How to Right-Size SAP Licenses

How to Right-Size SAP Licenses

Right-sizing SAP licenses means tailoring your software license counts and types to match real usage.

By aligning SAP license allocations with actual user needs and activity, enterprises can eliminate costly shelfware (unused licenses) and reduce compliance risks.

This article outlines a practical approach to analyzing current SAP license utilization, adjusting license types, and negotiating smarter contracts so that you pay only for the SAP access you truly need.

SAP License Types and Costs

SAP offers a range of named user license categories, each with different access levels and pricing. It’s crucial to understand these license types because misclassification can significantly impact costs.

Named user licenses often account for a large share of your SAP spend (commonly 40–70% of total licensing costs in many SAP contracts), so optimizing them provides a big opportunity for savings.

The major SAP user license types include: Professional User, Limited (Functional/Business) User, and Employee Self-Service (ESS) User.

Each type grants a different scope of system access and comes at a different price point.

For example, a Professional User license allows full access to all relevant SAP modules and transactions for power users or administrators.

In contrast, a Limited/Functional User license restricts access to specific modules or tasks (suitable for many operational staff).

An ESS User license is for very basic self-service tasks (like entering time sheets or viewing pay stubs).

Below is a comparison of these common license types and their relative costs:

In practice, a Professional license may cost around $3,000 (per user), a Limited/Functional user license around $1,500, and an ESS user license perhaps under $100.

These prices can vary, but the key takeaway is the huge cost difference: assigning someone a Professional license when they only need ESS-level access could cost 20–30 times more than necessary.

Ensuring each employee has the right type of license aligned to their role is the foundation of right-sizing.

Read Optimizing Indirect Access in SAP Licensing.

The Need to Right-Size: Shelfware Costs and Compliance Risks

Without active management, companies often over-license “just in case,” resulting in paid-for SAP licenses that are unused (known as shelfware).

Industry analyses find that roughly 20% or more of SAP user licenses in many organizations are assigned to inactive users or employees who haven’t logged in for months.

Each of those unused licenses isn’t just a sunk upfront cost – it also incurs about 20–22% of its cost annually in SAP support fees. That means wasted licenses continue to drain the budget year after year.

Right-sizing reduces waste by identifying and recovering excess entitlements.

For example, if your company has 1,000 SAP Professional user licenses but only 800 active users, the 200 unused licenses could be costing you hundreds of thousands of dollars in maintenance annually for no value. Reclaiming or terminating that shelfware can immediately reduce costs.

On the other hand, some organizations unintentionally under-license certain uses, which can lead to compliance issues.

If employees are using SAP beyond what you’ve licensed (for instance, using a module or indirect access not covered in your contract), your company faces audit exposure.

SAP regularly conducts license audits and compliance checks – often intensifying around renewal time or product migrations – and flags any under-licensing.

The penalties or “true-up” fees for unlicensed use can be financially painful and arrive unexpectedly.

A well-publicized example involved a company facing multi-million-dollar claims for indirect usage (third-party systems accessing SAP data without proper licenses).

The risk is real: SAP’s audit teams will look for misclassified users (e.g., someone using advanced functionality on an ESS license), engine overuse (usage exceeding licensed metrics), and indirect access.

Right-sizing licenses is critical to strike the balance – you want no more licenses than you need (to avoid shelfware waste), but also no fewer than required (to stay compliant).

By routinely adjusting licenses to actual needs, enterprises can typically save 15–30% of their SAP licensing costs while staying safely within compliance.

In short, right-sizing addresses both cost efficiency and risk mitigation in your SAP environment.

Read License Consolidation Strategies for SAP.

Auditing Your SAP License Usage

The first step to right-size your SAP licenses is to conduct a thorough internal license audit.

This is an inward-looking assessment of how your SAP system is being used compared to what you’re entitled to.

Key activities include:

• Gather Usage Data: Leverage SAP’s native license measurement tools – the User Statistics (USMM) and License Administration Workbench (LAW) – to collect data on user logins, transactions executed, and modules accessed. These tools can consolidate usage across systems and give you raw counts of users by category. Extract reports that show each user’s activity level (last login dates, number of transactions, etc.).
• Identify Inactive and Duplicate Accounts: Look for users who have not logged in for a prolonged period (e.g., 90 days or more) and flag them accordingly. These inactive accounts are low-hanging fruit for license optimization – if someone hasn’t used SAP in months, you likely don’t need to assign them a named license. Also, identify any duplicate user IDs (i.e., one person with multiple accounts) that may be unnecessarily consuming two licenses.
• Map Roles to License Types: For each active user, analyze their actual usage pattern. What transactions or modules do they use? Match this against the license type they have. This will uncover over-licensed users – for example, if John has a Professional license but only uses basic HR self-services and runs a couple of reports, he could probably be downscaled to a more cost-effective license type. Similarly, verify if any users might require a higher license than currently assigned (to ensure compliance); for example, if Jane uses extensive cross-module functionality but is assigned a Limited user, that’s a compliance gap to address.
• Review Engine/Package Usage: In addition to named users, check utilization of any SAP engine or package licenses you own. These are licenses for specific SAP components (such as the SAP HANA database, SAP Payroll, etc.), measured in units (e.g., number of records, employees, CPU cores, or memory). Compare current usage metrics (e.g., peak HANA memory used, number of payroll employees, documents processed) against what you’ve licensed. This helps pinpoint areas where you might be exceeding entitlements (risking an audit finding) or significantly underutilizing capacity (paying for far more than you need).
• Scan for Indirect Usage: Catalog any third-party systems interfacing with SAP (such as CRM, e-commerce platforms, or custom applications). Even if users aren’t directly logging in, these integrations may trigger the creation or retrieval of SAP data (e.g., an e-commerce site creating an order in SAP). Under SAP’s rules, this indirect access must be licensed (typically via SAP’s Digital Access document model or other license types). Identifying these connections is important so they can be properly accounted for in your licensing plans (and not emerge as nasty surprises later).

Performing this internal audit gives you a factual “license usage baseline.” It might reveal, for instance, that out of 500 people assigned Professional licenses, only 300 truly use features requiring that level – the other 200 could be candidates for downgrades.

Or you might find you purchased a 1,000-user package for a module, but only 600 users are active, indicating a surplus.

Document all these findings. This data is the evidence you’ll use to drive the next steps of optimization and negotiation.

Rightsizing and Reassigning SAP Licenses

Once you have a clear picture of usage, it’s time to take action on those insights by right-sizing your license allocations.

The goal here is to reallocate or adjust licenses so that each user (or system) has the most cost-effective license that still meets their needs.

Key strategies include:

• Downgrade Expensive Licenses Where Appropriate: For users identified as “over-licensed,” switch them to a lower-cost license type that aligns with their actual usage. For example, an engineer in your SAP system who only works with a specific module (say, just the Finance transactions) can be assigned a Limited/Functional User license instead of a full Professional license. Similarly, casual users who log in occasionally for simple tasks should probably be ESS users. By downgrading dozens or hundreds of such accounts, companies often see immediate savings — one company reduced its SAP licensing costs by nearly 30% by moving infrequent users from Professional to cheaper tiers. Remember to update the user’s classification in SAP’s user master data once you decide on a change, so that your records (and future audits) reflect the correct license type.
• Revoke or Reassign Unused Licenses: For the accounts that were completely inactive or duplicates, remove their license assignments. You may choose to retain the user account for record-keeping purposes, but unassign any licenses from it (or delete the user account entirely if appropriate). Essentially, harvest those licenses back into a pool. Many SAP contracts allow you to reassign licenses from one user to another as needed (for example, when employees leave and new ones join). Take advantage of that by recycling licenses rather than buying new ones. If 50 people left the company last quarter, make sure you’re not still counting them as active named users in your license tally. Clearing out the deadwood ensures you’re only licensing actual, active users.
• Check Contractual Constraints (License Ratios, etc.): Review your SAP contract for any clauses that might limit how you can allocate licenses. In the past, some SAP agreements included a license ratio clause – for instance, requiring a certain percentage of users to be Professional users versus less expensive ones. If your contract has a restriction, such as “Limited Professional Users cannot exceed 60% of total Professional users,” this could hinder your right-sizing effort. These clauses are less common in modern contracts, but if you find one, plan to address it in your next negotiation. In the meantime, factor it into your optimization (you might not be able to downgrade everyone you identified if a ratio cap exists).
• Ensure Downgrades Align with Job Needs: While cost savings are important, never compromise compliance. Only downgrade a user’s license if you’re confident their role does not require the higher-level access. For each change, document the rationale (e.g., “User X changed to Limited license as of Q3 because they only use the procurement module”). If there’s any uncertainty, err on the side of caution and leave the user on the higher license for now – it’s cheaper than a compliance violation later. The idea is to save money without incurring non-compliance penalties.
• Optimize Engine License Footprints: Apply rightsizing to package licenses as well. If you discovered, for example, that you licensed an engine for far more volume than you use, consider downsizing that metric at your next opportunity. For instance, if you’re licensed for a database size of 2 TB but only using 1 TB, you might negotiate to reduce the licensed amount (and thus reduce maintenance costs) in the future. Conversely, if you’re over-utilizing an engine (e.g., using more HR employee records than you paid for), plan to address that proactively by either reducing usage or purchasing the necessary increment – better to resolve it on your terms than during an audit.

By executing these steps, you effectively right-size your environment: aligning license levels with actual needs.

Many organizations find this exercise yields significant savings, often on the order of millions of dollars in avoided license purchases or maintenance fees over a few years.

As an added benefit, you’ll enter any forthcoming SAP true-up or audit with confidence that your house is in order, rather than fear of a big surprise bill.

Negotiating an Optimal License Mix with SAP

After making internal adjustments, the next step is to collaborate with SAP (or your SAP reseller) to update your license contract as necessary.

This typically comes into play during a contract renewal, a true-up period, or when you’re purchasing additional licenses or migrating to a new SAP product.

The objective is to ensure your contract entitlements match your right-sized needs and to secure commercial terms that recognize your optimizations.

Here are strategies to consider when negotiating with SAP:

• Leverage Your Usage Data: Bring the hard data from your internal audit to the negotiation table. If you can show, for example, that only 300 out of 500 Professional licenses are truly needed and the rest can be Limited users, use that to justify a request to rebalance your license mix (and cost). Presenting SAP with concrete usage evidence strengthens your case for why you need fewer high-level licenses and more of the lower-cost ones (or simply fewer licenses overall). You’re effectively saying, “We’ve analyzed our needs closely; here’s what we use, and we want our contract to reflect this reality.” This data-driven approach can counter any pushback from SAP and demonstrates you are an informed customer.
• Request License Swaps or Conversions: SAP may not voluntarily refund you for unused licenses, but they often will consider trading license types or granting credit toward new licenses. For example, suppose you determine you have 100 surplus Professional user licenses. In that case, you can negotiate to exchange some of them for an equivalent value in Limited user licenses (or even for a different software component your organization needs). Likewise, as many companies transition to S/4HANA or cloud offerings, SAP has programs to convert old licenses into new subscriptions or give credits for on-premise shelfware. Bring up these possibilities: “We’d like to convert our unused licenses into something we will use, rather than paying maintenance on shelfware.” This turns wasted spend into a potential asset for modernization.
• Secure Volume Discounts: If your right-sizing analysis reveals that you need to purchase additional licenses (perhaps you were under-licensed in some areas or require more ESS users due to a rollout to all employees), negotiate bulk pricing. SAP’s pricing has significant flexibility – large purchases can come with substantial discounts off the list price. Aim for strong discounts (30%, 50% or more off list, depending on the volume and your relationship) on any net-new license acquisitions. Use benchmarks if available (“Industry peers are getting X% off for similar deals”). Also, if you’re committing to a big migration (like RISE with SAP or a multi-year S/4HANA subscription), use that as leverage to get more favorable pricing on the licenses you truly need to add.
• Ask for Contractual Flexibility: A smart negotiation outcome is not just about the number of licenses, but also the terms around them. Try to build in flexibility clauses that will help with future right-sizing. For instance, negotiate the right to swap a certain number of user licenses from one type to another at a later date, as your needs evolve (sometimes referred to as license mobility or conversion rights). You could also negotiate annual termination rights for a portion of licenses or the ability to reduce users if you outsource a division, among other options. While SAP doesn’t always grant these easily, if you’re entering a significant renewal or purchase, push for terms that let you adjust license counts or types without penalty down the road. This ensures your licensing can remain right-sized over time, not just at a single static point.
• Time Your Negotiations Proactively: Don’t wait until the week before your renewal to start these conversations. The ideal window is 6–12 months before a major SAP contract renewal or upgrade. By starting early, you’ve time to perform the optimizations (as we’ve outlined), and you’re not pressured into a quick decision under a looming deadline. Early negotiations also allow you to evaluate alternatives or walk away if SAP isn’t cooperative. Remember, showing that you’re willing to optimize and even consider third-party support or other options creates helpful pressure in negotiations. SAP reps are more inclined to offer concessions if they see that you have a well-researched position and might say “no” to a bad deal.
• Use Competitive and Transition Leverage: If relevant, gently remind SAP that you have options. For example, if you’re contemplating a move to third-party support for SAP (which some companies use to save on maintenance fees), or if you could shift some workloads to alternative systems, let SAP know cost is a deciding factor. SAP very much wants to keep you as a customer (and move you to their cloud offerings), so they might be willing to be more flexible on license right-sizing and pricing if they know it’s critical to retaining your business. Similarly, during a major transition (such as moving to S/4HANA), SAP recognizes that you must make a significant investment – use that moment to negotiate not only the new licenses but also an optimal cleanup of the old ones. For instance, “We will sign up for S/4HANA, but only if we can retire 500 unused licenses from our legacy contract without penalty and carry over the value.” In sum, tie your right-sizing needs to any larger deal discussions.

By negotiating in this way, you aim to emerge with an SAP agreement that has no excess fat – you’re purchasing and maintaining the licenses that correspond to real usage, at the best possible price.

You’ll also set a precedent with SAP that your organization takes license management seriously and won’t pay for more than what is needed.

Continuous License Management and Governance

Right-sizing SAP licenses is not a one-time project but an ongoing practice. Businesses are dynamic – employees join and leave, roles change, new SAP modules get deployed, and usage patterns evolve.

To prevent creeping inefficiencies, establish a governance process to continuously align licenses with evolving needs.

Here are some best practices for ongoing license management:

• Regular License Reviews: Conduct internal license audits on a routine schedule, such as quarterly quick checks and a thorough annual review. These reviews should repeat the steps of usage analysis, but on a smaller, continuous scale. The goal is to catch any “scope creep” early: if a user’s job has expanded beyond their current license or if a team has started using a new feature that isn’t licensed, you want to know and address it before an official SAP audit is conducted. Regular reviews also help you spot new shelfware quickly (perhaps from a recent downsizing or project ending), so you can reclaim those licenses and potentially reduce maintenance costs.
• Integrate with HR and IT Processes: Make license assignment and removal part of your standard employee onboarding and offboarding workflows. When someone joins, IT should assign them the appropriate SAP license type based on their role, guided by a policy (e.g., “sales clerks get ESS licenses, warehouse managers get Limited licenses,” etc.). If unsure, start them on the lower end and only upgrade if needed. When someone leaves, there should be an immediate step to remove their SAP access and free up that license. By tying license management to personnel changes, you avoid the accumulation of unused accounts.
• Maintain Proper Classification: Ensure that every active user in SAP is tagged with the correct license type in the system. Unclassified or inaccurately classified users tend to default to the most expensive category (Professional) during audits, which can lead to incorrect compliance findings. As a preventive measure, enforce a rule that no user account is created without an assigned license type. Periodically run SAP’s reports to list users and verify none are sitting in an undefined category. This discipline will pay off by keeping your license counts accurate.
• Stay Informed about SAP Licensing Changes: SAP’s licensing models and policies are subject to change over time. They might introduce a new user category (for example, a new low-cost “worker” license type), adjust how indirect or digital access is measured, or introduce new bundling options in the cloud. Make it someone’s responsibility – whether a license administrator or a software asset management team – to keep up with SAP’s licensing announcements. By staying current, you can quickly take advantage of any new programs that could help with optimization. (For instance, if SAP offers a promotional discount to migrate to a new model, you’d want to know.) Similarly, keep an eye on market benchmarks: understanding what discounts other companies are getting or how they optimize can inform your strategy.
• Educate Administrators and Stakeholders: Ultimately, cultivate awareness among your IT and procurement teams about the importance of effective license management. Train SAP basis administrators, IT asset managers, and even department heads on the basics of SAP licensing and your internal policies. When everyone is aware that, for instance, “not all SAP users need a Professional license” and that there’s an internal process in place to evaluate needs, they are more likely to follow it. If you decentralize user management, provide guidelines so that those creating user accounts request the right license type from the start. A little education can prevent many instances of over-licensing by default.

By institutionalizing these practices, you ensure the hard-won savings from right-sizing persist year after year.

Think of it as preventative maintenance for your SAP investment – much like you regularly tune critical systems to keep them efficient, you must also regularly audit and adjust licenses to keep costs optimized.

This proactive stance will also put you in a strong position whenever SAP conducts an official audit or when it’s time to renew contracts, as you’ll be well aware of your usage and prepared to defend your license position.

Recommendations

• Conduct Regular Internal Audits: Analyze your SAP user activity at least annually (or more frequently) to identify discrepancies between license assignments and actual usage.
• Reclaim and Reassign Licenses Promptly: Don’t let unused licenses linger. When employees leave or roles change, immediately remove or reallocate their SAP licenses instead of buying new ones for new users.
• Use Data as Negotiation Leverage: Bring detailed usage reports to SAP negotiations to strengthen your position. Factual evidence of what you need (and don’t need) strengthens your case for reducing licenses or getting better pricing.
• Negotiate License Flexibility: When renewing or signing new contracts, push for terms that allow future adjustments, such as the ability to swap license types or scale down numbers as your business evolves.
• Avoid One-Size-Fits-All Licensing: Do not automatically assign a Professional license to every user. Match license levels to job roles and responsibilities – for example, assign cheaper “functional” licenses to users with narrow tasks.
• Document License Policies: Maintain clear internal documentation that maps typical roles to the appropriate SAP license types. Ensure IT staff and administrators follow these guidelines when provisioning access for new users.
• Monitor Indirect Usage: Keep track of any third-party applications that interface with SAP. License those interactions correctly (e.g., via SAP’s digital access licenses) or redesign them so that you won’t be caught off guard by indirect use in an audit.
• Benchmark and Budget: Familiarize yourself with the prevailing rates and discount levels for SAP licenses. Understanding industry benchmarks helps you recognize a fair deal and set realistic budgets. If you’ve saved money by right-sizing, reallocate some of those savings into a reserve for future license true-ups or expansions so there are no budget shocks.
• Plan Ahead for Transitions: If you’re migrating to S/4HANA or SAP cloud solutions, use this opportunity to optimize your license landscape. Engage SAP early about converting or crediting any surplus licenses as part of the migration deal.
• Seek Expert Advice if Needed: SAP licensing is a complex matter. Don’t hesitate to use third-party tools or independent licensing experts to validate your internal findings. An external perspective or software asset management tool can uncover additional optimization opportunities that might save more than they cost.

FAQ

Q: What are the main SAP user license types I should be aware of?
A: The primary SAP named user licenses fall into three broad categories: Professional Users – which allow full access to SAP’s functionality (for power users and administrators); Limited Professional/Functional Users – which provide access to a defined set of modules or tasks (suitable for many regular employees who have narrower roles); and Employee Self-Service (ESS) Users – which are very restricted licenses for basic self-service activities (like entering personal data, viewing payslips, etc.). SAP may use slightly different names in newer contracts (e.g., “Business User” instead of “Limited”). Still, the concept remains the same: ranging from full-power users to casual self-service users.

Q: How can I determine if a given user truly requires a Professional license?
A: Look at what the person does in SAP. If a user accesses multiple modules and performs a wide range of transactions (for example, someone in IT or a finance power user who runs reports, updates configurations, and so on), they likely need a Professional license. However, if someone’s usage is limited to one area or a few specific transactions – say they only create sales orders in one module, or only approve their team’s time sheets – that person probably doesn’t require the broad access of a Professional license. In short, match the license to the breadth of their SAP activities: narrow, task-specific usage can be covered by cheaper license types. It may be helpful to run a user activity report for each person and see how many unique transactions or modules they interact with; minimal usage indicators suggest a potential for a lower license tier.

Q: How much cheaper is a Limited or ESS license compared to a Professional license?
A: Significantly cheaper. In many SAP price lists, a Limited/Functional User license is roughly half the cost of a Professional User (50% or even less, depending on your negotiated discounts). An Employee Self-Service (ESS) license is significantly less expensive, typically costing only about 5–10% of a Professional license. For example, if a Professional user license costs $3,000, a Limited license might be around $1,500, and an ESS perhaps $100. The exact prices vary by contract and any applicable volume discounts, but the relative difference is substantial. That’s why downgrading even a handful of users from Professional to Limited can free up a significant amount of budget, and assigning ESS licenses for occasional users (instead of giving everyone a Pro license) can save a substantial amount.

Q: Can we change a user’s license type after it has been purchased and assigned?
A: Internally, yes – you can reassign license types to different users in the SAP system configuration at any time (for example, change John from a Professional to a Limited user in the license admin settings). SAP’s software allows you to alter the license classification of a user as roles change. Contractually, however, you need to own the entitlement for whatever license type you assign. This means if you want to permanently reallocate 100 Professional licenses to 100 Limited licenses, you should negotiate with SAP to adjust your contract (since those are different-priced items). In practice, many companies will do the internal reclassification first (to ensure compliance) and then address the contractual true-up at the next renewal. You can also negotiate with SAP to swap unused licenses – for instance, trading some of your surplus Professional license count for a larger number of Limited licenses to better fit your needs. It’s wise to involve your SAP account manager in discussions if you plan a large-scale reclassification, so they’re aware and can help formalize it in the contract if needed.

Q: What if we downgrade a user to a cheaper license, only to find that their role later requires higher access?
A: Then you should upgrade their license at that time. Right-sizing isn’t about permanently locking users into a lower tier; it’s about assigning them the correct tier based on their current needs. If someone’s responsibilities expand such that they now require functionality only a Professional user should have, you will need to assign them a Professional license again to remain compliant. The key is to monitor role changes – for example, if an analyst who was limited to a single module gets promoted to a role spanning multiple SAP modules, review their license. It’s important to be flexible: licenses can be adjusted upward or downward as needed. Always err on the side of compliance; it’s better to pay a bit more for a higher license when someone’s job legitimately needs it than to risk an audit finding that they were doing out-of-scope activities on a too-low license.

Q: Are “Limited Professional” licenses still available? Our SAP contract is a few years old – has the naming changed in newer contracts?
A: SAP has indeed renamed and tweaked some user license categories over time, especially with the introduction of S/4HANA. The classic “Limited Professional User” isn’t always explicitly listed in new S/4HANA contracts; instead, SAP might use terms like “Business User” or “Functional User” to represent similar restricted-access licenses. These newer categories serve the same purpose – providing a lower-cost option for users who don’t need the full Professional scope. So, effectively yes, there is an equivalent of Limited Professional in modern SAP licensing, even if it goes by a new name. If you are moving to a new contract or S/4HANA, ensure that you negotiate for an appropriate mix of user license types. Don’t let SAP bundle everything as all Professional Users. Ensure the contract includes those tiered options (functional, self-service, etc.), so you can continue the right-sizing approach in the new environment.

Q: How do we avoid paying for SAP licenses for employees who have left the company?
A: This comes down to operational discipline. First, as part of your HR off-boarding checklist, always include a step to immediately remove the user’s access in SAP when someone leaves. This will free up the named user license for reuse. However, freeing it in the system is only part of it – you also need to inform SAP (eventually) so you’re not charged maintenance on that license indefinitely. Typically, you can adjust the license counts at the next annual true-up or contract renewal. Some companies formally terminate a portion of their licenses each year, corresponding to attrition, which stops the support charges for those licenses. Be aware that SAP’s standard policy doesn’t allow you to just drop licenses mid-contract term without cause. Still, at renewal, you can certainly reduce quantities going forward (or negotiate a contract amendment if you’ve significantly downsized). The key is staying on top of it: regularly identify inactive users (including former employees) and have an internal record of “licenses we no longer need,” then use that in your next negotiation to reduce the support costs. In summary, immediately remove access internally, and periodically update the contract numbers in SAP so you’re not paying for users who are no longer active.

Q: Do we need to worry about indirect access to SAP (like when external systems connect to SAP)?
A: Yes, indirect usage is an important aspect of SAP licensing to consider in your right-sizing efforts. Indirect access refers to situations where SAP is being used by external systems or middleware rather than by a human logging in with a named user account. For example, if your Salesforce CRM system is pushing data into SAP, or a customer portal is retrieving information from SAP in the background, that constitutes usage that requires licensing. SAP introduced the Digital Access model to handle this: instead of requiring a named user for those external systems, SAP licenses indirect use based on documents (e.g., number of sales orders created, invoices generated, etc.). When right-sizing, you should identify all such integrations and ensure you have the appropriate licenses (e.g., have you purchased a Digital Access package, or do you have sufficient engine licenses covering that scenario?). If not addressed, indirect usage is a common area where audits find compliance gaps. To avoid that, you might decide to acquire SAP’s digital access licenses or otherwise adjust your architecture. It’s wise to proactively manage this: sometimes it’s more cost-effective to license via the digital document model, other times you might restrict certain indirect activities, but the worst move is to ignore it and be caught off guard. So, include indirect access in your license review checklist.

Q: Can optimizing and right-sizing our SAP licenses save significant money?
A: Absolutely. Many enterprises have achieved substantial savings by doing exactly this. It’s common to see 20% or more reduction in annual SAP spend after a thorough license optimization. In some cases, companies have uncovered even larger savings – for example, discovering that hundreds of users assigned expensive licenses didn’t need them, or that they were paying maintenance on a shelfware module nobody used. By downgrading license types, eliminating unused licenses, and negotiating better terms, those savings translate directly into hundreds of thousands (even millions) of dollars saved over a few years. Beyond direct cost reduction, right-sizing can also postpone or eliminate the need to buy additional licenses in the future (because you freed up existing ones). So, the ROI of a license optimization effort is typically very high. It’s one of the quickest ways to trim the fat from your IT budget without cutting functionality for any users.

Q: Should we involve SAP’s auditors or licensing team during our internal license optimization?
A: Generally, do your homework internally first before involving SAP. You are not under any obligation to invite SAP in or to share every detail of your findings. It’s often advantageous to first determine your ideal license state on your own (or with an independent advisor) and then discuss changes with SAP once you have a clear plan. If SAP approaches you for a “licensing workshop” or an audit, you can, of course, comply as required by your contract, but you control the timing to some extent. It’s perfectly fine to politely schedule any official audit activity at a time that suits you – ideally after you’ve cleaned up obvious compliance issues internally. When you do engage with SAP, share the high-level outcomes (for instance, “we identified X users we’re reclassifying to remain compliant”). You don’t need to hand over all raw data from your internal analysis; use it strategically to inform your negotiations. In summary: internal analysis first, external disclosure later. By getting your license house in order quietly, you reduce the risk of surprises, and you can approach SAP discussions from a position of knowledge and confidence.