Seven ways to reduce SAP licensing fees

Given today's recession, companies are taking a harder look at their ongoing costs. IT executives are being challenged to innovate within current budget...

Given today's recession, companies are taking a harder look at their ongoing costs. IT executives are being challenged to innovate within current budget levels, without sacrificing service quality or jeopardising productivity, writes Jeff Greenwald, director of enterprise product management at Acresso Software.

But while there are established processes to manage just about every other IT asset, software, which represents 20% of an IT organisation's spending, is often managed in a manual and fragmented way. Knowing what an organisation is entitled to use compared with what it is actually using is made complex by a combination of historical procurements, changing organisational structures, multiple licensing types and pricing tiers, and disconnects between procurement, legal, finance, and IT.

Left with a limited and unreliable view, teams are forced to make guesses about future license needs. To stay competitive, companies must adopt new methods for managing high-value enterprise software applications, including the SAP business platform, which more than 76,000 companies depend on to support core business processes.

In order to achieve a more efficient approach to SAP license lifecycle management, organisations should incorporate seven vital methods into their current processes.

Firstly, automating and centralising the usage data collection would be one of the initial steps in taking control. A large majority of organisations have complex SAP architectures, with satellite offices using their own SAP systems. Organisations could save significant time and effort by implementing technology and processes that can automatically interrogate each satellite system, centrally collect usage information, and prioritise it to enable efficient analysis and informed decisions.

Automating licence compliance validation can also help the process of gaining control. Once usage data is collected, license management teams must compare the data with SAP contract terms to determine if software usage is compliant with their agreement. Third-party licence management solutions enable organisations to automatically monitor software use as it relates to these contractual entitlements.

Control can also be gained by determining future procurement requirements based on usage trends. When determining future software needs, many organisations do not take into account the peaks and troughs of past usage cycles. In order to accurately forecast future SAP needs and proactively address compliance by planning for proper coverage, insight into these usage trends is essential.

Thinking of ways to identify and reuse under-utilised licences is also important. Too often, under-utilised licences are present. By analysing user behaviour, organisations can identify users with little or no CPU consumption over a given period of time and address them appropriately.

Likewise, identifying and reusing duplicate licences is essential to cut back on unnecessary spending. Some organisations do not have a standard in place to assign a uniform set of SAP user IDs. This can result in several licences being assigned to one person, who is represented within the system in multiple ways. By performing appropriate analysis, businesses may identify duplicate user ID assignments, consolidate them and then consider whether any unused licences could be reallocated to new users prior to making new purchases.

It is also important that there is a standardised process for assigning named user categories. In SAP's preferred method of application pricing, there are multiple named user categories, each with different usage rights and pricing. The boundaries between these licence types are vague and user classification is often left to an administrator who has little information to determine which licence type any given user should be assigned.

Licence administrators could more easily identify the most appropriate named user category based on unique criteria such as the amount of time used, the kind of component or module used, or authorisation role. Automated systems can recommend the most appropriate classification based on a combination of these attributes.

Finally, internally allocating SAP costs based on actual usage can help gain control of licences. Many companies allocate software costs back to their business, instilling greater accountability and influencing user behaviour to drive more efficient usage. However, given the overwhelming time and effort necessary to assemble usage data there is less incentive for an organisation to more efficiently manage its investment in SAP.

By following the necessary guidelines that result in accessible and actionable usage information, IT teams can more easily map this data to the organisational structure and internally allocate SAP costs based on actual usage.

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