EU Forces Change on SAP, But What About Other Vendors?
This has been long overdue.
On July 6, SAP came to an agreement with the European Commission to restructure its on-premises software maintenance and support (M&S) agreements. And, not just for Europe. For its entire customer base worldwide.
Hopefully, the EC won’t stop with SAP or just on-premises software.
First, let’s recap the immediate agreement.
I’m Frank Scavo. I cover issues and trends in enterprise technology, including lessons learned from a career of over 50 years. Subscribe for free to receive notification about new posts.
What the EU Found and SAP Agreed To
According to the EU’s press release, the Commission launched a 2025 investigation of SAP based on indications that SAP was abusing its dominant position by:
Preventing customers from terminating M&S services for unused software licenses, which may have resulted in SAP’s customers paying for unwanted services;
Charging reinstatement and back-maintenance fees to customers who subscribe to SAP’s M&S after a period of absence. In some cases, these fees corresponded to the amount customers would have paid if they had stayed with SAP all along;
Systematically extending the duration of the initial term of on-premises ERP licenses, during which termination of maintenance and support services was not possible; and
Requiring its M&S customers to seek maintenance and support services from SAP for all their SAP on-premises ERP software, and to choose the same type of services under the same pricing conditions for all their SAP on-premises ERP software. This effectively prevents customers from “mixing and matching” M&S services from different suppliers at different price and support levels despite it being more convenient for them.
Again, these have been long-standing problems for SAP customers, who are effectively being held hostage by SAP.
In response, SAP committed to:
Clarify the conditions for splitting customers’ SAP landscape into separate parts, allowing customers to choose different M&S service providers, different levels of support from SAP, or none, for each part.
Allow customers to terminate their licenses and the respective M&S fees in the following specific scenarios: (a) For products in the final M&S stage in which SAP provides reduced services; (b) For failed implementation projects where the responsibility for the failure is on SAP; (c) In case of customers’ insolvency or bankruptcy; (d) 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 licenses and related M&S costs; (e) In case of divestiture of a business, customers will be able to transfer the licenses to the buyer; transfer part of the licenses to the buyer and terminate the remainder, or terminate all the licenses if the buyer has no need for SAP software.
Give wider access to single-metric contracts, which provide an alternative way for calculating the license fees based on which M&S fees are calculated in turn.
Clarify its contractual provisions regarding the initial license term, during which customers cannot terminate their support contracts, and refrain from restarting a new term for every additional license purchase.
Abolish reinstatement fees and reduce back maintenance fees charged to customers who return to SAP’s support after a period of absence.
Create an internal clearing structure customers can turn to when they consider that SAP is not applying the commitments correctly.
These Are Significant Concessions by SAP
Although all these changes are welcome, there are four points that especially stand out to me.
Authorizing third-party service providers, something that SAP has been fighting for at least two decades. This will immediately result in savings for customers that choose other support providers. Rimini Street and Spinnaker Support are two well-known providers, but many IT services firms also offer such support services without openly publicizing them.
Allowing mixing of SAP support levels. In other words, you can buy higher levels of service for certain software products (e.g., newer SAP offerings) and less or none for other products (e.g., legacy SAP offerings). This will yield additional savings.
Support cost reduction when customers have a workforce reduction. SAP typically fights against cutting maintenance and support fees unless the customer agrees to buy more software, something that makes no sense for customers laying off workers. Now, SAP will no longer be able to force customers to pay for support based on excess employee counts.
Allowing termination of service for SAP products that are end-of-life. This especially benefits customers running SAP’s ECC software, for which SAP is terminating support in 2027 in an attempt to force them to upgrade to SAP S/4HANA. Combined with authorizing third-party support providers, this effectively allows such customers to continue running their ECC software for many years, rendering SAP’s forced upgrade deadline moot.
A Good Start, But More Work Remains
Hopefully, the European Commission is just getting started, because I see two major limitations to what SAP has agreed to so far.
First, the agreement applies to on-premises software only, not SaaS. With SaaS products, maintenance and support are bundled with the software. This is one reason that vendors like to push customers to their cloud versions. Since the software is delivered as a service, you can’t separate the maintenance and support from the software. I would argue, therefore, that SAP’s cloud versions restrict customers even more than its on-premises software does.
Second, the EU agreement applies to SAP only. SAP may be the largest ERP vendor in Europe, but it’s not alone.
For example, Oracle also puts contract restrictions on customers. Like SAP, it has fought tooth-and-nail to shut down third-party support options. Most famously, it underwent years of litigation with Rimini Street, attempting not only to put them out of business but, in my view, to discourage others from offering after-market support. I covered this battle extensively for years.
Microsoft likewise leverages power in its customer relationships. It prices its enterprise agreements aggressively, bundling all software and support services, but at the cost of being locked into Microsoft software and infrastructure, making switching difficult from an economic perspective.
Even born-in-the-cloud vendors like Salesforce have gotten into the act. For example, a customer decision to go with Salesforce is really a decision to go with the Salesforce platform. There may be few technical obstacles to migrating from Salesforce in the future, but contract terms and conditions make it financially difficult. When Salesforce began, its cloud technology was new but its customer relationship model was and still is old school, with founder Marc Benioff proudly pointing to Larry Ellison as his mentor.
So, customers are forced to make a choice. For example, do we want to be an SAP shop, an Oracle shop, a Microsoft shop, or a Salesforce shop? Woe to the customer who doesn’t want to make that decision, or, heaven forbid, change that decision years down the road.
So, after market services are not just a problem with SAP, but a problem with the enterprise software industry itself.
Which brings me to the next point.
Why Should Enterprise Software Be Different?
Other industries have had this problem, and governments worldwide have been taking action to restrict anti-competitive behavior in aftermarket support. For example:
In the automotive industry, both the U.S. and Europe do not allow OEMs to restrict independent repair shops from delivering services or buying parts. For example, Ford cannot force customers to only receive warranty coverage, service, or parts from Ford dealers or authorized repair shops.
For consumer products in the U.S., tie-in sales provisions generally are not allowed. “These are provisions that state or imply that a consumer must buy or use an item or service from a particular company to keep their warranty coverage.”
In the healthcare industry, manufacturers of medical devices are not allowed to lock out third-party repair providers.
Why should enterprise software be any different?
As I said, hopefully the Commission’s investigation is just the first battle in what should be a longer-term war. And hopefully, the U.S. and other jurisdictions globally will follow suit.
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