SAP has long held a significant and relatively conservative presence in the enterprise IT landscape. The vendor’s more recent push to the cloud (and resulting solutions and programs like S/4HANA Cloud and Rise with SAP) have revealed new agility – a positive for their customers’ fast-changing technology ecosystems. However, the vendor’s recent support fee increase has raised eyebrows and concerns. Effective January 1, 2024, SAP will increase the maintenance fees for existing contracts for SAP Standard Support, SAP Enterprise Support, SAP Product Support for Large Enterprises.
Despite expectations that SAP’s on-premise support fees would increase by around 3% (as they did last year), the software giant has recently announced it will again increase support prices by local CPI rates with a cap of 5%. The vendor seems to be hinting at positioning larger increases as a potential new norm.
It’s clear this is one more way SAP is “motivating” companies to transition to its cloud solutions. But the size of the support fee increase has caught some customers off guard. For enterprises that continue to make substantial investments in SAP’s on-premise solutions, this hike will likely put a strain on IT budgets.
Here are some tips to help enterprises minimize (or fully negate) the impact of higher SAP maintenance costs:
Explore SAP’s Cloud Solutions
As a preemptive action, enterprise customers even remotely considering a shift to the cloud should start assessing SAP’s cloud solutions now. This will help sidestep the potentially significant annual price escalations for on-premise support.
NPI recommends looking at more than one approach to SAP cloud and to consider at least two viable go-forward options from a full/minimum perspective. This is an easy first step in improving pricing transparency and negotiation leverage.
Optimize Current On-Premise Environments
If you’re not ready to migrate to SAP’s cloud solutions, then it’s critical to optimize your current on-premise environment and agreement for savings. Yes, SAP negotiations can be tough – particularly for customers that don’t have the leverage of a major expansion or cloud investment. But there are other paths to savings.
Even if there’s resistance to shift to the cloud immediately, there’s potential value to be unlocked from current deployments. NPI has observed that a number of SAP clients operate sub-optimally. By refining setups and reorganizing licenses, firms can realize substantial annual savings. Achieving this typically requires deep SAP licensing and negotiation expertise – so be sure to arm your IT procurement team accordingly.
Now is the Time to Optimize Your SAP Estate for Savings
SAP’s recent support fee increase highlights why it’s more important than ever for businesses to be proactive, informed, and strategic in their approach to SAP cost management. Whether this cost increase pushes you to explore SAP’s cloud solutions or maximize your current estate, ensure you’re making decisions that safeguard your IT budget.
If you’d like to learn more about how you can mitigate SAP’s recent support fee increase, NPI can help. Contact us to learn more.
- Bulletin: Unlocking Savings on the SAP S/4HANA Conversion Journey
- Bulletin: Is RISE with SAP a Fit for Your Business?
- Blog: 5 Ways to Cut Costs During Your Next SAP Contract Negotiation
- NPI Service: SaaS License Optimization Assessment Services
- NPI Service: IT Price Benchmark Analysis & Contract Negotiation Intel