SAP License Optimization

There are a myriad of different user types within SAP, each of which grants rights to a different set of activities within the system. There is a sizable price difference between a professional user — with virtually unlimited rights — and a basic employee self service (ESS) user license. By monitoring the activities that each employee performs and then matching those activities to the appropriate user license type, SAP customers can ensure that they remain in compliance, without overpaying for unused access.

In April 2018, SAP introduced a new pricing model to address growing concern around indirect access. the vendor also announced significant organizational and procedural changes to the way it handles software license audits. For many customers, this is a step in the right direction towards transparency – but only if the changes are fully understood.

An indirect access license is necessary whenever a custom or third-party application is programmatically accessing SAP. For example, if organizations integrate Salesforce.com CRM with SAP, an indirect access license is required. A custom application designed to automate processes or integrate external data also requires this type of license. In many organizations, integrations may exist without the knowledge of the system administrator. However, if this situation is discovered during the license audit, it could trigger financial penalties and even legal action. Organizations should have a proactive system in place for discovering potential indirect access situations and bringing their licensing into compliance.

Engines, also known as “packages”, are additional SAP products that organizations must purchase separately from named user licenses. Vendors typically price engines based on a distinct metric, such as the number of employees in an organization or the number of invoices processed. For SAP products in this category, it’s important to be aware of potential pitfalls in advance. For example, when SAP audits for license compliance of the HANA database, they look at peak usage for a trailing 12 month period. Organizations that exceed that license threshold even once during that time may be subjected to corrective action from SAP.

Any organization running SAP’s flagship ERP software should dedicate time and attention to license compliance. Many organizations find that they can avoid additional license costs by proactively managing user activity. Other organizations may discover potential pitfalls and can address licensing gaps before the gaps turn into much bigger problems.

It’s never too early to inspected and assess your SAP licensing and subscription for possible optimization opportunities, ideally between 6 to 12 months prior expiration. It’s very important to avoid internal time pressure. Many Enterprises overlook this (very) important step in ongoing SAP cost optimization, leading to overpaying for SKUs that are no longer the best option for their requirements.

One great way to eliminate overbuying and over-licensing is to routinely perform license / subscription optimization across your SAP estate. A License Position Assessment can provide excellent insight into what you actually use versus what you “own” and any delta that exists between the two. In some cases, customers may identify the need to get rid of unused licenses or subscriptions, or liberate that license currency to be used elsewhere.

It is easy to focus on initial investment costs, but it is also critical to understand and negotiate the longer-term software costs. This is especially true if you opt for a cloud or SaaS deployment of S4/HANA. Long-term costs, accelerators, and usage fees should be fully understood. We can help you built the business case required to successfully negotiate long term benefits for your organization.