SAP Contract Renewal Playbook: Leveraging Competitive Alternatives for Negotiation

SAP Contract Renewal Playbook – Competitive Leverage (Third-Party Support & Alternatives)

Renewing an SAP contract is a high-stakes endeavor, and savvy CIOs and CTOs use every advantage to secure better terms.

This playbook explains how to leverage competitive options, such as third-party support providers or alternative software solutions, as powerful negotiation tools with SAP.

By signaling credible alternatives, enterprises can create bargaining power that drives down costs, improves contract flexibility, and ensures SAP remains motivated to earn your business on your terms.

Read SAP Contract Renewal Playbook: Securing Future Flexibility Through License Swaps and Cloud Migration Clauses.

Competitive Leverage in SAP Renewals

Competitive leverage refers to leveraging the existence of viable alternatives to SAP’s offerings as a negotiating advantage.

SAP often assumes customers have no choice but to renew on SAP’s terms – but if you demonstrate that you do have options (and are willing to consider them), it shifts the power dynamic.

CIOs and CTOs should approach renewal discussions as a competitive bidding scenario rather than a sole-source vendor renewal. This mindset compels SAP to compete for your continued business, resulting in more favorable pricing and terms.

Shorter contract cycles and cloud transformations have made this especially relevant. SAP’s push toward S/4HANA and cloud subscriptions (like RISE with SAP) has been accompanied by rising support fees and pressure to lock into new agreements.

Annual maintenance for SAP Enterprise Support is roughly 22% of your license value, and SAP has introduced inflation-linked increases (e.g., 3–5% hikes in recent years).

If you face a 5% jump on an already hefty support bill, simply accepting it isn’t your only option.

By preparing credible alternatives (such as third-party support or even migrating certain modules to a competitor), you give yourself leverage to negotiate a better deal or cap these increases.

In essence, letting SAP know you have alternatives creates a healthy tension: they must either offer concessions to keep you, or risk losing revenue if you take your business elsewhere.

Read the SAP Contract Renewal Playbook for Mixed Landscapes.

Third-Party Support: A Powerful Negotiation Lever

One of the most effective levers in SAP contract negotiations is the option of third-party support. Third-party support providers (like Rimini Street, Spinnaker Support, Support Revolution, and others) offer independent maintenance for SAP systems at a fraction of SAP’s price.

These firms typically charge about 50% of SAP’s annual support fees, meaning an organization paying $2 million per year to SAP for support might get equivalent coverage for around $1 million per year externally.

They also often include support for customizations and older versions that SAP might not actively support, adding extra value.

By obtaining a quote from a third-party support vendor, you arm yourself with hard numbers to challenge SAP’s pricing. For example, if SAP is charging 22% of the license value and a third-party offers to support your environment for 11%, that represents a massive cost saving.

Even if you prefer to remain with SAP’s support in the long run, having this quote creates a bargaining scenario: “Why shouldn’t we switch and cut our maintenance spend in half?” That question alone puts SAP on the defensive, forcing them to either justify their cost or offer discounts and incentives to dissuade you from leaving.

Projected 5-Year Maintenance Costs: SAP Vendor Support vs. Third-Party Support (illustrative example for a $10M SAP license base). CIOs can save substantially, often 50% or more, by opting for third-party support, creating significant negotiation leverage.

In practice, savvy IT leaders use third-party support interest as a credible bluff (or genuine plan) during renewal talks. SAP is well aware that third-party support has gained traction, especially as many customers look to avoid high fees while they postpone an S/4HANA migration.

Notably, some Fortune 500 enterprises have successfully transitioned to third-party support, so SAP sales teams are aware that this threat is no longer considered “fringe.”

When confronted with a client exploring independent support, SAP’s typical reaction is to scramble to keep the maintenance revenue: they might suddenly propose a special discount on your support fees, a one-time credit, or additional services at no charge to convince you to stay.

In essence, floating the third-party support option puts a price tag on your loyalty.

To maximize this lever, get a formal proposal from a third-party provider before your SAP renewal discussions. Ensure the quote is detailed and covers your SAP products in scope. You don’t necessarily need to show SAP the document.

Still, you can confidently reference the specific savings (e.g., “We have an offer to cut our support costs by $1.2M annually with an independent provider”). This concrete data makes your position convincing.

Be truthful enough to be credible – even if you hope to stay with SAP, you should be willing to take the third-party route if SAP refuses to negotiate.

The mere existence of an alternative puts you in a stronger position to negotiate better terms on maintenance, subscription renewals, or even project services from SAP.

Table: SAP Enterprise Support vs. Third-Party Support (Typical Differences)

Using this option as leverage does not burn bridges if handled professionally. Many customers transparently tell SAP, “We’re evaluating third-party support to reduce costs – unless SAP can help us find equivalent savings.”

This opens the door for SAP to propose solutions (one customer dubbed this the “stay or go” discussion, where SAP had to assign a financial value to retaining the customer).

In some cases, SAP offered a 15–20% maintenance discount or credits toward future products when faced with the loss of a maintenance-paying client.

Those concessions would never have materialized without the competitive pressure.

In other cases, organizations have outsourced to third-party support, saved millions over a few years, and used those savings to fund their eventual transition to S/4HANA or other initiatives.

Either way, bringing a third-party support option to the table compels SAP to contend with real competition during your renewal.

Using Alternate Solutions to Pressure SAP

Beyond support contracts, another angle of competitive leverage is showing SAP that you have alternative solutions or vendors for the software capabilities their products provide.

In an SAP renewal or expansion, this could involve evaluating non-SAP platforms for specific functional areas and notifying SAP accordingly.

The goal is to create a “competitive bake-off,” even if SAP is your incumbent.

When SAP knows that an Oracle, Microsoft, Workday, or niche SaaS provider is being considered for a replacement or new project, it injects urgency into SAP’s sales approach.

They will work harder to retain or win your business with better pricing, terms, or added value.

For example, suppose your company is renewing SAP ERP and also considering a new CRM system. Let’s say you currently use SAP’s legacy CRM or Sales module, but you’re also looking at Salesforce.

Suppose SAP fears that an important footprint (like your CRM) might shift to a competitor. In that case, they will be more inclined to discount licenses or bundle additional products to persuade you to stick with SAP’s solution (e.g., pushing you towards SAP C/4HANA or Salesforce integration deals with SAP).

We’ve seen enterprises use this tactic effectively: one CIO openly evaluated Workday for HR while negotiating a SuccessFactors renewal, as a result, SAP significantly lowered the SuccessFactors renewal price and offered extra user licenses at no cost, knowing that losing the HR component could open the door for a broader defection to a competitor.

Key ways to leverage alternative solutions in negotiations include:

• Competitive RFPs: Run a formal RFP or vendor evaluation for the solution area in question (e.g., procurement systems, analytics, CRM). Even if you have a strong preference for SAP’s offering, a parallel evaluation of another vendor’s product (Oracle, Coupa, Microsoft, etc.) can yield competitive bids. Bringing those comparative quotes or value propositions to SAP provides hard leverage – SAP will realize it must match the competitor’s pricing or risk losing that portion of the business.
• Module-by-Module Pressure: Identify if any SAP module or component you use is replaceable by a best-of-breed alternative. This could be replacing SAP’s on-premise Business Warehouse with a Tableau/Power BI solution, or swapping SAP APO for another supply chain tool. If you indicate to SAP that you might drop a certain module upon renewal and move to another solution, it puts pressure on SAP to either allow you to drop it without penalty or improve the deal to keep it in place. (For instance, “We are considering moving our e-commerce off SAP Hybris to another platform – what can SAP do on pricing or flexibility if we retain Hybris?”)
• New Initiatives – Play One Vendor Against Another: For new software needs, don’t simply accept SAP’s proposal. Even if you lean towards SAP for integration benefits, obtain pricing from an outside competitor and inform SAP that you have this option. Often, SAP will respond with better bundles or incentives. For example, if you’re considering a new analytics tool and SAP wants to sell you SAP Analytics Cloud, mention that you’re also talking to Power BI or Tableau – SAP might then offer a larger discount or add-on cloud platform capacity to sweeten the deal.

The aim is not to start a vendor war for the sake of it, but to ensure SAP doesn’t take your renewal or expansion for granted. Alternative solutions provide tangible benchmarks against which to measure SAP’s offer.

In many cases, SAP will adjust its proposal when it sees that the customer is knowledgeable about competitive offerings and willing to switch for a better value. This tactic can influence not just price, but also contract terms.

SAP may agree to more favorable terms (such as flexible cancellation, price holds, or additional services) if it knows the customer is comparing those aspects with another vendor’s proposal.

One critical point: communicate strategically.

You don’t want to antagonize SAP by making threats that seem outlandish or purely tactical. Instead, position it as: “We have a responsibility to consider the best solutions and value for our company. Naturally, we’re looking at X solution as well to ensure we’re making an informed decision.”

This professional approach keeps the discussion grounded. It signals to SAP that while you value the partnership, you won’t hesitate to choose a different path if it’s objectively better for the business. That alone can prompt SAP to come back with a sharper pencil.

How SAP Might Respond and What to Expect

When you leverage third-party support interest or alternate vendors during negotiations, expect SAP to react in a mix of defensive and accommodating ways.

Understanding SAP’s likely countermoves helps you prepare your strategy and responses.

Here are typical ways SAP might respond once you introduce competitive pressure:

• Initial Dismissal or FUD: It’s common for SAP representatives to downplay third-party support or alternate products through FUD (Fear, Uncertainty, Doubt). They might say, “Third-party support can’t handle our latest updates or legal changes,” or “No other vendor can truly replace what SAP does for you.” Be prepared with relevant facts and customer references, if possible. (In reality, independent support providers often do provide tax/regulatory updates and bug fixes, and many non-SAP products can fulfill specific functions well. Your homework on these options will let you counter these claims.) Don’t get derailed by FUD – stay focused on the value proposition and cost savings you’re highlighting.
• Special Offers and Discounts: If SAP senses a real risk of losing maintenance or a product footprint, they often escalate the negotiation to higher management and come back with incentives. This can include maintenance fee concessions (e.g. “We can give you a 10% reduction on your Enterprise Support renewal” or cap annual increases), credits (e.g. credits that can be applied toward a future S/4HANA conversion or other SAP software), or bonus services (like free additional licenses, extended support for an older system, training or consulting hours thrown in). For example, some customers received a one-time maintenance discount or a freeze on increases for the next 2-3 years as a direct response to mentioning third-party support plans. Be prepared to evaluate these offers – sometimes a modest discount is not enough to match the value of the alternative, so don’t settle too quickly. Aim for structural improvements (such as a long-term cap on maintenance hikes or eliminating fees on shelfware licenses) in addition to any one-off price cut.
• Audit and Compliance Leverage: One subtle (and less friendly) tactic SAP might use is raising the topic of software compliance. If, during negotiations, SAP suspects you might walk away or reduce your footprint, they might remind you of the risks of being out of compliance or even initiate a license audit. This is rare as a direct retaliation, but not unheard of – SAP’s license compliance team operates separately, yet timing can be coincidental. The best defense here is preparation: before negotiations, ensure you’ve done an internal license audit or “license position assessment” to confidently know you’re compliant. If you have no major compliance gaps, the threat of an audit is a paper tiger. And suppose SAP tries to use it as leverage. In that case, you can respond by steering the conversation back to business terms or even negotiate audit terms (e.g., no surprise audits for a specified period) as part of the renewal.
• Appealing to Relationship: SAP might also shift the conversation to a softer tone: “We’ve been partners for years – going to a third party could put you at a disadvantage when you need our help” or “Switching vendors is a big risk; we value our relationship and want to find a way to continue it.” These statements are intended to prompt you to reconsider the disruption. While you should indeed weigh the relationship factor, remember that a true partnership involves give-and-take. A loyal customer deserves a fair deal; it’s not disloyal to seek one. You can acknowledge the partnership while still holding firm that you need tangible value to justify renewing with SAP. Often, this will prompt SAP to improve the offer rather than lose a valued customer outright.

From a risk standpoint, if you decide to execute a switch to third-party support or drop an SAP component, be aware of a few key considerations.

Exiting SAP support for an on-premise product means you won’t get new patches or upgrades – ensure your system is stable and that you have a plan for critical fixes (your new provider should clarify how they handle, say, a security patch or tax update).

You will also need to formally terminate support by giving SAP notice within the required window (SAP support contracts usually auto-renew annually, with a notice period of 3-6 months prior). Missing that window could lock you in for another year, so timing is crucial.

Additionally, understand re-entry costs: if you were to return to SAP support or license new SAP software after a period on third-party support in the future, SAP may charge back maintenance fees or treat it as a new sale.

Some customers never return once they leave, which is fine; others plan a temporary 3-5 year off-ramp to save money and later move to a new platform (which might even be SAP’s cloud).

Just go in with eyes ope,n that the decision to leave SAP maintenance is often a one-way street for the version of software you’re on.

As for alternative products, ensure that any pilot or parallel project with a new vendor is conducted with proper diligence – if you’re using it as a negotiation chip, you want it to be credible.

Sometimes, customers even run dual-track for a while (testing an alternate solution in one division, for instance) to genuinely compare. This can be costly, but it certainly underscores to SAP that you’re serious.

Finally, maintain executive alignment within your company. The worst outcome is to bluff SAP with threats that your leadership hasn’t agreed to follow through on.

If SAP calls your bluff (“Alright, if you feel that strongly, maybe third-party is your best option”), you need to be willing to proceed. Therefore, get buy-in from the C-suite and board on your negotiation stance and plan B.

When SAP sees that your top executives are backing the possibility of switching support or software, your leverage multiplies – it’s not just a procurement tactic but a business-backed decision.

This credibility can lead SAP to concede more, as they realize standard scare tactics won’t easily alter your course.

Building a Successful Renewal Strategy with Leverage

Employing competitive leverage is most effective when it’s part of a structured renewal strategy.

Here’s how IT leaders can integrate these tactics into an overall game plan for SAP contract negotiations:

• Start Early & Research Options: Begin renewal planning 6-12 months before. Use that time to research third-party support providers and alternate software solutions. Engage with them enough to understand offerings and get ballpark quotes. Early preparation ensures you’re not scrambling at the last minute – and it signals to SAP that you have had time to seriously evaluate other options.
• Internal Assessment – Know Your Usage and Costs: Do a thorough internal review of your SAP landscape. Identify any shelfware (unused licenses or modules) and areas where you’re over-provisioned. Also, document how often you use SAP support, what kinds of issues you log, and what value you get. If you find, for example, that you only log a few low-priority tickets a year, it strengthens the case that a third party could handle those at lower cost. An internal baseline helps you quantify the value (or lack thereof) you’re getting from SAP’s current contract, which is great ammunition in negotiations.
• Engage SAP with Questions, Not Ultimatums: When you open discussions with SAP, frame your stance constructively: “We are exploring ways to optimize our SAP investments and have been looking at the XYZ option…” rather than a blunt threat. Ask SAP how they can help meet the cost or flexibility targets you’re aiming for. This invites them to propose solutions. You can then compare their offer with the alternative on hand. By making SAP an ally in addressing your cost concerns, you often achieve more than simply confronting the issue. Of course, if they remain inflexible, you can progressively get more direct about your alternatives.
• Leverage Timing (SAP’s Fiscal Calendar): Be aware of SAP’s quarter and year-end timings. SAP sales teams have targets, and a deal at the end of the quarter or fiscal year (typically Dec 31 for SAP) might unlock extra incentives. If you casually mention that your board is reviewing the proposals next quarter, you hint that SAP’s timeline to win the deal is finite. Conversely, avoid locking yourself in under time pressure. If SAP knows your current support expires next week, you lose leverage. Plan so that you have enough runway to walk away if needed, or at least make SAP think you do.
• Combine Leverage Points: The best negotiations use multiple angles. For example, you might simultaneously discuss a looming support renewal and a potential S/4HANA license deal. By bundling discussions, you can trade one against the other (“We’ll consider your cloud proposal, but only if our maintenance terms on ECC are improved significantly”). Similarly, use both third-party support and alternate product evaluations in tandem if applicable – it creates a scenario where SAP has to fight a war on two fronts to keep your business, often yielding a better overall package for you.
• Document Everything and Get It in Writing: As you negotiate, insist that any concessions or special terms be documented in the contract or, at the very least, in formal communications. Verbal assurances (e.g., “We won’t increase your maintenance for two years” or “We’ll allow you to terminate a certain module’s support next year if not needed”) must be written in the agreement to be enforceable. When SAP agrees to something in principle in response to your leverage, work with your legal/procurement team to incorporate that language explicitly. A well-crafted contract is the end goal of all this effort – one that locks in the savings and flexibility you fought for.

By following a structured approach, you turn ad-hoc leverage into a systematic negotiation strategy. Competitive tactics should be used judiciously and backed by solid data (quotes, usage stats, market research).

When done right, the outcome is not only a lower-cost contract but often a healthier long-term vendor relationship. SAP will respect customers who negotiate knowledgeably and assertively.

You may even find that SAP account reps start proactively bringing better offers once they know you won’t hesitate to consider alternatives.

In sum, preparation, credible options, and timing are your friends – they transform the renewal process from a vendor-driven formality into a true negotiation where you hold strong cards.

Recommendations

• Obtain Competitive Quotes: Before renewing your SAP, obtain at least one third-party support quote and research alternative software solutions. Concrete pricing from these sources gives you leverage and confidence in negotiations.
• Communicate Alternatives to SAP: Inform your SAP account team promptly that you are evaluating other options. Professional candor about exploring third-party support or competitor products can prompt SAP to improve its offer preemptively.
• Use Savings Targets: Set a clear goal (e.g., “We need to reduce support costs by 30%” or “We need more flexibility in this contract”) and use that as a talking point. It forces SAP to figure out how to meet those targets – possibly via discounts, credits, or adjusted terms – to retain your business.
• Negotiate Contractual Protections: Don’t just focus on price – negotiate terms like maintenance fee caps, the right to terminate unused licenses, audit clause limitations, and flexibility to downsize or adjust licenses. These can provide long-term savings and reduce risk, and SAP may concede them when faced with a competitive threat.
• Be Willing to Walk (Plan B): The ultimate leverage is your willingness to say “no” to SAP’s offer. Ensure you have leadership buy-in and a viable plan B (such as moving to third-party support or another system) so that you can credibly walk away if SAP doesn’t budge. A credible walk-away position often yields the best concessions.
• Leverage Renewal Timing: Align your strategy with SAP’s fiscal deadlines and your contract end dates to optimize your renewal process. Use the fact that SAP wants to close deals by quarter or year-end to your advantage, but also give yourself enough time before your renewal deadline to thoroughly explore options.
• Document Concessions: Get all negotiated benefits in writing. If SAP agrees to a special discount or condition in response to your leverage, ensure it’s included in the final contract or an amendment. This prevents any “change of heart” later and locks in your wins.
• Maintain Professionalism: Conduct negotiations in a firm yet professional manner. Emphasize that exploring alternatives is part of your due diligence as a CIO/CTO. By staying fact-based and cordial (and avoiding personal or hostile discussions), you leave room for a positive, ongoing relationship after the negotiation.
• Assess Long-Term Implications: If you do opt for third-party support or a new vendor, plan for the long term. Understand the impacts on future upgrades, integration, and total cost of ownership. Leverage is about improving your position, but every choice has consequences – ensure the savings outweigh any downsides for your specific situation.
• Reevaluate Regularly: Vendor leverage isn’t a one-time move. Continually monitor the market and reassess your strategy before each renewal. What worked this year (e.g., threat of third-party support) might shift in a few years if SAP changes pricing models or if new competitors emerge. Staying informed ensures you can repeatedly negotiate from a position of strength.

FAQ

Q1: Is it risky to tell SAP I’m considering third-party support?
A: It’s a calculated risk, but one many enterprises use effectively. SAP won’t love hearing it, but if communicated professionally (“We must explore all options to manage costs”), it’s usually taken as a tough business reality. The key is to ensure that you consider third-party support if needed – that makes your position more credible. Also, have your internal house in order (know your compliance status and contract terms) so SAP has no easy avenues to pressure you otherwise. When done right, most customers find that SAP responds with concessions rather than retaliation.

Q2: What kind of concessions can I realistically expect from SAP by using these levers?
A: Common concessions include maintenance fee reductions (e.g., a percentage discount off the standard 22% rate), a cap on future support fee increases, extended support for legacy products at no extra charge, or credits toward new SAP licenses/cloud subscriptions. SAP may also allow you to terminate support for unused products (shelfware) to prevent wasting money. In competitive license deals, SAP may offer deep discounts on the software or include additional user licenses and services. The exact offers vary, but they tend to materially improve the value of the contract compared to SAP’s initial proposal.

Q3: How can I ensure my “threat” of switching is credible to SAP?
A: Preparation and executive alignment are vital. Obtain formal proposals from third-party vendors or detailed research on alternate solutions – this shows you’ve done more than just window shop. Speak with reference customers who have taken the alternative route; being able to cite an example (“Company X successfully moved off SAP support and saved Y%”) adds credibility. Internally, ensure your CEO or CFO supports the potential move – SAP representatives often gauge the unity of your team. If everyone from procurement to the CIO echoes the same openness to change, SAP will recognize it as genuine. Finally, don’t bluff something you’re utterly unwilling to do; if you know a move is impossible for you, it’s better not to use it as a fake lever, because SAP might sense the hesitation.

Q4: Are there situations where sticking with SAP makes more sense despite the higher cost?
A: Yes – if your company heavily relies on continuous SAP innovations, rapid security updates, or you’re midway through an SAP cloud transformation, the value of staying on SAP support can outweigh the cost savings of leaving. Additionally, if alternative solutions lack critical features your business needs, using them as leverage could backfire (SAP might call your bluff, and you may not be willing to switch). In such cases, you can still negotiate hard on terms and minor discounts, but your leverage is inherently less. It’s essential to assess the strategic value of SAP’s roadmap for you. For instance, if you plan to adopt S/4HANA in two years, staying with SAP (and potentially negotiating credits towards that migration) may be wiser than a short-term exit. Competitive leverage is most effective when alternatives can meet your needs sufficiently.

Q5: What if I do switch to third-party support or another product? How do I manage the relationship with SAP afterward?
A: If you leave SAP support for an on-premise product, you’ll typically maintain a limited relationship: you still own your licenses and can use the software, but you won’t be interacting with SAP support except for license compliance matters. It’s wise to maintain an open communication channel with your SAP account representative, letting them know that the door isn’t permanently closed. Often, SAP will periodically come back with offers to win you back (e.g., a special discount to return to maintenance or incentives to migrate to their cloud). Treat those as options – you may entertain them if they make sense later. If you switch a module to another vendor (say CRM to Salesforce), you might continue using SAP for other areas; SAP will still want to keep you happy in those areas. In short, remain professional and transparent about the reasons behind your decision (e.g., cost, functionality). Many companies that take a break from SAP support or products eventually do business with SAP again in some capacity. SAP’s sales teams will usually respect a customer’s decision, and if anything, try to re-win your business down the line. Just ensure you’re complying with any license rules during the interim (no usage of software beyond your entitlement or of SAP’s intellectual property, like patches, after support ends). If you maintain that integrity, you should have no issues engaging SAP in the future on your terms.

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