SAP License Optimization Case Studies

SAP License Optimization Case Studies

• Automated License Assignment: Case study showcasing how a global retailer saved 20% on SAP costs through automation.
• User Behavior Analysis: Highlights from a manufacturing firm’s strategy to identify unused licenses, saving $500,000 annually.
• Contract Negotiation Success: A healthcare provider reduced renewal costs by identifying discrepancies in their SAP contract.

SAP License Optimization Case Studies: How Businesses Maximized ROI

SAP licensing can be complex and challenging to manage. Organizations often deal with high costs, compliance risks, and unused licenses.

This article will dive into real-world case studies of companies that successfully optimized their SAP licenses.

We will explore the strategies they used, the challenges they faced, and the outcomes they achieved. These examples can provide inspiration and guidance for your SAP license optimization efforts.

SAP Licensing Challenges

Before diving into specific case studies, it’s important to understand why SAP license management is such a challenge for many organizations.

SAP offers various licensing models, including user-based and engine-based licenses.

Each has its own rules and implications:

• User-Based Licensing: Charges are based on the number of named users and the type of roles they have.
• Engine-Based Licensing: Charges are based on usage metrics for specific engines or modules (e.g., SAP HANA).

The primary challenges include:

• Indirect Access: When third-party applications indirectly access SAP data, companies often find themselves at risk of non-compliance, which can lead to unexpected costs.
• Over-licensing: Many companies pay more licenses than they need due to poor usage monitoring.
• Under-licensing: Failure to properly assess license requirements can lead to compliance risks and penalties.

Case Study 1: Reducing License Costs by Identifying Unused Licenses

Company: Large Manufacturing Enterprise

Challenge: The company had an excessive number of Professional User licenses, but many employees did not require all of the features these licenses provided. They were also using an outdated license model that had not been reviewed for several years.

Solution:

• Audit and Analysis: They conducted a thorough audit using a third-party SAP license management tool to analyze their current license usage. This audit showed that 30% of licenses were underutilized or completely unused.
• License Reallocation: Unused Professional licenses were downgraded to Limited Professional or Employee licenses, and many inactive users had their licenses removed entirely.
• License Type Optimization: The company re-assigned users based on actual activities and introduced role-based analysis to match appropriate licenses with each user’s needs.

Outcome:

• The company reduced license costs by 25% and eliminated the need to purchase additional licenses in the future. Their SAP cost savings over the following two years exceeded $1 million.

Case Study 2: Tackling Indirect Access Issues

Company: Global Retail Chain

Challenge: The company faced a significant challenge due to indirect access to SAP data. Their e-commerce system, customer portal, and mobile applications all accessed SAP data indirectly. SAP charged extra fees for this usage, leading to an unexpected cost increase.

Solution:

• Engage Legal and SAP Licensing Experts: The company worked with an external consultant specializing in SAP licensing negotiations to assess indirect access risks.
• Switch to SAP Digital Access: Instead of using the traditional license model, they migrated to the SAP Digital Access model, which allowed them to be charged based on document processing rather than per-user access.
• Implement Controls: They implemented monitoring tools to track indirect access and established strict controls on which systems could access SAP data.

Outcome:

• They reduced their compliance risk and improved transparency in licensing. By transitioning to SAP Digital Access, the company saved over 30% compared to traditional user-based fees. Additionally, they had clear documentation to avoid future compliance issues.

Case Study 3: Streamlining License Utilization with Centralized Management

Company: Multinational Pharmaceutical Corporation

Challenge: The organization was struggling to manage its licenses across multiple locations. Each regional office held its license agreements, resulting in duplication of licenses and limited visibility into overall license usage.

Solution:

• Centralized License Management: The company decided to centralize SAP license management by consolidating all license contracts at the global level.
• Deploying a License Management Tool: They used an SAP-specific license management tool to provide real-time insights into license usage across regions.
• License Consolidation: The centralization effort allowed the company to reallocate licenses from regions with a surplus to those with deficits, minimizing the need to purchase additional licenses.

Outcome:

• Centralizing SAP license management helped the company achieve significant cost savings, approximately $800,000 annually. It also reduced the administrative burden by simplifying license management.

Case Study 4: Using Automation for License Monitoring

Company: Energy Sector Company

Challenge: The company found that managing user roles and licenses consumed significant resources. Incorrect role assignments led to overusing expensive license types, such as Professional User Licenses.

Solution:

• Automation Tools: The company deployed an automated license management system that regularly assessed license usage, user behavior, and role assignments.
• Role Optimization: The automation tool identified users with excessive rights and automatically adjusted their licenses to match their activities.
• Regular Reviews: They established a quarterly review process to ensure licenses aligned with actual usage.

Outcome:

• By automating license monitoring, they reduced licensing costs by 15% within the first year. They also ensured they remained SAP audit-ready, eliminating the stress of manual compliance efforts.

Case Study 5: Optimizing for S/4HANA Migration

Company: Logistics Provider

Challenge: The company was preparing to migrate from SAP ECC to SAP S/4HANA. They were concerned about potentially buying additional licenses they didn’t need during migration.

Solution:

• Usage Analysis Before Migration: Before migrating, the company used a simulation tool to identify which licenses it would need under the new S/4HANA system.
• License Conversion: Based on the simulation results, they converted existing legacy licenses into new S/4HANA equivalents.
• Negotiation with SAP: The company negotiated new agreements with SAP to convert unused licenses into future use credits.

Outcome:

• They successfully migrated without over-purchasing licenses and saved over $500,000 by effectively negotiating during the transition. This approach ensured that they only paid for what they needed.

Key Strategies for SAP License Optimization

Here are some strategies that have consistently worked across these case studies:

• Regular Audits: Conduct regular internal audits to identify unused or underutilized licenses. Tools like Snow Software or Flexera can help with this.
• User Segmentation: Categorize users based on their actual usage patterns. This helps assign the correct license types to different roles and prevents unnecessary expenses.
• Monitor Indirect Access: Keep track of indirect access to avoid surprise costs. Consider using SAP Digital Access if it fits your organization’s needs.
• Centralize License Management: If your company has multiple branches or subsidiaries, consider centralizing license procurement and management for better transparency and cost-effectiveness.
• Leverage Negotiation Opportunities: When renewing agreements or transitioning to new versions like S/4HANA, work with SAP or external licensing experts to negotiate credits or better pricing terms.

Lessons Learned from the Case Studies

Each of these case studies shows a different facet of SAP license optimization.

Here are some key lessons you can take away:

• Proactive Management Pays Off: Many companies achieved significant cost savings by proactively managing their SAP licenses. Don’t wait until an SAP audit is looming to optimize your licenses.
• Use the Right Tools: Specialized tools like Flexera, Snow Optimizer for SAP Software, or even SAP’s Law Tool can make a big difference in accurately monitoring and optimizing licenses.
• Centralization Leads to Better Control: Centralizing SAP license management reduces duplication and enables more effective reallocation for organizations with multiple branches.
• Automation is Key: Automating routine license monitoring tasks ensures compliance and frees up valuable IT resources to focus on other strategic areas.
• Work with Experts: In cases involving indirect access or complex migration scenarios, consulting experts can help avoid compliance pitfalls and negotiate better deals with SAP.

Challenges Faced During Optimization

While license optimization can provide many benefits, companies often face challenges:

• Data Complexity: Gathering accurate data on actual usage can be difficult, especially for large organizations with numerous SAP modules.
• Internal Resistance: Employees or departments may resist changes to their license types, fearing a loss of functionality.
• Indirect Access Confusion: Determining what constitutes indirect access is often confusing and requires careful analysis.

Despite these challenges, potential savings and improved compliance make license optimization worthwhile.

How to Start Optimizing Your SAP Licenses

If your organization is facing challenges with SAP licensing, here’s how you can start your optimization journey:

1. Assess Your Current State: Use a license management tool to determine current usage. Identify inactive users, redundant licenses, and indirect access risks.
2. Segment Users: Categorize all users based on their role and usage requirements. This helps better allocate appropriate license types.
3. Engage with SAP or Consultants: Consult with SAP directly or hire licensing consultants to clarify your current agreements and opportunities for optimization.
4. Conduct Regular Reviews: Set up quarterly reviews to reassess usage, align roles, and adjust licenses accordingly.
5. Negotiate Smartly: Negotiate for better terms whenever you renew contracts or make a major change, such as a S/4HANA migration. Before entering negotiations, make sure you understand your organization’s needs clearly.

FAQ: SAP License Optimization Case Studies

What is SAP license optimization?
SAP license optimization involves aligning SAP license usage with organizational needs to avoid unnecessary costs.

Why is SAP license optimization essential?
It helps organizations save costs, maintain compliance, and effectively allocate licenses based on usage.

Can unused SAP licenses be reassigned?
Yes, many organizations reassign unused licenses after conducting a usage analysis.

What are the indirect usage risks in SAP licensing?
Indirect usage risks occur when third-party systems access SAP without proper licenses, potentially leading to compliance issues.

How can organizations identify unused SAP licenses?
Conduct audits or use SAP tools to monitor user activity and license utilization.

What role do user behavior patterns play in optimization?
Analyzing user behavior can help determine whether current licenses match actual usage needs.

Are there tools available for SAP license management?
Yes, tools like SAP License Audit Workbench and third-party solutions assist in tracking and optimizing licenses.

How often should organizations review SAP licenses?
Regular reviews, ideally quarterly or semi-annually, ensure licenses remain aligned with business needs.

What is the impact of over-licensing in SAP?
Over-licensing leads to unnecessary costs, such as purchasing more licenses than needed.

Can SAP license optimization affect compliance?
Optimization ensures organizations meet licensing agreements, avoiding penalties or legal disputes.

What is the role of contract negotiations in license optimization?
Negotiating SAP contracts help secure better terms, identify unused features and lower renewal costs.

Is it possible to consolidate SAP licenses?
Yes, consolidating licenses across departments can reduce costs and simplify management.

How can businesses manage SAP license audits?
Staying proactive, maintaining records, and conducting internal audits helps manage SAP license audits effectively.

What challenges arise in SAP license optimization?
Challenges include understanding complex licensing models, indirect usage, and managing frequent changes in requirements.

How do third-party services help in SAP optimization?
They provide expertise in audits, negotiations, and realigning licenses to fit organizational needs.