This is part of our "8 ways to reduce costs in SAP series". You can return to the first article here.
So how do you reduce costs in SAP ECC and SAP S/4HANA?
The events of 2020 have seen a cranking up of the need to reduce expenditure and conserve cash. Many companies are looking at which areas to look at to make a significant impact. Although opportunities will vary from business to business, there are two areas where an immediate return on investment can be achieved - Hosting and Licencing.
Have you migrated from an on-premise data centre to a managed service? Are you realising the cost savings that the business case was built on? If not, you need to be looking into the reasons for this.
To get the best value from your service, you need to pay attention to the detail and monitor your use forensically for all environments, not just Production. You are paying for a utility service. Ensure the service includes detailed usage and ongoing optimisation metrics.
Are you having regular reviews with your infrastructure service provider? Your requirements will change over time and so will the offerings from your supplier. You need to ensure that what you purchased originally is still the best option for your business.
You should demand a detailed plan for cost optimisation and get to understand the cost impact of varying compute power, or making changes such as turning training environments off when they are not needed.
Resulting worked with a client last year who was spending £25k/month on their AWD costs. We managed to get a 9% saving through optimization of resources and turning things off when they weren’t needed. This has saved them £27k in one year - a 2x ROI.
When was the last time you reviewed your inventory of SAP licenses and analysed them against your current business needs?
Most SAP customers are over-licenced. They were offered a great deal to purchase additional licenses as part of the original deal that have never been used due to the impact of various events such as the financial crisis, austerity and now Covid-19. There has been a general trend towards companies having underused licenses and the impact is compounded when you factor in ongoing maintenance costs at 22%!
What practical steps can you take to avoid paying more than you need to for SAP licenses and maintenance?
There are a variety of things you can do to address this situation. Licenses can be parked and even sold but the one thing you can do that will have the biggest immediate impact will be to run a license optimisation exercise based on real 2020 usage and take the opportunity presented by the reclassification of license tiers.
As well as identifying all the people who have left or not logged on for six months, for every user you can demonstrate should be on a Limited Professional rather than a Professional license you can save £700 per year. Understanding your license requirements in detail will also put yourself in a stronger position for your license renegotiation for S/4.
If you have 2,500 SAP licenses and just 5% are wrongly classified as Professional (a conservative estimate for a first cut!), that translates into savings of over £87k per annum, 4x ROI in one year.
Our advice is to be proactive. Don’t leave your license optimisation exercise until a licence audit is due. Get ahead of the curve, run the exercise now and put yourself in control and see what savings you can make immediately. There are tools and services available to help you identify an instant cost saving or expose any risk of penalties that can be mitigated ahead of any audit.
This is not to discount other opportunities. Reducing other areas of waste such as over-production, extra-processing, defects, waiting and data inventory in your SAP ecosystem and taking stock of your ECC inventory ahead of any S/4 migration are likely to yield greater savings and also allow you to make a real difference to the top and bottom line in your business.
If you would like to talk about any of these subjects and discuss how Resulting can help you to save money on your SAP running costs, please get in touch.