By Randy Littleson
You’ve all seen the ads in airports and on billboards. SAP proclaims that the world’s best business run SAP, citing the North Face, Pinkberry, Ghost River Breweries, Callaway Golf and many other marquee brands as examples. While I’m sure these companies get value from their SAP software, I’m also sure they are overpaying for that value. Why?
Let’s start with the fact that users overwhelmingly state that SAP licensing is too complex. A SAP user group survey late last year found that 95% of SAP users think the company’s software licensing is “overly complicated” as cited in a ComputerWorldUK article (read “No Surprise—Users Say SAP Licensing is Too Complex” for more).
SAP is most commonly licensed based on named user licensing. Unfortunately, license types are assigned based on vague descriptions and manually maintained master data. Users are categorized based on their working roles and features of SAP software they are permitted to use. Lacking factual data, customers make educated guesses on how many of each user license type to buy. The result is that in some cases the user is under-licensed—for example, they need a Developer license but only have a Limited Professional license. This situation represents a licensing liability at true-up time and can result in an unbudgeted expense. But in many cases, the opposite problem occurs—the user is over-licensed by having a higher license level than they need based on how they actually use SAP software. The vagueness benefits SAP.
SAP license optimization typically involves three main techniques:
- Retire SAP user accounts that are not actively being used
- Identify duplicate users not found by License Administration Workbench (LAW)
- Allocate the optimal named user license type to SAP user accounts based on analysis of real usage data
There are, however, a number of other software licensing issues that should be considered (read “Seeing the Bigger Picture of SAP Licensing” for additional information) to achieve a complete and accurate picture of SAP licenses, including:
- Contract clauses – purchased counts and license ratios
- SAP package licenses
- SAP indirect access
On the bright side, SAP has announced recent software licensing policy changes that provide customers newfound flexibility to businesses whose business requirements have changed (read “SAP Policy Changes Extend Software License Optimization Benefits” for more information). These changes provide organizations additional options to more readily monetize the outcome of Software License Optimization investments.
Many leading companies are being more proactive in managing their SAP software licenses and reaping the rewards. A leading consumer packaged goods company saved $18 million on their SAP software. A leading defense contractor saved more than $1 million on their SAP software spend. A leading global manufacturer saved $3m euros on their SAP software spend.
I’ve heard some companies say that they don’t think they have an SAP spend problem because they have people that manage their SAP software daily or that they have a special relationship with SAP that they don’t want to jeopardize. Really? You're willing to pay SAP more than you should? And, respectfully, the companies cited above realizing material savings have exceptional people managing their SAP implementations too. The problem isn’t the people, it’s the lack of actionable information to shed light on the problems and allow you to act on them to avoid over-spending and/or being out of compliance. SAP’s License Administration Workbench (LAW) tool is designed strictly for the benefit of SAP so they can audit you. It was never designed to help a customer manage their SAP licenses to optimize spend and ensure continuous compliance – so it doesn’t. It’s there to help SAP identify when you are out of compliance so they can charge you more via a software true-up.
It costs a lot of money to run SAP. The last thing you can afford to do is pay more than you should. Some of the world’s best businesses are running SAP while making sure they are not paying too much for the pleasure. Are you?Learn more by watching the webinar "SAP Software Licenses Could be Costing You" or read the white paper "Seven Ways to Gain Control of SAP Licensing and Spend."