Software License Optimization

You have optimized your SAP landscape...but now you have to account for a new module or system!

By Matt Schaefer

It's a very common scenario where it is necessary to bring a new SAP system into your SAP software license optimization efforts. This can happen for a variety of reasons-- the scope has broadened to include organizational entities that your SAP scope didn’t previously include; acquisitions, where one company strategically leveraging SAP's technology stack buys/merges with another company using SAP as well; your organization is expanding your SAP footprint and bringing more functionality on line.  When addressing these scenarios, it is critical to understand how your SAP licenses and related contractual obligations will be impacted.
 
Regardless of the reason, it’s important to make sure that you are maximizing your value from the new system. Before bringing this system online or in-house, there are a few things to consider:

• What are the licensing metrics of the new system? Do you pay for the user (license level type) or is it an add-on package based on business metrics like revenue or PO line items? Understanding this metric is key to knowing how this system fits into your SAP license framework.
• How does this 'new' system fit in terms of functionality and usage? If this system is redundant, which mainly occurs in acquisition scenarios, it’s critical to understand existing contract terms and conditions. For example, if you are now considered 'over licensed', does either company have parking language that could be exercised to reduce the cost of ongoing maintenance? Would the SAP license entitlements from one entity transfer to be able to cover the 'under-licensed' entity if that situation occurs? Can you leverage currently owned SAP license entitlements for your new system?
• Will the system be considered Production, QA or a Test environment?
• What is the expected lifecycle of this new system? Is it one that will be rolled into the buying entities’ system or will the two systems operate side by side? Depending on your next SAP audit or true-up, timing could influence what entitlement purchases will or will not be required.
• Can you apply already established business rules for determining what 'usage' is? For instance, will the same types of people / roles access this system, requiring a certain license level, as previously defined?  If not,  what level of CPU time, executed transactions, logon rate will be considered for establishing the policy for this system based on the named user license levels?
• If users already have logins for another SAP system, will the license entitlement they already have cover usage in this system as well?
• During the discovery/disclosure period of acquisitions, consider performing an SAP software license optimization exercise to be certain the assets and liabilities associated with the system landscape are truly understood. 

Many organizations focus on Portfolio Management and Application Lifecycle Management when making the decision to bring in a new system such as SAP, focusing on the features and value that are gained from the system. However, without understanding the overall picture of your SAP landscape, including license and contractual considerations, bringing a new module or system on-line or an acquisition’s system in-house could introduce risk to your overall business case.

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Learn more about SAP license optimization by viewing our on-demand webinar:  SAP Software Licenses Could be Costing You.

 

What does optimization of your SAP landscape actually mean?

By Matt Schaefer

We often discuss the concept of optimization of our SAP assets as if it is well understood, but what are we really talking about?  There are essentially three aspects of SAP optimization that need consideration:

• License
• Process
• Vendor Relationship

The License aspect considers the license position based on what was purchased versus what is consumed. There is some complexity that exists when taking into account the mix of SAP licenses that the organization is consuming (e.g. Developer, Professional, Limited Professional, Employee, etc.).  Investigating what this license type 'mix' should be requires that your organization understand how users are utilizing the SAP landscape. At a minimum, what transactions are users executing, how long are they in the environment, and how often between sessions do users log-in are questions that must be answered if you are to pick the most effective license type for each user based on their actual business use of SAP. This is important because customers tend to allocate the Professional level license to be sure their users are 'covered' no matter what they do in the system or systems. This can become a costly insurance policy that can be easily avoided with an appropriate software license optimization solution that can automate this calculation across the multi-system SAP environment.
 
The Process aspect considers the ability to replicate the set of the tasks necessary to repeatedly calculate your SAP license position. All too often SAP owners/users/practitioners do not consider the value of the amount of time and resources that go into the above. They believe that some version of custom reports and spreadsheets is enough (or if they realize it’s not enough, they believe it’s all they can do).  The problem that occurs is that manually creating this license view is not only operationally expensive but it keeps organizations from accurately understanding their usage and truly making the leap to license optimization. The sheer effort required from the manual approach forces them to 'get by' and 'survive' audits rather than maximize return on investment from their systems landscape. Software license optimization tools that bring automation to bear on SAP license management can streamline the process and dramatically improve results.

The Process perspective should also look outside of just SAP and holistically consider optimization of the entire software estate, of which SAP is just a part. Standardization of software asset management processes across the enterprise enables the centralization of reporting as well as streamlining vendor management communication internally between executives, IT, Procurement, and Legal. (And this allows a more strategic and “in the driver’s seat” positioning with suppliers!) For instance, the procurement group may want to focus their negotiation efforts on ‘parking’ language or remixing of licenses rather than drive for discounts for licenses they don’t even realize they don’t need. (Another way of saying that, is if you get a 50% discount but only use half the licenses you purchased….then you paid full price.) The key is organizations have to know how to get the most value from their systems, contracts and vendors. This process view focuses on getting the right information to the right people at the right time in an efficient and repeatable way to make more informed business decisions. 
 
The Vendor Relationship is the culmination of the execution of the two previous optimization areas.  This aspect considers what the relationship should be with a vendor— in this case SAP. It is being able to categorize them (e.g. are they a strategic partner?) and come to the appropriate value terms in an unequivocal and precise way. When it comes to vendor relationships, hostility is bred from ambiguity. It’s only when both parties can consistently understand and agree to the terms of value that the relationship's focus changes its posture from defensive to collaborative with a focus on strategic growth (for example, a shift from— I want x (feature) to— how can you help me achieve y (outcome)).

A common example of this is getting SAP to define the 'Limited' in the Limited Professional license type so it is relevant and valuable to your organization. Once this is established, the conversation can shift from defining features to how they can be leveraged. This is beneficial for SAP as well, as it gives their customers the ability to know and appreciate the value based business they have historically done with the vendor. It allows customers to have the confidence to re-invest their savings with SAP, broadening the SAP technology footprint in their landscapes.
 
So optimization means being able to accurately know how you are consuming and leveraging SAP assets, applying a strategic direction to that information and putting it in the hands of the people to nurture the relationship with specific value based goals as the framework for your collaboration with SAP.

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To learn more about optimizing SAP licenses, please view our on-demand webinar: SAP Software Licenses Could be Costing You

Duplicate Users, Misclassified Users, Unused
Licenses—all of these could mean that you are spending too much on SAP named
user licenses. Watch this Webinar to learn how to optimize your SAP software
licensing to reduce costs and be audit ready. less

 

Reduce SAP Spend -- The Cost of License Ratios Revealed

By Alan Swahn

If your SAP contract specifies a required ratio for Professional User licenses to Limited Professional User licenses, you may be overspending big time. It all depends on what you are really using, compared to the imposed contractual ratio. As an illustrative example, let’s say Professional Licenses cost 2.5X Limited Professional Licenses and your contract with SAP requires a ratio of 1 to 1. Let’s also assume each Professional License costs you $4000 USD and you have a 4062 licenses total.

The ratio would require 2031 Professional licenses and 2031 Limited Professional Licenses. Your spend for these licenses would be $11,373,600 ($4000*2031 + $4000 / 2.5 * 2031).

But, what if you really only needed 1354 Professional Licenses and 2708 Limited Professional Licenses after measuring how all your licenses are really being used? This would make the optimized license ratio 1 to 2. This means you are over paying by quite a bit—$1,624,800 or ~14.3% (see Table 1 highlight) of your total spend (~.143 * $11,373,600).

Flexera’s FlexNet Manager for SAP Applications will reveal what your optimized license ratio should be based on actual usage. Armed with this data you’ll be prepared for your next negotiation with SAP. Or if you are purchasing SAP for the first time, you will have a million reasons to negotiate the license ratio out of your SAP contract.

Table 1

Notes
1. If your Professional Licenses cost more than 2.5X Limited Professional Licenses, the overpayment as % of spend will be higher. If less than 2.5X, the overpayment as % of spend will be lower.

2. Percentages were rounded for display; the highlighted cell is really 14.2857%

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Readers may also be interested in viewing our on-demand webinar:  SAP Software Licenses Could be Costing You

 

Software Audit Ready and License Compliant in Under Four Weeks

By Fiona Graham

With time fast running out and no visibility into their SAP license position, a large, global customer was concerned that they would not be ready to complete an informed and successful SAP audit and contract negotiation. Could they be prepared in time with scant resources available to work on this?
The answer was yes. In fact, in my time working in SAP license management,   I have run projects for small, medium and large SAP customers in timeframes ranging from 3 to 30 days.

I have worked in the software industry for thirty years, with twenty-two years SAP and SAP related experience. In all these years I have never before seen such significant ROI and related business value delivered to customers in such a complex environment so quickly. 

 The customer’s problem:

• They were under pressure to complete an imminent SAP measurement of their global license estate and prepare for a contract renegotiation. However, they had no free SAP resources and no clear view of their SAP estate, since many of their SAP systems were spread across the globe and managed on separate networks by autonomous operating companies.
• They suspected that they may not be compliant in some areas but had no real proof.
• Like the majority of SAP customers, the company was required to run LAW (License Administration Workbench), the SAP license audit tool; however, they had no personnel internally who had experience with this tool and therefore needed outside support for this. 
• They were aware that LAW would count user licenses irrespective of whether the users ever logged on or did any meaningful work on SAP and therefore they needed to quickly clean their data.

How did they tackle the problem?

The Head of Procurement needed visibility into the SAP estate as soon as possible so as not to delay the measurement. Having consulted with the internal SAP team, SAP, their software asset management (SAM) partner and after taking a look at the marketplace, the company realised that there were SAP certified solutions and resources out there that could help. An SAP license optimization solution was selected and the implementation project was completed in 15 days.

The consulting team collected, consolidated and optimised the customer’s user, role and SAP Computer Centre Management System (CCMS) data. We then consolidated and optimised the SAP named user license classifications based on actual usage and the constraints of the contract. The output of this process was a set of recommendations on the optimal license mix (i.e. the number of Professional, Limited Professional, Employee User, etc., licenses actually required) and users who could be invalidated on the SAP systems. The customer then updated the license data across countries and systems. We then further analysed the reports to help shape optimal contract terms going forward.  After the idle users were removed and licenses reclassified, we then set up the SAP LAW measurement and ran this across the whole license estate.

Key Challenges

• Limited Resources—It is fair to say that the customer’s SAP team were already stretched to the limit running other high priority projects and had little available time to spend with us.  However, they did not doubt the value of the work and gave all the time they could to the project.  A dedicated resource is the best approach but it is often the case in projects that I have worked on that the SAP team is focused on upgrades and rollouts and so can only be part-time on an SAP audit and contract negotiation project, such as this one.
• Globally Distributed Organization—Once the data was collected and analysed, the hard work of convincing the autonomous operating companies to adopt the SAP licensing recommendations began and proved tough throughout. Although the savings were large, a number of operating companies had not been prepared to make the recommended changes and although this was very visible at Group level, it did complicate the project and was a significant risk in achieving the optimum license position.

Key Findings and Recommendations

• A large number of incorrectly defined Professional Users existed in the SAP systems at the start of the project as many of the operating companies failed to enter user license type in the user master files. The SAP measurement tool automatically counts users with no defined license type as Professional Users, and this is one of the most expensive SAP license types.  Furthermore, these SAP users were found to be employees working in the company’s retail stores.  The use of SAP in a retail store is an example of package licensing and the customer pays for the number of stores using SAP and not on the number of named users. Therefore, a compliance risk of tens of millions of pounds was removed.
• Idle and locked users were removed saving millions that were already budgeted for the SAP license compliance true-up.
• It was recommended that tighter control on number of Developers was required—Developer licenses are another high cost SAP license type.
• Central control of the SAP license estate was recommended. A common best practice approach supported by an automated SAP license optimization system would remove risk of the customer paying more than necessary for user licenses in future and would ensure continuous license compliance. It was clear that the operating companies should be brought onto the network and licenses controlled centrally.

The customer met their audit reporting obligations to SAP who reviewed and agreed with the results. The project was seen internally as a tremendous success and the operating companies are now being brought onto the network. The next step will be to introduce cross charging to the operating companies, a project which is high on the corporate agenda.

Finally, the customer successfully negotiated a 4 year deal with SAP that they were happy with. They now have the software license optimization tools to monitor and control their software estate at all times, with all the information needed to make the best purchasing decisions going forward.

This is not an unfamiliar scenario. Flexera Software is often involved in projects where the customer has an SAP measurement coming up, a contract negotiation taking place, or they are still rolling out SAP and are buying more licenses. It is relatively straightforward to get that customer to a position where they can ensure that they are correctly using what they have and buying only what they need, not just today but for as long as they run SAP.

However, SAP customers are facing an increasingly complex world where SAP license management includes applications and license models that are the result of acquisitions (e.g. Business Objects and Ariba). Customers are also seeing a growing need to identify indirect access usage and license accordingly. They also need to measure their SAP Packages correctly as SAP becomes ever more focused on this area of licensing. No two projects are the same but it is satisfying to be able to help customers solve their SAP license management challenges. 

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To learn more, please view our on-demand webinar: SAP Software Licenses Could be Costing You

 

No Surprise—Users Say SAP Licensing is Too Complex

By John Emmitt

A recent SAP Users Group survey found that 95% of SAP users think that the company’s software licensing is ‘overly complicated’ as discussed in the ComputerWorldUK article. The survey was conducted by the UK & Ireland User Group and questioned 336 SAP users across 150 organizations. The article goes on to say that “89 per cent of users would like to see SAP offer software that is only limited by one license or usage metric.”

Philip Adams, vice chairman of the UK & Ireland SAP User Group, is quoted as saying—“I would say licensing is a top five priority for our users at the moment. I am hearing lots of noises [from SAP], but am seeing very little action.”

It’s understandable that SAP users are concerned about SAP software licensing. As discussed in our Webinar: SAP Software Licenses Could be Costing You, there are two main SAP license models: Named User and Package (aka Engine) licenses. In the Named User case, there are many different categories or classifications of users—from Developers and Professional Users to Employee Self Service and Test users. Users are categorized based on their working roles and features of the SAP software that they are permitted to use. In most organizations this is a manual process, not based on actual usage of the system. It’s often difficult for the SAP administrator to determine the most appropriate license type for a given user, so it’s a ‘best guess’ approach.

The result is that in some cases the user is under-licensed—for example, they need a Developer license but have only a Limited Professional license. This situation represents a license 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, meaning that they have a higher level license than they really need, based on how they actually use the SAP software. In many companies that we work with, we find that there are far too many Professional and Limited Professional user licenses deployed when a lower cost Employee or Employee Self Service license would suffice for those users. By restructuring their license classification mix, organizations can avoid new license purchases for the more expensive licenses as they expand their use of the system, realizing significant cost savings.

The solution to the Named User licensing challenge is to use tools that automatically track and analyze SAP usage for each user. SAP license optimization tools can recommend the lowest cost license that meets the needs of the user.

By comparison, Package licenses are much more difficult to optimize and most organizations fall back to a combination of manual research and running SAP system measurements at true-up time to determine their package license consumption.

Tracking the license consumption of SAP packages is a daunting task. The challenges include:

•             Range of business metrics and calculations

•             Accessibility

•             Measurement techniques

Yet package licenses are an ever expanding part of the SAP licensing model. Cloud (On-Demand solutions), Mobility (On-Device solutions) and In-Memory Computing (HANA), all key areas of innovation and future growth for SAP, each require package licenses. We will delve further into package licensing in a future blog article.

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Readers may also be interested in viewing our on-demand Webinar: Lifting the Lid on SAP Licensing. SAP uses a combination of user based licensing and Package (or engine) licensing for its products. This Webinar will discuss strategies for gaining control of your SAP licensing to optimize costs, maintain compliance and better forecast future needs for SAP software.

Global Security Company Optimizes its SAP Licensing

By John Emmitt

Flexera Software recently held a customer advisory meeting in Washington D.C. and one of our customers presented on their IT Asset Management (ITAM) and software license optimization program. Their strategy is to: “Build a well managed, efficient [asset management] lifecycle documented by policy and procedures to ensure license compliance, improve utilization, reduce cost and reduce risk for all software and hardware.”

Their goals include:

1. Ensure that the asset management database has the physical, financial and contractual data needed to manage the assets and provide reports to our customers
2. Meet or exceed Gartner Level 3 of software asset management (SAM) maturity by 12/2012

They have documented what their Director of IT Asset Management calls “hard savings” of $10-12 million (USD) per year for both of the last 2 years and expect to achieve that again this year.

SAP License Optimization

A critical area of initial focus has been on SAP licensing. At the meeting they provided an update on SAP license optimization efforts and results comparing their previous “manual tracking” approach to the SAP License Administration Workbench (LAW) report numbers and the recommendations coming from FlexNet Manager for SAP Business Suite (see charts below). Here we see that for two of the SAP user based license categories—Professional and Limited Professional, they have been able to identify significant reductions in the numbers of these more expense license types by performing detailed usage analysis. Overall, the company has realized cost savings on SAP licensing of more than $1 million, so far.

ITAM Team Structure and Responsibilities

There was a lot of discussion at the recent SAM Summit in Chicago about the size and makeup of a software asset management team and where it should report in the organizational structure.  In this particular organization, the director of IT asset management originally reported to the CIO but now reports to the CFO, who is the “real believer” in software asset management and license optimization. They have a rather large team of about 50 people split out into these functional areas:

• Hardware team: About 10 people for receiving and tagging the assets (servers, mobile devices, PCs)
• Tools team: About 10 people running Altiris (hardware asset management and configuration management), FlexNet Manager Suite for Enterprises (software asset management and license optimization), and other tools
• Software team: About 30 people where about 8 are focused on Engineering Applications which represent about 50% of their software spend and 15 are focused on software license management and SAM processes

The team is responsible for many tasks including:

• End-to-end ITAM / SAM process design and implementation
• Sign off on all enterprise agreements for IT assets
• Record all purchased IT assets (Hardware and Software) in asset management database when asset is received
• Record all proof of entitlement for new software purchases
• Packaging and deployment of standard software products
• Support software vendor audits
• Internal chargeback reports and billing
• Design and implement enterprise disposal for all IT assets

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Readers may also be interested in reading the full case study that discusses other aspects of their ITAM and license optimization program, including savings of more than $4 million on a Microsoft annual trueup.

Webinar: Lifting the Lid on SAP Licensing

By John Emmitt

Optimizing your SAP licenses to ensure that you are buying what you need, based on actual usage, can be a challenge. SAP has also jumped into the top 10 list of major vendors that are performing more software license audits, so organizations need to do more to maintain SAP license compliance.

Join David Blake of UpperEdge and Chris Hughes of Flexera Software for a Webinar on SAP license management. SAP uses a combination of user based licensing and engine (or package) licensing for its products. David and Chris will discuss strategies for gaining control of your SAP licensing to optimize costs, maintain compliance and better forecast future needs for SAP software.

Date: Tuesday, 26th June, 2012
Time: 10:00 am CT (GMT -6:00)

Attend this Webinar to learn about:

• Managing the complexity of SAP User Based Licensing
• Identifying duplicate users, user data validation and cleansing
• Automating the process of selecting the optimal license type for each SAP user
• SAP Package (aka Engine) licensing and collection of package measurements
• Issues with indirect access and SAP license compliance
• Forecasting future needs for SAP software

Register Here

 

 

 

Quantifying Software Cost Avoidance: SAP’s Golden Wing

By Alan Swahn

SAP is a huge seller of software—its the largest enterprise software company in the world¹—and is currently rated #4 in market share.² When SAP customers purchase named user licenses they have a selection to choose from (Table 1) and each implies different levels of use and roles within a company³. The challenge is determining how many licenses to purchase of which type. It’s a chicken and egg problem. In an enterprise setting, until employees start using the software, administrators don’t know how the software will be used, and therefore, what license type should be purchased for each user. It’s an expensive guess. As you would expect, each license type is priced to capabilities and therefore varies quite a bit.

Table 1 provides an idea of how prices vary between license types; in my example, a “Developer” license is the most expensive and other licenses are less expensive by the relative multiplier. There is also an implied penalty for not classifying users, as the SAP License Administration Workbench (LAW) lists “Unclassified” users as expensive “Professional” users for the required periodic report that is sent to SAP.

Named User Types (partial list)	Relative Pricing Multiplier
Unclassified	0.53
Developer	1.00
Professional	0.53
Limited Professional	0.22
Employee	0.07
Employee Self Service (ESS)	0.02

Table 1

I wanted to explore the cost of guessing, or put another way, the potential for future savings (cost avoidance). I decided to make a 3D model so I could see what shape, savings would take. For my model, any “Unclassified” users would be classified in equal proportions among available license types, for which I used the 5 license types in Table 1. I planned to simulate a range of “Unclassified” users from 0-20%. To represent misclassified users and create a fair model of redistribution of these users, I decided that misclassified users would be equally distributed in lower license types. This follows reality, where users are many times classified in more expensive licenses compared to what they are really using within SAP. I planned to simulate a range of “Reclassified” users from 0-30%.  Table 2 shows the license shuffle permitted for reclassification.

Symbol	Named User Types	Reclassified Based on Usage
U	Unclassified	Dev., Professional , Limited Prof., Employee, ESS
D	Developer	Professional , Limited Professional, Employee, ESS
P	Professional	Limited Professional, Employee, ESS
L	Limited Professional	Employee, ESS
E	Employee	ESS
S	Employee Self Service (ESS)	none

Table 2

As an example of equal proportion reclassification, if 20% of users were “Unclassified”, then after reclassification the “Unclassified” bucket would be 0 and 4% would be added to each of the license types listed. I designated R to be the percentage of licenses from each license type (D,P,L,E)  reclassified in equal proportions to lower license types (S is the lowest and isn’t reclassified). Considering my assigned Symbols listed in Table 2, the “After Reclassification” column in Table 3 details how licenses are reallocated.

The “Initial State” in Table 3 is a specific example, where before optimization, U is 20% and licenses are equally distributed between license types where D=P=L=E=S=16%. As an example, I let R=15% to generate the “New Distribution” of licenses. To demonstrate the actual calculation let’s take P (Professional). Before reclassification, 16% of the users have been allocated Professional user licenses. After reclassification, there are 18.2% as: P= 20%/5 + 15%*16%/4 + (1-15%)*16% = 18.2%.  Note, if the “Initial State” had no “Unclassified Users”, U=0, then P would have dropped from 20% initially to 17.75% after reclassification.

Initial State	After Reclassification	New Distribution where R = 15%
U=20%	U=0	0.00%
D=16%	D= U/5  + (1-R)*D	17.60%
P=16%	P = U/5 + R*D/4 + (1-R)*P	18.20%
L=16%	L =  U/5 + R*D/4 + R*P/3 + (1-R)*L	19.00%
E=16%	E =  U/5 + R*D/4 + R*P/3 + R*L/2 + (1-R)*E	20.20%
S=16%	S =  U/5 + R*D/4 + R*P/3 + R*L/2 + R*E + S	25.00%

Table 3

Ok, now that we know the “New Distribution” of licenses post optimization, how do we calculate future savings (cost avoidance)?  The Relative Spend is found by multiplying the Relative Pricing Multiplier from Table 1  times the license distribution. The ratio of each license type’s Relative Spend to the total Relative Spend will provide the Spend Distribution for that license type. The Spend Distribution is depicted in Graph 1. Comparing total Relative Spend Before (Table 4) and After (Table 5), we have our savings for U=20% and R=15% .  

Savings = 1 – 33.29/40.07 = 16.9%

If you had spent $2M on SAP licenses, this implies an over licensed situation to the tune of $338,400!

Before:

Initial State	Multiplier	Relative Spend	Spend Distribution
U=20%	0.533	10.67%	26.62%
D=16%	1.000	16.00%	39.93%
P=16%	0.533	8.53%	21.30%
L=16%	0.217	3.47%	8.65%
E=16%	0.067	1.07%	2.66%
S=16%	0.021	0.33%	0.83%
	Total:	40.07%	100%

Table 4  (where U=20% and R=15%) 

After:

Reclassified	Multiplier	Relative Spend	Spend Distribution
U=0%	0.533	0.00%	0.00%
D=17.6%	1.000	17.60%	52.87%
P=18.2%	0.533	9.71%	29.16%
L=19%	0.217	4.12%	12.37%
E=20.2%	0.067	1.35%	4.05%
S=25%	0.021	0.52%	1.56%
	Total:	33.29%	100%

Table 5  (where U=20% and R=15%)

 

Graph 1   Spend Distribution where U (Unclassified) = 20%, and R (Reclassified) = 15%

 

Now putting it all together, let’s sweep R and U and let the savings be the output in Table 6.

	Reclassified
Unclassified	1%	5%	10%	15%	20%	25%	30%
0%	0.78%	3.92%	7.83%	11.75%	15.67%	19.58%	23.50%
5.00%	2.94%	5.85%	9.49%	13.14%	16.78%	20.42%	24.07%
10.00%	4.99%	7.70%	11.07%	14.45%	17.83%	21.20%	24.58%
15.00%	6.96%	9.46%	12.58%	15.71%	18.83%	21.95%	25.07%
20.00%	8.85%	11.16%	14.03%	16.91%	19.79%	22.67%	25.54%

Table 6

Now to  visualize the savings, I plotted Table 6  in 3D to produce Graph 2, which looks like a wing, a stealth fighter, or an awning; your call.

Graph 2

To allow you to run your own scenarios I have included an Excel spreadsheet: Download SAP_Cost_Avoidance. Besides generating the wing, it allows you to enter 2 sets of licenses with 5 license types each and the total number of licenses for each set. You can also enter your actual license prices and the multipliers are generated using “Developer” as 1X. The percentage of “Unclassified” users for each set is an input as well. The amount of “Reclassification” for both sets is the final input. The inputs are boxed and highlighted in yellow. The output shows the (i) license savings; (ii) spend distribution for each set before and after reclassification; and (iii) associated charts. 

This illustrates a method for forestalling future purchases through user type reclassification, compared with guesstimates that typically lead to over licensing. Armed with a true picture of SAP software license usage, you can have a fact based discussion at your next SAP negotiation!

For more on our products that measure SAP software usage and automatically determine the optimal license classification for each user, please visit http://www.flexerasoftware.com/products/flexnet-manager-sap.htm.

 

References:

1—Top 10 Enterprise Software Companies

2—Software Top 100

3—SAP Licensing Guide

Can “Optimized Software Asset Management” drive more business-centric, win/win software negotiations? Absolutely!

By: Jeff Jones

It is no secret that the economy over the last few years has had many corporations focusing on shaving dollars from their IT budgets.  But at the same time, I have seen several organizations taking the opportunity to implement Enterprise License Optimization programs to institute more strategic, business-centric metrics and methods for buying and managing their key software titles.  Through a thorough understanding of application usage and the implementation of an optimized license management process, many organizations have been able to change the game, and create a true win/win for themselves and their software vendors.

As an example, I have seen one customer focus on tracking software usage on a global level, and determine that buying software under a different metric would be beneficial.  And in this case, they wanted to buy software under a license metric that the software vendor in question didn’t traditionally support:  concurrent user.  But by sharing detailed usage information with the software vendor, this corporation was able to move from small, non-strategic purchases from many vendors, to a much larger enterprise-wide, concurrent model from one strategic vendor.  And in the process, they implemented a server-based strategy for measuring and tracking this concurrent usage that was amenable to both organizations:  A true win-win for both parties.

Another example was a customer using Oracle databases throughout their environment.  Only after doing a detailed License Optimization project, were they able to measure both their true current usage, and accurately forecast their future demand.  They were then able to determine that moving from a mixed CPU/Named User Plus model, to an Oracle Unlimited License Agreement (ULA), would provide them more flexibility and ultimately cost them significantly less.  Once again, a win-win for both the corporation and the vendor, since an Unlimited License Agreement tends to keep the customer in the Oracle fold.

And one last example:  we have an SAP customer that re-negotiated special license metrics based on their specific needs.  After implementing a License Optimization program to track and analyze their actual usage of SAP, this customer was able to determine that the traditional mixture of Professional, Limited Professional, and Employee Self Service was not meeting their needs.  They had warehouse and part-time office employees that didn’t easily fall into any bucket.  After detailed analysis of their usage patterns, and working closely with SAP, they negotiated a new license metric that better fit their needs, creating a win-win for both organizations.

Why SAP Licensing is Akin to Cable TV and Mobile Phones

By: Alan Swahn

Your local cable TV operator probably offers a number of channel packages—mine has 18. But to get the few channels you really want, you may get many channels that you will never watch. Each billing cycle, your statement includes all those channels you were entitled to, but didn’t watch. Mobile phones are a bit better, since the packages typically align closely with your actually usage – text, data, phone – until you go outside of your package limits, then you can be charged multiples of the in-package rates. Since there isn’t an overage notification before use, your mobile bill may be full of surprises, especially if it is a family plan. I now pay a few dollars extra every month, to monitor usage and allocated minutes, so I’m not over plan. On average this probably saves me 20-30% per month. Your SAP® software landscape may have a similar challenge and solution.

The idea of the SAP License Administration Workbench (LAW) is first-rate. Periodically, a system measurement is made to determine SAP license compliance. This measurement can be viewed by the customer and is sent to SAP as the single source of truth—LAW is the law. If it was as easy as paying for intended use, there wouldn’t be a problem. But like your cable TV or mobile phone statement, you may be in for some surprises.

Staying within your intended use can be difficult due to the complexity of the SAP® license rules that are applied. This can lead to unbudgeted expenses.  As an example, SAP dictates paying for users at different rates depending on their classification. LAW is fair in its reporting, but doesn’t ensure:

• Users are unique
• Users are active
• Users are in the correct classification

This may lead to higher than necessary charges. Unclassified users are applied to a more expensive premium tier license. Users that login, but don’t use the system are charged. Users that have left the company, but not removed from the system are charged. Users that are classified in a certain license type are charged for that license type, even if they are in fact using a lower value license type. A user classified at a lower license type on all systems except one, where the user was mistakenly classified at a higher license type, ensures LAW will report the higher charge. The burden of proof is on the customer and the complexity of keeping user classifications current can translate into substantial overpayments. Before the next billing cycle, check out license management and optimization tools that tip the scale in favor of paying for only what you need and use.