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6 Surprising Facts about SAP Licensing

Posted by in Licensing & SAM
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In recent years there have been many major developments in the field of usage inspection and customers are starting to analyze the true needs of their software investments. Despite this, having performed numerous SAP Licensing assessments, we’re still finding these 6 befuddling occurrences reappearing again and again:


1. No clue about real licensing needs

Although they are spending millions and millions of dollars, many SAP customers do not really know what licenses they actually have, what licenses they really need, and what licenses they don’t need. 

SAP is one of the most expensive software systems in the market, yet many organizations still treat their SAP licensing like a black box; they see it in terms of input and output without any knowledge of how it works. We were shocked to find some customers that felt that their SAP licensing was an invincible force that they were powerless against. 

This results in SAP customers having many misconceptions. We’ll hear things like “who are we to argue with the numbers?” or “it’s useless, we are small beans compared to the goliath,” or “we don’t have enough resources to really explore the SAP licensing contract.” They’d rather pay the amount that the invoice says or negotiate over the bottom line than to even question if their SAP licensing fits their needs. It doesn’t occur to them to think that there may be a possibility of reducing their licensing quota due to inactivity, for example. 

Remember this: You’re not being forced to pay for inactive accounts or for unjustified costs. You do have power here no matter your company’s size or budget.


2. Professional license types cost about 25x more than Employee Self Service license types.

Not only do many SAP customers not understand that there is a huge variance in the prices of different license types, but they also think there are only a few types (Professional, Limited Professional and Employee) when the truth is TOTALLY to the contrary. Refer to this post for an explanation of the different SAP license types

In reality, and in most cases, you’ll have a minimum of 5 suitable license types to choose from, and in other cases, many more. We cannot stress strongly enough the importance of knowing the many types, otherwise you will be severely limited and unnecessarily bound. 

Why? The more choices of licensing types you have, the more accurate your SAP licensing will be. Furthermore, if your licensing fits you better, it will have a positive impact on your budget. 

3.  The “use it or lose it” policy 

Many users only use the system 1-2 times a month and do not require expensive license types.

SAP customers need to inspect users’ behavior and cancel users that aren’t utilizing the system. This can be done by setting a threshold (typically three logins per month), monitoring users against this threshold, and receiving alerts if the user isn’t reaching the threshold. If it’s not being reached, you know you can take action.

4. Combining users between SAP systems is a key factor in reducing overall licensing costs

Customers are sometimes not aware that SAP is based on “employees” and not “users.” Combining user names to employees between different systems in a clever way can really optimize licensing costs. Do not, and I repeat, do not use email as your only source for combining user names. Customers that take the extra step in utilizing more sophisticated methods get better results. (See this article that discusses using fuzzy logic to match users.)

In other words, you should invest your energy into inspecting the results after you’ve combined user names. For instance, someone needs to check if the user name “Greene” is the same as the user name “Green.” LOOK OVER THE DATA. If you don't want to spend your time thinking about this, use an automated system like ProfileTailor LicenseAuditor, which uses fuzzy logic and other sophisticated methods for combining user names.

5. 800 pound gorillas get large discounts on their SAP license costs – you can too!

SAP likes to work with large enterprises and they like to keep these customers happy by giving them major discounts. We discovered that even small customers can negotiate wisely, if they identify the right time for it. They just make themselves strategically important to SAP, for example in M&A situations. Let’s say your 500 employee SAP-based company is merging with an Oracle-based company with another 500 employees, now your company is in a position that it needs decide between either SAP or Oracle. For SAP this means providing either 0 or 1,000 licenses. This is a strategic position for your company and suddenly, you have the negotiating power of an 800 pound gorilla. Always be focused on business moves that can be utilized to improve your licensing situation.

6. Most customers classify their users to licensing types by dialog steps, but this is the most arguable method

Because there is a lot of confusion about how to classify users to licensing types, many organizations choose a way that appears logical – they use the standard SAP measurement of “dialog steps.” But this approach has a built-in flaw. For more details, read the SAP Licensing Quick Guide to learn more about classifying users

Making decisions about the appropriate license type according to the amount of dialog steps per user is wrong. Dialog steps are simply a measurement of how much the system is being used by a user, but that’s not what the SAP contract is based on – it’s based on the user’s type of activity. There is no real connection between the amount of dialog steps and the type of activity that a user is doing, but since SAP doesn’t offer other simple measurements for licensing, people keep using dialog steps because at least they feel like they know something about their users. Don’t make that mistake. Use software like ProfileTailor LicenseAuditor to classify users by their type of activity. A reliable method of classification will allow you to go to the licensing audit with confidence. 

Xpandion is the leading provider of SAP licensing optimization software. If you have any questions or concerns about your SAP licensing, contact us now.

Dror Aviv joined Xpandion in 2010 as a programmer in the R&D team. Combining technical knowledge with implementation skills, Mr. Aviv serves today as a Senior Implementation Advisor, bringing with him extensive hands-on experience from the field. He works closely with customers at their sites, and is an expert in defining customer needs, translating them into business process and implementing them via ProfileTailor Dynamics’ suite of products.


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