SAP Contract Renewal Checklist: On-Premise Support Edition
Why an SAP Support Renewal Checklist Is Critical
SAP’s on-premise support renewals are a significant budget item – typically 22% of your license costs each year.
Yet, many SAP ECC support contracts automatically renew with built-in fee hikes and minimal flexibility for the customer. Without a proactive plan, you risk overspending and locking into unfavorable terms.
This checklist offers a practical approach to avoid overspending and enhance your negotiation position.
It will help you identify waste (like unused “shelfware” licenses), challenge SAP’s default renewal conditions, and consider alternatives (such as third-party support) to maximize the value of your SAP maintenance spend. Read our overview for SAP Contract Renewal & Optimization Strategies.
12–18 Months Out: SAP Annual Maintenance Renewal Steps
Start your renewal planning 12–18 months before the contract expiration.
Early preparation lays the groundwork for savings and leverage:
- Audit Licenses and Usage: Inventory all SAP licenses and analyze actual usage. Find any shelfware (unused licenses or modules) and note areas of underutilization. Also, check for any usage exceeding your entitlements to preempt compliance issues.
- Review Maintenance Contract Terms: Understand your current support agreement. Note the renewal date, any auto-renewal clause, and the required notice period to reduce or cancel licenses. Identify clauses on fee increases or restrictions. This SAP maintenance contract review ensures you know the rules before negotiating changes.
- Align Internal Stakeholders: Engage the CIO, CFO, and procurement early. Ensure everyone agrees on objectives (cost reduction targets, not paying for shelfware, etc). Presenting a united front gives you stronger backing for tough negotiations.
- Research Third-Party Support Options: Explore third-party support as a potential alternative (often ~50% cheaper than SAP’s fees). The mere option of switching gives you leverage when negotiating with SAP.
9–12 Months Out: Benchmark Costs and Build Leverage
About 9–12 months before renewal, focus on benchmarking costs and formulating your negotiation strategy:
- Baseline and Compare Costs: Calculate your current SAP support spend and project it forward a few years to see the trajectory. Also, research the market: get quotes from third-party support providers (they often charge ~50% of SAP’s fee) and see if SAP’s price is above market.
- Quantify Savings and Build the Case: Calculate the potential savings from each action. For example, eliminating $500,000 of shelfware licenses would save about $110,000 per year in support fees. Use these figures to present a cost comparison of options (renew as-is vs. remove shelfware vs. third-party vs. migrate to S/4HANA). Showing the financial impact helps leadership understand the plan and secures their support.
With benchmarks in hand, you know what a fair deal looks like and can back up your requests with data.
6–9 Months Out: Engage SAP and Request Better Terms
Six to nine months before expiration, start formal talks with SAP about the renewal.
Show them you’re an informed customer looking for a fair deal:
- Open the Discussion Early: Let your SAP account manager know you are reviewing the upcoming renewal in depth. Ask for a meeting to go over your license inventory and support costs. By initiating contact early, you set the expectation that this renewal will involve dialogue (not an automatic renewal).
- Demand Fee Transparency & Fairness: Request a breakdown of how your support fee is calculated. Ensure it’s based on your net license value and doesn’t include licenses you plan to drop. State that you won’t accept unexplained charges or automatic fee hikes. Request a cap on support fee increases (for instance, max 2% per year) to keep costs predictable.
- Leverage Alternatives Tactfully: Without revealing details, hint that you’re exploring other support options. Knowing they could lose your business will push SAP to offer more competitive terms.
Read more, SAP RISE Subscription Renewal Strategy: How to Negotiate Savings & Flexibility
3–6 Months Out: Key SAP ECC Maintenance Negotiation Tactics
As the renewal date nears, negotiate the specific terms to reduce cost and increase flexibility:
- Remove or Credit Unused Licenses: Insist on not paying for shelfware. Negotiate to terminate unused licenses from the support contract or get credit toward future purchases. If SAP is reluctant, push for a clause allowing you to drop a percentage of licenses mid-term if they remain unused.
- Secure Discounts or Caps: Push for a better financial deal. This could be a multi-year support discount or at least locking in the current rate (0% increase) for a couple of years. At minimum, get an annual increase cap so you know support fees won’t jump more than, say, 2% per year. Many customers successfully negotiate caps on the standard 5% uplifts – but only if they ask.
- Ask for Future Migration Perks: Leverage your value as an ECC customer who might move to S/4HANA down the line. Ask SAP to include incentives for the future – for example, a credit of some support fees toward an S/4HANA license or RISE with SAP subscription when you decide to migrate. This way, you’re paying maintenance now with an understanding that part of it will benefit your eventual transition, not just vanish into SAP’s coffers.
These tactics can significantly trim your support costs. Be firm that you need tangible improvements from SAP to justify renewing.
1–3 Months Out: Decision Time – Renew SAP or Go Another Route?
In the final 1–3 months, you must make the call. If SAP meets your key requirements (discounts, flexibility), renewing ensures continuity. If not, you should be ready to pivot to third-party support or another option.
Compare the outcomes side by side. Below is a comparison of renewing SAP support, switching to third-party support, versus migrating to RISE with SAP (S/4HANA cloud) to illustrate the trade-offs:
| Option | Pros | Cons |
|---|---|---|
| Renew SAP Support (On-Prem) | – Full access to all SAP updates and upgrade rights. – No disruption to current operations; you maintain direct SAP support. | – High annual cost (≈22% of license value). – Inflexible terms – you pay for all licenses even if some sit unused. |
| Switch to Third-Party Support | – Much lower fees (often ~50% less) and more dedicated service. – No forced upgrades – run ECC indefinitely. | – No new SAP patches or versions (you’re frozen on current software). – If you later need to return to SAP (e.g. move to S/4HANA), it can be expensive to rejoin later. |
| Migrate to RISE with SAP | – Move directly to SAP S/4HANA (latest ERP) with cloud infrastructure included. – SAP may offer incentives or credits for transitioning, leveraging your existing investment. | – Very high cost and multi-year commitment. – Major migration effort required (reimplement customizations, potential business disruption during the switch). |
Choose the path that best balances cost and future needs. If SAP’s price is far higher, third-party savings likely win. If an S/4HANA migration is imminent, staying with SAP (or RISE) avoids potential reactivation fees.
FAQ: SAP Support Renewal (On-Premise/ECC)
Q1: When should we start the SAP support renewal process?
A1: Begin about 12–18 months before your renewal date. Starting early gives you time to audit usage, explore options, and engage SAP before deadlines.
Q2: What is SAP’s annual maintenance fee for on-premise software?
A2: Usually around 22% of your license purchase price per year, with potential annual increases of up to ~5%. (For a $5 million license estate, that’s roughly $1.1 million per year in support.)
Q3: Can we drop unused SAP licenses during renewal to save money?
A3: Yes. Identify unused ECC users or modules and negotiate their removal or a fee reduction. You shouldn’t pay 22% for licenses you aren’t using.
Q4: Is third-party support a viable alternative to SAP’s support?
A4: Absolutely. Third-party support for SAP ECC can cut maintenance fees by ~50%. The catch is you won’t get new SAP patches or upgrades, but many companies find the savings worth it.
Q5: Can we negotiate a cap on future SAP support fee increases?
A5: Yes – and you should. Many customers ask for a cap (e.g., a 0–3% maximum increase per year) or even a freeze for a period. This keeps support costs predictable.
Read about our SAP Contract Negotiation Service
