Taming SAP Licensing – Conquering Overly Complicated Licensing

By Chris Hughes, Flexera Software

A recent SAP User Group survey found that 95% of SAP users think that the company’s software licensing is ‘overly complicated’ as discussed in the ComputerWorld UK article (1). The survey was conducted by the UK & Ireland User Group and questioned 336 SAP users across 150 organizations. The article goes on to say that “67 per cent of users […] have found it increasingly difficult to keep track of license usage” and that “89 per cent of users would like to see SAP offer software that is only limited by one license or usage metric.”

Philip Adams, vice chairman of the UK & Ireland SAP User Group, is quoted as saying—“I would say licensing is a top five priority for our users at the moment. I am hearing lots of noises [from SAP], but am seeing very little action.”

SAP licensing is increasingly difficult to manage and optimize, and could be costing many organizations a small fortune. This is particularly evident when considering SAP named user licenses and the inaccuracies and inefficiencies that can arise. Every person who interacts with SAP data directly through an SAP application or indirectly through a 3rd party application, web portal, etc. requires a named user license. There are many different categories or classifications of users—from Developers and Professional Users to Employee Self-Service and Test users. Users are categorized based on their working roles and features of the SAP software that they are permitted to use. In most organizations this is a manual process, not based on actual usage of the system. It’s often difficult for the SAP administrator to determine the most appropriate license type for a given user, so it’s a ‘best guess’ approach.

When optimizing SAP named user licenses, the first step is to identify users who have not logged in or run any SAP transactions for a significant period of time. Seasonal usage aside, these users can often be retired and their licenses reharvested to forestall additional purchases.

A further reduction in named user licenses can be achieved through identification of duplicate users. Each SAP user requires a single named user license regardless of how many SAP systems they use and how many user accounts they have. Duplicate users occur when a single user has accounts on multiple SAP systems but SAP is unable to determine that these accounts belong to the same person. SAP combines user accounts based on a single field such as user name or email address, and if the chosen field does not adhere to a consistent naming convention across all SAP systems then some users will not be accurately consolidated and as a result will be licensed multiple times. This occurs in many organizations to some extent, and can be magnified by M&A activity where username and email address naming conventions have changed.

Detection of duplicate users requires user records of a high quality and completeness. At a minimum, one user field should be reliably populated in addition to the field used by SAP to combine users. However, the more available fields the more comparisons that can be done. Completeness of user data can be improved through manual population of empty fields, and data quality can be improved by validating field values against company naming conventions.

A long term approach should consider a central user management solution to improve consistency of user fields. SAP provides both Central User Administration (CUA) and Identity Management (IDM) for this purpose.

The biggest challenge related to optimizing SAP named user licenses is to determine the most appropriate named user license classification for each SAP user. Organizational structure, job titles and even SAP roles are somewhat useful for this purpose, but only by analysing how each user really uses SAP does an accurate license position emerge. This SAP named user license optimization commonly results in many users being classified against less expensive license types than before and a net surplus of expensive license types created, such that future license purchases will likely be for cheaper license types.

Aside from named user licenses the other key SAP license model is package (aka engine) licenses. Packages are optional applications for which additional licenses must be purchased, each priced based on a business metric that is unique to that application and which essentially measures the business value being provided.

Many SAP packages are capable of self-auditing, using a measurement function that calculates one or more metrics. This data is collected at true-up time and used to determine the license consumption for each package over the true-up period.

In theory this sounds straightforward, but in practice it is very difficult to convert the metrics provided by SAP into a single license consumption (or business metric) figure for each package. Some packages do not provide a measurement function, and others have documented inaccuracies. Some return a dozen or more metrics, only a few of which are relevant to licensing for that application package, and others require different calculations based on the SAP Basis version or price list version. And some packages must attain a minimum threshold of activity before being considered active for licensing purposes.

For those packages that do not provide a measurement function, there a number of techniques that can be used to measure license consumption. For packages licensed based on the number of active users, examining usage data can indicate which users are using which packages. For those packages licensed by number of employees, the SAP HR system can provide this information, or alternately, Active Directory, configuration management or inventory solutions could provide this data. Where none of this is available, manually inspecting an application’s user interface or database tables may suffice.

The value of proactively managing SAP package licenses is achieving year-round visibility of the SAP environment. In some organizations, package licenses can comprise 50% or more of SAP license spending. Rather than waiting for license consumption to be calculated at true-up, organizations can regularly run SAP’s engine measurement functions and other measurement techniques and determine their license consumption at any time. This enables organizations to more accurately budget and predict future SAP license spending and avoid nasty surprises at true-up. It also allows organizations to understand how their spending is distributed. In addition, organizations can detect when a new package is used for the first time and take appropriate remedial actions to avoid unnecessary use and expenditure, if unlicensed packages have been installed.

When implemented properly, SAP license optimization is not a one-off engagement but rather a continuous cycle of review and refinement. SAP license optimization enables optimal use of SAP licenses, avoids unnecessary license and maintenance costs, and provides the ability to accurately budget and predict future needs based on an accurate view on SAP licensing at all times. And with SAP moving into the top 10 list of major vendors performing software license audits, there’s never been a better time to start.