The World’s Best Businesses Are Paying Too Much to Run SAP

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.”

 

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