7 steps to a worry free SAP license audit

by Kevin Kuestermeyer

SAP license audits can be stressful events for organizations that aren’t prepared. With the rising frequency of these audits and the budget issues they can cause, today is as good of a time as ever to avoid a future headache and get your organization prepared.

Drawing on our experience of helping organizations optimize their SAP license allocations in preparation for an SAP license audit, we’ve come up with seven steps that will not only ensure you’re ready for your next license audit but also potentially save you millions in license costs and maintenance fees.

1 ) Assess your current SAP license status

The first step to preparing for an SAP license audit is knowing where you stand today. A proper assessment includes comparing your USMM and SLAW reports with your current license agreements, determining how well you understand indirect usage, and forecasting your consumption of user and engine licenses.

2 ) Kickoff a two-week license management project – or not

Once you know your current SAP license status, you can decide if a short project to improve license allocations is worthwhile. The goal of this two-week license project is to pull all of your data together into one place and to determine if you can reduce compliance risks and expected costs through improved license allocations. Assuming a two-week project makes sense, you should start by getting all the data you need into one place. For example, you should:

• Collect all SAP licensing contracts into one place and understand your total licensing envelope for users and packages.
• Identify all package or engine licensing metrics.
• Identify all applications integrated into your SAP environment and all the users for each one of the integrated applications.
• Get the most likely IT capacity forecast for the next 6-18 months. Ideally, you already have an IT capacity forecast that is based on your firm’s business plans, but if you do not then you will need to get a copy of your firm’s business plans and then translate that into an IT capacity plan.

Once you have the above information, you can use it in the following steps to build a license forecast for SAP users and for SAP packages (a.k.a. engines). Your license forecast should answer three key questions:

1. What SAP users will be added based on your business plan?
2. What indirect users will be added based on your most likely business or IT capacity plan?
3. How will your engine licensing metrics increase or decrease due to the business activity levels implied by the business plan or IT capacity plan?

3 ) Build a forecast to anticipate direct user license requirements and define rules for optimally allocating direct user licenses.

Once you have the necessary information in one place you can start using it. We recommend starting with understanding and optimizing your direct users since this is typically the least complex licensing area and much of the work done for direct users can be leveraged when managing compliance for indirect users. Start by:

1. Analyzing user transaction histories to identify and remove inactive and duplicate users.
2. Defining an assignment ruleset for allocating license types to users based on what access they have.
3. Running simulations to determine if there are enough licenses for direct users based on the most likely and most optimistic business plans.

These steps can be difficult without a tool like our License Management module which captures detailed user transaction history, supports complex assignment rules, and offers simulation support. However, the rewards are significant once a company has optimized its license allocations and understands how many are truly consumed. Only then can companies maximize their investments in SAP by ensuring that users aren’t assigned more expensive license types than they are actually using and only then can a company understand how much spare capacity (headroom) they have and if those unused licenses are sufficient to meet the near-term requirements implied by the current business plan.

4 ) Optimize indirect user licenses

Optimizing licenses for indirect user access is perhaps the most challenging license management task. Begin by building on the work done in step 3.  Take the rules you’ve created for assigning license types to your SAP users and use them to determine how each of the roles for each user of each “non-SAP” application would map to an SAP license type. To do this, simply ask yourself, “If the user were to read or change data in SAP directly instead of through the integrated application, what roles would they need and what license type that would require?”

Once you have mapped SAP license types to the application roles in the “non-SAP” application then simply compare the list of direct SAP users along with their assigned SAP license type with those users of the “non-SAP” application. Once you have compared the two lists, ensure that every user with both an SAP user ID and access to the “non-SAP” application has an SAP license type assigned to them that is equal to or greater than what they would require due to their access to SAP through the third party application. And, for those who only have indirect access, ensure the SAP license required of them due to their access levels in the third-party application is accounted for.

In order to optimize indirect user licenses, it may be necessary to create or modify role definitions in the third-party application or your SAP license assignment rules. Here again, leverage the work done in step 3.  Also important is to use simulations based on your current IT capacity plans and business plans to see how the planned usage of the “non-SAP” application might impact licensing.  Check your simulation results against your existing license inventory and see how long your company can go before needing to purchase additional licenses.

5 ) Understand current consumption levels of package or engine licensing metrics

While optimization of licenses is most often done at the user level, if you want to easily pass your SAP license audit you will need to ensure you understand the consumption of licenses associated with owning a given software package. These metrics vary widely. Not only are they different from one product to the next, but they can also differ from one version of the product to the next. Be sure to review what metrics are in your contracts and how those metrics are expected to change based on the business plan and IT capacity plans.
To make licensing audits stress-free, you will want to keep everyone informed on when incremental license purchases are expected. We recommend updating everyone monthly even when there is no need for more purchases, because this helps to remind people that if the business plan or IT capacity plan changes, then they will need to let you know.

6 ) Monitor user and business activities, user count, and rates of change and then adjust allocations automatically

At the end of your two-week license management project, you will have assessed your SAP license status, gathered the required data, optimized your license allocations for both direct and indirect license allocations, and tentatively budgeted for any incremental licenses for users or SAP packages. Now is the time to put a simple process in place to ensure you stay ready for a license audit.
We recommend spending a couple of hours each month putting together a short report called: “State of SAP License Compliance”. Distributing this report to various stakeholders in procurement, business planning, and IT can go a long way to avoiding budget surprises-both because it lets everyone know that you need to know changes to the business plan as soon as they are made so that you can adjust your forecast for SAP license consumption and because it keeps reminding people that even if they have not bought SAP licenses in some time, they will eventually.
We also recommend every 6 to 12 months re-running simulations, looking closing at license consumption trends, updating allocation rules, and sending out a more robust report at that time. Not only because it shows stakeholders how well you are able to make data-driven forecasts but also because it is a great way to highlight the hard dollar savings from any role redesign work and higher returns on SAP investments you’ve been able to achieve.

7 ) Acquire additional licenses if needed

There comes a time, as your business grows and grows when you will need to buy more licenses – even if you have perfectly optimized your current investments. However, by using all the information you’ve gathered and the proficiency you’ve developed by continuously applying the above steps, you can now make informed decisions and any additional investments in SAP licenses will be just the right amount (not too much and not too little) and at just the right time (not too early and not too late). Furthermore, your purchasing decisions will be based on actual usage and aligned with expected business growth.

If you enjoyed this post, you may also like our posts on how license management can help your CFO sleep better at night. Read it here.

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