SAP licensees need to know what licenses they own, and what they are using them for. As well as being fundamental to the effective control of the technical environment, this information allows licensees to drive better value from software investments and avoid the wasted costs of ‘shelf-ware’.
Software licensing structures reflect complexity and rapid change in the technical and business environment. Virtualization, on-demand, on premise, hosting, outsourcing, new product development – to only name a few – all add to the challenges in tracking software entitlements and deployment.
The management of SAP licenses is particularly challenging:
Due to this complexity, companies using SAP software may find it hard to achieve and maintain a clear overview of SAP licensing rules and usage rights. In its turn, this may lead to a not optimal usage of licenses and potentially unexpected and unnecessarily high costs.
SAP-Clients are obliged to install the License Administration Workbench (LAW) tool, which reports the clients’ respective license usage statement to SAP. Based on this statement SAP invoices their clients annually. It is, however, important to know that LAW only takes into account the license type set up at account creation – not the actual use of the solution. Furthermore, SAP contracts are set up so that the annual fees cannot be decreased during the contract duration. Therefore, user accounts clean-up needs to be performed prior to the annual measurement by LAW to avoid a permanent increase of fees.
In my experience, many customers pay for licenses that they are not even using. However, due to the complex configuration process, licensees are not always able to identify and optimize license requirements. Over the last decade, these challenges have led many SAP customers to experience double-digit increases in maintenance and license fee costs.
A successful SAP license management, which makes use of all monetary potential, requires a holistic overview of your agreements made with SAP, your purchased entitlements, your actual SAP software deployment and utilization as well as a clear understanding of your requirements.
Here are eight key questions you can ask yourself to better understand your specific needs to optimize SAP license management in your organization:
If you find it hard to answer the above questions, there is clearly room for improvement. Going through the following steps can help you to gain transparency of your SAP licenses in use, potentially realize cost reductions through an optimized license allocation and overall obtain increased control over your SAP usage in order to maintain an accurate inventory through a holistic license management process.
A License Performance Evaluation (LPE), a maturity level analysis of current SAP SAM processes, will help you realize improvements, providing facts against which to assess deployments and optimize license requirements.
With only minimal data input from your side, we can provide you an overview of your contractually available SAP licenses versus SAP’s view on your SAP environment, which is the basis of SAP’s periodical billing. On this basis, you will be able to see any current licensing gaps and according monetary threats to your organization.
In a second step, an in-depth analysis of license usage can show you what your organization’s actual activity status of SAP software is. This provides clarity around your SAP license deployment e.g. identifying duplicate licenses, accidental license installations, and outdated or incorrect license deployments.
Based on the identified potential, a reclassification of licenses directly translates into a monetary potential where reported to SAP prior to the annual LAW report measurement. Newly developed license management processes and their continuous monitoring and development will additionally help you to maintain these cost savings going forward and to adhere to compliance guidelines.
The following graphic provides a concrete example of the monetary savings potential that a client (with approximately 3500 users) was able to identify and profit from:
Only by applying these three steps you can already significantly improve transparency of your SAP licenses and achieve a significant cost reduction though an optimized license allocation. In the longer term, you will be able to increase your control over SAP usage to maintain an accurate inventory and be well prepared in case of an SAP audit.
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