Why Shelfware Exists in SAP Contracts
Shelfware isn’t an accident — it’s built into SAP’s commercial model. SAP’s standard license agreements are deliberately rigid, ensuring that once you buy licenses, you keep paying maintenance on them indefinitely.
This rigidity means that even if certain SAP modules or user licenses go unused, you’re still on the hook for annual support fees.
Over years of expansions, mergers, or IT changes, companies accumulate “shelfware” – licenses purchased but never fully utilized. The problem is contractual, not just operational: SAP’s default terms make it extremely difficult to shed these unused licenses or reduce costs. For more insights, read our guide SAP True-Downs & License Transfers: Reducing Your License Footprint.
The result is a perpetual maintenance burden on shelfware, siphoning budget for value you’re not receiving. To break out of this trap, you must proactively negotiate contract protections up front.
The following sections outline key SAP contract clauses to review, SAP’s default stance (and resistance) on each, and how to negotiate terms that limit your exposure to paying for unused SAP licenses forever.
SAP’s Standard Position on Termination
SAP’s “all-or-nothing” termination policy is the root of the shelfware problem. Under SAP’s standard contract language, all licenses are perpetual, non-refundable, and non-returnable.
Once purchased, you cannot return licenses or drop their maintenance individually. Partial termination of maintenance is forbidden by default. If you ever want to terminate, SAP typically allows it only for the entire agreement, not for specific products or license types. In practice, this means:
- No partial support cancellations: You can’t stop maintenance on just one module or a subset of users – it’s all or nothing.
- No refunds or credits: Money spent on unused licenses is sunk cost; SAP won’t credit unused software.
- No module-by-module exit: Ending support usually means terminating everything, which is unrealistic if you still rely on any part of SAP.
SAP’s stance is intentionally one-sided. The company counts on collecting ~22% of your license purchase price in maintenance fees every year, even if those licenses sit idle.
Most customers can’t risk terminating their entire SAP agreement (since critical systems would lose support), so they grudgingly continue paying for shelfware maintenance indefinitely.
SAP sales reps will emphasize that “policy” prevents any partial reductions, locking you into a steady stream of payments.
Checklist: When reviewing your SAP contracts, pay close attention to the termination clauses:
- Identify any sections titled “Termination” or “License Returns.” Check if they explicitly forbid partial termination of support.
- See if maintenance fees can ever be recalculated or reduced at renewal – or if they remain tied to the original license count.
- Confirm that terminating support on one product would, by default, cancel support for all SAP products (this is the usual SAP position). Knowing these default terms will underscore why negotiating exceptions is critical.
Read about SAP licenses in merger and acquisitions, Licenses in Mergers & Acquisitions: How to Manage SAP Entitlements During Corporate Change.
Partial Termination Rights – Negotiating What SAP Doesn’t Offer
Under standard terms, SAP won’t let you drop maintenance on individual products or licenses – but you can negotiate this flexibility. A Partial Termination Rights clause gives you the option to trim shelfware and avoid paying for it going forward.
Clause Risk: Without partial termination rights, you’re effectively trapped: your only way to reduce maintenance costs is to abandon the entire SAP contract.
This “nuclear option” is impractical, so most customers end up paying for unused licenses year after year. SAP’s policy creates a huge risk of overpayment – you finance support for modules or users you no longer need, with no contractual way out.
Negotiation Fix (Example Clause): Include a provision such as:
“Customer may terminate maintenance for specific licenses or modules upon written notice at least 90 days prior to the renewal date, without terminating the entire agreement.”
This clause explicitly allows partial termination of support on select items (e.g., a shelfware module) at renewal time.
SAP will not volunteer this language – you must push for it in negotiations. Expect resistance: SAP knows this clause lets you cut their maintenance revenue. However, if you have leverage (a major renewal or purchase), insist on it.
Benefits: Securing partial termination rights provides multiple advantages:
- Controlled downsizing: You can gradually reduce your SAP footprint as needs change, rather than being locked in.
- Shelfware savings: It prevents the need to pay maintenance on shelfware. You can retire unused licenses and immediately stop the support costs on those items.
- Flexibility in retirements: If you decide to decommission a specific SAP module or reduce user count, you won’t be penalized – you simply terminate its support going forward.
In short, this clause turns shelfware from a perpetual expense into a one-time spend. It gives you a contractual escape hatch for parts of SAP you no longer use.
Checklist: To incorporate partial termination rights successfully:
- Add a partial termination clause at your next renewal or contract amendment. Make sure it’s written clearly, specifying the notice period (e.g., 90 days before renewal) and that it applies to individual license types or components.
- Tie termination to usage data: Consider linking the right to an annual usage report. For example, you might agree to provide SAP with a license utilization report, and based on that, terminate support for licenses shown as unused. This builds a factual case for the reduction.
- Document timelines: Define the timing (e.g., you can only exercise the reduction at the yearly maintenance renewal date) and how notice must be given. Keeping these terms unambiguous will avoid disputes when you invoke the clause.
What is a SAP true-down? – What Is an SAP True-Down? Understanding License Reduction and Why SAP Rarely Allows It.
License Swap Rights – Turning Shelfware into Value
Another powerful tool to combat shelfware is a license swap (exchange) clause. Instead of simply terminating unused licenses, you negotiate the right to exchange them for other SAP products or modern equivalents. This keeps your total spend similar but improves the value you get. In effect, you’re trading in shelfware for licenses you can actually use.
Why it matters: Without swap rights, shelfware stays shelfware – dead weight on your balance sheet. SAP’s standard policy doesn’t allow exchanges of one product for another; every new purchase is additive. But many companies have legacy licenses (like unused SAP ECC modules or older engines) that could be far more useful if converted to current solutions (like S/4HANA modules or cloud services). License swap provisions formalize this trade.
SAP has even introduced formal programs to facilitate this: SAP’s Cloud Extension Policy is one example, aimed at on-premises to cloud conversions. Under that program, you can terminate certain on-premise licenses and redirect their maintenance spend toward new cloud subscriptions.
However, SAP typically requires offsetting new spend (often equal or greater value) as part of the deal – they won’t simply let you swap out licenses and reduce cost with nothing in return. Knowing this, you can craft a clause that gives you swap rights while acknowledging SAP’s need to preserve revenue.
Negotiation Fix (Example Clause):
“Customer may, once per contract term, exchange unused software licenses for other SAP products or services of equal or greater license value. Any maintenance fees already paid will be applied to the new licenses, and maintenance on the returned licenses will terminate.”
This kind of clause lets you reallocate your investment. For example, you could exchange 100 unused SAP CRM user licenses for an equivalent value of SAP Analytics Cloud subscriptions, or trade an outdated engine license for credits toward a newer SAP solution. The key is that maintenance fees follow the value of the new licenses, and you stop paying for the old ones.
SAP’s likely stance: SAP will only agree to swaps in controlled ways – often if you are buying something new. Be prepared that they may insist the swap occurs at a renewal or that the new product’s license value meets or exceeds the old one’s value.
Use that to your advantage: align your swap request with SAP’s sales incentives. For instance, if SAP is pushing cloud adoption, propose swapping on-prem software for cloud subscriptions (so SAP still benefits from the cloud deal).
Checklist: To make license swaps work for you:
- Inventory shelfware: Quantify your unused licenses and the annual maintenance tied to them. This is your “currency” for a swap – e.g. $500k in shelfware maintenance could be converted into $500k credit for new licenses.
- Propose logical trade-ins: Come to SAP with a plan. Perhaps replace legacy SAP ERP modules you’re not using with SAP SaaS products (SuccessFactors, Ariba, etc.) that meet current needs. Align swaps with technologies SAP is motivated to sell, increasing chances of approval.
- Get maintenance relief in writing: Ensure the contract (or side letter) explicitly states that maintenance charges for the surrendered licenses will cease and that maintenance will apply only to the new licenses in the future. Without clear documentation, you risk SAP “forgetting” to remove the old support fees.
Maintenance Cap or Base Adjustment Clauses
Even if you can’t remove all shelfware, you can limit how much you pay for it. Maintenance cap and base adjustment clauses protect you from ever-increasing support costs on a shrinking license footprint. SAP’s default is to calculate maintenance on your original license purchase value – regardless of how many of those licenses you actually use today.
That means if you drop usage or even formally terminate some licenses, your maintenance bill might not drop accordingly (unless you renegotiate it). And SAP typically raises maintenance fees by a small percentage each year (or ties it to inflation indexes), further creeping up your cost base.
Clause Risk: Without caps or recalculation rights, you face perpetual cost creep. You could be paying the same or more in support five years from now, even if you’re using far fewer licenses.
This happens because contracts often lock the support base cost at the initial purchase value, with at least a standard uplift (often ~3% per year). The risk is overpaying for maintenance relative to your actual usage, forever.
Negotiation Fixes: There are two complementary clause types to seek:
- Maintenance Recalculation Clause: This ensures support fees track the licenses you actively use or retain. For example:
“Annual maintenance fees shall be calculated based on the active license entitlements as of each renewal period. If the Customer has terminated or exchanged licenses, the maintenance base will be reduced commensurately for the next term.”
In plain terms, if you have fewer licenses, you pay less maintenance. This is essentially a true-down clause for support costs. - Maintenance Cap Clause: This limits how much maintenance can increase year-over-year. For example:
“Annual maintenance fees shall not increase by more than 2% each year, and in no event shall maintenance fees increase if the overall license quantity is reduced.”
This guarantees that even if SAP raises support fees generally, your costs won’t balloon beyond a modest cap, and it enforces a decrease when you downsize licenses.
Benefits: These clauses protect your IT budget long-term:
- You prevent cost inflation on support – SAP can’t suddenly hike maintenance 5% or more annually (which they might attempt through policy changes or new support tiers).
- You pay for what you use – as your licensed footprint contracts, your maintenance is adjusted downward proportionally, avoiding the scenario of paying for dead licenses.
- Budget predictability – caps ensure you can forecast support costs with a known maximum increase, aiding financial planning.
Checklist: To negotiate and implement maintenance protections:
- Include a cap or recalculation clause in the contract or support addendum. Be specific about the percentage cap and the mechanism for reducing fees if licenses are dropped.
- Align with renewals: Structure the clause so that each annual maintenance renewal is an opportunity to adjust the fees based on the current entitlement count. This often means coordinating it with your internal review of license usage (e.g., every year or contract period, there’s a true-down evaluation).
- Double-check SAP’s paperwork: If SAP issues updated order forms or supplements each year, ensure the agreed cap or adjusted base is reflected there. Don’t rely on a verbal understanding – get the capped uplift or reduced base written into the contract and any renewal quotes.
Shelfware Audit Clauses – Gaining Visibility and Leverage
Often, organizations pay for shelfware simply because they lack visibility. Unused licenses stay on the books without anyone noticing their inactivity.
By negotiating a shelfware audit clause, you empower yourself to regularly assess usage and act on it. This clause gives you the contractual right to review your own SAP license utilization annually and then adjust your licensing or support accordingly.
In practice, you can already audit your usage internally, but having a formal clause means SAP agrees to cooperate in good faith with true-down actions.
It turns shelfware analysis into a recognized step toward contract adjustments (like terminations or swaps) rather than a contentious issue.
Sample Clause:
“Customer may conduct an annual review of its SAP software usage. If the review identifies unused licenses or under-utilized entitlements, Customer may request reclassification, removal, or exchange of those licenses without penalty or additional fees, effective at the next renewal.”
This language does a few things: it obligates SAP to consider adjustments based on real usage data, and it frames shelfware management as an expected, routine process, not an exceptional favor. Essentially, it’s a self-audit right focused on license optimization (distinct from SAP’s audit rights, which protect SAP).
Result: Making shelfware visible turns it into leverage. When you can show, with data, that 500 of your 2,000 licenses haven’t been used in 12 months, it strengthens your case to terminate or swap those licenses.
Instead of quietly paying for them, you bring that evidence to the negotiation table: “Here’s proof of what we aren’t using – our contract says we can address this.” It shifts the conversation from SAP’s default “no returns” stance to a data-driven request per the contract.
Checklist: Maximize the value of a shelfware audit clause by:
- Securing the right to review usage in your contract. Even if SAP resists a formal clause, commit internally to perform this audit yearly and document it.
- Timing it with renewals: Line up your internal shelfware review a few months before each maintenance renewal or contract anniversary. That way, you have findings ready to discuss when fees are up for negotiation.
- Maintaining usage records: Keep a “living” record of license assignments and actual usage (logins, transactions, etc.). This not only helps in negotiations but also in internal decision-making (maybe you can reallocate licenses internally before dropping them). A well-documented usage history is your evidence to justify any true-down requests.
Exit or Termination Scenarios – What Happens if You Stop Maintenance
It’s important to understand the endgame of SAP contracts: what if you decide to stop paying maintenance altogether?
SAP’s perpetual license model means you own the software license, so you can theoretically stop support payments and continue using the software in its current state. However, there are significant consequences and contractual booby traps to be aware of when terminating maintenance:
- Loss of upgrades and fixes: The moment you drop maintenance, you forfeit access to new software versions, patches, and SAP support services. Your software becomes frozen at its current version, and you must self-support (or use third-party support) for any issues. For mission-critical systems, this is a heavy trade-off.
- Potential re-entry fees: Should you later decide to re-subscribe to SAP support, expect a hefty penalty. SAP often charges back-maintenance plus a reinstatement fee (commonly around 20% of the total lapsed fees). In other words, taking a break from maintenance can cost more in the long run if you ever need to get back on SAP’s support. This “re-entry toll” is designed to discourage customers from leaving in the first place.
- Cloud subscriptions are term-bound: If your SAP use includes cloud services (SaaS), termination is even more restrictive. You can’t just keep using a cloud service without paying – if you stop subscription payments, access to that service is turned off. And if you signed a multi-year cloud contract, SAP will enforce payment for the full term unless you negotiated an exit clause.
Given these factors, many customers feel handcuffed to keep paying maintenance, even on shelfware, for fear of losing all support or incurring penalties. To avoid this no-win scenario, you can negotiate exit-friendly clauses for specific situations:
Negotiation Tip: If you foresee transitioning to SAP’s cloud or a different platform in the future, bake in a clause to ease that move. For example:
“In the event that Customer migrates equivalent functionality to an SAP cloud service or successor SAP product, Customer may terminate maintenance for the affected on-premise licenses without penalty or additional fees.”
This clause ensures that if you invest in SAP’s newer offerings (like RISE with SAP, S/4HANA Cloud, or other cloud services), you won’t be double-paying — one for the new service and again for the old shelfware left behind.
It essentially promises a maintenance-free exit for replaced software. SAP is sometimes amenable to this if it incentivizes cloud adoption (they’d rather you move to their cloud than drop SAP entirely).
Checklist: Prepare for and negotiate cleaner exit scenarios by:
- Identifying modernization opportunities: Outline any plans to upgrade or move to cloud solutions. For instance, if you plan to shift from SAP ECC to S/4HANA Cloud in two years, negotiate terms now that let you drop ECC maintenance when that happens.
- Building exit terms into renewals: Don’t wait until you’re ready to leave to discuss exit terms. At each renewal or during a RISE with SAP discussion, include language for graceful termination or migration. Early agreement is key; once you’re in a long-term contract, SAP has little incentive to add exit options.
- Capping re-entry costs: If completely stopping maintenance is on the table, try to cap any reinstatement fee in the contract. For example, agree that if you return to SAP support within 2 years, you’ll pay at most 10% on top of missed fees, instead of an undefined penalty. This at least quantifies your risk if you leave and come back.
Governance – Tracking Shelfware Contractually
Negotiating strong shelfware protections in your SAP contract is a win, but it’s not “set and forget.” You need solid governance practices to ensure you actually use those hard-won clauses.
Many companies secure rights like partial termination or swap options, only to forget about them and let shelfware persist. Don’t let that happen. Instead, bake shelfware management into your contract governance and Software Asset Management (SAM) processes:
- Maintain a Shelfware Register: Create an internal register or spreadsheet listing all purchased SAP licenses, their usage status, and their annual maintenance cost. Mark which ones are identified as shelfware (unused or underused). Include key info like renewal dates and any contractual clause that could address each item (e.g., note if a partial termination clause could drop it next renewal). This register makes the issue tangible and highlights the cost of unused licenses.
- Regular Cross-Functional Reviews: Before every SAP renewal, have a checkpoint meeting with IT, SAM, procurement, finance, and legal. Review the Shelfware Register and decide which actions to take: terminate something, swap licenses, renegotiate a cap, etc. Legal should verify the contract clauses and notice periods, SAM should provide the usage data, and procurement/finance should quantify the potential savings. This team approach ensures shelfware clauses are actually invoked and not overlooked.
- Document Everything: If you do execute a partial termination or swap, document it thoroughly. Ensure SAP provides written confirmation (via contract amendment or official communication) that the licenses are terminated or exchanged and that maintenance billing will adjust accordingly. File these documents in your “SAP contract bible” – a centralized repository of all SAP agreements, amendments, and important communications. This way, if there’s any dispute later (e.g., SAP still charges for a terminated license), you have the evidence at hand.
- Ongoing Monitoring: Don’t wait for SAP’s audits to discover shelfware. Implement tooling or manual audits to track license usage continuously. Catching declining usage early (say a project is shelved or the workforce is reduced) gives you more lead time to plan a termination or swap at the next window. Incorporate shelfware metrics into your IT asset management dashboard so it stays on leadership’s radar.
Checklist: Strengthen your governance with these steps:
- Update SAM policies to include shelfware tracking and a mandate to use negotiated contract clauses. Make it someone’s job to own the Shelfware Register and keep it current.
- Integrate contract and renewal planning: Well before a renewal, have procurement and legal review what shelfware rights can be exercised. Don’t assume the business or IT team will remember – create a formal sign-off process that checks shelfware clauses every time.
- Centralize clause knowledge: Keep a central repository (contract library or wiki) that highlights all your special SAP clauses (termination rights, swap rights, caps, etc.). When personnel change or time passes, this ensures new team members can quickly understand what flexibility you’ve negotiated and how to use it.
5 SAP Contract Clauses That Protect Against Shelfware
- Partial termination rights for modular cost control. (Allow you to drop maintenance on unused licenses instead of paying for them indefinitely.)
- License swap or conversion rights in your MSA. (Let you exchange shelfware for new SAP products or cloud services of equal value, so spend isn’t wasted.)
- Maintenance cap or recalculation clauses to limit cost creep. (Ensure support fees decrease with reduced usage and cannot rise unreasonably each year.)
- Internal shelfware audit rights for annual review. (Give you the power to review and renegotiate based on actual utilization data regularly.)
- Exit clauses tied to modernization or cloud transitions. (Provide a penalty-free path to terminate maintenance when moving to new SAP solutions or platforms.)
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