There are multiple ways to treat such Demand based on underlying considerations and PMO process.
Option 1: You can capture the Demand state in the 'Notes' tab and record the detail of why team arrived at the decision while using the 'Decisions' tab.
Option 2: Mark it incomplete and follow the rest of the process as described in Option 1:
Even a cancelled Demand has incurred cost, since a person or many teams might have worked on a Demand before a decision was made to cancel it. If such a demand was funded by a Program or Portfolio you want to ensure that PMO has the ability to capture and report such cost to indicate the draw down on funds up to that point in time.
Other consideration is a demand might have been supported by analysis, quotes obtained for services, impact and if such a demand were to be reactivated in future, PMO would not want to lose the cost incurred and also leverage information captured.
Thus best practices dictate to include comments and treat Demand as incomplete even when its cancelled.
