5 proven ways to reduce your SAP spending with Technology Intelligence
For organizations worldwide, SAP systems represent a cornerstone of their operations, but also a significant and perpetually growing line item in their budgets. The intricate nature of SAP licensing often obscures substantial opportunities for cost savings. But, enterprises that mature their software asset management (SAM) processes and use optimization tools typically report spending reductions of up to 30% within a single year.
Gaining a holistic view of your entire SAP environment is the key to unlocking these savings. When you know exactly what you’re using and how it aligns with your entitlements, you can optimize licenses, manage indirect access, eliminate waste, and enter contract negotiations with SAP from a position of strength.
This guide explores five proven, data-driven strategies to take control of your SAP costs.
About the author:
Mathijs ten Tusscher, a Principal Solution Engineer with over 25 years of experience in SAP, has a deep understanding of SAP licensing models, like ECC, S/4HANA, SAP Cloud ERP, BTP, digital access, and more. He has successfully helped numerous enterprise clients optimize their SAP spend and navigate the complexities of SAP licensing.
1. Optimize named user licenses beyond the "best-guess"
SAP offers a wide array of named user license types, each with vastly different costs and permissions based on the user's rights within the system. The responsibility falls on the customer to assign the correct type to each user. Without clear data, this often becomes a "best-guess" exercise. If no license type is assigned in a production environment, SAP defaults to the most expensive Professional user type, leading to immediate overspending.
Common pitfalls that inflate costs:
- Over-provisioning for safety: Organizations purchase unnecessarily expensive license types to ensure users are covered, paying for access to transactions they never use.
- Static license assignments: The work individuals perform changes, but their license assignments often don't. A license that was compliant last year might be excessive or insufficient today, creating risk and waste.
- Choosing the right indirect access license type: SAP customers most often don't know whether to choose Indirect (per user) or Digital (licensed per document) Access licensing, as they have no visibility of the best fit for their business. This carries with it the consequences of unbudgeted costs associated with Indirect Access.
- Unnecessary costs when migrating to S/4HANA: All customers must migrate to S/4HANA by 2027, but many don't have visibility of what they currently have and use, so they don't know what to migrate. Without this visibility, organizations may end up paying for costly new S/4HANA licenses that they don't even need.
How to achieve optimization:
A continuous, systematic approach is required.
Snow Optimizer for SAP® Software replaces guesswork with data by measuring transaction activity for every user across all systems over time. This provides an accurate, aggregated view of real usage, empowering your SAP team to custom-fit the most cost-effective, compliant license type for each user. This dynamic approach ensures you minimize incremental purchasing and assign new users the right license from day one.
2. Re-harvest licences from inactive users
The number of users needing SAP access fluctuates constantly. Contractors finish projects, employees change roles, and others leave the organization. But their expensive SAP licenses often remain active, draining resources. Manually identifying and deactivating these users across a large, distributed SAP landscape is a laborious and error-prone process. The sheer manual effort involved is why a core principle of IT Asset Management is automating license reclamation.
How to Eliminate Waste:
You must implement a process to regularly check for inactive users so their licenses can be re-harvested and reassigned.
Snow Optimizer for SAP® Software automates this by:
- Monitoring usage across the entire SAP estate to identify users who have been inactive for a defined period (e.g., 90 days).
- Integrating directly with HR and Active Directory systems to automatically flag and deactivate users who have left the organization.
- Returning these licenses to a central pool for reallocation, creating a continuously optimized estate.
“With a nearly real-time view of our license consumption, we can constantly monitor our license allocations to ensure that we never overspend on licenses that we don’t need.”
3. Eliminate costly duplicate user accounts
As an organization's SAP environment evolves, users who need access to multiple systems are often given new accounts, sometimes with slightly different usernames (e.g., John Smith and JSmith). This common scenario leads to one individual consuming two or more named user licenses when they only need one. These duplicates are nearly impossible to identify with embedded SAP tools, and result in the organization double-paying for the same person.
How to stop double-paying:
Snow Optimizer for SAP® Software identifies these hidden duplicates by analyzing user master records across all systems. It intelligently flags potential duplicates by matching data points like email addresses, first names, and last names. This empowers administrators to consolidate accounts and revoke incorrectly assigned licenses, releasing them back into the license pool for others.
4. Master indirect and digital access
Indirect Access, where a third-party application like Salesforce or a custom web portal accesses your SAP system, is one of the largest and most misunderstood financial risks in SAP licensing. To address this, SAP introduced its Digital Access model, which licenses usage based on the number of documents created in the system rather than by named users. You can learn more about this directly from SAP's official explanation.
To choose the most cost-effective model, you must have factual data on:
- The number of digital documents being created via external interfaces.
- How many users are accessing SAP data indirectly, and whether they are already licensed.
How to gain control and choose the right model:
Understanding your usage is the only way to minimize risk.
Snow Optimizer for SAP® Software provides a single console to demystify this complex area. It shows you:
- All external access points into your SAP landscape via protocols like HTTP and RFC.
- How many digital documents have been created, allowing you to accurately predict costs under the Digital Access model.
- It reconciles third-party access against named users already in the system, preventing you from paying for unnecessary indirect access licenses.
This consolidated data allows you to confidently choose the best licensing model for your needs, minimizing financial risk.
See how EDEKA DIGITAL deployed Snow Optimizer for SAP® Software and:
- Saved €6.2 million in software license costs
- Significantly reduced time to prepare for SAP software audits
- Simplified user and IT asset management activities
5. Monitor SAP engine consumption to avoid surprises
Beyond user licenses, many SAP modules require engine licenses based on functionality usage. These engines are licensed against a wide range of metrics, such as the number of master records for SAP Payroll Processing or the number of candidates for SAP e-Recruiting.
Manually measuring these diverse metrics is nearly impossible, and failing to monitor them can lead to unpleasant surprises and unbudgeted costs at your annual review.
How to maintain continuous compliance:
Regular measurement is key to planning your SAP spend effectively.
Snow Optimizer for SAP Software automates this by:
- Enabling administrators to set measurements appropriate for each specific engine metric.
- Automatically combining these metrics to determine a single, clear license consumption figure for each engine.
- Sending automatic warnings when your usage approaches contractual limits, allowing you to act before you have a compliance issue.
6. Evaluate purchased entitlements to what is in use
SAP’s License Administration Workbench (LAW) does not consider which contracts and entitlements a company has, so by its design and nature, it does not highlight areas where a company is incompliant with its contract.
That task is left to the audit team at SAP. They will highlight any shortage of licensing which represents a compliance issue, and will note the true-up requirements for a company to get back into compliance. Clearly, it’s better to understand one’s compliance position prior to submitting any data to SAP.
Snow Optimizer for SAP Software can manage all the SAP contracts and entitlements, highlighting specific areas where the company is out of compliance. Moreover, with the contract data loaded into an SAP license optimization product, the actual costs for each license and engine can be better understood by those managing the licenses.
This additional transparency allows them to consider the annual cost for each group or department. The SAP LAW tool does not look at or report any license cost metrics as a measurement tool.
From complexity to financial control
SAP licensing is complex, but it doesn’t have to be a black box draining your budget. By applying these five data-driven strategies, you can transform your SAP environment from a source of uncontrolled spending into a well-optimized asset. Having the right data on hand ensures you can optimize license use, protect against audit risk, and negotiate with SAP effectively.
Ready to see how much you could save?
See it in action: Schedule a demo with an SAP licensing expert.
Frequently asked questions
SAP license optimization is the process of analyzing actual user activity and aligning it with the most appropriate license types to avoid overspending and ensure compliance. It is based on usage data, not assumptions.
You can reduce costs by assigning the correctly named user license types, identifying and removing inactive or duplicate users, managing indirect and digital access licenses, and monitoring engine usage with tools like Flexera’s Snow Optimizer for SAP.
Direct access refers to a user logging directly into an SAP system. Indirect access occurs when a third-party system interacts with SAP, which still requires a valid license and can lead to unexpected costs if not managed.
It is an alternative licensing structure where charges are based on the number of digital documents created by third-party systems, rather than by named user licenses.
They cause a single person to consume multiple licenses across different SAP systems, leading to unnecessary license costs that often go undetected in manual audits.
During an audit, SAP reviews your usage against your contract entitlements. If you are under-licensed, you may face significant, unbudgeted charges. Being prepared with a solution that provides accurate data can significantly mitigate audit risk.
Inactive users hold valuable licenses that can be re-harvested and reallocated to active users, reducing waste and avoiding the need to purchase additional licenses.
SAP engines are licensed based on specific metrics like CPU consumption or number of records. Flexera’s Snow Optimizer automates this tracking and provides alerts when you approach your limits.