Practical solutions for interim SAP access during mergers, acquisitions, and divestitures — covering transitional service agreements, partner-hosted options, cloud bridges, compliance risks, and cost comparisons for CIOs and CTOs.
When companies undergo mergers, acquisitions, or carve-outs, IT systems often integrate more slowly than the business itself. A newly acquired or separated unit might rely on another company's SAP ERP to run critical processes before a full transition is complete.
For example, a spin-off (SpinCo) may continue using the parent company's SAP for months after separation, or an acquiring firm may need data from the acquired company's SAP system. In these scenarios, temporary access to SAP is crucial for maintaining operational continuity.
However, SAP licences are tied to specific legal entities, meaning employees of one company are typically not authorised to use another company's SAP software without proper arrangements. This creates a licensing gap that must be bridged to avoid compliance violations.
Temporary licence bridging offers a compliant, short-term solution for users of one company to access another company's SAP system during a transition period. By leveraging formal agreements or interim licensing arrangements, CIOs can ensure business continuity without violating SAP's strict licensing rules. Read: Managing SAP Licences During Organisational Change.
SAP's standard contracts include strict non-transferability clauses — licences can't freely move between companies or cover third parties. If a divested business continues using the former parent's SAP system without a new agreement, both sides risk breaching licence terms.
The parent company would be providing unlicensed SAP access to an external entity, and the spin-off would be using SAP without a valid licence. Similarly, in a merger, if employees start logging into another company's SAP without updating licence counts, it creates an unlicensed usage situation.
SAP actively monitors M&A events and often triggers audits after such changes.
One merged firm that allowed 200 users to access another's SAP system informally received a $1.5 million audit charge plus maintenance on redundant licences. In another case, a parent that failed to plan licence transfers ended up with 500 unused SAP user licences (paying full support), while the spun-off unit had to purchase a new SAP contract at higher prices. Skipping formal bridging results in significantly higher costs — compliance penalties, duplicate expenses, and business disruption.
One common solution is a Transitional Service Agreement (TSA) that includes SAP usage. The original owner (ParentCo) agrees to continue providing SAP to the new entity (SpinCo or buyer) for a limited period. Because SAP licences can't simply be lent out, it's critical to obtain SAP's consent — typically through a temporary licence extension or amendment.
Engage SAP early (ideally before deal closure) to obtain approval. Pre-negotiate TSA usage clauses — e.g., "in a divestiture, a former affiliate may continue using the software for up to 12 months under a TSA."
SAP usually grants 6–12 months of temporary use, documented via a Temporary Use Licence (TUL) letter or contract addendum. This provides legal protection without requiring an immediate full licence purchase.
SAP may charge a fee — typically 10–20% of the divested unit's original licence value to cover up to a year of use. This is significantly cheaper than purchasing an entire SAP environment from scratch.
Ensure the TSA licence arrangement is in place by Day 1 of the transition. If you wait until after separation, you risk a period of non-compliant use. Include SAP TSA terms in M&A planning.
The TSA arrangement is finite — use the window to implement the long-term solution (migrating to a new SAP instance or another ERP). The clock starts on Day 1.
When directly sharing the original system is impractical or SAP's terms are too costly, companies can turn to SAP's cloud offerings or certified partners to bridge the gap.
An SAP-certified hosting partner runs an SAP system on behalf of the transitioning entity. The partner provides licences as part of their service — SpinCo just pays a subscription or monthly fee.
✓ Offloads licensing burden to partner
✓ Scale or terminate flexibly
✓ No large upfront purchase
✗ Higher monthly cost (partner margin)
✗ Data migration required
SAP migrates the relevant system to a cloud subscription contract. The new entity subscribes to SAP software for the needed duration with immediate legal usage rights.
✓ Immediate legal usage rights
✓ Includes infrastructure
✓ Quick to provision
✗ May lock into multi-year terms
✗ Negotiate flexible short duration
Accelerate development of a new, independent SAP system (or alternative ERP) to reduce bridging dependency. For cloud SaaS, quickly set up new tenants and migrate data.
✓ Shortest bridging period needed
✓ Clean break from legacy
✓ Reduces long-term cost
✗ Significant implementation effort
✗ Risk of rushing go-live
Vet the scope carefully: ensure any partner contract explicitly covers all required SAP modules, user count, and usage. Obtain SAP's acknowledgement that the arrangement is suitable. The goal is to remain fully compliant while avoiding a rushed, suboptimal licence purchase.
It's important to weigh the costs and risks of different approaches to interim SAP access.
| Approach | Description | Cost Implications | Risk |
|---|---|---|---|
| TSA Temporary Licence | SAP-approved use of existing system for 6–12 months | Moderate fee (~10–20% of licence value); negotiable | Low — fully compliant |
| Partner-Hosted SAP | Certified partner provides separate SAP system with licences | Subscription/hosting fees; avoids big upfront spend | Low — partner covers compliance |
| New SAP Licence Contract | Purchase full new SAP licences for the entity | Very high upfront; potential duplication; ongoing maintenance | Low — compliant but costly overspend |
| No Formal Bridging | Continue sharing access without SAP approval | No direct cost initially, but multi-million exposure if audited | HIGH — non-compliant; audit penalties, forced purchases at list price |
Investing in a proper interim licensing solution is far more cost-effective than doing nothing. A one-time transition fee or a few months of cloud subscription can save millions compared to audit penalties or hasty licence purchases at list price.
Incorporate SAP licensing considerations into M&A planning from the start. Identify where interim cross-company SAP access will be required and address it before Day 1.
Proactively discuss your plans with SAP (under NDA if needed) to secure a Temporary Use Licence or TSA agreement. Negotiating upfront yields far better outcomes than last-minute requests.
Add clauses that permit transitional use during divestitures or acquisitions. Pre-approve 6–12 months of post-separation usage and/or the right to transfer licences to a spun-off entity.
Line up a certified SAP hosting partner who can quickly provide an SAP environment. This serves as insurance if direct bridging falls through or SAP's offer is too costly.
Resist buying a whole new SAP licence set for an acquired unit if you plan to consolidate. Explore bridging or integrating users into existing contracts first to avoid redundant spend.
Audit both companies' SAP use and contracts before the transition. Resolve compliance issues to prevent inheriting problems. After integration, reconcile licences and eliminate overlaps.
Use the transition as an opportunity. When merging, approach SAP for a consolidated agreement or enterprise subscription that covers both entities at a discount.
Ensure temporary arrangements (TSA letter, partner contract, etc.) are documented in writing with clear dates and conditions. If audited, you'll need proof that SAP granted permission for interim usage.
Our SAP licensing specialists help enterprises negotiate compliant bridging solutions, avoid audit penalties, and optimise licence portfolios during mergers, acquisitions, and divestitures.