SAP Licensing Pitfalls for CIOs – Staying on Shelfware Maintenance (paying support on modules you don’t use)
Many CIOs and CTOs are unknowingly paying SAP maintenance fees for software modules and licenses that sit unused – a costly form of shelfware. This hidden pitfall quietly drains IT budgets with no business benefit.
In this advisory, we explain how shelfware maintenance happens, its financial impact, and strategies to eliminate these wasted costs so enterprises only pay for software that delivers value.
Read Top 10 SAP Licensing Pitfalls for CIOs.
The Shelfware Maintenance Trap
Shelfware refers to SAP licenses (whether entire modules or user licenses) that have been purchased but are not currently in use in the business.
The trap for CIOs is that SAP’s support contracts automatically charge annual maintenance (typically 20–22% of the software’s license price) on all purchased licenses, even if those licenses are sitting idle.
In practice, this means you continue to pay a yearly support “tax” on modules and components you aren’t using. Over time, these fees accumulate significantly, yielding no return on investment.
SAP’s traditional on-premises model (used in SAP ECC and also relevant for on-premise S/4HANA) is built on perpetual licenses plus maintenance.
Once you buy a module or user license, you’ll keep getting billed for support every year until you proactively terminate that license or negotiate its removal. SAP won’t alert you that you’re not using something – the onus is on the customer to identify shelfware.
This makes shelfware maintenance a hidden but pernicious cost: it often goes unnoticed because invoices continue to arrive with bundled line items, and busy IT departments may not thoroughly scrutinize the usage of each component.
Read SAP Licensing Pitfalls: Overlooking Engine Metrics.
How Does Shelfware Accumulate in SAP Environments?
CIOs often end up with shelfware due to over-provisioning and changing plans. Common scenarios include:
- Bundled Purchases and Overbuying: SAP deals often bundle extra modules “just in case” or as part of suite licenses. For example, an enterprise might have licensed SAP CRM, SRM, or PLM modules as part of a large ERP purchase but never fully implemented them. Optimistic project plans or broad enterprise agreements can overshoot actual needs.
- Mergers & Organizational Changes: After mergers or business changes, companies might inherit redundant SAP systems or modules that become surplus. Similarly, suppose a planned rollout of a module is canceled or the company switches to a different solution (e.g., adopting a third-party CRM). In that case, the SAP equivalent module turns into shelfware.
- Inactive Users and License Churn: Shelfware isn’t just modules – it also includes unused named user licenses. Employees leave or change roles, but their SAP user licenses (Professional, Limited, etc.) remain allocated unless reclaimed. Without regular cleanup, you pay maintenance for users who haven’t logged in for months or years. Likewise, duplicate user accounts across development, test, and production systems can inflate license counts.
- Misaligned License Types: Organizations often default to assigning expensive license types, resulting in unnecessary costs. For instance, providing every user with a Professional license, even those who only require self-service functions, results in paying for premium support for capabilities that are not used. These “oversized” licenses sitting idle are a form of shelfware caused by cautious or one-size-fits-all provisioning.
- Fear of Compliance or “Maybe Someday” Mentality: Some CIOs hesitate to remove or downgrade licenses out of concern that they might need them later or trigger compliance audits. SAP’s complex contracts and naming changes can confuse, leading IT to leave everything as is. The result is shelfware lingering “just in case,” accruing maintenance charges while delivering no value.
Over time, without governance, it’s no surprise that large SAP customers accumulate significant shelfware. Industry assessments frequently reveal that 20–30% of SAP licenses in a typical enterprise are not being actively utilized. This creep happens unless you actively manage and adjust entitlements as your usage evolves.
Read SAP Licensing Pitfalls: Failing to Engage Business Stakeholders.
The Cost of Paying for Unused SAP Modules
Paying support for unused licenses is essentially a waste of money.
SAP’s maintenance fees (around 22% of license value annually for Enterprise Support) mean that in less than five years, you will have paid more than the original cost of a license without using it.
The table below illustrates how the costs accumulate for shelfware:
| Unused License Value | Annual Maintenance (22%) | Maintenance Paid in 5 Years |
|---|---|---|
| $1,000,000 | $220,000 per year | $1,100,000 (110% of original cost) |
| $500,000 | $110,000 per year | $550,000 (110% of original cost) |
In other words, a $1M module sitting idle will still cost about $1.1M in support fees over five years, effectively doubling what you invested with nothing to show for it. Multiply this by the number of unused components, and the waste can reach millions.
For example, one company discovered it was paying over $5 million per year in maintenance for roughly $10 million worth of SAP licenses that were not being used at all. This huge expense had gone unnoticed in the aggregate support bill.
Identifying this shelfware opened the CIO’s eyes to an immediate cost-saving opportunity. The funds tied up in shelfware maintenance are essentially dead weight in the IT budget – money that could be redirected to innovation, new projects, or cloud investments if reclaimed.
Aside from direct financial loss, there’s an opportunity cost and governance issue: CFOs and boards are increasingly scrutinizing IT spend.
Finding out that IT has been paying for “shelf” software for years can erode leadership’s confidence in IT asset management. It’s far better for the CIO to proactively address it than for an auditor or finance leader to point out the waste.
Risks and Pitfalls of Ignoring Shelfware Maintenance
Staying on shelfware maintenance indefinitely comes with several pitfalls:
- Budget Drain: The most obvious risk is the ongoing drain on your IT budget. Every dollar spent on unused software support is a dollar not spent on something productive. Over a typical 5-10 year SAP lifecycle, this could amount to a sizeable portion of your total software spend wasted.
- Missed Investment Opportunities: Those maintenance fees could fund strategic initiatives, such as migrating to S/4HANA, implementing analytics, or enhancing customer-facing systems. By tying up budget in shelfware, CIOs may find it harder to justify or afford new projects.
- Reduced Negotiation Leverage: If SAP knows you’re passively paying for shelfware, they have little incentive to offer concessions. You’re effectively rewarding the vendor for nothing. In contrast, if you take action (even just threatening to drop unused licenses), it can create leverage for better terms or credits in your next negotiation or SAP contract renewal.
- Complexity and Compliance Confusion: Having unnecessary licenses hanging around can complicate compliance analyses. It might not pose an audit penalty if you’re fully paid up, but it adds noise when trying to track what you need. Some organizations leave shelfware on the books out of fear of non-compliance, but this “safety net” rationale often fails to hold up to cost-benefit scrutiny. In reality, you can remain compliant and optimize costs by properly terminating or reallocating unused licenses.
- Lock-In to Outdated Solutions: Paying maintenance on a module you’re not using often means you also haven’t upgraded or innovated in that area. For instance, sticking with a shelfware SAP CRM module (just because you paid for it) might prevent you from exploring better CRM solutions. It’s important not to let sunk cost fallacy dictate your architecture – just because you have an SAP module on paper doesn’t mean it’s the right tool for the job today.
In short, ignoring shelfware is costly and offers no upside. It’s a silent eroder of IT value. CIOs should treat the reduction of shelfware as low-hanging fruit for cost optimization and effective IT governance.
Strategies to Eliminate Shelfware Maintenance Costs
The good news is that shelfware is a reversible problem. CIOs have several strategies to stop paying for software they don’t use:
- Terminate Unused Licenses: The most direct approach is to surrender the unused licenses to SAP and cease maintenance. This involves identifying which module or user licenses are truly not needed and following SAP’s formal process (usually a written notice before your maintenance renewal date) to terminate those licenses. Once terminated, you cease paying support to them in future years. For example, if you have an unused module worth $500,000, giving it up could immediately reduce your annual support bill by approximately $110,000. Be prepared for pushback – SAP account reps may discourage this since maintenance revenue is important to them. However, if you follow contract procedures, you have the right to drop licenses. This is often the single most effective way to eliminate the “tax” of shelfware maintenance.
- Negotiate a License Swap or Credit: If you prefer not to lose the asset value of the shelfware, consider negotiating a swap or trade-in. SAP may allow you to apply the value of unused licenses as credit toward new licenses or products that you do need. For instance, if you own an idle SAP SRM module (procurement) worth $500K and you’d rather invest in, say, SAP analytics or extra S/4HANA users, you can ask SAP to repurpose that $500K value. In a swap, you essentially exchange shelfware for new licenses of equivalent value, often under a new contract or deal. Note: SAP will usually insist that your total maintenance payment doesn’t decrease in a swap – they often use a “maintenance base credit” approach (you keep paying the same amount, but now for something else). This means a swap might not save cost immediately, but it converts wasted shelfware into useful capabilities. Many CIOs view this as a win, as it converts a dormant investment into something that supports current business needs.
- Reduce Maintenance Scope via Negotiation: In some cases, you can negotiate a reduction in maintenance fees for software you’re phasing out. For example, if you plan to retire an SAP module next year, you might ask SAP for a concession – perhaps a temporary maintenance suspension or a lower support rate on that product until it’s gone. SAP’s standard policy is “all or nothing” (i.e., if you own it, you pay full support); however, large customers have obtained exceptions. The key is to articulate that you’re willing to drop the product; SAP might prefer to give a discount rather than lose the maintenance entirely. Any such agreement should be documented in writing (via a contract amendment) to ensure you’re not billed at the full rate.
- Leverage Third-Party Support: Another cost-saving option is to move unused or underutilized SAP products to a third-party maintenance provider. Companies like Rimini Street or Spinnaker Support offer support for SAP at roughly 50% of SAP’s maintenance fees. Organizations often consider this for stable legacy systems or shelfware modules they must retain for data purposes, but don’t actively use or require upgrades for. By switching these to third-party support, you can cut maintenance costs in half while still retaining access to basic break-fix help. Caution: If you leave SAP’s official support, you will forgo future updates or enhancements for that software, and returning to SAP support later can be costly (SAP typically charges back-maintenance to reinstate). Therefore, use third-party support selectively – e.g., for an old SAP module that you’re keeping only for read-only access for compliance purposes, or until you completely sunset it.
- Implement License Recycling: Ensure you have processes to continually reclaim and reassign licenses internally. For user licenses, set up a regular audit (quarterly or biannually) to remove accounts of former employees and re-harvest those licenses instead of purchasing new ones. For engine (module) licenses, when a project is shelved or a system is retired, update the licensing count with SAP or your records immediately. By keeping your entitlements aligned with actual usage, you prevent new shelfware from accumulating. Many CIOs establish a Software Asset Management (SAM) function or assign a licensing specialist to monitor this on an ongoing basis.
- Time Actions with Contract Renewals: SAP maintenance agreements typically renew annually (or on a multi-year cycle), with a required notice period for changes. Mark your calendar for those renewal dates. It’s often most practical to remove or swap shelfware at the natural renewal point. Similarly, if you’re migrating to a new SAP contract (e.g., moving to RISE with SAP or S/4HANA Cloud), that’s a prime chance to eliminate shelfware. When negotiating a new contract, bring a detailed list of your unused licenses and their associated maintenance costs, and use it as leverage to secure credits or discounts. In one real-world case, a company transitioning to an S/4HANA cloud subscription successfully obtained a credit for their shelfware, which significantly offset their first-year subscription fee. SAP, at the end of the day, would prefer to keep your business (even in the cloud) than lose you, so they may be willing to recognize your sunk costs if you push the case.
By using a combination of these strategies, enterprises can drastically reduce or even eliminate the money wasted on shelfware support.
The approach can be tailored to your situation – for truly dead assets, termination might be the best option; for underutilized but needed in the future, perhaps a swap or third-party support is more suitable; and for everything else, better internal license management is recommended.
Shelfware in SAP ECC vs. S/4HANA (HANA) Environments
Shelfware is an issue that spans both legacy SAP and newer systems, but there are some differences to note:
- SAP ECC (Business Suite) Shelfware: In the classic ECC environment (often running on traditional databases), shelfware typically appears as extra modules, such as HR, CRM, SRM, and PLM, that were licensed but never fully deployed. It also shows up in large pools of unused user licenses. ECC contracts are perpetual licenses, so if you stop paying maintenance on a shelfware component, you technically still own the license – you just won’t get support or updates for it. Many ECC customers approaching the 2027 support deadline are auditing their installations to decide what to keep, replace, or drop. It’s wise to shed the baggage of unused ECC modules now, rather than carrying them into a new contract.
- S/4HANA On-Premises: S/4HANA (the ERP suite running on the HANA database) still employs a similar licensing model (named users + engine metrics) when deployed on-premises. So the same shelfware pitfalls apply. One difference is that S/4HANA packages may bundle more functionality so that you might have fewer completely separate modules than ECC; however, you could still over-license users or require additional extensions. Regularly measure usage of S/4HANA components to ensure you aren’t paying for features or capacity (like extra HANA database size or engine metrics) you don’t use.
- RISE with SAP (S/4HANA Cloud Subscription): RISE is SAP’s cloud subscription model, and it changes how shelfware is handled. In RISE, you pay a subscription fee (often based on a metric like Full User Equivalents) that includes software, infrastructure, and support. You don’t pay a separate maintenance fee; however, shelfware can still exist in the form of over-committed subscriptions. If you over-estimate your user count or sizing and lock into a 3- or 5-year RISE contract, you’ll be paying for that unused capacity until the term ends. SAP typically does not allow mid-term reductions. In effect, shelfware in the cloud is paying for more subscriptions than you need. The lesson for CIOs is to carefully right-size your subscription and negotiate flexibility at renewal (e.g., the right to reduce users if business demand falls). On the plus side, moving to RISE forces you to identify unused on-premises licenses, as SAP will require you to terminate or shelve them during the transition. This means you stop paying maintenance on those licenses, resulting in significant immediate savings. Be aware that you’re trading perpetual shelfware for a subscription commitment.
- Global Considerations: Regardless of region, the shelfware dynamic is similar globally. The key is maintaining active license management. Some countries’ SAP user bases might have different mixes (for example, global companies may find shelfware in one region’s subsidiary, which bought a local SAP add-on that is not used group-wide). Ensure your shelfware review covers all geographies and business units to capture a global view of unused licenses.
In summary, migrating to newer SAP platforms presents an opportunity to streamline operations, but the fundamental principle remains: only pay for what you use.
CIOs overseeing either ECC or HANA-based systems should embed shelfware checks into their regular IT financial management.
Recommendations
- Audit Your SAP License Usage Regularly: Conduct an internal SAP license audit to identify unused modules and inactive users. Use SAP’s tools (LAW, USMM) or software asset management tools to get data on actual usage vs. entitlements. Quantify the shelfware – e.g., “Module X costing $100K/year has zero users” – to build the action case.
- Stop Paying for Unused Modules: Don’t stay on autopilot. If a module or component is not in use and not in your future roadmap, initiate the process to remove it from your maintenance contract. Provide timely notice to SAP to surrender those licenses and eliminate their ongoing support costs.
- Reallocate or Swap Value: For licenses with potential value, consider engaging with SAP to trade them in for a more valuable option. Plan for contract renewals or S/4HANA migrations by listing which licenses you’d like to exchange for more relevant products. Aim to repurpose shelfware investments into areas that support your current strategy (while keeping overall costs flat).
- Tighten License Governance: Establish governance to prevent shelfware from creeping back. Assign someone to be responsible for managing SAP licenses. Enforce processes like reclaiming licenses when employees leave, rightsizing user license types based on role, and requiring approval for new license purchases (favoring reuse first). This governance will save costs continuously.
- Leverage Maintenance Alternatives: Consider third-party maintenance for any SAP systems or modules you must keep but aren’t actively developing. If you have a legacy SAP instance that is primarily used for data archival or a module you use infrequently, a third-party support contract can significantly reduce costs. Consider the trade-offs (no upgrades from SAP) before migrating critical systems off SAP support.
- Engage SAP Proactively in Negotiations: Don’t wait until renewal crunch time – start conversations with SAP early about your findings. If you’re a significant client, let them know you intend to optimize licenses (including dropping some). SAP might offer incentives, especially if you’re also considering moving to their newer offerings. Showing that you’re informed and willing to act (even to leave support) often leads to better proposals from SAP.
- Align with Strategic Plans: Integrate shelfware elimination into broader initiatives, such as cloud migration or cost-cutting drives. For example, when planning a move to S/4HANA Cloud, use this opportunity to clean up your license landscape and negotiate credits for unused licenses. Likewise, if you’re under pressure to cut costs by X%, shelfware maintenance is a quick win that can contribute to meeting that target.
- Document and Communicate Savings: After taking action on shelfware, track the savings and report them. This not only validates the effort but also builds a culture of cost-conscious license management. For instance, “We saved $500K this year by terminating unused SAP licenses” is a message the CIO can proudly share with the CFO and stakeholders.
By following these recommendations, CIOs can significantly reduce waste in SAP licensing and ensure their organizations pay only for software that drives business outcomes.
FAQ
Q1: What exactly is “shelfware” in SAP licensing?
A1: Shelfware refers to SAP software licenses that your company owns but isn’t using in operations. It could be entire modules (engines) that were purchased but never implemented, or excess named user licenses allocated to former employees, or duplicate accounts. They sit “on the shelf” unused, often still incurring annual support costs.
Q2: How can we identify unused SAP modules or licenses in our environment?
A2: Start by running SAP’s license audit tools like USMM and LAW to gather usage data. Check for any modules showing little or no transaction activity and compare your named user license count to the number of active user logins. Also, review entitlements versus deployment – if a component is licensed but not installed or accessed in 6 months or more, it’s likely shelfware. Regularly speaking with business owners can confirm if a given SAP component is utilized.
Q3: Can we stop paying maintenance on SAP licenses we aren’t using?
A3: Yes. SAP allows customers to terminate licenses and remove them from the maintenance contract, typically with written notice before their annual renewal date. Once removed, you no longer pay support for that license. You give up the right to future upgrades on it (since you’ve left support), but if it’s truly unused, that’s usually fine. Always follow the contract procedure and get confirmation from SAP that the licenses are terminated, so billing is adjusted.
Q4: What are the risks of terminating a license or dropping maintenance?
A4: The main risk is that if you later decide you need that software, you would have to re-license it from scratch (or pay hefty back-maintenance fees to reinstate support). Essentially, you lose the safety net of being able to use that software in the future with support. To mitigate this, only terminate licenses you are confident you won’t use, or consider swapping them for something more useful instead. Also, ensure the software is not in use anywhere (even unofficially) before you drop it, to avoid compliance issues.
Q5: How do SAP ECC and S/4HANA differ regarding shelfware?
A5: In SAP ECC (the older ERP), shelfware often appears as separate add-on modules or surplus user licenses that you keep paying for. In S/4HANA on-premise, the model is similar – you can still overbuy and end up with unused entitlements. In RISE with SAP (S/4HANA Cloud), shelfware takes the form of over-subscribed cloud licenses (since you pay a subscription for a set amount of usage). In all cases, the principle is the same: you want to align what you pay for with what you use. The methods to reduce shelfware (analysis, termination, etc.) are applicable in both ECC and S/4 environments, though the contract mechanics differ.
Q6: Is swapping unused SAP licenses for other products feasible?
A6: It can be. SAP often has programs or is open to negotiations where you can exchange the value of unused licenses for new licenses. This usually happens during a big contract change (like moving to S/4HANA or a cloud subscription). The key is that SAP will try to preserve the maintenance revenue – for example, they’ll let you trade an unused module for another product of equal value, but you’ll continue to pay the same annual support (now for the new product). It’s not an automatic right, but if you approach your SAP account team with a proposal (and especially if you’re considering alternative vendors), they may accommodate a swap or provide credit for shelfware to keep your business.
Q7: How much can third-party maintenance save us on shelfware?
A7: Third-party support providers typically charge around 50% of the standard SAP support fee. So if you’re paying $200,000 per year to SAP for support on an unused system, a third-party might offer support for that system for about $100,000 per year. That’s an immediate 50% savings. Over a few years, that adds up. Companies often use third-party support as an interim solution for shelfware or older systems to save money while they figure out the long-term plan (like migration or retirement). Just remember, under third-party support, you won’t get new patches or upgrades from SAP – you’re mainly getting break-fix help on your current software version.
Q8: How frequently should we review our SAP license usage?
A8: At a minimum, do an annual review before your maintenance renewal. However, a semi-annual or quarterly internal audit is better, especially in dynamic organizations. Additionally, whenever a major change occurs (such as a division being sold off or an implementation project being deferred), that’s a trigger to revisit license needs. Incorporating license checks into employee offboarding and project closure processes will help continually reduce shelfware. The goal is to make license optimization a routine part of IT operations rather than a one-time cleanup.
Q9: We plan to move to S/4HANA or RISE. What should we do with our existing shelfware?
A9: This is a perfect time to address it. Inventory all your current SAP licenses and identify which ones you’re not using. When you negotiate the S/4HANA or RISE contract, use those unused licenses as leverage. Ask for credits or trade-in value for them – essentially, you want SAP to acknowledge your past investments. Many customers have secured significant discounts on their S/4HANA migration or cloud subscription by highlighting the shelfware they will be giving up. Also, be sure to subscribe only to the new model for what you need. Don’t automatically carry over all licenses to the new agreement if some are redundant; that would just transport the shelfware problem into the new environment.
Q10: How can I get organizational buy-in to eliminate shelfware?
A10: Communicate the financial impact in simple terms. Show leadership how much money is being wasted and what else could be done with those funds. For instance, “We’re spending $300K a year on unused SAP licenses – with that budget we could fund X new analytics project or hire Y developers.” Also, emphasize that removing shelfware does not hurt operations (since by definition it’s not used). It’s a relatively low-risk way to save money. Engage finance and procurement teams as allies – they are often very supportive of cutting unnecessary costs. Finally, position it as part of a broader IT cost optimization or modernization effort, which gives it positive strategic framing rather than just penny-pinching.
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