Licensing User Types in SAP S/4HANA

Licensing User Types in SAP S/4HANA

SAP S/4HANA’s licensing revolves around named user types – each defining what a user can do and the associated cost.

Properly aligning employees with the correct license type (Professional, Functional, Productivity, Developer, or Employee Self-Service) is crucial for controlling costs and maintaining compliance.

This article breaks down the SAP S/4HANA user license categories, their typical costs, and strategies to optimize licensing in enterprise environments.

Types of SAP S/4HANA User Licenses

SAP’s user licenses are tiered to different activity levels. Key S/4HANA user types include:

• Professional Users: Full enterprise access across all SAP modules and functions. These are power users (e.g., finance managers, SAP administrators, senior analysts) who execute end-to-end processes without restrictions. Professional licenses carry the highest cost but grant broad capabilities.
• Functional Users (Limited Professional): Role-based access confined to specific modules or departments. For example, a procurement specialist or warehouse supervisor who works within one functional area. They can create and edit transactions only in their domain. Functional users are more cost-effective than Professional users, offering a suitable option for focused roles.
• Productivity Users: Basic transactional users performing simple, repetitive tasks or approvals. Think of customer service reps checking order status or sales associates entering routine orders. Their activities are mostly read-only or minor updates. Productivity licenses are lower-cost and suitable for users who need limited system interaction.
• Developer Users: Technical users with access to development tools and sandbox environments. These are ABAP developers or technical consultants creating custom programs and integrations. Developer licenses enable full use of SAP’s development workbench but typically do not grant broad access to business processes.
• Employee Self-Service Users: Employees who use SAP for self-service tasks like entering timesheets, viewing payslips, or requesting leave. They have no access to core business transactions beyond their data. Employee licenses are the most limited and least expensive, appropriate for large populations of end users with minimal system touchpoints.

Each category is aligned with a set of permitted activities. SAP’s official definitions (often referred to as “S/4HANA Enterprise Management for Professional/Functional/Productivity use”) specify which modules or transactions each type can access.

The Professional user encompasses all rights, whereas Functional and Productivity users cover progressively narrower scopes. This tiered model allows enterprises to mix and match license types, ensuring each user receives the appropriate level of access at a suitable cost.

Read License Audits in SAP S/4HANA.

On-Premise vs. Cloud Licensing Considerations

SAP S/4HANA can be licensed in traditional on-premises mode or via cloud subscriptions (including RISE with SAP and S/4HANA Cloud editions).

The core user types above exist in both models, but the measuring and pricing differ:

• On-Premise (Perpetual Named Users): Companies purchase a perpetual license for a certain number of each user type. For example, you might buy 100 Professional and 500 Functional user licenses to deploy S/4HANA in your data center. Each named user is classified by type in SAP’s system measurement. You pay upfront license fees (CapEx) plus annual support (~20% of license cost). Managing an on-prem license means periodically running SAP’s user measurement tools (USMM/SLAW) to ensure your named users are correctly classified. Notably, any user without a classification in the system defaults to a Professional User for audit purposes—a costly surprise if not managed. Additionally, historically, SAP has sometimes limited the number of lower-tier users relative to Professional users (to prevent over-classification due to cheaper licenses). However, newer S/4HANA contracts utilize the updated categories without strict ratio caps.
• Cloud (Subscription & FUE Metrics): In SAP’s cloud subscriptions (including RISE private cloud or S/4HANA public cloud), licensing is typically based on an annual subscription per user. You still define users as Professional, Core/Functional, or Self-Service, but SAP uses a credit system called Full User Equivalents (FUEs). Each user type consumes a certain fraction of an FUE (e.g., 1 Professional = 1 FUE, 1 Functional might = 0.2 FUE, etc.). You contract for a total FUE count to cover your user population. For instance, instead of naming 50 Professional and 250 Functional users, you might purchase a pool of say 100 FUEs that cover your mix. The cloud model bundles software and infrastructure costs, shifting to OpEx. It offers flexibility (you can reassign user types as needs change) but requires careful planning: overestimating FUEs means overpaying, while underestimating risks means running out of capacity. RISE with SAP deals often set minimum FUE commitments, so right-sizing is key.

Whether on-premises or in the cloud, the fundamental principle is to align each employee with the correct user category. On-premises provides more granular control (and asset ownership) but demands diligent compliance tracking.

Cloud subscriptions simplify updates and include infrastructure, but you’re committing to ongoing per-user fees.

In either case, understanding your workforce’s actual SAP usage is crucial to avoid shelfware licenses (unused, expensive user licenses) or compliance issues.

User License Costs and Real-World Pricing Examples

SAP maintains official price lists that are confidential and negotiable; however, well-known benchmark ranges exist for S/4HANA user licenses.

The table below summarizes typical list prices for on-premises licenses (one-time fees) and cloud subscriptions, per user:

Note: These figures are indicative list prices. In practice, SAP licensing is highly negotiable – enterprises routinely secure discounts of 30–50% or more off the list price, especially when migrating from older SAP ERP systems or making large commitments.

For example, a large on-premises S/4HANA deal for 500 users (100 Professional and 400 Functional) might be quoted around $1 million upfront (list price). Still, after negotiations and credits for legacy licenses, the final price could be significantly lower.

Annual maintenance on a $1 million investment would be approximately $ 200,000.

In a cloud scenario, a subscription for 5 Professional and 5 Functional users could cost roughly $ 20,000 per year (e.g., 5 × $2,500 + 5 × $1,000), but volume discounts or promotional bundles might reduce this cost.

Always engage SAP early with a clear picture of your needs, and get quotes for different mixes of user types – this transparency can reveal cost trade-offs (e.g., adding one extra Professional user versus five Functional users).

Real-world pricing example scenarios:

• Small Cloud Deployment (Public Cloud): A regional retail firm implements S/4HANA Cloud for 10 users, comprising 5 Professionals and 5 Functional Users. SAP’s quote includes a base cloud fee plus user fees. List pricing might be $10,000 annual base + $2,500/year per Professional + $1,000/year per Functional Area. That tallies roughly $10k + $12.5k + $5k = $27.5k/year. After negotiation, the deal might close at around $ 20,000 per year (e.g., SAP might waive the base fee or offer a bundle discount). This subscription includes software, hosting, and standard support.
• Large On-Premises Deployment: A manufacturing enterprise with 500 named users opts for S/4HANA on-prem. They determine that 100 should be Professional and 400 Functional. At list, Professionals at $4k each = $400k, Functional at $1k each = $400k, plus core S/4HANA software license perhaps $200k (depending on modules). Total list $1.0M. SAP, eager to move this customer from ECC, offers a 50% discount and credits for the older licenses. The final price may be $ 500,000 upfront. Ongoing costs: annual maintenance is approximately $ 100,000 (20%), and the customer bears the costs of infrastructure and support staff. Over a typical 5-year horizon, this might total $ 500,000 + $ 500,000 in maintenance = $ 1,000,000, plus internal infrastructure costs.

These examples illustrate how license type mix and negotiation dramatically influence TCO. Professional users, while necessary for broad roles, drive costs up fastest.

Many enterprises analyze each user’s actual transactions (often via SAP’s LAW or user audit reports) and find that a significant portion can be downgraded to cheaper licenses without impacting their work.

Conversely, under-licensing (assigning someone a Functional license when they regularly perform Professional-level tasks) is a hidden liability – it may go unnoticed until an SAP audit flags it, at which point penalties or true-up fees apply.

Striking the right balance is an ongoing effort that requires both accurate role design and vigilance as users’ roles evolve.

Understanding SAP S/4HANA’s licensing requires clarity on user types. Each license type carries different cost implications and permissions, so IT and procurement leaders must collaboratively map business roles to the appropriate SAP user licenses.

Clear internal policies on who qualifies as a Professional vs Functional user (backed by usage data) can prevent over-licensing and surprise costs during annual true-ups or audits. Regular internal reviews help ensure that the license mix aligns with current user activities.

Read SAP S/4HANA Licensing Costs Explained.

Compliance and Audit Considerations

SAP’s license audits are thorough – every named user in your system is scrutinized to ensure the license type aligns with their activity.

Compliance risks around user licensing include:

• Misclassified Users: If a user with a “Functional” license executes tasks reserved for Professional users (for example, an HR clerk running a cross-module report or a power user with broad read/write access), SAP can deem that user mislicensed. In an audit, that single user could be reclassified as Professional retroactively, often resulting in a hefty back maintenance fee and purchase of the correct license. The “compliance mirage” for CIOs is thinking you saved money by assigning many lower-tier licenses, only to face a true-up bill because some users exceeded their allowances. Prevent this by strictly controlling roles and authorizations – a user with a limited license should be technically restricted from out-of-scope transactions. Role-based access control in SAP should align with license definitions to prevent any gray areas.
• Inactive or Unused Accounts: Unused SAP user IDs can still count against your license totals. Auditors often include any named user who has not been deleted or properly retired. Best practice is to regularly clean up dormant accounts – simply locking an account may not be enough, as some contracts count locked users as active licenses unless they are completely removed or set to an expired status. Regular user recertification campaigns and immediate de-provisioning of departed employees help keep your license count optimized.
• Indirect Access (Digital Access): Not all SAP usage comes from human users logging into the GUI. If external systems (e.g., a customer portal or a third-party app like Salesforce) indirectly query or create data in S/4HANA, SAP expects licensing for that as well. Historically, this has been a contentious area: SAP may require a named user license for each external user or a separate “SAP Electronic Access” license. To simplify, SAP now offers Digital Access licensing, which charges based on documents (e.g., number of orders, invoices created via external systems) instead of users. Companies should analyze their integrations: If thousands of external users or IoT devices interact with SAP, it may be more cost-effective to license by document instead of purchasing a large number of named users. Digital Access can be purchased as document packs or a percentage add-on to your contract – it’s wise to negotiate a predictable model (like an upfront flat fee or cap) to avoid surprise charges.
• Audit Process and Frequency: SAP typically audits customers on a regular cycle (often annually for large enterprises). During an audit, you’ll run SAP’s measurement programs that count users by license type and check engines. Ensure USMM (user measurement) is set to the correct price list version (S/4HANA user categories) and that each user is assigned the appropriate type in SAP’s license administration. It’s common to conduct an internal “test run” before an official audit – this allows you to address any glaring issues (e.g., a batch job user being set to Professional inadvertently). Also, watch for “multiplying” user counts – the same person with two accounts (perhaps one dialogue user and one background user) could be double-counted if not consolidated. SAP auditors will query anomalies, so prepare documentation for any unusual cases (like generic system accounts or integration users and how they’re licensed).

SAP licensing audits scrutinize every named user.

Companies should institute proactive compliance practices, including monthly license assignment reviews, strict role-change procedures (e.g., reevaluating if a user’s job expansion warrants a higher license), and maintaining evidence of license entitlements and purchases.

If an audit finds you under-licensed, remediation costs can be significant, often at list price and backdated maintenance.

On the other hand, if you’re over-licensed (paying for more Professional users than you need), that’s a wasted budget.

Many enterprises engage third-party licensing experts or use specialized tools to continuously monitor SAP usage against license counts, catching issues before SAP does. The goal is to make SAP audits a formality, not a feared event.

License Optimization and Negotiation Strategies

Licensing SAP S/4HANA is not a one-time task but an ongoing optimization exercise. Here are strategies enterprises use to minimize cost and risk:

• Right-Size and Rebalance Licenses: Before true-ups or new purchases, audit your usage. Identify users with Professional licenses who only use limited functions – consider downgrading them to Functional or Productivity licenses. Conversely, proactively upgrade any under-licensed heavy users. Regularly update the mapping of job roles to license types, as business growth or changes can shift requirements (e.g., a finance user taking on more responsibilities may need to move from Functional to Professional).
• Leverage Contract Renewals and Migrations: Major transitions, such as moving from ECC to S/4HANA or from on-premises to RISE, are prime times to negotiate. SAP often provides conversion programs – e.g., credit for unused legacy licenses or discounted bundles – to incentivize moves. Use this leverage: consolidate redundant licenses, eliminate outdated categories, and push for bundled discounts (for example, adding a block of additional users at a lower unit cost per user). End-of-quarter or end-of-year timing can enhance SAP’s flexibility, as sales teams strive to meet their targets.
• Consider SAP RISE or Cloud for Simpler Billing: If infrastructure management is not your core strength, RISE with SAP offers a single subscription that packages the software, hosting, and support. While sometimes at a premium, it shifts to a predictable OpEx model and can simplify user licensing via FUEs. But be cautious – once you trade in perpetual licenses for RISE, you lose ownership of those licenses. Some organizations do a detailed ROI comparison of staying on-prem vs. RISE; the best choice depends on your IT strategy and ability to negotiate cloud terms (such as caps on cost escalators and clear exit options).
• Monitor Package/Engine Usage: Beyond user licenses, S/4HANA has add-on engines (such as SolMan and Treasury) that may be licensed based on metrics (e.g., revenue, number of employees). These aren’t “user types,” but they can indirectly affect user license needs (e.g., if you license SAP Time Management by employee count, fewer HR self-service user licenses may be needed separately). Keep an eye on these metrics – underutilized engines might be candidates to drop from your contract, and overutilized ones might trigger unexpected fees if not licensed correctly.
• Transparent Internal Communication: Educate your department heads and IT teams about how SAP licensing works. Often, unintended non-compliance occurs when a well-meaning IT administrator grants broader access to resolve a user’s problem, unaware that it violates license terms. By making managers aware that “every new SAP user or additional access has a cost profile,” you foster a culture of compliance. Some companies institute a license request process, where a manager requests SAP access for a new hire or expanded rights for an existing user. The license management team then reviews and approves the appropriate license type. This governance prevents license creep.

Finally, don’t be afraid to seek external benchmarks. SAP’s initial quotes can be high; by comparing with other SAP customers (via user groups or advisors), you can gauge if the per-user pricing is fair. SAP reps expect informed customers to negotiate.

A well-prepared organization will come to the table with a clear understanding of how many of each license they truly need and what a reasonable price range is.

It will push for protections such as price caps on future growth or flexible reclassification rights (e.g., the ability to swap 10 Functional licenses for 5 Professional licenses later if needed).

In sum, treat SAP licensing management as a continuous improvement process – much like tuning your applications, you should continually tune your license landscape for efficiency.

Recommendations

• Map Roles to License Types: Perform a comprehensive role analysis. For each job role using SAP, define the appropriate license category (e.g., buyer = Functional user, executive = Professional). Use this mapping as a policy for onboarding new users and assigning licenses.
• Audit Your SAP Usage Regularly: Don’t Wait for SAP’s Official Audit. Use SAP’s License Administration Workbench (LAW) or third-party tools quarterly to identify any misclassified users or unused licenses. Immediately reassign or retire licenses that are not needed.
• Optimize License Mix to Cut Costs: Allocate expensive Professional licenses only to those who truly need full access. Shift casual or departmental users to lower-cost licenses. Many enterprises achieve 15–30% cost savings by downgrading users who don’t require broad permissions.
• Negotiate with the Data on Hand: When renewing or expanding your SAP agreement, come prepared with exact user counts and usage statistics. Leverage that data to negotiate better pricing tiers (e.g., volume discounts if you grow) and to secure credit for any legacy licenses if migrating to S/4HANA or RISE. Always ask SAP for transparent pricing options (named user vs. FUE vs. document licensing) and choose the one that best fits your usage profile.
• Plan for Indirect Access: Inventory all systems that interface with SAP. If you have portals, mobile apps, or integrations feeding data into S/4HANA, develop a strategy (such as Digital Access document licenses or adjusting user licenses) to cover that usage. Negotiating a flat-rate indirect usage license up front can prevent a nasty surprise later.
• Educate and Enforce: Train your SAP security and BASIS teams on the implications of licenses. Make it part of the change management process: if a user’s role changes or they request extra access, evaluate if a license upgrade is required. This prevents well-intentioned internal changes from causing compliance gaps.
• Utilize Contract Flexibility: Where possible, include clauses that allow swapping of license types or growth at predefined rates. For instance, negotiate the right to convert unused Productivity user licenses into Functional licenses, or vice versa, to adapt to changing needs. This flexibility can save money as your organization evolves.
• Engage Experts if Needed: SAP licensing and contracts can be dense. Consider utilizing specialized SAP licensing advisory services or tools to validate your license position before making significant decisions. An external review can identify overlooked savings (like unused users or mispriced components) and strengthen your hand in negotiations with SAP.
• Stay Informed on SAP Policy Changes: SAP occasionally updates its licensing models (for example, introducing new user categories or modifying Digital Access rules). Stay informed about SAP announcements, user group forums, and Gartner analyses. Being aware of changes (such as the phase-out of older “Limited Professional” licenses or new bundle offerings) ensures you’re taking advantage of the latest options and not stuck on outdated, expensive models.

FAQ

Q1: What are the main SAP S/4HANA user license types, and how do they differ?
A: The primary S/4HANA user licenses are Professional, Functional (Limited), Productivity, Developer, and Employee Self-Service. Professional Users have full unrestricted access across all modules (intended for power users and managers). Functional Users are limited to specific business areas or modules (for example, a supply chain analyst working only in logistics). Productivity Users have very narrow usage (simple tasks like viewing data or approvals). Developer Users are for technical staff who need access to development tools (coding and customizing, but typically not daily business transactions). Employee Self-Service users are the most limited, with access to basic self-service tasks (HR updates, time entry) only. Each type carries different usage rights and costs, allowing companies to tailor access according to user roles.

Q2: How are SAP S/4HANA user licensing fees determined?
A: Licensing fees depend on both the quantity and type of users. Professional licenses are the most expensive per user, as they provide complete system access. Functional and Productivity users come at lower prices due to their restricted scope. For on-premise, you pay a one-time fee per user license plus annual support (typically ~20% of the license price). For cloud subscriptions, you pay a monthly or annual fee per user. For example, a Professional cloud user might be around $200–$250 per month, whereas a Functional user could be around $50–$100 per month. SAP also sometimes charges a base fee for the software in cloud deals. Everything is ultimately negotiable – large enterprises often get tiered discounts (the per-user price drops as you add more users) and other incentives. Always request SAP’s price breakdown by user type to determine where the bulk of your costs lie.

Q3: Can we mix and match different user license types in one SAP S/4HANA system?
A: Yes. Combining multiple user types is the normal practice. A single S/4HANA environment can have a mix of Professional, Functional, Productivity, and other user licenses concurrently. You assign each named user the appropriate type based on their role. This mix-and-match approach optimizes costs by providing full licenses to heavy users and restricted ones to lighter users. There’s no technical limitation in the software regarding mixing license types; it’s controlled contractually and by how you classify users in SAP’s license administration. Be mindful to keep track of how many of each type you are entitled to under your contract. And if a user’s role changes (say,a warehouse clerk gets promoted to a planner role), update their license type accordingly.

Q4: What happens if a user performs activities outside their licensed role?
A: This is considered non-compliant usage. For example, if someone with a Functional User license starts executing transactions that SAP deems require a Professional User license, you are essentially using an unpurchased license. In an audit, SAP can retroactively charge for that usage, usually by requiring you to purchase the appropriate number of Professional licenses (often at list price, covering the period of misuse) plus maintenance back-pay. It’s important to prevent this by aligning the user’s system authorizations with their license type. The system won’t automatically prevent a Functional user from performing a Professional task if they have the necessary permissions – it’s up to your security design to enforce this. Regular internal audits can help identify if any Functional license users have accumulated excessive permissions. If discovered early, you can either remove the extra access or proactively upgrade the license (which is cheaper than being caught in an official audit). Essentially, each user should only be able to do what their license allows; anything more is a compliance risk.

Q5: How can we determine the right number of each license type we need?
A: Start with a user role mapping exercise. List all the roles/jobs in your organization that will use SAP S/4HANA. For each role, identify the transactions and modules they require. Then classify the role into the closest SAP user license category. For instance, if a role requires cross-module capabilities or configuration access, mark it as requiring a Professional license. If it’s confined to one module (such as creating purchase orders in procurement), mark it as Functional. If it involves only approvals or data lookup, Productivity might suffice. Tally how many people are in each role to estimate quantities. It’s also helpful to examine usage data from any existing SAP systems – often, usage logs or the last audit from ECC can show how many heavy vs light users you had. Remember to account for growth and new projects: if you plan to add 50 new users next year for a new plant, include this in your projections. Many companies intentionally purchase a slight surplus (perhaps 5-10% extra) of lower-tier licenses to accommodate new hires, since those are cheaper, but avoid overbuying high-cost licenses “just in case.” You can usually purchase more licenses later, but you won’t receive a refund for unused ones.

Q6: How does cloud (RISE or public cloud) user licensing differ from on-premise licensing?
A: Functionally, users in cloud vs on-prem have the same types (Professional, etc.), but the commercial model differs. In on-premise, you buy perpetual user licenses and own them, paying maintenance for support. In the cloud or RISE, you essentially rent licenses on a subscription basis. SAP often measures cloud users in Full User Equivalents (FUEs) rather than individual named users – an FUE is a unit that represents, for example, 1 Professional or 5 Functional users. You contract for a certain total of FUEs per year. The cloud subscription fee encompasses the software license, hosting (if using SAP’s cloud), and standard support in a single bundle. Another difference: cloud contracts are time-bound (e.g., 3-year term), after which you renew or adjust quantities; on-prem licenses are one-time buys you can use indefinitely (with the option to pay maintenance for upgrades). Cost-wise, cloud is more OPEX and scales with the number of active users, whereas on-premises is a larger upfront CAPEX. One benefit of cloud licensing is that you can typically flex user counts up or down at renewal (or sometimes mid-term with notice), whereas on-premises, you might be stuck with excess licenses if your user count drops. However, cloud can be more expensive over a long horizon if you don’t negotiate well, as you continue to pay every year. The decision often comes down to your company’s preference for capital vs operational expense and how much responsibility you want for managing systems yourself.

Q7: What is SAP’s policy on indirect access, and do we need licenses for bots or external users?
A: SAP’s indirect access policy requires that any usage of SAP data by non-SAP systems is properly licensed. If you have external users (customers, suppliers) or software (like a web portal, RPA bots, IoT sensors) that interact with S/4HANA’s data, you must account for that.

There are two main approaches:

• Named User licenses: In the past, SAP expected customers to buy named user licenses even for indirect users (e.g,. if 1,000 customers access an SAP-based portal, you’d theoretically need 1,000 user licenses, which was impractical).
• Digital Access (Document Licensing): To modernize, SAP now offers licensing these scenarios by the number of documents processed (e.g., sales orders created via APIs, invoices generated externally), rather than by user count. You purchase a block of document licenses, and any external activity that consumes SAP counts against that block.

Today, new S/4HANA contracts often include a Digital Access component. SAP even ran a Digital Access Adoption Program to help customers transition. The key for your organization is to identify indirect usage and choose the more cost-effective model. For high-volume, anonymous interactions (such as a customer website), document-based licensing is typically more suitable.

For a handful of third-party apps used internally, sometimes just obtaining a few named user licenses for those integration accounts is sufficient. Importantly, bots and background technical users also consume licenses.

SAP has special technical user types (e.g., for communication users or test users), but these may still map to a license. Always clarify with SAP how they expect non-human access to be licensed and obtain this information in writing in your contract to avoid future disputes.

Q8: Can we adjust a user’s license type if their role changes later on?
A: Yes, SAP allows for the reclassification of users, but the process and timing depend on the scenario. For on-premise, if you have spare licenses of the needed type available, you can simply change the user’s classification in the system from, say, Functional to Professional in your license administration, and then ensure you stay within your licensed counts when the next audit comes. If you don’t have a free Professional license, you will need to purchase an additional one (or swap it with another user by downgrading someone else). SAP doesn’t automatically credit you for downgrades – those licenses remain in your inventory – but you can internally choose not to assign some and assign another. In a cloud subscription context, you often commit to a certain number of each type for the year. You might be able to do minor adjustments (some contracts allow a degree of “floating” FUEs among types). More typically, you’d make adjustments at the end of the subscription term or via a contract addendum if mid-term. Practically, it means periodically reviewing roles and anticipating changes. It’s wise to have a small buffer of the higher license tier available. For example, if you expect some analysts might become power users, having a few extra Professional licenses can cover that without delay. In summary, you can change a user’s assigned license type in the tool easily; the challenge is ensuring that contractually, you have purchased enough of the new type to cover it.

Q9: How often does SAP audit license usage, and what are the consequences of non-compliance?
A: SAP typically has the right to audit your licenses annually, although in practice, many customers see an audit every 2-3 years (it can depend on your contract and if SAP has any compliance programs ongoing). You’ll be asked to run measurement programs and submit results. If the audit finds shortfalls – meaning you have more usage than licenses – SAP will require you to purchase the necessary licenses to cover the difference, usually immediately. Often, they invoice backdated maintenance on those licenses as well (as if you should have been paying support on them all along). In cases of significant non-compliance, it can result in a multi-million-dollar exposure, and those findings typically need to be resolved (paid for) before you can renew support or make new purchases. While SAP audits aren’t usually as punitive as, say, some software vendors who impose fines, the “true-up” bill is effectively a fine since you’re paying unplanned fees. On the other hand, if the audit reveals that you’re within compliance (or even over-licensed), there’s no direct refund, but it provides useful information for you to optimize. To avoid drama, many companies do internal pre-audits and even engage third-party audit defense specialists to validate data before sending it to SAP. If SAP’s audit results appear incorrect, you can dispute and reconcile them, but it’s better to ensure your report is accurate and complete. In summary, non-compliance typically leads to forced purchase of additional licenses (often at unfavorable terms). If not resolved, SAP could terminate your support agreement – a very last resort scenario that most avoid by negotiating a settlement.

Q10: Are there ways to reduce SAP S/4HANA user licensing costs without violating agreements?
A: Absolutely. Here are a few enterprise-proven tactics:

• License Recycling: Implement a process to reclaim licenses from users who leave or no longer need access. For example, if someone exits the company or leaves the SAP system, immediately free up that license and reassign it, rather than purchasing a new one.
• Role Optimization: Design SAP roles so that they align with lower license types whenever possible. For instance, avoid giving broad access to someone who doesn’t truly need it. By crafting more granular roles, you can safely assign cheaper licenses.
• Contract Negotiation: As mentioned, use your purchase volume as leverage. If you’re making a big push (like adding 200 users), negotiate a deal that not only discounts those but maybe also gives you some “free” Employee self-service licenses or a better rate on extra modules. Also, negotiate maintenance terms – some customers negotiate a fixed cap or a lower percentage for support fees, especially if the environment is large.
• Third-Party Support or Shelving: In some cases, companies with excess licenses or older SAP products consider third-party support (like Rimini Street) to save on maintenance, or they shelf (terminate support for) unused licenses to cut annual fees. With S/4HANA, if you have far more licenses than users, you might not need to pay maintenance on all of them – you could try to downsize your support scope at renewal, or at least ensure new purchases don’t all attract immediate maintenance if not needed.
• Monitor Usage Trends: Over time, watch if certain departments start using SAP more heavily – that might be an early signal that you need to adjust license types upward (which you can plan a budget for) or if some departments are using it less, you may be able to reduce some licenses in the next renewal. The goal is to achieve a tight alignment between what you pay for and the value you receive.

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