maintenance covers the annuity on unused licences and what the termination clause allows. Price protection and capped uplifts is the term that keeps maintenance predictable across the whole agreement. And SAP negotiation and the fiscal calendar is where session thirty seven picks up, so timing, discounting and deal structure.
That is session thirty six. The thing to take away is that support is charged on what you bought rather than what you use, so the decision that controls it is the purchase, and the alternative is worth costing whether or not you ever take it. Next time, the negotiation itself. See you then.