SAP License Audit Readiness & Compliance – Preparing for SAP License Audits
Executive Summary
SAP license audits are a routine yet high-stakes event for enterprises running SAP ECC or S/4HANA. CIOs must ensure their organizations are audit-ready to avoid surprise costs and compliance penalties.
This playbook provides a strategic overview of SAP license compliance management and audit preparation.
Key takeaways include:
- Importance of License Compliance: Non-compliance can result in significant unbudgeted fees or legal disputes. Proactive management of SAP licenses protects the company’s financial and legal interests.
- Common risk areas include misclassified users, unused accounts, indirect (third-party) usage, and exceeding licensed metrics (such as engines or packages). These are primary risk factors to address.
- Audit Preparation Tactics: Leverage SAP’s measurement tools (USMM and LAW) for internal audits, clean up user records and roles, monitor usage against entitlements, and mitigate indirect access exposure through SAP’s “Digital Access” model or alternative licensing strategies.
- Strategic Recommendations: CIOs should implement ongoing license governance, conduct regular internal compliance reviews, and establish cross-functional teams that include IT, procurement, and legal to manage SAP licenses. By treating license management as a continuous process rather than a one-time event, organizations can negotiate from a position of strength and avoid costly true-ups.
Background Context
Why SAP License Compliance Matters: SAP software is mission-critical and licensed under complex agreements; enterprises invest millions in SAP licenses, and contracts often grant SAP the right to audit usage periodically, typically on an annual basis.
These audits verify that the customer’s actual usage aligns with the licenses purchased. If audits find under-licensing (usage exceeding entitlements), the customer must purchase additional licenses (often immediately, at list price) and may owe back maintenance fees.
This can amount to millions in unplanned costs – for example, a well-known 2017 legal case saw an SAP customer liable for over £54 million in fees due to unlicensed indirect usage. Even over-licensing (owning more licenses than needed) is problematic, as it ties up capital in shelfware.
SAP’s Audit Process: SAP’s Global License Audit and Compliance (GLAC) organization, recently rebranded as Global Adoption Insights & License Compliance, conducts audits with an emphasis on compliance and customer adoption insights.
In practice, the audit process still requires customers to run SAP’s measurement programs and submit data for review. Typically:
- SAP notifies the customer of an upcoming audit, now referred to as a “License Measurement Service” or similar, although the purpose remains the same.
- The customer runs system measurement tools on each SAP system (described below) and compiles usage data, including named user counts and consumption of engine metrics.
- The customer also fills out self-declaration forms for any additional metrics that are not captured automatically (e.g., specific package licenses or indirect use details).
- SAP’s audit team analyzes the submitted data. In a basic audit, they verify compliance based on provided measurements. In an enhanced audit, also known as a premium engagement audit, SAP may scrutinize user classifications, cross-check authorizations, examine indirect access, and even perform on-site validation.
- After the analysis, SAP presents an audit report. If gaps are identified, the customer is expected to purchase the required licenses to close the shortfall, often referred to as “truing up.” In some cases, SAP may also identify misclassified licenses (e.g., users assigned to a license type that is too low) and require reclassification, as well as additional fees.
ECC vs. S/4HANA vs. Cloud: For on-premises SAP ECC or S/4HANA, the audit focuses on classic named user licenses and engine metrics. In hybrid landscapes (e.g., SAP on-premises integrated with cloud services like Ariba, SuccessFactors, or S/4HANA Cloud), compliance management must cover both worlds – on-premises usage measured by internal tools, and cloud subscriptions, which SAP tracks via its cloud metering.
Each cloud service has its own usage metrics, typically user counts or transactions, and can be audited separately. However, the core principles of license compliance – ensuring you have entitlements for all actual usage – remain the same.
CIOs should be aware that moving to S/4HANA (especially RISE with SAP or other cloud models) doesn’t eliminate audits; it changes how they are conducted. SAP’s audit teams now also offer services like Cloud consumption analysis and Digital Access evaluations, reflecting new licensing models in the S/4HANA era.
In summary, SAP license compliance is both a compliance necessity and a cost optimization opportunity.
By understanding how audits work and why they matter, CIOs and IT executives can steer their organizations to both avoid compliance failures and minimize license overspend.
Key Compliance Risks
SAP’s licensing model presents several common compliance risk areas that CIOs should address proactively:
- User Classification Errors (Professional vs. Limited, etc.): Every SAP user ID is assigned a license type (e.g., Professional, Limited Professional, Employee, Developer), which determines the actions that the user is entitled to perform. A frequent issue is misclassification – for instance, classifying a heavy user as a cheaper “Limited” user type. During an audit, SAP’s tools will count users as classified by the company, not based on how they use the system. This means if a user who should be a Professional is mistakenly classified as a Limited user, the measurement won’t automatically flag it – compliance responsibility lies with the customer. Conversely, if you classify someone too conservatively (e.g., as a Professional when they only do basic tasks), you might be overpaying. It’s especially important to keep classifications consistent across systems. If the same person has accounts in multiple SAP systems with different license types, SAP will consider the highest classification as their true license. A user left unclassified or inconsistently classified will default to a Professional user in LAW’s consolidated results – SAP’s most expensive user category. In short, any error in user license assignments can directly translate to compliance gaps or wasted spend.
- Inactive or Unused Users: SAP licenses are typically “named user” licenses – each active user account that is not explicitly retired may count as a license in use. SAP’s measurement tools count every active user ID (not marked as expired or locked), regardless of actual activity. This poses a risk if companies do not regularly clean up user accounts. Former employees, contractors, or test accounts that are no longer needed should be removed or properly locked and excluded from license counts. Otherwise, you might be seen as using more licenses than you need. Inactive users inflate the license count and could force unnecessary purchases. For example, if 15% of users in your system haven’t logged in for a year but are still “active,” an audit would count them, potentially pushing you over your license allotment. Regular user recertification and de-provisioning are critical – removing or deactivating dormant users can immediately reduce license consumption and lower compliance risk.
- Indirect/Digital Access: Indirect access, also known as “digital access” in SAP’s newer terminology, is one of the most significant and nuanced compliance risks. Indirect access occurs when people or devices use SAP through third-party systems, rather than directly logging in to SAP. Classic examples include a customer web portal that creates orders in SAP, a third-party CRM integrated with SAP, or IoT sensors updating SAP data in the background. Historically, SAP required that any individual or system using SAP data had an appropriate license, even if they didn’t log in directly – this led to confusion and some high-profile disputes (e.g., the Diageo case, where a Salesforce front-end indirectly using SAP led to a massive license claim). In 2018, SAP introduced the Digital Access model to provide a clearer framework. Instead of requiring named-user licenses for indirect usage, Digital Access charges based on the number of specific document types created or accessed by external systems, such as sales orders, invoices, and purchase orders. There are nine core document types defined by SAP that incur digital access fees. Customers now have the option to adopt this model (often through a contract amendment) or continue using traditional named users for all usage. Compliance risk arises if indirect use is not licensed at all. Many organizations overlook processes where a non-SAP application triggers events in SAP. During an audit, SAP will analyze system logs and interface accounts to detect high-volume transactions that may indicate indirect use. If found, SAP will expect you to have corresponding licenses (either sufficient named users to cover all external users or a digital access agreement covering the documents). If neither is in place, the audit findings can be extremely costly. CIOs must inventory all third-party integrations to SAP and ensure there’s a license strategy for each (e.g,. adopting digital access licensing or assigning partner accounts proper user licenses). Indirect access compliance is complex, but it cannot be ignored – SAP has stepped up its focus on it. Policies have evolved, so staying current on SAP’s indirect usage rules is essential.
- Engine/Package Usage (Volume-Based Licensing): In addition to named user licenses, SAP software includes many “engines” or packages licensed by specific metrics, sometimes referred to as package licenses or named by functionality, such as SAP Human Capital Management, SAP Sales and Distribution, and SAP HANA. These engines have unit-based metrics – common examples include: number of employees (for an HR module), number of sales orders processed, annual revenue, database size, or CPU cores used. When you purchase such an engine license, your contract specifies a metric allowance (e.g., up to X employees or Y orders per year). Compliance risk occurs if your actual usage of that metric exceeds what you’ve licensed. For instance, if your SAP contract allows for 1,000 named employees in an HCM module and your HR system grows to 1,200 active employees, you are underlicensed for that engine. Similarly, if a manufacturing company licensed SAP Plant Maintenance for up to 500,000 maintenance orders per year, but the system is processing 600,000, they are out of compliance. These overages would be identified either through self-declaration or audit and would require true-up fees. Some engine metrics are not automatically measured by SAP tools (or are only partially covered); therefore, it is up to the customer to track them. Ignoring engine license limits can lead to significant compliance gaps – often, these metrics grow in line with business growth or new initiatives (e.g., a new product line resulting in more transactions). CIOs should ensure that each metric-based license is monitored by the business owner (for example, Finance should track if SAP Financials’ “annual revenue” metric aligns with company growth). It’s prudent to implement internal checks or reports for these metrics and include them in regular license compliance reviews.
In summary, these key risk areas – user licensing errors, stale accounts, indirect usage, and engine metric overages – are the most common culprits behind SAP audit findings. Awareness and active management of these areas greatly reduce the likelihood of an unpleasant audit surprise.
Tools for Internal Review
SAP provides built-in tools to help customers measure and manage license usage internally. CIOs should mandate the regular use of these tools (not just during audits) to understand the organization’s license position.
The primary tools and practices include:
- SAP System Measurement (USMM): The Usage Measurement (transaction USMM in SAP ERP systems) is the core tool that collects raw license data from each system. USMM collects details on named users and their classifications, as well as engine and package usage statistics. When run, USMM will produce lists of users by license type (as currently classified in the system) and counts of various SAP packages’ consumption (for example, the number of SAP SD documents, the number of HR employees, etc., as applicable to the system). It also flags “technical users” (background accounts), which might indicate indirect access if heavily used. Running USMM on each productive system is a required step of the audit, but as a best practice, companies should run it internally at least once or twice a year. Regular USMM checks can highlight anomalies, such as a user classified as “Employee” executing transactions that might require a Professional license, or an engine usage that is trending above the licensed amount. By reviewing USMM output, the license manager can correct misclassifications and address issues before the official audit.
- License Administration Workbench (LAW): In landscapes with multiple SAP systems (typical for large enterprises, such as separate ERP, BW, CRM, etc.), the LAW tool is used to consolidate and reconcile data from USMM. LAW (sometimes called SLAW for System Landscape LAW) takes the measurement results from each system and deduplicates users across systems. For example, suppose the same person, “J. Smith,” has accounts in three systems. In that case, LAW can identify that linkage (usually via user ID or mapping tables) and count J. Smith only once for licensing purposes, instead of three times. This prevents over-counting named users. LAW also aggregates engine metrics from all systems to present one combined usage report. After consolidation, LAW generates an audit package that can be sent to SAP. For internal use, LAW’s consolidated report is extremely useful to compare against your license entitlements. LAW has evolved; the newer LAW 2.0 runs via a web interface and offers simulation features to model license scenarios. One key feature is the ability to simulate “what-if” changes – e.g., you can adjust a user’s license classification in the LAW data and see how it affects the overall counts. This helps in planning reclassifications or estimating the impact of shifting users to different license types. CIOs should ensure their IT teams are comfortable using LAW to perform an internal license reconciliation at least once a year (ideally a couple of months before the contractual annual measurement is due). The output will show how many of each license type you are consuming versus how many are purchased, across the whole landscape.
- Cross-System Reconciliation and Cleanup: Using the data from USMM/LAW, organizations should perform a reconciliation exercise. This means verifying that for each physical person or service account using SAP, there is one consistent license classification and that duplicate accounts are linked. It also means identifying accounts that can be deleted or excluded. For example, if an employee has left the company but their SAP account remains active in a system, now is the time to properly retire that account so it doesn’t count. Reconciliation also includes verifying that test systems or duplicate clients are not incorrectly counting users. Often, non-production systems are set not to count users for license purposes. Typically, contracts stipulate that only production systems are counted, although all systems must be measured. Ensuring the LAW grouping is correct (production vs non-production) is part of this internal review. This cleanup directly reduces license count and risk. Companies that perform these internal reconciliations often find that 5-15% of users can be retired or downgraded, which both reduces cost and ensures compliance.
- Mapping Usage to Entitlements: Once you have measurement data (ideally after LAW consolidation for a complete picture), the next step is analysis: compare the measured usage to your entitled licenses. This means looking at each category of user licenses – e.g., 500 Professional, 300 Limited – and each engine metric, against what your contracts state you own. A simple internal spreadsheet or dashboard can track year-over-year changes. If usage is near or above entitlement in any area, that’s a red flag to address before SAP’s auditors do. For instance, if LAW reports 510 Professional Users but you only have 500 licensed, you either need to quickly reclassify 10 users to a lower category (if appropriate and justified by their actual usage) or plan to purchase additional licenses. Similarly, if an engine (such as the “SAP ERP Financials – Orders” metric) shows 105% of the licensed amount, you should investigate the reason and consider negotiating additional capacity. By mapping in this way, the CIO and license management team have a clear view of compliance status. Some companies integrate this into their IT asset management systems or use third-party SAP license management tools to continuously monitor entitlements versus usage. The goal is to never be surprised by the audit: you should already know the outcome (and have taken corrective actions) before SAP reviews your data.
- Supplementary Tools: In addition to SAP’s standard tools, organizations can leverage SAP Solution Manager, which centralizes license data across systems, or third-party Software Asset Management solutions tailored for SAP. These can automate the collection of USMM data and provide more frequent monitoring. SAP now also provides the “SAP for Me” License Consumption dashboard for customers, where you can upload measurement results and view your license utilization compared to entitlement in a user-friendly portal. CIOs should ensure that their teams utilize these resources for ongoing compliance oversight.
By regularly using USMM and LAW (and similar tools) as internal audit tools, companies can identify and address compliance issues on their timeline.
This dramatically reduces the risk of a negative audit surprise and puts the organization in a stronger position to negotiate if additional licenses are needed. It’s much better to identify a shortfall internally and address it (or seek an appropriate license deal) than to let SAP discover it and dictate terms.
Tactics for Audit Preparedness
Preparing for an SAP license audit shouldn’t be a frantic, last-minute scramble. It should be the culmination of steady license management practices.
CIOs can guide their teams to adopt the following tactics well in advance of any official audit notification:
- Role-Based License Mapping and User Cleanup: Align SAP user licenses with business roles and actual usage. This starts with analyzing what transactions and activities each role in the organization performs in SAP. For example, a procurement clerk might only need an Employee or Limited User license if their tasks are restricted, whereas a finance manager likely needs a Professional license. By mapping job roles to appropriate license types, you create a template that ensures new user accounts are assigned the correct license from the start. Next, perform a license cleanup for existing users: review high-level usage logs or transaction histories to identify mismatches (e.g., someone classified as “ESS (Employee Self-Service)” but executing create or change transactions that should be Professional). Tools or scripts can help automate this analysis by comparing user authorization profiles to license definitions. When you find misclassified users, correct their license type or adjust their access rights.Additionally, periodically remove or lock unused accounts as discussed earlier. One effective practice is to implement an attestation process, where managers confirm their staff’s access needs annually. Any accounts not confirmed or no longer needed are deactivated. By enforcing role-based licensing and scrubbing unnecessary users, you ensure your license count reflects active, legitimate usage only. This not only readies you for an audit, but often yields cost savings by eliminating surplus accounts.
- Automating License Assignment and Monitoring: Manual license management can’t scale in a large enterprise. Automate wherever possible. For instance, incorporate license type assignment into the user provisioning workflow. When a new SAP user is created via an identity management system or HR trigger, have rules that assign the appropriate license based on their job role or a template user. Some organizations maintain a “license catalog” that maps roles to license types and has provisioning scripts set the user’s classification in SAP accordingly. Beyond assignment, automate monitoring: schedule a monthly report (or use a third-party tool) to flag if any user’s activity exceeds their license scope. SAP’s engine for Governance, Risk and Compliance (GRC) or other solutions can detect if a Limited user executed a transaction reserved for Professional users. For example, an automated alert can then prompt the SAP admin to re-evaluate that user’s classification. Automation can also help with repetitive audit prep tasks, such as running USMM and LAW and compiling the results. By automating these processes, the organization can maintain near real-time compliance insight. This reduces the last-minute workload when an audit is announced and ensures ongoing adherence to rules. CIOs should invest in tools or develop scripts to make SAP license management as real-time and rule-driven as possible, rather than an annual manual exercise.
- Engine Usage Tracking and Forecasting: For every metric-based SAP license (engines or packages), implement a tracking mechanism owned by a relevant department or the IT asset management function. For example, if you have an SAP licensing metric based on annual revenue, tie it to the Finance team’s reports. If it involves several CRM users or orders, tie it to Sales or IT’s monitoring of those systems. Collect these metrics on a quarterly (or at least semi-annual) basis and compare them to your licensed entitlements. Forecast the trends: if the business is growing 10% year-over-year in terms of order volume, anticipate that you may exceed current license limits next year. With this foresight, the CIO can approach SAP for an anticipatory license extension or upgrade as part of normal budgeting, rather than making a reactive purchase under audit pressure. Document how you calculate these metrics and keep records, so during an audit, you can confidently show SAP auditors your method and data (and catch any discrepancies in SAP’s understanding). It’s also wise to simulate peak usage – for example, if your license is based on annual peak values, ensure you know when your busy season is and measure usage during that time. By treating engine licenses like you would capacity planning (e.g., tracking CPU or storage usage against limits), you avoid compliance overshoot. In audit preparation, having a clear engine usage report that shows current use versus licensed capacity, along with projections, demonstrates to SAP that you are on top of compliance (and may even deter aggressive findings). Should any metric be near its limit, proactively decide whether to curtail usage (if possible) or negotiate an increase before the audit concludes.
- Managing Indirect Access Proactively: Indirect access, which involves third-party systems interfacing with SAP, deserves a focused plan. Start by cataloging all integrations with SAP, both inbound and outbound. For each interface, determine if it merely moves data between SAP and another system for internal use (sometimes called indirect static read, which SAP may not charge for) or if it enables non-SAP users to trigger SAP transactions. For any integration that allows you to create or update SAP documents from outside (such as orders, invoices, shipments, etc.), assess your licensing approach. SAP offers two main approaches now: Named User licensing for Indirect Use: This means every individual (or system) indirectly using SAP is covered by some named user license. In practice, this is hard to manage if external parties are involved (e.g. hundreds of customers using a portal – you likely wouldn’t buy each a license). It might be more applicable if the indirect use is within the company (e.g., employees using a non-SAP front-end – you
- ensure they have an SAP login license somewhere). Digital Access licensing: This newer model charges for the documents themselves. SAP’s Digital Access Adoption Program (introduced in 2018 and updated in 2021) allows customers to adopt this model – often by converting some existing user license value into a pool of digital document licenses. Under digital access, you count the documents (out of the 9 types) created by any external system and license them in blocks (for example, you might purchase rights for X thousand documents per year of each type). One benefit is that it decouples external user numbers from cost – whether you have 100 or 10,000 users, you pay for the document count. The challenge is measuring those documents: SAP provides a Digital Access Estimation tool and SAP Passport technology to help identify documents generated indirectly. CIOs should strongly consider conducting a Digital Access evaluation (SAP offers a free service for this) to see if this model makes sense for their environment.
- Stay Informed on SAP Licensing Policy Changes: SAP periodically updates its licensing models and audit programs. For instance, the recent renaming of the audit organization to GLAC came with promises of a more transparent, advisory approach. SAP also updates definitions of user types, metrics, and bundling options, such as removing the Limited Professional user license for new contractsor introducing new cloud metrics. The license management team needs to stay informed about these changes through SAP’s support notes, webinars, or consulting advisors. By understanding SAP’s current policies (such as what is free versus charged in indirect usage and how S/4HANA licensing differs), you can adjust your compliance tactics accordingly. For example, SAP has clarified that certain indirect scenarios, such as “static read” (reports extracted from SAP and viewed externally), do not require an additional license – knowing this, you can avoid over-counting those. Likewise, knowing that new S/4HANA contracts require digital access for indirect use could influence your migration strategy. In short, staying up to date with SAP’s licensing rules and audit focus areas allows you to prepare the right defenses and avoid compliance issues based on outdated assumptions.
By executing these tactics, an organization will effectively make itself audit-proof. When SAP’s official audit eventually occurs, the internal team will have already done most of the heavy lifting: user counts will be accurate, usage data will be available, and compliance risks will be mitigated. Instead of a stressful event, the audit becomes a straightforward validation exercise.
Real-World CIO Scenarios
To illustrate the above concepts, here are a few scenarios (based on real-world patterns) that show how CIOs have tackled SAP license audit challenges:
- Scenario 1: Cleanup of Dormant Users Yields Immediate Savings – A global manufacturing company was due for its annual SAP audit in six months. The CIO initiated an internal review using LAW. The team discovered that out of ~10,000 named users in the SAP ECC system, about 1,500 had not logged in over the past year. Many were former employees or contractors whose accounts had never been removed. These inactive accounts were still classified as active users, including some costly Professional licenses. The IT asset manager worked with HR to verify departures and promptly deactivated 1,300 accounts that were no longer needed. They also downgraded the license type for 200 users who moved to roles with fewer SAP transactions. As a result, the effective license usage fell well below the company’s entitlement. In the subsequent official audit, SAP’s analysis found the company to be fully compliant, with a comfortable buffer, and no additional purchases were required. The CIO not only avoided a true-up bill but also identified an opportunity to negotiate a reduction in maintenance costs by returning surplus licenses in the next contract renewal. This proactive cleanup demonstrates that regular hygiene in user management directly translates to financial benefits and audit success.
- Scenario 2: Indirect Access Risk Managed Proactively – A large retail enterprise integrated its SAP backend with several e-commerce websites and mobile apps. Customers could place orders that flowed into SAP, and store kiosks queried SAP inventory in real-time. The CIO recognized this as a potential indirect access minefield – thousands of customers and devices were interacting with SAP data indirectly. Instead of waiting for an audit dispute, the company engaged SAP early under the Digital Access model. They used SAP’s Digital Access evaluation service to count the number of documents (such as sales orders and delivery notes) that these channels generated. With that data, the CIO negotiated a Digital Access license package that covered an ample volume of documents per year, converting some of their existing named-user investment into this model. They also implemented monitoring on the interfaces to ensure the document counts stay within estimates. Later, during a routine audit, SAP reviewed their indirect usage and found that the new digital document licenses covered it. The audit report found no issues with indirect access, validating the proactive approach. The CIO’s decision prevented a potential multi-million dollar compliance exposure and provided a predictable cost model for the growing digital business channels.
- Scenario 3: Forecasting Engine Usage to Avoid Compliance Breach – A pharmaceutical company using SAP S/4HANA had licensed an SAP’ Industry Package’ for production planning, limited to a specific number of batch records per month. The CIO’s team included this metric in their quarterly license dashboard. Mid-year, as vaccine production ramped up, they saw the batch record count was trending 20% higher than the licensed limit. Anticipating a compliance issue, the CIO entered negotiations with SAP well before the audit, explaining the business’s growth and securing an upgrade to the package license at a reasonable cost, leveraging planned spending rather than audit penalties. They documented the new entitlement and continued to track usage. When the official audit was conducted at year-end, the measured usage exceeded the old license limit but was within the new, upgraded entitlement. Because the CIO had preempted the shortfall, the company passed the audit with no compliance issues. This scenario highlights the value of forecasting and addressing license needs as part of business planning. By integrating license metrics into operations reviews (in this case, linking it with production forecasts), the CIO turned a potential audit weakness into a well-managed outcome.
Each of these scenarios underlines a common theme: CIO leadership in license management pays off. Whether it’s ensuring the cleanliness of user accounts, taking initiative on indirect usage, or aligning licenses with business growth, proactive steps can turn license compliance from a reactive fire-fighting exercise into a strategic management practice.
Prioritized Recommendations
For CIOs and their license management teams, the following are high-priority actions to enhance SAP license compliance and audit readiness:
- Establish a Dedicated License Compliance Function: Assign clear ownership for SAP license management. Whether it’s a licensing manager, SAM (Software Asset Management) team, or an IT asset owner, designate people responsible for tracking entitlements, running internal audits, and staying current on SAP licensing policies. Ensure this function coordinates with procurement (for contract terms) and the SAP basis and security teams (for user management).
- Conduct Internal License Audits Annually (or More Frequently): Don’t wait for SAP’s audit notice. Schedule an internal “mini-audit” at least once a year using USMM and LAW across all systems. Review the results to catch misclassified users, inactive accounts, and engine usage that is approaching limits. Treat this like an official audit rehearsal – produce a compliance report for internal review and action items to fix any discrepancies.
- Implement Continuous User License Optimization: Enforce policies to regularly review user access vs. license type. For example, mandate that all SAP user accounts be reviewed every quarter for activity and proper classification. Lock or delete dormant accounts. Utilize role-based templates so that as people change jobs or responsibilities, their SAP license type is adjusted accordingly. This ongoing grooming will keep your named user counts accurate and rightsized.
- Monitor and Mitigate Indirect Usage: Create an inventory of all third-party systems that interface with SAP and categorize the type of access (read vs. write, internal vs. external users). For each, decide on a licensing approach (additional named users, a blanket license, or digital access). Implement technical measures to track the volume of transactions from these integrations. If indirect usage is significant, engage with SAP proactively to ensure a clear agreement (such as purchasing a Digital Access license package) is in place. This avoids contentions during audits about what constitutes “indirect use” and how it should be licensed.
- Track Engine License Metrics and Align with Business Growth: For each SAP package or engine in your contract, maintain a dashboard that displays its current usage metrics (users, orders, revenue, etc.). Share this with business owners and incorporate it into capacity planning. If you expect to exceed a licensed metric due to expansion or projects, plan for that by either optimizing usage, negotiating an increase with SAP in advance, or finding alternative solutions. Never let an engine metric exceed 100% without a plan – by the time auditors find it, it’s too late.
- Educate and Engage Stakeholders: Ensure that relevant teams, such as IT operations, SAP security, procurement, and finance, understand the basics of SAP licensing. Provide training or guidelines on how to classify users properly, what constitutes indirect access, and why these matter. Users creating new interfaces or implementing new modules should be aware of licensing implications upfront. Also, keep executives informed of your license compliance status – no CIO wants to explain an unexpected audit bill after the fact. Regularly reporting on compliance helps manage expectations and supports proactive investment in licenses when needed.
- Maintain Thorough Documentation: Keep records of license entitlements (such as contracts and purchase orders) and historical usage reports. Document any assumptions or agreements (for example, if SAP provided written clarification that a certain type of access is included in a license, file that away). During an audit defense, having a well-documented trail of how you calculated usage and what your understanding of the contract is can expedite discussions and resolve ambiguities. Good documentation also helps in turnover scenarios – if key personnel leave, the next team can pick up where the previous team left off without starting from scratch.
- Leverage Advisory Services Carefully: If unsure about your compliance position, consider a third-party SAP license review or use SAP’s own License Advisory services (keeping in mind that SAP’s interest is to ensure compliance, not to minimize your spend). An independent review by a firm experienced in SAP audits can identify hidden risks and optimization opportunities. However, always control the scope of any external or SAP-run analysis to avoid inadvertently triggering a formal audit. Engage legal counsel if needed to interpret contract language for complex scenarios, such as indirect access. Get expert help if you need it, but on your terms.
By following these recommendations, CIOs will build a robust license compliance regimen. This not only reduces the anxiety around SAP audits but also puts the organization in a stronger position to manage software costs. In essence, treat SAP license compliance as an ongoing discipline, not a one-time project. The payoff is fewer surprises, better budget predictability, and a more trust-based relationship with SAP.
