Many licence reports seem to be based on the basic consideration that “one installation equals one licence”, and in the case of desktop, on-site software, this may be true.
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SAP requires customers to perform a yearly self-measurement using the SAP tools USMM and LAW. However, these tools are not designed to optimise your licence position; they simply measure what you currently have in your systems. Before using the SAP measurement tools, it makes sense to look at your user classification. Here, you can determine the licences of your users according to their usage.
There are a number of steps IT departments need to take to avoid making over-payments to SAP.
Only pay for what you use
First, never pass raw LAW (Licence Administration Workbench) reports to SAP in the hope that the software provider will optimise the findings for you.
LAW reports contain multiple usage records of many modules across a large enterprise resource planning (ERP) system. SAP will count each use of a module as a requirement for a separate licence. Be sure to optimise this before you hand over any data to SAP.
Clearly, it is good practice to make sure you only pay for licences for people who are employed at the company. You don’t pay wages for people who leave, so why continue to pay an SAP user licence fee?
A well-engaged joiners, movers and leavers process should help track licences against the employee lifecycle. Significantly, keeping track of staff should cover those people whose jobs change: people who roll off assignments that use SAP should have their licences recovered to a licence pool.
Again, it makes financial sense only to buy the products you use. In an SAP installation this means only using the licences you really need. It doesn’t make sense to throw out IT budget for bells and whistles modules.
When assessing licences, IT departments should be meticulous with the different use cases for SAP in the business. A typical use case may run as follows: “As a <insert job role here> I want to be able to <insert task here> so that I can complete <insert business activity here>.”
Aligning the technology behind these use cases should help to flush out which SAP technologies are essential for business operations, rather than simply nice to have.
Keep tabs on software use
It is also good licence hygiene to revisit usage. Over time, you will find that some users do not need the high-priced SAP licence that was originally prescribed to them. Equally, some users might require more expensive SAP licences.
SAP will look to wring maximum value from any licence calculation by integrating a custom business metric – the third level metric. This will be agreed by you prior to installation. So it’s important to ensure that the collection and inclusion of this data is not prohibitive or labour-intensive, and it certainly should not elevate SAP licence budgets beyond your expectations.
It is also worth reviewing the value of your SAP support and maintenance contract. If the technical support and upgrades to SAP technology are not giving you a feeling of value for money, then consider third-party support when your contract is up for renewal.
Understand licensing terms
Clearly, best practice dictates that IT needs to stay on top of changes to SAP licensing. This is not a tip unique to SAP. Keep in mind that the terms and conditions that apply to your SAP use at the point of purchase – backed up by the existing contract of the time – are not necessarily the terms and conditions an auditor might quote six, 12 or 18 months later.
Finally, given the recent high-profile cases of licence dispute, understanding what indirect usage means in your organisation should be a priority. SAP is licensed on a per-user basis.
While automation and technical connectivity might appeal to resolve a given business scenario (connecting your Salesforce system to SAP, for example), ensure your software asset management team has rightly priced what this potential extra functionality will cost your company. Just because something is technically achievable, doesn’t mean the (SAP) licence permits such access or use.
It is best to ask SAP about the recently introduced volume-based pricing and to understand the benefits of volume-based pricing versus named user-based scenarios. This is not a quirk of SAP licensing – other software suppliers look at system connectivity as a means of requiring a company to pay for additional licences, too.
Be prepared to negotiate
Overall, businesses need to be prepared. When was the last time SAP told you that you are over-licensed after a measurement? Most SAP users are over-licensed – on average, by 20-30% – and these licences can be used to cover for indirect usage, or at least to get the costs down.
So, make sure you have all relevant information for a negotiation with your SAP account executive, especially when the topic of indirect usage is on the table.
This article was written by Rory Canavan and Jeroen Van Dijk. Canavan is founding consultant and owner of SAM Charter. Van Dijk is business development director at software asset management firm VoQuZ Group.