In this blog, I’m going to share information about the ever-changing SAP license & its metrics. This information will give a good understanding about the modus operandi of SAP licenses & its complications. Since SAP AG started reselling licenses through partners, it has changed it’s pricing model & metrics of billing more than 30 times. Efficient SAP license-management's recipe for success is based upon a well-balanced and efficient mix of people, processes and tools. In many instances, there is no governance structure for establishing the interfaces/communication paths between Purchasing, Legal Affairs, IT Operations, Controlling and License Management.
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WALLDORF — Driven by unprecedented collaboration with user groups, customers, partners and industry analysts, SAP SE (NYSE: SAP) today announced a new sales, audit and pricing model for its Digital Access licensing policies commonly known as “Indirect Access.”
- WALLDORF — Driven by unprecedented collaboration with user groups, customers, partners and industry analysts, SAP SE (NYSE: SAP) today announced a new sales, audit and pricing model for its Digital Access licensing policies commonly known as “Indirect Access.” New approach, developed in.
- SAP License Cost. According to most industry leaders and publications, the average a manufacturing or complex distribution company can expect to pay is about $4,000. per user According to a survey of over 225 CIOs of global companies done by CIO Insight, the average ongoing cost per user for SAP is $1518 per year.
- SAP license Table. After all this commercial stuff, let’s dive to more technical staff. I have already write about the SAP license Types. Check this post?SAP License Table?and find more information about SAP license User type. SAP License Table will list the SAP table used for storing the SAP User license information.
- For existing SAP ERP customers licensing SAP S/4HANA and wanting to consolidate/simplify old contracts (full contract conversion) The Contract Conversion option applies the value of the licenses in the customer’s existing contract as a credit towards a new reconfigured SAP S/4HANA-based solution landscape that.
- New approach, developed in consultation with user groups, focuses on transparency
The new approach makes it easier and more transparent for customers to use and pay for SAP software licenses. It also differentiates between Direct/Human and Indirect/Digital Access*, while clarifying the rules of engagement for licensing, usage and compliance.
New Pricing Model
The new model – a first of its kind for the enterprise software industry – addresses challenges faced by some customers when it comes to pricing for Indirect/Digital Access.
- Historically, for most use cases, customers primarily had the option to pay for the SAP ERP application based on the number of users. As more systems began to access SAP software systems, this created a challenge for customers, who asked for an alternative pricing approach.
- Moving forward, SAP will differentiate between:
- Direct/Human access (existing), which will be charged for by number of human users.
- Indirect/Digital Access: Access via third party, Internet of Things (IoT), bots and/or other digital access that can be licensed based on transactions/documents processed by the system itself (new).
- SAP’s new model pertains to the digital core – SAP S/4HANA and SAP S/4HANA Cloud – as well as the SAP ERP application.
- Existing customers can choose to remain on the current model or move to the new document-based pricing model – whichever best fits their SAP solutions and digital transformation initiatives.
- Conversion offerings are available to help customers who choose to move from current pricing to the new model.
Clear Separation of License Sales from Audit and Compliance
SAP also introduced new organizational changes that separate license sales departments and procedures from auditing departments and procedures.
- Customers and SAP have sometimes struggled to reconcile older commercial agreements with the requirements and outputs of modern digital activity levels. Combined with ongoing discussions regarding the procurement of new software, this can sometimes cause frustration.
- Moving forward, the organizational change will allow the two conversations to develop independently of one another, empowering customers and SAP customer-facing professionals to collaborate more freely.
- SAP plans to introduce features that will enable customers to measure their own usage and license consumption in a self-service manner.
Timeline and Additional Information
SAP began rollout of the new licensing, sales and audit policies in April 2018. SAP will continue to provide educational resources and tools for customers in the coming months to help them fully understand the new licensing approach and decide on the right model for them.
Adaire Fox-Martin, Member of the Executive Board of SAP SE, Global Customer Operations
“SAP has been built on a legacy of trust, empathy and transparency with our customers. As the industry and customer requirements change, our legacy does not. Therefore, after thoroughly reviewing our processes and practices around Indirect Access – and based on extensive feedback from all stakeholders – we are rolling out a new and modern engagement model with our sales personnel that delivers industry-leading clarity. We are set on building lifelong relationships with our customers and we will continue to relentlessly innovate to ensure best business outcomes for each one of them.”
Christian Klein, COO and Member of the Executive Board of SAP SE, Global Business Operations
“We believe that especially in the age of digital transformation, an adjustment was necessary after listening to our customers. By offering a new pricing and licensing model, we provide enhanced transparency, predictability and consistency to our customers. I trust that these three aspects will encourage our customers to continue to invest in digital business models.”
Perspective: User Groups
Geoff Scott, CEO, Americas’ SAP Users’ Group (ASUG)
“I commend SAP for entering into an open and thoughtful dialog with its customers regarding licensing. We have made tremendous progress on many important topics that we are announcing today and providing additional details and insight in the coming days. I am looking forward to hearing the feedback from the community as we continue this important journey with SAP.”
Andreas Oczko, Board Member Operations, Service & Support; Deputy Chairman of the Management Board; German-Speaking SAP User Group (DSAG)
“The reorganization of pricing model, sales, license audits and compliance announced by SAP is the remarkable consequence of intensive workshops and discussions with DSAG. With the help of the SAP Executive Board, we developed a vision for indirect use in the future and formulated the key data for a new licensing model. This is an important first step toward removing stumbling blocks and obstacles from the path of digital transformation. More will follow. SAP and DSAG continue to work together on an unprecedented pricing model for the Internet of Things.”
Gianmaria Perancin, Chairman of SAP User Group Executive Network (SUGEN) and the French-Speaking SAP User Group (USF)
“We applaud SAP for bringing to market this new model that should bring transparency and simplicity to customers for future SAP software use cases. There is further work to do to demonstrate to customers that the new model will be cost-neutral for their existing use cases. Customers need reassurance that if they believed they were correctly licensed, due to factors such as discussions or communication with SAP or ambiguous contract clauses, they will not face new license costs.”
Perspective: Industry Analysts
R “Ray” Wang, CEO, Constellation Research
“Digital transformation has driven every organization to rethink how they create business value for their customers. As enterprises transform their business models from selling products to services, services to experiences, and experiences to outcomes, they evolve their pricing models. Enterprise software vendors not only seek to modernize their pricing to meet the shifts to outcomes-based pricing, but also must find models to allow customers to stay the course, receive value for their existing investments and convert to new business models in a fair and equitable manner to their customers.”
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*Direct/Human Access occurs when people log on to use the SAP Digital Core by way of an interface delivered with or as a part of the SAP software. Indirect/Digital Access occurs when devices, bots, automated systems, etc. directly access the Digital Core. It also occurs when humans, or any device or systems indirectly use the Digital Core via a non-SAP intermediary software, such as a non-SAP front-end, a custom-solution, or a third-party application.
Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP’s future financial results are discussed more fully in SAP’s filings with the U.S. Securities and Exchange Commission (“SEC”), including SAP’s most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.
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For major international organizations, SAP software is the go-to solution. SAP is widely used across the industries such as Automotive, Oil and Gas, Retail, and Healthcare.
It is the most successful software company with around 2,90,000 enterprise customers across the globe. SAP software is comprised of a number of modules that integrate together, which has made it an instant favorite of organizations. It covers every aspect of enterprise management and governance from the identification of risks to their resolution.
SAP is meant to help businesses follow best practices and run efficiently, but the customers are saddled with heavy licensing fees. The main issue is that businesses are often unable to distinguish clearly and accurately between what licenses they are allowed to use and what they actually use. This difficulty arises because of historical factors, changing business structures, many license types, and the interconnections between procurement, finance, IT, and legal requirements.
Businesses currently can only make educated guesses about future license needs, yet they are challenged to adopt high-value software applications including SAP business platforms, currently used by over 76,000 companies.
These challenges are all the more stressful because of the current fluctuating economic conditions. The only logical option is to innovate within the scope of their modest budgets without ignoring the quality of their service or products. They also want to acquire the latest software such as SAP HANA and Cloud applications.
A recent study on the licensing usage/spend had proved that
- 95% of organizations are still paying for the users who never use the SAP system.
- 90% of them do not evaluate the exact authorization requirements of their users and end up giving them higher authorizations, thus needlessly paying higher license fees.
- 60% of the organizations buy more licenses than they actually need.
- 50% do not know that incorrect classification of users will result in higher costs because they are considered professional users.
- 40% are unaware that, though sharing of IDs is okay, it results in heavy penalties.
- At least 10% of organizations unknowingly commit fraud by deleting user IDs before the audit.
Listed below are five specific tips that help businesses minimize their licensing expenditures. Basic wine guide pdf.
Tip # 1 – Always “Classify” the named user under a license type
Given that the distinctions between the different SAP license types are not clear-cut, the administrator is often forced to assign the appropriate type to a given user based on a meager information. If the administration does not assign a license to a particular user, then SAP automatically designates them as Professional User. Companies end up paying huge costs on these user IDs. Hence, it is always recommended to assign the right classification as and when the user is created.
This might be an impractical and time-consuming task for the customers who haven’t classified the users correctly. In such scenarios, automated systems such as SLICE can recommend the most appropriate classification based on a combination of roles and authorizations that are assigned to the users.
Tip # 2 – Check for dormant users periodically
Identifying the dormant (inactive) users is a critical task and could be a life-saver in many cases. It is a common practice to create a user ID in SAP systems when a new employee comes on board. However, very few organizations review the usage of user IDs. It is a best practice to identify, review, and take appropriate action on the disposition of inactive users.
Sap License Cost
Tip # 3 – Never share user IDs
Sap Bo License Price
Sharing IDs (User IDs that are used commonly by multiple users at a time) is a common practice at a lot of companies. Managers often think that they could save huge costs by sharing the user IDs. In reality, this has more risks than advantages. With common IDs, auditors may find it difficult to identify who had performed a specific activity and SAP penalizes shared user IDs heavily. If you follow this practice, be sure to create an ID for every user in your system. Also, it is recommended that you enable the system parameter login/disable_multi_gui_login so that IDs can’t be shared by users on their own.
Tip # 4 – Assign only the right number of authorizations. Never give out everything that is available.
I have come across some situations where even the functional users were provided with SAP_ALL access in the product environment. This might save the authorization design implementation costs to the organization, but the licensing costs will exponentially increase because a user can perform anything and everything they want. This also paves the way to potential risks and serious financial fraud.
It is always advisable to follow the “Principal of Least Privileges” model when giving authorizations to a user in the system. I further recommend that you have an efficient authorization design that can segregate business processes and the activities that need to be performed.
Tip # 5 – Never delete a user ID.
Sap Ariba License Price
Deleting the user ID when an employee leaves the organization is a common practice. However, it is always best to keep the user ID in an inactive mode by removing the authorizations, locking the ID, and limiting its validity.
SAP licensing audit does not count these in their audit, and an accurate accounting of all valid and active licenses will be available.
How the evaluation is done?
The easiest and most common way to account for licenses is through role-based licensing classification. The roles can be pre-classified for the licensing types using the transaction code LICENSE_ATTRIBUTES, and the users can be evaluated further on the basis of their classification.
However, this requires that the administrator manually adjust some of the classifications and identify and take action on the dormant and duplicate user IDs.
Once the measurement report is generated from USMM, it can be submitted to SAP for further evaluation and discussion.
Sap License Pricing
How Clematis SLICE can help?
This analysis activity is done on 2 levels, namely User ID level and Role level. But the inbuilt solution for the user measurement doesn’t have the capability to analyze and classify users based on their actual or de facto usage or the historical usage. Thus a new approach to authorizations, assignments, and licenses is required for a company to stay competitive and save a significant chunk of its licensing budget.
The first recommendation is to automate and centralize the usage data from within their complex SAP structures.
Second, they should identify and reuse un-utilized licenses by analyzing user behavior over a period of time.
Third, they should check for duplicate licenses and reuse them to save on unnecessary outlays, by using standard procedures to assign uniform IDs. Otherwise, a single user could end up with multiple licenses based on more than one role.
SAP costs, determined on the basis of actual usage, will result in greater control over licensing budgets rather than when they are charged as a lump sum to their businesses. But that will take a tremendous amount of time and effort when large amounts of usage data are involved.
SLICE addresses all NetWeaver (on-premise) platform-based licensing issues. Since NetWeaver is the primary application builder from SAP that facilitates the integration of business processes and databases involving a variety of Web technologies, SLICE works as a major aid in the evaluation of SAP licenses. The solution is especially needed because companies can run their measurement reports only at the level of user IDs and authorizations, leaving room for problems in other areas. Furthermore, even the two-level measurement is not perfectly executed because the authorizations were incorrectly assigned in the first place. SLICE automates this process, besides verifying the appropriateness of the licenses at all levels and in all relevant areas. Thus SLICE leaves no room for error or oversight in the entire NetWeaver environment.
To recap, SLICE does all of the following:
Sap License Price List
- It determines the presence of the user in the system, the tasks performed, and the license type assigned to them.
- If the user is assigned the incorrect license type, it recommends the right type for that user based on their authorizations and duties.
- It thus helps the organization plan its license procurement.
- It provides a choice of reports for a range of dates and users as well of license types
- It also evaluates all existing assignments and provides the option to update the license type.
The benefits of the SLICE solution include but are not limited to the following:
- Its easy-to-use analysis methodology allows for the generation of reports based on either Tcodes or roles.
- It has the option to exclude user types and groups when generating the report.
- It analyzes only the BOMs added.
- It readily provides license summaries and management dashboards as needed.
- The entire process is automated.
Sap License Management
Each one of these steps is meticulously designed to save significant amounts of budget allocation for the procurement and utilization of SAP licenses. The cost difference and budget savings would be especially welcome to businesses which operate under tight budget constraints, and in any proposed acquisition of the latest software.