Identifying Unused SAP Licenses

Identifying Unused SAP Licenses in ECC and S/4HANA

Many enterprises discover that a significant share of their SAP licenses are not being used – so-called “shelfware”.

These unused SAP user accounts and modules quietly accumulate costs (especially annual maintenance fees) with no business value. Identifying and eliminating these unused licenses can yield substantial savings and ensure your SAP contract aligns with actual needs.

The Hidden Cost of Unused SAP Licenses

Unused licenses drive ongoing costs: SAP’s annual support fee is typically around 20–22% of the upfront license price.

This means even idle licenses incur yearly maintenance charges. For example, an organization with $5 million in SAP licenses pays approximately $1.1 million per year in support.

If 15% of those licenses are unused, that’s about $165,000 wasted annually on maintenance for shelfware. Beyond support fees, maintaining unnecessary user licenses and systems also burdens infrastructure and administration resources.

Shelfware defined: Shelfware refers to SAP software – whether user licenses or add-on components – that your company purchased but isn’t actively using.

These could be named user licenses assigned to employees who never log in, accounts left behind by departed staff, or entire SAP modules bought “just in case” but never implemented.

Every dollar tied up in shelfware not only wastes its purchase value but continues to drain budget through support costs and management overhead.

Why it matters:

Eliminating unused licenses directly cuts costs and simplifies compliance. Every unused license removed is one less item to track in audits and one less fee to pay.

By shrinking your SAP licensing footprint to match actual usage, you free up the budget for innovation and reduce the complexity of your SAP environment.

Read Optimizing Indirect Access in SAP Licensing

Why Unused SAP Licenses Accumulate

Several common scenarios cause companies to accumulate unused SAP licenses over time:

• Inactivity and Turnover: Employees change roles or leave the company, but their SAP user accounts (and associated licenses) remain active. If a user hasn’t logged in for 90 days or more, their license may be effectively unused. Companies without a cleanup process often have dozens or hundreds of these dormant accounts consuming licenses.
• Duplicate Accounts: In some cases, one person ends up with multiple SAP accounts (for example, across different systems or due to integration of multiple SAP environments). Unless consolidated, each account might be counted as a separate named user license. Duplicates inflate your license count unnecessarily.
• Overallocation “Just in Case”: Businesses sometimes over-purchase licenses anticipating growth or project needs that never fully materialize. Extra users or modules are purchased for contingency (e.g., a planned CRM system rollout that gets canceled), resulting in unused entitlements.
• Misclassified License Types: Not all shelfware is a completely unused login – some waste happens when users have an overly powerful (and expensive) license type that they don’t need. For instance, a casual SAP user with a Professional license (full access) may only use basic functions that are suitable for a cheaper license. Over-licensing in this way means paying premium prices for usage that a lower-tier license could cover.

Over time, these factors contribute to a bloated SAP license roster. The result is your organization paying for more capability than it utilizes.

Read Using Tools for SAP License Optimization.

How to Identify Unused Licenses and Accounts

Identifying unused SAP licenses starts with gathering the right usage data and conducting regular internal audits.

Key steps include:

• Run SAP Usage Reports: SAP provides a system measurement program (transaction USMM) and the License Administration Workbench (LAW) to collect user activity data. These tools show the number of named users and their last login dates, helping pinpoint accounts that haven’t been active for months. Generate reports for each system to identify users who never or rarely log in.
• List Inactive Users: Look for any SAP user accounts with no activity in the last 3–6 months (or a threshold that makes sense for your business). Each inactive account represents a license that could potentially be recovered. Pay special attention to users who have left the company or changed roles – HR and IT should coordinate to identify these individuals.
• Spot Unused Modules/Engines: Beyond user logins, review your SAP installations for components that are not in use. For example, if you own an SAP add-on, such as SAP CRM or SRM, but the project was shelved, you may still be paying maintenance on that unused software. Compile a list of such modules or engines that are installed (or contracted) but not delivering value.
• Analyze License Assignments: Verify that users’ license types align with their actual usage. Identify any users assigned high-level licenses (e.g., Professional or Developer licenses) who only perform light tasks. These misassignments can be treated as “under-used” licenses – an opportunity to downgrade to a cheaper category and free up the expensive license for someone who truly needs it.
• Use Software Asset Management Tools: Many companies augment SAP’s own tools with third-party Software Asset Management (SAM) solutions (such as Snow, Flexera, or USU). These tools automate the analysis of user activity across SAP systems, flag duplicate users, and provide dashboards of license utilization. They can quickly highlight, for instance, a batch of users utilizing only 5% of their license capabilities or accounts that haven’t been used since creation.

By combining SAP’s native audit reports with detailed scrutiny of usage patterns, you can develop a clear map of which licenses are actually in use versus idle. It’s not unusual to find that 10–20% of named user licenses haven’t been used in months.

Similarly, you might uncover entire modules that were paid for but never turned on. This discovery phase is critical – it provides the hard data needed to take action.

Reclaiming and Optimizing License Usage

After identifying unused licenses, the next step is to reclaim value from them and optimize your license allocation.

Consider the following actions:

• Deactivate or Reassign Unused Accounts: For each inactive user identified, determine if the account can be removed or the license reassigned. When employees leave, promptly remove their SAP access and reallocate the license to a new hire instead of purchasing a new one. This “recycling” prevents license creep. If an account is a duplicate, merge or delete it to avoid double-counting.
• Rightsize User License Types: Align each user with the most suitable license type based on their actual needs. This often means downgrading some users to less expensive licenses. For example, casual users who only run reports or do self-service tasks can use a Functional or Employee Self-Service license instead of a full Professional license. Right-sizing license types can dramatically reduce costs while still meeting users’ requirements.

License Type Optimization Example:

Misclassifying 100 employees with Professional licenses (when they only needed a Functional license) would result in a significant annual waste of support fees.

By analyzing usage and correcting these assignments, one company was able to downgrade a large set of users, resulting in an immediate reduction of their annual support bill. The table below illustrates typical SAP named user license costs:

By switching users to the correct license level, organizations often cut license costs by 50% or more for those users.

It’s important, however, to document any changes and ensure no one loses access to the functionality they truly need – cost optimization should not create compliance issues by under-licensing a user’s activities.

• Eliminate Unneeded Software: If you identified unused SAP modules or engines, evaluate whether they can be removed from your environment. Shutting down a completely unused component (for example, an old SAP BusinessObjects or Supply Chain add-on that nobody uses) allows you to terminate its licenses. This not only stops the bleeding of maintenance fees but also reduces system complexity. Often, IT can archive any historical data from that system for compliance and then fully decommission the module.
• Document and Prioritize Changes: Create a plan for which unused licenses and components to remove, replace, or downgrade. Prioritize those with the highest cost savings. For instance, freeing a cluster of high-cost Professional licenses will save more money than trimming a few low-cost ESS licenses. Aim to complete key clean-up actions before major contract events (like your annual renewal or an upcoming migration project) so you can realize the savings promptly.

By reclaiming unused licenses and optimizing the usage of each user, companies can immediately reduce their SAP spend.

One real-world audit found that ~20% of the company’s SAP users were tied to former employees or duplicate accounts – by cleansing this shelfware, they avoided renewing hundreds of unnecessary licenses and saved hundreds of thousands of dollars per year in fees.

The benefits extend beyond cost: a leaner license pool simplifies license compliance audits and provides a clearer picture of genuine SAP usage within the organization.

Planning Ahead and Negotiating License Reductions

Identifying unused licenses is not just a clean-up exercise; it’s also a key part of SAP contract management.

To truly capture the value, organizations should incorporate these findings into their negotiation and renewal strategy:

• Terminate Shelfware at Renewal: SAP generally doesn’t allow dropping licenses in the middle of a contract period, but you can remove unused licenses from your agreement at the next renewal or true-up. Plan ahead to inform SAP that you intend to terminate (surrender) those unused licenses when the term is up. By cutting them from the contract, you immediately stop the maintenance charges going forward. Ensure you provide SAP with sufficient notice, as some contracts require advance written notice to reduce license counts.
• Negotiate Swap Rights: Verify if your current SAP agreement contains a clause that allows you to swap or convert licenses. Some agreements allow customers to exchange unused licenses for different SAP products of equal value within a specified period. If you have shelfware that you know you’ll never use, SAP may agree to a swap – for example, trading a surplus of HR user licenses for licenses of a needed Analytics module. This way, you’re not paying for something idle; you’re redirecting that value to the technology you will use. (Such swap options usually must be negotiated upfront in the contract.)
• Leverage S/4HANA Migration: A move to SAP S/4HANA (especially a contract conversion from ECC to S/4) is an excellent chance to purge unused licenses. SAP often offers conversion programs that allow you to trade in legacy licenses for credits toward S/4HANA licenses or cloud subscriptions. You’ll get the most benefit from these programs if you only convert the licenses you need. In practice, this means cleaning up shelfware now, so you aren’t carrying dead weight into the new S/4HANA contract. Enter the migration with a lean, accurate license count – it will reduce your costs in the S/4 era and ensure you’re not paying for unused legacy functionality.
• Consider Support Alternatives: If you’re stuck with a large number of unused licenses that you can’t drop immediately, one tactical option is to evaluate third-party support vendors (such as Rimini Street) for a portion of your SAP environment. These providers can take over support for older, stable SAP systems at roughly 50% of SAP’s standard maintenance cost. Moving an idle system or excess licenses to third-party support could save money in the interim. (Be mindful, however, that you won’t get new SAP updates while on third-party support, and you’ll need to return to SAP support if you upgrade in the future.) Even if you don’t ultimately switch, having this option can provide leverage in negotiations with SAP.
• Build Flexibility into Contracts: Going forward, try to incorporate terms that give you the flexibility to adjust license counts. For example, you might negotiate the right to reduce a certain percentage of licenses at each renewal or to swap license types as needs change. Making license management an ongoing process, rather than a one-time true-up, will help prevent the accumulation of shelfware. Align any new SAP purchases or expansions with cleanup efforts: SAP is more receptive to adjusting terms if they coincide with selling you something new (bundle your requests together for better outcomes).

Ultimately, the goal is to align your SAP contract with reality – pay for what you use and nothing more.

By proactively addressing unused licenses and baking optimization clauses into your agreements, you ensure your organization isn’t locked into paying for perpetual shelfware. This puts you in a stronger position to manage costs year over year.

Recommendations

• Audit Regularly: Conduct periodic reviews (e.g., quarterly or annually) of SAP licenses to identify and address unused accounts and modules promptly. Don’t wait for a vendor audit – know your own usage internally.
• Reclaim Immediately: When an employee leaves or changes roles, promptly remove or reallocate their SAP license. A process for de-provisioning users prevents the buildup of dormant accounts.
• Use SAP’s Tools: Leverage SAP’s license measurement tools (USMM and LAW) to track user activity and license consumption. Complement these with automated SAM tools for deeper insights across your landscape.
• Optimize License Assignments: Match each user to the right license type. Avoid giving everyone expensive “Professional” licenses if many only need limited access. This rightsizing can dramatically cut costs without impacting productivity.
• Clean Up Before Renewals: Identify shelfware well in advance of contract renewal or a migration project. Plan which licenses to drop or swap, and communicate that to SAP as part of your renewal negotiation strategy.
• Negotiate Flexibly: In new contracts or extensions, include terms allowing for license reductions or swaps in the future. Secure the ability to adjust your license counts as your business needs evolve (such as divestitures, workforce changes, or cloud transitions).
• Align with IT Strategy: Tie license optimization efforts to broader initiatives (e.g., funding a digital transformation or S/4HANA upgrade). This context can justify aggressive cost-cutting and encourage SAP to cooperate on contract adjustments.
• Maintain Governance: Treat SAP license management as an ongoing discipline. Establish governance to prevent shelfware from resurfacing – for instance, implementing an annual true-up exercise and assigning clear ownership for monitoring license usage throughout the year.

FAQ

Q1: What are “unused” SAP licenses (shelfware)?
A: Unused SAP licenses, or shelfware, refer to any SAP software licenses your organization owns but isn’t actively using. This can include named user licenses assigned to individuals who never log in (or are no longer employed by the company), as well as SAP modules or engines that were purchased but not deployed. Essentially, shelfware is software sitting on the shelf – paid for but not delivering value.

Q2: How do unused licenses affect our SAP costs?
A: Even if a license isn’t used, it still incurs costs. Upfront money was spent to purchase it, and more importantly, SAP charges annual maintenance (support fees) on all active licenses. This maintenance is approximately 22% of the license price annually. So, an unused $ 1,000 license costs about $220 each year in support fees for nothing. On a large estate, unused licenses can significantly inflate the support bill. By removing shelfware from your contract, you lower that support cost base and avoid paying upkeep on idle software.

Q3: How can we identify which SAP user licenses are unused?
A: Start by reviewing user activity. Within SAP, use the system measurement reports to get data on each named user’s last login and activity levels. Identify any users who haven’t logged in for a long period (e.g., 3+ months). Those accounts are strong candidates for unused licenses. Additionally, cross-check user lists with HR to find accounts of former employees. Any account for someone who is no longer at the company is considered an unused license that can be reclaimed. Some organizations also run scripts or use license management tools to quickly list all users with no recent activity.

Q4: What tools does SAP provide to track license usage?
A: SAP has built-in license auditing tools. The primary ones are the User Measurement (USMM) program and the License Administration Workbench (LAW). USMM is used on each system to collect data on user classifications and usage, and LAW aggregates data from multiple systems to produce an overall compliance report. These tools will show how many users are classified in each license type and can highlight inactivity or over-assignment. In addition, the SAP admin team can use tables (like user master records with last login timestamps) to find dormant accounts. Many companies export this data to Excel or use third-party analysis tools for easier reporting. In short, SAP provides the raw data needed – it’s up to you to analyze it.

Q5: Can we cancel or remove unused licenses immediately to save money?
A: Not usually in the middle of a contract term. SAP contracts typically lock in a certain number of licenses for the duration. You can certainly stop using a license (free it up internally), but you’ll still pay maintenance on it until you formally terminate it with SAP. The opportunity to remove licenses (and stop paying for them) comes at contract renewal or an agreed true-up point. At that time, you can decide not to renew certain licenses or to terminate a portion of your license volume. The result is that those licenses are removed from your entitlement, and you cease paying maintenance on them going forward. It’s essential to plan this and notify SAP by your contract terms – you may need to provide notice several months before renewal if you intend to drop licenses.

Q6: Is it possible to swap unused SAP licenses for other products or users?
A: In some cases, yes. SAP has offered license swap or conversion programs; however, you must have a contract clause or make a special arrangement to take advantage of these options. If allowed, swapping means you can exchange unused licenses for different licenses of equivalent value. For example, you might swap unused HR module licenses for additional analytics licenses if that’s a better use of your investment. Swaps typically happen during specific periods (like a migration to S/4HANA or a contract renegotiation) and need SAP’s approval. Always check your contract – look for any “swap rights” or ask your SAP account executive if they are open to a trade. Swapping can be a smart way to avoid waste, essentially turning shelfware into something useful.

Q7: How often should we review and clean up unused licenses?
A: License reviews should be a regular practice. At a minimum, conduct an annual audit of SAP usage before each maintenance renewal cycle. Many organizations now perform internal license checks quarterly, especially if they experience high employee turnover or are in a growth phase. Routine checks ensure that as people leave or change roles, their licenses get recycled promptly. Regular monitoring also helps identify when new shelfware starts to accumulate (for instance, after a major project rollout, you may find some temporary accounts that can be removed). The key is to make it an ongoing process, not a one-time project.

Q8: Should we address unused licenses before moving to SAP S/4HANA?
A: Absolutely. An SAP S/4HANA migration is a prime opportunity to streamline and optimize. When transitioning to S/4HANA (which often involves signing a new license contract or converting existing licenses), you don’t want to carry over any unused users or obsolete products. It’s wiser to terminate or swap out shelfware as part of the migration. SAP’s conversion programs for S/4HANA will give you credits for your existing licenses – you’ll get more credit for licenses you need, and you can drop the ones you don’t. By tackling unused licenses beforehand, your new S/4HANA environment (whether on-premises or cloud subscription) will be sized correctly, potentially saving a significant amount in subscription fees or new license costs.

Q9: What if we ignore the unused license issue?
A: Ignoring shelfware means you’ll continue to pay for it. The immediate impact is financial – you’ll be burning the budget on support fees for software that isn’t used, year after year. There’s also an opportunity cost: money tied up in shelfware could be spent on something that delivers value (new projects, upgrades, etc.). Additionally, having numerous unused licenses available can create compliance confusion. In an official SAP audit, if licenses are misassigned (e.g., users have the incorrect license type) or if usage is not tracked, it could lead to non-compliance findings or penalties. While shelfware itself isn’t a compliance violation (since you’re over-licensed, not under-licensed), it often correlates with poor license management practices. Overall, the organization gains nothing by keeping shelfware – it only pays needless costs and carries potential risks.

Q10: How can we prevent unused licenses from piling up in the future?
A: Prevention comes down to proactive license management. First, implement a governance process; for example, designate someone to continuously monitor SAP license allocation. Ensure that when an employee leaves, there’s a checklist item to remove or reallocate their SAP user license immediately. You can also use automation or tools to alert you when a user hasn’t logged in for, say, 60 days – then verify if that account is still needed. Another good practice is to periodically cross-train the IT and procurement teams on SAP licensing rules, so they assign the correct license types and avoid over-provisioning. Lastly, whenever you plan a purchase of additional licenses, review your current usage to see if you can reuse existing licenses first. By ingraining these habits and checks, your company can minimize shelfware and ensure that you only pay for what is truly used.