Introduction – Why Contract Terms Matter as Much as Licenses
Most companies pour their energy into negotiating SAP license counts and upfront discounts. However, the fine print in support and contract terms can carry equal or greater impact on long-term costs and flexibility.
Hidden clauses around support tiers, renewal terms, and uplifts can turn a great license deal into an expensive commitment over time.
In other words, locking in good contract terms is just as critical as getting a good price on licenses. Many savvy CIOs, CFOs, and IT procurement leaders now scrutinize support and contract clauses as closely as the software licenses themselves.
By understanding SAP’s support offerings and the key contract clauses to watch, you can avoid unexpected cost escalations and maintain more control over your SAP investment.
This overview covers the support options, renewal mechanics, and crucial clauses that shape your total cost of ownership with SAP.
SAP Support Offerings
SAP provides several tiers of support for on-premises software, each with different costs and benefits:
Standard Support: SAP’s basic maintenance tier (roughly 19% of license fees per year). It provides essential fixes and updates with limited SLAs and slower response times. Large enterprises rarely opt for Standard due to its narrower scope, although it can be suitable for smaller or less critical systems.
Enterprise Support: The default level for most customers (around 22% of license cost annually). Enterprise Support includes 24/7 support, regular patches and upgrades, and defined SLAs for critical issues.
SAP positions this as the standard for all but the smallest customers. Because it offers faster response and more comprehensive service than Standard, nearly all mid-size and large enterprises end up on Enterprise Support despite the higher fee.
Premium Support (MaxAttention, etc.): SAP’s elite support services (like MaxAttention) provide dedicated engineers, custom optimizations, and on-site assistance beyond standard support.
These come at a significantly higher cost (often an extra fee or percentage on top of Enterprise Support). Premium support is typically reserved for the largest customers or in truly mission-critical environments where even minimal downtime is unacceptable.
Third-Party Support: Independent providers (like Rimini Street) offer support for SAP systems at roughly half the cost of SAP’s support. While they can’t provide new SAP version upgrades, they do offer bug fixes, tax/regulatory updates, and general support for your existing software.
This alternative has gained popularity (especially in North America) among companies looking to dramatically cut support costs on stable SAP systems. SAP doesn’t endorse this route, but it can be a viable strategy if you plan to stay on your current software version for an extended period.
Commercial Terms Impact on Long-Term Cost
Upfront license discounts can be quickly overshadowed by ongoing support costs and the terms of the contract. At ~20% of license value per year, SAP maintenance means you effectively repay the cost of the software every 4–5 years.
For example, if you negotiated a 50% discount on a $1 million SAP purchase (paying $500k upfront), you’d still pay about $110k in support fees annually.
In less than five years, those support fees will sum to more than your initial license spender – eroding the benefit of that discount. And if your contract allows annual fee increases, the impact compounds further.
Several contract terms directly drive long-term cost:
- Annual Uplifts: Most SAP contracts let SAP raise support fees yearly (tied to inflation or a fixed 3–5%). Without a negotiated cap, these small increases snowball into large costs over time.
- Currency Terms: In global deals, paying in a foreign currency can introduce budget risk. If, say, your contract is in euros but your company budgets in USD, exchange rate swings might spike your costs unexpectedly.
- Renewal Terms: Automatic renewals or built-in hikes at renewal can lock you in at higher costs. For example, some cloud contracts auto-renew with a pre-set 5% increase if you don’t cancel in advance.
These “fine print” items often have more financial impact than a one-time license discount. Negotiating protections – including caps on increases, stable currency clauses, and flexible renewal conditions – early on is crucial for controlling the total cost of ownership.
Renewals and Uplifts
Renewals and fee increases are a major driver of long-term SAP spend. In on-premise support contracts, SAP often ties annual maintenance adjustments to the Consumer Price Index (CPI) or a fixed rate (approximately 3% per year).
It may not sound like much, but a 3% hike every year compounds to over 15% in five years. After any initial price-lock period, these increases kick in and can steadily push your maintenance spend higher.
For cloud subscriptions, renewal time can bring even steeper adjustments. Cloud contracts usually run for a term (e.g., 3 years), and when it’s time to renew, SAP might apply a significant uplift (5–10% or more) if not contractually limited.
Plus, if you don’t agree to the new price, you risk losing access to the service – a strong lever for SAP. Some SaaS agreements also auto-renew unless you give early notice, so missing a deadline could lock you into another term at higher rates.
Negotiating caps on uplifts is essential to avoid surprises. The ideal moment is before signing the contract (or at renewal time, when you have leverage). Aim to include language capping support fee increases (for example, “no more than 2% per year” or “not above CPI”).
Some customers negotiate an initial multi-year freeze (no increases for the first 2–3 years) followed by a capped rate.
For cloud deals, push for limits on renewal pricing – or even an option to renew at the same rate for one extension term. Securing price protections can save a fortune over the contract’s life. Once you’re locked in, remember, SAP has little incentive to restrain increases – so get those limits in writing up front.
Global Contracts and Currency Terms
For multinational customers, currency and regional pricing terms can dramatically affect costs. If your SAP contract is in a currency different from your home currency, exchange rate swings may cause your costs to rise (or fall) without warning.
For example, a US-based company paying SAP in euros will see its costs rise in USD if the euro strengthens. Over a multi-year deal, such FX fluctuations can wreak havoc on budgets, so most companies prefer to eliminate that volatility.
Regional pricing differences add complexity, too. SAP’s pricing and support rates have varied by country over the years, so if you have separate regional contracts, you might be paying inconsistent rates for similar licenses. Consolidating to a global agreement can be helpful, but then selecting the right currency and terms is crucial.
To manage these risks, try to price your SAP agreement in a stable, familiar currency (often your HQ’s currency). For instance, North American firms often push to have SAP contracts denominated in USD even when dealing with SAP’s European entity.
Also, ensure support percentages and increase rules are uniform across regions so one country isn’t facing steeper hikes than another.
You might seek a clause that triggers a pricing review if exchange rates swing beyond a certain threshold (SAP may not always agree, but raising the issue underscores your concern).
The goal is to avoid a scenario where a currency shift or regional quirk blows up your IT budget – good contract planning makes costs predictable worldwide.
Exit and Flexibility Clauses
It’s crucial to build in exit and flexibility options at the start of an SAP contract.
Once you’re locked in, your leverage is limited, so the contract needs to preserve some freedom to adapt or exit if needed.
For cloud subscriptions, be very clear on how and when you can exit. Many cloud deals auto-renew and can bind you unless you give notice months in advance.
Make sure the contract spells out the end-of-term options: Can you reduce users or scope at renewal?
Are you free to not renew without penalty? Avoid “evergreen” clauses that automatically renew the contract on the same terms (or higher prices) without an opt-out. If you think you might leave a cloud service in the future, negotiate data export rights and cooperation terms so you can transition off smoothly.
For on-premise licenses, check the change-of-control clause. If your company is acquired or merged, you want the right to transfer your SAP licenses and support to the new entity.
Without this protection, SAP could treat an acquisition as a termination event – meaning the new merged company might have to re-license or pay fees to keep using SAP. Ensure your contract explicitly allows assignment to a successor or affiliate in the event of mergers, acquisitions, or corporate restructuring.
Also consider flexibility to adjust your SAP usage. Over time, you might stop using certain SAP modules or divest a business unit. Standard SAP policy doesn’t let you easily drop maintenance on unused licenses – you usually keep paying unless you give up the licenses entirely.
It’s worth discussing provisions for reducing scope or rebalancing your investment.
For example, negotiate the ability to terminate support on truly unused products or to apply that maintenance spend to new SAP solutions your company might adopt. SAP may not readily agree to waive fees, but having the conversation can lead to creative compromises down the line.
For on-premise customers, one possible “exit” route is switching to independent support (as mentioned earlier). If SAP’s support costs or terms become too burdensome, you could decide to let your SAP maintenance lapse and use a third-party support provider instead.
Be mindful of any notice requirements to terminate SAP support so you aren’t auto-billed for another year, and know that rejoining SAP support later may incur penalties. Still, this path can give you flexibility to run your systems on your own terms without SAP’s constraints.
In summary, don’t sign a contract that traps you. Build in options wherever you can: the option to exit a service cleanly, to transfer the agreement if your company changes, and to adjust the scope if your needs evolve.
These clauses might seem minor now, but they become critical if things change in your business.
Key SAP Contract Clauses to Watch
Below are some critical SAP contract clauses that warrant close attention. Each can significantly affect cost and flexibility over time:
| Clause | Why It Matters | Risk if Ignored | Negotiation Strategy |
|---|---|---|---|
| CPI Uplift (inflation) | Drives annual maintenance fee increases (tied to CPI or a fixed %). | Compounding cost: Fees can snowball year after year, blowing budgets. | Negotiate a cap on yearly increases (e.g. CPI-only or max 3%). Lock rates for initial years if possible. |
| FX Terms (currency) | Sets contract currency and how exchange rates are handled in global deals. | Budget uncertainty: Currency swings can make costs unpredictable. | Fix the contract in a stable currency (for example, USD for US companies) or include a clause to adjust if FX moves beyond set ranges. |
| Change of Control (assignment) | Addresses mergers/acquisitions – whether your licenses and contract can transfer to a new owner. | Termination or fees: Without protection, SAP could demand re-licensing or block transfer in an M&A event, causing big costs. | Ensure assignment rights so you can transfer the contract to a new entity or affiliate without needing SAP’s consent. |
| Renewal Auto-Increase (cloud) | Automatic hike on subscription renewals (often 5–10% or to current list price). | Cost spikes: You could be locked into paying much more at renewal with no leverage to negotiate. | Cap or fix renewal rates in advance. Negotiate for at most CPI-based increases, or even flat pricing upon renewal for a certain term. |
SAP Support & Terms Essentials Checklist
- ✓ Confirm your support tier. (Are you on Standard, Enterprise, or Premium? Ensure you know what level you’re paying for and why.)
- ✓ Benchmark the support percentage against norms. (Check what percentage of license cost you pay in support fees, and how that compares to SAP’s standard rates or industry benchmarks.)
- ✓ Review CPI uplift language. (Does your contract allow annual increases? If so, how are they determined, and are they capped?)
- ✓ Audit FX/currency terms in global contracts. (Identify your contract currency and any exposure to exchange rate changes. Plan for mitigating currency risk.)
- ✓ Ensure change-of-control protections. (Make sure there’s a clause allowing contract/license transfer in case of mergers or acquisitions.)
- ✓ Scan renewal clauses for hidden increases. (Look for auto-renewal provisions or built-in price hikes at renewal, especially in cloud agreements, and plan to address them.)
Related articles
- SAP Support Tiers Explained – Enterprise vs Standard vs MaxAttention (and When to Consider Third-Party)
- Managing SAP Contract Renewals – Avoiding Uplifts and Securing Price Caps
- SAP Cloud Contract Flexibility – Exit Rights and Change-of-Control Clauses
- Global SAP Contracts – Managing Currency Fluctuations and Multi-Country Discounts
FAQs
Q: What percentage is SAP Enterprise Support?
A: SAP Enterprise Support is generally 22% of your software license value per year. For example, if you purchased $1 million in SAP licenses, the annual Enterprise Support fee would be about $220,000. (By comparison, SAP’s Standard Support is roughly 19%, though large enterprises rarely use that tier.)
Q: Can SAP support fees be negotiated?
A: Yes, support fees and terms can be negotiated. SAP might quote the default 22% rate, but many customers – especially large ones – push back. You could negotiate a reduced percentage (SAP offers a 17% program for very large accounts, for instance) or at least secure a multi-year freeze or cap on increases. At a minimum, insist on clarity around uplifts (e.g., no more than CPI inflation). In some cases, customers even use the option of third-party support as leverage to get SAP to improve maintenance terms or pricing.
Q: Do FX terms really impact multi-year contracts?
A: Absolutely. If your SAP fees are billed in a foreign currency, changes in the exchange rate over time can make a significant difference. Imagine a UK firm paying SAP in US dollars: if the pound weakens against the dollar, the cost in pounds of the SAP contract will rise even if SAP’s price in dollars stays the same. Over a 5-year contract, such shifts can add unexpected costs. That’s why it’s wise to either negotiate in your local currency or include provisions to adjust for major currency swings, ensuring you’re not caught off guard by FX fluctuations.
Q: What’s the risk of missing change-of-control protections?
A: If your contract lacks a change-of-control clause, a merger or acquisition involving your company could trigger a licensing crisis. SAP could refuse to recognize the new entity or demand that the new company re-license all the software. In practical terms, it means that during an M&A event, you might face surprise costs or even loss of support because the agreement can’t be transferred. This is a huge risk at a very sensitive time. Including robust change-of-control (assignment) rights in your contract prevents SAP from exploiting an ownership change and ensures continuity of your SAP usage.
Q: How do cloud subscription renewals differ from on-prem support?
A: The biggest difference is leverage. With on-premise licenses, if you stop paying support, you still own the software and can continue using it (you just won’t get updates or help desk support). With a cloud subscription, if you don’t renew, you lose access to the software entirely once your term expires. This means at renewal time, SAP has more leverage to raise prices because walking away is much harder. Additionally, cloud contracts often have pre-set renewal increases and require you to give notice if you plan to cancel. In short, cloud renewals need extra vigilance: you should negotiate any increase limits upfront and keep track of notice deadlines, since you can’t coast on an old version like you could on-prem.
Five Expert Recommendations
- Always negotiate CPI caps early. (Lock in a reasonable limit on annual support increases from the outset of the contract.)
- Align global contracts to a stable currency if possible. (This avoids budget surprises from exchange rate fluctuations across regions.)
- Treat support % as a negotiable item, not a fixed fee. (Don’t accept the standard rate as immovable – ask for a better rate or added value.)
- Never ignore renewal clauses — they drive future cost. (Scrutinize and negotiate how renewals will work to prevent unwelcome cost jumps later.)
- Build exit and flexibility rights into every SAP contract. (Ensure you have options to change or leave without catastrophic penalties if your business needs shift.)
Read about our SAP Advisory Services
