What to Expect from SAP License Auditors
- Usage Analysis: They check if your licenses match actual usage.
- Contract Compliance: Auditors verify adherence to SAP agreements.
- Indirect Access Review: They assess third-party software connections.
- User Classification: Proper user types and roles are evaluated.
- System Measurements: Audit tools gather data on license usage.
What to Expect from SAP License Auditors
If you use SAP software, you will eventually face a licensing audit. It’s part of the deal. SAP licensing is complex, and the auditing process can seem intimidating if you don’t know what to expect.
Knowing the typical steps, strategies, and outcomes of an SAP license audit will help you stay prepared and avoid nasty surprises.
Below, we’ll break down everything you need to know about SAP license audits so that you can navigate the process smoothly.
1. Why Does SAP Conduct License Audits?
SAP license audits ensure that customers comply with their license agreements. These audits help SAP verify that you are using the software according to the number of licenses purchased and the agreed-upon conditions.
The reasons behind an SAP audit include:
- Ensuring Compliance: Ensuring that your usage aligns with your SAP license agreement.
- Revenue Assurance: SAP wants to confirm that the use of its software generates the revenue it expects.
- Standard Procedure: Most SAP customers are audited periodically, usually annually or bi-annually.
Understanding these reasons will help you prepare in advance and avoid unnecessary costs.
2. How Does the SAP License Audit Process Work?
SAP’s license audit process has several stages. Understanding these steps can help you prepare and minimize stress during the audit.
- 1. Notification: SAP will inform you in advance about the audit. You’ll typically receive an official email or letter notifying you that they plan to conduct an audit within a specific time frame.
- 2. Data Collection: SAP will send you a questionnaire or instructions on using certain tools (like the License Administration Workbench – LAW) to collect information on your SAP system usage. This includes the number of users, access levels, and other system metrics.
- 3. Data Submission: You must submit this data back to SAP within a specified timeframe. Typically, your IT department will generate the License Measurement Program (LMP) or LAW report.
- 4. Evaluation: SAP’s audit team will evaluate the data. They compare the results against your purchased licenses to identify discrepancies.
- 5. Report: SAP will then provide a summary report indicating potential license gaps, over-usage, or non-compliance.
- 6. Negotiation & Settlement: SAP typically requires you to purchase additional licenses or pay penalties if discrepancies are found. This is often the stage where negotiation takes place.
3. What Are SAP License Types and Metrics?
Understanding SAP’s license types is crucial for passing an audit without incurring additional fees. SAP has multiple licensing models; knowing what applies to you will make the auditing process much smoother.
1. Named User Licenses
- Named User License: The most common type of SAP license. A license is assigned to each user.
- Example: An HR user who accesses SAP HR will need a specific license type that fits their role.
2. Package Licenses
- These licenses cover access to specific functionalities or business modules, like SAP ERP or SAP HANA.
- Example: If you use SAP Financials, your license package will cover the financial module’s capabilities.
3. Digital Access Licensing
- Licenses that cover indirect access, such as third-party systems that read/write data into SAP.
- Example: If your CRM system communicates with SAP to extract customer data, this may require digital access licenses.
4. Licensing Metrics
- User Count: Based on the number of people accessing SAP systems.
- Transactions Processed: Some packages are licensed based on transaction volumes.
Knowing these metrics is crucial to evaluating if your current licenses adequately cover all your activities.
4. Common Challenges in SAP License Audits
Facing an audit means being aware of the typical pitfalls that companies experience. Here are some common challenges:
1. User Overlaps
- Problem: Many companies assign multiple user licenses to a single individual due to oversight, leading to over-licensing.
- Solution: Regularly run internal checks to remove redundant or duplicated user accounts.
2. Indirect Access
- Problem: Accessing SAP indirectly through third-party applications can result in hefty compliance fines.
- Example: If an employee updates data in a non-SAP CRM system that feeds information into SAP, this is indirect access.
- Solution: Map out all third-party applications communicating with SAP to ensure you have appropriate digital access licenses.
3. Misclassification of Users
- Problem: Assigning users higher license roles than they need can lead to overspending.
- Example: Giving an entry-level employee a professional-level SAP license.
- Solution: Audit user roles periodically to match each user with the minimum license they need.
5. How to Prepare for an SAP License Audit
Preparation can significantly reduce headaches when the auditors come knocking. Here’s how to prepare effectively:
1. Conduct Internal Audits
- Regular Internal Checks: Periodically audit your usage of SAP to understand whether you are compliant.
- Use Tools: Utilize tools like SAP’s License Administration Workbench (LAW) to consolidate and analyze licensing information.
2. Establish an SAP Audit Team
- Form a Cross-Functional Team: Include members from IT, procurement, and finance.
- Allocate Responsibilities: Clearly assign who will collect and review data during the audit.
3. License Optimization
- User Role Review: Regularly review user roles and licenses to ensure efficient allocation.
- Retire Unused Licenses: Identify and retire any unused licenses to avoid over-licensing.
4. Documentation and Record Keeping
- Track Changes: Keep track of all SAP license purchases, changes in usage, and internal compliance reviews.
- Maintain Records: Document communications with SAP regarding license agreements and any changes over time.
6. Understanding SAP’s Audit Tools
During an audit, you will likely interact with several SAP tools. Here’s what you need to know:
- SAP LAW (License Administration Workbench): This tool consolidates license data from different systems and provides an overall usage report.
- Tip: Ensure the LAW report is error-free before submitting it to SAP.
- SAP USMM (User Measurement Tool): This tool measures the usage of named users and engines.
- Tip: Run USMM reports regularly to identify discrepancies before SAP does.
Using these tools effectively can ensure accurate reporting and reduce potential compliance issues.
7. Negotiating After the SAP Audit Report
Once SAP provides you with the audit report, it’s not the end of the road. You’ll often have to negotiate the terms, especially if SAP claims under licensing.
Here are some negotiation tips:
1. Validate SAP’s Findings
- Scrutinize the Report: Review every report detail and cross-check with your internal records.
- Look for Inaccuracies: Audit findings can sometimes be incorrect due to data errors or misunderstanding usage details.
2. Engage an SAP Licensing Expert
- Expert Guidance: Hiring a third-party SAP licensing consultant can save you money. They understand the licensing landscape and can identify where SAP might overestimate compliance gaps.
3. Consider License Consolidation or Re-negotiation
- Consolidate Users: Check if you can consolidate multiple users under a different license structure for cost savings.
- Re-negotiate Contracts: If closing compliance gaps is expensive, re-negotiating your SAP license contracts may help better align with your actual needs.
8. Key Strategies to Minimize SAP License Costs
SAP license audits often reveal licensing gaps that could cost you. Here are some strategies to minimize those costs:
1. License Reclassification
- Downgrade Where Possible: Look for opportunities to downgrade users who may not need a high-level license.
- Example: Change a user from a Professional License to an Employee Self-Service License if their role doesn’t require extensive functionality.
2. Automate License Allocation
- Automated Tools: Use license management tools that help you allocate the most cost-effective license based on each user’s activity.
3. Monitor Indirect Access
- Map Systems: Identify all third-party systems interfacing with SAP. Evaluate if you can reduce indirect access instances.
4. Optimize Test and Development Systems
- Limit Licensing to Essential Personnel: Ensure that test and development environments are accessed by only those who need to. Avoid unnecessary licensing of test systems.
9. Best Practices for SAP Audit Communication
Communication is key to ensuring a smooth audit. Here are some best practices:
1. Keep Written Records
- Document Everything: Always communicate with SAP in writing, especially when discussing the audit scope and requirements. This prevents misunderstandings.
2. Get Clarity on Questions
- Ask Questions: Don’t hesitate to ask SAP to clarify audit requirements. The licensing language can be complex.
3. Involve Legal and Procurement Teams
- Contract Expertise: Your legal team should be involved in understanding contract obligations. Procurement can provide insights into purchase histories that might help with negotiations.
10. The Role of Third-Party Tools and Consultants
Many organizations find managing SAP licensing on their own overwhelming. Third-party tools and consultants can be a big help.
1. Third-Party License Management Tools
- License Control: Tools like Snow Software or Flexera help you automatically track and optimize your SAP licensing usage.
- Example: If your employees’ roles change often, these tools can suggest when to downgrade or upgrade licenses.
2. Hiring SAP Consultants
- Consultants for Audit Preparation: Hiring a specialized SAP licensing consultant can save both time and money. They can help prepare for an audit, evaluate your current licenses, and negotiate on your behalf if necessary.
FAQ: What to Expect from SAP License Auditors
What is the focus of an SAP license audit?
SAP auditors focus on ensuring compliance with licensing agreements, analyzing system usage, and identifying any shortfalls or overages in license allocation.
How often do SAP license audits occur?
Typically, audits are conducted annually, but the schedule can vary based on contractual terms and system configurations.
What is indirect access in SAP licensing?
Indirect access occurs when third-party applications interact with SAP systems, potentially triggering additional licensing requirements.
Can I prepare for an SAP audit in advance?
Conducting internal audits, reviewing contracts, and ensuring user roles are accurate can help you prepare.
What tools do SAP auditors use?
SAP auditors often use system measurement tools like USMM or LAW to assess license usage.
What are the consequences of non-compliance?
Non-compliance can result in back payments, penalties, or the need to purchase additional licenses.
How should I handle discrepancies found during the audit?
Work with SAP or a licensing expert to address discrepancies, renegotiate terms, or purchase necessary licenses.
Do SAP audits include cloud services?
Yes, audits often encompass both on-premises and cloud-based SAP systems.
What documents do auditors typically request?
Auditors may ask for system logs, contract copies, user lists, and indirect access documentation.
How long does an SAP license audit take?
The duration varies, but most audits are completed within a few weeks, depending on system complexity.
Are there any risks during an audit?
Risks include unexpected licensing gaps, incorrect user classifications, and penalties for non-compliance.
Can I negotiate audit findings?
Negotiation is possible, especially for discrepancies or new licensing needs identified during the audit.
Do SAP auditors look for unused licenses?
Yes, unused licenses might be flagged, but they are generally not refunded or credited.
What role do licensing agreements play in audits?
They serve as the foundation for the audit, defining what the auditors will measure and verify.
Should I involve external experts for an SAP audit?
Licensing experts can help identify potential risks, optimize usage, and negotiate better terms.
