SAP licensing models are among the most complex of all tier one vendors. For organisations who have been long term SAP customers this complexity is added to as the number of contract documents accumulates over time. Add to that licence model changes and constant changes to prices and conditions it can become difficult to keep track of your licensing position. Understanding SAP contracts and licences can be further complicated through staff attrition where knowledge of specific historic purchasing events is lost.
Take stock control as an example. You can implement best in class stock management, but regular stock takes are a must to identify creep and make adjustments to ensure the accuracy of inventory data. The same goes with SAP licensing. Good Software Asset Management practices will help you manage contracts and licences effectively. However regular Internal Audits are a necessity to ensure you maintain visibility of your licensing position and control over licensing costs.
2021 is a pertinent year for SAP customers in terms of licence management. There are currently a number of key drivers for performing an Internal Licence Audit, several of which are likely to apply to any given customer.
When sales revenues are down as is the case with the current economic climate, all major vendors including SAP are more likely to ramp up licence audit activity. It is therefore critical that you analyse your licensing position to avoid unbudgeted licence fees.
Another economic driver is cost control. Many customers will be looking to shore up IT budgets and cut unnecessary spend where possible. Customers should be looking in detail at how they are licensed and what they are actually using in order to identify possible cost cutting measures.
SAP extended their DAAP programme until 2021. This is a commercial framework offering incentives to customers who migrate to Digital Access this year. If you have not dealt with this risk already, now would be the time to do so and take advantages of the commercial incentives on offer.
A thorough evaluation of actual usage combined with effective demand planning will help you plan your optimal S/4 HANA Bill-of-Material and will help you plan the most effective negotiations strategy when buying licences. An internal review is the ideal springboard towards effective S/4 HANA negotiations.
How do you perform an Internal SAP Licence Audit?
When performing an internal review, there are 4 components worth investigating:
– User Licences
– Package/Engine Licences
– Indirect Access
This data can then be consolidated to get a clear report.
– Create an ELP (Effective Licensing Position) document
Once you have performed the analysis of the items you can then derive insights and actions.
– Identify licensing gaps/risks
– Quantify licensing costs
– Identify mitigative actions to optimise or reduce risk
Note that this guide is primarily oriented at SAP’s ERP systems. Over time, SAP has acquired many companies which can add some complications in your review. Prominent examples are BusinessObjects and the various Cloud companies such as SuccessFactors, Ariba and Concur. However, the principles should remain the same.
SAP Contracts Review
The purpose of the SAP contracts review is to establish a clear view of your licence entitlements. Having this, is particularly important for SAP as SAP contracts often have custom wording or metrics and can have outdated language. Your licence entitlements include licences purchased, licence metrics, volumes purchased, product pricing, discounts, pricing conditions, and product use rights. This information should be documented in an SAP Bill-of-Material. The Bill-of-Material (BoM) should document each licensing transaction with SAP in order to accurately track the effect of all purchases, terminations, and credits made over time. The BoM will become the basis of the ELP documents.