Key Takeaways
- The SAP right-sizing process after M&A has four distinct phases, each with specific deliverables and a defined sequence that must not be reversed.
- Pre-close due diligence is consistently the most underfunded phase — enterprises that skip it spend 3–6 months post-close recovering the analysis that should have been done before signing.
- The 90-day post-close window is the most critical — it's when the right-sizing initiative must be resourced and launched before SAP takes commercial initiative.
- No SAP engagement should occur before Phase 2 (internal analysis) is complete — this is a hard rule with no exceptions.
- Contract amendment is the only valid outcome — verbal commitments, email confirmations, and "SAP will sort this in the next renewal" are not acceptable substitutes.
SAP right-sizing after M&A follows a specific sequence that, when executed correctly, produces measurable savings and protects the combined entity from SAP's commercial exploitation of the transition. When the sequence is reversed — most commonly when SAP engagement precedes internal analysis — the outcome is almost always a commercial renegotiation on SAP's terms, not yours.
This checklist organises the complete right-sizing action plan into four phases, each with specific deliverables. It connects to the detailed methodology in our practical enterprise guide, the risk mitigation framework, and the cost reduction strategies. For the complete strategic overview, see our complete guide to SAP right-sizing after M&A.
Phase 1: Pre-Close Due Diligence
Ideally, SAP licensing due diligence happens during the transaction process — before the deal closes. In practice, it is often skipped entirely or delegated to the IT integration work stream without dedicated licensing expertise. The checklist below covers the minimum viable due diligence for any acquisition or divestiture where the target has a material SAP environment.
Pre-Close Due Diligence
Timeline: During transaction process, before signing/close- Contract inventory: Obtain copies of all SAP contracts (Master Agreements, Order Forms, T&Cs, BoMs). Index by entity, product, metric, and renewal date.
- Change-of-control review: Identify all change-of-control clauses across contracts. Note notification deadlines and SAP's rights upon notification.
- Licence entitlement summary: Build a summary of contracted licence entitlement across all entities — Named Users by type, engines, packages, Digital Access.
- Indirect access landscape map: Identify all third-party systems that connect to SAP in the target's environment. Document the document types created. Assess Digital Access exposure.
- Open audit or dispute identification: Confirm whether the target has any open SAP audit, unresolved compliance gap, or disputed back-licence claim. These are material liabilities that affect deal valuation.
- Renewal calendar: Map all upcoming SAP contract renewals across both entities for the 24-month post-close period. Identify the primary leverage event.
- Right-sizing opportunity model: Produce a preliminary savings model: estimated reclassification opportunity, dormant account volume, and volume discount benefit at the combined level.
- Liability quantification: Estimate total SAP licence liability inherited from target (including compliance gap exposure, support arrears if any, and indirect access risk). Include in deal model.
⚠ The Due Diligence Gap
80% of the enterprises we work with post-acquisition had no independent SAP licensing due diligence before close. The average cost of that gap — in unidentified liabilities, overpaid licences, and missed renegotiation windows — is €2–6M for a mid-market acquisition with a 5,000+ user SAP environment. For larger transactions, the impact is proportionally greater.
Phase 2: Post-Close Internal Analysis
This phase must be completed before any communication with SAP's commercial or account team about the M&A event. The objective is to build your independent Effective Licence Position (ELP) across the combined landscape so that when SAP engages, your team enters from a position of complete information.
Post-Close Internal Analysis
Timeline: Days 1–60 post-close- USMM execution: Run USMM on all SAP production systems in both entities. Extract measurement files and LAW reports from each system.
- Dormant account identification: Extract last-login data from all systems. Flag accounts inactive for 90+ days. Cross-reference against HR records to confirm status.
- Duplicate account analysis: Identify users who appear in both landscapes with separate User IDs. These should be counted only once in the combined ELP.
- Transaction-level usage analysis: Extract T-code execution data for the combined user base. Identify users whose actual activity is inconsistent with their current licence classification.
- Reclassification candidate list: Based on transaction analysis, build a list of users recommended for reclassification from Professional → Limited Professional or from Limited Professional → Employee/FUE. Document the evidential basis for each recommendation.
- Combined ELP construction: Build the base ELP (current position) and the optimised ELP (post-reclassification). Calculate the compliance gap or surplus at both levels.
- Engine and package metric calculation: Calculate combined engine and package metric values. Compare against contracted thresholds. Identify any threshold crossings.
- Savings modelling: Quantify the total savings available across all six cost reduction strategies. This is the number you'll negotiate to capture.
- Legal position briefing: Brief your legal team on the specific contractual provisions that support your right-sizing position. Identify any T&Cs that create risk and require renegotiation.
Need Phase 2 Support?
Running USMM, building an ELP, and completing reclassification modelling requires deep SAP licensing technical expertise. Our SAP licence optimisation team executes Phase 2 for you — typically in 2–4 weeks for a combined landscape of up to 20,000 users.
Get Phase 2 SupportPhase 3: SAP Engagement and Negotiation
This phase begins only after Phase 2 is complete. Your opening position should be fully documented and quantified. SAP's account team will be expecting your notification and will have prepared a commercial agenda. Yours must be equally prepared.
SAP Engagement and Negotiation
Timeline: Days 45–90 post-close- Change-of-control notification: Submit the formal notification to SAP. Keep it minimal and factual. Do not include your ELP or any commercial position in the notification itself.
- SAP initial response management: SAP will typically respond by scheduling a "strategic review" or "governance meeting." Accept the meeting but do not provide any commercial data before your prepared position is ready to present.
- Opening position submission: Present your documented ELP (optimised) to SAP as the basis for the commercial discussion. Frame it as the result of a thorough independent analysis, not as a wish list.
- Volume discount negotiation: Assert the volume discount entitlement at the combined licence level. Come with the benchmark pricing data to support your position. Understand how to benchmark SAP licence pricing before this discussion.
- Support cost negotiation: Negotiate price protection provisions as part of the consolidation amendment. Target a 3-year cap on support cost escalation.
- T&Cs renegotiation: Challenge unfavourable legacy terms identified in Phase 1. Prioritise: indirect access definitions, audit rights, change-of-control provisions for future transactions, and licence portability.
- Divestiture licence treatment (if applicable): Negotiate the formal mechanism for separating licences associated with the divested entity. Secure contractual confirmation of the post-divestiture licence count and cost.
- Escalation readiness: Prepare your escalation position in case account-level negotiations stall. Know your walk-away point and the commercial/legal options available if SAP refuses a reasonable position. Independent negotiation advisory is typically deployed at this stage.
Phase 4: Contract Amendment and Implementation
The negotiation is complete only when it's in writing. This phase converts the agreed commercial positions into signed contract documents and implements the licence changes in the SAP landscape.
Contract Amendment and Implementation
Timeline: Days 60–120 post-close- Amendment drafting: Work with legal to draft the contract amendment reflecting all agreed commercial positions: revised user counts, updated pricing, support cost caps, T&Cs changes.
- Amendment review: Have the draft amendment reviewed by an independent SAP licensing advisor before signing. SAP's legal team produces favourable-to-SAP drafts as default.
- Amendment signing: Obtain signatures from all required parties. File executed copies securely.
- Reclassification implementation: Implement the agreed user reclassification in both SAP landscapes: adjust roles, update user classifications, delete dormant accounts.
- USMM measurement submission: Run the first combined USMM measurement under the new contract terms. Submit to SAP. Verify that the output matches your expected ELP.
- Savings documentation: Document the total savings achieved against the pre-right-sizing baseline. Quantify the annual and contract-life saving for internal reporting.
- Ongoing governance setup: Establish the licence governance process for the combined entity: quarterly USMM reviews, user lifecycle management, regular ELP maintenance, and contract calendar tracking.
Complete This Series
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