SAP To Raise On-Premise Annual Support Fees After Cutting On-Prem Innovation SAP On-premise

Continuing the latest trend in price increases by major enterprise software vendors, SAP announced on July 26, 2023, that they will increase the annual support fees for SAP support agreements by roughly 5.0% (by local CPI rates, capped to 5%). This is on top of the previous increase they announced in 2022 for an average support fees increase capped at 3.3% effective Jan 2023. The new 2024 pricing increase affects all existing contracts for SAP Standard Support, SAP Enterprise Support, SAP Product Support for Large Enterprises and it will take effect January 1, 2024. If you are an affected customer or partner, SAP should notify you in accordance with your respective locally agreed contractual stipulations.  

This announcement should come as no surprise as generally SAP support agreements terms and conditions allow for an annual adjustment of the support fees after the initial term and first renewal term. However, with the recent announcement of end of innovation features to all SAP on-premise or hosted on-premise ERP customers on hyperscalers, this appears to be a double whammy to SAP customers as it also impacts customers who recently moved to S4/HANA implementations on-premise or on hyperscalers outside of RISE with SAP option. These customers feel disappointed and left behind with no path to gain AI innovations or access to green ledger sustainability capabilities that they would generally get with SAP Cloud ERP (SAP S/4HANA Cloud, Public Edition or SAP S/4HANA Cloud, Private Edition via GROW-with-SAP or RISE-with-SAP contracts). 

Watch out for my upcoming research on the impact to SAP on-premise customers, actions they can take to mitigate the risks and why ERP modernization planning certainly needs high level of dexterity and doing so early has significant benefits taking into consideration ERP market movements. 

Questions? Forrester clients looking for an in-depth analysis on this topic can book time with me (an inquiry or guidance session) so I can help answer your questions about this evolving situation.