Maximizing Value from Existing SAP Licenses

Maximizing Value from Existing SAP Licenses

Introduction

SAP software is a significant investment, and IT decision-makers prioritize maximizing ROI on SAP licenses. Large enterprises often over-license or underutilize their SAP entitlements, leading to wasted budgets.

Studies have found that, on average, 30% of purchased SAP licenses sit unused, representing a huge opportunity for cost savings.

A proactive licensing strategy can yield substantial benefits if your organization runs SAP ECC, S/4HANA, SuccessFactors, or other SAP products.

This article explores practical strategies for getting the most value from your SAP licenses—from preparing for audits and managing indirect usage to eliminating shelfware and leveraging usage data in negotiations.

The goal is to optimize your SAP environment over time so that you pay only for what you truly need and not a penny more.

Preparing for SAP License Audits

Regular SAP license audits are a reality for on-premise SAP customers. Preparing for and defending against these audits is crucial to avoid surprise compliance fees.

Key steps include:

• Maintain a Current License Inventory: Keep an up-to-date inventory of all SAP licenses your company owns, including the number of each user type and any engine/module licenses. Know your contract entitlements inside out. This serves as your baseline to compare against actual usage during an audit​.
• Conduct Internal License Checks: Don’t wait for SAP’s auditors to find issues. Proactively run SAP’s measurement tools (such as USMM and LAW) regularly (e.g., quarterly). These tools consolidate user counts and engine usage across systems. By doing “mock audits,” you can catch and fix problems early. For example, one company’s internal audit revealed 300 accounts that hadn’t logged in for over a year – they locked those users before the official audit, which brought their license count back into compliance. Cleaning up inactive users and duplicate accounts ahead of time can dramatically reduce your apparent usage.
• Correct License Classification: Ensure each user is assigned the proper license type in SAP. Misclassified users (e.g., tagged as Professional when they only need limited access) will inflate your audit results. Before an audit, review user roles and adjust to the appropriate license category. SAP’s audit tools often flag “unclassified” users, which default to the highest (and most expensive) category if not fixed​. Taking the time to right-size user licenses (downgrading some users’ licenses where appropriate) can preempt compliance gaps.
• Document and Defend Your Position: During an audit, be prepared to explain anomalies. Keep records of any special cases – for instance, if certain engine metrics are high due to test data or if some users were recently terminated and removed from the system. If SAP’s auditors ask questions, respond with factual explanations and only share information within the audit’s scope​. Demonstrating that you actively manage your licenses sends a positive signal​. At the same time, don’t volunteer unnecessary data that could open new scrutiny.
• Engage the Right Stakeholders: Treat audit prep as a team effort. Involve IT administrators, the SAM/licensing manager, procurement, and HR. HR can help verify employee counts (for user-based licenses) and identify departures to deactivate; procurement/legal can interpret contract nuances. A coordinated approach ensures nothing is overlooked – for example, verifying that all SAP systems in your landscape (including any recently decommissioned ones) are properly accounted for so SAP doesn’t audit an old system you’ve retired.
• Stay Audit-Ready Year-Round: The best defense is an ongoing offense – continuously monitor license usage and compliance as a routine governance activity. This way, when that official audit notice arrives, it won’t trigger a last-minute scramble. Effective audit preparation avoids large true-up bills and often leads to insights that help optimize your licenses further. In many cases, companies discover hidden inefficiencies during self-audits – it’s common to find that over 20% of SAP user accounts are inactive on average. By catching and resolving these issues beforehand, you can face SAP’s audit with confidence and hard data to back your compliance.

Managing Indirect Access and Digital Access

One of the trickiest areas of SAP licensing is Indirect Access (also called Digital Access in SAP’s newer model). This refers to scenarios where non-SAP systems or third-party applications access your SAP data or functions, potentially creating usage not covered by a traditional named-user license.

If not managed, indirect usage can lead to surprise bills. A cautionary example is the SAP v. Diageo case, in which a customer was found liable for nearly $68 million in fees due to thousands of unlicensed external users accessing SAP via a Salesforce system​.

To avoid unpleasant surprises from indirect usage, consider these strategies:

• Audit Your Interfaces: Inventory all the external systems, bots, or applications that connect to your SAP environment (ERP, S/4HANA, etc.). Determine what data they read or write. Under older contracts, even read-only access by a third-party system might require a license, whereas SAP’s current policy exempts certain static read scenarios. Map out where indirect access is happening so you can address it deliberately.
• Understand SAP’s Digital Access Model: In 2018, SAP introduced Digital Access licensing, which charges not per user, but per digital document created by indirect activity (covering documents like sales orders, invoices, etc.). This model can provide more transparency, but needs careful monitoring – the volume of documents can be huge. An average organization generates millions of such documents; one estimate found ~32 million documents in a typical case, equating to $735,000 in Digital Access fees​. Review the nine document types SAP counts and estimate your volumes. If you haven’t adopted Digital Access, run SAP’s estimator tools to see what your indirect usage would cost under this model.
• Proactively Manage Indirect Usage: If you stick with traditional named-user licensing for indirect scenarios, ensure that any account used by external systems is properly licensed as a Technical or Communication User (or whatever classification your contract stipulates). Avoid sharing a single-user login for multiple external processes unless allowed, as this can violate license terms. If you move to the Digital Access model, implement monitoring for document creation. Work with your functional teams to minimize unnecessary document generation – e.g., consolidate interface transactions or batch updates to reduce document counts​. Small process tweaks (like combining multiple small orders into one or reducing automated write-backs) can cut down the billable documents.
• Leverage SAP’s Indirect Use Programs: Stay informed about any SAP programs or offerings that can help. SAP has offered Digital Access adoption programs with steep discounts (up to 90%) to encourage customers to transition​. There may also be options to convert some of your existing named-user license investment into a pool of Digital Access documents. If indirect usage is significant in your landscape, engage SAP early to negotiate a reasonable package on your terms rather than waiting for an audit-driven compliance claim​. Be sure to evaluate different scenarios (continuing with named users for external access vs. switching to Digital Access) to see which is most cost-effective for your situation.
• Govern and Review Continuously: Indirect access risk isn’t a one-time check – make it part of your governance to review integrations whenever new systems come online. Implement controls so that any new third-party interface to SAP triggers a licensing review. It’s easier to address licensing needs upfront than to retrofit them later under audit pressure. Regularly reconcile SAP’s log data or use tools to track external usage volumes. By actively managing indirect access, you can avoid surprise costs and ensure compliance, turning a potential risk into a well-handled aspect of your license strategy.

Identifying and Eliminating Shelfware

Shelfware refers to SAP licenses you’ve paid for but aren’t actively using – a costly form of waste.

Shelfware can take the form of unneeded user licenses or entire SAP modules and components installed (or even just entitled) but deliver no business value.

Eliminating shelfware is one of the quickest ways to derive more value from your SAP investment:

• Find Unused Modules and Engines: Over the years, companies often purchase add-on SAP modules (CRM, SRM, PLM, industry solutions, etc.) that are never fully deployed or later replaced by other systems. These dormant components sit “on the shelf” while the company continues paying annual support to them​. Conduct a thorough review of your SAP portfolio – identify any engines or packages with little to no usage. Check system logs and talk to business owners to confirm if a product is longer in use. Each unused module is an opportunity to save on support costs. SAP’s maintenance contracts are usually evergreen (unlike Microsoft EA, which renews every few years), meaning you pay maintenance indefinitely until you cancel a license. Terminating truly unused software licenses can immediately stop the bleeding of maintenance dollars.
• Reclaim Inactive User Licenses: Shelfware also accumulates in the form of inactive SAP user accounts that still have licenses allocated. Employees who left the company or changed roles, duplicate accounts across systems, and test users not properly flagged can inflate your named user count. Regularly run reports to find users with no login activity in 90+ days and remove or deactivate them. One real-world company discovered that many of its SAP user licenses were tied up by people who hadn’t logged in for over a year – by cleansing these accounts, they freed up licenses and avoided buying more. Also, consolidate duplicate users (someone with separate IDs in ECC and BW should consume only one license). You can often meet new demand by recycling licenses from former employees or redundant accounts without purchasing additional licenses.
• Right-Size License Types (Avoid Over-licensing): A common form of shelfware is mismatched license levels – paying for a higher-cost user type when a lower one would suffice. SAP offers tiers like Professional, Limited Professional, Employee Self-Service, etc., with very different price points. Many organizations err on caution and broadly allocate expensive professional licenses, even to users with light usage needs. The result: you’re overspending on capabilities that those users never utilize. Review user roles and transactions: if users only run reports or make basic entries, they likely don’t need a full professional license. Downgrade them to the appropriate level. For example, one company realized it had given all finance staff Professional licenses. Still, many only used basic functions – by switching a large subset to Limited Professional licenses, they saved over 20% of their annual SAP licensing costs while still covering everyone’s needs. Optimizing license types immediately reduces maintenance fees (typically ~20% of license cost per year) and can improve compliance by ensuring each user’s license matches their actual usage.
• Terminate or Trade in the Shelfware: You have a couple of options after identifying shelfware. If you have entire software modules that are unused, you can cancel those licenses and stop paying maintenance on them going forward. It’s important to follow SAP’s formal process for termination (usually requiring notice before your maintenance renewal date). While SAP’s reps may resist (since maintenance revenue is at stake), you have the contractual right to terminate unused licenses. Companies have achieved significant savings this way – one firm cut its annual SAP support bill by 20% by surrendering a set of unused module licenses​. Alternatively, consider negotiating a swap or credit if you anticipate needing other SAP products. SAP, at times, allows customers to apply the value of shelfware licenses toward new purchases. For instance, if you have $500,000 worth of idle SRM licenses, you might negotiate to exchange them for $500,000 credit on a new SAP analytics solution. SAP will typically insist that your total maintenance spend doesn’t decrease (they might require the new purchase to equal or exceed the value). Still, at least you’re redirecting money from unused software to something your business can use. This license recycling turns shelfware into value, effectively funding new initiatives without a net new budget and cleaning up your license portfolio.
• Monitor Cloud Subscription Usage: Shelfware isn’t limited to on-premise licenses; it can also occur in cloud subscriptions. For SaaS products like SuccessFactors or Ariba, you might be signed up for more users or modules than you need. Make it a habit to compare your subscribed user count to actual active users. SuccessFactors, for example, counts only active employee users against your subscription; if someone leaves, deactivating their account promptly frees up that license slot​. Track usage of each module – if a module’s adoption is low, you might remove it in the next renewal or reduce the user count. Cloud contracts often allow adjustments at renewal (if not mid-term), so use those opportunities to eliminate cloud shelfware and adjust your subscriptions to match reality.

Leveraging Usage Data to Renegotiate Terms

Your SAP usage data is a powerful bargaining chip for contract renewals and negotiations with SAP.

Rather than blindly renewing the same quantities or accepting SAP’s first quote for additional licenses, savvy organizations use detailed analysis of what they have and use to drive a better deal.

Here’s how to leverage this data for maximum advantage:

• Perform an Enterprise License Assessment (ELA): Before any major negotiation – an annual true-up, a contract renewal, or migrating from ECC to S/4HANA – gather a clear picture of your current license utilization. This includes user counts by license type, peak usage of engines or packages, indirect access metrics, and identification of shelfware, as discussed. By knowing your Effective License Position, you can discuss with SAP armed with facts. For example, you might discover you only actively use 800 to 1000 licensed Professional users or that one module’s metrics are far below the licensed capacity. This insight allows you to target reductions or swaps in areas of excess.
• Renegotiate the License Mix: If your usage analysis shows a mismatch between what you’re paying for and what you need, proactively renegotiate those terms. Perhaps you can reduce the number of certain user types or convert some license types to a lower tier. If you’re moving to a newer SAP offering (say, transitioning from on-prem to a cloud solution), seek credit for your existing investment. SAP has been known to offer trade-in credits, especially encouraging moves to the cloud or S/4HANA. A Forrester analysis noted cases where SAP offered to trade unused on-premise license maintenance for new cloud subscriptions, effectively reducing the net new cost for the customer. Don’t be afraid to ask SAP to repurpose what you’ve already paid – it never hurts to request a license swap or to apply unused fees toward new needs.
• Time Your Negotiations Strategically: The best leverage often comes at renewal time or when you’re about to make a significant new purchase. Align these conversations. If you plan a big S/4HANA purchase or add SuccessFactors, use that moment to address legacy shelfware or unfavorable terms. SAP sales teams are more flexible when they see a larger deal. You can achieve a more holistic, win-win agreement by bundling discussions together. For instance, you might agree to a new multi-year deal for additional products, but only if SAP agrees to adjust your maintenance on a defunct product or lock in discounts for a stable overall spend. Show SAP a clear plan: “We will invest in X, Y, and Z, but we need to right-size A and B, which we’re not utilizing.” This approach makes it easier for SAP to justify concessions as part of a broader relationship.
• Use Data to Drive the Conversation: When negotiating, bring concrete usage data to back up your requests. If you propose eliminating 200 Professional user licenses, have the usage reports and user lists that justify those as truly unused or over-assigned. If you want a discount on Digital Access, show your document counts and how you’ve optimized processes to minimize unnecessary documents. Providing SAP with transparency into your environment, to a reasonable extent, can bolster your case that you deserve a better rate or terms. Demonstrating proactive management of your usage may encourage SAP to be more collaborative. Showing that you have been optimizing (e.g., you reduced inactive users and tightened indirect usage) signals that you’re an informed customer. SAP reps have more difficulty pushing excess licenses if you clearly show what you need. As one set of experts advises, documented usage statistics and scenario plans give you strong negotiation leverage to obtain tailored pricing. Use evidence to shift the negotiation from “SAP’s list price and assumptions” to your actual usage reality.
• Aim for Flexible Terms: In any renegotiation, try to build in flexibility that protects your interests. For example, seek clauses that allow you to adjust license counts downward at renewal if your usage or employee count drops (this is especially important in cloud subscription deals – negotiate the ability to reduce seats if your workforce shrinks or you divest a business unit). You can also negotiate future unit prices for additional licenses (a fixed price for any extra users you add later, so there are no surprises). Another tactic is securing price holds or caps on maintenance increases. The key is to avoid being locked into paying for a static or over-inflated number of licenses when your business is dynamic. Use your data trends (past and projected) to argue for these terms – for instance, if you know you will be phasing out a certain module in 2 years, negotiate now how its removal will be handled commercially.
• Bring in Expert Help if Needed: Optimizing SAP agreements can be complex, so don’t hesitate to involve licensing specialists or third-party advisors. They can analyze your usage data and suggest negotiation strategies or creative licensing constructs. The investment in expert advice can pay for itself many times more in SAP cost savings. Whether or not you use external help, always involve your procurement and legal teams in major SAP negotiations – they will ensure any promises are captured in contract language and help push for the best commercial terms.

By treating your SAP usage data as an asset, you can turn contract discussions into opportunities for optimization.

A successful renegotiation often results in a leaner license profile (eliminating excess) and contractual guardrails that prevent future overspending. In short, you make your existing licenses work harder and ensure new investments align with actual needs.

Recommendations

To summarize, here are the key recommendations for maximizing the value of your existing SAP licenses:

• Implement Continuous License Management: Don’t wait for an audit or renewal to review your SAP licensing. Establish a governance process to monitor usage and compliance continuously. Know your license entitlements for both on-premise and cloud SAP products and track consumption on a regular basis. This ongoing vigilance will surface issues (inactive users, over-assigned licenses, etc.) in time to address them proactively.
• Clean Up and Right-Size Regularly: Make license optimization a routine IT housekeeping task. Identify inactive user accounts and remove or reassign them each quarter. Review license assignments by role and downgrade users’ license types if their usage is low. By keeping user licenses tightly aligned with real needs, you avoid paying for shelfware and ensure you can reach new users without extra purchases.
• Prepare for Audits Before They Happen: Always assume an SAP audit is approaching. Maintain audit readiness by running internal measurements and fixing discrepancies ahead of time. This includes reconciling user counts, consolidating duplicates, and documenting indirect access. Being well-prepared means an audit will be a manageable exercise rather than a fire drill. It also positions you to confidently defend your license position since you’ll have data to counter any incorrect claims.
• Manage Indirect/Digital Access with Care: Treat indirect access as a top compliance risk to be managed, not an afterthought. Inventory all connections to SAP and ensure they are licensed appropriately. If you adopt SAP’s Digital Access model, monitor digital document creation and optimize processes to control volumes. If you stick to named users, allocate dedicated integration user licenses and keep tabs on usage. Proactively address indirect usage issues (via technical or licensing solutions) to avoid hefty surprise fees down the road.
• Eliminate Shelfware Systematically: Conduct periodic reviews to spot unused SAP components or surplus licenses. When found, take decisive action—cancel maintenance for unused products or negotiate swaps and credits to put that value to use elsewhere. Likewise, recycle under-utilized user licenses to avoid buying new ones unnecessarily. Every instance of shelfware you retire is an immediate cost savings and a step toward a leaner, more efficient license landscape.
• Leverage Renewal Time for Better Deals: Approach your SAP renewal or new purchase negotiations like a strategist. Use your usage data as leverage to push for terms that fit your needs. Don’t simply renew what you’ve always had – present SAP with a proposal that right-sizes your licenses (dropping what you don’t need, maybe adding something new of value) as a package. By tying removals and additions together, you can often get SAP to agree to beneficial changes it might otherwise resist. Ensure any concessions or special terms are documented in your contracts.
• Engage Stakeholders and Seek Expertise: Maximizing SAP license value isn’t just an IT task involving finance, procurement, and business leaders. They can help identify business changes (mergers, divestitures, new initiatives) that should trigger license adjustments. Consider bringing in SAP licensing experts or SAM tools to uncover optimization opportunities. Tools can automatically identify dormant users or misclassified licenses, and consultants can share tactics proven by other organizations. A small investment in analysis can reveal millions in potential savings.
• Plan for the Future: Finally, align your license strategy with your IT roadmap. Plan the license transition carefully if you plan to move to S/4HANA or SAP cloud solutions. Take advantage of migration programs to convert old licenses, and avoid double-paying during the switch (e.g., don’t keep paying for a module you’ll replace in a year). Negotiate phased ramp-ups for subscriptions during deployment so you’re not overpaying before users are on board. By anticipating changes, you can ensure you only pay for what you need at each stage of your SAP journey.

By following these recommendations, large enterprises can significantly reduce SAP license costs and risks while fully enabling the business with the necessary software.

The overarching principle is simple: treat SAP license management as an ongoing, data-driven discipline.

With diligence and a proactive approach, you can continually optimize your SAP licensing footprint – maximizing value, minimizing waste, and controlling compliance.