Dealing with SAP licensing can seem tricky, tough, or outright confusing. It doesn’t have to feel this way. The more you know about your SAP licenses, the more you get from your relationship with SAP.
This web page offers information and insights that bring transparency to your licensing situation with SAP, empowering you in negotiations, uncovering savings, and keeping your company compliant.
You don’t want to overpay for the SAP software you use. SAP doesn’t want you to underpay. A Software Asset Management program helps you strike that balance — in favor of your company.
Annual measurement: Make your review smoother with better data collection and quality.
Optimization: Get more bang for your buck from your SAP licenses, with less effort.
Savings: Start paying for what you use and correct over-authorized users, re-negotiate contracts covering unused software, and choose the cheapest indirect access model for your company.
Before your annual self audit, an SAP audit, or contract negotiation, get to know your SAP licensing situation.
Know what licenses you have. Know the engines you’re using. Know what non-SAP applications have access to SAP software. Know what software your users are authorized to use (hint: it might be more than they need). Why?
As a publicly-traded company always looking for growth opportunities, SAP knows its vast pool of customers offers the perfect market for selling its software.
The Price and Conditions List is difficult to understand, it updates every quarter, and it’s vague enough to be open to interpretation. SAP’s measurement tools – USMM and License Administration Workbench – aren’t always completely accurate, yet you’re obligated to use them.
There’s no escaping the LAW – every year SAP customers must gather their usage data from USMM, then consolidate it and submit it with LAW to assess their licensing compliance. Before you hit the send button, remember LAW isn’t 100% accurate.
- It inconsistently accounts for special terms in contracts, so those special conditions you negotiated might not be accounted for.
- It doesn’t exclude redundant or unused licenses from its billing, both for unused named user licenses and engines that haven’t been installed.
- It often reads data inaccurately from older software versions.
- At the end of 2018 it will track and assign prices for license authorizations, not usage.
- It applies newer metrics and price models when your contract may entitle you to older metrics that are less costly to your usage situation.
SAP license roles are extremely difficult to change after they’re submitted to LAW. When over-licensed data is calculated by LAW, that’s it – you’re locked in at those prices. Before submitting to LAW, a SAM tool can trim unused or redundant licenses, analyze your usage to assign less costly licenses, and use your contract as a search rule in its analysis to uncover overlooked advantages. This optimized data analysis rules from the SAM tool can then be submitted to your SAP systems and applied to the next LAW report, bringing transparency between your company and SAP — and lower costs to your company.
SAP often uses audits to sell its solutions to existing customers. An audit seems like a compliance issue, but it’s a sales issue, which makes it negotiable. The more and faster you learn about your SAP licensing situation, the stronger your negotiating position. If you’re faced with an audit (or self audit), here are a few things to remember:
- Take the initiative and respond promptly. This shows SAP you’re ready to dance the audit dance.
- Review your Review. Request time to properly gather and analyze your data before submission. A quality analysis takes time, SAP understands this.
- Get expert assistance. Many Software Asset Management providers, including Aspera, have experts with experience in SAP licensing, contracts, and audits.
- Read your contract. Thoroughly. In fact, don’t just read your contract, analyze it. Know your rights and look out for special conditions that could help your measurements.
- Aggregate your SAP data. You must use the SAP measurement tools, like LAW or USMM, but a SAM tool will go further and deeper, gathering license usage data and using your contract as a search rule to uncover potential advantages.
- Optimize your licenses. Remove inactive users. Match license authorization to actual usage. A SAM tool gets this done, strengthening your position in an audit. It’s not uncommon for SAP customers to use savings from optimized licenses to cover unexpected costs from an audit.
- No time? Performing a Rapid Vendor Analysis takes a snapshot of your license position in just a couple of weeks. Its results give you a leg up in your negotiations.
No! You’re not alone if you think SAP licensing is too complicated to handle. Whether you’re dealing with an audit, renegotiating a contract, or looking to reduce ever-increasing costs, SAP Software Asset Management tools and expertise will help you.
- Save an average of 10% on SAP licenses
- ROI in less than a year
- Cut down your annual self audit response time by 10%
- Save 33% of your time with automation
A letter from SAP arrives announcing a deep-dive audit or your first LAW submission deadline. Then the scramble begins to understand your contract’s terms and conditions, your licenses, and the SAP pricelist while you gather all the requested data. A SAM program keeps you prepared, ending that scramble. It gathers complete data quickly and efficiently, giving you the initiative with SAP. And it keeps your contract rules and results over time, so you only have to optimize once.
SAP licenses and your contract are not page turners. Long, complex, and boring, you’ll need patience and a fluency in legalese to read them. Yet, they’re crucial to know your user licenses’ limits and your entitlements. A SAM expert can understand your contract and a SAM tool can set them as rules to optimize your license position. At this SAP level of complexity, anything else is as useful as an abacus.
The Price and Conditions List from SAP is a complicated slurry of legalese and software nomenclature open to interpretation and seems designed to obfuscate. Then, just when you think you understand the PCL, it changes on you, every 3 months. It’s not meant to confuse – SAP’s breadth of products and services are ever-shifting and expanding, and the PCL reflects this. When you need to buy additional licenses, SAP licensing expertise can help you understand and interpret them to your advantage. So, for example, you don’t move your entire contract from an old PCL you understand to a new one you don’t understand.
SAP’s engines are complex beasts to measure. Many have different sets of metrics, depending on usage and what they’re used for, so they get complicated quickly.
- Here are a few licensing metrics: Per core, Per device, Per named device, Per user, Per named user, Per processor (CPU count), Per processor value unit…
- Here are a few for key business metrics: Per patient, per contract, per transaction, per revenues, per employee, per job posting…
In a complex software environment, it’s easy to lose track of how usage for each engine is determined and how many users are legitimately accessing which engines. An effective SAP SAM tool can tame your engines, so they’re friendly to your bottom line, not ferociously expensive.
The better your data, the more you can trust your compliance position and negotiate with SAP. Understanding what kinds of licenses to buy, how many, and with what authorizations requires good data. Applying the licensing rules in your favor requires good data. Without complete, high-quality data, you might end up with LAW results that leave you paying more for licenses and for licenses you don’t need.
Running a SAM program allows you to automate many of your processes. Naturally, this saves you and your team a great deal of time. Automating license management will make reclaiming licenses and cutting costs a regular activity.
Now! It’s always a good time to manage your SAP licenses. SAP updates their pricelist every 3 months. New rules for authorizations, new measurement tools, new indirect access pricing are opportunities to improve your situation with SAP and make your costs predictable.
How? You can get expert services to help you get compliant in a pinch. Or you can start a SAM project long before your next self audit. You can be hands-on or let a SAM service partner do it all for you. It all depends on your situation:
- Audit: Take a deep breath and remember: an audit is about sales as much as compliance. So, when SAP wants to dig deeper into your results, a SAM program will give you the valuable data to negotiate with SAP and satisfy both sides.
- Contract renegotiation: SAM for your SAP gives you the transparency that strengthens your position before a contract renegotiation. A contract analysis is a standard part of SAM because it uncovers benefits you didn’t know about.
- S/4HANA migration: Named user license roles are difficult to change after your data submission to SAP. If you’re over-licensed, then optimize with SAM and reap the savings. As SAP migrates to S/4HANA, the window to optimize your licenses will close and your over-licensed position will be locked in.
Don’t wait to automate! Allocating licenses to users, measuring engines, reclaiming unused licenses, and canceling duplicates are time-consuming tasks that increase the potential for errors. A SAM tool automates the SAP license management process, speeding it up and removing the potential for error. For some, it’s as simple as setting a timer on Friday and seeing the results on Monday morning.
- Problem: SAP is shifting its license measurements from application usage to authorizations. Your licenses’ authorization scope will be larger – along with your licenses’ costs – because they’re based on what users could use, not what they actually use.
- Opportunity: Many SAP users have more authorizations than they need, so there’s a chance to save! SAM technology can show you both license models for your current authorizations and current usage, comparing them so you choose the right one for your users and your budget.
The danger of the default license
- Problem: If you don’t assign a license role to a new user, SAP will assign a Professional User License. It is authorized for all SAP software (which is good) but is also an expensive user license (which is not good).
- Opportunity: A SAM tool shows you the gap between actual usage and mapped license types, and closes the gap by selecting the license with enough coverage. You pay for what you actually use and free up budget to invest in other areas.
Reduce, reuse, recycle your licenses
- Problem: Contractors come and go, without deactivating their licenses. Employees move to another department, getting another, redundant license. Employees leave companies, leaving behind user licenses. Left unwatched, unused licenses pile up and push up maintenance costs.
- Opportunity: A Software Asset Management tool can recycle these unused, forgotten licenses – keeping you in a cost-effective, compliant situation and preventing you from buying more licenses than you need. Recycling is good for your license environment. And it’s easy with a SAM tool that will automatically pool our licenses for you.
Who’s inside your SAP systems?
- Problem: If your user license is a key, then your SAP engine is the house. This means you need a named user license to access the application, and an engine license for the application itself. The tangle of licenses begins.
- Opportunity: A SAM tool can disentangle your crisscrossing user and engine licenses, giving you a clear picture of your SAP licensing environment and compliance. It’s the first critical step towards transparency and optimizing your licenses.
Engine, engine number 9…10, 11, 12…
- Problem: SAP’s engines are complicated things. Many have different sets of metrics, depending on usage and what they’re used for, so they can go from complicated – per core, per device, per named device – to really complicated – per patient, per transaction, per revenues, per job posting.
- Opportunity: The complicated nature also means engines, or package licenses, are loaded with optimization opportunities. An effective Software Asset Management tool can rev up your engines’ savings by discerning and optimizing your complicated engine metrics—automatically.
Engines for long-term planning
- Problem: Package licenses are bought by the bundle, like hundreds of users or thousands of processes. This makes planning difficult. Do you over-purchase and risk paying for a slew of unused metrics? Or under-purchase and hope you remain compliant?
- Opportunity: SAM digs into the details of your engine metrics and usage, cross-references it with a detailed contract analysis, and optimizes your licenses. This gives you the knowledge to make smarter licensing decisions for future growth and finds value in your existing engine licenses to make these plans a reality.
SAP contracts are no beach read, they’re dense and complicated – but knowing the ins and outs of your contract is crucial to optimize your SAP license position.
Beyond the convoluted text, many contracts are filled with unique clauses and special conditions from negotiations or from old contracts rolled into new ones. A detailed contract analysis can uncover opportunities for more budget friendly self audit or contract negotiations. For example:
- Active Reconfiguration Right lets you shift user and engine licenses around from a type you don’t use to a heavily-used type, if you stay within an agreed overall amount.
- Some contracts allow SAP users to carry over credit from a previous contract to a current contract.
- Special metrics for engine license are often included in the appendix, so you can ignore the LAW measurement and submit your own, like revenue or employee count.
- No limits on usage or obligations for LAW reporting (an Unlimited During Deployment Agreement)
If your company has an Unlimited During Deployment Agreement, then a hefty bill might be coming. SAP’s default Professional Named User license come with a load of authorizations and a high price tag, so you’re likely over-licensed and the new contract will reflect that with a higher set of rates.
What’s in your contract? Knowing your rights and obligations is the first step towards bringing transparency to your negotiations with SAP and evening out the playing field. It means cutting a fair deal with them, which maximizes your software resources and keeps your costs low.
SAP introduced S/4HANA, its newest ERP platform, to address all the issues that modern enterprises will face in the future. Your migration could take years. It will be challenging and potentially costly, so start planning for S/4HANA now.
1. Choose your migration approach - there are two.
- A contract conversion with a new S/4HANA contract lets you reconfigure your R/3 solutions into their S/4HANA equivalents.
- A product conversion moves to S4/HANA in phases. You keep the same agreements and credit your current R/3 licenses against S/4HANA solutions.
2. Get an inventory of your SAP estate
Knowing what you own is essential. Analyze your contracts and usage to see what’s in your SAP environment and how it’s used – or if it’s being used. SAP will recommend what you need in S/4HANA, and recommend more than you need. You will already know what you won’t need, so you know when to say, “Thanks, but no thanks,” which leads to cost savings.
3. Get your environment under control
Lots of savings are lurking in your SAP environment, like over-licensed Professional Named Users, unused licenses, and under-used or even decommissioned engines. Your S/4HANA migration is the best opportunity to optimize your SAP licenses. It’s a fresh start with a new contract loaded with only the SAP solutions you intend to use. And it will only happen once since you only migrate to S/4HANA once.
4. Understand your licenses vs. S/4HANA metrics
S/4HANA has one metric for most solutions with three use types that roughly correspond to their R/3 twins: Professional Use, Functional Use, and Productivity Use. You must understand your current named users’ usage to know where they should be mapped in S/4HANA’s license metrics to prevent over-licensing. Getting it wrong could cost you millions in over-licensing.
4½. Get a professional SAM tool
A professional SAM tool isn’t mandatory, but it’s crucial for a cost-effective migration. Moving to S/4HANA will only happen once, so get it right and you will cut costs in the process. A SAM tool can:
- Give you a clear inventory of your SAP estate
- Optimize your existing licenses to reflect their actual usage
- Simulate and analyze of the effects of an S/4HANA migration
- Oh, and it can do all of that automatically.
A SAM tool shows cost-saving potential and makes negotiations with SAP smoother. You buy only what you need from SAP, while SAP still gets to sell some S/4HANA licenses.
How to learn to love indirect access or at least learn how to live with it: Indirect access is possible if your non-SAP applications interface with SAP software. The more non-SAP applications and the more complex IT structure you have, the more likely indirect access is occurring.
Step 1: Accept that indirect access is normal
In today’s world of data centers, clouds, apps and bots, indirect access is common. Generally, any indirect access to SAP needs to be licensed. But, as with so many issues with SAP, there are grey areas.
Step 2: Acknowledge the ambiguity
Indirect access is not only difficult to detect by SAP customers and SAP themselves, it’s also difficult to define. As with SAP licenses, contracts, and the Price and Conditions List, there are grey areas, exceptions, and qualifications around indirect access. Talking to an SAP expert can fill in those grey areas.
Step 3: You don’t need a license to read
Without getting deep into the details, an Indirect Static Read is when data flows in one direction: from SAP to you because you’re extracting the data and not changing it. It’s only a transfer of data, like reading, so that doesn’t usually require a license.
Step 4: You don’t always need a user license
Order to Cash and Procure to Pay are common scenarios that might cause indirect access to SAP software, so you won’t need named user licenses but you might need special order licenses.
Step 5: If a user license is needed, you only need one per user
You must allocate a named user license for any SAP usage, indirect access or otherwise, but each user mostly needs only one license with sufficient scope. That’s it.
Step 6: Stop doubling up on licenses
When indirect access occurs, another license demand might be created, because it’s through a third-party application. Search for SAP licenses (created for direct access) and separate licenses under the same name (created for indirect access). Then apply one license to the highest authorization needed for both direct and indirect access. Or let a SAM tool do this for you.
Step 7: No indirect access is too trivial
Factory workers clock in and out of work with software and office workers use software to order paperclips. These seemingly trivial activities require named user licenses, like an affordable Employee Self Service User.
Step 8: Find it before SAP finds it
SAP is looking for indirect access too. LAW and USMM show every active license type and SAP’s audit department is aware of non-SAP applications that usually indirectly access SAP software through an interface. Prevent the costs of SAP-imposed licensing by investigating your own indirect access.
Step 9: License unlicensed indirect access
Uncovering unlicensed indirect access gives you transparency, so you’re aware of the financial risks, and can make an informed decision. What you don’t know can cost you. But knowledge allows you to act quickly. SAP is known to avoid auditing customers for indirect access when they buy a batch of licenses that clearly cover indirect access.
Step 10: Don’t be afraid to seek support
A SAM partner knows SAP licensing, dives into the complexity and brings transparency to the surface. They can recognize and minimize the risk of indirect access, license what needs to be licensed, and help you remain compliant with SAP—and lower your costs.
SAP has listened to its customers’ complaints – they might have even heard your long sigh when you finished reading the previous section – so they introduced a Digital Access, which uses “Document licenses” for instances of indirect access.
Here are five important things to know.
- Instead of licensing named users for indirect access, documents created by accessing the SAP digital core by third-party applications are licensed.
- There are nine document types. Only the creation is licensed – reading, editing, or deleting shouldn’t create a new license.
- They come in a tiered pricing system. More documents cost less per document – like buying in bulk.
- Once the measurement is done, both customers and SAP can see the documents created by indirect access.
- SAP customers can:
- Stick with the current indirect access model, or
- Trade in old indirect access licenses for document licenses while keeping their current contract, or
- Get a whole new contract including document licenses.
SAP insists document licensing brings convenience and transparency to the process. But you’re probably asking yourself: What’s the catch?
If you’ve analyzed your data connections and you’ve properly licensed users for indirect access, you might be paying less than you would with document licenses.
Plus, not all documents are so easily measured. For example, SAP Professional Named Users are licensed for indirect access, but when they create a document, a license is created for that new document. So, they’re doubled licensed.
SAP will entice you with special deals, but you must resist. If you’re serious about compliance now and cost control later, there’s no escaping a thorough analysis of your current indirect access instances to know what you truly need.
An advanced simulation of your SAP license situation shows exactly what you’re using and what you need. So you purchase the right licenses from the start, saving money on maintenance fees, and ensure compliance. You can expect an average of 10% reduction in SAP licensing costs.
Organizing your SAP licenses and setting up SAM processes will make LAW submissions to SAP easier and quicker. You have the information on hand, ready to go and you’re aware of your level of compliance and how to apply licensing rules in your favor. The same applies to responding to audits.
SAM tools give you more information about your SAP licenses than SAP gives you from LAW. By using that information along with an optimized license position, the transparency puts you in a powerful place to negotiate a better deal with SAP.
With a Software Asset Management program in place for your SAP software, you’re able to:
| || |
SAP software is so intertwined with most companies’ day-to-day business that it’s easy to reluctantly accept its high costs. Gathering a clear overview of your SAP licensing and contracts helps you get more from your SAP investment.
Automating your SAM processes for your SAP licenses will:
| || |
SAM gives you transparency into your current and past SAP software needs. These valuable insights help shape your SAP software environment. You’re able to make plans with more certainty and use the savings from SAM to invest in that future. Make better long-term contract decisions, cut licensing costs, avoid indirect access risks, and develop strategies that make your SAP environment more flexible and agile.
As SAP rolls out S/4HANA and new rules on indirect access, SAM for your SAP will prepare you for the eventual migration. Optimizing your licenses cuts costs before you’re locked into a new contract. A clear, comprehensive overview of your SAP licenses and engine metrics helps you understand what you use now and what you need later.