Introduction – Why Optimize SAP Licensing
SAP’s licensing model is notoriously complex, and that complexity hides massive inefficiencies. Many enterprises pay for far more SAP capacity than they actually use. In fact, over 30% of most SAP estates are inactive, overclassified, or simply overpaid.
Optimizing SAP licenses isn’t just about cutting costs – it’s about regaining control. By proactively managing entitlements, you reduce exposure before SAP’s auditors come knocking or a costly renewal hits. For an overview of SAP licensing, read our guide SAP Licensing Models & Optimization.
This playbook outlines 10 proven tactics that CIOs, IT asset managers, and procurement leaders can use to reclaim budget and minimize compliance risk.
Tactic 1: Reclaim Inactive Users
Identify and remove the “dead weight” in your SAP user list. Use SAP’s own measurement tools (USMM and LAW) to flag users who haven’t logged in for 90 days or more. These dormant accounts still count toward your license consumption but provide zero value.
Remove or lock inactive accounts and reharvest their licenses for new hires or projects.
The same goes for duplicate accounts across multiple systems: consolidate them so each person only consumes one license. Making this a routine (say, quarterly) prevents a buildup of unnecessary licenses over time.
Checklist:
- Compare the SAP user roster against your HR records to identify former employees or contractors who are still active.
- Run a monthly login report to spot users with no activity in the last 3+ months.
- Lock or delete unused test IDs and outdated system accounts.
Example: One enterprise reclaimed 1,200 dormant user licenses, saving about $800,000 in maintenance and license costs. All that value was recaptured just by cleaning up accounts instead of buying more licenses.
Tactic 2: Rightsize User License Types
One size does not fit all for SAP user licenses. It’s common to find many users on costly Professional licenses even though they only run basic reports or self-service tasks. Downgrading those users to cheaper license categories (like Limited Professional or Employee Self-Service) can dramatically cut costs without hurting productivity.
Review what each user actually does in SAP. Check their transaction usage or roles to see the highest level of functionality they use. If someone never goes beyond viewing data or simple entries, they likely don’t need a full Professional license. Reassign them to a lower-tier license allowed by your contract.
After reclassifying users, rerun USMM to verify the new counts and compliance. Make it policy going forward: start new users on the lowest license level that fits their job, and only upgrade them if necessary. Avoid the default habit of giving everyone a Professional license “just in case.”
Optimization Tip: Simulate the impact of mass downgrades before making changes. For example, do a test run of USMM (or use a license management tool) with adjusted classifications to estimate savings and ensure no critical access is lost.
Tactic 3: Eliminate Shelfware & Redundant Products
Shelfware – modules or engine licenses you paid for but never fully used – quietly drains your budget via maintenance fees. Identify these underutilized products and cut them off to stop the bleed.
Shelfware Reduction Tactics:
- Terminate Unused Licenses: At your next renewal, formally drop any SAP module or component that isn’t actively used. By giving SAP proper notice, you can remove it from your entitlements and stop paying support on it.
- Switch to Third-Party Support: If you can’t cancel a shelfware license outright (or want to keep it as an option), move it to a third-party support provider. This can halve the maintenance cost while keeping the software technically available.
- Leverage Unused Value: Use shelfware as a bargaining chip. Let SAP know you spent, say, $500k on a product like SRM that was never deployed. Push to apply that value as credit toward something new you actually need (e.g., “We want that $500k applied to our S/4HANA licenses”). This pressure SAP to acknowledge your sunk cost and be more flexible.
By eliminating shelfware, you reduce wasteful spending and signal to SAP that you won’t pay for software you aren’t using. This strengthens your hand in negotiations.
Tactic 4: Manage Indirect Access Proactively
Indirect access (often now called “Digital Access”) is a notorious SAP licensing pitfall. It happens when third-party systems (like an e-commerce site or external CRM) interact with SAP data in a way that creates SAP documents or transactions.
SAP may argue that those interactions require additional licenses if not properly covered.
Stay ahead of this by mapping out all integrations touching your SAP system. Inventory each third-party application, interface, or API that reads or writes SAP data.
Then monitor their usage:
- Track Document Creation: Use SAP’s Digital Access Estimation Tool (DAET) or system logs to count how many documents (invoices, orders, etc.) are generated indirectly each month.
- Clarify Your Contract: Ensure your SAP agreement defines what is allowed for indirect use. If you have older, more lenient definitions, think twice before adopting SAP’s newer Digital Access licensing model without analysis.
- Evaluate Before Adopting: If SAP is pushing you to switch to document-based Digital Access licensing, do the math internally first. In some cases, the traditional named-user model or existing interface licenses might be cheaper. Only adopt the new model if your own analysis shows it will reduce your costs or compliance risk.
By actively tracking and managing indirect usage, you can address any exposure on your terms (e.g., adjusting licenses or negotiating a flat deal) instead of being hit with surprises in an audit.
Read about managing SAP Indirect Access risks, Managing SAP Indirect Access Risk.
Tactic 5: Optimize Engine & Package License Metrics
Many SAP products are sold as “engines” or packages with their own usage metrics – like number of employees for SAP HCM, revenue or order counts for sales modules, or gigabytes of data for databases.
These metrics can drift over time, so regularly scrutinize them to avoid paying for more than you need (or getting caught short).
- Validate Actual Usage: Check each engine’s current usage versus what you’ve licensed. If you’re entitled to 10,000 SAP Payroll employees but only have 8,000 active employees, you’re paying for unused capacity. If you now have 12,000 employees, you’re under-licensed and at risk. Make sure the usage counts (from USMM or system reports) exclude any irrelevant entries like old test data, so you have an accurate picture.
- Adjust to Business Changes: If your business shrank or divested a unit, don’t keep paying for the old larger metrics. Negotiate those license metrics down at renewal to match your new reality. On the flip side, if usage grew, plan for a true-up or see if you can reallocate unused entitlements from elsewhere to cover it.
- Negotiate Resets or Swaps: When an engine’s usage drops significantly or the module is no longer critical, ask SAP about converting that value into something else. For example, if you licensed SAP CRM for 1 million customers but now serve far fewer, request to swap the excess license value toward another product or a lower metric tier. SAP sometimes allows such conversions, especially if you’re investing in new SAP solutions at the same time.
The goal is not to overpay for theoretical capacity. Treat metric licenses like any other resource – review and right-size them periodically so they align with what you actually use.
Tactic 6: Audit Internally Before SAP Does
Don’t wait for SAP’s official audit notice to find out about compliance issues.
Conduct your own internal SAP license audits regularly. By finding and fixing problems yourself (quietly), you’ll turn any eventual SAP audit into a non-event.
Key steps for an internal audit:
- Run USMM and LAW: Execute SAP’s USMM in each system to gather user counts and engine metrics, then consolidate with LAW to eliminate duplicate users across systems. Do this for internal insight only (no need to send results to SAP unless required).
- Clean and Correct: Analyze the output and remediate issues. Reclassify any users mis-assigned to overly rich licenses and remove any obsolete or test accounts. Check each measured engine metric against your entitlements – if something looks off, investigate and correct anomalies. Include interface usage here too: ensure you account for any indirect usage documents (from Tactic 4) in your analysis.
- Document Everything: Keep a log of what you found and fixed during the internal audit. This creates evidence of your good governance. If SAP auditors later question your license position, you can show that you’ve been proactively managing it, which can expedite discussions or disputes.
By self-auditing first, you’re likely to already know (and have resolved) any compliance gaps. When SAP runs their audit, their numbers will match yours – with no surprises or last-minute purchases needed. You’ll be negotiating from a position of confidence.
Tactic 7: Time Purchases Strategically
When you buy from SAP, the process can be almost as important as what you buy. SAP’s sales teams have quarterly and annual targets, which you can use to your advantage.
The general rule: end-of-quarter – especially end-of-year – is deal time.
SAP’s fiscal year is the calendar year, so Q4 (Oct–Dec) is when reps are under maximum pressure to hit numbers. Discounts and special offers tend to be most generous then.
Conversely, trying to strike a big deal in Q1 may get you a colder response, since quotas have just reset.
Use timing as leverage:
- Leverage Quarter-End Urgency: Let SAP know your purchase decision or renewal will be finalized near their quarter-end. For example, “We’re targeting end of December for this sign-off.” This signals to the sales rep that their quarter results are on the line, prompting them to be more flexible on price.
- Tie Deals to Timing: You can explicitly link your agreement to timing incentives. For instance: “We’ll sign by December 31, but only if you extend our 80% discount to cover the first year of maintenance as well.” If they want the deal booked this quarter, they need to sweeten the pot.
- Avoid Off-Season Commitments: If possible, schedule large purchases or renewals in the quarters when SAP is hungriest (Q4, and to a lesser extent Q2 or Q3). A proposal that might receive a 30% discount during a quiet period could achieve over 50% when it helps them hit a critical target.
By syncing your buying cycle with SAP’s selling cycle, you gain negotiating power that costs you nothing. It’s all about being in the right place at the right time when SAP is most motivated to meet your terms.
Tactic 8: Bundle and Co-Term Contracts
Fragmented contracts can undermine your bargaining power. If different business units or regions each negotiate with SAP separately (on different timelines), you’re missing out on volume leverage. Bundling those deals and co-terminating the contract end dates turns many small transactions into one big negotiation.
How to Co-Term and Bundle:
- Align Renewal Dates: Work with SAP to get all your major licenses on the same renewal schedule. This might involve a one-time extension or short-term renewal on some contracts to sync them up (SAP can prorate fees to facilitate this). For example, if one deal expires in March and another in October, adjust one so both co-term on December 31.
- Negotiate as One Portfolio: Once dates are aligned, combine your purchasing requirements. Approach SAP with a single large renewal covering everything. The higher spend in play should unlock better volume discounts. Plus, SAP’s team will prioritize a consolidated deal – they don’t want to jeopardize a big chunk of business.
- Standardize Terms: Use the bundling process to eliminate inconsistent terms. Negotiate one master agreement with your best-achieved terms (discount levels, usage rights, audit clauses, etc.) that applies globally. This way, no division is stuck with a subpar clause that another part of the company managed to negotiate away.
By co-terming and bundling, you create a high-stakes event for SAP, requiring them to earn all your business at once. That dynamic usually leads to more concessions in your favor, as losing or upsetting the account has bigger consequences for them.
Tactic 9: Negotiate Maintenance Smartly
Annual maintenance fees (typically ~22% of license value) can, over the years, cost more than the licenses themselves.
Don’t accept SAP’s standard support terms as a given – there’s room to optimize and save significantly:
- Based on Net Price: Ensure that the 22% support fee is applied to your net purchase price (after any discounts), not the full list price. Lock this into the contract to avoid any ambiguity.
- Cap Yearly Increases: Put a ceiling on annual maintenance rate increases. For example, cap them at 3% per year maximum. In some cases, you might negotiate a freeze for a couple of years or other limits to prevent surprise jumps.
- Get Multi-Year Value: If you commit to multiple years of support, ask for something in return. It could be an extra discount on the maintenance itself or added services (like a Technical Account Manager or enhanced support) thrown in. Multi-year commitments should come with multi-year benefits for you.
- Consider Third-Party Support: For older, stable systems that you’re keeping but not heavily changing, third-party support can cut costs roughly in half. If you don’t need SAP’s updates on that system, providers like Rimini Street can handle support more cheaply. Even raising this option during negotiations can give SAP an incentive to sharpen its pencil on your maintenance quote.
Because maintenance is a recurring cost, every percentage point or concession you win has a compounding effect. Be as rigorous in negotiating support as you are with the upfront license costs.
Tactic 10: Prepare for S/4HANA Migration Early
An S/4HANA migration is a golden opportunity to reset your SAP licensing. Instead of simply carrying over your old entitlements, leverage the transition to renegotiate and clean up your license landscape.
Plan your licensing strategy well in advance of the migration project so you can use it as leverage.
Opportunities during S/4HANA migration:
- License Conversion Credits: If you’ve invested a lot in ECC licenses, ask SAP for credits when moving to S/4HANA. Often, SAP will let you apply the value of unused licenses or remaining maintenance toward the new licenses or subscriptions. Don’t pay twice for the same capability – push to get credit for what you already paid under the old system.
- Right-Size the New Environment: Re-evaluate how many users and which modules you truly need on S/4HANA. A migration is a chance to drop unused components or adjust license counts. Also, if you’re considering SAP’s cloud offering (such as RISE with SAP), model out the 3-5 year cost to ensure it’s cost-neutral or cheaper than staying on-prem. Sometimes a flashy cloud deal costs more in the long run – be sure before you commit.
- Fix Compliance First: Before signing any S/4 contract, resolve existing compliance issues. You don’t want an audit issue (like indirect access under-licensing) to surface during the migration and derail your project or budget. Clean up your user classifications, indirect usage, and shelfware now so that the S/4HANA negotiations focus solely on the future.
- Negotiate Fresh Terms: Treat the S/4HANA agreement as a new contract, not just an upgrade. Push for modern, flexible terms – for example, the ability to scale down users if needed, or clauses that protect you if the deployment is delayed or if you exit a cloud service. Carry over any favorable terms from your old deal and use the moment to shed any unfavorable ones.
By getting in front of these issues early, you can approach S/4HANA with a clean slate and a strong negotiating position. SAP will be keen to lock in your S/4 business, so use that momentum to drive a better overall deal.
Additional Quick Wins
Finally, here are a few extra quick wins to further optimize your SAP licensing:
- Review License Definitions: Periodically revisit the definitions in your SAP contract. SAP sometimes updates product names or user categories. Make sure your contract’s terms aren’t outdated or overly broad. Tighten any definition that could be misinterpreted so you’re not caught by surprise (for example, clearly define what counts as “an employee” or “indirect use” if those terms matter).
- Split Entitlements by Division: If your company is large or might undergo divestitures, consider structuring some licenses by business unit or region. This creates flexibility — if you sell off a division, you can transfer or terminate just that division’s licenses rather than being stuck with excess enterprise-wide licenses you no longer need.
- Baseline with an Expert: Engage a third-party SAP licensing specialist to perform a baseline assessment, especially before big negotiations or migrations. An outside expert can often spot hidden compliance gaps or optimization opportunities. Their report can validate your internal findings and strengthen your stance when you tell SAP, “According to an independent analysis, here’s our actual usage.”
5 Next Steps for SAP Cost Optimization
Instead of a conclusion, let’s end with five concrete steps you can take right now to kickstart your SAP cost optimization:
- Run an Internal Audit: Execute USMM in all your systems and consolidate with LAW (including digital access estimates). Do this now to get a current baseline of license usage and compliance.
- Build a License Dashboard: Set up a dashboard to monitor SAP license metrics monthly – active users by license type, key engine usage vs entitlements, etc. This visibility will help you catch issues early and measure progress as you optimize.
- Plan Renewal Timing: Map out your SAP contract renewal calendar. Where possible, align expirations and target your major negotiations for SAP’s quarter-end or year-end. If needed, make a one-time adjustment to align renewal dates, allowing you to negotiate as one large event during a high-leverage period.
- Revisit User Assignments: Identify quick-win adjustments in your user list. Find users with high-level licenses who have minimal activity, and plan a cleanup to downgrade or remove those licenses in the next cycle. Communicate this plan and get stakeholder buy-in, then execute the changes.
- Coordinate a Bundled Proposal: Anticipate upcoming SAP needs (new licenses or additional products) and bundle them into one negotiation. Internally unite your departments so you approach SAP with one consolidated request. A larger, combined deal will put you in a position to demand bigger discounts and more favorable terms.
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