How CIOs and CTOs can leverage the S/4HANA transition to eliminate costly shelfware, retire unused modules, negotiate licence credits, and build a leaner SAP contract aligned with actual business needs.
SAP shelfware refers to software licences and modules you've paid for but aren't actively using. These idle user licences and add-on modules quietly consume budget through annual maintenance fees (typically 20-22% of the licence price every year).
If a company owns $10 million in SAP licences, even a 15-20% shelfware ratio means $1.5-2 million of that investment brings no value — yet the company might still be paying $300-400,000 per year in support fees on it. This is effectively wasted IT spend.
Legacy CRM, SRM, PLM bought in bundles or for stalled projects. Paying maintenance for capability you don't use.
Employees who left or changed roles but still have assigned licences. Hundreds of inactive accounts are common.
Older SAP components superseded by newer tools but remaining on contract "just in case."
Modules purchased as part of enterprise bundles that were never implemented or adopted.
Beyond direct costs, shelfware adds complexity — making compliance management more challenging and obscuring visibility into what your organisation truly needs. Recognising the scope of shelfware is the first step to cutting it. Read: Budgeting for SAP S/4HANA Licence Transition Without Surprises.
The impending migration to SAP S/4HANA (with ECC support ending in 2027) forces a rethink of your SAP licensing. This transition isn't an automatic carry-over — moving to S/4HANA often means signing a new contract, presenting a golden opportunity to clean house.
Instead of a like-for-like renewal, you can restructure your SAP agreement from the ground up — shedding what you don't need and optimising for the future.
Identify legacy SAP products that won't be needed in the S/4HANA era. S/4HANA's core may include functionality that previously required separate engines in ECC. If you have an older module (SAP BW Accelerator, an industry solution) that S/4 innovations render redundant, retire it rather than carrying it forward.
Before migration, run a usage audit. If 500 out of 3,000 named users are effectively idle, decommission those 500 rather than converting all 3,000 into S/4HANA licences. This ensures you only licence active personnel.
If you're consolidating systems (retiring a separate SAP CRM instance in favour of S/4HANA's customer management functionality), you can also consolidate licences and drop overlapping ones.
Treat the migration as a contractual do-over. CIOs can align the new S/4HANA environment closely with actual business requirements, free of historical bloat. SAP may offer incentives for early adopters (credits, extended ECC maintenance), but those benefits are maximised when you come to the table with a clear, pared-down vision. Read: S/4HANA Migration Licensing Guide for CIOs and CTOs.
Retiring old SAP components requires a combination of usage data analysis and input from internal stakeholders. Start with a thorough licence utilisation assessment well before you sign any S/4HANA deal.
List every SAP product and user licence your organisation owns — core ERP modules, additional components (HCM, CRM, industry solutions, third-party add-ons), and the number and type of user licences.
For each component, ask: "Are we using this? Do we still need it in the S/4HANA era?" Look for modules purchased for projects that never went live, or functionality a business unit abandoned (e.g., SAP SRM replaced by Ariba or Coupa).
Talk to business and IT owners of each SAP module. Confirm whether processes will continue in S/4HANA. Many legacy components (SAP APO, classic SAP HR) might be replaced by new S/4HANA modules or third-party systems.
Use SAP's Licence Administration Workbench (LAW) or other tools to see actual usage. Identify unused licences — named users with zero activity, engine metrics well below licensed levels. This data-driven approach highlights what can be safely removed.
Every retired component is one less item to pay for and manage. Don't let obsolete software roll into your new environment.
How you execute the migration contractually determines the fate of shelfware. SAP's two conversion approaches offer different levels of flexibility.
Keep your existing SAP contract and swap certain products for S/4HANA equivalents. Gradual, one-for-one exchange with dual-use rights during transition.
✓ Maintains original terms and discounts
✓ Migrate in phases with dual-use rights
✗ Limited to converting what you have
✗ Shelfware remains unless actively removed
✗ Little flexibility to reconfigure licence mix
Negotiate an entirely new S/4HANA agreement and trade in existing licences for credit. A wholesale licence overhaul — the "milkshake" approach.
✓ Apply any legacy licence value to any new product
✓ Monetise shelfware into useful assets
✓ Redesign licence mix from scratch
✗ More complex negotiation process
✗ SAP may assign lower credit for unused licences
✗ May require minimum incremental spend
Whether you pursue product or contract conversion, plan your shelfware strategy upfront. If you have significant shelfware, contract conversion typically provides a better mechanism (trading it in or reallocating value). Product conversion may be chosen if you have minimal shelfware and want a simpler, lower-risk migration.
Some enterprises use a hybrid: selective product conversion first (to maintain continuity on critical systems) and later a contract conversion for the remainder to clean up and optimise the portfolio. The path should align with your technical migration plan, but always keep the end goal in mind — don't carry waste into the new environment.
Retiring unused SAP components isn't just housekeeping — it yields substantial cost savings that can fund your S/4HANA project or other innovation.
| Scenario | Legacy ECC Environment | S/4HANA Migration (Optimised) |
|---|---|---|
| Total SAP Licence Value | $12.9 million (perpetual) | $12.9 million (reinvest via credit) |
| Unused Shelfware Portion | ~20% (≈$2.6M worth idle) | 0% shelfware carried forward |
| Annual Maintenance on Shelfware | $2.6M × 22% = $572,000/yr wasted | $0 (terminated; maintenance saved) |
| Outcome | Paying $572K/yr for no benefit | $2.6M credit applied to S/4HANA; $572K/yr reallocated |
Even smaller-scale optimisations add up: terminating a single unused SAP engine module costing $100,000 in maintenance per year is an immediate $100,000 back to the bottom line. Reducing your named user count by 500 could easily save six figures in annual support.
Freed funds can be redirected to S/4HANA implementation services, training, innovation initiatives, or future digital transformation projects — things that deliver real business value rather than maintaining unused software. An optimised licence footprint also reduces compliance risk.
CIOs should approach shelfware reduction strategically to avoid common pitfalls.
Before terminating a licence, double-check with business owners. An idle module today might have a planned use tomorrow. Coordinate retirement with your IT roadmap.
Review your SAP contracts for how and when you can terminate. Often only at specific times (contract anniversary or renewal) with notice periods. Plan to align with your migration timeline.
Terminating saves maintenance immediately but reduces your credit pool for conversion. Assess which licences SAP is likely to credit generously versus those they won't value.
Don't over-provision S/4HANA "just in case" or convert all users 1:1. Start lean and add later under pre-negotiated pricing.
S/4HANA introduces new metrics (Digital Access, FUEs). If a third-party replaces a retired module but still integrates with SAP, ensure you have the right indirect access licences.
Ensure dual-use rights or a transition window so you can run both old and new systems in parallel without paying extra licences during overlap.
Before negotiating any S/4HANA contract, perform a comprehensive SAP licence audit. Identify all shelfware (unused modules, inactive users) so you have a clear list of what to eliminate.
Discuss contract conversion vs product conversion well in advance. Understand how your shelfware could be treated (credit or otherwise) and signal that you plan to optimise.
Where possible, exercise contract rights to terminate truly unused licences before migration. Halting maintenance payments on shelfware immediately saves money.
Push SAP to recognise your past investments. Provide usage data to support credit requests. Aim to apply legacy licence value to new S/4HANA products, minimising net new spend.
Don't automatically replicate old licence counts. Scrutinise user roles and transaction volumes to purchase just what you need. Consider phased additions if uncertain.
If your strategy includes non-SAP solutions replacing certain functions, reflect that by not licensing similar SAP components in S/4HANA.
Include dual-use rights and adequate transition duration. This protects you from rushing the cut-off of old systems and allows verification that no necessary functionality was dropped.
SAP licensing is complex. Consider a third-party advisor to validate your shelfware analysis and support negotiations. They can identify hidden risks or opportunities. See: SAP Contract Negotiation Service.
Inform finance and business stakeholders that S/4HANA presents a cost optimisation opportunity. Create transparency around what will be retired and why.
After migrating, institute regular reviews of licence usage. Ensure expected savings are realised and new shelfware isn't accumulating. Optimisation should be ongoing.
Our SAP licensing specialists help enterprises identify shelfware, negotiate credits, right-size S/4HANA contracts, and save millions during migration.