September 10, 2020 | Ken Conz | Manager, Technical Support Services

When it comes to support for most SAP products, two days of every year stand out: January 1, when the new support year starts, and September 30, the deadline day by which SAP users must notify SAP of their intent to cancel their annual support agreement to avoid being auto-renewed for the next year.

We’re about a month out from the cancellation notice deadline, so if you have reservations about the substantial cost of your SAP-provided support, now is the best time to assemble and engage your internal stakeholders for a support review. You might ask the team whether you are getting the best value for what you are paying each year.

Your Two Options on September 30

By September 30, you have two choices:

  1. Do nothing and be automatically locked into your SAP annual support/maintenance contract for all of 2021.
  2. Exercise your right to cancel by sending a “notice of cancellation” letter.

Option 1 is easy but irreversible. Given the expense of SAP support, even if you choose to do nothing, we recommend having procurement and sourcing review the fine details of the contract(s) and run an internal compliance audit to avoid unanticipated costs or licensing issues.

Option 2 is also easy and is simply the legal way of delaying a final decision on renewal. Sending a cancellation letter (here is a template your organization can use) buys you 90 more days in which to research alternative support options from either SAP, such as Standard Support, or from third-party SAP support vendors like Spinnaker Support.

Why Exercising your Right to Cancel is a Smart Tactic

No matter what your motives, by sending the termination notification, you buy yourself an extra three months to discuss your strategic SAP road map and earn valuable negotiating leverage with SAP. In some countries, such as Italy, companies are required to renegotiate contracts on an annual basis.

As detailed in recent Gartner research on SAP[i], your alternatives can include

  • Demanding cost transparency from SAP
  • Developing a stronger price negotiation strategy (e.g., removing shelfware, receiving credits for an upcoming cloud migration)
  • Moving from Enterprise Support to Standard Support (reducing support costs by 14% per year)
  • Switching to an independent third-party SAP support provider (reducing support costs by over 60% per year)

The Advantages of Switching to Spinnaker Support

The primary impetus for switching to third-party support is the cost model. Third-party support brings immediate “hard” savings of about 60% compared to SAP fees. You can reduce one of the largest expenses in your IT budget and reallocate those precious funds to strategic IT initiatives (e.g., new software, hardware refresh, new hires) or recognize them in bottom-line savings.

SAP customers tell us that they are investigating replacements for SAP support due to one or more of the following primary circumstances:

  1. SUSTAIN: 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.
  2. FINANCIAL RELIEF: They are financially distressed or under pressure to cut costs immediately due to competition, changes in the market, or business circumstances (e.g., a merger or acquisition).
  3. MIGRATION: They are migrating either away from SAP or to a cloud solution and want to save on expensive services they will be using less.

It’s the Time to Cancel

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.

If you’re dissatisfied with the cost of your SAP support, it’s time to consider how Spinnaker Support’s third-party SAP support can benefit your organization. Start your journey by visiting our interactive infographic “It’s About Time” and reading the details of The Time to Cancel.

 

 

[i] Gartner, “Use SAP’s Business Suite 7 Support Extension to Manage Costs and Optimize Your S/4HANA Transition,” Bill Ryan, Lori Samolsky, Fabio Di Capua, Roberto Sacco, Jocelyn Gerard, 21 April 2020,