Top 10 SAP License Optimization Strategies

Top 10 SAP License Optimization Strategies

SAP software licensing is complex and costly; however, there are practical strategies to optimize license utilization and minimize unnecessary expenses.

This advisory outlines 10 effective SAP license optimization strategies, ranging from cleaning up unused licenses and right-sizing user access to leveraging tools and negotiating smart contracts.

By applying these strategies, CIOs and procurement leaders can minimize SAP licensing costs, ensure compliance, and maximize the value of their SAP investments.

1. Audit and Inventory All SAP Licenses

The first step is a comprehensive internal SAP license audit. Gather a detailed inventory of all SAP licenses your organization owns – including named user licenses (by type) and package/engine licenses (by metrics like users, revenue, cores, etc.).

For each license, map out who or what system is using it, how often, and for what purpose.

This should be implemented across all global SAP installations and departments to achieve a single, consolidated view.

• Identify Redundancies: Look for duplicate user accounts across multiple systems (e.g., the same person with two IDs). Duplicates indicate that you may be allocating two licenses when one would suffice. Consolidate such accounts to free up licenses.
• Usage vs. Entitlement: Compare actual usage data (logins, transactions, engine consumption) against what you’re entitled to. This highlights areas of over-licensing (excessive licenses) and under-licensing (potential compliance gaps).
• Include All License Types: Document everything from high-level Professional users down to limited or self-service users, as well as engine-based licenses for SAP modules (like HANA database, SAP CRM, etc.). A full picture will reveal optimization opportunities in subsequent steps.

By establishing an accurate baseline, you can target where to cut excess licenses and where to reallocate or adjust license types. Many firms find that this audit uncovers immediate savings (e.g., finding hundreds of unused accounts that can be retired).

2. Right-Size User License Types to Actual Needs

SAP offers multiple named user license categories (such as Professional, Limited/Functional, and Employee Self-Service) with vastly different price points and access levels.

One common pitfall is over-assigning expensive license types to users who don’t need that level of access.

To optimize costs, align each user with the minimum license type that still covers their job requirements.

For example, don’t give every employee a full Professional license by default – a casual or inquiry-only user might only need an Employee Self-Service license, which costs a fraction of a Professional license.

Analyze user activity logs and roles to determine the appropriate license:

• Power Users: Employees performing broad, complex transactions (e.g., SAP super-users, finance power users) should be assigned a Professional User license. Use these high-cost licenses sparingly, only for those who truly need full system capabilities.
• Functional/Limited Users: Many users work only in specific modules or have read-only duties. They can be downgraded to a Limited Professional (also referred to as a Functional) license, which restricts access to certain SAP modules at a lower cost.
• Self-Service Users: Employees who perform basic self-service tasks (such as time entry, expense filing, and viewing pay stubs) can utilize Employee Self-Service licenses, which are significantly more cost-effective.

Below is a comparison of common SAP user license types and indicative costs:

Pricing is illustrative. Actual SAP list prices vary; enterprise agreements often include volume discounts.

By right-sizing licenses, organizations avoid paying for capabilities users don’t need. One company, for instance, saved nearly 30% of its SAP user licensing costs by downgrading hundreds of infrequent users from Professional to Limited user licenses.

Regularly review user roles and adjust their license type as responsibilities change – if a user’s scope is reduced, downgrade to a cheaper license tier to save costs.

3. Eliminate Unused “Shelfware” Licenses

Unused licenses – often referred to as shelfware – are a hidden drain on your SAP budget. These are licenses purchased but not actively used (e.g., accounts of former employees, or modules that no one in the business utilizes).

Identify and eliminate this shelfware to stop wasteful spending.

Start by running SAP usage reports or using a software asset management tool to find licenses with little or no recent activity.

Key targets include:

• Inactive User Accounts: If certain named users haven’t logged in or executed transactions in, say, the last 90 days or more, they likely don’t need an assigned license. Each unused SAP user license not only ties up a license fee but also incurs ~22% annual maintenance on that license. For example, a $3,000 license costs approximately $660 per year in support fees, even if it is not being used. Removing or reallocating idle accounts immediately cuts these ongoing costs.
• Modules or Engines Not in Use: Check if you’re paying for SAP software components or engines that your teams aren’t leveraging. Perhaps you licensed a special SAP add-on or industry solution that never went live in production. If it’s truly not needed, consider terminating that license or not renewing its maintenance. This can save not just license fees but also the yearly maintenance (which typically is a significant percentage of license cost).

Action: Reclaim these unused licenses for future use or cancel support on them at the next renewal. Be sure to follow SAP’s rules – generally, you cannot obtain a refund on purchased licenses.

Still, you can avoid paying maintenance on unused ones in the future by notifying SAP ahead of contract renewal. In some cases, SAP may allow swapping shelfware licenses for other products or credit if negotiated properly. The key is to stop paying for what you’re not using.

4. Reassign and Recycle Licenses Proactively

Optimization isn’t a one-time task – it requires continuous license management. Implement a process to “recycle” licenses regularly.

When users leave the company, change roles, or complete short-term projects, make it standard procedure to promptly remove or reassign their SAP licenses instead of leaving them idle.

Best practices for license recycling:

• Integrate with HR Offboarding: Ensure that whenever an employee exits, or a contractor’s term ends, IT/development is alerted to deactivate their SAP user account. Their license can then be returned to the available pool. This prevents the accumulation of dormant licenses over time.
• Periodic Internal Audits: Conduct regular internal license reviews (quarterly or at least bi-annually). In these reviews, cross-check active employees against active SAP users and verify that each license assignment is still necessary. This routine sweep will catch any stragglers – for example, an employee who has moved from a finance role (requiring SAP access) to a non-SAP role but whose license has not been downgraded. By continuously cleaning up, you avoid the need to purchase new licenses when capacity can be freed internally.
• Monitor Usage Trends: Use monitoring tools or SAP’s audit reports to identify users with minimal activity. If someone hasn’t used SAP in months, reach out to confirm if they still require access. Often, you’ll find roles change, and some users no longer need SAP at all; you can then recycle those licenses to new hires or growing teams without purchasing more.

Making license recycling part of your IT governance ensures you maximize the utilization of licenses you’ve already paid for, and it delays or avoids new license purchases.

This ongoing discipline ensures that SAP license counts remain lean and aligned with actual business needs at all times.

5. Manage Indirect Access Proactively

Indirect access (also known as indirect use) occurs when non-SAP systems or external users interact with SAP data.

A classic example is a customer web portal or a third-party CRM system (like Salesforce) retrieving or inputting information from SAP in the background. In SAP’s view, those interactions still require proper licensing, even if no human directly logs into SAP. If left unmanaged, indirect usage can lead to compliance issues and surprise fees.

To optimize and control costs:

• Catalog All Integrations: Create an inventory of all third-party applications, interfaces, and external systems that connect to your SAP environment. Common sources include e-commerce websites, supplier portals, mobile apps, middleware, and IoT systems. Understanding these connections is crucial because each technical integration might necessitate an SAP license (often a named user license for the external system or a special indirect access license).
• Assign Licenses or Users for External Systems: There are several approaches. One approach is to ensure every external system’s access is covered by an existing named user license. For instance, if your e-commerce site pulls order data via a single integration user account, that account should have an appropriate license type. Alternatively, use SAP’s External Access licenses or the newer Digital Access model (document-based licensing) if that is more efficient (see next strategy).
• Avoid Audit Surprises: Unlicensed indirect use has been a common pitfall in audits. Many companies only discover they have a licensing gap when SAP auditors flag an interface that wasn’t licensed, leading to hefty back-charges. By proactively managing it now – either licensing those interactions or adjusting the integration approach – you can avoid last-minute panic and fees. Essentially, close the gaps before SAP audits do.

Managing indirect access is an important part of SAP license optimization because it ensures you’re not inadvertently under-licensing (which could cost you in penalties). You can choose the most cost-effective way to license those indirect uses, such as the document mode, if it proves cheaper.

6. Evaluate SAP’s Digital Access Licensing Model

In 2018, SAP introduced a new licensing approach for indirect use, known as Digital Access (also referred to as “document-based licensing”).

Instead of requiring a named user license for every external system or user that triggers SAP, the Digital Access model charges based on the number of specific business documents created (such as orders and invoices) by external systems.

Evaluating this model is a key strategy for optimization, especially if you have heavy interfaces with SAP.

Why consider Digital Access?

For some organizations, it can simplify licensing and potentially reduce costs:

• Document Counting vs User Counting: Under Digital Access, you purchase a quantity of documents (in bundles) that cover the indirect creation of core document types (sales order line items, purchase orders, financial postings, etc.). If your third-party systems generate a manageable volume of such documents, this model may be less expensive than purchasing multiple named user licenses.
• SAP Incentives: SAP has offered assessment tools and conversion programs to encourage customers to adopt Digital Access. In some cases, they provide a free Digital Access Evaluation Service or a temporary license to count how many documents your system generates. This data-driven evaluation enables you to compare the cost of maintaining classic named-user licensing for indirect use versus switching to document licenses. SAP often negotiates special credits or discounts if you transition to Digital Access, especially as part of larger S/4HANA migrations.
• When it’s beneficial: Companies with a high volume of occasional external transactions (for example, a large B2C portal that creates thousands of orders through a few integration users) may find document licensing more straightforward and sometimes cheaper. Conversely, if external interactions are minimal or already covered by existing licenses, it might not save money. Evaluate based on your integration volume.

Perform an internal analysis: how many documents would Digital Access count in a year for your environment? Then, model the cost vs. the equivalent named user licenses.

This strategy is about choosing the licensing model that minimizes your indirect usage cost while keeping you compliant.

If Digital Access is advantageous, consider negotiating a conversion with SAP – just do so armed with data about your document counts to get a fair deal.

7. Optimize SAP Engine and Package Licenses

Beyond named users, SAP also sells licenses for specific software components (often referred to as engines or packages) that are measured by unique metrics.

Examples include SAP HANA (licensed by memory size), SAP Payroll (licensed by the number of employees), and SAP Sales & Distribution engines (licensed by order lines or revenue), among others.

Optimizing these engine licenses means ensuring you’re not overpaying for unused capacity or risking fees by exceeding licensed amounts.

Strategies for engine license optimization:

• Review Usage Against Metrics: For each engine license, identify the relevant metric (e.g., users, cores, GB of data, company revenue) and verify the current usage. For instance, if you have an SAP HANA license for two terabytes of memory but your database uses only 1 TB, you might be over-licensed. That’s wasted investment and maintenance on capacity you don’t use. Conversely, if you’re nearing a metric limit (e.g., employee count on an HR module), you risk non-compliance if you exceed it; plan to address this proactively.
• Adjust or Downsize at Renewals: If you find that you’ve significantly overestimated your usage, consider negotiating a lower tier at your next renewal. Using the HANA example, if you consistently use 1 TB out of a 2 TB licensed capacity, you could attempt to reallocate or re-license at the 1 TB level, possibly trading in the excess capacity. This might reduce your maintenance fees proportionally. Likewise, if a certain SAP engine isn’t providing commensurate value, consider sunsetting it.
• Monitor Peak Usage: SAP often measures engine compliance based on peak usage over a period (for example, the highest monthly usage in the past year). Make sure you monitor those peaks. If a one-time spike in transactions or data volume pushed you over the licensed metric, be prepared to address it (either technically limit usage or true-up the license) to avoid an audit penalty. Managing usage patterns can sometimes avoid unnecessary true-up costs (e.g., archiving old data to stay within a database size license).

Optimizing engine licenses ensures you pay for the capacity you use, rather than oversizing buffers. It also avoids nasty surprises, such as an audit finding that you exceeded a licensed metric, which can result in a steep compliance bill.

Regularly validate each engine license against business reality and fine-tune your contracts accordingly.

8. Use License Management Tools and Analytics

Manually managing SAP licenses is notoriously difficult. Fortunately, you can utilize technology to continuously analyze and optimize license usage.

There are two categories of tools to consider:

• SAP’s Built-in License Tools: SAP provides tools such as USMM (User Measurement) and LAW (License Administration Workbench) to help customers measure license consumption. Make it a habit to run these tools across all systems. USMM collects user and engine usage data per system, and LAW consolidates this data to show an enterprise-wide compliance position. These tools can identify discrepancies (such as users being counted as Professional by default if not classified) and help simulate the number of each license type needed. Ensure your SAP Basis or admin team is trained to use these tools effectively and run them well before any official SAP audit or true-up. This gives you time to correct issues internally first.
• Specialized SAM/License Optimization Tools: For larger SAP environments or to add intelligence, consider third-party software asset management solutions (e.g., Snow Optimizer for SAP, Flexera, VOQUZ, etc.). These tools go beyond SAP’s basic measurement by automatically detecting things like duplicate users across systems, inactive users, and misassigned license types. They often provide recommendations – for example, alerting that User X has only run very basic transactions and could be downgraded to an ESS license or flagging indirect usage not covered by a license. Some tools can even automate deactivating users who appear in HR as left or simulate Digital Access document counts. While these solutions come with a cost, companies with very large SAP spends often recoup that cost in the form of license savings uncovered by the tool’s analysis. Engaging an independent licensing expert or consultant for a one-time review can similarly reveal optimization opportunities that in-house teams might overlook.

Using data and analytics is crucial to make informed decisions. Rather than guessing or over-provisioning “just in case,” the right tools will show exactly where you can safely cut licenses or need to add them.

This data-driven approach underpins all the strategies above – it provides the evidence to right-size licenses, eliminate shelfware, and negotiate with SAP confidently.

9. Plan for Future Growth and Change

Your SAP licensing strategy should align with your business’s trajectory.

A proactive plan for future changes can prevent overspending and ensure you’re prepared to negotiate what you’ll need (and only what you need).

Key considerations:

• Anticipate Growth: If you know your organization will add a significant number of users, expand into new regions, or acquire another company, factor those into your license strategy early. For example, suppose you expect to onboard 200 new SAP users next year as a result of a project or acquisition. In that case, it may be wise to negotiate those licenses upfront in a bundled deal rather than one-off later (bundling can secure volume discounts).
• Prepare for Contraction: Conversely, if the business plans to divest a division or if a shift to automation might reduce headcount, avoid over-committing to perpetual licenses you might not need. In negotiations, you may seek contractual flexibility, such as the right to reduce the number of users or swap licenses if business units are sold, to accommodate potential changes.
• Leverage Major Transitions: Moving to S/4HANA or SAP’s cloud (RISE with SAP) by 2027 is on the roadmap for many. These transitions are golden opportunities to revisit and reset your license counts and types. SAP often provides conversion offers, such as trading in your existing ERP licenses for S/4HANA licenses. Take advantage of this opportunity to eliminate shelfware (don’t convert unused licenses – drop them) and only convert what will provide value in the future. Additionally, S/4HANA’s licensing utilizes the FUE (Full User Equivalent) model, providing an opportunity to adopt a simpler metric if it better aligns with your usage. Plan carefully during the migration to ensure the new contract is tailored to current needs (not just a copy-and-paste of your old one).
• Global Harmonization: If you’re a global enterprise with multiple SAP contracts or instances, plan to consolidate and co-terminate agreements where possible. Aligning contract end-dates and combining purchases can dramatically increase your bargaining power (SAP will see one big renewal instead of many small ones). It also simplifies tracking and avoids missed opportunities to optimize because of staggered contract timelines.

In essence, don’t think only in the short term. By aligning license decisions with business strategy, you can negotiate better terms and avoid both shortages and surpluses.

Planning ahead ensures you have the necessary licenses at the optimal cost when the business changes, without the need for panic buying or wastage.

10. Negotiate Favorable Contract Terms at Renewal

Ultimately, one of the most effective strategies for optimizing SAP license costs is savvy contract negotiation.

SAP licensing is not a take-it-or-leave-it proposition – especially for large enterprises, there is considerable room to improve terms if approached strategically. Treat every renewal or expansion as an opportunity to drive down costs and secure protections.

Here are tactics for CIOs and procurement teams:

• Start Early and Leverage Timing: Don’t wait until the last minute. Begin discussions well in advance of your contract renewal date. SAP account executives have sales targets and are often more flexible at quarter-end or year-end to close a deal. Use this to your advantage – timing your negotiation when SAP is eager to meet its targets can secure you deeper discounts.
• Aim for Significant Discounts: SAP’s published price list is typically high, and most customers do not pay the list price. Enterprise agreements typically result in 30% or more off the list price for licenses when negotiated properly. Come to the table with data (perhaps quotes from third-party benchmarks or knowledge of what similar companies pay) to justify a lower price. Be prepared to push – even 50%+ discounts have been achieved in competitive situations or large deals. Remember, everything is negotiable: user licenses, engine metrics, cloud subscriptions, etc.
• Bundle Your Needs: If you know you’ll need additional licenses or products over the next year or two, negotiate them together rather than piecemeal. For instance, combine the purchase of the new SAP module and the 100 extra users you anticipate into a single negotiation. A larger deal size gives you leverage for better pricing and concessions.
• Lock in Maintenance Rates: SAP’s standard maintenance rate is 22% of license fees annually, with the potential for annual increases. Push to cap maintenance fee increases (e.g., a maximum rise of 0-3% per year or a fixed fee for a couple of years). Also, ensure that maintenance is calculated based on the net discounted license price, not the list price. This alone can save a huge sum over time. For example, a 22% maintenance on a 50% discounted license is effectively 11% of the list instead of 22%. Spell this out in the contract.
• Secure Flexible Terms: In multi-year deals, negotiate clauses that let you adjust as needed. This could include the ability to swap several licenses for different types if your usage changes, or to drop a certain percentage of licenses without penalty if you downsize. If you have separate SAP agreements in different regions or acquired through subsidiaries, try to align them. Hence, they co-terminate at the same time and then negotiate a renewal altogether as one larger contract (usually yielding better volume discounts).
• Consider Alternatives (Carefully): While you likely intend to stay with SAP, it doesn’t hurt to benchmark against competitors or have an alternative strategy. Even if you won’t switch vendors, showing SAP that you are evaluating other solutions (Oracle, Microsoft, or even third-party support providers) can increase your bargaining power. Be cautious with this approach (and be mindful of the user’s request to avoid competitor specifics), but internally know your BATNA (Best Alternative To a Negotiated Agreement) – it will make you more confident in negotiations.

A successful negotiation can reduce your SAP spend by millions and establish a more favorable agreement for years to come.

Always approach SAP license renewals as a major sourcing project: do your homework, involve your sourcing and procurement experts, and don’t be afraid to ask for concessions.

SAP’s sales team expects customers to negotiate – those who don’t are leaving money on the table.

Recommendations

• Establish Ongoing License Reviews: Make SAP license management a continuous process. Set up quarterly or biannual reviews of user licenses and usage. This way, you can catch and correct inefficiencies (such as unused or misassigned licenses) before they escalate into significant costs.
• Use Data Before Spending: Base any purchase of additional SAP licenses on hard usage data and clear business needs, rather than assumptions or vendor suggestions. Quantify the requirement – e.g., prove that 50 new users genuinely need access – before making a purchase.
• Clean House Pre-Audit or Renewal: Before any SAP true-up, official audit, or contract renewal, perform an internal “clean up.” Remove inactive users, address indirect use gaps, and ensure your records are up-to-date. This puts you in a position of strength – you’ll enter negotiations or audits knowing your exact license standing and able to avoid or minimize additional charges.
• Negotiate Proactively, Not Reactively: Don’t wait until a contract is about to expire (or worse, after an audit finding) to scramble for a deal. Engage with SAP early to discuss renewals or any necessary changes. With time on your side, you can evaluate alternatives and walk away if terms aren’t good – a leverage you lose if you’re up against a tight deadline.
• Educate and Involve Stakeholders: Ensure that not only IT, but also procurement, finance, and business unit leaders, understand the basics of SAP licensing and the cost impact of their decisions. When everyone is aware, for example, when managers understand that adding a user to SAP incurs a cost, the organization as a whole makes more cost-conscious decisions. Provide training or guidelines on license usage, and communicate the policies (like recycling licenses when staff leave).
• Document and Govern: Maintain a well-documented record of your SAP licenses, including their assignment and any changes made (such as upgrades, downgrades, or transfers). Also, record any communications or assurances from SAP. Good governance and documentation help sustain optimization efforts in the long term and provide an evidence trail if any licensing questions arise later. Having this discipline makes internal management and external audits much smoother.

By following these recommendations, enterprises can maintain control over SAP licensing costs and avoid the common pitfalls that lead to overspending.

FAQ

Q1: How often does SAP audit customers, and how can we prepare?
A1: SAP typically has the right to audit annually, but in practice, most companies face an audit roughly every 2-3 years. Preparation is key: run your license measurement (using SAP’s LAW tool) in advance and address any discrepancies internally first. Keep all your licensing documentation and usage reports organized and up to date. By proactively cleaning up and knowing your exact license counts, an audit should be a routine rather than a stressful process. Being transparent and ready with data often makes the audit process quicker and prevents surprises.

Q2: What exactly is indirect access in SAP licensing, and why is it important?
A2: Indirect access refers to the use of SAP functionality or data by external systems or users who don’t directly log into SAP. For example, if a third-party e-commerce site queries SAP’s inventory or creates an order in SAP, that constitutes indirect usage. It’s important because SAP requires you to license those scenarios (either via named users or the Digital Access document model). If indirect usage is overlooked, an audit could reveal unlicensed use and result in substantial fees. Managing it proactively ensures you’re compliant and avoids unpleasant financial hits.

Q3: How can we track SAP license usage more effectively?
A3: Start with SAP’s tools: run USMM and LAW reports regularly (not just when SAP asks) to see your current license consumption and compliance status. Also, enable user logging to identify inactive users or low-activity users. For large environments, consider investing in a dedicated license management solution (from vendors like Snow, Flexera, etc.) that automates usage tracking and finds optimization opportunities (like duplicate users or wrong license types). Additionally, implement internal processes – e.g., monthly review of new user requests against license availability. The combination of tools plus processes will give you a continuous handle on usage.

Q4: We have many unused SAP licenses. Can we eliminate them and save money?
A4: You generally can’t “return” purchased licenses for a refund – SAP license sales are typically perpetual. However, you can save money by terminating maintenance on truly unused licenses at your next renewal. This stops the yearly 22% maintenance spend on those items. It’s essential to flag any shelfware to SAP during renewal negotiations – sometimes they may allow you to swap unused licenses for different ones your team can use, or provide credit towards new products, as long as it’s part of a broader deal. The key is not to keep paying support for licenses that serve no purpose.

Q5: Are SAP’s annual maintenance fees negotiable, or are they fixed?
A5: Maintenance fees (standard 22% of license price per year) are negotiable to an extent. While SAP won’t typically lower the percentage for standard support, you can negotiate how it’s applied and future increases. Always ensure the 22% is applied to your discounted license cost, not the full list price (this is a common oversight – it should be explicitly stated in your contract). You can also negotiate caps on maintenance escalation – for instance, a clause that maintenance will not increase more than 3% per year or even a couple of years of no increase as an incentive in a large purchase. For very large customers, SAP has been known to offer customized support agreements, so it’s worth inquiring about.

Q6: What’s the difference between a Professional, Limited, and Employee Self-Service user license?
A6: These refer to tiers of named user licenses in SAP. A Professional User license grants full access to all SAP modules and transactions – it’s the most powerful (and most expensive) user type, meant for users who need broad capabilities. A Limited Professional (Functional) User license is more affordable. It restricts the user to specific business areas or a subset of transactions, suitable for users who work primarily in one module (such as HR or procurement) or have a more limited role. An Employee Self-Service (ESS) User license is the least expensive and is for basic self-service activities (like entering timesheets, travel expenses, or viewing personal data). The rule of thumb is to give Professional licenses only to “power users” who truly need them and assign all others the lowest tier that meets their needs. This hierarchy is crucial for optimizing cost, as Professional licenses can cost several times more than ESS.

Q7: What should we do if SAP says we’re out of compliance on some licenses?
A7: Don’t panic – compliance gaps can often be resolved through negotiation rather than paying a straight penalty. First, ask SAP for details on where the shortfall is (which license types or engines and by how many). Then, evaluate internally – was this due to growth, an oversight, or misclassification? When addressing it, consider the bigger picture: rather than just buying the exact licenses to cover the deficit at the list price, see if you’re due for a broader contract renegotiation. You might incorporate the necessary licenses into a larger deal at a discount or negotiate to switch to a different model (for example, by transitioning some users to a different license type or a subscription model if that proves more cost-effective). The key is to use the compliance issue as a catalyst to optimize overall, not just to reactively plug a hole at a high cost. In the immediate term, tighten internal controls to prevent the issue from recurring.

Q8: Are there tools or services to help optimize SAP licensing?
A8: Yes, there’s a niche industry around SAP license management. Aside from SAP’s tools (USMM/LAW), numerous third-party software tools can continuously analyze your environment. These include license optimization tools from vendors such as Snow Software, Flexera, and VOQUZ, which can automate the identification of unused accounts and duplicate users and suggest right-sizing opportunities. They often have dashboards to monitor compliance in real time. If investing in a tool isn’t feasible, you can also engage specialized SAP licensing consultants who can perform a one-time assessment or provide ongoing advisory. They bring expertise from other clients and can often find savings opportunities quickly. Many enterprises find that the cost of these tools or services is justified by the millions in potential license and support savings uncovered.

Q9: When is the best time to negotiate with SAP for better licensing terms?
A9: The best time is well before you actually need the licenses or before your current agreement lapses – essentially when you still have the flexibility to walk away or postpone a deal. In practice, the end of SAP’s quarter or fiscal year can be an opportune time, as sales representatives may have quotas to meet and will be more likely to offer discounts and concessions. Also, if you’re planning a significant project (such as an S/4HANA migration or adding a major new SAP module), use that as a negotiation moment – SAP knows you have to make a decision. They’ll be keen to keep you in the ecosystem, often leading to special offers. In summary, plan negotiations strategically around both your timeline and SAP’s sales calendar for maximum leverage.

Q10: How will moving to S/4HANA or RISE with SAP affect our licensing?
A10: Transitioning to S/4HANA (whether on-premise or via the RISE cloud subscription) is effectively a re-licensing exercise. S/4HANA utilizes a new licensing metric called Full User Equivalents (FUE), which assigns weights to different user types rather than counting each license separately. In a conversion, your existing licenses are mapped to FUEs. Ideally, you want to convert only what you need – it’s a chance to shed old shelfware. SAP often offers deals to make the migration attractive, but don’t assume it will automatically be cheaper. RISE with SAP, for example, bundles licenses, infrastructure, and support into a subscription; it simplifies things (and includes indirect usage in the price), but you should compare the multi-year cost of RISE versus continuing on-premise with annual maintenance. The move is a great opportunity to negotiate – you can ask for incentives like price locks, cloud credits, or flexibility to right-size during the transition. The bottom line: approach S/4HANA or RISE licensing as a renewal negotiation, aiming to optimize and align licenses to your current needs as you modernize.