When determining what level of SAP support you will require going forward, it is important to consider what level of support you are currently operating under and whether there is an opportunity to switch to PSLE based on overall spend with SAP. If there is, is this truly the most beneficial switch for your business?
If you ultimately determine that PSLE is the best option going forward, it is also imperative to lock down certain commercial elements when negotiating support, such as Support Protections. Here we will cover what SAP’s support options are, how to determine which support is best for your company, and what to negotiate once you’ve decided.
A Brief Overview of SAP’s Support Models
SAP offers 3 support options:
- Enterprise Support: Enterprise Support is SAP’s most popular support option and is available to all SAP customers small to large. SAP offers Enterprise Support at 22% of Annual Maintenance Base and has no minimum threshold requirements.
- Standard Support: Standard Support is also offered to customers small to large. Standard Support is priced at 19% of Annual Maintenance Base and has no minimum threshold requirements.
- PSLE Support: Product Support for Large Enterprises (PSLE) is available to SAP’s largest customers. PSLE is offered at 17% of Annual Maintenance Base and does require a threshold requirement based on total investment spend with SAP. I will cover the need for the threshold requirement later.
Of these, Enterprise and PSLE are the most common options.
If SAP positions PSLE as an opportunity for your company, the fact that you will be paying a 17% factor for support in lieu of 22% will seem compelling when negotiating a deal with SAP. But before your company starts calculating potential savings, consider the following:
Will PSLE Meet Your Needs?
There are several differences in the level of support that SAP offers between Enterprise and PSLE options, such as reduced deliverables, which are listed in the graphics below:
So, although PSLE offers SAP customers a lower support percentage, keep in mind that it does come with some reduced deliverables. For example, if you decide to go with PSLE, you forgo certain deliverables such as Service Level Agreements for initial reaction time with corrective action, global root cause analysis and the support advisory center. We recommend taking an opportunity to solicit clarification from SAP and understand the corresponding reduction in support under PSLE.
Are You Comfortable Committing to a Certain Level of Spend in Perpetuity?
Once you make the commitment to PSLE, your agreement with SAP will contractually bind you to a certain level of spend each year. If you drop below that level of spend, you will expeditiously lose your right to the reduction in the support factor by 5%. Therefore, it is important that your company is comfortable committing to that level of spend with SAP in perpetuity.
For example, if your On-Premise relationship and MaxAttention relationship make up your commitment and you chose not to renew MaxAttention, you will need to make up that spend elsewhere (such as with Cloud spend mentioned above).
Are You Leveraging This Commitment to Renegotiate Your Agreement?
SAP typically proposes PSLE when a customer is in the throes of a negotiation and it can be positioned as an opportunity to sweeten the deal. Despite this tactic, we recommend revisiting your agreement for commercial improvement opportunities. When you make the commitment to PSLE, it should not be the only commercial item on the table. You should be leveraging this opportunity to renegotiate your agreement as well as aspects like your future discount option, exchange rights, etc.
Making the Switch to PSLE
The first thing to review is your prior and current agreements with SAP. Are you already operating at the 17% annual support, or has it been positioned in the past?
Similar to how SAP positions other commercial offerings, when it positions PSLE, it does so in a way to make it appear non-negotiable. However, based on our experience supporting and negotiating many of our client’s conversions to PSLE, PSLE is in fact negotiable (just like every other commercial offering from SAP). SAP has agreed to lower levels of commitment to achieve the PSLE threshold.
Given the fact that the PSLE offering is negotiable, it is important for clients to assess spend if they plan to move from ECC to S/4HANA. In order for customers to understand more about the various support models who are transitioning from ECC to S/4HANA, customers can turn to the SAP published “SAP Enterprise Support Guide” which is intended to provide the following incentive/benefits:
- Unlocking the value of the S/4HANA transition
- Enterprise Support provides a tailored, goal-based engagement plan to enable successful completion of the S/4HANA transition
- Provides the customer with relevant SAP Best Practices to minimize disruptions during the S/4HANA transition
- Ability to leverage on-demand support expertise at the customers’ own pace of implementation
- Reduces total cost of implementation by mitigating risks and validating quality (e.g., quality checks and technical optimization)
Customers can also determine their overall spend with SAP through its applicable Cloud Services (e.g., SAP S/4HANA Cloud, SuccessFactors, Ariba, etc.) which would add to the threshold requirement.
We have also seen clients leverage PSLE over the course of many years, depending on the relationship with SAP. In this case, it is important to position support lock protections that holds the PSLE percentage at 17% for an extended period of time. This is dependent on a transaction-by-transaction basis.
In the end, not every company will see a proposal from SAP to make the change to PSLE. But if you are considering transitioning to PSLE, keep in mind that it is certainly a commitment that cannot be taken lightly, as it includes an obligation to a certain level of spending in perpetuity. We recommend reaching out for a discussion on whether PSLE will meet your needs and whether the PSLE-related commercial terms SAP is positioning are competitive. As with many other negotiation strategies with SAP, it is critical for businesses to do their due diligence and determine what is the best course of action going forward with SAP.