Taking Control of Your SAP Software Costs

Taking Control of Your
SAP Software Costs

Taking Control of Your SAP Software Costs

  • Steve Gahr
  • Publisher Advisory, Software Lifecycle Management
  • SAP, Indirect Use

SAP audits customers every year. It is mandatory for customers to extract User System Metric Measurements (USMM) data and submit to SAP on an annual basis. Understanding this data and how SAP uses it is key to avoiding any unnecessary SAP costs and potential exposure to an in depth, formal audit, including an indirect usage analysis. Controlling the initial and recurring expenses of an SAP deployment is a complicated, ongoing process. Due to the intricate nature of SAP pricing, licensing metrics and agreements, organizations may end up overpaying for additional licenses, or receiving unexpected fines due to non-compliance. This can result in a range of difficult to control expenses.

Even if your organization has successfully deployed an optimized SAP solution in the past, a current evaluation of your current license entitlements, use and new license options available is paramount. As SAP’s contracts are often amended and changed over time, organizations that have used SAP for a long time should ensure that their environment is properly maintained to enable greater Return on Investment (ROI).

Before determining how to take control of ongoing and upfront SAP costs, let’s take a look at why many organizations have difficulty when understanding SAP licensing costs.

Complicated Pricing Structure

When integrating a new software solution, organizational leaders will typically want to know the approximate expense for the project. Unfortunately, SAP pricing is very difficult to predict. This is primarily due to SAP’s subjective pricing structure. Not only is SAP’s pricing structure unique to each deployment, the precise details of its pricing structure are not publicly known. While longtime SAP experts have been able to produce a fairly accurate itemized list of SAP’s pricing considerations, these lists are extremely long and complex. To further complicate the true costs of an SAP deployment, the expenses that experts have identified are not always applied consistently.

When trying to control costs, organizations must consider more than just SAP’s price tag for their services. Instead, organizations must try to accurately estimate their Total Cost of Ownership (TCO), which is made of many direct and indirect costs. To approximate their TCO, organizations must fully understand every application, person, and process that SAP will interact with. This is a daunting task. As a result, organizations that want to control costs related to their SAP deployment should have a solid understanding of their software and operational environment.

Complex Licensing Agreements

One of the most common concerns about SAP deployments isn’t pricing – it’s the complexity of SAP’s licensing agreements. When surveyed, 95 percent of SAP users in the UK and Ireland believed the licensing structure was “overly complicated.” This causes a two-pronged problem: Organizations are unable to fully optimize their licensing spend, and they are at risk for compliance-related fines.

This challenge is driven by the breadth of their licensing entitlements, which can make a SAP investment difficult to maximize. While some broad categories of licenses do exist, underneath the surface level they become much harder to comprehend. Here are three examples of broad SAP user licenses:

  • Professional User – These named users can perform operational tasks and roles, such as system administration and management.
  • Limited Professional User – These users are similar to professional users, but their roles are limited by the terms of the software license.
  • Employee User – These users are not permitted to use SAP on someone else’s behalf, and are limited by the terms of their software licensing agreement.

While user licenses can become much more complex, these are three general categories that all SAP teams should be very familiar with. Be aware that the definition of each named user type may be different among customers – or even for the same customer – based upon the agreement at the time of purchase. In addition to this, customers should be familiar with package licenses, database scale licenses, and how these license types are utilized throughout their organization.

If organizations are not well-versed in the capabilities and limitations of their SAP licenses and unique metrics, they will be at risk for compliance issues. With a wide range of programs and licenses, it’s very common for organizations to not understand their restrictions. For example, some organizations are unaware that SAP does not allow integrations between SAP and other software. Other organizations may not be aware of how their license restrictions become more intense with each new version of SAP.

Without this knowledge, IT teams aren’t just at risk of operational costs spiraling out of control – they’re at risk of penalization and fines.

Controlling SAP Licensing Costs

To get the most out of your SAP deployment, consider consulting a third-party SAP expert. By leveraging the expertise of a specialized consultant, organizations can ensure that they are spending the optimal amount on their deployment.

Furthermore, by partnering with SoftwareONE’s SAP experts, organizations can receive advice on how to optimize their processes and licensing environments. This will enable greater cost savings, enhanced budget planning, and reduced risk in the SAP environment. Here is a sample of the benefits that SoftwareONE’s SAP consultants can offer to your organization:

  • A deep analysis of methods to optimize your unique software environment
  • Identification of cost avoidance opportunities
  • Mitigation of audit risks
  • Understand how to best convert and take advantage of SAP’s new Digital Access license model
  • Ability to predict and control future SAP spending

Through SoftwareONE’s range of SAP coverage and advisory services, organizations can enjoy peace of mind as they ensure their SAP deployment is controlled and optimized.

Final Thoughts

If your organization is struggling with a lack of transparency when trying to integrate an SAP solution, assistance is available. To attain the detailed knowledge necessary to improve the visibility SAP-related expenses and license entitlements, consider enlisting the help of an expert SAP consultant.

Control Your SAP Licensing Costs

Discover how SoftwareONE can help simplify complicated SAP environments with our SAP Advisory Services.

Learn more
  • Wednesday 27 November 2019

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Author

Steve Gahr

Steve Gahr Practice Lead – SAP License Advisory Services

Publisher Advisory | SAP

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