In this article I will describe the most common enterprise metrics. Licensing by enterprise metrics is beneficial when the software programs are planned to be used by a large number of users or in case the software programs are installed on multiple servers. The enterprise metrics depend on your business’s growth. This way, you only need to obtain additional licenses when your business grows (for example, your revenue or your number of employees increased).
Perhaps the most common self-declaration metric among the big 4 software vendors (SAP, Microsoft, Oracle and IBM), “Revenue” is usually defined as “the income that a company receives from its normal business activities as well as from dividends, royalties or other sources”.
In your contract, the metric definition might be slightly different than the generic metric definition described in the “Software Use Rights” (released every year by SAP). Therefore, when declaring the revenue during the audit, you need to make sure the number is declared according to your contractual clauses and specific mentions.
Besides the metric definition, you should identify in your contract the calculation method for additional licenses to be acquired once your revenue grows above the licensed revenue cap. The additional licenses to be acquired are called “increments” and represent a round number that reflects one growth unit (e.g. 1 increment equals $1,000,000). This way, additional increments need to be acquired to extend the licensed revenue cap.
Number of employees
The “Number of employees” metric is defined as the total number of individuals (including contract workers) “employed by the company or employed by the legal entity that is licensing the functionality of the package.” (as defined in SAP’s “Software Use Rights”).
The definition is applicable, unless otherwise specified in the contractual agreement, for the majority of SAP software programs licensed by the number of employees. In some cases, the metric can be limited to a certain entity or subsidiary of your company.
“Spend volume” is defined as “the total amount of a company’s annual expenditure for the procurement of all direct and indirect goods and services.” The spend volume or expense metrics are used to measure the procurement performances which are linked to a company’s wellness. Once the licensed amount of spend volume increases, similar to the revenue metric, additional increments need to be acquired to cover the growth.