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A straight forward plan to reduce SAP licensing costs

Reduce SAP licensing costs

This is part of our "8 ways to reduce costs in SAP series". You can return to the first article here.

In Part 7 of our series of ways to cut SAP running costs we explain why you should perform a license optimisation exercise – especially if it’s not audit time

Most SAP customers are also over-licenced.

When a company goes into an ERP programme, they usually go into it believing they will grow. At this point SAP will usually offer you a deal if you purchase additional licenses. Against this, we have seen periods such as the financial crisis, austerity and now Covid-19 where companies have contracted, and the number of SAP users has reduced.

This is compounded by the cost of maintenance. Typically, you will be paying 22% for this across your entire SAP license inventory. This can be parked, though SAP won’t always tell you about this.

It is perfectly legal to sell SAP licenses on. SAP won't usually tell you about that either but there are organisations that specialise in license brokering.

Before both of these, your priority should be to assess the low hanging fruit presented by the reclassification of users from Professional to Limited Professional. For every user you can demonstrate should be on a Limited Professional you can save £700 per user, per year – and that is before you consider people who have left or not logged on for six months.

There is another strand to this when you move to S/4 - the whole license model changes and Limited Professional users become Professional and there are additional licence types introduced. If you can get a detailed understanding of what your users are doing at a very granular level it will allow you to ‘fine tune’ and optimise your licensing and licensing costs going forward.

The final element concerns the Indirect Access (IA) and Digital Access Adoption Programme (DAAP) opportunity. You have only 18 months until December 2021 to decide whether to move to the DAAP and avoid SAP potentially reviewing you in respect to your IA exposure. On the face of it, it seems like a sensible thing to do but you will only know if it is right for your organisation if you carry out some detailed analysis and understand what your users are doing in your system today.

We would recommend that you look at running a license optimisation exercise based on real 2020 usage. This will have a return on investment within 12 months. You will probably find that you are over-licensed which provides an opportunity for an instant saving, and you will put yourself in a stronger position for your license renegotiation for S/4.

Be proactive. Don’t leave your license optimisation exercise until a licence audit is scheduled. Run one when it is not, put yourself in control and look at what savings you can make immediately. There are specialist tools that are inexpensive and can identify an instant cost saving or expose any risk of penalties that can be mitigated ahead of any audit.

Contact us if you would like to know more about our SAP Licence Optimisation Service

Next: How optimising your SAP ECC system can help reduce cost - even if you’re moving to S/4


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