SAP License Audit – SAP Audit Defense Strategies 2025

An SAP license audit is:

• Compliance Check: A process to ensure customers use SAP software according to the terms and conditions of their licensing agreement.
• Regularly Scheduled: Typically conducted annually to assess and verify the usage of SAP licenses.
• Measurement Tools: Involves using SAP’s measurement tools to track and report software usage.
• Audit Types: Includes Basic and Enhanced audits, each with varying degrees of scrutiny and complexity.

What is a SAP License Audit?

SAP License Audits are formal compliance inspections by SAP to verify that a customer’s software usage, especially in SAP ECC environments, aligns with the licenses they have purchased. In plain terms, an audit is SAP’s way of checking if you’re using more SAP software or users than you paid for – and if so, sending you a bill.

Every CIO and CFO running SAP ECC should brace for these audits, as they are contractually allowed and often used by SAP to drive revenue. Below, we break down how these audits work, what triggers them, the risks associated with direct vs. indirect usage (including “Digital Access”), SAP’s typical tactics, and what you can do to defend your organization.

Read SAP Audit Trends In 2025..

How SAP Conducts an Audit (Process and Data Collection)

When an audit is triggered, SAP follows a structured process from notification to resolution. As a CIO/CFO, you must manage this process carefully:

1. Audit Notification: SAP sends a formal audit notice (usually via email) to your organization’s contact, citing the audit clause in your contract. You typically can’t refuse – audit rights are typically included in your SAP agreement. At best, you might negotiate a short delay for practical reasons, but outright refusal would violate contract terms and invite legal trouble.
2. Kickoff Meeting: Shortly after notice, SAP’s audit team (or an outsourced auditor on SAP’s behalf) will hold a kickoff call​. They will confirm the scope (which systems and what license metrics), the tools to be used, and deadlines. ECC (an ABAP-based system) is usually in scope via SAP’s standard measurement programs. Be sure to clarify which systems (ECC production instances, any sandbox or test systems) and which license metrics (such as named users, engines, packages, etc.) are included.
3. Data Collection (System Measurement): This is the core of the audit. Your SAP Basis team will be instructed to run SAP’s measurement tools – typically USMM (User and Software Measurement Management) on each ECC system to collect user counts and classifications, and LAW (License Administration Workbench) to consolidate these across systems​. SAP may also request additional data exports, including user lists with license types, lists of inactive users, logs of third-party interfaces (to detect indirect use), and any engine metric reports (such as the number of orders or employees in the HR module). Essentially, they want everything needed to compare your usage vs. your entitlements.
   • Example: SAP might ask for the user classification report. Every user ID in ECC is assigned a license type, such as Professional, Limited Pro, Employee, etc. They will check how many users of each type you have active, and compare them to what you purchased. If a user has no classification, SAP’s tools will default them to the most expensive “Professional User” license by default​ – a nasty surprise if you haven’t diligently maintained classifications.
   • SAP will also review engine and package usage. For example, if you have an ECC add-on licensed for up to 1,000 employees and now have 1,200 employees in the system, the tool will flag that. Any SAP module that is usage-based (e.g., orders, revenue, processors) requires current usage statistics to be provided. If you’ve turned on a module that you didn’t license, it will also be visible (usually through technical tables or audit logs that display activity).
4. SAP Analysis: Once you send SAP the measurement results (usually a LAW report file plus any extra spreadsheets they requested), the ball is in their court. Over a few weeks, SAP’s auditors parse the data. They will identify any gaps – e.g., 50 more Professional users used than licensed, or engine XYZ used without a license. They often correlate across systems. LAW helps merge duplicate users across systems to avoid double-counting, provided that you maintain consistent usernames. If not, duplicates may slip through as separate users. Count on SAP to find them and count them twice until proven otherwise. Also, suppose they see large volumes on interface accounts. In that case, they’ll analyze indirect usage (they might come back asking, “What is this interface user doing 100,000 transactions? Describe this interface.” – a precursor to an indirect access charge).
5. Audit Report and Findings: SAP provides an official audit report that enumerates compliance issues. This typically lists each shortfall, for example: “X Professional User licenses are short,” “Y Employee User licenses are short,” “Indirect use of SAP has been detected via system ABC – not licensed under the current agreement,” “Unlicensed engine usage has been detected for the Production Planning module,” etc. The report will typically quantify the financial exposure according to SAP’s price list, often at full list prices. Don’t be shocked by the sticker price – it’s SAP’s opening volley. For instance, they might claim that you need 50 Professional licenses at $3,000 each and are two years out of compliance, so they calculate $150,000 plus two years of maintenance (~$66,000) – a total of approximately $216,000 in exposure. These numbers are intentionally high (no discounts applied), aiming to scare the customer into buying more licenses quickly.
6. Resolution & Negotiation: After the report, you enter a negotiation phase. SAP will pressure you to “resolve” the compliance gap, meaning you should purchase the shortfall licenses (often with backdated maintenance fees) promptly. At this stage, CIOs and CFOs must push back and scrutinize the findings. This is where you can dispute counts (e.g., identify inactive users that should not count, or prove two “users” are one person in two systems), provide additional information (e.g., demonstrate some access was read-only, which might be exempt), and negotiate financially. It’s common to negotiate a settlement rather than paying the full list price, especially if you plan to make other purchases. SAP might be open to waiving some back-maintenance or offering a discount if, for example, you agree to purchase the new S/4HANA system as part of the deal. The key is that you don’t have to accept the first report as gospel – you need to validate it. SAP’s tools sometimes overcount or misinterpret usage​, and SAP auditors are not infallible. You have a window (often a few weeks) to discuss and push for a fair outcome.

Throughout the audit, document every communication. Keep emails, meeting notes, and copies of any data you provided. This paper trail helps if there are disputes later. Also, stick to what your contract requires you to provide – don’t volunteer extra data that isn’t asked for or required.

For example, if they didn’t ask for details on a specific interface, you don’t need to hand them over. Be polite but firm in communications; understand that the auditors ultimately report to SAP’s sales department. Their “findings” often feed a sales quota, so treat the audit as a negotiation, not an independent review.

Read our SAP Audit Defense FAQ.

What Triggers an SAP License Audit?

SAP ECC license audits can occur annually by default, but certain events will put a target on your back for a deeper audit.

Knowing these triggers helps you anticipate an audit before it hits:

• Rapid Growth in Usage: A sudden spike in SAP usage, such as adding hundreds of new users or a significant increase in transactions or data, is a red flag. SAP monitors license metrics and will audit if your usage exceeds the numbers you last licensed. In their eyes, a fast expansion likely means unlicensed use that needs “true-up”.
• Contract Renewals or Changes: If you’re up for a renewal, negotiation, or trying to reduce your SAP spend, expect an audit. SAP often initiates audits during contract changes to ensure you’re fully compliant before signing a new deal. It’s a classic tactic: uncover compliance gaps to upsell licenses in the renewal.
• New SAP Modules or Systems: Deploying new components, such as adding SAP HANA or a new ECC module, can trigger an audit. SAP wants to verify that you have properly licensed the new functionality and are not using it for free.
• Mergers & Acquisitions: Corporate M&A activity (or divestitures) often prompts an audit​. Combining companies or systems can muddle license entitlements – SAP will audit to reconcile usage under the new structure. For example, acquiring a company that also uses SAP may suddenly double your user count, and SAP will check compliance for the merged environment.
• Indirect Access (Third-Party Systems): If SAP suspects heavy indirect usage of ECC, for example, non-SAP applications or interfaces accessing ECC data, they may conduct a specific audit to investigate this. Indirect access has been a goldmine for SAP audit findings (more on this below), so any hint, such as high transaction volumes through an interface account, can trigger a deep dive.

Keep in mind that SAP’s Global License Audit and Compliance (GLAC) team can launch an audit outside the annual cycle if they identify risk factors like the ones mentioned above. In short, big changes in your SAP landscape – whether technical or organizational – will draw audit attention.

Read CIO Playbook SAP License Audit Readiness & Compliance – Preparing for SAP License Audits.

SAP Basic Audit vs SAP Enhanced Audits

Understanding the differences between basic and enhanced SAP audits is crucial for preparing effectively and ensuring compliance.

Here’s a breakdown of what each type entails:

Basic Audit:

• Scope:
  • It focuses primarily on products that can be measured using standard SAP license audit tools, such as License Administration Workbench (LAW) and License Management by License Indicator (LMBI).
• Customer’s Role:
  • Involves self-reporting technical data easily extractable from systems, such as the number of cores.
  • Also requires self-reporting of business metrics relevant to specific product usage.
• SAP’s Guidance:
  • SAP provides detailed manuals that guide customers in extracting and reporting the necessary information.

Enhanced Audit:

• Deep Dive:
  • Goes beyond simple quantification of license usage to thoroughly examine how SAP products are utilized within the organization.
• License Assignment Scrutiny:
  • Involves a detailed evaluation of how Named User licenses are assigned and whether they are used correctly.
• Additional Data Sources:
  • SAP may access extra data sources to ensure accurate user licensing. While this is more common in Enhanced audits, it can also occur in Basic audits.
• Extended Scope:
  • May include:
    • Role Analysis: Reviewing Named User assignments.
    • Indirect Use Assessment: Evaluating how SAP data is accessed through third-party systems.
    • Functional Review: Particularly of the HANA Runtime Edition database.
    • On-site Visits: Auditors may visit the organization to conduct interviews and gather additional insights.
• Discretionary Scope:
  • While SAP considers all product areas, it can limit the scope of the audit. In some cases, customers may be able to negotiate these limits.

By clearly distinguishing between these two types of audits, organizations can better prepare for the specific requirements and challenges each one presents.

Direct vs. Indirect Access: Named Users and “Digital Access” Risks

SAP ECC licensing comes in two flavors: direct (named user) access and indirect access. Both can bite you in an audit if not managed.

Direct (Named-User) Licensing Challenges

“Direct” use means users logging into SAP ECC directly (using SAP GUI, a web portal, etc.). These users need Named User licenses. SAP has a tiered hierarchy of user license types.

Common ones in ECC contracts include Professional User (full access, highest cost), Limited Professional, Employee User, and Employee Self-Service, each with different allowed activities. Users must be assigned the correct type based on their role or responsibilities.

This is easier said than done:

• Misclassification – A perennial problem. Companies often give many users cheaper license types to save money, but if those users perform tasks beyond their license’s scope, SAP will nail you. For example, giving someone an “Employee” license (meant for basic use) who then runs transaction codes that only a Professional should (like complex reports or configuration changes) is non-compliant. In an audit, SAP’s tools will identify usage patterns that are inconsistent with the assigned license. The auditors will reclassify those users to the higher license and charge you the difference for each user​. It’s common to see dozens of users reclassified as Professional in an audit because their activity was too extensive for their license. This can cost a fortune – for example, each misclassified user might incur a roughly $2,000 increase in license cost. If 100 users need to be upgraded, that’s $200,000 you didn’t budget for. (See table below for an example of how misclassifications can add up.)
• Duplicate Users – If the same person has multiple user accounts (common in SAP for various technical reasons) and you haven’t linked them, the audit might count them as separate “named users.” SAP’s LAW tool attempts to consolidate duplicate accounts by matching names or emails, but it’s not foolproof. If your data is inconsistent (e.g., one account is listed as “J. Smith” and another as “John Smith” with no matching email), LAW may miss the duplicate and count two users, inflating your count. SAP might then say you’re over your license count. It’s your job to identify and argue duplicates. The rule is one human = one license (except some read-only/system accounts). You must proactively clean these up or be prepared to show proof to SAP that two accounts belong to the same person.
• Inactive Users – Old accounts left active also count. LAW simply counts every named user account that is not locked or deleted. If you never removed ex-employees or test accounts, they appear as “active users” and consume a license. SAP will happily count them and tell you you’ve exceeded your entitlements. We’ve seen audits where 10–15% of counted users were inactive users that nobody cleaned up. It’s a boring admin task, but failing to purge or lock unused accounts is paying for nothing​. (SAP won’t automatically exclude them – it’s on you to have cleaned them up before measurement, or to argue after the fact and hope SAP is lenient).
• Default to Professional – Worth repeating: If a user ID has no license classification assigned in the system, SAP will default it to Professional (the most expensive option). During measurement, any “blank” classifications are a gift to SAP’s revenue. This often happens if your admins forgot to maintain the license type field for some users or new accounts. Always ensure every user has a proper license type in SAP – otherwise, SAP assumes the worst (for you).

Misclassified User Cost Example: Here’s a simple illustration of how seemingly small license mistakes can create large financial exposure:

Misclassification Scenario	Assigned License (Cost Each)	Required License (Cost Each)	Difference per User	# of Users	Potential True-Up Cost (one-time)
Heavy SAP users improperly given Employee licenses ( ~$500 each)	Employee User ($500)	Professional User ($3,000)	$2,500 underpriced	20	$2,500 × 20 = $50,000
Department leads given Limited Pro instead of Professional	Limited Pro ($1,500)	Professional User ($3,000)	$1,500 underpriced	10	$1,500 × 10 = $15,000
Total exposure: 30 users under-licensed					$65,000 + back maintenance fees

Assumptions: Illustrative pricing used for Professional vs. cheaper licenses. Actual SAP price lists vary, but the relative gap is real. SAP would likely also charge approximately 22% annual maintenance on the above, retroactive to when those users were using SAP without a license, which could add tens of thousands more​.

The takeaway: named-user licensing requires vigilant housekeeping. You must continually align license types with actual usage; otherwise, SAP will do it for you during an audit, on their terms. Every inactive account or misclassified user is low-hanging fruit for SAP’s auditors.

Indirect Access and Digital Access Licensing

Indirect access is the silent killer in SAP audits. This refers to using SAP’s functionality without directly logging into SAP, typically via third-party applications, interfaces, or automated systems that query or update SAP ECC in the background​. Classic examples:

• A Salesforce CRM system reads customer data from ECC or creates a sales order in ECC.
• An e-commerce website that pulls product availability from ECC and then posts orders to ECC.
• A supply chain system or a robotic process automation (RPA) bot that updates SAP records via an API.
• IoT sensors feed data into ECC (e.g., a machine in a factory updating SAP on production counts).

From SAP’s perspective, all that counts as “use” of SAP software, even though no one is clicking in ECC. Historically, SAP required that any individual or system indirectly using ECC had to be covered by an appropriate license, often a named-user license. This was often murky and frequently ignored by customers until SAP started cracking down, notably with the infamous 2017 Diageo case, where a customer was hit with a £54 million claim for unlicensed indirect use. That case and others sent shockwaves: CIOs discovered that integration architectures could carry massive SAP license liability.

To clarify (and capitalize on) indirect usage, SAP introduced the Digital Access model in 2018. Digital Access licensing switches the model from “every indirect user needs a named user license” (which was hard to track) to “license the documents created in SAP by indirect access”​.

SAP identified nine document types that matter for digital access, such as sales documents, Invoice Documents, Purchase Documents, Manufacturing documents, and Finance documents. Whenever an external system triggers the creation of one of these documents in ECC, SAP wants to charge for it. For instance, creating a Sales Order in an external webshop for ECC counts as one “sales document” for Digital Access licensing.

Key points on Digital Access and audits:

• It’s optional (in theory) – Customers can stick to the old Named User licensing for indirect use, or adopt Digital Access. In reality, SAP heavily pushes Digital Access as the “proper” way now. During audits, SAP might run an Indirect Usage Estimation tool on your ECC system to count those nine document types​. If you haven’t already licensed Digital Access, they will present the document counts and a bill.
• Document Counting – Only creation of documents by external systems counts (reading or updates might be exempt in some cases). For example, viewing data via a third-party app is generally not charged if it’s an “indirect static read” (data statically exported from SAP). SAP has defined criteria where pure read-only access does not require a license. However, anything that writes or triggers a business process in ECC, such as creating a sales order, invoice, delivery, or time entry, will count. SAP’s audit tools (LAW 2.0 and others) now actively identify high-volume “technical users” to flag potential indirect usage.
• Huge Volumes, Huge Costs – Indirect usage can generate millions of documents. We’ve seen audits where the customer was unaware of the number of SAP documents their integrations were generating. For example, every order, every invoice from various channels all count. SAP’s pricing for Digital Access is typically tiered – for instance, a list price might be around $100 per 1,000 documents (varying by region and negotiation), with volume discounts available at higher tiers. It may not sound bad until you realize a large enterprise can easily create tens of millions of documents per year indirectly. One study found that an average SAP customer had ~106 million Digital Access documents, which at list price amounted to ~$20 million in license fees (SAP was offering a 90% discount in a special program, still leaving $2 million cost!)​.

To illustrate, consider a mid-sized scenario:

Example Indirect Use Case	Annual Documents (approx)	Cost per Document (est.)	Annual Cost (est.)	5-Year Cost Exposure (est.)
Orders from external web storefront	50,000	$0.20	$10,000	$50,000
Invoices from external billing system	50,000	$0.20	$10,000	$50,000
Updates from IoT sensors (manufacturing)	200,000	$0.05	$10,000	$50,000
Total Indirect Documents = 300,000			$30,000	$150,000

Even moderate indirect usage can easily incur a six-figure compliance cost over a few years. Higher volumes (millions of documents) scale linearly into the high six or seven figures.

• Named User vs. Digital Access trade-off – Some customers attempt to cover indirect use by purchasing named-user licenses for non-SAP users (e.g., every web customer or every API user, as a form of cheap licensing). This often isn’t practical or cost-efficient, which is why Digital Access was introduced. In an audit, if you haven’t adopted Digital Access, SAP will still evaluate indirect usage. They might say, “Under old rules, every one of those 5,000 external users needs an SAP license,” which is even more expensive. Either way, indirect use is being added to the bill. Digital Access at least provides a transparent metric (document count) to discuss. Many customers took advantage of SAP’s Digital Access Adoption Program (DAAP), which offered steep discounts (up to 90%) and forgiveness of past indirect use fees if they voluntarily switched to Digital Access licensing. That program was SAP’s carrot to get people on board rather than fighting over audits.

Bottom line: Indirect access is one of the riskiest areas in SAP audits today. CIOs need to inventory all systems that interface with ECC and understand their functions. If you don’t have Digital Access licenses, an audit could drop an enormous unexpected charge on your desk for document usage.

If you have Digital Access, you should run SAP’s tools regularly to measure document counts and know your exposure.

And always check your SAP contract’s wording on indirect use – older contracts might not mention it explicitly, but SAP’s standard definition of “Use” is so broad that it covers it anyway. Never assume a third-party integration is free of licensing requirements. Indirect use charges have caught many CFOs by surprise, and SAP knows they are often not monitored, making them a prime audit finding.

Who Conducts SAP License Audits?

Understanding the orchestration of SAP license audits is crucial for businesses engaged with SAP products.

The audit process is a meticulously coordinated effort involving specialized professionals.

Licensed Auditors and Compliance Managers

• International Team of Auditors: SAP license audits are conducted by licensed auditors based in various global locations, including Ireland, China, and India. These auditors are responsible for executing the fundamental audit process.
• License Compliance Manager’s Role: A dedicated license compliance manager works closely with these auditors and ensures that the audit activities adhere to SAP’s established procedures and guidelines.

Selection of Customers for Audits

• Strategic Selection Process: Not all SAP customers are subject to annual audits. The selection is a strategic decision made collaboratively by license compliance managers, auditors, and experts from SAP’s audit business team.
• Criteria for Selection: Large enterprises, recent purchasers of new SAP products, or customers labeled as “high risk” in previous audits are typically more likely to be selected for an audit.
• Initial and Subsequent Audits: Unless otherwise specified, new SAP customers generally face their first license audit within two years of signing the contract. Subsequent audits aim to be annual, contingent on SAP’s resources and planning.

SAP’s Common Audit Tactics (“How SAP Gets You”)

SAP’s audit teams are not your friends – their job is to find compliance gaps and revenue opportunities.

Here are common tactics and pressure points they use in license audits:

• Reclassification to Expensive License Types: As discussed, SAP will reassign users to higher license tiers if their usage warrants it. They often take an aggressive stance: even borderline cases will be counted as Professional User if possible, since that’s $$ for SAP. If a user executed one transaction that is technically beyond an Employee license, SAP may declare that user a Professional in the audit. They rely on the contract clause that you are responsible for assigning the correct license types, and they have the right to adjust those classifications. In negotiations, you can sometimes argue downgrades if you change the user’s activities, but during the audit, the auditor’s report will maximize counts of high-cost users. Be prepared with internal evidence of what each user does if you want to contest SAP’s classification.
• Counting Every Account (Over-Deployment): SAP will claim “over-deployment” whenever the raw count of users in use exceeds your entitlement. For example, you purchased 500 Professional and 1,000 Employee licenses, but the audit finds 520 users classified as Pro and 990 as Employee – they will say you are 20 over-deployed on Professional. It doesn’t matter if some of those pros barely use the system; if they’re active and classified as such, it’s a compliance gap. This often happens because of the inactive/duplicate issue – if you didn’t purge unused accounts, you inadvertently “used” more licenses than you owned. The burden is on you to have managed that. The auditors will coolly present that you need to buy 20 more Professional licenses immediately. They will likely also charge you back maintenance on those 20 users for the period they were “unlicensed” (perhaps from the last audit or contract start)​. SAP’s logic: you benefited from the use of those extra licenses, so now you owe support fees as if you had bought them originally. This retroactive charging can significantly increase the cost – e.g., 20 licenses * $3,000 = $60,000, plus 2 years of 22% maintenance (~$26,000), totaling around $ 86,000 in the bill, not even counting future maintenance.
• Fishing for Indirect Usage: Auditors scrutinize interface technical users and external connections. If they see high transaction counts or data volume via an interface account, they will investigate “indirect access.” Often, they’ll include a finding like “Third-party system X is accessing SAP – no licenses for indirect use are in place.” If you haven’t adopted Digital Access, this is where they might calculate how many partner users or documents should be licensed and hit you with a proposal (which can be astronomical, as covered). Even if you do have Digital Access licenses, they might challenge if your document counts exceed what you licensed. Either way, indirect access is almost always highlighted. SAP views it as usage that you likely didn’t account for, so they will present it as non-compliance unless it is covered. (Watch out: even if you bought a bunch of extra Named User licenses in the past “for interfaces”, an auditor might not give credit unless it’s explicitly in the contract that those cover indirect use. This gets legally tricky.)
• Engine/Package Usage Over the Limit: ECC includes many “engines” (modules) licensed by metrics, such as the number of employees for HR, the number of orders for SD, and CPU cores for databases, among others. SAP will check all such metrics. If any metric usage exceeds what you have rights to, that’s non-compliance. A common example: your contract allows for 1,000 employees in SAP HR, but now you have 1,200 active employees – SAP will want you to purchase an expansion. Or you licensed SAP Sales & Distribution for up to 100,000 sales documents per year, but your business grew to 130,000 – an audit finds you exceeded the limit by 30,000, so it’s time to pay up. Worse, sometimes customers unknowingly activate a module they haven’t licensed (e.g., start using SAP Treasury functions without purchasing the license). The audit will catch that via logs, and you’ll get a nasty surprise: SAP will insist that you purchase the module license retroactively since you’ve been using it. They typically demand not just the license fee but also back maintenance from the time the usage started. There is little wiggle room here – SAP’s contract is clear that using unlicensed software is a breach. Your only hope is to stop using it immediately and plead for leniency, or bundle the purchase with something else. But expect to pay; SAP has no issue charging for features you “accidentally” turned on.
• Retroactive Compliance Charges: We’ve touched on this, but to be explicit, SAP often seeks to charge for past unlicensed use, not just for future use. Their audit clause usually allows them to invoice you for past usage as if you had had the proper licenses all along; this is how they justify backdated maintenance and support fees. In extreme cases, they could even impose penalties or threaten to disable functionality until you pay up​​. Disabling software is rare (that would likely require a legal injunction), but the threat exists in the event of a severe breach. More commonly, they use the specter of legal action or contract termination as a stick to make you comply. The negotiation often frames it as: “You should have bought these licenses before; we’re being kind, only charging maintenance from the past two years instead of five.” It’s galling, but it’s how the game is played.
• Audit Deadlines and Pressure: SAP will impose tight timelines – for example, asking you to respond with data within 30 days and then pushing to close the findings within another 30 days. This is designed to give you little time to internally analyze or push back. They know CFOs want the issue off the table, so they create a sense of urgency. Don’t be rushed into signing off on purchases just because the clock is ticking. You can ask for extensions for valid reasons, such as a complex environment or needing more time to validate data. Once SAP issues findings, they may also escalate through your account executive, who will frame the purchase as urgent to “get you back in compliance.” It’s high-pressure sales cloaked in compliance language.
• Bundling Compliance with New Sales: A common tactic is for SAP to say, “You owe us $X for this compliance gap, but if you sign a new deal for Y (such as an S/4HANA migration or additional products), we can waive or discount the $X.” This is essentially using the audit as leverage to drive new sales. From SAP’s perspective, either outcome is fine: you pay the shortfall or you buy more software. As CIO or CFO, recognize this leverage play. It can sometimes work to your advantage if you truly were planning to buy new SAP products – you can negotiate to erase the audit fees in the new contract. But if you weren’t planning additional purchases, it can also feel like coercion (“Buy something or just pay the fine”).

In summary, SAP auditors will use the terms of your contract and SAP’s complex licensing rules to exploit any compliance gaps. Nothing is left on the table: every user count, every engine metric, every third-party interface, even obscure features enabled – all are fair game. The audit report will likely be a list of every possible discrepancy, many of which you may not have even been aware of. Expect the initial $$ figure to be shocking.

This is deliberate – anchoring the negotiation at a high level. Your job is to systematically refute what you can (provide evidence for duplicate users, justify license assignments, point out if SAP’s counting is off) and negotiate down the rest. SAP, of course, knows most customers won’t catch everything, and whatever sticks is revenue for them.

SAP License Audit Tools

SAP license audits involve specialized tools to help SAP and its customers accurately measure and manage software usage.

These tools are essential for ensuring compliance with licensing agreements, identifying potential issues, and preparing for audits.

Here’s an overview of the key SAP license audit tools, their functions, and how they can be used effectively.

1. License Administration Workbench (LAW)

• Purpose: The License Administration Workbench (LAW) is a central tool for consolidating and analyzing license-relevant data from multiple SAP systems. It helps organizations manage their license usage across complex SAP landscapes.
• How It Works:
  • LAW collects user data from various systems and aggregates it into a comprehensive report. This allows organizations to identify duplicate users, consolidate license types, and ensure they are not over-licensed.
  • Example: A multinational company with multiple SAP instances in different countries might use LAW to collect user data from each instance, ensuring that all employees are correctly licensed without duplication.
• Key Features:
  • User Consolidation: LAW can identify and merge duplicate user accounts, ensuring that each individual is only counted once, even if they have access to multiple systems.
  • Centralized Reporting: LAW simplifies the audit process by centralizing data collection, making it easier to generate accurate reports for SAP audits.

2. User and System Measurement Management (USMM)

• Purpose: The User and System Measurement Management (USMM) tool measures license-relevant data within individual SAP systems. It helps determine the number of users, their roles, and the extent of their system usage.
• How It Works:
  • USMM collects detailed information about user activity within a specific SAP system, including user types, roles, and transaction histories. This data is critical for understanding how licenses are being utilized.
  • Example: A company might use USMM to track the number of “Professional Users” and “Employee Users” active in its SAP ERP system, ensuring the correct number of licenses is purchased.
• Key Features:
  • User Classification: USMM helps classify users based on their activities, ensuring they are assigned the appropriate license type.
  • Detailed Reporting: The tool provides detailed reports on system usage, helping organizations identify discrepancies or potential compliance issues before they occur during an audit.

3. SAP NetWeaver Administrator (NWA) License Management

• Purpose: SAP NetWeaver Administrator (NWA) includes features for managing and monitoring SAP license usage, particularly in environments where SAP NetWeaver is in use. It is useful for monitoring engine metrics and non-user-based licensing.
• How It Works:
  • NWA provides tools to monitor the usage of various engines and components within the SAP NetWeaver platform. It tracks metrics such as database size, transactions processed, and the usage of specific applications.
  • Example: If a company uses the SAP NetWeaver Portal, NWA can monitor the number of transactions processed to ensure that the licensing complies with SAP’s terms.
• Key Features:
  • Engine Monitoring: NWA tracks usage metrics for engines and applications, ensuring compliance with non-user-based licensing models.
  • Alerts and Notifications: The tool generates alerts when usage approaches licensing limits, allowing organizations to proactively avoid non-compliance.

The Audit Clause and SAP Contract Gotchas

Your SAP contract is the rulebook for an audit. Unfortunately, that rulebook is usually written in SAP’s favor. Key clauses to be aware of:

• Audit Rights Clause: Virtually every SAP license agreement contains a clause granting SAP the right to audit your usage, typically with some notice (e.g., 30 days) and no more than once a year (although for cause, they may conduct additional audits). By signing the contract, you agreed to this. It usually states that you must reasonably cooperate and provide necessary assistance and data. Non-compliance with an audit can be considered a breach of contract in its own right. In plain speak: you can’t say “no” to an SAP audit. At best, you can schedule it to better suit you, but you’ll have to go through it eventually.
• Remedy for Non-Compliance: Contracts state that if you are found out of compliance, you are required to purchase sufficient licenses to cure the non-compliance. Often it’ll specify this must be done at list price (i.e., no discount) because it’s not a normal sale, it’s a breach cure. SAP may not always enforce the no-discount strictly (especially if you negotiate a broader deal), but they reserve the right. The contract may also say you must back-pay maintenance to cover the period of unlicensed use. In effect, the contract sets the stage that if you’re caught short, you owe SAP whatever it costs to make it right, period. This is why audits are so scary – it’s not just a slap on the wrist; it’s an obligation to spend unbudgeted money.
• Definition of “Use” and “User”: This is incredibly important. SAP’s standard definitions are very broad. “Use” often encompasses both direct and indirect use of the software, including through third-party applications. That means even if your contract doesn’t explicitly mention “indirect access,” the general definition of “Use” is broad enough that SAP can claim an external system writing to SAP is a “use” that requires a license. The “Named User” definition typically refers to one named individual with access to the software, whether direct or indirect. In short, the contract is written so that any way SAP is used counts against your license, unless it is explicitly excluded. Customers who don’t read these definitions get a rude awakening in audits (“but those portal users never logged in to SAP!” – doesn’t matter, they used SAP data).
• Indirect Access Clause: Some newer contracts have specific language about indirect access or Digital Access. Older ones might not, relying on the broad definition of use. If your contract is silent on it, SAP has the flexibility to enforce it as they see fit (and they will). If it’s explicitly addressed, read it carefully – it might, for example, allow certain types of indirect read access for free (SAP did introduce an “Indirect Static Read” clause a few years ago to placate customers for read-only scenarios​, but any create/update via external systems likely is not exempt. Check for any hints like “Named Users are required for any individual that indirectly accesses the software through a non-SAP interface.” If you find such text, you know SAP will lean on it in an audit.
• Multi-Affiliate or Third-Party Use: Who is allowed to use the SAP system under your license? Many contracts limit use to employees of the customer and maybe its majority-owned affiliates. If you have contractors, partners, or a spun-off division using the system and they are not covered in the definitions, SAP may flag this as unlicensed use. For example, if a contractor logs into ECC and you only have licenses for employees, technically, that’s a breach. Or I,f after a merger, users from a sister company (not legally an “affiliate” under the original contract) start using your SAP, they might not be covered. Some customers assume all their subsidiaries can use a centrally licensed SAP system – not always true unless explicitly stated. Ensure all entities using SAP are named in the contract or covered by a clause. If not, SAP may require that those external users be licensed. They may need you to purchase a license for each third-party user or obtain a license extension for that entity.
• Geographical or System Scope: Some SAP contracts tie licenses to a specific installation or geography. For ECC, licenses are usually global. However, if you have any peculiar clauses (such as licenses only for a particular region’s deployment), be mindful. Using the software outside its geographical scope could be another gotcha, though it’s less common nowadays.
• No Reduction (Shelfware): Slightly tangential to audits, but note that many SAP contracts don’t allow you to drop licenses or reduce maintenance easily. This means if you over-bought, you’re paying maintenance on shelfware, which is painful but at least protects against an audit finding (over-licensing isn’t non-compliance, it’s just wasted money). Some clients try to cut costs by reducing license counts or dropping support on unused licenses; SAP may audit soon after to ensure you aren’t using those. And if you still have those users active, you’re out of compliance because you terminated the licenses but continued to use them.

In summary, familiarize yourself with your contract thoroughly. The audit clause gives SAP broad audit authority; the definitions of licenses and use give them broad compliance authority. Most “surprises” in audits are only surprises because the customer didn’t realize what they agreed to.

One tip is to conduct a contract review with licensing experts to identify any particularly nasty clauses or ambiguities. For example, if your contract doesn’t exclude a scenario (such as casual access by non-employees), assume SAP will charge for it. The time to clarify or negotiate is before you sign, not during an audit.

High-Risk Scenarios for Non-Compliance

Certain business or IT scenarios greatly increase the risk of SAP ECC license issues. Be extra cautious during these situations:

• Mergers & Acquisitions: As mentioned, when companies merge or one acquires another, their SAP landscapes often merge as well. User counts can skyrocket overnight by combining systems. License agreements may not automatically transfer without SAP’s consent (licenses are usually non-transferable assets). If Company A buys Company B and both run ECC, you can’t just let B’s users start using A’s system unless you formally move licenses or purchase more – otherwise, those users are unlicensed. M&A activity almost always triggers an audit or a required contract revision. Proactively involve your SAP account rep when planning an integration – not necessarily to tip them off, but to negotiate a proper combined license agreement if needed, rather than wait for an audit hammer. Also, during divestitures, ensure that the separated entity stops using your SAP (or obtains a license). We’ve seen cases where a spun-off business continued to access the parent’s SAP system without a valid license, leading to major compliance issues later.
• Rapid Hiring or Business Growth: If your company’s headcount or SAP user base is growing quickly, you can outstrip your license allotment between audits. For example, a fast-scaling startup implemented SAP ECC with 100 users licensed, then grew to 200 users in a year – the next audit will find you 100 licenses short. Similarly, growth in transactions (such as new customers or more sales orders) can exceed engine metrics (like exceeding the Sales Order limit or database size limit in your contract). It’s on you to monitor these and purchase additional licenses in advance. SAP sales teams won’t always remind you, but the audit team will catch it. Plan license true-ups as part of any major expansion project; budget for them.
• Implementing New SAP Functionality: Whenever IT enables a new module in ECC (even something minor, such as activating SAP Workflow or an add-on), check if it requires a separate license. SAP’s price list is labyrinthine – some features you might assume are included aren’t under your license. A classic example is SAP Solution Manager – it’s free for basic operations, but using it for non-technical processes, such as a service desk, used to require a Named User license. If you’re unsure, ask SAP in writing if a feature is covered under your existing licenses. Because if you turn it on and use it, an audit will later enforce the license requirement. Don’t rely on “the system let us use it” – technically, many modules are installable but not legally usable without a license.
• Integrating New Systems and Digital Transformation: In today’s landscape, ECC often connects with cloud services, customer portals, mobile apps, and other digital platforms. Every new integration is a potential indirect access scenario. For instance, hooking your ECC to a new e-commerce platform or implementing an RPA bot to update orders – these are great for business efficiency, but also a way to inadvertently violate SAP licensing. Before you go live with any interface to ECC, run it through your license team: Does this count as indirect use? How many documents or users will it generate? Do we have enough license cushion to cover it? Involve your enterprise architects and include licensing impact in those projects. A $100,000 integration project could incur a $200,000/year SAP cost if done naively.
• Hybrid Environments (ECC with Cloud Services): Many companies now have a mix of SAP ECC on-premises and SAP cloud products, such as SuccessFactors and Ariba, or are transitioning to S/4HANA Cloud. Hybrid setups can confuse license compliance. For example, if you feed data from ECC to SuccessFactors, SAP may consider that an indirect use on the ECC side or may cover it under your cloud subscription – it depends on the contract details. Also, if you move certain processes to the cloud but keep ECC as the backend, you might still need ECC licenses for those processes. Double-check licensing when moving functionality to the cloud. Sometimes, moving to SAP cloud products reduces your on-premises license needs, but SAP won’t automatically adjust your maintenance until you negotiate it. And suppose you simply stop using a module on ECC because you went to the cloud. In that case, you might be paying maintenance for nothing (not a compliance issue, but a waste unless you negotiate removal) conversely, if you have an ECC license and start using a new SAP cloud service in parallel (such as SAP Analytics Cloud, which reads ECC data), ensure that your named user licenses allow for this or that the cloud subscription covers it. Hybrid use can also trigger audits because SAP wants to ensure you’re not “re-using” an on-prem license for a cloud user or vice-versa improperly.
• SAP S/4HANA Transition: Many ECC customers are migrating to S/4HANA. SAP often uses that moment to reconcile licenses. If you switch to S/4HANA under the RISE program or a new contract, they will usually require an audit of your ECC usage to properly convert licenses (and they’ll want to catch any compliance issues to monetize them in the new deal). Be careful during migration – try to negotiate a clean slate, but SAP might insist you pay for any ECC overuse before or as part of the migration. On the other hand, a migration is an opportunity to clean up – retire unused users and remove obsolete modules – so your new S/4 system is right-sized. Don’t bring your ECC compliance debt into S/4 if you can help it; resolve it strategically, possibly exchanging it for a discount on the S/4 licenses.

In all these scenarios, the common thread is change – changes in business or technology can quickly make your last license count outdated. SAP audits thrive on those gaps. CIOs should integrate license compliance checks into their event planning.

And CFOs should insist on a licensing impact assessment, including potential costs, when reviewing proposals for acquisitions or new systems. It’s much better to proactively budget $100k for extra SAP licenses during an expansion than to be ambushed by a $500k audit finding later.

Recommendations (Audit Defense Checklist for CIOs & CFOs)

To wrap up, here is a blunt checklist of actions to minimize audit risk and control your SAP ECC license exposure.

These are hard-learned lessons from the field that every CIO/CFO team should implement:

• Conduct Internal License Audits Regularly: Don’t wait for SAP. At least annually (if not quarterly), run SAP’s measurement tools yourself and review the results as if you were SAP. This means checking user counts, classifications, and engines against your entitlements​. Identify discrepancies now and fix them (or purchase additional licenses on your terms, not SAP’s deadline). An internal audit allows you to address issues quietly, rather than under the pressure of an audit.
• Clean Up User Accounts Proactively: Establish a strict process to remove or lock user IDs when employees leave or roles change. Ensure there are no active duplicate accounts for a person. Use SAP’s LAW consolidation or third-party tools to scan for duplicates. By audit time, only legitimate active users remain. This avoids paying for “ghost users” who do nothing​. Also, regularly review who has which license type. If someone has changed jobs and now uses SAP more heavily, consider voluntarily upgrading their license to the correct level. It’s cheaper to make a small purchase adjustment than to face penalties in an audit.
• Optimize Named User License Allocation: Align license types with actual usage and document why. Keep a record of each user’s license assignment and the justification (role, transactions used)​. This way, if SAP challenges a user’s classification, you can show your rationale. Continually look for over-licensed users as well – if someone has a Professional license but only performs basic tasks, consider downgrading them and note the date and reason for the change. Just don’t do a massive downgrade of hundreds of users right before an audit with no usage change – that looks suspicious​. If you need to reclassify many users to cheaper licenses, do it gradually and be prepared to demonstrate that their usage justifies it.
• Monitor SAP Engines and Metrics: Assign owners in IT to track each metric-based license (orders, employees, CPUs, etc.). These owners should report usage vs license quarterly. This avoids the “oops, we exceeded our licensed limit last year” problem​. If you see a metric trending over your entitlement, address it: optimize usage or budget to extend the license before SAP takes action. Never activate a new ECC module or functionality without confirming licensing. If unsure, ask SAP in writing or consult a licensing expert before turning it on.
• Inventory and Manage Indirect Access: Create a list of all third-party systems, interfaces, or reports that interact with ECC. For each, estimate how many users or documents it generates. Quantify your indirect usage. If you haven’t licensed Digital Access, strongly consider using SAP’s Digital Access estimation tool to get a document count​. You need to know if you’re dealing with 50,000 documents or 50 million – the financial stakes differ by orders of magnitude. Once you have the numbers, evaluate your licensing strategy: it might be worth proactively negotiating a Digital Access license via DAAP rather than risking an audit bomb. If you already have Digital Access licenses, actively measure your document consumption to ensure you don’t exceed them. And if you have a mixture (some indirect covered by named users, some by Digital Access), maintain clarity to show auditors. The goal is no surprises – you should know your indirect footprint better than SAP does.
• Review Your SAP Contract (Fine Print): Pull out your SAP license agreements and read the use definitions, indirect usage terms, named user definitions, affiliate use rights, etc. Involve your legal counsel or a licensing advisory firm to interpret any vague clauses. Identify any risky areas (e.g. unclear indirect access terms, or no mention of certain scenarios). This will tell you where SAP is likely to be audited. If you find something troubling (say, the contract doesn’t cover a new subsidiary’s use), you might address it proactively via a contract addendum or at least be ready to defend your interpretation. Knowing your contract also means you can push back if SAP’s auditors overstep (by requesting data not relevant to licensed metrics, for example). Knowledge is power – don’t go into an audit ignorant of what you agreed to.
• Engage Independent Licensing Experts: Consider a pre-audit assessment by a third-party SAP licensing expert before your official audit is due​. They can spot compliance issues in advance and suggest fixes. Yes, it costs some money, but often far less than an audit settlement would. Additionally, if an audit becomes complex while it’s underway, having experienced negotiators on your side can pay off. Firms that specialize in SAP audit defense know SAP’s playbook and where there’s room to negotiate. They can also calculate your effective license position more accurately, so you know when SAP’s claims are exaggerated. In high-stakes audits, with potential exposure in the millions, this expertise is invaluable for the CIO and CFO to level the playing field.
• Negotiate during procurement and renewals: The best time to handle audit risks is when you have leverage, such as before signing a new deal. When buying additional SAP licenses or renewing maintenance, negotiate terms that will benefit you in the future. For example, try to get an explicit clause covering a planned indirect use case, or include affiliate usage for a new acquisition at no extra cost. You might consider negotiating a bulk license pool instead of rigid user types to offer more flexibility. Also, if SAP presents a hefty compliance finding, see if you can bundle its resolution into a bigger purchase at a discount. Essentially, use your purchasing power to mitigate audit pain. It won’t eliminate audit rights, but it can pre-solve some issues.
• Establish an Audit Response Plan: Don’t be caught scrambling when the audit notice arrives. Have a plan: designate an internal audit response team that includes a licensing manager, an IT representative, a procurement representative, and someone from legal or contracts. Ensure that everyone knows their role – who will gather the data, who will interface with SAP auditors, and who will verify the results. Also, plan to validate the data before sending it to SAP – e.g., run LAW and let your team review the output for obvious errors (such as users not being classified) and make the necessary fixes before handing it over. This isn’t falsifying data; it’s ensuring accuracy. The CFO’s office should be in the loop early to set the tone that the company will cooperate but also protect its interests. Treat an audit like a project with executive sponsorship, such as that of the CIO or CFO, rather than just an IT task.
• Stay Current on SAP Licensing Changes: SAP licensing rules evolve (e.g, new digital access policies, changes in user definitions, new bundling of products). Make it someone’s job to stay up-to-date on SAP announcements, webinars, or ASUG user group discussions related to licensing. For instance, SAP recently adjusted some Digital Access document definitions and provided new tools – these could benefit you or change your compliance status. If you’re aware of it, you can take action (maybe SAP offers a new license model that would save you money, or a limited-time amnesty for certain compliance issues). In contrast, if SAP changes something and you’re unaware, an audit might apply the new rules without you even realizing what happened. Keep your knowledge up to date to avoid being blindsided by “fine print” updates.

By following these recommendations, CIOs and CFOs can dramatically reduce the risk of an ugly surprise in an SAP ECC license audit. The overarching theme is control and visibility: take control of your licensing position, maintain visibility into usage, and don’t give SAP easy targets.

An SAP audit is essentially a test – if you prepare continuously, you won’t panic when the test comes, and you’ll pass with minimal “fees.” On the other hand, if you neglect license management, SAP will make you pay (literally) for that mistake.

Read How to Prepare for a SAP License Audit.

Building an SAP Audit Defense Strategy

Preparing for an SAP license audit requires a well-planned defense strategy to ensure compliance, minimize risks, and avoid unexpected costs.

An effective audit defense strategy helps you respond to the audit and positions your organization to manage SAP licenses more efficiently in the long term.

Here’s how to build a robust SAP audit defense strategy:

1. Understand Your SAP Licensing Agreement

• Comprehensive Review: Start by thoroughly reviewing your SAP licensing agreements. Understand the licenses your organization holds, the specific terms and conditions, and any unique clauses that may apply to your situation.
  • Example: If your agreement includes indirect access clauses, ensure you fully understand how third-party systems accessing SAP data are licensed. Misunderstandings could lead to significant compliance issues during an audit.
• Document Interpretation: Work with independent licensing experts to interpret complex licensing terms. These experts can help you identify potential risk areas and ensure that your understanding of the agreement aligns with SAP’s interpretation.
  • Example: An independent expert might identify that certain users classified under “Professional User” licenses could be reclassified under a less expensive license type, reducing costs without breaching compliance.

2. Conduct Regular Internal Audits

• Proactive Auditing: Conduct regular internal audits to monitor your SAP usage before an official SAP audit is announced. This includes running tools like the User and System Measurement Management (USMM) and License Administration Workbench (LAW) to gather accurate data.
  • Example: An internal audit might reveal that several former employees still have active SAP accounts. Deactivating these accounts reduces the licenses needed and prevents potential compliance issues.
• Usage Tracking: Monitor all SAP system usage, including user activity, license allocation, and system access patterns. Regularly updating this information helps you stay compliant and quickly address any discrepancies.
  • Example: If your internal audit reveals that a department uses SAP more intensively than initially anticipated, you can adjust its license allocation accordingly, ensuring compliance before the official audit.

3. Optimize License Management

• Right-Sizing Licenses: Evaluate your current license allocation to ensure that each user has the appropriate type of license based on their actual usage. This process, known as license right-sizing, helps to avoid overpaying for licenses and reduces the risk of under-licensing.
  • Example: If many employees use SAP only for basic tasks, such as viewing reports, they may not require full “Professional User” licenses. Reallocating these users to less expensive “Employee User’ licenses could result in significant cost savings.
• License Reallocation: Regularly review and reassign licenses as roles and responsibilities within your organization change. This dynamic license management approach ensures you always comply with your licensing agreement.
  • Example: After a reorganization, a team that previously required “Developer” licenses may no longer need them. Reallocating those licenses to another team that needs them more can optimize your license usage and prevent unnecessary purchases.

4. Maintain Accurate Documentation

• Record-Keeping: Maintain detailed records of all SAP-related activities, including user access logs, system configurations, and any changes in license allocations. This documentation will be invaluable during an audit and provide evidence of your compliance efforts.
  • Example: If SAP auditors question the classification of certain users, you can refer to your records to demonstrate that the licenses were assigned according to the agreed terms.
• Audit Trail: Ensure that all changes to SAP licenses and configurations are thoroughly documented, creating an audit trail that can be reviewed during an audit. This transparency can help resolve any disputes quickly.
  • Example: If you reclassified a group of users from “Professional User” to “Employee User,” documenting the rationale and process for this decision can help defend your actions during the audit.

5. Engage with Independent Licensing Experts

• Pre-Audit Consultation: Engage independent SAP licensing experts to conduct a pre-audit review. These experts can help you identify and correct potential compliance issues before the official audit begins, reducing the risk of penalties.
  • Example: An independent expert might discover that your organization has been overlicensed in certain areas. Adjusting your license usage can reduce costs and strengthen your case during the audit.
• Audit Defense Support: If the audit identifies compliance issues, these experts can help negotiate with SAP and ensure that any additional licenses or fees are fair and justified.
  • Example: If SAP auditors claim that your organization owes additional fees for indirect access, an independent expert can present evidence of actual usage and compliance to help negotiate a more favorable outcome.

6. Prepare for Potential Negotiations

• Audit Findings Review: After receiving the audit report, carefully review the findings. Understand how SAP arrived at its conclusions and be prepared to question any discrepancies or unclear areas.
  • Example: If the audit report indicates you need to purchase additional licenses, verify that the calculations are accurate. If there are any discrepancies, be ready to provide evidence from your records to challenge the findings.
• Negotiation Strategy: Develop a strategy to minimize additional costs while ensuring ongoing compliance. Be prepared to discuss alternative solutions, such as reallocating existing licenses or implementing new processes to manage usage more effectively.
  • Example: If SAP proposes that you purchase additional licenses, you might negotiate for a grace period to reallocate existing licenses instead, potentially saving your organization a significant amount of money.

In Summary, building a robust SAP audit defense strategy involves understanding your licensing agreements, conducting regular internal audits, optimizing license management, maintaining accurate documentation, and engaging with independent experts.

By taking these proactive steps, your organization can effectively prepare for an SAP audit, ensuring compliance and minimizing financial risks.

A well-prepared defense strategy helps you navigate the audit process and strengthens your SAP license management practices.

FAQs on SAP License Audits

What is an SAP license audit?

An SAP license audit reviews a company’s SAP usage and licensing to ensure compliance with contractual agreements.

What is the role of SAP auditors before the submission deadline?

SAP auditors are responsible for repeatedly contacting end users to verify the measurement status and remind them of the submission deadline.

How can measurements be sent to SAP?

Measurements can be sent directly from the tools to SAP or as email attachments formatted according to SAP requirements.

What happens if measurement errors are identified?

If errors are found, the SAP auditor will email the customer to request corrections. The deadline for updating the measurement is typically extended by a week.

Who evaluates the measurement results?

The auditors are responsible for evaluating the measurement results, which involve various technical verifications and analyses.

What is the role of the SAP license compliance managers?

They work closely with the auditors to compare the measured figures with the contractual license entitlement.

What is a Closure Notification Email?

This communication is sent to the customer after the measurements have been evaluated. It confirms the completion of the audit and indicates whether any compliance gaps have been identified.

What is an Enhanced Audit?

An Enhanced Audit is a more thorough audit led by licensed compliance managers, compliance team executives, and SAS experts. It includes additional measurements and a unique measurement of indirect access usage.

How are indirect access usage levels researched during an Enhanced Audit?

When SAP auditors arrive on site, they will investigate the levels of indirect access usage by checking interactions between SAP and non-SAP systems, the direction of data flow, and how data is transferred.

Are customers required to participate in SAP annual license audits?

Customers must participate in annual license audits, during which SAP audit tools review license usage.

What is the role of the SAP License Audit Workbench (LAW)?

LAW measures SAP-named users based on how customers have classified them. However, it cannot determine how users should have been licensed.

What happens if users are classified incorrectly?

If users are incorrectly classified, customers may buy the wrong licenses, leading to significant over-licensing.

What is the impact of not expiring unused user accounts?

If unused user accounts are not properly locked and expired, they can still be active for licensing purposes and will be counted by LAW, potentially leading to over-licensing.

What is a Self-declaration audit?

A self-declaration audit involves the customer self-declaring software use based on their configurations. Technically, it’s not a full SAP license audit.

Are all SAP products in-scope for an annual SAP License Audit?

No, only certain SAP products are in scope. The SAP License Audit Workbench only measures ABAP systems, not Java-based ones.

If I don’t hear back from SAP following my annual license audit, does that mean I am compliant?

Not necessarily. SAP may be unable to review every annual license audit submission in detail. Issues can be missed or not brought to the customer’s attention at the time.

Are SAP License Audit Workbench measurements always accurate?

Is the SAP License Audit Workbench a Software Asset Management (SAM) tool?

No, the SAP License Audit Workbench is primarily a tool for collecting data on SAP. It doesn’t provide visibility into usage, licensing costs, or functionality for actively managing licenses and configurations.

Does the SAP License Audit Workbench help identify indirect access within my landscape?

At least License Audit Workbench 2.0 does this by examining transactional load via technical user accounts to interface third-party systems with SAP.

What is the purpose of the USMM TCode?

USMM TCode is designed to count active dialog users with customer-assigned license types from a valid price list.

What happens if a user is assigned a blank license type?

If a user is assigned a blank license type, the USMM TCode assigns them an expensive professional license.

Does the USMM TCode collect license usage data from all systems?

No, it only collects data from ABAP systems, excluding the Java stack.

What kind of license usage data does the USMM TCode collect?

USMM TCode collects license usage data, including Named Users, Indirect Usage data, Managed Engine usage, peak concurrent Logon sessions, and Professional Users.

Has the introduction of SAP S4 Hana changed license definitions?

Yes, with the introduction of SAP S/4HANA, license definitions have changed significantly from those in legacy ECC to those in S/4HANA, including the HANA Database License.

Negotiating SAP License Audit Settlements

The SAP audit negotiation phase becomes crucial when an SAP license audit reveals compliance issues. Handling this process can significantly impact your organization’s financial and operational future.

Understanding what to look for, the tactics to employ, and the mistakes to avoid can help you navigate this complex negotiation effectively.

Read more about SAP License Audit Negotiations.

What to Look For During Negotiation

1. Accurate Understanding of Audit Findings:
   • Verify Audit Results: Before entering negotiations, thoroughly understand the audit findings. Cross-check SAP’s calculations with your internal data to identify any discrepancies.
   • Example: If SAP’s audit report claims you are under-licensed by 200 users, but your internal audit shows only 150 unaccounted for, you must clarify this difference before negotiating any settlement.
2. Clarity on Licensing Requirements:
   • Understand License Types: Ensure you understand the different SAP license types, such as “Professional User” or “Employee User”, and how they apply to your organization’s usage.
   • Example: If SAP suggests purchasing additional “Professional User” licenses, but many users only require “Employee User” access, negotiate to adjust the licensing mix accordingly.
3. Potential for License Optimization:
   • Explore Reclassification: Look for opportunities to reclassify or reallocate existing licenses rather than purchasing new ones. This can often lead to significant cost savings.
   • Example: Reclassifying some “Professional Users” to “Employee Users” based on usage might reduce the additional licenses you need to buy.
4. Opportunities for Bundling or Discounting:
   • Negotiate for Discounts: If you need to purchase additional licenses, consider negotiating for volume discounts, bundling opportunities, or extended payment terms.
   • Example: If SAP requires you to purchase many new licenses, negotiate for a bundled discount or an extended payment plan to ease the financial impact.
5. Review of Indirect Access Charges:
   • Clarify Indirect Access: Indirect access charges can be a significant cost in SAP audits. Ensure you fully understand how SAP has calculated these charges and explore ways to minimize them.
   • Example: If SAP has imposed indirect access charges for a third-party CRM system, discuss whether the usage justifies the charges or if a more cost-effective licensing solution is available.

Tactics for Successful Negotiation

1. Engage Independent Licensing Experts:
   • Leverage Expertise: Hire independent SAP licensing experts to interpret the audit results, identify potential errors, and develop negotiation strategies.
   • Example: An expert might uncover that SAP overestimated the number of users requiring a particular license type, giving you leverage to negotiate a lower settlement.
2. Prepare a Strong Business Case:
   • Document Your Position: Prepare a comprehensive business case detailing your usage, the steps you’ve taken to ensure compliance, and any discrepancies in the audit.
   • Example: Presenting a well-documented case showing that SAP’s user count includes inactive accounts or duplicates can strengthen your negotiation position.
3. Explore Alternative Solutions:
   • Consider All Options: Be open to alternative solutions, such as adjusting how certain users access SAP systems or implementing new processes to reduce indirect access risks.
   • Example: Instead of agreeing to purchase additional licenses, propose implementing a different access method to reduce indirect access fees.
4. Keep the Long-Term Relationship in Mind:
   • Maintain Good Relations: While negotiating firmly is essential, keep the long-term relationship with SAP in mind. Aim for a resolution that is fair and sustainable for both parties.
   • Example: Propose a phased implementation of license adjustments or a long-term plan to ensure compliance, which could be more acceptable to both parties than a large, immediate purchase.
5. Be Ready to Walk Away:
   • Know Your Limits: If SAP’s proposed terms are unreasonable, be prepared to leave the negotiation. Sometimes, the threat of not reaching an agreement can lead SAP to offer more favorable terms.
   • Example: Indicating that your organization might seek alternative software solutions if a fair agreement isn’t reached can be a powerful negotiating tool.

Common Mistakes to Avoid

1. Rushing the Negotiation:
   • Take Your Time: Don’t rush the negotiation process. Carefully review all audit findings and proposed settlements before agreeing to anything.
   • Example: Agreeing to SAP’s initial proposal without fully understanding the implications could lead to unnecessary costs or unfavorable terms.
2. Overlooking the Fine Print:
   • Read the Details: Consider the fine print in any settlement agreement. Look for clauses that may impose additional costs or future obligations.
   • Example: A clause requiring you to purchase additional licenses under specific conditions might seem minor now but could lead to significant expenses later.
3. Failing to Document the Process:
   • Keep Records: Document all communications and decisions made during the negotiation process. This documentation is essential if disputes arise later.
   • Example: Keeping a detailed log of emails, meeting notes, and agreed terms can protect your organization if SAP later disputes aspects of the settlement.
4. Ignoring Future Implications:
   • Think Long-Term: Consider how the settlement will impact your organization. Ensure that any agreements made now will not lead to compliance issues later.
   • Example: Agreeing to a license purchase that only meets short-term needs might leave your organization vulnerable to future audits and additional costs.
5. Underestimating SAP’s Position:
   • Respect Their Leverage: Recognize that SAP has extensive experience in these negotiations and will likely have a strong initial position. Be prepared to counter this with well-researched arguments.
   • Example: Assuming that SAP will agree to significant discounts without a solid business case could lead to unsuccessful negotiations.

Read more about our SAP Audit Defense Service.

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