SAP S/4HANA Licensing

Retiring Old SAP Components During S/4HANA Migration

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 LicensingShelfware OptimisationS/4HANA Migration20 min read
This article is part of our comprehensive SAP S/4HANA Guide. For the full pillar overview, start there.
15-20%Typical SAP Shelfware Ratio
$572K/yrWasted Support on $2.6M Shelfware
20-22%Annual SAP Maintenance Fee Rate
2027SAP ECC Mainstream Support End

Table of Contents

01

The Hidden Cost of SAP Shelfware

Context+

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.

⚠️
Unused SAP Modules

Legacy CRM, SRM, PLM bought in bundles or for stalled projects. Paying maintenance for capability you don't use.

⚠️
Dormant Named Users

Employees who left or changed roles but still have assigned licences. Hundreds of inactive accounts are common.

⚠️
Redundant Legacy Systems

Older SAP components superseded by newer tools but remaining on contract "just in case."

⚠️
Bundle Over-Provisioning

Modules purchased as part of enterprise bundles that were never implemented or adopted.

Key Insight

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.

02

S/4HANA Migration — A Chance to Clean House

Strategy+

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.

Drop Unneeded Components

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.

Eliminate Idle Users

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.

Consolidate and Simplify

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.

Strategic Reset

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.

03

Retiring Old Components During the Transition

Execution+

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.

1
Inventory All Licences and Modules

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.

2
Assess Business Relevance

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).

3
Engage Functional Owners

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.

4
Analyse Usage Logs

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.

⚠️ Key Principle

Every retired component is one less item to pay for and manage. Don't let obsolete software roll into your new environment.

04

Licence Conversion Strategies and Shelfware Impacts

Conversion+

How you execute the migration contractually determines the fate of shelfware. SAP's two conversion approaches offer different levels of flexibility.

Product Conversion Phased

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

Contract Conversion Full Reset

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.

Hybrid Approach

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.

05

Quantifying the Benefits of Eliminating Shelfware

Savings+

Retiring unused SAP components isn't just housekeeping — it yields substantial cost savings that can fund your S/4HANA project or other innovation.

ScenarioLegacy ECC EnvironmentS/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)
OutcomePaying $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.

Where the Savings Go

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.

06

Avoiding Pitfalls When Retiring Software

Caution+

CIOs should approach shelfware reduction strategically to avoid common pitfalls.

Don't Cut Blindly

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.

Understand Termination Clauses

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.

Balance Credit vs Maintenance Savings

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.

Avoid Creating New Shelfware

Don't over-provision S/4HANA "just in case" or convert all users 1:1. Start lean and add later under pre-negotiated pricing.

Watch for Indirect Use Changes

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.

Leverage the Transition Period

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.

07

Strategic Recommendations

Key Actions+
Conduct a Pre-Migration Licence Audit

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.

Engage Early with SAP on Conversion Options

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.

Terminate Unused Licences to Reduce Maintenance

Where possible, exercise contract rights to terminate truly unused licences before migration. Halting maintenance payments on shelfware immediately saves money.

Negotiate Aggressively for Credits

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.

Right-Size the New Environment

Don't automatically replicate old licence counts. Scrutinise user roles and transaction volumes to purchase just what you need. Consider phased additions if uncertain.

Align Licensing with IT Roadmap

If your strategy includes non-SAP solutions replacing certain functions, reflect that by not licensing similar SAP components in S/4HANA.

Secure Transition Safeguards

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.

Consult Experts if Needed

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.

Communicate Internally

Inform finance and business stakeholders that S/4HANA presents a cost optimisation opportunity. Create transparency around what will be retired and why.

Monitor Post-Migration Usage

After migrating, institute regular reviews of licence usage. Ensure expected savings are realised and new shelfware isn't accumulating. Optimisation should be ongoing.

08

Frequently Asked Questions

FAQ+
What is "shelfware" and why should CIOs care?+
Shelfware means SAP licences you've bought but aren't using. CIOs should care because it wastes budget through support fees on idle software and clutters your contract. Eliminating shelfware immediately cuts costs and simplifies licence compliance — ensuring you only pay for software that delivers business value.
How can we identify which SAP components are truly unused before migrating?+
Analyse system usage data and user logs — look for modules with no or minimal transaction activity and user IDs with no logins in months. Cross-check with business units. Common culprits include modules purchased as "insurance" or part of bundles, and accounts of former employees. SAP's LAW tool or software asset management services can provide detailed utilisation data.
What types of old SAP modules are often retired during S/4HANA migration?+
Typically modules replaced by S/4HANA functionality or third-party solutions: legacy SAP SRM (supplier management), SCM/APO (supply chain planning), older SAP CRM, unused Industry Solutions, and niche engines. If you've moved to Ariba, IBP, Salesforce, or similar alternatives, the corresponding legacy SAP modules are prime candidates for retirement.
Can we get financial credit for unused licences when moving to S/4HANA?+
Yes, through SAP's contract conversion programme. SAP evaluates your licences and gives credit towards S/4HANA. However, SAP may not give full credit for shelfware that's not in use. It's negotiable — you need to advocate for every dollar and demonstrate how existing investments align with S/4HANA requirements. For RISE with SAP deals, negotiate subscription pricing that reflects your past spend. See: SAP Contract Negotiation Service.
What's the difference between product conversion and contract conversion?+
Product conversion is a one-for-one swap — keep your existing contract and exchange individual products for S/4HANA versions. It's gradual but inflexible (shelfware that isn't swapped just stays unused). Contract conversion involves ripping up the old contract and setting up a new one — you turn in all licences for credit and purchase what you need. Contract conversion is more complex but allows you to apply any licence's value to any new product, which is great for repurposing shelfware value.
If we terminate unused licences early, do we lose their value in S/4HANA negotiation?+
Potentially yes — once terminated, licences typically won't count for conversion credit. There's a balance to strike: if SAP is unlikely to credit a licence (or maintenance savings are higher value), terminate early. For licences SAP might credit well, keep them through negotiation to trade them in. Evaluate maintenance savings versus potential credit for each case.
How does RISE with SAP impact existing licences and shelfware?+
RISE means you go to a subscription model and give up perpetual licences. SAP may provide incentives or credits to ease the transition, but if you're not careful you could "double pay." Ensure your legacy investment is taken into account — even shelfware gives you leverage. You can argue: "We own $X million of licences; we expect a competitive subscription price reflecting our past spend."
How can we prevent accumulating new shelfware on S/4HANA?+
Governance and monitoring. Resist over-procuring "just in case." Implement regular licence usage reviews (at least annually). Re-harvest licences when employees leave or roles change. If business strategy changes and a planned module isn't needed, engage SAP to adjust. Treat licences as assets to be continuously optimised.
Our finance team says dropping paid-for licences is "waste." How do we address this?+
The money spent is already a sunk cost — keeping unused licences compounds the waste through ongoing fees. In contract conversion, you're not throwing it away; you're leveraging whatever value is left as credit toward something useful. Frame it as: "We're freeing up funds to invest in things we need instead of perpetually funding unused software." The short-term accounting impact is far outweighed by cost savings.
What if we discover additional needs after we've cleaned up — is there a risk we cut too much?+
It's better to err on cutting true dead weight and dealing with edge cases separately. You can always purchase additional licences later. Mitigate risk by negotiating price protections or options for specific licences in your S/4HANA contract (e.g., a clause to buy additional users at a pre-agreed discount within two years). A phased migration approach also helps — leave some lesser-used components on ECC for a year as a safety net.
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FF

Fredrik Filipsson

Co-Founder, Redress Compliance

Former Oracle, SAP, and IBM — now helping enterprises worldwide negotiate better software deals. 20+ years in enterprise licensing, 500+ clients served.

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