SAP commits to change its policies regarding Maintenance & Support for new and existing customers and avoid abuse of its dominant market position. As a result of the European Commission’s intervention, SAP has committed to allow for more flexibility for its customers to freely choose their support providers or execute partial cancellations of support when needed.
As part of the agreement, SAP published their new policies here: Evolving Our Maintenance and Support Practices to Deliver Greater Flexibility for SAP Customers
According to the European Commissions website, SAP will (literal citation):
- Clarify the conditions for splitting customers’ SAP landscape into separate parts, allowing customers to choose different maintenance and support (M&S) service providers, different levels of support from SAP, or none at all for each part;
- Allow customers to terminate their licences and the respective M&S fees in the following specific scenarios: For products in the final M&S stage in which SAP provides reduced services; For failed implementation projects where the responsibility for the failure is on SAP; In case of customers’ insolvency or bankruptcy; In case of workforce reduction of 10% or more over a period of two years customers will have the possibility to reduce 10% of their licences and related M&S costs; In case of divestiture of a business, customers will be able to transfer the licences to the buyer; transfer part of the licences to the buyer and terminate the remainder, or terminate all the licences if the buyer has no need for SAP software;
- Give wider access to single-metric contracts, which provide an alternative way for calculating the licence fees based on which M&S fees are calculated in turn;
- Clarify its contractual provisions regarding the initial licence term, during which customers cannot terminate their support contracts, and refrain from restarting a new term for every additional licence purchase;
- Abolish reinstatement fees and reduce back maintenance fees charged to customers who return to SAP’s support after a period of absence; and
- Create an internal clearing structure customers can turn to when they consider that SAP is not applying the commitments correctly.
What does this mean for SAP customers?
- You can now divide your license landscape into two parts: licenses kept under SAP maintenance and licenses moved to third-party maintenance or no maintenance.
- You can reduce license quantities when your company has an objective decline in demand, such as workforce reduction, bankruptcy, or insolvency.
- You can transfer or terminate licenses and related maintenance fees in the event of a divestiture.
- You can decline automatic extensions of initial license terms, which previously limited your ability to cancel maintenance.
- You can return to maintenance without reinstatement fees, apart from a six-month back-maintenance fee.
- You will have access to a central clearing structure with contacts who can support implementation of these commitments in your company.
The European Commission chose to pursue an agreement with SAP and address the questionable business practice directly, rather than impose penalties that could harm SAP’s bottom line without resolving the issue for customers. We welcome this approach because it prioritizes the interests of global customers while requiring a market leader to uphold fair business practices.
SAP appears to be improving its broader market practices. One example is the transformation of its “Global License Audit and Compliance” team into the “Adoption Insights & Services” team, which focuses more on helping customers adopt best practices and resolve licensing issues. However, this new department must still manage the conflict of interest created by an overly complex licensing model designed to increase costs, while customers get additional work to control those costs.
Any publicly listed software company faces strong pressure to continually grow revenue and EBIT. Revenue churn threatens those goals, so it is understandable that SAP, like any other company, would take steps to reduce churn. With that in mind, we further appreciate SAP’s decision to give customers more flexibility when they need to reduce their SAP footprint for various reasons.
Turn new flexibility into measurable savings
SAP’s commitments create new opportunities—but realizing them requires a clear understanding of your current license inventory, actual usage, maintenance costs, and contractual rights.
Before cancelling support, splitting your landscape, transferring licenses, or renegotiating maintenance, build a reliable baseline. With samQ and visoryQ FinOps Manager, you can identify unused licenses, assess your effective license position, quantify potential savings, and model different support and licensing scenarios before approaching SAP.
