SAP Negotiations: 10 Tips
Negotiating SAP software contracts is a high-stakes process that can yield millions in savings if handled correctly.
This article provides ten practical tips to help enterprises negotiate SAP licensing agreements more effectively, reducing costs, mitigating compliance risks, and securing flexible terms for future growth.
Negotiation with SAP is complex, but with the right strategy, you can achieve a fair deal that meets your business needs.
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1. Prepare Early and Set Clear Objectives
Successful SAP negotiations start well before you meet with SAP’s sales team.
Begin preparations 6–12 months in advance of any major contract event (new purchase or renewal). Define your objectives clearly – for example, target a specific cost savings (e.g., “reduce SAP licensing spend by 25%”) or critical terms (like audit protections or a cap on maintenance fees).
Assemble a cross-functional negotiation team including IT (to detail requirements), Procurement/Finance (to drive pricing and terms), and Legal (to review contract language).
Use this time to gather data on your current SAP usage and spend, identify pain points, and decide on your “must-haves” versus “nice-to-haves” in the negotiation.
Key preparation steps:
- Inventory current usage: Audit all SAP users, modules, and usage metrics. Document what you have and what you use.
- Identify needs & goals: Pinpoint which licenses or new SAP products you truly need for the next few years. Set goals for cost savings and terms (e.g., “at least 30% discount and the right to swap unused licenses”).
- Form your team: Engage stakeholders early – IT for technical needs, finance for budget limits, and legal for reviewing SAP’s contract drafts.
- Research benchmarks: Understand typical discounts companies of your size get, and any relevant market trends (such as SAP pushing cloud subscriptions, which might make them more flexible on price).
Read How to Negotiate with SAP.
2. Audit Your Current Usage and Eliminate Shelfware
Before negotiating, take a hard look at your existing SAP licenses. It’s common for companies to be over-licensed, paying for software that isn’t being used (known as shelfware). Run SAP’s own measurement tools (like USMM and LAW) or internal audits to find unused user accounts, idle modules, or engine licenses you bought but never deployed.
These represent immediate savings opportunities: you can attempt to terminate, exchange, or get credit for unused licenses during negotiations instead of continuing to pay maintenance on them.
For example, if you discover 100 unused SAP user licenses, you should push SAP to allow you to drop them or credit their value toward new products you need. Showing SAP that you know your usage cold will prevent them from selling you “extras” you don’t need.
By entering talks with data on what you use versus what you’re paying for, you can confidently remove unnecessary items and avoid overbuying going forward.
3. Right-Size User Licenses (Optimize License Types)
SAP’s named user licenses come in different types (e.g., Professional, Limited Professional, Employee Self-Service), each with vastly different price points. One size does not fit all – you must right-size licenses to each user’s needs.
Review every user account and ensure they have the appropriate license type. For instance, a casual employee who only checks pay stubs in SAP should have an inexpensive Self-Service license, not a full Professional license.
Regularly reclassify users if their roles change or if you find someone with a too-powerful license for their actual usage.
Optimizing license assignments can significantly cut costs – named user licenses often make up 40%–70% of SAP contract value, so this is a big lever for savings. Below is an example of typical SAP license list prices (one-time fees) for on-premise users:
| License Type | Approx. List Price (USD) per User | Usage Description |
|---|---|---|
| Professional User | $3,000 – $4,000 | Full access for power users and admins |
| Limited Professional | $1,500 – $2,000 | Restricted access for specific roles |
| Employee Self-Service | ~$500 | Self-service or occasional use |
Note: These are rough list price ranges. Enterprises usually negotiate substantial discounts off these prices (50% or more for large deals), and annual support (~20% of license cost) is additional.
By optimizing license types, one company avoided a $500K true-up: an internal review found hundreds of users assigned Professional licenses who only needed Limited access, correcting this before the SAP audit prevented a huge bill.
Make it a practice to routinely reconcile user roles with license types and purge duplicate or inactive accounts. This ensures you’re only paying for what’s truly needed.
4. Address Indirect Access and Compliance Risks
Indirect access – when non-SAP applications or external users indirectly interact with data in SAP – is a notorious pitfall. SAP will charge for this usage if it’s not properly licensed, and the costs can be shocking.
For example, in a well-known case, SAP pursued a customer for £54 million in fees because the client’s Salesforce system was indirectly pulling data from SAP. To avoid such nightmares, proactively discuss indirect usage in your negotiation.
SAP has introduced a Digital Access licensing model (document-based licensing) as a way to license indirect use by counting documents (sales orders, invoices, etc.) created via external systems.
Determine if the Digital Access model or the traditional named-user model is more cost-effective for your integration scenarios – this depends on your transaction volumes. Negotiate protections for indirect use, such as an agreed definition of what counts as indirect usage, a reasonable price or volume cap for digital documents, or even an upfront allotment of free documents.
The goal is to ensure you won’t be ambushed later by an audit finding “unlicensed” indirect activity.
By being transparent about your system interfaces (e.g., e-commerce platforms, CRM systems) and securing an agreement on how they’re covered, you turn a major compliance risk into a manageable, budgeted line item.
5. Leverage Upcoming Migrations (SAP S/4HANA) for Better Terms
Major shifts in your SAP landscape – like migrating from ECC to SAP S/4HANA or moving to SAP’s cloud (e.g. RISE with SAP) – present prime negotiation opportunities.
SAP is very keen to transition customers to its newer platforms, so use that to your advantage.
If you are planning (or even considering) an S/4HANA migration, let SAP know and ask for incentives: for instance, conversion credits to swap your old licenses for new ones one-to-one, discounted S/4HANA user licenses, or extended maintenance on legacy systems during the move.
Evaluate SAP’s conversion programs (there are options like contract conversion vs. product conversion) carefully – each can impact your flexibility and cost. The key is not to accept the first offer blindly: you might negotiate that a portion of your existing investment carries over as credit, or that you get bundled migration services/training included.
Timing matters too; as SAP’s 2027 support deadline for ECC nears (if applicable), SAP sales reps have quotas to get customers onto S/4HANA or RISE. This can translate into bigger discounts if you negotiate at the right moment.
Always model the total cost of ownership for the new solution (licenses + cloud infrastructure + integration costs) and use that to push for a fair deal.
A well-negotiated S/4HANA migration agreement can save millions and set you up with modernized terms rather than simply porting over all the old, restrictive ones.
6. Secure Multi-Year Pricing Protections
An SAP deal might look great in year one, only to become overpriced later due to escalations. Always negotiate price protections for the future. SAP’s standard contracts often allow annual list price increases (some agreements bake in up to 5–10% per year!), which can erode your savings.
Insist on a cap for year-over-year price hikes, or lock in a fixed price for additional licenses for a defined period. For example, you could negotiate that the price per user license will not increase for the next 3 years, or any increase is capped at 3% annually.
Similarly, if you anticipate needing more licenses down the road, include a “most favored pricing” clause: any additional purchases of the same license type will receive at least the same discount or unit price as your current deal.
This prevents SAP from quoting higher prices later when you’re locked in. If you’re entering a multi-year enterprise agreement or subscription, also negotiate limits on renewal uplifts. The aim is to maintain the value of your deal over time.
Without these protections, you might save 30% today only to see maintenance or extension costs jump dramatically in a couple of years, wiping out those gains. Lock in the discounts and keep future pricing predictable.
7. Align the Contract with Your Business Roadmap
Your SAP contract should reflect your company’s growth and change plans, not trap you in a static snapshot. Align the deal with your business roadmap. If you expect to acquire companies, divest a division, or expand into new regions, build in flexibility for that.
For instance, negotiate the ability to transfer or reallocate licenses across subsidiaries, or to adjust license counts annually based on business changes (sometimes called “flex-down” or “flex-up” rights).
Also, we aim to co-term contract end dates when possible – having a patchwork of SAP agreements expiring at different times weakens your negotiating leverage and adds administrative hassle. It’s often better to consolidate renewals so they come due together, allowing you to negotiate from a position of a larger, unified spend.
During negotiations, let SAP know your long-term plans: if you anticipate needing additional SAP modules (SuccessFactors for HR, Ariba for procurement, etc.), consider discussing them now.
SAP may offer bundle deals or at least commit to pricing protections for those future additions, by ensuring the contract scales with your needs – whether through pre-negotiated pricing for extra users or the right to swap licenses if you change a business process – you avoid having to sign expensive add-on deals later under less favorable terms.
In short, make the contract a living framework that supports your future expansion and changes as much as it covers your current state.
8. Tackle Maintenance and Support Costs
Annual maintenance fees (support fees) are a huge component of SAP’s cost. SAP typically charges ~20–22% of the license purchase price every year for support.
Over a 5- or 10-year period, you end up paying more in maintenance than the original license cost! Negotiating on maintenance can yield big savings: ask for a reduction or cap on the support percentage.
For example, if SAP is charging 22%, consider negotiating a lower rate, such as 18–20%, or a temporary rate freeze for a few years. Also, be aware of SAP’s practice of “pegged” maintenance. If you got a deep discount on licenses, ensure that the maintenance is calculated on the discounted price you pay, not the original list price (this should be explicit in the contract).
In recent years, SAP has even increased support fees (e.g., adding inflation adjustments of several percent annually), so try to include contract language that limits maintenance fee increases.
Another angle is to evaluate third-party support providers (like Rimini Street) – even if you don’t switch, having a quote from one can provide leverage to negotiate a better deal with SAP’s support or convince SAP to throw in additional support benefits.
Finally, scrutinize the SLA (Service Level Agreement) terms if you are on SAP cloud services; make sure the support response times and system uptime commitments meet your business needs, or negotiate for credits/penalties if SAP fails to meet them.
The bottom line: don’t treat maintenance as untouchable overhead – it can and should be negotiated as aggressively as the upfront license fees.
9. Negotiate Important Contract Clauses (Not Just Price)
SAP’s standard contract terms are vendor-centric, but many of them can be negotiated or improved. Pay close attention to the fine print and push for terms that protect you.
Key areas to focus on include:
- Audit and compliance clause: Limit audit frequency (e.g., no more than once per year with 30 days’ notice) and seek to remove any “surprise audit” language. Ensure any compliance true-up will honor your negotiated discounts rather than the full list price.
- Usage definitions and flexibility: Get clarity on how SAP defines user categories, processor metrics, or “licensed consumption.” If you negotiate any special arrangements (like the right to temporarily reassign licenses or use a test system for free), make sure they’re written into the contract. You can also ask for the right to swap license types (e.g., convert some Professional users to self-service users later) or to terminate unused cloud subscriptions with notice, giving you flexibility if your needs change.
- Liability and termination: If possible, have legal review and soften overly strict clauses. For cloud services, ensure data protection and liability clauses meet your standards. Try to include a termination for convenience for cloud subscriptions (even if it’s with some penalty, better than being locked in completely).
- SLA and remedies: For any critical SAP service, negotiate an SLA that includes meaningful remedies. For example, if uptime drops below the threshold, you get service credits or the right to terminate. Having these in writing holds SAP accountable beyond just selling the licenses.
While SAP won’t agree to everything, you can often get concessions if you ask.
For instance, many companies have successfully added an addendum to modify SAP’s default audit clause or gotten explicit language allowing certain indirect uses.
Remember, everything is negotiable to some degree – don’t accept boilerplate if it doesn’t work for you. A well-negotiated contract isn’t just about a low price; it’s about preventing future headaches by clearly defining rights and responsibilities.
10. Use Timing and Competitive Leverage
Finally, be strategic about when and how you negotiate. SAP, like many vendors, has sales targets each quarter and year-end, and they often dangle extra discounts if you sign before a deadline (e.g., “deal must close by Q4 end to get an extra 5% off”).
This can work in your favor: the end of SAP’s fiscal year (December) is typically when they’re most eager to close deals, so you might achieve significantly better pricing or freebies. Plan your negotiations to coincide with these periods if you’re truly ready to sign.
However, don’t let the rush force you into a bad deal – it’s better to walk away or delay than agree to unfavorable terms just to meet their quarter-end. In parallel, leverage competition and alternatives.
Even if you’re an SAP shop, consider obtaining quotes or information from Oracle, Microsoft Dynamics, or other software that addresses similar needs. Let SAP’s team know you have options.
For example, you might mention “We’re also evaluating Oracle for this new CRM module” – this signals to SAP that they need to put their best offer forward.
Another leverage point is the possibility of third-party maintenance (as mentioned earlier) or delaying a project – anything that shows SAP you are not desperate to close.
Use these external pressures tactically, always in a professional manner. The combination of timing it right and showing that you have Plan B’s is extremely powerful: SAP will be far more inclined to grant concessions when they fear losing the deal.
Ultimately, make SAP compete for your business and don’t hesitate to ask for the maximum discount and most favorable terms – you often won’t get what you don’t ask for.
Recommendations
- Do your homework on usage: Enter negotiations armed with detailed data on your current SAP usage and clear internal requirements. This prevents overspending and strengthens your arguments for a better deal.
- Aim high in negotiations: Set ambitious targets for discounts and terms (based on industry benchmarks) and put all your requests on the table. You can always trade something later, but you can’t get what you don’t ask for.
- Leverage timing but stay in control: Use SAP’s quarter-end or year-end rush to your advantage to secure better pricing, but don’t sacrifice important terms due to deadline pressure. Be willing to pause talks if needed; a short delay can be better than a costly long-term mistake.
- Focus on total value, not just upfront price: Negotiate the whole package – license discounts, maintenance rate caps, future purchase price locks, and contract flexibility (like conversion rights or the ability to reduce licenses). This holistic approach ensures savings aren’t undone by hidden costs later.
- Insist on clear contract language: Every special term or concession you negotiate must appear in writing in the contract or order form. Ambiguity only benefits the vendor, so nail down the details on user definitions, audit terms, and any promises made.
- Maintain a collaborative tone: While being firm, keep negotiations professional and constructive. Building a positive relationship with SAP’s sales reps can encourage them to advocate for you internally. They are more likely to seek a “win-win” if they see you as a long-term partner rather than an adversary.
- Don’t skip the legal review: Have your legal team review and, if possible, negotiate critical clauses (audit rights, liability, data protection for cloud, etc.). Even if SAP won’t change much, understanding those terms is vital, and sometimes you can get minor but important tweaks.
- Double-check the final deal: Before signing, cross-check that all negotiated discounts and terms are correctly reflected in the paperwork. If something discussed isn’t in the contract, speak up before it’s executed – after signing, it’s too late.
- Plan for the future: Treat this negotiation as one step in an ongoing relationship. Document what was agreed, keep notes for next time, and include mechanisms (like shorter renewal cycles or review clauses) that give you opportunities to renegotiate as your needs or market conditions change.
- Consider expert help for big deals: If the SAP contract in question is especially large or complex, don’t hesitate to involve independent advisors or use customer network resources (like SAP user groups) to validate your strategy. Specialized licensing experts can often identify negotiation angles you might miss.
Read SAP Cloud Negotiations: New and Renewal Contracts.
FAQ
Q1: How much of a discount off SAP’s list price is realistic to expect?
A1: It depends on your deal size and leverage, but large enterprises often negotiate 30–50% or more off list prices. Discounts of 50%+ are not uncommon for big multi-million dollar deals or year-end negotiations. Smaller purchases might see 15–30%. Always benchmark against peers if possible. Start high in your ask, and let SAP counter–aim for the upper end of what’s typical for your size.
Q2: Can we negotiate SAP’s annual maintenance fees or are those fixed?
A2: You can negotiate maintenance. While SAP’s standard is ~22% of the license price annually, many customers have secured lower rates or caps on increases. For example, you might get SAP to agree to 18% maintenance, or to freeze the rate for a couple of years. At minimum, ensure maintenance is based on what you paid (after discounts) rather than the full list value. It’s a significant area for potential savings.
Q3: What strategies help in negotiating with SAP’s cloud (subscription) offerings like RISE with SAP?
A3: Many of the same principles apply. Focus on total cost of ownership – subscription fees, included services, and any extras (data storage, etc.). Negotiate caps on annual price increases for subscriptions, and ensure exit flexibility (for example, shorter term or a termination clause) in case the service doesn’t meet expectations. Also, leverage SAP’s desire to sign cloud customers – ask for credits (e.g., free migration support or modular add-ons included) and compare equivalent proposals from competitors like Oracle Cloud or Microsoft to keep SAP’s pricing honest.
Q4: How can we mitigate the risk of an SAP software audit turning into an unexpected bill?
A4: Proactive management and contract clauses are key. Internally, run regular license audits using SAP tools (USMM/LAW) to ensure compliance and fix issues before SAP audits you. During negotiation, negotiate the audit clause: require advance notice, reasonable frequency (annually at most), and agreement that any license shortfall can be purchased at the pre-negotiated discount. Also, address indirect access licensing upfront (via the Digital Access model or specific terms) so it doesn’t become a surprise audit claim. With these measures, an audit should simply be a formality, not a financial ambush.
Q5: Is it better to go with a shorter contract or a longer commitment with SAP?
A5: It depends on your situation. A longer contract (3-5 years) can lock in discounts and provide price predictability, which is good if you’re confident in your future SAP usage. SAP may also offer bigger discounts for multi-year commitments. However, a shorter term (1-2 years or yearly renewals) gives you more flexibility to renegotiate as needs change or if market prices improve. One strategy is to sign a longer deal but include mid-term review clauses or opt-out options. Ensure that, whatever term, you have protections against price hikes throughout that period.
Q6: What if SAP’s offer still seems too expensive or inflexible? Can we walk away?
A6: If the deal isn’t right, you should be prepared to pause or walk away. This is where having alternatives helps. Perhaps you delay a project, use an older version longer, or consider a third-party solution for some functions. Walking away (even temporarily) can be a powerful negotiation message. Often, SAP will come back with a better offer when they realize you’re willing to forego the purchase or renewal. Just be sure to communicate your concerns and give SAP a chance to address them – sometimes escalating within SAP (to a sales manager or executive) with your issues can result in a revised proposal that meets your needs.
Q7: How do we handle negotiations if we have multiple SAP contracts (from different acquisitions or divisions)?
A7: It’s best to consolidate and co-term these contracts if possible. Engage SAP about aligning expiration dates and merging agreements. This consolidation increases your spend leverage and simplifies management. When negotiating, present SAP with the total picture of your various contracts – they may offer a global discount or incentives to streamline everything under one enterprise agreement. If co-termination isn’t immediately feasible, at least coordinate the negotiations and use each event as an opportunity to gradually bring terms in line. Also, ensure consistent clauses across contracts (audit terms, discounts) so one unit of your company isn’t stuck with a worse deal than another.
Q8: SAP is pushing us to move to cloud subscriptions (RISE), but we have existing licenses – how can we use this in negotiation?
A8: SAP’s push to the cloud can be leveraged for you. If you have substantial existing investments (on-prem licenses), you can ask for credit or migration incentives to switch to RISE or cloud solutions. This might include allowing you to convert unused on-prem licenses value into cloud subscription credits, or getting a discounted subscription rate that recognizes your prior spend. You can also negotiate contract flexibility, such as the option to revert to on-prem or port subscriptions elsewhere if performance is not as promised. Use SAP’s eagerness by saying, “We are interested in cloud, but it needs to make financial sense given our past investments,” and let them sweeten the deal. If you prefer to stay on-prem for now, that’s okay too – just ensure you’re not penalized for it. Sometimes, hinting that you’ll consider cloud if the offer is good can get SAP to improve terms on either option.
Q9: What are some common mistakes to avoid during SAP negotiations?
A9: A few pitfalls to watch for: rushing the process (signing just to meet a deadline without fully vetting the contract), failing to verify usage (buying more licenses than needed or wrong types because you skipped internal analysis), and accepting SAP’s first quote or boilerplate terms (there’s almost always a better deal if you push). Also, don’t negotiate in silos – involve your stakeholders, so you don’t agree to something that IT or legal can’t live with. Finally, avoid burning bridges; a combative approach can backfire. You want a tough negotiation, not an antagonistic relationship. Keeping it fact-based and professional yields better results in the long run.
Q10: After the deal is signed, what should we do to prepare for the next negotiation or renewal?
A10: The work isn’t over when ink dries. Document everything from this negotiation – the discounts achieved, any special terms, and areas where SAP was resistant. Over the contract’s life, monitor your usage closely and keep a list of what you might need to negotiate next time (like new licenses or issues with current terms). Maintain a good relationship with your SAP account manager by having regular check-ins, but also engage in user groups or hire auditors periodically to stay sharp on compliance. When the next renewal or expansion comes up, start early again with an even better understanding of your usage and a record of past promises. Essentially, treat SAP license management as an ongoing process, not a one-time event. This way, you’ll be in a strong position every time you return to the table.
Read about our SAP Contract Negotiation Service.
