SAP Shelfware Reduction and License Recycling
Executive Summary
Many SAP on-premise customers (running ECC or S/4HANA) are paying for software licenses that sit unused or underutilized – a phenomenon known as “shelfware.” This unused shelfware includes idle SAP modules and dormant user licenses that still incur annual maintenance fees.
CIOs and IT executives face a strategic imperative to reclaim this wasted investment. By identifying and reducing SAP shelfware, organizations can cut ongoing support costs and free up budget for innovation.
This article outlines a strategic approach to assessing license utilization, implementing effective user license recycling processes, and negotiating reductions in maintenance spending. The goal is to help enterprises optimize their SAP license portfolio, ensuring they pay only for what delivers business value, while maintaining compliance and strong vendor relationships.
Background Context
SAP’s traditional on-premise licensing model is built on perpetual licenses (for named users and software modules) coupled with annual maintenance fees. Once purchased, companies are automatically enrolled in ongoing support, which typically costs around 20% of the license price every year.
There is no natural expiration for unused licenses – you continue paying maintenance until you proactively terminate those licenses. This model, combined with complex SAP contracts, has led to a pervasive issue of shelfware: customers owning SAP licenses and add-ons that are not being used.
Over time, organizations may over-purchase due to optimistic project plans, bundled deals, or mergers and acquisitions, and then fail to scale back when plans change. Without regular scrutiny, unused modules and license entitlements remain on the books, quietly accumulating support costs in the background.
It’s no surprise, then, that shelfware is common in large SAP environments. Companies often discover that a substantial percentage of their SAP investment is effectively wasted. For example, industry analysis and audits often find that double-digit percentages of SAP users haven’t logged in for months, or entire SAP components that were purchased but never deployed.
This pattern persists in part because SAP does not require periodic license true-ups that reduce counts; unless customers initiate a change, the status quo (and the maintenance billing) remains unchanged.
Moreover, the complexity of SAP licensing can mask unused software. Product name changes, evolving user roles, and a fear of compliance penalties might cause organizations to leave everything as is (“we might need it someday”) rather than actively optimizing.
All of this results in significant ongoing costs with no return, prompting CIOs to seek strategies for reducing shelfware and recycling licenses to better align costs with actual usage.
SAP Shelfware and Waste Areas
- Unused Engine/Module Licenses: A major source of SAP shelfware is add-on products or modules that were purchased but never fully utilized. Companies might license SAP engines like Supplier Relationship Management (SRM), Product Lifecycle Management (PLM), Customer Relationship Management (CRM), Strategic Enterprise Management (SEM), or industry-specific solutions, only to find that implementation stalled or business needs changed. These components end up “on the shelf” – the organization holds the licenses and pays maintenance, but little to no activity occurs in the system. For example, a business might have acquired SAP CRM as part of a large deal but later adopted a different CRM system, leaving the SAP CRM module idle. Each unused engine or module represents a direct waste: the company continues to pay support for functionality it isn’t using. Identifying these underused or non-deployed modules is often the first step in tackling shelfware, as they can usually be removed or swapped without impacting current operations, since, by definition, the business isn’t relying on them.
- Inactive or Dormant Named Users: SAP named-user licenses are purchased in specific categories (e.g., Professional, Limited Professional, Employee) and are allocated to individuals. Over time, normal personnel churn and role changes can lead to a build-up of user IDs that are no longer active. For instance, employees leave the company or change jobs, but their SAP accounts may remain in the system if they are not diligently cleaned up. These inactive accounts still count against your license allocations. It’s common in a true-up or audit to discover that a significant percentage of user licenses are assigned to people who haven’t logged into SAP in months or even years. Dormant users effectively tie up licenses that could be freed for others – or eliminated to reduce costs. This waste area also includes users who have multiple accounts across systems (common in SAP environments with multiple instances for ERP, BW, etc.), which can result in an individual consuming more than one license unnecessarily if not properly consolidated. Inactive and duplicate user licenses create shelfware by inflating the total license count beyond what the organization truly needs for active staff.
- Misaligned License Types: SAP offers different license types at varying price points, and each user must be correctly classified according to their usage. A frequent issue is misalignment – users are given a higher-tier (more expensive) license type than their actual usage warrants. For example, an SAP Professional User license allows for full operational use of SAP. In contrast, an SAP Limited Professional or Employee Self-Service license is more affordable but has a limited scope. In practice, companies often err on the side of caution by assigning more expansive license types to certain users “just in case” they need those permissions. The result is that many users holding Professional licenses only perform basic tasks, such as running reports or data entry, which a lower-cost license could cover. This over-licensing means paying premium maintenance for capabilities that sit unused – essentially a form of shelfware. Misaligned licenses can happen due to one-size-fits-all provisioning, lack of clarity on role requirements, or simply not revisiting user classifications as job roles change. It not only wastes money but also can skew compliance positions (some users are over-covered while others might be under-covered). Correcting these mismatches – by downgrading users to the proper license level or reallocating surplus high-level licenses – is a key opportunity for cost savings.
License Utilization Assessment Strategies
To tackle shelfware, organizations should start by conducting a thorough assessment of their current license utilization. This involves gathering data on what is deployed and how it’s being used (or not used).
Several strategies can help pinpoint where licenses are underutilized:
- Leverage SAP Audit Tools (LAW and USMM): Use SAP’s own License Administration Workbench (LAW) and the USMM measurement program to collect baseline data. USMM (User and Service Measurement Management) is run in each SAP system to calculate metrics, such as named user counts by license type and usage of specific packages. LAW can consolidate these results from multiple systems to provide an enterprise-wide view. By running these tools (ideally outside of an actual SAP audit, for your internal analysis), you can compare the number of licenses you’re consuming with what you’ve purchased. Look for red flags that indicate shelfware, such as modules showing zero consumption or user license counts in LAW that are far below your entitlements. For example, LAW might reveal you have 500 Professional user licenses purchased but only 300 assigned active users, suggesting 200 Professional licenses are sitting unused. Similarly, if an engine’s measured usage (e.g., the number of payroll employees or order volume) is significantly under the licensed metric, it indicates excess capacity. This data provides a factual foundation for identifying where you have more licenses than needed.
- Analyze User Activity and Roles: Raw counts from LAW/USMM are useful, but to truly understand misutilization, analyze how each named user account is being used. SAP’s license model for users is largely authorization-based, meaning the roles and authorizations assigned to a user determine the type of license they should have. A user may be classified as a Professional simply because they have broad permissions, even if they rarely use them. Conduct an internal review or use scripts to gather the last login date for all users and the transaction codes (T-codes) they have executed. Identify inactive users (e.g. no login in 90 days or more) and list them separately. For active users, review their role assignments versus their actual transaction usage. You may find, for instance, a user with an extensive role that allows procurement transactions, yet in reality, they only ever display reports – a candidate to be downgraded to a less powerful license after adjusting their roles. By mapping roles to the minimum license required, you can quantify how many users are over-licensed. This analysis also often uncovers generic or system accounts that might be consuming licenses unnecessarily. The outcome should be a clear picture of which user accounts can be eliminated (inactive) or adjusted (role or license optimized), along with the scale of potential license savings from these actions.
- Identify Unused Modules and Engines: Create an inventory of all SAP software components and engine licenses your organization owns, and check their utilization. Some shelfware is obvious (e.g., a module purchased for a planned project that was canceled), but other types might be less so (a component installed but not actively used). Engage with module owners or check system transaction logs to see if a particular product, such as SAP SRM or an add-on like the SAP Treasury module, has regular users or transactions. If a module has no activity or the business process owner confirms it’s not in use, flag it as shelfware. Additionally, review engine license metrics: for example, if you own a license for SAP Payroll processing that supports up to 10,000 employees, but you currently have only 6,000 employees, then 40% of that license capacity is effectively unused unless your workforce grows. In some cases, companies maintain licenses for legacy components, such as older Business Suite engines, that newer solutions have superseded – these may be strong candidates for retirement. Document each unused or underused component along with its annual maintenance cost, which will support the business case for action.
- Utilization Tools and Expert Reviews: Given the complexity of SAP environments, consider using specialized license optimization tools or engaging experts to augment your assessment. Third-party SAP license management tools can automate the detection of shelfware by analyzing usage patterns across all systems. These tools can identify duplicate user accounts (e.g., the same person with two usernames in different systems) and consolidate them, which can immediately reduce the count of named users consuming licenses. They can also track actual transaction usage over time to suggest the appropriate license type for each user, rather than relying solely on SAP’s sometimes broad role definitions. For instance, such an analysis might reveal that dozens of users currently allocated as “Professional” have never executed a transaction beyond basic inquiry and could be reclassified as “Limited” users. Some tools even highlight indirect usage (access to SAP data via non-SAP systems) that might be inadvertently consuming licenses. If in-house expertise is limited, organizations can also engage SAP licensing consultants or their SAP account team’s License Advisory service to perform a deep dive assessment. The key is to get a detailed, accurate picture of license usage versus entitlements. This will identify concrete targets for optimization (users or modules that are shelfware) and provide the evidence needed to take action on them.
License Recycling Processes
Once you’ve identified where the license waste is, the next step is to put processes in place to continually reclaim and reallocate licenses.
License recycling means that when a license is not needed in one area, it can be freed up and reused elsewhere, avoiding new purchases and containing costs.
The following practices help establish an efficient recycling loop for SAP licenses:
- Reclaim and Reuse Named Users: Develop a clear process for recycling named user licenses whenever employees leave or roles change. In an SAP context, “recycling” a user license means that if one person no longer uses the system, their license authorization can be removed and made available for someone else. Tie this into your HR off-boarding procedures: whenever an employee with SAP access departs, the IT or SAP admin team should promptly lock or delete their SAP user account and mark that license as recoverable. By doing this consistently, you prevent license creep, where new hires continue to acquire new licenses while old ones remain unused. Keep a count of how many licenses of each type are in use versus those that have been purchased. For example, if you purchased 100 Professional user licenses and currently only 85 are assigned to active users, you have 15 that are free to allocate to new users without needing to buy more. Regularly cleaning up departed users ensures that those licenses are returned to the available pool. SAP’s contracts allow reassigning a named user license from one individual to another as long as the previous assignment is ended, so you should fully leverage that flexibility instead of purchasing additional licenses unnecessarily.
- Periodic User Audits & Role Right-Sizing: License recycling isn’t a one-time event – it requires ongoing housekeeping. Establish a regular cadence, such as quarterly reviews, to audit SAP user accounts. During these audits, generate reports of user activity to catch any accounts that have become inactive or redundant. Inactivate or remove any user IDs that haven’t been used in a defined period (e.g., 90 days) after verifying they are truly not needed. Also, review user roles at the same time: if a user’s job responsibilities have changed, ensure their SAP roles (and thus license classification) are updated accordingly. For instance, if a power user in Finance moved to a lighter role, you might downgrade their access and recategorize their license from Professional to a lower level. Conversely, suppose someone took on new duties that require more SAP functionality. In that case, you should adjust their license type upward to stay compliant; this might mean using one of the freed-up Professional licenses from the pool. The objective is to continuously “right-size” each user’s license to their actual needs. By keeping user assignments aligned with current usage, you both minimize shelfware and reduce audit risk. It’s helpful to make these user and role reviews part of the IT governance process – for example, requiring manager approval for assigning high-level licenses and periodically re-justifying those users with the most expensive license types.
- License Pool Management and Allocation Workflows: Treat your pool of purchased SAP licenses as a shared resource that can be dynamically allocated, rather than static one-time assignments. Set up internal workflows for requesting and assigning SAP licenses. For example, rather than a project manager buying extra licenses directly for a new project, they would submit a request to the central IT asset management or SAP admin team. That team would first check the license pool (unassigned licenses on hand) to fulfill the request. Only if sufficient licenses aren’t available in the pool would a purchase be considered. This approach requires maintaining a simple inventory: at any given time, it tracks how many licenses of each type are purchased versus how many are actually in use. If well-managed, many organizations find they can accommodate new users for a long period just by recycling licenses from departures and retirements. It’s also important to coordinate across multiple SAP systems – for instance, if the company has separate SAP instances for different subsidiaries, a global license pool approach can prevent one division from buying licenses while another has surplus. Implementing a formal license allocation workflow, potentially through your IT service management system or a SAM tool, adds a layer of control. Every new SAP user access goes through a check against available licenses and requires approval, ensuring that no license is issued without verifying both need and availability. Over time, this can significantly reduce “rogue” license growth and keep utilization optimized.
- Automate Where Possible: In a large enterprise with thousands of SAP users, manual processes may not catch everything. Consider automation to support license recycling. Many SAP license management solutions offer features such as automatic identification of inactive users and even automatic deprovisioning or downgrading. For example, you could configure rules such as “if a user hasn’t logged in for 120 days, switch their license type to an inactive role or remove their assignments” – effectively putting that license back into the pool. Some tools integrate with HR systems so that when an employee’s status changes to inactive, their SAP access is automatically revoked promptly. Automation can also help with ongoing user classification. By continuously monitoring what transactions each user executes, software can recommend if a user should be reclassified to a different license type. Implementing these tools ensures that license recycling is not just an annual or quarterly cleanup event, but a continuous activity. It reduces reliance on remembering to run reports or the diligence of individual admins, and it provides a safety net that catches license inefficiencies in real-time.
- Downgrading and Reclassifying Users: A key part of recycling is ensuring that each license entitlement is used as cost-effectively as possible. If your analysis shows that certain users are over-licensed, you should have a process in place to downgrade them to a more appropriate license type. This might occur during a periodic audit or when reviewing a license request: you identify that user X only needs a Limited license instead of the Professional license they were assigned. Practically, downgrading might involve adjusting the user’s roles (to remove high-level transactions) and then updating their classification in the SAP license measurement to the lower tier. It’s wise to document a policy for license downgrades so that managers and users understand that license levels can change with job needs – this manages expectations (for example, a user might notice they no longer have access to a certain transaction because their license was downgraded; that should be communicated as intentional optimization). Keep track of how many of each license type you have in use after reclassification. Suppose you consistently find that a certain type (say, expensive Professional licenses) is underutilized. In that case, you might even negotiate with SAP to convert some of those excess licenses into a greater number of lower-tier licenses, or simply terminate the excess (more on that below). In summary, license recycling isn’t just about shuffling the same assignment from one user to another – it’s also about recycling an expensive license into a cheaper license where appropriate, extracting more value from each license asset.
Reducing Maintenance on Shelfware
Even after internal recycling, you may still have surplus licenses or modules that no one in the company needs.
To truly realize cost savings, organizations must go beyond internal optimization and remove or renegotiate unused elements from their SAP agreement, reducing maintenance costs.
Here are strategies to address shelfware on the maintenance contract:
- Terminate Truly Unused Licenses: The most straightforward way to cut shelfware costs is to stop paying for software you don’t use. SAP permits customers to terminate (surrender) licenses they no longer need, which then removes those licenses from the annual maintenance charge. This typically requires formal notice to SAP before your maintenance renewal date, which is often a few months in advance. For example, if your maintenance contracts renew on January 1, you must notify SAP by September 30 of the prior year about any licenses you intend to drop. It’s critical to plan this well: identify the modules or user licenses that are completely unused or have been replaced by other systems, and confirm internally that there is no future need or dependency on them. Then, work with your legal and procurement teams to send SAP a notice of termination for those specific licenses. Once terminated, you forfeit the right to use that software (which is fine if it’s shelfware), and SAP will no longer charge maintenance on it in the future. Companies have achieved substantial savings this way – for instance, eliminating a set of unused SAP modules with a significant license value can immediately reduce the corresponding support costs. One real-world example saw a 20% reduction in the annual SAP support bill by dropping shelfware licenses. Be prepared for pushback – SAP representatives may discourage this (after all, maintenance is a major revenue stream for them) – but contractually, if you follow the procedure to surrender licenses, you are within your rights. This is often the single most effective tactic to eliminate the “tax” of shelfware maintenance, as it directly stops the bleeding of dollars for no benefit.
- Negotiate License Swaps or Credits: In some cases, you might prefer not to simply terminate a license but rather replace it with something more useful. SAP, at times, offers flexibility through license conversion programs – especially as customers transition to S/4HANA or cloud offerings. You could approach SAP to swap an unused product for another product or to apply the value of shelfware licenses as credit toward the purchase of new software that you do intend to use. For example, suppose you have $ 500,000 worth of unused SRM licenses and now need $ 500,000 of additional SAP analytics licenses. In that case, SAP might allow an even exchange or a credit of the SRM value against the analytics licenses. This way, you’re not reducing the money you spend with SAP, but you’re redirecting it to areas of value, effectively recycling your investment. Keep in mind that SAP will typically require that the maintenance revenue stays at least the same when doing such swaps – they often operate on a “maintenance base credit” principle (meaning they don’t want your total maintenance payments to decrease as a result of a swap). So, you might get credit for the license value of shelfware. Still, you may need to purchase new licenses of equal or greater value, which will maintain or increase your maintenance commitment. Still, from a CIO perspective, this can be a win if it means trading truly unused software for something that supports new initiatives. When pursuing this, come armed with your shelfware analysis (to show SAP what isn’t used) and a clear ask for what you’d rather have instead. The negotiation will likely involve your SAP account executive and possibly special approval within SAP. Still, they do have programs to facilitate this kind of conversion, especially when moving customers to newer platforms.
- Reduce Maintenance Scope or Costs: Another angle is to negotiate adjustments to your maintenance terms for shelfware items. If you have a handful of products that are lightly used or planned for decommissioning, you might request that SAP remove them from full support or provide a discount on their maintenance. SAP’s standard policy is that if you own it, you pay full maintenance on it, but large customers have sometimes obtained concessions. For instance, if you commit to not using a product but want to keep the license (perhaps as a contingency), SAP might agree to suspend support for it, meaning no support services or upgrades for that product, which could reduce fees. Alternatively, if you’re renewing a big maintenance contract, you could try to bundle in a maintenance reduction for the shelfware as part of the overall deal (e.g., “We will renew everything for the next 3 years, but at a 15% lower rate for these unused components” or similar). These discussions can be challenging – SAP tends to resist outright maintenance discounts – but if you show a willingness to drop the products, they may prefer to retain you as a customer even at a reduced fee rather than lose the maintenance entirely. Ensure any such agreement is captured in writing (amended contract or side letter) specifying the reduced maintenance obligations or altered support level for those items. This is essentially a negotiation strategy to claw back costs without giving up the license assets, which some organizations prefer if they believe the software might have future use or if there are internal politics involved in surrendering licenses.
- Consider Third-Party Support for Shelfware: If SAP is inflexible on maintenance fees and you have significant shelfware that you can’t fully retire (perhaps due to internal reasons or because you want to keep the option to use it), another cost-saving route is third-party support. Third-party support providers (like Rimini Street, Spinnaker Support, and others) offer maintenance services for SAP products at a fraction of SAP’s maintenance fee. Organizations typically consider this for stable, non-mission-critical systems or for products they aren’t actively using but need to retain for legal reasons (to access data or in case of future use). By moving those SAP licenses off of SAP’s maintenance to a third-party provider, companies can save 50% or more on support costs for that portion of their portfolio. This approach needs to be weighed carefully: if you leave SAP’s maintenance, you forgo future software updates, and returning to SAP support later can be costly, often requiring back-payment of fees. However, for shelfware that you don’t plan to upgrade or that is essentially in “maintenance mode” operationally, third-party support can provide basic break-fix support and legal usage rights at a much lower cost. Even if you don’t ultimately switch, getting a quote from a third-party provider can be useful leverage in conversations with SAP – it signals that you have alternatives to paying full freight for support. Some organizations have reported that simply informing their SAP representative that they are evaluating third-party support options prompted a greater willingness from SAP to negotiate solutions, such as offering limited-time discounts or assistance with optimizing licenses. Thus, third-party support is both a tactical cost reduction measure and a strategic bargaining chip regarding shelfware.
- Optimize Through Portfolio Rationalization: Reducing shelfware maintenance can also be achieved by rationalizing your overall application portfolio. Often, SAP shelfware exists because overlapping systems or modules were acquired, and one won out over the other. Take a step back and evaluate whether your organization can retire entire chunks of SAP functionality because a better alternative solution covers it. For example, if you have an SAP PLM module that a particular division tried out but ultimately the company standardized on a non-SAP PLM system, you might decide to shut down the SAP PLM instance entirely. In doing so, you could then terminate that license and maintenance. Similarly, look for any dormant projects – maybe an SAP bolt-on, such as SAP Supplier Network, was installed for a pilot but never rolled out – those could be candidates for removal. When planning upgrades or migrations, such as moving from ECC to S/4HANA, take the opportunity to right-size your entitlements. Don’t automatically carry over all old licenses if some of them won’t be needed in the future state. SAP’s migration and contract conversion programs can provide a framework for this (as noted, you can convert unused licenses into credits for new ones). Still, even outside of a migration, you can choose to drop deadweight licenses when renewing contracts. The key is internal alignment – involve business stakeholders and application owners in decisions to ensure that no one finds value in the software that is to be dropped. If everyone agrees a certain component is not providing value, it’s much easier to justify ending its maintenance. Over time, this kind of pruning keeps your SAP landscape lean: you only pay maintenance for the users and functionality that the business actively leverages. This continuous improvement mindset prevents shelfware from accumulating again after you’ve done an initial cleanup.
Recommendations
For CIOs and IT leaders looking to reduce SAP shelfware and optimize license usage, here is a prioritized action plan:
- Launch a License Utilization Audit: Begin with a comprehensive audit of your SAP environment’s license usage. Gather data from SAP’s measurement tools and/or SAM tools to identify unused modules, inactive user accounts, and mismatched license assignments. Quantify the cost of these inefficiencies (e.g., “X named user licenses worth $Yk are unassigned or inactive” and “Module Z costs $N per year in maintenance but has had no usage in 12 months”). Present these findings to executive sponsors to build awareness of the shelfware issue and secure support for remediation efforts.
- Establish Governance and Ownership: Set up proper governance for managing SAP licenses. Designate a responsible owner or team (for example, a Software Asset Management function or an SAP license manager) to continually oversee license allocations and compliance. Define policies such as: a) no new SAP licenses are purchased without a utilization check, b) regular reconciliation of user accounts across systems to eliminate duplicates, and c) mandatory removal of access for leaving employees. Governance should also include executive-level oversight, given the financial stakes – for instance, including license optimization status as a topic in CIO staff meetings or IT steering committee meetings quarterly. Having this structure in place ensures ongoing attention to license usage, rather than a one-time project.
- Implement License Recycling Workflows: Translate the policies into day-to-day processes. Work with HR and IT service management teams to integrate SAP user license recycling into onboarding and offboarding workflows. For example, when HR processes an employee exit, an automated ticket can be generated to notify SAP admins to remove that user’s access and reclaim the license. Similarly, create a standardized request form or system for new SAP access that checks against the available license pool inventory. Document step-by-step procedures for how to evaluate and reassign a license from the pool, how to downgrade a user’s license type if needed, and how to handle exceptions. Then, train the relevant administrators and support teams on these procedures. The goal is to make license recycling a routine, predictable operation, much like provisioning hardware or any other IT asset management task.
- Engage with SAP Proactively: Don’t wait for the next audit or contract renewal crunch to address shelfware – reach out to your SAP account team as soon as you have clarity on what you want to reduce. Discuss options for shedding or repurposing unused licenses. It may be helpful to involve a third-party licensing advisor or licensing attorney to assist in negotiations, especially if large sums are involved. When approaching SAP, be firm about your intent to optimize (including your willingness to terminate licenses), but also look for win-win scenarios, such as trading shelfware for new SAP solutions you need. Start this dialogue well in advance of your maintenance renewal deadline to allow time for back-and-forth communication and approvals on SAP’s side. By engaging early, you also avoid the scenario of last-minute renewals where shelfware removals might get overlooked.
- Track Progress and Continuously Optimize: After taking initial actions, such as reclaiming licenses and renegotiating contracts, track the impact. Verify in the next maintenance invoice that the removed licenses are indeed gone and that the costs have been adjusted. Monitor SAP system usage on an ongoing basis – possibly using automated tools – to identify any recurrence of shelfware. Make it a continuous improvement cycle, for example, by reporting current license utilization annually or semi-annually. Compare it to the previous period, highlighting any improvements or new areas of concern. This will help demonstrate the value of the optimization initiative (e.g., “We saved $X this year by avoiding new purchases and cutting maintenance on shelfware”) and keep momentum. Additionally, stay informed about SAP’s licensing changes or new offerings (for example, SAP’s shift toward cloud subscriptions or new licensing metrics like Digital Access), as these may open up further opportunities to optimize or may require adjustments to your strategy. The landscape of enterprise software licensing evolves, and a savvy CIO will ensure their organization’s approach to SAP licenses remains agile and cost-effective over time.
