SAP Licensing

All SAP contracts include a yearly audit right, that allows SAP to check, whether a client is appropriately licensed. This audit right is executed by SAP in two different ways:

- Yearly system measurement, required almost every year upon SAP inquiry

- Enhanced license audit, executed approximately every 3 years

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The yearly system measurement is executed by the client with the SLAW tool (SAP license audit workbench), which is included in the standard ERP.

The enhanced license audit is conducted on site at the client’s offices and led by SAP’s GLAC team (global license and compliance). The auditors interview the client, execute SLAW, and discuss the licensed level and actual usage level with the client. At the end, the auditors produce an SAP audit report that must be approved by the client with his signature.

Reliable information about the SAP license portfolio in the company can then only be obtained with relevant investment of time and personnel, and all SAP agreements made with the company must be adhered to. In small companies with a small number of SAP systems and users, the required information can still be gathered with the help of Excel tables or the company's own knowledge of the user base. But with several hundred users, this is no longer an option. In complex SAP landscapes, there is simply no precise overview of the current license inventory.

There are different procedures depending on the SAP product purchased. For ERP applications that are installed on the customer's premises and account for the largest share of SAP applications in the company, the measurement is performed annually. It is to be performed by the customer himself, for which he must use the tools provided by SAP. Transaction USMM is used for data collection, while License Administration Workbench (SLAW) is used for subsequent data consolidation and reporting of the results to SAP.

It is worthwhile for companies and other organizations to introduce professional license management. After all, every investment in SAP licenses inevitably entails maintenance fees. Unnecessary license purchases should therefore be avoided at all costs.

In addition to automated measurement, however, there are also manual analysis procedures for other products in the form of self-reporting or questionnaires. This is the case, for example, for CRM, Business Objects, or HANA. For cloud solutions, SAP performs the measurement itself.

SAP also conducts formal audits if a license violation is suspected. SAP always focuses on different points. In most cases, some irregularities have been noticed or SAP recognizes that the company has no discernible transparency regarding SAP licenses.

With the help of SAP license management tools, the audit preparation process can be conducted much more efficiently. The company is licensed in such a way that SAP compliance prevails, has optimally designed license costs, thus does not pay too much, and permanently has possible requirements transparently available. This means that SAP can be approached proactively, the best discounts can be achieved, and the clear SAP licensing situation means that SAP has no basis for discussions about the audit findings.

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System Measurement Guidelines

Rights and authorizations depend on the SAP products and license types that the company uses and the time of purchase. It is vital that an SAP user is licensed in such a way that his or her license covers his or her real activities in SAP, or even falls short of this. If they fall short, then his would then be overlicensing. And an opportunity to optimize costs.

Of careful consideration for many SAP Clients is the new USMM 2.0. SAP promotes licensing according to authorizations and has supplied a system in USMM 2.0 especially for this purpose, in which the guidelines for licensing according to authorizations can be stored. If a company uses this system, the licenses are assigned accordingly and directly during the measurement with the USMM. For this reason, a company will probably achieve a state of permanent overlicensing, because actual usage is no longer base of the review, and excessive allowance of authorizations will inevitably lead to higher costs.

For effective license management, knowledge of the types, costs and risks is therefore just as essential as knowledge of current SAP guidelines. Since these are constantly changing, it is advantageous to always be up to date. In the past, some of the guidelines have been relaxed, giving companies more leeway to optimize their license inventory.

We can certainly help customers identify what leeway they can make use of in the following ways.

SAP customers...

... can trade in licenses.

... receive partial credits when returning licenses. Unused package licenses can be credited when purchasing new products.

... receive incentives to switch to cloud solutions.

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Underlicensing and overlicensing

Most companies often lack processes or ways to determine exactly how many licenses they have and how many are needed in the first place. In complex SAP landscapes, there is almost always a gap between license inventory and license requirements. The following two manifestations occur:

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Underlicensing = license inventory < licenses requirement.

Frequency: rare

Underlicensing occurs when there are more SAP users than licenses purchased, or functions are used that are not covered by the user's license. Indirect use or SAP Digital Access is currently very much in the focus of SAP. This is because data is frequently accessed from or delivered to SAP systems via third-party applications. But also an incorrect use of industry solutions, such as SAP Patient Management (IS-H), often leads to claims from SAP, because insufficiently defined or documented licensing metrics and rules are occasionally cause for discussions between the client and SAP.

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Overlicensing = license inventory > license demand

Frequency: very often

Overlicensing is much more common than underlicensing. It is characterized by the fact that more licenses were purchased by the company than were necessary. Often, to be on the safe side, the significantly more expensive license types were purchased, even though their functionality is not fully utilized. In addition, if a user has not been assigned a license at all, then the expensive Professional User category is automatically applied when measuring. Although customers are not in breach of the SAP contract when they over-license, this results in unnecessary expenses in yearly maintenance.

SAP contract when they over-license, this results in unnecessary expenses in yearly maintenance. Relevant savings potential is detected, when a client assigns his users inneceserily unnecessarily the most expensive license types.

The use of alternative types of licenses also offers potential savings. However, since many companies often do not know which license types are suitable for them, they always fall back on the expensive Professional license.

Caution:  overlicensing can also be risky if the existing licenses are incorrectly assigned. This is the case, for example, if a user uses the functions of a professional user but only has an employee license, or conversely, a user with an expensive professional license only uses employee functions. The latter is of no interest to SAP. But if the audit finds users whose usage exceeds the scope of their license, SAP will insist on additional payment. As a result, a company may have to buy additional licenses despite overlicensing. This sounds paradoxical at first but is not uncommon.

You might now think that overlicensing means that it no longer makes sense to optimize SAP licenses. However, this is not true. Often new licenses are purchased every year and this without knowing the exact need. With the help of a proper license management tool, surpluses become visible, especially in the expensive license area, the company is put in a position to buy the cheapest licenses when there is a need and, if necessary, expensive licenses can be exchanged for cheaper licenses.

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Causes of overlicensing

At first glance, underlicensing appears to be more threatening than overlicensing, as it has an almost 100 percent probability of resulting in a penalty payment. Money that was not budgeted for in this way. However, most companies are already spending too much money on licenses without knowing it. The phenomenon of overlicensing can be traced back to the following two causes:

1) Too many and/or too expensive named-user licenses.

a) Too many named-user licenses have been purchased without knowing exactly how many licenses are needed per category.

b) Licenses are assigned manually without precise information on the actual usage behavior of the user.

c) The different license categories are defined by SAP in such a way that there is a lack of clarity within the company as to how which license types can be used.

d) The assignment of the license type in the user master data has been omitted. As a result, the expensive Professional category is automatically set as the default during license measurement.

e) An expensive license type was assigned to a user, but the user does not take full advantage of its functions and authorizations. A lower and therefore cheaper license type would be sufficient.

f) A user has several licenses, because he has several user accounts in SAP, to each of which a license is assigned.

g) Licenses for former employees or employees who no longer work with SAP have not been deactivated.

h) Employees only use third-party software that accesses SAP and the company already licenses SAP Digital Access. In this case, these employees do not need an SAP license, as the documents generated are licensed here.

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2) Too little information about the consumption of the engine licenses or the metric to the packages.

a) It is not precisely defined which of the numerous parameters are used by SAP to determine costs.

b) The actual consumption can only be determined at the time of the system measurement. Proactive management and optimization is only possible with a high manual effort or with SAP license optimization software. samQ supports your company both centrally and automatically to ensure the most transparent license usage.

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License measurement ≠ License optimization

SAP license measurement is primarily a quantitative evaluation that compares the current status with the target status from the license agreement. The SAP tools USMM, for data collection, and the License Administration Workbench (LAW), for data consolidation, are used for this purpose.

However, conclusions about the actual use of SAP programs or the use of certain functions are not transparent, since the data collection only determines the total number of all user accounts per named user category that have been manually assigned by the client. Duplicate user accounts are also not adequately detected and manual corrections are not supported.

LAW consolidation is always under discussion because it does not consider all consolidation cases. For this reason, one should know quite precisely before LAW consolidation what result is to be expected. Otherwise, it often happens that licenses are purchased that would actually not have been necessary, and it is not uncommon for duplicate licensing as a result.

The measurement of engine and package licenses is also not very transparent and meaningful. For example, SAP does not inform its customers about license consumption, but only about the measured parameters. However, it is often unclear what significance these have for determining consumption. In addition, there can be unpleasant surprises if you have measured with an outdated USMM version and are then requested by SAP to measure again. Often, one then receives different measurement results, which can result in additional payments. Therefore, SAP customers should ensure that they always have the latest SAP Notes installed in the individual systems, which SAP requires for these SAP releases.

License measurement is therefore purely a compliance check on the part of SAP. The data collected does not contain any information regarding the usage behavior of the users and is therefore not a basis for license optimization. SAP customers need a different solution. They need a solution that analyzes how users make use of the SAP systems. First-class tools examine the license inventory not only quantitatively, but also qualitatively. They collect meaningful information that is evaluated and prepared in a comprehensible and usable form.

Manually addressing the causes of over- or under-licensing is hardly feasible. It would cost considerable personnel resources, time and ultimately money. Complex SAP landscapes lack a precise overview, which cannot be obtained without the help of a suitable license management tool. This tool must be able to determine and, if necessary, optimize the license inventory with regard to both named user and engine and package licenses.

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Optimization of named user licenses

In order to optimize named-user licenses and avoid surprises during engine measurement, the license management tool must be able to collect and centrally consolidate the usage data of the individual SAP users and engine values. The following questions need to be answered:

• Which engines and packages are used and in which SAP systems are they relevant for billing?

• Which functions are used? Which actions are executed?

• How many licenses are assigned to the user?

• Is access to the SAP systems direct, indirect or both?

• For some special licenses, it may also count how often the SAP system was used.

SAP expects their clients to independently license their employees according to their real activities across all billing-relevant systems and that this licensing will be accurate for audit purposes.

The figure below shows the transparent evaluation from samQ of SAP user licenses according to the SAP functionality used. This usage data is evaluated with the help of a transaction database. This database defines which licenses are required for each transaction executed in SAP. This enables the tool to determine the optimal license type for each SAP user. However, this evaluation of the transactions must not happen only once, but must be executed again and again, otherwise only a snapshot is created. Since both the work environment (e.g., using a new SAP program) and the user's tasks are constantly changing, this must dynamically adjust the license inventory. The tool must be able to identify new transactions and evaluate them in terms of the correct license type. Likewise, the program must be able to recognize when a user is not using the full scope of his SAP license or is violating the license terms. In any case, the tool must be able to assign the appropriate license type to each SAP user automatically, without manual intervention, and change it if necessary.

If this is the case, then everything in the "Assignment too low" column would be "0" as shown in the figure.

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In addition to the usage data, the tool must also be able to process the information and, in some cases, individual regulations from the license agreements. These include authorizations and usage rights. It must be possible to store the contract data in Customizing to form a framework for the effective management of named-user licenses.

The goal is to permanently minimize or completely eliminate compliance risks. On the one hand, this is done by comparing authorization, entitlement and usage rights with the usage data collected. This ensures that each user has the correct license type. On the other hand, it is equally important that the license management solution helps to uncover possible indirect usage or SAP Digital Access in SAP and, if necessary, also offers suggestions on how to deal with these findings. This is the only way to prevent these users from causing unbudgeted or simply excessive costs during SAP license measurement.

In the end, the SAP Applications department must be enabled to...

... automatically assign the optimal license type to a user.

... identify licenses that are not needed and use them elsewhere.

... identify duplicate users and clean up duplicates.

... optimize licensing for indirect use or SAP Digital Access.

If there are any ratio clauses in the SAP contract, the solution should also explicitly show in its report the optimal number of licenses per license type compared to the number stipulated in the contract. This is particularly helpful when it comes to renegotiating contracts with SAP. In some cases, customers can overturn the ratio clause if they can prove that the actual demand does not correspond to the current ratio.

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Optimization of engine and package licenses

The optimization or at least the summary of engines and packages from the various SAP systems must also be enabled by the tool. Here, the optimization does not consist in identifying what is used, but in the central consolidation of where which consumptions are and from which systems the data is relevant. The solution must recognize all engines and packages on all SAP systems and consider the respective licensing rules and parameters. Based on this, reports are created that serve as the basis for consumption calculations. Since engines and packages are often on multiple systems, the tool must be able to count parameters across systems. All information should be collected in one place, thus minimizing the effort required for consolidation.

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Optimization of digital access

As described before, the actually provided methods to measure indirect usage and digital access are not sufficiently accurate and need further investigation and analysis after the technical document counting.

In order to properly understand your need for indirect usage licensing, you should lead an evaluation process consisting of the following steps:

- Estimation of digital access documents – with or without passport

- Investigation of the connections causing these documents

- Assignment of external applications to technical users

- Evaluation of the single use cases

- Subtracting documents from internal batch processing

- Subtracting subsequent documents

- Factorizing Material and Financial documents

- Comparing digital access costs with indirect usage model

- Preparing documentation for the SAP audit

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