License Compliance in the Transition to SAP S/4HANA

License audit is a task that many SAPinsiders spend months preparing for, but may still not fully understand users’ actual product usage. This is critically important when moving to SAP S/4HANA as making the wrong license decisions will have a significant cost impact.

By Robert Holland, VP Research, SAPinsider

In order to ensure that they are fully compliant from a license perspective, many organizations err on the side of caution in their SAP user license estimates simply because they do not have enough insight into what users are doing across different systems. As there is a significant variation in cost of different SAP license types, with the default professional license being the most expensive, understanding usage and assigning the right license type before moving to SAP S/4HANA offers considerable cost saving opportunities.

Staying Compliant with SAP Licenses

As SAPinsiders move to SAP S/4HANA, they should be aware that this is not an upgrade but a new product that they must license from SAP. And as with any new product, organizations must ensure that they understand the usage implications of making that move as they can be expensive. At the same time, SAP customers should also remember the findings of the lawsuit between SAP and Diageo which resulted in a £54 million finding against Diageo based on API access involved in integrating data with Salesforce. Since SAP licenses are based on variable metrics like users or type of users, or amount of memory used, incorrectly stating usage can result in license or maintenance fee surprises.

As SAP can be aggressive in performing license audits, it is incumbent upon SAPinsiders to be able to manage their licenses well and defend any position that they take in an audit. But for enterprise organizations this can result in months of preparation for an audit if they want to ensure that they are providing the correct information. Not only does this require an extensive use of resources within the IT area, even if all the preparation is done correctly the usage data may still not be completely accurate. And in a transition to SAP S/4HANA, having the most accurate information possible can offer significant cost savings.

Given the complexities involved in understanding licenses, and particularly what type of license different end-users require, many organizations are looking for third party applications to help address this need, particularly SAP certified applications that are available in the SAP App Center. One provider of applications that help organizations manage their SAP licenses is Snow Software. SAPinsider recently spoke with solution experts from Snow Software about managing licenses of SAP solutions, the move to SAP S/4HANA, and the trends they’re seeing from customers across the globe.

Managing Licenses During the Move to SAP S/4HANA

According to Snow Software’s Telma Rafael, customers who come to Snow Software want a greater ability to manage their SAP licenses. “Customers want to manage their licenses well and defend their position. They want to reduce the risk of digital access licensing fees since SAP has extended the digital access program,” said Rafael. Licenses must be in place for organizations to allow other non-SAP systems access to SAP data. This access can be licensed either through digital access or by licensing indirect access by user. SAPinsiders can choose which metric to use, so it is critical to have accurate information on which to base this decision and avoid costly mistakes.

Having a tool like Snow Optimizer for SAP® Software means that organizations can ensure that they have the actual usage data for each user and each system that they access. These tools can help prepare for audits in a matter of days rather than months. “We can also configure alerts and notifications so that system tells them when there is an issue so that they can be proactive with licenses,” said Rafael. With organizations moving to SAP S/4HANA, understanding exactly how many users you have and in what ways they are accessing your existing ERP systems will then have a significant license impact. Since for many SAPinsiders the one of the main drivers of their business case for SAP S/4HANA is around the increasing cost of maintaining highly customized environments and older technology, the last thing organizations want is the transition to SAP S/4HANA to result in an increase in spend. This is why understanding usage and licensing within your SAP solutions is so critical for that move.

What Does This Mean for SAPinsiders?

Whether or not organizations are moving to SAP S/4HANA now or at some point in the future, taking control of the licensing of your SAP systems can offer significant cost savings and avoid time consuming and expensive preparations for SAP audits. To understand and control costs in their own SAP systems, SAPinsiders should:

  • Examine your current plans for understanding and controlling SAP usage. Any organization running an enterprise ERP likely has hundreds or thousands of users of that system. Understanding exactly what access those users need, and what systems they are using, is a key step towards preparing for any potential SAP license audit and minimizing licensing and maintenance costs. SAPinsiders should look at how they are currently achieving these goals, and whether they will be sufficient to support a move to SAP S/4HANA.
  • Plan for time to understand licensing and usage when building your SAP S/4HANA business case. Many organizations are still trying to determine if and when they will perform their transition. Regardless of when the actual move may occur, ensuring that you have a good understanding of your software licenses and usage going into that move has the potential to offer significant cost savings in commercial negotiations. Plan for sufficient time to gather this information.
  • Fully prepare for SAP license audits. As 2020 is a challenging year for many organizations, it is more important than ever that you ensure you are prepared for an SAP license audit. Take the time to stay on top of which users are connecting to which systems, check whether they are actively accessing the system, and what level of access they need. This is particularly important as many users permissions are being changed on systems to allow them to perform roles that they may not have done in the past due to remote working environments and the difficulty of assigning tasks to those they are not personally interacting with.
  • Evaluate solutions that can help manage licenses and reduce costs. The maintenance savings that can be gained from using license management tools is only part of the ROI around using license management tools. Other areas involve the reduction in the time staff need to prepare for audits, allowing them to be assigned to more critical tasks, but also the benefit of end-users having the right access they need to the systems they use—something that they may have to wait days for if the appropriate license has to be found and assigned to them. These savings can, for an organization running an enterprise ERP system, cover the cost of a solution, so they are worth evaluating for inclusion in the organization’s SAP landscape.

About Snow Software

Based in the San Francisco Bay Area, Snow Software produces solutions that help organizations understand and manage their technology consumption. Snow produces the only native SAP asset management solution, Snow Optimizer for SAP® Software, which is an SAP Certified App and is currently available in the SAP App Center