Leveraging Third-Party Support in SAP Negotiations
Why This Matters for CIOs Now
SAP’s maintenance fees are notoriously high (typically around 20%+ of license costs annually) and often creep upward with inflation.
CIOs and IT leaders face intense pressure to achieve enterprise SAP cost control while still funding innovation. Read our SAP negotiations guide.
This is why many are adopting a vendor-skeptical approach to SAP tactics – scrutinizing the value of SAP’s standard support and exploring alternatives.
Third-party support providers and cloud-based support alternatives have emerged as credible levers in SAP negotiations. By signaling a willingness to leave SAP’s maintenance umbrella, CIOs demonstrate readiness for negotiation and budget discipline.
In short, introducing an alternative maintenance strategy forces SAP to reconsider its pricing and terms, because the risk of losing a support customer suddenly becomes very real.
Presenting third-party support as an option puts CIOs in a stronger position at the bargaining table. SAP account reps know that if they don’t offer better terms, the customer can and will walk to a cheaper support model.
This dynamic has only grown in importance as SAP pushes its customers toward new cloud products and S/4HANA upgrades, many organizations are balking at the costs and using alternatives as bargaining chips.
In 2025 and beyond, CIOs are expected to demonstrate savvy cost management, which means utilizing third-party support or cloud alternatives as negotiation leverage to reduce SAP support costs.
CIOs often find themselves at a crossroads: continue paying escalating SAP support fees or pursue third-party support alternatives. The mere possibility of switching providers can tip the negotiation scales in the customer’s favor.
How Third-Party Support Enhances Bargaining Power
Leveraging third-party support, SAP options can significantly boost a CIO’s negotiation leverage during contract renewals.
Here’s how it works:
- Credible Threat of Competition: Telling SAP that you are evaluating third-party maintenance (or a cloud alternative support model) sends a clear message – their monopoly on your support budget is no longer guaranteed. SAP’s sales and support teams know they must compete to keep your business. This often prompts SAP to offer cost reduction or more favorable terms to dissuade you from switching. Simply put, viable alternatives end SAP’s assumption of a captive customer.
- Price Pressure: Third-party support providers typically charge 50% or less of SAP’s standard fees, and they usually commit to no forced upgrades or surprise hikes. When SAP is aware that you have a quote in hand for half the cost, it creates instant price pressure. The vendor may counter with discounts, extended payment terms, or assurances of price locks to match the market. Your willingness to consider alternatives is a powerful bargaining tactic to extract concessions in SAP support negotiations.
- Highlighting Value Gaps: Third-party vendors often tout personalized service (dedicated engineers, faster response) and support for custom code or legacy systems that SAP might not handle well. By raising these points, CIOs put SAP on the defensive, forcing it to demonstrate greater value. For example, if a third-party offers 24/7 support with 5-minute response times, you can ask SAP to step up its game or justify its premium price. Vendor-skeptical CIOs use this comparison to negotiate improvements, such as higher service levels or credits for downtime.
- Option to Walk Away: Ultimately, your strongest leverage is the actual ability to switch. If SAP thinks the “threat” of third-party support is just a bluff, they may not budge. But if you’ve done your homework (e.g., obtained proposals, done a pilot), your stance is far more convincing. CIOs who confidently present an alternative support plan (or even a potential move of certain systems to a cloud alternative) create a credible scenario in which SAP loses revenue. This mindset shift – from playing defense to having other options – transforms the negotiation dynamic. SAP is much more likely to negotiate reasonably when it knows you’re prepared to leave.
In essence, third-party support enhances bargaining power by giving you leverage beyond SAP’s ecosystem. It turns a once one-sided renewal into a competitive bid for your support dollars.
Pros and Cons of Leaving SAP Support
Moving away from SAP’s standard support to a third-party (or another platform) is a strategic decision. CIOs must weigh significant pros and cons:
Pros of Third-Party Support:
- Dramatic Cost Savings: Enterprises often see immediate savings of 50% or more on annual support fees, and potentially up to 90% in total maintenance costs over time. These savings come not just from lower fees, but also from avoiding costly forced upgrades. This freed budget can boost ROI on the overall SAP support alternatives strategy.
- Tailored, Responsive Service: Third-party support vendors provide personalized service levels. You get named, experienced engineers who know your systems. Many offer 24/7 support with aggressive SLAs, focusing on actually resolving issues (not just telling you to upgrade or apply notes). They also support custom code, integrations, and older versions – areas SAP often won’t touch. This means that if your custom ABAP program breaks or you’re on an older ECC release, the third-party will still provide full support to you.
- No Forced Upgrades & Extended System Life: With independent support, you can run your current SAP software as long as needed. The vendor imposes no end-of-support deadlines. For example, if you’re on SAP ECC 6.0 or Business Suite 7, a third-party provider may support it well into the 2030s, far beyond SAP’s cutoff. You upgrade on your timetable, when it makes business sense – not under vendor pressure. This flexibility is hugely valuable if you’re not ready to migrate to S/4HANA or if your ERP is stable and meeting needs as-is.
- Predictable Pricing: Third-party contracts tend to have fixed or capped annual fee increases (if any). You gain long-term predictability compared to SAP maintenance, which not only starts high but can rise due to indexing or new surcharges. This helps with budgeting and avoids unpleasant surprises in IT spend.
Cons of Leaving SAP Support:
- Loss of Official Updates and Roadmap: Stepping off SAP support means you lose access to new patches, upgrades, and enhancements from SAP. Your system will be frozen at its current software version (the third-party will provide fixes and tax/regulatory updates for that version, but no brand-new SAP features). If your business relies on getting the latest SAP innovations or quarterly updates (especially relevant for cloud products or S/4HANA), this is a serious drawback. You must accept a slower pace of SAP-delivered innovation.
- Re-Engagement and Upgrade Challenges: In the future, if you decide to return to SAP support or adopt new SAP products, you may encounter hurdles. SAP may require back-paying maintenance fees for the lapsed period or charge penalties to reinstate support. License conversion programs (such as moving from ECC to S/4HANA licenses) may not be available to you if you’re off maintenance. Essentially, leaving SAP support can complicate any future move that involves SAP’s help. CIOs should negotiate and understand these terms before leaving – or be prepared for a one-way journey (possibly switching to a new platform entirely when the time comes).
- Legal and Compliance Risks: Although using third-party support is legal (if you own your SAP licenses outright), there are intellectual property considerations to consider. Third-party providers must recreate patches and support you without infringing on SAP’s IP. Reputable firms do this above board, but the industry has seen lawsuits (e.g., Oracle vs. Rimini Street) over support practices. CIOs need to conduct due diligence: review your SAP contract for any restrictions and ensure that any third-party vendor operates within legal boundaries. The risk of direct liability to customers is low; however, you should still proceed with caution and consult your legal counsel.
- Vendor Pushback & Ecosystem Impact: It’s almost certain SAP will push back hard if you plan to leave their support. Expect higher-ups from SAP to reach out and try to convince you to stay (possibly with scare tactics about compliance or support quality). Additionally, once off official support, you lose certain benefits: you can’t call SAP support for help, and you might have less influence in SAP user groups or beta programs since you’re not a paying maintenance customer. You’re essentially an “ex-customer” in their eyes. Some companies mitigate this by maintaining a small footprint with SAP (or staying active in user communities), but there’s an impact. Internally, you may also face stakeholder concerns – for example, the SAP team or executives might worry about running “unsupported” systems. Strong change management and effective communication of the benefits are necessary to ensure everyone is comfortable with the transition.
- No Direct Access to SAP Expertise: In niche or complex scenarios (a very rare bug deep in the code), only SAP’s engineers might have the answer. With third-party support, you are trusting that provider’s experts to solve issues. They usually perform well on known issues and customizations, but they don’t have access to SAP’s internal development resources. There is a slight risk in severe cases that you may be stuck with workarounds until a permanent fix is found. This trade-off must be acknowledged, although many find the risk acceptable given the cost benefits.
In summary, opting for third-party support can yield major cost and flexibility benefits. Still, CIOs must weigh the innovation slowdown, legal considerations, and relationship changes that come with leaving SAP’s fold.
The good news is that thousands of enterprises (including many Fortune 500 firms) have successfully navigated these trade-offs, using third-party support as a strategic tool.
Real-World Examples of Negotiation Wins
Using Third-Party Quotes to Secure SAP Discounts:
A global manufacturing company was facing a pricey SAP support renewal. Their CIO obtained a proposal from a third-party support provider (Rimini Street) that would cut maintenance fees by 50% and support their older ECC system through 2030. Armed with this, the CIO went back to SAP.
The result? SAP, fearing the loss of a long-term customer, offered a multi-year discount on support fees, freezing the annual rate and extending the support period by an additional 2 years beyond the normal cutoff. In this scenario, merely demonstrating a ready alternative (with hard numbers) prompted SAP to significantly sweeten the deal. The company ultimately stayed with SAP support at a much lower cost – a win facilitated by the credible threat of third-party support.
Switching and Reaping Innovation Benefits:
In another case, a large retail enterprise switched from SAP’s support to a third-party provider, saving several million dollars annually. Rather than just pocketing the savings, the CIO redirected a chunk of the budget into innovation projects. They funded a new AI-driven analytics initiative and a pilot for cloud ERP modules in areas where SAP’s capabilities were weak.
For example, some of the savings were invested in developing a ChatGPT-powered support chatbot for internal SAP users, which handled common inquiries and reduced the number of support tickets. Throughout a couple of years, the company not only enjoyed reliable third-party support (with no drop in service quality) but also used the cost reduction from support to drive modernization.
This dual success gave them leverage in subsequent talks with SAP – when SAP later pitched new cloud products, the client had both the confidence and financial flexibility to negotiate hard, knowing they had thriving systems outside SAP’s direct control.
These examples show that whether you use third-party support as a negotiation lever or switch, the outcome can be improved in terms of strategic gains.
The key is to approach it in a structured, business-driven manner.
Six Strategic Recommendations for CIOs
To successfully leverage third-party maintenance or cloud alternatives in SAP negotiations, CIOs should adopt a strategic plan. Here are six actionable recommendations:
- Conduct a Support Cost & Value Review: Start by baselining your current SAP support costs versus the value you derive. Analyze what you’re paying in maintenance and what your organization gets (number of tickets, quality of resolutions, upgrade entitlements used, etc.). This “support ROI” analysis often reveals you’re overpaying for underutilized services. Knowing this baseline, you can make a strong case to either negotiate a lower price or switch. It also helps pinpoint which areas of support are critical and which are not being utilized (e.g., perhaps you don’t need SAP’s upgrade support if you’re not planning to upgrade soon). This review equips you with data to justify exploring alternatives and serves as a foundation for any negotiation.
- Issue a Competitive RFP to Create Market Pressure: Treat your SAP support renewal like a procurement exercise – invite competition. Reach out to third-party support providers (and even consider cloud/SaaS alternatives for certain modules) for quotes and service proposals. By running a formal RFP or gathering multiple bids, you establish a market price for support. Share relevant portions of these findings with SAP during negotiations (you don’t necessarily have to show the documents, but you can cite “we have proposals that cut our costs by X and still meet requirements”). The mere fact that an RFP is underway puts SAP on notice. It creates credible market pressure, demonstrating that you’re not only discussing alternatives but actively evaluating them. Often, SAP will respond by reviewing your account for possible discounts or special offers to pre-empt losing the business.
- Use Alternative Support as Leverage in Renewal Talks: When entering discussions with SAP, be explicit that you have an alternative option on the table. For instance, ask SAP to match or beat the third-party offer – whether in terms of price, contract flexibility, or service level. Be specific: “Provider X will charge us $Y and cover A, B, C for the next 5 years. Can SAP offer a comparable deal?” This puts the onus on SAP to justify its value or lower its price. Even if you prefer to stay with SAP, don’t reveal that – let them believe switching is a strong possibility. Maintain a firm yet professional tone: you are seeking the best outcome for your company, and loyalty alone won’t justify millions in additional spending. By anchoring the negotiation around a concrete alternative, you change it from a one-sided renewal to a competitive comparison. Many CIOs find that SAP, when faced with a real alternative, will concede on items such as multi-year discounts, fee caps, extra licenses, or migration credits. Ensure that any concessions are documented in the contract (e.g., a discounted support percentage locked in for a specified period).
- Negotiate Legal Protections and Re-Engagement Terms: If you’re seriously considering third-party support, involve your legal and procurement teams early to iron out contract details with SAP. One strategic move is to negotiate a “graceful exit and return” clause. For example, ensure that if you leave SAP support now, the contract clearly outlines what happens if you wish to resubscribe later. Try to eliminate or cap any potential reinstatement fees or penalties – even if you ultimately stay with SAP, having that in writing is valuable. Similarly, get clarity on how license rights will be handled if you go off support (you want to maintain the right to use your licenses perpetually). Another protection: if you’re going partially off support (say, some systems on third-party systems, others remain on SAP), ensure SAP won’t penalize the portion that stays (they should still receive support and not be treated as second-class). By negotiating these points, you can reduce the risks associated with switching. You might also negotiate future price holds – for example, SAP could agree to honor current pricing if you return within two years. All these legal safeguards make your threat to switch more credible, because you’ve addressed the “what if we need to go back?” scenario upfront. It also prevents SAP from using fear, uncertainty, and doubt to scare you during negotiations.
- Pilot Third-Party Support on Non-Core Systems: Before fully committing to a new support model, consider a pilot program. Select a non-mission-critical SAP system or a less critical module and contract a third-party provider to support it for a trial period. This could even be done before your big negotiation (some companies do a year-out pilot, knowing renewal is coming). Monitor the provider’s performance: response times, issue resolution quality, and customer service. Document the cost savings and outcomes. This accomplishes two things: (a) It gives you tangible evidence to present to executives (and to SAP) that “this alternative works – we tried it on the HR module, saved $X, and had equal or better support.” (b) It familiarizes your team with the third-party process on a small scale, making the eventual transition easier. By piloting on a small scope, you de-risk the larger move. If the pilot goes well, you have confidence to expand; if it doesn’t meet expectations, you’ve learned with minimal impact. When SAP sees that you’ve already onboarded a third-party (even in a limited way), they will take your plans extremely seriously in negotiations. It demonstrates you are prepared to switch if needed, not just making empty threats.
- Bundle Support Alternatives with Innovation Budget Shifts: One effective CIO tactic is to frame the support change as part of a broader innovation strategy. In negotiations – and internal discussions – outline how savings from third-party support will fund new capabilities. For example, explicitly state: “By reducing maintenance spend, we will free up $N million to invest in cloud analytics, AI tools, and process automation.” This creates a positive narrative that it’s not just cost-cutting, but cost reallocation to innovation. It can also resonate with SAP – they might prefer to keep some business (with a discount) and see you invest elsewhere, rather than lose you entirely. From the organization’s perspective, this approach gains buy-in from other executives, as the end goal is to enhance ROI and competitiveness.
By following these six steps, CIOs can craft a well-rounded strategy: you’ll have done your homework, put competitive options on the table, managed the risks, proven the concept, and aligned the change with strategic growth. This not only strengthens your negotiation hand but also ensures that if you do pivot to third-party support, your organization is ready to reap the benefits.
Avoiding Common Pitfalls
When leveraging third-party support as a negotiation tool, be mindful of a few pitfalls so you don’t inadvertently undermine your position:
- Underestimating IP and Contract Nuances: One mistake is not thoroughly reviewing your SAP contracts for any clauses that might affect a support switch. Avoid making assumptions – for instance, some CIOs forget to verify if moving support affects their license warranties or access to specific SAP tools. Collaborate with legal experts to review and refine contract terms, ensuring compliance with license use after switching. Also, be very careful about how you or the third-party provider accesses SAP support materials (notes, patches) – it must be done in a manner that is legally approved. Addressing these issues upfront prevents nasty surprises or legal disputes later.
- Dropping Support Without an Upgrade/Patch Plan: A common pitfall is failing to plan for critical patches and updates after leaving SAP. Security fixes, tax/regulatory updates, and bug patches still need to happen – you’re just getting them via a new provider. Make sure the third-party contract explicitly covers these (most do). Internally, establish a process to evaluate any new SAP releases or integration needs that may be missing. For example, if SAP releases a vital security patch to its customers, how will your team know and apply an equivalent fix through the third party? Have a clear understanding with the provider on how they’ll deliver such updates. Don’t assume everything is automatic; governance is key to avoiding vulnerabilities here.
- Making a Mid-Cycle Switch Haphazardly: Timing matters. Avoid switching support in the middle of a contract period or project without due planning. If you decide to leave SAP, do it at a natural break (e.g., when your annual support term expires) to avoid paying for overlap or losing support unexpectedly. Provide SAP with proper notice of non-renewal as required (usually several months in advance) – missing this window could result in being locked in for another year. Additionally, ensure that your internal team is prepared to manage the new support relationship. This includes updating your support ticket processes, informing end-users of any new support portals or phone numbers, and retaining a few SAP-savvy staff members who can liaise smoothly with third-party engineers. In short, don’t underestimate internal preparation: a poorly executed transition can disrupt business and give ammunition to skeptics who opposed the switch.
- Succumbing to FUD Tactics: When SAP senses you might leave, they may employ FUD (fear, uncertainty, doubt). For example, they might imply your systems will be at risk, or that third-party support is inferior, or hint at audit scrutiny. It’s a pitfall to get rattled by these tactics. Stay grounded in facts and your plan. Engage with independent advisors or consult peers who have done it to counter any overblown claims. And, importantly, keep communications with the SAP professional factual – don’t reveal internal debates or uncertainties. If SAP detects hesitation, they might hold off on their best offer. Remain firm and confident in your course (even if internally you are still deciding). This will extract the best concessions and, if you do leave, you’ll do so on your terms.
By proactively addressing these pitfalls – including legal details, patch management, timing, internal readiness, and handling vendor pressure – you significantly improve your chances of achieving a smooth and successful outcome. You want the story to be about how you optimized SAP support costs and drove value, not about a stumble due to oversight.
Governance & Ongoing Strategy
Adopting third-party support as a negotiation lever isn’t a one-time gimmick; it should become part of your ongoing vendor management playbook.
Here’s how to govern and sustain this strategy over time:
- Maintain a Support-Cost Dashboard: Treat support costs as a key metric to monitor throughout the year. Build a simple dashboard that tracks what you pay to SAP (or a third-party) and the business value received (tickets resolved, uptime, user satisfaction). Include historical trends and comparisons to alternative cost scenarios. This data-driven approach allows you to annually evaluate the ROI of your support model. If the cost creeps up or value delivery falters, you’ll spot it quickly and can decide to rebid or renegotiate. The dashboard can be shared with finance and procurement to keep everyone aligned on the reasons behind using specific support strategies.
- Schedule Periodic Support Model Reviews: Establish a cadence (for example, every 12 or 24 months) to formally review whether your current support approach remains the best fit. Business needs change, and what was right two years ago might need adjustment. If you’re on third-party support, review their performance and any changes in your SAP roadmap. Do you plan to adopt new SAP modules that might warrant re-engaging with SAP support, or is everything stable? If you stayed with SAP after negotiating a discount, check when that discount expires and be ready to reopen discussions or explore alternatives again. By treating support strategy as dynamic, CIOs avoid complacency and ensure they’re always getting optimal value.
- Keep Alternative Options Open: Even after a successful negotiation where SAP improved terms, don’t “retire” the idea of third-party support. Savvy CIOs keep that lever in their back pocket. This could involve maintaining relationships with third-party providers (e.g., quarterly check-ins or receiving updates on their new services) and staying informed about market developments. It also means documenting the negotiation for institutional memory: e.g., “Last renewal we got a 30% discount after presenting alternative X.” This prepares future IT leaders to do the same. The presence of credible alternatives should be a permanent fixture in your strategy, continuously reminding SAP that your business won’t tolerate a complacent, high-cost status quo. Essentially, treat third-party support as a live option, not a one-time bluff.
- Align Support Decisions with Business Strategy: Finally, ensure your approach to SAP support (whether sticking with SAP, switching, or toggling between) aligns with your broader IT and business roadmap. For example, suppose your company is moving aggressively to cloud solutions or AI-driven processes. In that case, your support strategy should reflect that – perhaps you invest less in legacy SAP support and more in new platforms. Or if SAP becomes more central to your digital strategy in the future (say you adopt SAP’s cloud products), you might reconsider the balance. The key is governance: establish a decision-making framework that involves not just IT, but also procurement, finance, and business stakeholders. Revisit the guiding criteria (cost, risk, innovation, vendor relations) regularly to make sure the support model is serving the business optimally.
By instituting ongoing governance, CIOs can continuously optimize support costs and value. Whether negotiating with SAP or managing a third-party contract, this strategic vigilance ensures you sustain the benefits – cost savings, leverage, and flexibility – over the long term.
In an era where IT budgets are scrutinized and technology needs evolve rapidly, this approach transforms your SAP support plan from a static expense into a dynamic lever for business advantage.
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