SAP Audit Defense FAQ

This FAQ is designed to help SAP customers avoid unnecessary costs and risks during SAP license audits. It covers common questions about audits, licensing pitfalls, preparation strategies, defense tactics, optimization, legal considerations, and real-world lessons.

The focus is on protecting your organization’s interests – minimizing costs and mitigating risks – rather than simply adhering to SAP’s audit process.

SAP Audits

Q1: What is an SAP audit, and why does SAP conduct it?

A: An SAP audit is a formal process where SAP reviews your software usage to ensure it aligns with the licenses you’ve purchased. SAP typically conducts audits to protect its intellectual property and ensure customers aren’t using more software or users than their contract allows.

This means SAP will ask for usage data (like user counts and system metrics) and compare it against your entitlements. Audits help SAP recover revenue for any unlicensed use, but from your perspective, the goal is to catch any issues internally first so you don’t face surprise fees.

Q2: What triggers an SAP software audit?

A: Audits can be triggered by factors beyond the routine annual check. Common triggers include a sudden spike in your user count or data volume, adding new SAP modules or products, major organizational changes (like mergers or acquisitions), or known past compliance issues.

Indirect usage (third-party systems accessing SAP) is a big red flag – SAP might audit if they suspect you have significant indirect access without proper licenses. Anything suggesting your SAP usage has grown or changed significantly could prompt an audit request.

Q3: How often does SAP audit its customers?

A: SAP typically has the right to audit customers annually, and many on-premise customers undergo a formal license audit roughly once a year. The exact frequency can vary – your contract might specify annual audits or give SAP the right to audit at any time with notice.

While annual audits are common, SAP may delay or skip audits for smaller customers or if a recent audit showed full compliance. Conversely, an out-of-cycle audit might occur if signs of non-compliance or after big events (like a merger or large purchase) warrant a closer look. Always check your contract’s audit clause for the official frequency and notice period (e.g. 30 days notice is common).

Q4: What types of SAP audits might we face (Basic vs. Enhanced)?

A: SAP generally performs two types of audits: Basic and Enhanced. A Basic audit (sometimes called a standard audit) is mostly done remotely and focuses on straightforward metrics – SAP will use tools like USMM and LAW to count users and engines, relying largely on your self-reported data.

An Enhanced audit is more in-depth and may involve on-site reviews or screen-sharing sessions. Auditors investigate how licenses are assigned and used in detail. They scrutinize indirect access, named user roles, and specific SAP products more closely.

In short, a basic audit checks the numbers, while an enhanced audit thoroughly examines usage quality and compliance. Knowing which type you’re undergoing helps you prepare appropriately – enhanced audits require more documentation and internal resources.

Q5: What is the typical scope of an SAP audit?

A: An SAP audit usually covers all SAP software and licenses your organization has deployed across all environments (production and non-production). This includes every SAP product in use – ERP systems (ECC or S/4HANA), databases like HANA, SAP cloud services if applicable, and even niche SAP engines or add-ons.

The auditors will look at named user licenses (every person or account using SAP) and package/engine licenses (for specific functions or modules). They may also review indirect usage where non-SAP systems connect to SAP.

Essentially, the audit scope is enterprise-wide: SAP wants to verify compliance for everything you’ve licensed from them. Be prepared to provide a consolidated view of all your SAP systems and how they are used.

Q6: How does SAP notify customers of an upcoming audit, and what happens next?

A: SAP will send a formal audit notification letter or email, often to your CIO or software asset manager, indicating their intent to audit. This kicks off the process. The notice typically outlines the scope and asks you to prepare by running certain measurement programs (like SAP’s USMM for user counts) and filling out self-declaration forms.

Once notified, you usually have a kick-off meeting with SAP’s Global License Auditing team to clarify the timeline and data requirements. Customers commonly have a few weeks from the notice date to collect and submit data. It’s important not to ignore the notice—engage with SAP to agree on a timeline (you might negotiate a slight extension if needed to gather data properly).

Early in the process, assemble your internal team and double-check the data before sending it to SAP, as this will form the basis of their audit analysis.

Q7: What steps are involved in the SAP audit process?

A: While timelines can vary, an SAP audit generally follows these steps:

1. Notification: SAP sends an audit notice to start the process (Day 1 in a typical timeline).
2. Kick-off Meeting: Within a week or so, you meet SAP’s audit team (often remotely) to confirm the scope, tools to use, and deadlines.
3. Data Collection: You run SAP’s measurement tools (like USMM for user counts and LAW for multi-system consolidation) and gather requested data (user lists, engine usage, interfaces) by the agreed deadline (often 30 days from kickoff).
4. Analysis: SAP analyzes the data to find any license shortfalls or usage beyond entitlements (this can take a few weeks).
5. Audit Report: SAP delivers a report of findings, highlighting any compliance gaps, such as extra users or unlicensed products detected (around Day 60 in a sample timeline).
6. Resolution/Remediation: You discuss the findings with SAP. If non-compliance is found, you negotiate how to resolve it—purchasing additional licenses, adjusting usage, or disputing errors (by around Day 90+).
   Throughout the process, document communications and ensure you understand each step. A structured approach keeps the audit manageable and reduces surprises.

Q8: Will SAP audit our cloud subscription products (like SuccessFactors or S/4HANA Cloud) the same way as on-premise software?

A: Cloud SAP products are handled differently. Traditional audits are mainly for on-premise licenses where you buy perpetual rights, and SAP needs to verify usage. For cloud subscriptions (SuccessFactors, Ariba, SAP S/4HANA Cloud, etc.), SAP typically monitors usage through the cloud service. Your contract will define what usage is allowed (e.g., the number of users or transactions).

If you exceed those, SAP can charge for overages or require an upgrade at renewal. There isn’t usually a formal “audit” with data extraction because SAP already has the usage data. However, SAP may still perform a compliance check or ask questions if they suspect misuse (for example, if an integration feeds data into a cloud service beyond what’s licensed).

Cloud products enforce compliance via subscription limits and periodic true-ups rather than surprise audits. But be vigilant: at renewal time, SAP might review your cloud usage and bill for any extra consumption, so manage your cloud licenses proactively.

Q9: Can we refuse or delay an SAP audit?

A: Generally, you cannot flat-out refuse an SAP audit without serious consequences. Your SAP license agreement almost always contains an audit clause granting SAP the right to audit your usage, and you’re contractually obligated to comply within reasonable parameters.

If you ignore or refuse an audit, SAP could consider it a breach of contract. This could lead to the termination of licenses or legal action, which is a far worse scenario. That said, you have some flexibility in managing the audit: you can discuss the timing with SAP to ensure you have enough time to gather data, and you should clarify the scope so it’s focused.

It’s also within your rights to carefully control the information you provide – give SAP what the contract requires, nothing more. In summary, outright refusal isn’t an option (short of ending your SAP relationship). Still, you can negotiate practical details (like a slight extension or staging of systems) to ensure the audit doesn’t disrupt your operations unreasonably.

Q10: What are the consequences of failing an SAP audit or being found non-compliant?

A: The fallout from an unfavorable SAP audit can be costly. Typically, SAP will demand that you purchase the necessary licenses to cover any shortfall, often at the list price and sometimes with back-dated maintenance fees for the period of unlicensed use.

For example, if you used 50 unlicensed user accounts for two years, SAP might require you to pay for those 50 licenses plus two years of maintenance for each – this can easily total a large, unbudgeted sum. In extreme cases, SAP may impose penalties or disable certain functionality (though the latter is rare and would follow contract terms/legal process).

Legal action is also risky if you blatantly violate license terms (as seen in some high-profile cases). Beyond direct fees, an audit failure can mean operational disruption—you’ll need to divert IT and procurement resources to fix compliance issues quickly.

It can also strain your SAP supplier relationship and put a spotlight on your IT governance. The key is to treat audit prep seriously so you don’t get to that point. It’s far cheaper to proactively stay compliant (or negotiate license needs upfront) than to pay penalties afterward.

Common SAP Licensing Pitfalls

Q11: What is SAP indirect access, and why is it a licensing pitfall?

A: Indirect access means using SAP’s data or functions via a third-party application or interface rather than a direct SAP login. For example, if you have a Salesforce CRM that pulls customer info from SAP, those Salesforce users (or the system itself) might indirectly use SAP.

The pitfall is that SAP requires licenses for indirect usage, too, and it’s not always obvious. Companies often assume only named SAP users need licenses, but if non-SAP systems are reading or writing SAP data, SAP may classify that as unlicensed usage​ . This has led to huge compliance issues – in one case, a company faced a claim of £54 million for indirect use because their external systems weren’t properly licensed.

To avoid this trap, identify all third-party applications interfacing with SAP and check if those interactions are covered under your licenses. SAP’s new Digital Access model (document-based licensing) was introduced to address indirect use more transparently, but it’s optional and needs careful consideration.

Bottom line: Indirect access is a major audit hotspot, so don’t overlook it.

Q12: What is SAP Digital Access, and how does it relate to audits?

A: Digital Access is SAP’s updated licensing model, which accounts for indirect usage by counting “documents” created or processed in SAP by external systems. Instead of requiring a named user license for every indirect user (which was the old model), SAP identified nine types of business documents (like Sales Orders, Invoices, etc.) and charges for those documents generated via indirect access.

SAP might flag high volumes of these documents in audits if you haven’t licensed Digital Access. The Digital Access model can simplify indirect licensing, but it also means you need to measure document counts. SAP has a Digital Access Evaluation tool and may ask for its output during an audit. If you haven’t adopted Digital Access, SAP could still audit indirect use under the old rules (which can be even more expensive, as seen in the Diageo case).

The important thing is to understand how your contract covers indirect use – via traditional named users or the Digital Access documents – so you can anticipate what an audit might find. Some customers use SAP’s Digital Access Adoption Program (DAAP) to transition, which offers steep discounts and waivers on back fees to mitigate audit risks.

Q13: How can misclassifying user license types lead to audit problems?

A: SAP offers different Named User license types (e.g., Professional, Limited Professional, Employee, Developer, etc.), each with different costs and usage rights. Misclassification happens when a user’s activity is higher than your assigned license type.

For instance, you’re under-licensed if you give someone a cheaper “Employee” license, but they perform tasks reserved for a “Professional” user. SAP’s tools and auditors will spot usage patterns that exceed a user’s license authorization in an audit.

This is a common pitfall. Companies sometimes try to save money by assigning everyone lower-tier licenses or simply don’t update licenses when roles change. The result can be a big compliance gap: SAP will re-categorize those users as higher license types and charge you the difference, potentially for every such user. To avoid this, regularly review user roles vs. license types.

It’s often wise to align license types with job functions and adjust if usage analysis shows some users could be downgraded. But do it carefully and document why each user has their license type so you can defend those assignments during an audit.

Q14: Why are duplicate or inactive SAP user accounts a licensing problem?

A: SAP licenses are generally per named user, so each individual should only consume one license across all systems. Duplicate accounts (the same person having two IDs in one or multiple SAP systems) can lead to SAP counting two licenses for that one person if not consolidated​.

Inactive users – accounts of people who left the company or haven’t logged in for a long time – also consume licenses if not properly retired. During an audit, SAP’s License Administration Workbench (LAW) tool helps merge duplicates, but if your user data (names, emails) is inconsistent, LAW might not catch it​. That means you could be shown as “using” more licenses than you need, and SAP might bill for them. Likewise, inactive accounts will appear in user counts unless you’ve removed or classified them as obsolete.

The pitfall is paying for licenses that provide no business value. The best practice is to routinely clean up: remove or lock accounts of former employees and ensure each real person has only one user ID (or mark secondary IDs as aliases). Doing so prevents an audit from counting phantom users, which costs you extra​.

Q15: Is sharing SAP user accounts to save on licenses okay?

A: No – sharing login accounts is against SAP’s licensing terms and is a serious compliance violation. SAP’s agreements specify a “Named User” as a person, not a generic login for multiple people​. If two or more people use the same credentials, from SAP’s perspective, each is an unlicensed user.

This can be disastrous in an audit: SAP could require a license for each person who shared the account, which may raise suspicion when auditing other practices. Besides compliance issues, account sharing poses security and traceability problems (you cannot see who did what in the system).

It’s more cost-effective in the long run to ensure every user has their license and account. If license costs are a concern, explore legitimate optimization strategies (like reassigning unused licenses or adjusting license types) rather than risking non-compliance by sharing accounts.

Q16: What are SAP package or engine licenses, and what pitfalls do they present?

A: Package/engine licenses refer to licenses for specific SAP functional components or “engines” – for example, SAP Payroll, SAP CRM, SAP HANA database, or other add-on modules. These are often licensed based on metrics like hardware size (cores), number of employees, amount of data, or transactions per period.

A pitfall here is that usage of these engines can grow beyond the licensed metric. For instance, you might have a SAP Payroll license for up to 1,000 employees; if your company grows to 1,200 employees and runs payroll, you’re now out of compliance.

Unlike named users (easier to count), engine metrics can be harder to track daily, so they might be forgotten until an audit flags overuse. Another issue is activating new modules—some customers enable functionality (like SAP TDMS or a Geographic module) without realizing it requires a separate license metric.

If SAP finds an unlicensed engine being used, it will charge the license and back maintenance for it. The lesson is to monitor these metrics: assign responsibility for monitoring engine usage (e.g., the number of sales orders if you have a Sales Engine license). Always consult your contract’s Schedule of Licenses before using a new functionality to ensure you’re covered.

Q17: What happens if we use an SAP module or feature we haven’t explicitly licensed?

A: Using any SAP software beyond what you’ve purchased is considered unlicensed, even if the software technically lets you do it. SAP systems often install many modules, but you can only use those you’ve contracted for. For example, your SAP installation might include functionality for Material Ledger or Treasury, and perhaps a savvy user or consultant turns it on for your business.

If that module wasn’t licensed, an audit will reveal usage (via transaction logs or tables populated), and SAP will treat it as non-compliance. The result: you’ll be asked to pay for that software retroactively. Even using advanced features within a licensed product can be an issue – SAP licenses some features separately (like certain SAP Fiori apps or HANA performance features).

In short, just because you can technically access a feature doesn’t mean you have the right to use it. To avoid this pitfall, maintain a clear list of what you’re entitled to. Govern system changes so new modules or components are only activated after confirming licensing.

If you discover unauthorized usage before SAP does, consult with your SAP account team or a licensing expert about rectifying it (sometimes you can negotiate a favorable deal to legitimize the usage if you approach SAP proactively rather than waiting for an audit).

Q18: What are some contract terms that can become pitfalls during audits?

A: The definitions and clauses in your SAP contract can hide pitfalls. A key example is the definition of “Named User” and “Use” – SAP’s definitions are very broad, essentially counting any direct or indirect interaction with the software as usage requiring a license. If your contract doesn’t exclude certain scenarios, SAP will default to charging for them.

Another is the indirect access clause (or lack thereof): SAP has leeway to claim fees for any external access if it’s vague. Additionally, watch out for clauses about multi-entity use—if your affiliates or third parties use the system, the contract might require them to be named or separately licensed.

Some customers assume their corporate license covers subsidiaries, only to find audits treat those users separately. User classification responsibility is also a contract matter: SAP requires you to assign the correct license types to each user​. If you misassign them (even by mistake), SAP can enforce reclassification during an audit.

The pitfall is not the contract itself but not reading the fine print: many audit surprises come from customers saying, “I didn’t realize that was how SAP defines it.” Always review your license agreement in detail (especially any footnotes and attachments) to know exactly what you’re on the hook for.

Q19: What is license reclassification, and why can it be risky?

A: License reclassification means changing a user’s assigned license type to a different type. Companies do this to optimize costs, such as downgrading a user from a Professional license to a Limited Professional if they no longer need full access.

While it’s a valid optimization strategy, it becomes risky if done improperly. SAP expects license types to reflect actual usage and job roles. SAP will see a discrepancy if you reclassify many users right before an audit (e.g., to cheaper licenses) without changing their activities.

They may challenge the justification for those changes. An auditor could ask for the date and reason for each user’s last license change. If it looks like a license type was downgraded just to reduce fees, but the user’s transactions are still high-level, SAP can flag non-compliance.

The safe way to reclassify is to pair it with real changes: say you shifted certain tasks from one team to another, then you can genuinely downgrade the first team’s licenses. Always document the rationale (like “User moved to a read-only role on date X, so changed from Professional to Employee license”).

That way, if SAP inquires, you can show it wasn’t just gaming the system. In summary, reclassification is not inherently bad – it’s part of good license management – but doing it without evidence of changed usage can backfire during an audit.

Q20: How do Named User licenses differ from Package (Engine) licenses, and why does it matter?

A: Named User licenses and Package/Engine licenses are two fundamental aspects of SAP licensing that serve different purposes. A Named User license is tied to a person and grants them the rights to use SAP software according to their user type (e.g., a Professional user can perform a broad range of tasks, while an Employee user may only perform self-service tasks).

These licenses ensure every human accessing SAP is accounted for. On the other hand, a Package or Engine license covers usage of a specific SAP product or feature, measured by a metric (be it number of records, transactions, CPUs, etc.).

Think of it this way: if SAP were a theme park, the Named User license would be a ticket for each person to enter, and the Package license would be a ticket for a particular ride or attraction inside. Why it matters: SAP will check both dimensions in an audit – do you have enough named user licenses for all individuals using the system?

And are you within the limits of each engine’s licensed metric? Sometimes, customers focus on one and forget the other. For example, you might have licensed 500 users properly (everyone has a user license), but you might be running an SAP Business Warehouse on hardware twice the size of what you licensed.

That would result in a compliance gap for the package license. Understanding the difference helps you manage compliance: you need to monitor user counts and how you consume SAP engines. Effective SAP license management means no surprises on either front.

How to Prepare for an SAP Audit

Q21: How can we prepare internally before an SAP audit notice arrives?

A: The best way to avoid audit panic is to stay audit-ready year-round. Conduct internal license audits regularly (e.g., quarterly or at least annually). This involves gathering your user counts and usage data just as SAP would.

Use SAP’s measurement tools (USMM for user classification and usage and LAW for multi-system consolidation) to see where you stand. Also, maintain an up-to-date inventory of all SAP systems, users, and license allocations. If you spot anything odd – like more users in the system than you have licenses for or heavy interface usage – address it proactively.

Internal audits let you uncover discrepancies in your terms and fix them quietly (by archiving users, buying additional licenses, or changing processes) before SAP comes knocking. It can be helpful to simulate an audit: have your team pretend to be SAP auditors, generate the license reports, and see if you’d “pass.” Any issues found are much easier and cheaper to handle ahead of time than under the pressure of an official audit.

Q22: What tools or reports should we use to check SAP license compliance ourselves?

A: SAP provides built-in tools to help manage licenses, primarily USMM (User Measurement) and LAW (License Administration Workbench). USMM is a transaction you run in each SAP system to tally up users by license type and count certain package metrics.

LAW consolidates results from multiple systems, ensuring a user counted in two systems is recognized as one named individual. You get an overall compliance snapshot by running USMM in all systems and then LAW. SAP also has newer tools (in Solution Manager or SAP for Me portal) showing license consumption.

Besides SAP’s tools, consider third-party Software Asset Management (SAM) solutions: Snow Software, Flexera, VOQUZ, USU, and others with SAP license management modules. These tools can automate usage tracking, identify dormant users, and suggest optimal license assignments.

They often provide more user-friendly analytics than raw SAP reports. Using them periodically can alert you to compliance risks (for example, Snow might warn you that a certain interface looks like indirect access requiring Digital Access licenses).

In summary, leverage USMM/LAW for the official picture (since that’s what SAP will use), and supplement with SAM tools for deeper analysis and continuous monitoring.

Q23: How often should we perform internal license reconciliation or “true-ups”?

A: It’s wise to perform an internal true-up at least once a year, if not more frequently. Many companies align this with their annual budgeting or before SAP’s likely audit period. However, a quarterly review is a good practice, given how dynamic organizations are.

Frequent checks help catch issues early. For instance, if a project adds 50 new SAP users, a quarterly review would spot the increase and allow you to adjust (maybe reallocate some existing licenses or budget for new ones). Some organizations even build license checks into the user provisioning process (so every time someone gets access to SAP, a license assignment is reviewed).

Regular true-ups also mean there are no “surprises” accumulating. If you’re over-deployed, you can correct it or plan for a purchase in advance (possibly negotiate a better price than if SAP catches you in an audit). Think of it like balancing your checkbook often instead of waiting for an overdraft notice – small corrections along the way prevent a big problem later.

Q24: What data and documentation should we gather in preparation for an SAP audit?

A: Preparation is largely about having your facts ready. Key data and documents include:

• User Lists & License Assignments: Export current lists of all users in each SAP system, including their license type classification. Make sure it’s cleaned for duplicates and ex-employees.
• System Architecture Overview: Document all SAP systems (production, test, dev) and how they connect. Auditors may ask for system IDs and confirmation that non-production systems are properly licensed (your licenses usually cover non-production use, but all named users should still be licensed).
• Contracts and Entitlements: Have your SAP contracts, order forms, and latest license certificate on hand. You must know what licenses you own (types and quantities) and any special terms.
• Usage Reports: Run USMM in each system and compile LAW results to see license consumption. Also, gather any engine-specific usage info (, the number of FI transactions, HANA productive cores, etc., depending on your license).
• Indirect Access Inventory: List third-party systems interfacing with SAP and their function. If you have any written agreements with SAP about those (like a letter saying a certain interface is covered under a specific license), keep it ready.
• Previous Audit Results (if any): If you’ve been audited before, have the old compliance report and proof that you addressed any findings.
  Being organized with this information speeds up your response to SAP’s requests and helps you double-check everything for accuracy before handing it over. The more you know about your environment, the less likely SAP is to “discover” something you weren’t aware of.

Q25: How can a “mock audit” help us prepare for a real SAP audit?

A: A mock audit is like a fire drill for an SAP audit – you simulate the process to test your readiness. Conducting a mock audit internally (or with the help of an independent expert) can be extremely helpful. In a mock audit, you would follow an SAP auditor’s steps: send out internal “notifications,” run the measurement programs, consolidate the results, and produce a pretend compliance report.

This exercise will reveal any gaps in compliance or your knowledge. For instance, you might discover that some systems weren’t measured or that certain users were misclassified. It also tests your team’s ability to pull together all the data under a time constraint, which is good practice for the real thing.

If the mock audit finds issues (like overused licenses or a bunch of indirect access documents), you can fix them quietly. By the end of a thorough mock audit, you should feel more confident because you’ll either find you’re in good shape or have remediated the problems before SAP comes in.

Think of it as proactive self-defense – identifying and patching weaknesses in your licensing compliance beforehand.

Q26: Who should be on our SAP audit preparation team?

A: An SAP audit touches both technical and business aspects, so build a cross-functional team:

• IT/SAP Basis Team: They know the systems, can run the SAP measurement tools (USMM/LAW), and extract the necessary data. They’ll interface with the technical auditors on details.
• SAP License Manager or SAM Manager: A person (or team) responsible for software asset management who understands the contracts and license entitlements. They translate the technical findings into license terms.
• Procurement or Sourcing Manager: If new purchases might be needed, procurement should be in the loop to handle vendor communications and negotiate if necessary.
• Finance Representative: They’ll want to know potential financial exposure and can help budget for any true-up.
• Legal Advisor: Someone from legal or an external licensing attorney should be on call to interpret contract clauses and ensure SAP sticks to the contract terms. They can advise on how to respond to certain findings or requests.
• Business Process Owners (as needed): For example, if many HR users use SAP, someone from HR IT might be involved to explain usage. Or, if you suspect indirect access in a sales system, involve the CRM team.
  Having this team before an audit means you can hit the ground running. During the audit, they will coordinate responses, ensure data accuracy, and craft your negotiation strategy if issues arise. A well-prepared team is less likely to make mistakes in the rush of an audit, and they can push back appropriately because they know their stuff.

Q27: Should we tell SAP about potential compliance issues before they audit us?

A: This is a delicate strategy. In general, you wouldn’t want to volunteer information about compliance gaps to SAP unless you plan to resolve it in a way that benefits you. Suppose you discover a minor shortfall you can easily correct (say you found 10 extra users and immediately bought 10 licenses quietly). In that case, there’s no need to flag that to SAP outside of normal true-up processes.

However, suppose you find a major issue you know SAP will catch (for example, a significant indirect use scenario), which could lead to a massive bill. In that case, some companies approach SAP proactively to negotiate a resolution (like opting into a new license model or phasing out the usage). The advantage of doing so could be leveraging an ongoing negotiation or an upcoming contract renewal to get better terms rather than facing an audit surprise.

The risk is that you alert SAP to a problem they weren’t yet aware of, which might prompt an audit or a hardline stance. So, the rule of thumb is to handle what you can internally. If it’s unfixable internally and would be disastrous in an audit, consider discussing it with SAP under a broader negotiation context, ideally with legal advice and maybe an expert negotiator. But tread carefully – once SAP knows, you can’t put the cat back in the bag.

Q28: Can training our employees help with SAP audit compliance?

A: Absolutely. User behavior is a big factor in license compliance. You reduce accidental non-compliance by training employees and administrators on proper SAP usage. For instance, train your IT staff on correctly assigning license types when creating user accounts (so they don’t just give everyone a costly license or, conversely, the cheapest license regardless of role).

Educate business users about not using unauthorized third-party tools with SAP without checking with IT. Make sure everyone knows not to create generic shared accounts. Even basic awareness, like department heads knowing that adding five new people to SAP might require license coordination, can help.

Additionally, if you have a decentralized environment, train local admins on how to retire users when they leave or change jobs. SAP-specific training can help, too—e.g., showing users how to run certain reports without needing a higher license role.

A culture of compliance and awareness means fewer surprises. It’s been noted that companies with regular staff training on SAP licensing tend to have fewer issues surface during audits. So yes, training is a preventative measure that can pay off by keeping everyone aligned with licensing do’s and don’ts.

Q29: Should we hire external experts to help with SAP audit preparation?

A: If you lack in-house expertise or have a complex SAP landscape, engaging an SAP licensing expert or consultant can be very beneficial. These experts (often former SAP auditors or specialized firms) know the audit process inside out and can spot issues you might miss. They can conduct a professional license assessment, help optimize license allocations, and guide your internal team in data collection.

It’s like having a coach for the big game—they ensure you’re practicing the right drills. Moreover, if an audit does happen, an external expert can assist in communicating with SAP, rebutting questionable findings, and advising on negotiation tactics.

However, weigh the cost-benefit: for a smaller company with a straightforward SAP use, you might handle it internally. For a large enterprise with multiple SAP systems, thousands of users, or heavy indirect scenarios, the cost of a consultant is often justified by the potential savings (they might help you avoid millions in fees).

Even having an expert do a one-time audit readiness review can be helpful. In summary, it’s not mandatory to bring in outside help, but it’s a wise move if your team is unsure about the intricacies of SAP licensing. Ensure any consultant has a solid track record and is truly independent (not trying to sell you more software but to defend your interests).

Q30: What’s the best way to practice or simulate an SAP audit with our team?

A: Running a tabletop exercise or role-play can be an effective practice method. Assign someone on your team (or a consultant) to act as the SAP auditor. This person would issue a fake audit notification to your team, requesting specific data. Then, have your team go through the motions – gather user reports, run USMM in a sandbox, fill out any self-declaration forms (for engines or indirect usage), and present the “results.” After that, critique the outcome internally: Did we find any compliance issues? How long did it take to get the data?

Were there any fields or information we didn’t readily have? This rehearsal can expose procedural gaps (maybe you discovered it’s hard to get a consolidated user list because different units manage users differently). It also helps reduce anxiety—your team will be more confident, having gone through a simulated audit once.

For added realism, you could use last year’s data and see what SAP would have found if that were an official audit. If you want to go further, practice the negotiation phase too: say the mock auditor “finds” 100 overused licenses, then let your team practice formulating a response or settlement proposal. By doing all this in a low-stakes environment, you’ll perform much better when the real audit comes.

Defending Against SAP Audit Findings

Q31: We’ve received an SAP audit report with compliance findings – what should we do first?

A: First, stay calm and analyze the details. The audit report will list areas where SAP believes you’re non-compliant – e.g., “X number of users over license”, “Y package metric exceeded by Z amount”, or “indirect usage not licensed for ABC system”. Take the time to verify each finding against your data. For each point:

Do you agree it’s accurate? Sometimes, SAP’s analysis might count a user twice due to a spelling difference or assume an interface is unlicensed when you have a license covering it. Cross-check the user names, license counts, and system data with what you know. Finding errors or overestimates is common, so document any discrepancies on your end.

Also, review your contract to see what it says about each item—it may be that SAP applied a policy that wasn’t in your agreement. Once you have a clear understanding, you can prioritize the findings (which ones are correct vs. which you will dispute).

Don’t rush to pay or respond aggressively; do your homework so you can approach SAP from an informed position. Showing that you have thoroughly dug into the report often makes SAP more willing to negotiate or clarify points because they see they’re dealing with a knowledgeable customer rather than someone who’ll just accept the report at face value.

Q32: How can we challenge or dispute SAP’s audit findings if we believe they’re wrong?

A: You have every right to challenge any audit findings you believe are inaccurate or interpretations you disagree with.

The key is to base your challenge on facts and contract terms:

• Provide Evidence: If SAP says you have 100 unauthorized users and believe some were retired, show the audit team your evidence (e.g., those user IDs were locked on a certain date, or they are test users not used productively).
• Clarify Usage: Sometimes SAP might misinterpret how you’re using a product. For example, they might count an engine as “in use” because data is present, but maybe you weren’t actively using it. Explain the situation and provide supporting logs or documents.
• Contractual Arguments: Point to specific language in your contract. If the contract’s metric definition differs from how SAP calculated it, politely highlight that. For instance, “Our contract defines Named Users as active human users, and we have 50 service accounts included in the count that shouldn’t be considered Named Users per the agreement.”
• Engage in Discussion: Often, SAP auditors will consider your feedback. They may escalate your disputes to SAP compliance managers. Be persistent but professional – ask for clarification on how they arrived at the numbers.
• Indirect Use Disputes: If it’s about indirect access, this is a gray area. You might argue that certain indirect usage falls under an existing license or that it’s read-only access that does not require a license. SAP might not immediately agree, but raising these points sets the stage for negotiation.
  Remember, an audit report is not a final verdict; think of it as SAP’s opening statement. You can and should respond with your perspective. Companies have managed to reduce findings by providing additional context or corrections. If needed, bring in your legal counsel or a licensing expert to articulate the challenges clearly. Always keep written records of your communications during this phase.

Q33: How do we negotiate unfavorable audit findings to reduce costs?

A: Negotiating an audit outcome is much like any business negotiation – you need leverage, a clear ask, and sometimes creativity.

Here are strategies to consider:

• Validate and Prioritize: There may still be valid shortfalls after challenging what you can. Prioritize the most costly items. Perhaps you’re short 50 Professional User licenses – a must-fix, whereas an engine being 5% over might be minor. Focus your negotiation on the big-ticket items first.
• Seek Discounts: SAP’s initial remedy will be to “buy the missing licenses at list price plus back maintenance.” You should rarely accept the list price. Just like purchasing new software, negotiate a discount or waivers. If the audit is near your fiscal year-end or SAP’s quarter-end, they may be extra motivated to deal.
• Bundle with Future Needs: If you know you’ll need more SAP licenses or products in the future, use that as leverage. For example, “We’ll agree to purchase these 50 licenses now if SAP gives a discount and also gives us a better price on an additional 100 licenses for our expansion next year.” You can sometimes bundle an audit true-up with a larger purchase or renewal to get a package deal.
• Payment Terms: If the bill is huge, negotiate payment terms or phased licensing. Perhaps commit to some licenses now and next year when the budget allows. SAP would rather lock in future revenue than have you outright refuse.
• Explore Alternatives: Discuss alternative licensing models. If indirect access is an issue, propose adopting the Digital Access document model at a special rate to resolve it instead of buying a ton of named user licenses. SAP had a program (DAAP) that offered up to a 90% discount on document licenses for those converting. Use that knowledge.
• Executive Escalation: If negotiations stall with the audit team, involve your SAP account executive or higher management. They often have more flexibility. Clear that you want a fair outcome that doesn’t wreck your relationship or budget.
  Keep the tone cooperative but firm – you acknowledge SAP’s right to compensation for genuine use and expect fair commercial treatment. Document everything and get any settlement agreement in writing, with language that resolves the findings fully so it’s not brought up again. Many customers find that SAP is willing to negotiate significantly, especially if you’ve been a good customer or have future projects with them. They prefer a negotiated settlement over a sour relationship or legal fight.

Q34: SAP claims we owe a lot for indirect access – how can we defend or reduce this?

A: Indirect access findings are often the most contentious and expensive.

Here’s how to defend and mitigate:

• Scrutinize the Claim: Ask SAP to detail exactly which interactions count as indirect use and how they calculated the license requirement. They might say, “System X accessed SAP 10,000 times, equivalent to Y users or Z documents.” Understanding this lets you pinpoint if they over-counted (e.g., maybe many accesses were by a single licensed integration user, not multiple users).
• Legal Stance: Check your contract for indirect usage language. If it’s not clearly defined, you have a bit of leverage – it becomes a negotiation of interpretation. You can argue that some access was “read-only” or that you believed a gateway (like SAP PI) covered it​. These arguments were made in the famous Diageo case (though Diageo lost, it highlighted the ambiguity).
• Propose Digital Access Conversion: SAP’s Digital Access model might be a way out. If SAP says you need 500 extra user licenses for indirect use, calculate the cost of going to Digital Access documents instead. Often, SAP will be open to a deal where you adopt Digital Access (which they’ve been encouraging) at a special price to resolve the indirect usage. This can eliminate back-maintenance fees and dramatically cut costs.
• Show Restraint or Changes: If some indirect usage is no longer happening (maybe it was a legacy system that is now decommissioned), bring that up. “We had System X connected, but it was turned off last quarter, so we’re willing to license the past, but going forward, that usage is gone.” This may help waive ongoing license needs.
• Negotiate a Cap: In some cases, customers negotiate a one-time fee for all indirect use up to that point, agreeing to manage it better in the future. You close the issue with a fixed settlement rather than an ongoing license count.
  Dealing with indirect access is tricky because it often feels like a gray area tax. Your best defense is a combination of factual clarification (maybe the impact isn’t as big as SAP’s first calculation) and commercial negotiation. Don’t be afraid to push back – SAP knows indirect access is controversial and tends to be more flexible if you engage constructively.

Q35: Can our contract terms help us defend against certain audit findings?

A: Yes, your SAP contract is your primary shield. It’s the ultimate reference for what you owe and what SAP can rightfully charge. Some ways contract terms can defend you:

• Definitions: If SAP’s audit claims something not defined in the contract, you can dispute it. For example, suppose they charge for indirect use, but your contract doesn’t mention “indirect” or “third-party interfaces” explicitly. In that case, you have room to negotiate since it’s not a clear contractual obligation.
• License Specifics: Your contract may contain specific metrics or use rights. The contract wins if an auditor uses a generic standard, but your agreement has a different metric. For example, maybe your contract says your SAP Professional users can also use SAP CRM without extra licenses. If the audit tried to count CRM users separately, you can point to the contract clause.
• Audit Clause Limits: Some contracts limit audits—for example, SAP can’t audit more than once in a 12-month period, they must give 30 days’ notice, or they should disturb business as little as possible. If SAP is overstepping (say, they come back 6 months after an audit for another), you can push back using that clause.
• Resolution Period: Check if your contract gives you a grace period to cure compliance issues. Some agreements allow a period to purchase needed licenses after an audit without penalty. If you have that, use it to argue against any back-dated fees.
• Expired Products or Shelfware: If you have licenses you no longer use, ensure SAP isn’t double-charging. For instance, if you swapped certain licenses via contract amendments, ensure the audit doesn’t count both old and new.
  You might need your legal team’s help to use contract terms in your defense. Always communicate to SAP regarding the contract: “According to section X of our agreement, we are allowed Y, so this finding should be adjusted.” It frames the discussion in a way SAP must respect. It’s also why knowing your contract inside-out is crucial when heading into audit discussions.

Q36: How should we involve our legal team in the audit defense process?

A: Involving legal counsel – either your in-house lawyers or an external attorney experienced in software licensing – can strengthen your position. They can help in several ways:

• Contract Interpretation: Legal can parse the exact wording of your SAP agreements to find nuances or defenses as discussed. They’ll ensure you’re correctly asserting your rights.
• Communications: You might have your legal team draft or review correspondence to SAP, especially if things get contentious. Wording matters – you want to be firm about disputing certain points without inadvertently admitting liability. Lawyers are good at that careful phrasing.
• Negotiation Strategy: If the amounts are large, legal might advise on a settlement strategy or even the possibility of litigation/arbitration if negotiations fail. While going to court is rare (and undesirable), the fact that you are legally involved signals SAP that you’re prepared to defend your rights.
• Protecting Privilege: If you have sensitive internal analysis (like you did find a violation), involving legal can sometimes cloak certain discussions under attorney-client privilege. That way, those frank assessments wouldn’t be exposed if it escalated legally.
• Final Agreements: Any settlement or resolution of the audit findings should be reviewed by legal. They’ll ensure that you aren’t agreeing to unfavorable new terms or waiving important rights by signing it. For example, they might add language to protect you from the same issue being raised again.
  In summary, legal should be consulted early, once the audit report comes in, if not from the notification stage. They provide a layer of defense and rigor. Many companies treat an SAP audit like a legal/compliance matter (like a tax audit) – they let the lawyers manage the process with the support of IT and procurement rather than just treating it as a procurement negotiation.

Q37: Should we accept SAP’s initial audit settlement offer or push for more favorable terms?

A: It’s almost always in your interest to push for more favorable terms. SAP’s initial offer to settle an audit (whether it’s a quote for additional licenses or a payment demand) is just a starting point.

They often expect customers to negotiate. If you accept the first offer, you’re likely leaving money on the table.

Consider these points before accepting:

• Is the pricing fair? Often, the first offer might be list price or close to it. Most customers have discounts in their original purchase; you should aim for at least similar (if not better) discount levels for any true-up licenses.
• Back Maintenance Waiver: If SAP wants back maintenance fees (support fees for the period you used unlicensed software), see if you can waive or reduce those. These fees add up, and SAP has been known to forgive some or all of them as part of a negotiation, especially if you commit to proper licensing moving forward.
• Future Protection: Try to bake in protections. For example, if you settle on indirect access by buying some licenses now, ensure the agreement states this resolves any past indirect use claims. Or if you’re buying a bunch of licenses, perhaps ask for a cap or a clearer definition for the future to avoid repeat issues.
• Payment Flexibility: Perhaps you can accept the license count but ask to spread payment over two years or to co-term the new licenses with your existing maintenance cycle. SAP might accommodate to close the deal.
  Of course, if SAP’s initial proposal is surprisingly reasonable and fits your budget, you might take it – but that’s rare. They typically have room to sweeten the deal. By respectfully pushing back and presenting a counter-proposal, you show procurement savvy. Remember, the SAP audit team’s goal is to reconcile compliance, but SAP as a company also wants to keep you as a customer. They have an incentive to find a win-win. That first offer shouldn’t be the final answer unless the negotiation has already been stretched out and you’ve gotten concessions.

Q38: What if we strongly disagree with SAP’s audit claims? Can we escalate or take legal action?

A: You can escalate if negotiations break down and you believe SAP’s claims are truly unfounded or unreasonable. First, escalate within SAP: involve your SAP account executive, regional managers, or even SAP’s customer advocacy units.

High-level SAP reps might take a more business-friendly view and seek a compromise. You can also seek arbitration or mediation if your contract provides for it (some contracts have dispute resolution clauses). As a last resort, there’s litigation – suing or awaiting SAP to sue for license fees – but that path is costly and relationship-damaging. Companies have fought SAP in court (the most notable being the Diageo case in the UK and another involving AB InBev); in public cases, SAP has often prevailed, or the cases settled privately.

This implies SAP’s contracts are usually solid, but a court might side with you if you have a unique situation or ambiguous contract terms. Still, going to court means big legal bills and uncertainty. The mere threat of litigation can often bring SAP back to the table – they generally prefer a negotiated solution over public fights.

If you plan to escalate this far, ensure leadership is on board because it will impact your SAP partnership. Also, double-check that the financial stake truly warrants it. In summary, yes, you can escalate beyond the audit team. Theoretically, you can take legal action – but exhaust all channels to negotiate a fair settlement first, as that’s almost always a better outcome.

Q39: Should we involve our SAP account manager or executives in audit negotiations?

A: In many cases, yes. Your SAP account manager (sales representative) is vested in maintaining a good relationship and selling you more products in the future. While the audit is run by SAP’s compliance team (which operates independently of sales), the resolution often involves purchasing licenses – which is very much a sales matter.

Bringing your account manager into the loop can help: they might advocate internally for flexibility or discounts to keep you a happy customer. They may also bundle the audit resolution into a larger deal (as mentioned earlier), which could benefit both sides. In some instances, SAP account executives can obtain approvals for special discounts or concessions if it means closing a renewal or preventing a customer from walking away.

However, use this approach judiciously – if the audit is contentious and you’re considering a legal dispute, you might keep communications formal. But in most scenarios, looping in the account team (and even higher executives or your SAP partner manager if you have one) can add pressure on the compliance side not to be overly punitive.

One word of caution: the sales team’s goal is to sell, so ensure any proposal they push aligns with your interest (don’t let them convince you to buy some new SAP product you don’t need as part of the settlement unless it truly provides value to you). Keep the conversation focused on resolving the compliance issues cost-effectively.

Q40: Can committing to future SAP purchases help resolve audit findings at a lower cost?

A: Yes, this is a common strategy. Suppose you indicate to SAP that you plan to make a significant future investment (like migrating to S/4HANA, expanding users, or buying a new cloud product). In that case, SAP may be more lenient or generous in the audit settlement.

Essentially, you’re leveraging future business as a bargaining chip. For example, you might say: “We’ll purchase these 30 required licenses now, and we’re also looking at SAP Ariba next year. In light of that, we’d like a discount on the audit licenses and perhaps credit for two years of back maintenance.”

From SAP’s perspective, they might accept a lower immediate payment if it secures a larger sale down the road. Another scenario is bundling the audit true-up with a renewal. If your maintenance renewal is coming, you could negotiate the audit resolution as part of that package, sometimes getting a better overall deal. This approach should be genuine – don’t promise things you won’t do.

But if you were already considering some SAP expansion or purchase, timing the discussion alongside the audit can turn a painful situation into an opportunity. Ensure any agreement clearly states what you’re committing to and what SAP offers (e.g., “Customer will purchase X by date Y, SAP will waive Z fees or apply N% discount on current shortfall”). That way, both sides have clarity. This kind of win-win negotiation moves the conversation from adversarial audit mode to a partnership mindset, often leading to better customer financial outcomes.

SAP License Optimization Strategies

Q41: How can we identify and remove unused SAP licenses to cut costs?

A: Start by identifying inactive users – these are users who have SAP accounts but haven’t logged in or used the system in a long time. SAP systems track last login dates, and you can run reports to find users who haven’t used SAP in, say, 90 days or 180 days. Those accounts can likely be removed or at least set to inactive. Each inactive account you retire frees up a license that can be reallocated to someone else, potentially avoiding a new purchase.

One company found that 20% of its named users were tied to people who had left the organization; cleaning those up dramatically reduced the license count. Also, watch for role changes – if a user moves to a non-SAP role, they might not need access anymore. Another area is duplicate users (as discussed before); cleaning those ensures you’re not double-counting. Some tools automatically scan for inactive or duplicate accounts.

Process-wise, establish a quarterly review of user lists: work with HR so that whenever an employee leaves, there’s a trigger to remove their SAP access promptly. By continuously purging unused accounts, you keep your active license count as low as possible, which saves on maintenance costs and future purchases. And remember, an inactive license still costs you maintenance fees annually if you don’t terminate it – so it’s money for nothing until you remove it.

Q42: How can we optimize license types to avoid over-licensing users?

A: License optimization means giving users the cheapest license type that meets their needs. This requires analyzing the transactions and activities each user performs in SAP. For example, you might find that many users categorized as “Professional” only run reports or do basic data entry – tasks that a cheaper “Limited Professional” or “Employee” license would cover. By downgrading those users, you free up expensive license allocations.

Usage analysis might reveal that out of 100 Professional users, 30 never use advanced features. Downgrading those 30 could save a lot (Professional licenses often cost multiples of an Employee license). On the flip side, make sure no one doing heavy tasks is on too low of a license (that’s under-licensing and will bite you in audits).

Tools from Flexera or Snow can help map actual usage to suggested license types, or you can use SAP’s logs (ST03N transaction analysis, etc.). It’s wise to pilot this: pick one department, review their usage, adjust license types, and see if anyone’s work is impeded. If not, roll it out more broadly. Also, consider time-of-day or seasonal usage – some users might only need a higher license occasionally.

If SAP allows named licenses to be reassigned (and they usually can be when someone’s job changes), you could swap license types during the year as needed.

Keep records of why a user is assigned a certain type. Continual rightsizing like this is one of the best ways to reduce recurring costs. You might be surprised how many users have historically been over-classified just out of convenience.

Q43: What’s a quick way to find underutilized SAP licenses?

A: One quick win is to look at transaction usage frequency. Many SAP installations have logs (like ST03N workload analysis) that show how often each user runs transactions. If you find users with barely any activity (or only very light activity like viewing data), those users might not need a “power user” license. Another quick approach is checking user roles: users with read-only roles might be candidates for a cheaper license type.

Also, consider any modules that are lightly used. If you have an engine licensed for 1000 inputs but you only ever use 100, perhaps you can scale down the license in the next negotiation. “Shelfware”—licenses you bought but never deployed fully—often sit unnoticed. A classic example is a company that had 100 developer licenses but only 50 actual developers; the rest were just in case.

That’s 50 licenses worth of shelfware you could potentially negotiate away or use elsewhere. Running SAP’s LAW tool effectively highlights duplicates (so you can quickly recoup duplicates a single use). Talking to department heads can yield insights: maybe a team says, “We have SAP accounts but haven’t used them since Project X ended.”

Those are licenses you can reclaim immediately. By systematically rooting out these underutilized areas, you can reduce your maintenance spend (drop unnecessary licenses at renewal if possible) or use the licenses for new users instead of buying more. It’s about ensuring every license either serves a purpose or is eliminated.

Q44: What third-party tools can help with SAP license optimization?

A: Specialized Software Asset Management (SAM) tools focus on SAP. Notable ones include Snow Optimizer for SAP, Flexera’s SAP module, Voquz (SAMSon), USU License Management, and others. These tools plug into your SAP environment and gather detailed usage data automatically. They can identify inactive users, duplicate users across systems (sometimes better than SAP’s LAW if data is messy), and even analyze transaction patterns to recommend the optimal license type for each user.

For example, Snow’s SAP tool might show that User A only executes basic HR transactions and could be downgraded from Professional to Employee, saving a license cost. They often have dashboards that track your license consumption versus entitlements in real-time so you can proactively manage it. Additionally, these tools can simulate license compliance: input your contract entitlements, and the tool will flag if you’re over in any category.

Another advantage is monitoring indirect usage – some tools detect RFC calls or background service accounts that might indicate indirect access, alerting you to a potential compliance issue. While these tools come with their own cost, medium to large SAP shops find that the savings they uncover outweigh the expense.

They’re like having an automated license auditor on your side constantly. Even if you don’t use a dedicated SAP SAM tool, general SAM suites like ServiceNow SAM or Certero have SAP capabilities. The key is to move beyond spreadsheets; these tools give a level of insight manual tracking can’t easily achieve.

Q45: How can SAP’s License Administration Workbench (LAW) help optimize licenses?

A: SAP’s LAW tool is mainly meant for audit preparation but is also useful for optimization. LAW aggregates user data from all your SAP systems to ensure one person = one license. By running LAW, you might find, for example, that “John.Doe” in the ERP system and “jdoe” in the CRM system are the same person – LAW helps combine them.

This prepares you for an audit (so you don’t double-count) and lets you see your landscape’s true unique user count. Often, companies over-purchase licenses because without LAW, they see, say, 1000 accounts across systems and assume 1000 licenses needed, when in reality, it might be 800 people with accounts in multiple systems.

LAW will output a consolidated user list that you can then optimize: check that list for any names you don’t recognize (could be obsolete) or people who left. Also, LAW lets you mark certain accounts as tests or duplicates ahead of time via mappings (the “multi-client” user concept). If you use LAW proactively, you can set those mappings so that SAP does not count them during audit time.

Also, LAW’s output shows how many users are assigned to each license type across the landscape. That’s a great overview for spotting anomalies (why do we have 300 professionals in system A but only 100 in system B of similar size?). While LAW doesn’t suggest optimizations, it gives you the data foundation to act on. Think of LAW as the truth reconciler – use it periodically (not just when SAP asks) to keep your license counts honest and optimized.

Q46: Can we reassign or reuse licenses from employees who left or changed roles?

A: Yes, most SAP licenses are reassignable if you follow the rules. A named user license isn’t tied to a specific person forever, regardless of circumstances; it’s tied to an individual while they are using SAP. You can reassign that license to another user if that person leaves the company or no longer needs access. SAP’s contracts usually allow the reallocation of user licenses, though sometimes they ask that you document it.

The key point is that you cannot have more active users at once than you have licenses, but they don’t have to be the same users over the years. So, make it a practice to free up their license and add a new person under that license entitlement instead of buying a new one when someone exits.

For role changes, similarly, if someone moves from a heavy-use role to a light-use role, you could downgrade their license type and upgrade someone else as needed.

One caution: if you’re on older license contracts, check if any named licenses were “non-transferable” – that’s rare in SAP (more common in some other vendors). However, SAP-named user licenses generally float within your organization’s user pool.

Always keep an internal log of license reassignments (who had it, when they left, who it went to) to show a clear audit trail that you didn’t exceed the count, just reused it. This reassignment ability is a major cost saver, as it avoids purchasing licenses for new hires when you have departing users.

Q47: How can we manage SAP licensing during mergers or acquisitions to optimize costs?

A: Mergers and acquisitions are tricky but also present opportunities for license optimization. When companies merge, you might inherit new SAP licenses from the acquired entity (or vice versa). First, ensure you have the right to use each other’s licenses – typically, you’ll need to get SAP’s approval to transfer or combine licenses due to an acquisition (this is usually allowed, but paperwork is needed).

Once combined, eliminate overlaps: there may be duplicate users now in the combined company using two sets of licenses that can be consolidated. Also, standardize license types across the new organization; the acquired company might have classified users differently, so harmonize them to whichever is more cost-effective (with SAP’s agreement).

During a merger, SAP often audits to reconcile licensing. Still, you can turn that into a negotiation: you might have an excess of one license type and a deficit of another between the two entities – ask SAP to let you redistribute or convert some licenses.

For example, Company A had extra CRM user licenses, and Company B needed some; rather than buying new, negotiate to repurpose A’s surplus for B’s use. Also, watch out for contract consolidation: if each company has separate SAP contracts, decide if you’ll merge them or keep them separate.

Merging contracts could get you to a higher discount bracket due to volume, which is a win, but only if the timing and terms align. Lastly, in divestitures (the opposite scenario), try not to lose licenses you paid for – if a part of the business splits off, maybe you retain certain licenses or negotiate a give-back credit from SAP.

The overarching principle is to treat the licenses of both companies as one big pool and optimize as if you were one entity (which you now are) – but do it transparently with SAP. Hence, they bless the transfer and you maintain compliance.

Q48: What are some “quick wins” to reduce SAP license costs before an audit?

A: If an audit is looming or you just want to tighten up fast, focus on these quick wins:

• Archive Old Users: Go into each SAP system and remove or lock users who haven’t logged in within the last year. It’s low-hanging fruit and immediately reduces your named user count.
• Align License to Role: Pick a high-license-cost area (like Professional users) and spot-check a few. If you find someone in a junior role with a Professional license, downgrade them to the appropriate level. Doing this for even 10-20 users can make a difference.
• Monitor Indirect Points: Identify one or two major interfaces (like a connection to a third-party system). If possible, ensure they use a technical communication user and do not spawn many named user requirements. Maybe temporarily limit access or volume to cap any runaway indirect use.
• Clean-Up Test Systems: Test or training systems sometimes have many users, inflating LAW counts. Make sure all those users are either marked correctly (as test IDs) or removed if they are not needed.
• Talk to SAP Admins: Have a quick workshop with your SAP Basis/security team and ask, “Where do you see potential license waste?” Those on the ground often know, for example, that 50 generic accounts were set up for an expired project. Clean those up.
• Reclaim Developer licenses: Developer licenses are pricey. If contractors or developers no longer work on SAP, ensure their developer user is locked or converted to a cheaper license if they still need limited access.
  These actions can typically be done in days and won’t negatively impact operations (since you’re removing unused stuff). They can trim the fat and put you in a better position numerically. Just be careful to document what you changed if it comes up in the audit (“Yes, we locked these 100 dormant accounts as part of routine maintenance”). Quick wins won’t solve structural licensing issues, but they can reduce obvious overspending and tighten compliance in the short term.

Q49: How can we reduce ongoing SAP maintenance costs on licenses?

A: SAP maintenance (annual support fees, typically ~20% of license cost) can be a significant yearly expense. Reducing these costs often ties back to optimizing the number of active licenses you have. One approach is terminating unused licenses from your maintenance coverage. If you identify, say, 100 licenses that you truly don’t need anymore (maybe you downsized a division), you can attempt to terminate those licenses, which stops the maintenance fees on them.

SAP’s standard contracts don’t make this easy—they often don’t allow dropping licenses without a fight, but customers have negotiated this during renewals or big contract changes. Another path is shelfware reduction: If you bought licenses that never got deployed, see if SAP will credit them towards something else.

For example, “We have 50 unused CRM licenses; can we swap them for 50 needed ERP licenses?” This isn’t guaranteed, but SAP sometimes allows a one-time conversion as part of a new deal (especially if moving to S/4HANA). Some companies consider third-party support providers for SAP (like Rimini Street) to replace SAP maintenance at a lower cost.

However, going third-party support usually means no new licenses or software updates, so it’s a big decision outside pure audit scope. A simpler tactic: ensure your license count is right-sized each year before you pay maintenance. If you can drop any excess (with SAP’s agreement), do it before the maintenance invoice hits.

Also, consolidate contracts if you have multiple – it can give you leverage to negotiate a lower support percentage or simplify management. Essentially, every license you retire or don’t own is maintenance you don’t pay. So optimization and maintenance savings go hand in hand.

Q50: What long-term practices keep SAP license usage optimized?

A: License optimization isn’t a one-time project; it’s an ongoing process. Here are long-term practices to institutionalize:

• Dedicated License Management: Assign a person or team to continuously monitor SAP usage. This could be part of a SAM team or an SAP center of excellence. They should have visibility into user onboarding and offboarding, project changes, etc.
• Join SAP User Groups: Many regional SAP user groups have licensing workgroups sharing best practices and tips. Staying connected can warn you early about audit trends or new license models.
• Periodic Internal Audits: As mentioned earlier, run an audit-like process annually. You could even schedule it 6 months offset from SAP’s cycle, so you always have a recent internal check compared to SAP’s audit.
• Automate Monitoring: Use scripts or SAM tools to flag anomalies monthly. For example, an automated report of any user-created with a Professional license in the last month—review those to ensure they truly need that level. Little automated checks can catch gradual creep.
• Governance for Changes: Whenever you plan to deploy a new SAP module or integrate a new third-party system, involve your license manager in the project approval. They should assess the licensing impact before going live. This prevents nasty surprises (like a team going live with an unlicensed add-on).
• Contract Reviews: Before any contract renewal or new purchase, review how you’re using what you have. You might negotiate different license mixes. Also, keep an eye on SAP’s evolving models (such as SaaS offerings or bundled offerings like RISE)—sometimes, moving to a new model can reduce cost if it better fits your usage, but you need to analyze it.
• Audit Clause Negotiation: Each time you negotiate with SAP (even if it’s just for extra licenses), see if you can insert more favorable audit terms (like clearer indirect terms or a promise of a free soft audit before penalties). Over time, building better terms into your agreements will make future audits less painful.
  By making license management a part of your IT operations rhythm, you’ll steadily reduce waste and stay ahead of compliance issues. Companies that treat SAP licensing as a continuous discipline rather than a once-a-year scramble generally have smooth audits and lower costs over the years.

Legal and Contractual Considerations

Q51: What does the audit clause in SAP contracts typically allow?

A: Most SAP license agreements contain a clause that grants SAP the right to audit your usage of their software. Typically, it allows SAP to audit annually (some say no more than once per year) and requires SAP to give advance written notice (often 30 days) before the audit.

The clause might specify that the audit will be conducted during normal business hours in a way that doesn’t unreasonably interfere with your operations to protect you from overly intrusive audits. It also usually says you must reasonably cooperate and provide the information or access needed to perform the audit. Another aspect is that you’re on the hook for any under-licensing found, often requiring you to order additional licenses at the license fees in effect at the time of audit (which could be the current list price).

Some contracts also have language about paying “applicable maintenance fees” for the period of unlicensed use. However, many contracts do not specify penalties beyond purchasing the licenses – interest or penalties aren’t typically enumerated, leaving that up to SAP’s discretion (and your negotiation). Importantly, the audit clause is one-sided – it gives SAP rights, not obligations, so it rarely limits what SAP can charge except by implication of the contract terms.

As a customer, understand this clause to know SAP’s rights (and limits). For example, if SAP shows up more than once a year without cause, you could refer to the contract to decline the extra audit. Or if they give only 5 days’ notice, you could push back for the contractually stated notice period.

Q52: How does SAP define the “Use” of software in their contracts, and why is that important?

A: SAP’s definition of “Use” in their license agreements is typically very broad. It often goes along the lines of: “Use is the activation of the processing capabilities of the software, or the operation of the software, or the accessing, processing, or storing of data using the software.” In plain terms, any interaction with the SAP software counts as use.

This broad definition is critical because it underpins the scope of what requires a license. For instance, by SAP’s definition, if data is input into SAP (even by a non-SAP system), that’s “Use.” If a user views or extracts SAP data via an API, that’s also “Use.”

Many customers are surprised that even read-only access or indirect data exchange constitutes usage, but SAP covers that contractually. Knowing this, you realize why SAP pursues things like indirect access; their definition of use covers it unless explicitly carved out. Also, the definition of “Use” ties into metric definitions.

If you have a license metric like “orders processed per year,” SAP would consider an order processed by any means (manual or automated) as counting. In an audit or dispute, if you argue, “We didn’t use SAP; the data was just in SAP,” the counter will be that having data reside in or pass through SAP is indeed “Use” per contract.

The takeaway: Read your contract’s definition of Use (usually in the Definitions section). If you see anything unclear or overly expansive, clarify it during contract negotiation. It sets the stage for what SAP can claim as licensable activity.

Q53: Can we negotiate our SAP contract to limit audit surprises or unfavorable terms?

A: Yes, savvy customers try to negotiate contract terms that give them better protection and clarity. Some areas to consider:

• Audit Process Terms: You might negotiate a longer notice period to conduct audits at certain times of the year only or limit the audit to certain environments. Some have negotiated that an independent third party performs the audit instead of SAP directly (not common with SAP, but possible in theory).
• True-Up Period: A useful clause is an “annual true-up” or cure period. This would allow you to report any license shortfalls and purchase the needed licenses at regular prices, say once a year, without penalties. If you can get SAP to agree to that, then an audit wouldn’t be punitive as long as you true up in good faith.
• Indirect Use Clarity: This is a big one. Try to explicitly define what constitutes indirect use and what fees would apply. If you know certain interfaces exist, write them into the contract as permitted. SAP started providing an “Indirect Static Read” clause in some contracts (allowing certain read-only access without a fee) – ensure you have that if it applies.
• License Flexibility: If your user counts fluctuate, negotiate provisions that let you swap license types or redeploy licenses across affiliates freely. For example, a clause that allows conversion of some Professional users to Limited users annually can help adapt to changes.
• Merger/Divestiture Language: Include clauses allowing license transfer to an affiliated company or a divested entity without fresh fees (or with a one-time transfer fee). This prevents SAP from using an M&A event to force new licenses.
• Caps or Limits: Getting SAP to cap audit liability is tough, but you could attempt something like “penalties (back maintenance) will be limited to 1 year” or similar. Or at least clarify that license fees are not listed at a contracted discount.
  Remember that SAP won’t readily give these, especially to smaller customers, but it’s more likely during a big purchase or renewal when you have negotiation leverage. Anything you can get in writing that pre-defines how things are handled is better than leaving it to SAP’s standard policies. If you lack these terms, plan to negotiate them in your next renewal. A well-negotiated contract is your best defense in an audit, turning many “surprises” into non-issues because you already agreed on how to handle them.

Q54: Which SAP contract clauses or definitions commonly lead to disputes?

A: A few recurring culprits in SAP contracts often lead to later disputes if not crystal clear:

• Indirect Access: If the contract does not explicitly address indirect use, it’s a ticking time bomb. Many older contracts did not mention it, and SAP relies on the broad “Use” definition to enforce it. This gap has led to high-profile disputes (like Diageo, where neither side had defined it clearly). Nowadays, SAP might include the Digital Access documents approach or some wording. If yours doesn’t, this is commonly contested in audits.
• Named User vs. Concurrent User: SAP uses named user licensing, but some customers mistakenly think they have “concurrent” users (sharing licenses among a pool). If any language in the contract is misinterpreted, it can result in a dispute. It’s usually clear, but misunderstandings occur.
• Engine Metric Definitions: If you have a peculiar metric (say “orders” or “revenue” or “employees”), make sure how that metric is counted is well defined. There have been cases where, for instance, “employee” count – does it include part-timers? Contractors? – was debated, causing audit friction.
• Territory or Entity Restrictions: Some contracts license SAP for use by certain legal entities or certain geographies. SAP could raise an issue if your organization uses it outside that scope. Customers sometimes didn’t realize a subsidiary wasn’t covered.
• Multiplexing/Batch: SAP often has clauses stating that using intermediary software or batch processes doesn’t reduce license requirements (the “multiplexing” clause). This clause is a catch-all to prevent avoiding licenses via proxy systems, and it has led to arguments about whether a customer tried a technical workaround.
• Third-Party Access: If you allow business partners or customers to access your SAP system (e.g., through a portal), the contract should ideally address that (like specific license types for external parties). If not, SAP will likely demand they be licensed, which could be disputed if you assume otherwise.
  The lesson is to comb through your contract for anything ambiguous and clarify it before you have an issue. An audit is a bad time to realize something is vague. Engaging a legal expert to review your SAP agreement can preempt many disputes. If you’re already in a dispute, these are the clauses lawyers focus on to see who has the stronger footing.

Q55: How do audit rights differ for SAP cloud subscriptions vs. on-premise licenses?

A: For SAP’s cloud services (like SuccessFactors, Concur, SAP S/4HANA Cloud, Ariba, etc.), the concept of an “audit” is a bit different. On-premise, you control the environment, and SAP audits you. SAP provides the service in the cloud and usually has visibility into usage.

Cloud contracts often include terms that SAP can monitor your usage and that you agree not to exceed certain limits. If you do, SAP typically can charge for overage or require an upgrade – this is more of an automated enforcement than a formal audit process.

That said, cloud agreements sometimes allow SAP to check your compliance with terms (for instance, the number of users activated in SuccessFactors versus purchased). They may request that you certify user counts periodically. The audit clauses for the cloud might simply state that SAP can verify you’re using the service within the scope of your subscription.

The big difference is that if you exceed usage with the cloud, SAP’s remedy is often immediate (additional fees or reduced functionality) rather than a backward-looking penalty. Also, SAP cloud products are subscription-based, so every renewal is an audit point – they’ll reconcile how many users or documents you used and adjust your renewal quote accordingly.

In practice, customers don’t get “surprise” cloud audits the way on-premise ones happen; it’s more continuous oversight. But you should still manage cloud usage carefully – e.g., don’t add 100 extra users thinking nobody will notice; SAP will likely see it in the system and invoice you.

Audit rights exist in cloud contracts but are exercised more via system controls and renewal true-ups than formal audit teams.

Q56: Can we legally refuse certain requests during an SAP audit (like access to sensitive data)?

A: You have a right to protect sensitive or confidential data, but you must also fulfill the audit somehow. SAP auditors should not require direct access to raw, sensitive data – usually ask for aggregated information (counts, license classifications, etc.). If an auditor ever asked for something like actual payroll records or employees’ data, you could push back for privacy reasons.

Typically, you can satisfy audit requirements by providing anonymized or summarized info. For example, if SAP wants user lists, you might give user IDs, license type, and last login, but you don’t have to hand over full names if that’s a concern (although usually that’s not an issue). If parts of your system are highly confidential (say, government classified data), you can arrange to run any queries yourself and just show results. The contract likely obligates you to cooperate, but it doesn’t explicitly say you must hand over all data unfettered.

It’s about showing compliance. Also, SAP audit teams usually sign NDAs by default, meaning anything you do share is legally protected as confidential. So leverage that – ensure there’s an NDA in place and limit the distribution of any data you provide.

If something seems beyond scope or invasive, you can get involved legally and negotiate an alternate way to satisfy the requirement. For instance, if SAP wanted to do a system scan, you might deny direct access but offer to run their tool under supervision.

In short, you can refuse specific methods or scope creep (politely), but not the overall obligation. Work with SAP to find a reasonable way to get them what they need without compromising your data security policies.

Q57: What legal defenses can we use if SAP overcharges or misinterprets our license usage?

A: Your best defenses are grounded in contract law and interpretation. If you believe SAP is overreaching, consider:

• Contract Ambiguity: In contract disputes, ambiguity can be interpreted in favor of the party that didn’t draft the contract (which is you, since SAP writes the standard contract). If an SAP term is unclear and SAP is stretching it to charge more, you can argue that your interpretation (which is more favorable to you) should govern.
• Estoppel/Conduct: If SAP previously knew about your usage and didn’t object, you might argue they can’t suddenly claim fees now (though this is hard to prove). For example, if for years SAP saw you connecting a third-party system in architecture diagrams and never said it needed extra licenses until now, you could use that in negotiation (“you implicitly approved this setup”).
• Mitigation of Damages: If SAP is demanding back maintenance or some penalty, you could argue that they have not incurred a “loss” in the legal sense beyond the license fee itself – especially if you weren’t receiving support for those unlicensed uses; why pay maintenance? This is more of a negotiation point, but it has some legal rationale.
• Good Faith: All contracts have an implied covenant of good faith. You can assert that you’ve acted in good faith and that SAP’s interpretation is opportunistic beyond the spirit of the agreement. Again, that’s soft, but it frames you as the reasonable party.
• License Scope: If SAP charges for something outside the scope of what was licensed (e.g., they try to charge for use in a category you never agreed to), you can flatly say that’s not part of the contract. For instance, if users license you and SAP tries to charge you by servers, the contract doesn’t include that, so you shouldn’t owe it.
  In practice, these defenses are usually used in negotiation as persuasive points. Your lawyers would bring these up in court/arbitration if it went legal. It rarely gets there because both parties often settle. But articulating these points shows SAP you know your rights and will not be steamrolled. It often leads them to compromise. A very concrete example: In one case, SAP hadn’t defined indirect use clearly; the customer argued in court that they shouldn’t owe licenses for it because it wasn’t specified – the court sided with SAP’s broad definition, but that was a risk for SAP. Knowing that SAP may prefer to settle with you rather than gamble a judge’s interpretation of an ambiguous contract clause.

Q58: What contractual considerations can protect us from audits during mergers or divestitures?

A: During M&A, reviewing and possibly updating your SAP agreements to reflect the new reality is important. Contractually:

• Transfer Rights: Ensure the contract allows the transfer or assignment of licenses to a new or merged entity. SAP usually requires approval, but they shouldn’t unreasonably withhold it in a bona fide merger. Get that in writing to avoid an audit claiming the other party’s use is unlicensed.
• Addition of Entities: If a new subsidiary will start using SAP, formally add them to the contract or notify SAP as required. Sometimes, an audit triggers because SAP sees a new company in your organization using SAP that they weren’t aware of; preempt that by updating the contract or usage rights.
• Consolidation of Contracts: If two companies with SAP contracts merge, you might consolidate contracts. Negotiate that carefully – pick the more favorable contract as the basis if possible. Also, during consolidation, negotiate adjustments: maybe you have overlapping licenses, try to return some or get credit. This negotiation can forestall an audit by proactively addressing the compliance in the new environment.
• Divestiture Use: If you’re selling a part of the business, decide if that part can continue using SAP (maybe under a transition services agreement) and ensure the contract covers that scenario. Possibly negotiate a clause for a temporary license extension to the divested unit to avoid immediate audit issues.
• Audit Timing: If you can, negotiate with SAP to hold off audits during the integration period of a merger. Some customers have gotten a 6-12 month grace period during which SAP agrees not to audit until things settle in return for transparency and a plan to reconcile licenses. This isn’t a typical clause but could be arranged via a side letter.
  The big risk in M&A is either having too many licenses (paying maintenance redundantly) or too few (combining usage exceeding entitlements). You can often secure a smoother path by working with SAP at the contract level while the deal is happening. Also, don’t forget to involve your legal team to ensure any amendments or new agreements properly reflect the new usage and protect you from being accused of unlicensed use for the new users or entities.

Q59: Is it beneficial to have a lawyer review our SAP contract before we sign or renew it?

A: Absolutely. SAP’s contracts are dense and written in SAP’s favor. A lawyer (especially one experienced in software licensing) can spot problematic language and suggest changes to protect you. For instance, they might catch that the indirect use clause is too open-ended and propose adding a clarification or limit.

They might suggest adding that true-up clause or adjusting an overly broad definition. When making a big purchase or renewal, you often have some leverage to negotiate terms – that’s when legal input is invaluable. They can also ensure that any promises made by SAP’s sales team are included in the contract. Verbal assurances mean nothing if the written contract contradicts them. Lawyers can also help align the SAP contract with your company’s standards (e.g., data protection and liability clauses).

Another key part is limits of liability – many SAP contracts limit SAP’s liability heavily. Still, maybe you want to ensure something like a data breach or confidentiality breach during an audit is covered. A lawyer will pay attention to those. If you already have the contract, a legal review before an audit can help interpret it (as we discussed). But the ideal time is before signing: preventing bad clauses is much easier than fighting them later.

In short, a legal review is beneficial because it can save you from costly misunderstandings or exposures. Think of it as buying insurance – hopefully, you never need to fight about the contract, but if you do, you’ll be in a much stronger position.

Q60: What if SAP’s audit process or conduct violates our contract terms?

A: If SAP oversteps what the contract allows in an audit (for example, audits too frequently, doesn’t give proper notice, or demands access beyond what’s reasonable), you should call it out and use it to manage the situation. Start by referencing the contract in communication: “As per section X of our agreement, SAP is to provide 30 days’ notice; we received only 10, so we need to adjust the schedule accordingly.”

That puts SAP on notice that you’re aware of your rights. If auditors ask for things that feel out of scope, you can say, “Our contract doesn’t specify an obligation to provide XYZ, so we’re willing to provide A and B, which should suffice.”

Most of the time, SAP will pull back if they realize they’re not in line with the contract – they must also operate within it. If the issue is serious (say an auditor did something like scanning your systems without permission, or you feel harassed), escalate to SAP compliance management and document the incident.

Extremes aside, often just holding SAP to the letter of the audit clause can buy you time or limit the scope. For instance, if the contract says one audit per year, and they try to start another too soon, you can politely decline based on that clause.

In the worst case, when SAP breaches the contract in the audit process, you could have a legal claim, but it usually won’t get there. It’s more of a negotiation tool – SAP wants to maintain that they follow their contracts, so pointing out a deviation gives you an upper hand in negotiating audit parameters in your favor.

Always remain professional. For example, “We’re happy to comply, but we need to ensure it aligns with our agreement terms, which currently allow X.” This sets a boundary. If necessary, involve legal to reinforce it. But typically, showing you know the contract is enough for SAP not to play loose with the rules.

Real-World Scenarios and Lessons Learned

Q61: What was the SAP vs. Diageo indirect access case, and what can we learn from it?
A: The SAP v. Diageo case (2017) is one of the most famous examples of indirect access becoming a legal battle. Diageo, a large beverage company, had an SAP system and allowed its Salesforce CRM to connect to SAP to pull data for sales and ordering.

Diageo believed that because they had a SAP Process Integration (PI) license (often thought of as a “gateway”), they covered Salesforce users. SAP disagreed, arguing each Salesforce user indirectly accessing SAP needed a named user license​. The UK High Court sided with SAP, leaving Diageo facing a claim of roughly £54 million in license fees​.

They had already paid tens of millions for SAP, yet this integration was deemed outside that. Diageo ultimately settled (so we don’t know the final amount, but it was a serious hit).

Lessons learned: (1) Don’t assume middleware or technical gateways protect you from licensing requirements – clarify it with SAP. (2) If you use third-party apps with SAP, explicitly license that scenario or get SAP’s written nod. (3) The court is a last resort; even though SAP won, the case was a PR wake-up call that led SAP to introduce the Digital Access model in 2018 to address indirect usage more fairly. (4) Contract ambiguity (Diageo’s contract didn’t nail down indirect use) tends to favor the vendor with the deeper interpretation – avoid that by tightening your contract language.

Ultimately, the case taught all SAP customers to take indirect access seriously and proactively manage it rather than find out the hard way.

Q62: Have companies successfully negotiated down large audit penalties?

A: Many companies have faced hefty initial audit bills and managed to negotiate them down substantially – often through settlements or by signing new deals. While specifics are usually confidential, anecdotal evidence and industry experts suggest it’s common.

For example, At one point, Anheuser-Busch InBev reportedly was on the hook for a staggering $600 million for indirect use. Still, that case was settled out of court for an undisclosed sum, almost certainly much lower than $600M. When SAP presents a huge compliance fee, customers rarely pay that sticker price in full.

They may agree to purchase some new licenses (maybe at a discount), or commit to a strategic partnership (like migrating to new SAP products), in exchange for SAP dropping or reducing the back charges. One strategy seen is converting a big audit finding into a longer-term contract – essentially, spreading the cost out as additional license purchases or subscriptions over a few years.

Another example is one company that faced a large compliance gap in engines. They negotiated a deal where they upgraded to a newer SAP product edition that bundled those engine rights, thus clearing the issue with a more modest increase in annual fees.

The key to all these is leverage and transparency—if SAP sees you’re willing to fix compliance but not at the absurd figure, they often come to the table. Conversely, companies who tried to stonewall completely have found SAP can be tenacious (and might escalate legally).

So, the success stories are usually those of those who engaged SAP in a solution-oriented negotiation and leveraged future business or the threat of a drawn-out dispute to get a palatable outcome.

Q63: What common mistakes have led to expensive SAP audit findings for other companies?

A: Several recurring mistakes show up in audit horror stories:

• Ignoring Indirect Access: As we’ve discussed, assuming that connecting third-party systems or giving external users access won’t need licenses. Diageo’s “gateway” assumption was one​. Many learned from that to thoroughly license any such scenario.
• Over-assigning Powerful Licenses: Some companies just give everyone a Professional license to avoid thinking about it. This isn’t a compliance risk per se (it’s over-compliance), but it’s a cost risk—they overspend massively. Conversely, some under-assign (everyone gets an “Employee” license) and hope to save money, which blows up in an audit. Striking the right balance by actual usage is key.
• Not Tracking Changes: One company merged and doubled its SAP users but didn’t update its license count. They thought they’d true up at renewal, but SAP audited first. The lesson: big changes (mergers, expansions) should trigger a proactive license review.
• Poor User Management: A classic mistake is failing to clean up users. We’ve seen cases where a customer was found to have hundreds of accounts that belonged to people who left years ago. They paid maintenance on those unnecessarily, and in an audit, they had to sort out which were real.
• Underestimating SAP’s Tools: Some admins didn’t realize SAP’s measurement tools could detect certain usage. For example, some thought if they named all external interfaces with a generic user, SAP wouldn’t notice the volume of docs—but newer audit tools did catch it. Never assume you can “hide” usage; it’s better to address it.
• Late Reaction: Several companies receive the audit notice and scramble to understand their license situation for the first time. This reactive approach often means they miss opportunities to correct things and accept SAP’s findings more than they should. Proactive management could have caught issues earlier.
  In sum, expensive audits usually result from a combination of not fully understanding SAP’s licensing rules and not actively managing usage. Each painful story (like Diageo’s) illuminates a specific oversight. The best practice is to learn from these: treat indirect access seriously, align licenses to roles, incorporate license checks into IT changes, and maintain hygiene in user/license management.

Q64: How can a merger or acquisition lead to an SAP audit, as seen in real scenarios?

A: Mergers and acquisitions often alarm SAP audits for several reasons. One, SAP knows that when companies merge, license entitlements and actual usage can get out of sync (for instance, combined usage might exceed what each had individually).

Two, SAP might see it as an opportunity to sell more licenses or newer products to the merged entity so that an audit can create that conversation. In real scenarios, companies that merged found themselves audited within the next year. For example, Company A buys Company B, both SAP customers. Suddenly, Company A is using SAP for a larger user base and maybe consolidating systems. If they don’t proactively reconcile their licenses, SAP’s audit could find that they have 20% more users than licenses (because they started using each other’s systems).

One IT services firm that merged with another recounted that SAP audited them six months post-merger and found overlapping use that wasn’t licensed under one contract. They had to quickly negotiate an agreement to merge the contracts and cover the gap. The clear lesson: when planning a merger, include a review of both companies’ SAP usage and entitlements.

Ideally, approach SAP with a plan to unify licenses – you might negotiate a deal rather than wait for the audit hammer. Also, realize that each company might have had an audit recently, but the merger resets the clock because the usage pattern changed. If you acquire a company using SAP, you essentially inherit their compliance risk.

Real-world tip: perform a license due diligence during the M&A process so any needed license costs are factored into the deal rather than discovered later by audit.

Q65: Can you give an example of a company that saved money by optimizing SAP licenses?

A: There are many case studies of companies that have saved significantly through license optimization. One example: A global manufacturer used a third-party tool to analyze its SAP user base and discovered that roughly 30% of its users assigned Professional licenses hardly used any advanced functionality.

They embarked on a project to reclassify those users to the cheaper Employee or Limited Professional licenses. This optimization saved them millions in maintenance and reduced their audit risk (since they were no longer “over-licensed” in one area while short in another). Another example: a large enterprise discovered over 1,000 inactive accounts still assigned licenses.

By cleaning those up and re-harvesting the licenses for new hires, they avoided buying several hundred new licenses that year. In a different case, a company realized they had a bunch of engine licenses for a CRM module they weren’t using. During their S/4HANA migration negotiations, they traded those in for credit towards needed licenses (essentially not paying twice for shelfware).

Also, companies that invested in SAM tools often reported savings: e.g., a utility company implemented Snow Optimizer for SAP and identified $1.5M in potential annual savings through a combination of downgrades and retiring unused licenses.

These cases underline that a systematic review can pay off. The savings aren’t just in license fees but also in avoiding compliance surprises. Many success stories share a common thread: using data to drive decisions rather than assumptions. When execs see actual usage vs. license allocation charts, it becomes clear where to cut or redistribute, leading to immediate cost benefits.

Q66: Has indirect access led to huge real-life penalties, and how did those turn out?

A: Aside from the Diageo case, another well-known incident was with Anheuser-Busch InBev (ABI). Around 2017, SAP claimed ABI’s indirect use (through Salesforce and perhaps other systems) was valued at around $600 million in licensing. This number was even more jaw-dropping than Diageo’s. ABI did not let it go to a public court fight; they negotiated with SAP and eventually settled confidentially.

We don’t know what they paid, but it’s believed to be far less than the initial claim (still likely a substantial figure). The public nature of these cases put a spotlight on SAP’s approach and led to an outcry from user groups. The indirect access issue became so heated that 2018, SAP introduced the Digital Access model as a sort of mea culpa and path forward. That came with a one-time adoption program where customers could convert to document licensing at a 90% discount, which many saw as SAP acknowledging the old model’s pain.

Since then, there haven’t been publicly reported mega-cases of indirect use fines – likely because SAP and customers now try to handle it via that program or proactive deals. But even recently, in audits, we have heard of six- or seven-figure compliance findings due to indirect use, especially if customers haven’t moved to the document model. Those usually get negotiated down.

The takeaway from real life: When SAP had no formal metric for indirect licensing, it tried to charge by analogy (named users for everyone touching data). With Digital Access, there’s a clearer (if still potentially expensive) method. Companies with shock scenarios, like Diageo and ABI, have either settled or moved to the new model. And the rest of us learned to tackle indirect licensing head-on rather than pretend it doesn’t exist.

Q67: How have companies handled the pressure to settle quickly during an audit?

A: SAP’s audit teams sometimes pressure customers to resolve findings quickly – for instance, “Please sign this compliance report and purchase order within 2 weeks.” Companies have taken different approaches.

The best ones don’t rush under pressure but instead insist on a thorough review. One CIO shared that when SAP gave them a $10M compliance bill and pushed to close the case by quarter-end, they pushed back, saying they needed time to validate the findings and would not make any decisions under arbitrary deadlines.

They involved their CFO and made it clear a rushed decision could not happen given corporate governance. SAP dialed down the urgency when they saw that the customer was serious about reviewing.

Another firm, however, felt intimidated by hints that non-settlement could lead to higher fees later, and they quickly agreed to a large purchase. Later, they realized some of the licenses might not have been needed at all.

The lesson is: don’t let SAP’s timeline override your fact-checking. Even if SAP’s sales team dangles a “settlement discount if you sign now,” weigh that against potentially overbuying.

Many companies who methodically went through the audit report found errors or negotiated better terms, which they would’ve missed if they caved to time pressure. If needed, escalate to higher management and say, “We need an extension to do due diligence.” SAP isn’t going to cut you off overnight; they want a sale, not a standoff. So, it’s often a negotiator’s tactic to impose urgency. Successful defenses often involve slowing the process down to your pace to ensure you cover all bases.

This might mean an extra few weeks or months of back-and-forth, but in multi-million dollar stakes, it’s worth it. So, the companies that handled it well treated the audit like a serious contract negotiation (with legal and executive involvement) rather than an IT procurement task with a ticking clock.

Q68: What changes did SAP make after customer backlash on audits, and how can we benefit?

A: The strong customer backlash around indirect access led SAP to introduce the Digital Access license model in 2018. Instead of charging a named user for indirect use, they defined 9 document types (like Sales Orders, Invoices, etc.) and said, “License these documents created by indirect systems.”

To ease the transition, SAP offered the Digital Access Adoption Program (DAAP): customers could opt in, count their documents, and then pay 10% of the calculated cost (90% discount) to get licensed for them moving forward. They also waived historical use penalties for those who adopted. This was a huge olive branch, and many customers took advantage of it to close the chapter on past indirect issues at a steep discount. Beyond indirect, SAP’s GLAC (Global License Auditing & Compliance) team has engaged more with user groups to communicate audit processes and avoid “ambush” feelings.

They emphasize that audits are separate from sales (though, in practice, they eventually involve sales). As customers, we benefit from using these new models and programs. If indirect access is a risk for you, seriously evaluate Digital Access—it might simplify compliance and remove uncertainty (just model the cost carefully).

SAP also, in some cases, allowed license exchanges or conversions when moving to S/4HANA or the cloud, which can be leveraged to clean up old shelfware. Essentially, SAP gave customers new tools to manage licensing more transparently after the backlash. To benefit, stay informed about these initiatives (for example, DAAP had deadlines that got extended multiple times—keep an eye on whether they still honor them or something similar).

Also, because of the backlash, SAP account teams are often more willing to discuss indirect usage upfront in deals now. The climate changed from “surprise, here’s a bill” to “let’s find a way to license this properly”. Use that to your advantage by bringing up any odd usage scenarios and getting them resolved contractually.

Q69: Have any companies successfully fought off SAP audit claims in court?

A: There are few public examples of outright victories against SAP in court, mainly because most disputes are settled. As we discussed, Diageo tried in court and lost on the core issue. Another case in 2020 involved a German company (probably not as publicized) that went to arbitration. Generally, SAP’s contracts are robust, and going to court is risky for customers.

That said, the threat of litigation has been used effectively to bring SAP to a more reasonable stance. Companies with strong legal positions (like a very unclear contract) might use lawyers to press SAP to negotiate rather than litigate. And SAP, not wanting bad precedent, often settles. So, while we don’t hear of “Company X defeated SAP in court and paid nothing,” we do see that many who stood their ground ended up with a compromise.

If a customer were to definitively win in court on something like indirect access, it would be big news – but it hasn’t happened; SAP usually doesn’t let a truly losing case get that far. Also, consider geography: the Diageo case was UK law. There haven’t been similar high-profile lawsuits in the US, again, likely due to settlement. One interesting scenario: a few companies threatened to sue under competition law or for entrapment-like arguments (because SAP hadn’t defined indirect well, then charged for it).

While those didn’t make it fully to trial, they pushed SAP to be more conciliatory. The bottom line is that a full legal fight is rare and generally not “won” outright by customers. Success is measured in achieving an acceptable settlement. Those successes are usually kept confidential, so we know they happen but do not know the details.

It reinforces that, for most customers, the pragmatic path is to work it out with SAP (with the shadow of legal action in the background if needed).

Q70: What best practices from other companies can help us get through an SAP audit unscathed?

A: Companies that navigate audits smoothly tend to do the following:

• Maintain Continuous Compliance: They don’t treat licensing as a once-a-year task. They have processes to update license assignments with every personnel or role change, keeping them accurate in real-time.
• Use Tools and Data: They leverage license management tools to monitor usage closely. This means that at any point, they can produce a compliance report that likely matches what SAP would find, giving them confidence and bargaining power.
• Internal Auditing: They sometimes run internal audits or health checks with third-party experts to catch issues early. If a surprise is brewing (like an indirect use case starting to grow), they catch it in internal audits and address it – maybe by licensing it properly or curbing that usage.
• Educated Stakeholders: They invest in training and awareness (as discussed), so everyone from IT to procurement to end-users know the basics of compliance. This reduces accidental mistakes like spinning up an extra SAP instance without informing licensing.
• Strong Negotiation Prep: When an audit does occur, they treat it seriously and project-manage it. They gather a cross-functional team, have a clear strategy, and possibly engage experienced negotiators or legal counsel to manage communications. They don’t go in blind or alone.
• Good Relationship with SAP: Interestingly, companies with positive, transparent relationships with SAP often report less adversarial audits. If SAP knows you and you’ve been proactive (even asking them for advice on licensing in tricky cases), audits might feel more collaborative. This isn’t to say you won’t be charged for overuse, but the tone can be different – more “let’s solve this” than “Gotcha.”
• Clear Documentation: Successful audits often include documentation – having all usage and entitlement records ready. Companies that swiftly answer any auditor question with a document or report can usually contain the scope and show professionalism, possibly discouraging the auditor from digging for faults.
  In essence, the best practice is to be prepared and proactive. An audit won’t catch you off guard if you view license management as part of running SAP (not an afterthought). Many companies that adopt this philosophy end up with either clean audits or minor findings that are easily resolved. Remember, the goal is not just to survive an audit but to do so without unnecessary cost – and that comes from consistent good practices long before the audit clock starts.

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