SAP License by Usage Metrics
- Defines license type based on actual user actions
- Ensures alignment with business needs and usage levels
- Optimizes cost efficiency by tracking real usage
- Enables flexible licensing adjustments as requirements change
SAP License by Usage Metrics
SAP licensing can be complex, especially when understanding the impact of usage metrics on licensing costs.
This guide provides a detailed overview of SAP License by Usage Metrics, explaining the key concepts, types of licenses, and practical examples to help you navigate the intricacies of SAP licensing effectively.
By the end of this article, you will have a clearer understanding of how usage impacts licensing and how you can optimize costs.
What Are SAP Usage Metrics?
SAP usage metrics are data points that indicate how users interact with SAP systems. These metrics determine how much the system is utilized and are directly tied to licensing costs.
Essentially, SAP charges customers based on usage to ensure that licensing costs align with how much value companies derive from SAP solutions.
Key usage metrics can include:
- Number of users: The cost is determined by the different types of users and the number of named users.
- Volume of transactions: The frequency and type of transactions processed within the SAP system.
- System utilization: The extent to which system resources, such as storage or computational power, are consumed.
SAP License Types and Usage Metrics
There are several SAP license types, each with unique implications for usage metrics. Here’s a breakdown of the most common SAP license models:
1. Named User Licenses
This is the most common type of SAP license, where customers pay based on the number of unique users who access the system. The cost depends on the user type and role within the organization.
User Types include:
- Professional Users: Users who have broad access to SAP modules and perform a wide range of activities.
- Limited Professional Users: Users with restricted access limited to specific roles or functions.
- Employee Users: Users with minimal access to SAP for basic operations such as viewing reports.
Example: If an organization has 10 financial analysts using SAP for core business processes and 50 employees accessing it only to view payroll details, the licensing cost will vary based on these different user types.
2. Engine/Package Licenses
This license type is tied to specific SAP modules or applications, often called “engines.” The licensing cost depends on the usage metrics defined for each engine.
Common metrics used include:
- Number of documents processed (e.g., invoices or purchase orders)
- The volume of data processed (e.g., GB of data)
Example: If a company uses SAP’s Warehouse Management module, the cost might depend on the number of delivery notes processed monthly. If delivery volume increases, so does the cost.
3. Digital Access Licenses
With Digital Access licenses, SAP looks at usage beyond traditional human users and includes interactions from third-party systems, sensors, or IoT devices.
Key metrics for Digital Access include:
- Document Access: The number of business documents created by non-human users.
Example: If a retailer uses IoT sensors to automatically reorder stock, SAP charges based on the number of documents generated, such as purchase orders or receipts.
Why Usage Metrics Matter in SAP Licensing
Understanding SAP usage metrics is crucial because it directly influences how much you pay for licenses. Optimizing your licensing strategy can prevent unexpected costs, particularly if you are experiencing growth or changes in system utilization.
Key reasons why usage metrics matter include:
- Cost Transparency: Knowing the exact metrics helps you predict costs more accurately.
- Avoiding Compliance Issues: Misunderstanding your usage could lead to indirect access issues and costly audits.
- Scalability: Proper metrics management allows you to scale licenses up or down based on business needs.
SAP Licensing Metrics: Key Considerations
When it comes to optimizing your SAP licensing based on usage, it’s important to keep the following considerations in mind:
1. Analyze Current Usage
Start by analyzing how your organization currently uses SAP. This involves:
- Identifying User Types: List the different types of users and their roles.
- Tracking Transaction Volume: Record the number of transactions and activities performed in SAP.
- Monitoring System Integration: Understand the extent of integration between SAP and third-party systems.
2. Right-Sizing Licenses
After analyzing your usage, ensure you only pay for what you need. This might involve:
- Reassigning User Roles: Downgrade users from Professional to Limited Professional licenses if they do not need full access.
- Eliminating Unused Licenses: Identify and eliminate licenses not in active use.
Example: A company discovers that 20 employees have been assigned Professional licenses but only use basic functions, leading to significant cost savings by switching to Employee User licenses.
3. Manage Digital Access
Digital access can be tricky to manage, as automated systems often create documents that count toward licensing. A few strategies to manage this are:
- Limiting Document Creation: Avoid unnecessary document creation by adjusting workflows.
- Batch Processing: Group smaller transactions into batches to reduce the number of chargeable documents.
How to Optimize SAP License Usage
Optimizing SAP license usage is an ongoing process that requires both strategic planning and regular monitoring. Here are a few best practices:
1. Regular License Audits
Regularly auditing your SAP usage helps you understand whether you are over-licensed or under-licensed. SAP provides tools like SAP License Administration Workbench (LAW) and SAP Solution Manager to conduct these audits.
Example: A large enterprise uses the SAP LAW tool to compare the number of named users with the purchased licenses, discovering some users had dual roles that could be consolidated.
2. Utilizing License Management Tools
Several third-party tools are available to help companies manage and optimize their SAP licenses. These tools provide detailed analysis and reporting capabilities to help identify inefficiencies.
- Snow Software: This tool helps companies identify unused licenses, automate compliance checks, and optimize SAP license spending.
- Voquz samQ: It provides insights into indirect usage and helps organizations understand how third-party system interactions impact their SAP costs.
3. Negotiating with SAP
SAP licenses can often be negotiated based on your specific usage and growth projections. When negotiating contracts, use your understanding of current and projected usage metrics to achieve better pricing.
Example: If your organization is scaling rapidly, negotiating a tiered pricing model with SAP that offers discounts based on increased usage could be beneficial.
Indirect Access and Its Impact on Licensing
Indirect Access refers to situations where third-party systems or users access SAP indirectly—such as through an external application. SAP charges for such access based on the number of documents created or modified.
Common Scenarios of Indirect Access:
- E-commerce Platforms: When a customer order is placed through an e-commerce platform and recorded in SAP, this may count as indirect access.
- CRM Systems: Data synchronization between a CRM like Salesforce and SAP can lead to indirect access charges.
How to Mitigate Costs:
- Digital Access Adoption Program (DAAP): SAP offers DAAP to help customers transition to digital access licensing, often at a discounted rate.
- Proper Integration Planning: Limiting direct integrations between SAP and third-party systems to avoid excessive document creation.
Real-World Example of Usage Metric Licensing
Company Scenario: A global manufacturing company using SAP ECC faced rising costs due to increased transaction volume. Their primary issues were:
- Unoptimized User Roles: Employees with basic functions were assigned expensive Professional User licenses.
- Indirect Access Costs: Data integration between SAP and the company’s internal CRM led to significant charges.
Solution:
- The company conducted a license audit for right-sized user roles, downgrading over 30 users to employee user licenses.
- They adopted batch processing to minimize document creation from the CRM system, reducing indirect access costs.
Outcome: By focusing on SAP usage metrics and optimizing user licenses and system interactions, the company saved over 20% on its annual SAP licensing fees.
The Future of SAP Licensing and Usage Metrics
SAP licensing is evolving, particularly as more organizations move towards SAP S/4HANA and cloud-based solutions. Consumption-based licensing is gaining traction, where customers pay based on how much of the SAP system they use rather than a fixed number of users or documents.
Key Trends to Watch
- Cloud Transition: Moving to SAP S/4HANA Cloud introduces new metrics, such as resource consumption and number of API calls.
- Automation and IoT: Increased use of automation and IoT devices will impact Digital Access costs, making usage tracking more critical.
- AI-driven Optimization: Machine learning and AI tools are increasingly used to analyze usage data and suggest optimizations in real-time.
SAP License by Usage Metrics FAQ
What is SAP License by Usage Metrics?
SAP Licensing by Usage Metrics involves assigning licenses based on actual user activity within the SAP system, ensuring that businesses pay only for what they need.
How does SAP track license usage?
SAP monitors activity through specific metrics, including transaction counts and frequency of use, to understand user behavior and assign licenses accordingly.
Why choose a usage-based SAP licensing model?
A usage-based model allows businesses to match licenses with real user needs, potentially reducing costs by avoiding unnecessary allocations.
What are the key usage metrics in SAP licensing?
Key metrics include user logins, transaction volume, and activity levels within different modules, providing a clear view of the system is utilization.
How can usage metrics impact SAP license costs?
Usage metrics reveal actual usage, allowing businesses to adjust licenses for cost control and ensure licenses align with employee activity.
Is usage-based licensing beneficial for all organizations?
This model is advantageous for most businesses, especially those with fluctuating user demands, as it allows for adaptable licensing.
How frequently should usage metrics be reviewed?
Regular reviews—quarterly or semi-annually—are recommended to keep licenses aligned with current usage and respond to any changes in demand.
Can usage metrics help identify inactive users?
Tracking usage metrics can highlight inactive accounts, which can then be reassigned or adjusted to optimize licensing.
What tools does SAP offer for monitoring usage metrics?
SAP provides built-in tools and dashboards to track and analyze usage metrics, aiding in transparent license management.
How are licenses adjusted based on usage metrics?
Licenses can be reassigned or downgraded based on actual user needs identified through metric tracking, ensuring appropriate license levels.
Does usage-based licensing support seasonal workforce changes?
Yes, it allows flexibility to scale licenses up or down, making it ideal for businesses with seasonal or temporary workforce requirements.
Can usage metrics improve license compliance?
By monitoring real usage, businesses can avoid over-licensing or under-licensing, helping maintain compliance with SAP licensing terms.
What happens if usage metrics exceed current licenses?
If usage metrics indicate a need for additional licenses, businesses can adjust accordingly to maintain access and avoid penalties.
Is it possible to forecast licensing needs using usage metrics?
Usage metrics provide historical data, helping organizations predict future licensing needs based on trends and expected growth.
Can usage-based licensing be combined with other SAP models?
Yes, usage-based licensing can complement traditional or named-user licenses, offering a flexible approach tailored to organizational needs.
