W H I T E PA P E R Seven Ways to Gain Control of SAP Licensing By Jeff Greenwald, Director of Enterprise Product Management, Flexera Software Published February 11, 2010
Seven Ways to Gain Control of SAP LicensingSeven Ways to Gain Controlof SAP LicensingBy Jeff Greenwald,Director of Enterprise Product Management, Flexera SoftwareOverview The SAP Cost LifecycleThis white paper describes seven methods through which According to leading analyst firms, successful companies do notBasis and Procurement management teams can more efficiently look at their SAP investment as a series of separate projects;manage the lifecycle of their SAP® Business Suite licenses and rather they view it like any other enterprise asset. By takingmake more informed software planning and such a view, these organizations place their SAP expenditurepurchasing decisions. alongside other long-term costs such as staff and facilities. But unlike these other long-term costs, the vast majority of costsEnterprise-Class Software Falling Through the Cracks (about 80%) are incurred by typical SAP investments after goingGiven today’s recession, companies are taking a harder look live. In order to uncover savings opportunities, it is critical thatat their ongoing costs. IT executives are being challenged to organizations examine these costs more closely.innovate within current budget levels, without sacrificing servicequality or jeopardizing productivity. After going live, the majority of SAP costs can be separated into four categories:But while there are established processes to manage just about 1. Support costs: ongoing support-related costs for both endevery other IT asset, software, which represents 20% of an IT users and systemsorganization’s spending1, is often managed in a manual and 2. New license costs: new enhancements, new projects andfragmented way. Knowing what an organization is entitled to new business process capabilities to differentiate theuse compared with what it is actually using (which on the face of businessit should be simple enough) is made complex by a combination 3. Upgrade costs: projects that typically come along everyof historical procurements, changing organizational structures, three to five years as organizations seek to overhaul theircomplex and vague licensing types and various pricing tiers, and SAP systems with a major revampdisconnects between procurement, legal, finance, and IT. 4. Depreciation: a decrease in value over timeSome companies think they have these problems solved because Ongoing support and maintenance costs generate the majoritythey have a IT asset management system (ITAM). Although of unexpected costs, despite this being the area where ITformal ITAM programs may be in place to manage the desktop departments are expected to achieve the most savings.in a relatively systemic way, datacenter applications, such asSAP and Oracle, cannot be managed with traditional ITAMinventory processes. Left to their own devices organization oftentimes rely on spreadsheets and manual processes.Left with a limited and unreliable view, teams are forced to makeguesses about future license needs and risk spending preciousbudget dollars and time ineffectively, leaving little to drive newinitiatives. To stay competitive in today’s challenging market,companies must adopt new methods for managing high-value,high-liability datacenter applications, including the SAPbusiness platform.More than 76,000 companies depend on SAP Business Suiteapplications, such as ERP and CRM, to support their core Image Source: AMR Research, 2008business processes throughout their organization. It representsone of their most significant software investments. Astute Managing Ongoing Support Costs In order to initially determine the appropriate support fee,enterprises need a greater degree of control over SAP Business SAP customers first forecast future usage levels for their SAPSuite application and recognize that implementing a process, license agreement. Each year thereafter, most are required tobest practices and technology that supports more informed run a license measurement process, whereby an administratorallocation, planning, and purchasing decisions is critical to measures user activity from every individual satellite system, andoptimize their return on this investment. sends the results back to SAP to determine if additional licenses are necessary.1 Gartner, IT Spending and Staffing Report, 20082
Seven Ways to Gain Control of SAP LicensingThis is a time-consuming process for an organization with entitlements. In addition to periodically checking the solution’smultiple satellite systems. From a financial perspective, if this compliance dashboard, truly diligent organizations can alsoprocess is only conducted prior to a license measurement, an set up alerts to automatically inform them as limit thresholdsorganization may be surprised to find that more users have draw near.access to the system than was estimated and additional licensesmust be purchased. This can be viewed as an “accidental” 3. Determine Future Procurement Requirements Based oninvestment, because this expense is not budgeted for or subject Usage Trendsto the same scrutiny as other IT purchases. When determining future software needs, many organizations base decisions on a state that exists at a single point in time,In addition, although this process answers the question, “Who not taking into account the peaks and valleys of past usagehas access to SAP?” it does not answer, “Who actually used cycles. But in order to accurately forecast future SAP needsit and to what extent?” SAP’s preferred method of application and proactively address compliance by planning for properpricing outlines multiple user categories (developer, professional, coverage, insight into usage trends is essential. For example, iflimited professional, employee, portal and indirect users), so it looking to add a new business area, the usage patterns of othercan be extremely arduous to analyze each individual license similar units support a more intelligent procurement decision.with regard to the amount of time used, the kind of componentor module used, and the various authorization roles. But Although the SAP system maintains a very detailed log of allto ensure accurate and appropriate licensing, this level of user access statistics, the data is regularly reorganized andindependent analysis is necessary. historical information is purged. If a sub-set of these statistics are stored in a separate table, usage may more easily be monitoredSeven Ways to Gain Control of SAP Licensing and historic data be kept as long as required.In order to achieve a more efficient approach to SAP licenselifecycle management and subsequently gain greater control 4. Identify and Reuse Underutilized Licensesover SAP licensing , organizations should incorporate the Too often, underutilized licenses are present. By analyzing userfollowing seven methods into their current process. behavior, organizations can identify users with little or no CPU consumption over a given period of time and address1. Automate and Centralize Usage Data Collection them appropriately.A large majority of organizations have complex SAParchitectures, with satellite offices using their own SAP systems. Unfortunately, the tools within the SAP system do not provide anAs a result, when preparing for an SAP license measurement, easy way to identify idle users and consolidate them. It can takean administrator must evaluate installations from each individual many time-consuming and manual steps to analyze and comparesatellite system and stitch multiple reports together using several user behavior for each user name and then make changesspreadsheets before submitting this information to SAP. resulting from the analysis to each satellite system. In fact, many SAP Basis Teams feel that there is just too much data to justifyIn addition, the SAP system maintains very detailed logs of all the investment in time and effort. But in order to ensure accurateuser access statistics. Unfortunately, these statistics are so measurements and cost-effective procurement, organizationsdetailed, teams are left with a mass of data but a shortage of would greatly benefit from identifying and reusing idle licenses.actionable information. 5. Identify and Reuse Duplicate LicensesOrganizations could save significant time and effort by Likewise, some organizations do not have standard processesimplementing the technology and processes necessary to in place to assign a uniform set of SAP user IDs. This can resultautomatically interrogate each satellite system, centrally collect in several licenses being assigned to one person, because theyusage information, and prioritize it to enable efficient analysis are represented within the system in multiple ways. For example,and informed decisions. This provides the foundation for Jack Dawson may be assigned two user names in the system,the compliance validation and optimization methods to be such as JDAWSON and JACK_DAWSON. By performing thediscussed in more detail in this paper. appropriate analysis, businesses may identify duplicate user ID assignments, consolidate them and then consider whether2. Automate License Compliance Validation any unused licenses could be reallocated to new users prior toCollecting usage data for central analysis is just the first step in making new purchases.ensuring SAP license compliance. License management teams mustthen compare that data with the SAP contract terms and determineif the software is being used in ways compliant with the agreement.But as organizations grow and change, so does the complexity oftheir license agreements, especially following mergers, acquisitions,or divestitures. Manual, fragmented, and resource intensiveapproaches to this task are soon found to be inadequate.Third-party license management solutions enable organizationsto automatically monitor software use as it relates to contractual Use existing licenses more efficiently to minimize additional purchases.