July 22, 2015 | Shawn du Plessis | Vice President, Global SAP Support Services
September 30th is an important date for organizations that run SAP. It is the deadline day by which SAP users must terminate their annual maintenance/support agreement to avoid being auto-renewed for the following year. By exercising the right to cancel (sending the termination notification), SAP users gain 90 days to research alternative support options from either SAP, such as Standard Support, or from third-party SAP support vendors.
According to its research brief published July 13, 2015, Gartner reports seeing “a steady increase in inquiries” from ERP leaders who are considering cancellation of existing ERP maintenance agreements. Gartner overviews the pros and cons of alternative support options available to these ERP leaders, one of which is categorized as independent support. Spinnaker Support is one of only two firms that offer independent Oracle and SAP support. (1)
The additional 90 days gained by sending in your annual maintenance termination notification can be used to research and assess alternatives to SAP support. Cancelling an SAP maintenance agreement is a smart tactic that creates extra time for SAP users. Your alternatives include:
- Moving from Enterprise Support to Standard Support will save 3% per year.
- Switching to third-party support will save you considerably more.
- Negotiating parts of your SAP contract such as: Removing shelfware off your annual maintenance invoice; Lower price; Cloud migration path
With over 200,000 customers worldwide, it seems that your best negotiation tactic is to exercise your right to terminate your contract by September 30. In the blog post this week entitled Tired of Losing Support Fee Reduction Negotiations with SAP?, UpperEdge states “there is a path to gain leverage and get executives within your company fired up for those negotiations.” Read more.
SAP users who are investigating the replacement of SAP support with third-party support most often have 3 things in common:
- They run stable SAP systems, meaning there are no near-term upgrade plans, the system is highly customized, and/or want to see better value for the cost.
- They are financially distressed or under pressure to cut costs immediately.
- They are migrating either away from SAP or to a cloud solution (e.g. waiting for a more clear S/4HANA migration plan).
Now is the time to be thinking about your strategy and evaluating whether this is the year you are going to take control of your SAP support/maintenance spend.
“Allocating a couple of months to complete a full and comprehensive evaluation would put your company in a position to prepare for SAP negotiations in the early part of Q4.” – Jeff Lazarto, Principal at UpperEdge
1. Gartner, What to Consider Before Cancelling Your ERP Vendor’s Maintenance Agreement and Switching to Third-Party Support, Pat Phelan, July 13, 2015