Support  |  1-800-620-4210  |  

Cost effective vs. costly SAP license reconciliation

There’s no way around it – you have to be compliant with your SAP license contracts if you don’t want to face legal and/or financial risks. Unfortunately, for some enterprises that means devoting weeks of staff time (or worse, consultant time) focusing solely on reconciling SAP licenses.

Why? Because preparing for an audit requires several heavy lifts. First, your enterprise must have a thorough understanding of their existing contracts. Second, you need to understand how the licenses in those contracts map to user activities so they can be optimally allocated or assigned to users. Third, you need to understand how each and every user has historically interacted with your SAP environment either directly by logging in and executing transactions or indirectly through some non-SAP application. And, fourth, you must assign the appropriate license type to each user either directly or based on role assignments.

This is no small task.

Then, once you’ve done it, you have to prepare so that in a 3 to 12 months you can do it all over again.

To stay on top of SAP licensing you need to forecast licensing requirements, adjust license type allocations as user interactions change, account for additional indirect licenses as new integrations are built between your SAP ERP platform and non-SAP applications, and maintain license allocation rules so that they meet all agreed-to specifications and are synchronized to any contract changes.

Staying on top of SAP licensing may include consolidating or updating license contracts (especially if M&A activities have taken place or if any new license types have been defined), tracking package or engine licensing metrics, and, in some situations, documenting all users for any application that has been integrated into your SAP environment along with how each class of users of each non-SAP application interacts indirectly with your SAP environment through the integration.

You will also need planning documents. For example, you will need an IT capacity forecast for the next 6-18 months. Don’t have one? You can create an IT capacity forecast by looking over your company’s business plan and translating it into an IT capacity plan. Another planning document you will need is an IT development and deployment roadmap showing all planned integrations with your SAP environment and any rollouts of your SAP environment to new user groups for the next 6-18 months. This includes internal user groups (like that plant in Latin America), as well as any groups of customers or suppliers who will be interacting with your SAP environment.

Once you have all consumption, planning, and contractual information, you can use it to reconcile past license type allocations with current allocation requirements, understand your current level of compliance, and build a licensing forecast.  You may drive your license management project by asking yourself the following questions:

1. What changes if any are there to our contracts regarding SAP user license types and how will these changes affect allocation algorithms?
2. How many direct SAP users do we have, how has each user’s interaction with SAP changed and how many will be added based on IT and business plans?
3. How many indirect users do we have and through which integration are they accessing SAP, how has each user’s interaction with SAP changed either because the user’s work has changed or the integration has changed, and how many indirect users by application will be added based on IT plans because of new or enhanced integrations and how many will be added as a result of your company achieving its business plans?
4. How will your engine licensing metrics increase or decrease based on the business activity levels that are laid out in the business plan?

You can ask yourself these questions and a few others, but the bulk of your work is going to come down to this: figuring out which user interactions with SAP have changed that dictate a change in license type allocations and whether or not user license type assignments are correct per your contract. Another big issue with SAP license management is going to be around how integrations should have been evaluated based on their licensing impact and not just productivity impact – but we will get to that later. For this post, it’s just about how costly SAP user license management can be and as I said, the rub is going to be figuring out a confident baseline in order to assess compliance and forecast when new licenses will be required.

When you have answered these questions, the next step is to analyze and predict direct user license requirements and define the rules to allocate them.

First, look at each user’s transaction history and remove inactive or duplicate users. Next, define your assignment rule set for allocating license types to users based on what access they currently have. Last, run simulations to figure out if there are enough licenses for your direct users based on the most likely (and most optimistic) business plan. It is better to overestimate than to underestimate when it comes to an SAP audit. But for the sake of your own business costs, ideally you should do neither. Paying for more licenses (or more expensive licenses) than you actually use can be a huge financial hit over time.

After you have analyzed your direct user needs and made predictions, you can move on to indirect users. This is a little more complicated. Start with the same steps you used for direct licenses – look at transaction histories and remove inactive or duplicate users. Then take the rules you created for direct users and figure out how each of the roles for a non-SAP application would match up to an existing SAP license type. Ask yourself the following: 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 would that require?

Compare this list with the list of direct users and their roles and their license type. This will give you a good idea of which license type you will need for your indirect users. Just make sure that every user with both an SAP user ID and access to the non-SAP applications has an SAP license type assigned to them that is equal to or greater than what they require based on their access to SAP through the third party applications. And for those with only indirect access, make sure that the SAP license assigned to them accounts for their access through the third-party application.

In addition to user licenses, you need to understand your engine licensing metrics. These metrics are generally different from one product to the next, so you need to do an analysis on each and every one. Compare these metrics with the metrics in your contracts to identify how they are expected to change based on the business and IT capacity plans. Then budget for expected changes.

If you think this sounds like a lot of tedious, time consuming detective work, you’re right. Reconciliation can be a nightmare, and if you do it using the methods described above, you can plan on spending an enormous amount of time, money, and resources to make sure you pass your audit.

Or, you can utilize License Management, an automated solution that does the work for you – a solution that captures and stores user histories and makes data-driven recommendations on how to reallocate license types to dramatically lower licensing and support costs and still maintain compliance. After all, wouldn’t you rather make your purchasing decisions based on actual usage and expected business growth rather than just taking a shot in the dark?

License Management from Security Weaver provides clear visibility into role-based end user license costs while taking into account different license types, different contract terms, and pertinent cost models.

Click here to request a free demo of License Management, or visit our License Management page for more information.

Commenting is not available in this channel entry.