Maximizing SAP Licensing with VOQUZ Labs

⇨ SAP license management presents a significant opportunity for savings – many organizations are overpaying for their services.

⇨ SAP licensing costs are determined by three pillars – products, deployment, and license model.

⇨ With SAP S/4HANA migrations ramping up, SAP organizations have a perfect opportunity to make certain that their SAP landscape will provide them with all the capabilities they need.

SAP businesses are always looking for ways to operate smarter and more efficiently. SAP is constantly rolling out new products, licensing types, and other solutions to help organizations meet their objectives. With over 3,000 different products and 100 license metrics, many organizations struggle to line up their needs with the exact right set of services and products from SAP.

SAP is essential to the function of its users. As such, many enterprises view the cost of licensing SAP software as absolutely necessary. Many may not be aware that they have robust options for tailoring and specifying the services and software in their package to dramatically reduce the total cost of ownership.

Lowering TCO

To gain insight into the options that users have for managing their SAP optimization, SAPinsider spoke with Francisco Hansen, Global COO of VOQUZ Labs. He explained that SAP users can often decrease their TCO by being more conscientious about their licenses and third-party applications.

“There is very often a big mismatch between what the client purchased and what they are actually using, either because they have a big surplus of licenses or because they haven’t considered things that they are doing and they didn’t buy from SAP,” said Hansen.

Three Pillars of SAP Licensing

SAP licensing costs are determined by three pillars – products, deployment, and license model. It is crucial that each organization understands which option under each of these components best fits their needs and how they can combine each one effectively.

• Products – The largest percentage of SAP licensing costs typically go towards named-user licenses, accounting for 40-70% of all costs in a contract, per VOQUZ Labs. The different types of named-user licenses vary widely based on the job requirements and capabilities. Organizations should carefully examine each department to determine what capabilities each user will need, as equipping teams with capabilities they do not need can inflate costs. Beyond individual named-user licenses, organizations should also consider the licenses they will need for engine usage, packages, and middleware.
• Deployment – SAP deployment have come into sharper focus recently, as many organizations have started or are planning their moves to SAP S/4HANA. Enterprises must examine the pros and cons of going with on-premise, public cloud, or private cloud offerings. Beyond that, they should consider how much customization they will need, as well as the level of service their SAP landscape will require.
• License Model – SAP organizations have utilized several different payment models for licensing SAP products. Some pay based on a single metric, like number of users or revenue. Others opt to pay based on their consumption of services like documents used or procurement volume. Organizations can also use perpetual licenses, permitting them to use SAP software indefinitely but while agreeing to an annual maintenance and support contract. There are several other options companies should also consider when exploring methods of balancing costs and capabilities for their SAP system.

RISE with SAP

Another SAP offering that enterprises must consider when deciding on licensing options is RISE with SAP. Organizations that are considering RISE with SAP should conduct an internal review of the needs of their users, the amount of user licenses required, and the full user equivalents. There can be a wide difference in costs between lower-impact user and a user that requires more capabilities out of their license.

“If you are going RISE, make very sure that you are covering the infrastructure sizing that you have today because SAP has T-shirt sizes on what is included in infrastructure there. There may be things that are not included in your proposal, such as additional server instances, memory, storage, disaster recovery, et cetera. They will cause unexpected spend, if you didn’t plan them in advance, said Hansen.

Previously, when SAP users considered moving to SAP S/4HANA or RISE with SAP they compared software with software. Now the decision is more complex. Users must consider actual services and infrastructure on ECC with potential future options on RISE with SAP or continuing on with an S/4HANA Perpetual License Model, where they can bring their own license on a hyperscaler with their own contract.

This complexity can be confusing. Decision-makers must sift through well over 1,000 different services on the roles and responsibilities file associated with RISE with SAP. Without a guide through this process, managers would have to comb through each one to decide if that was a service they needed. If so, they must also determine whether they could manage it internally or need to outsource it to a third party if SAP does not provide a solution.

Solutions

With all these options, companies may struggle to make sense of which licensing product, deployment, and model combination makes sense. They need something that will allow them to spend the least amount of money on their SAP landscape while also ensuring that all departments have access to the capabilities they need now, as well as any potential future options that allow them to scale and adapt to market conditions.

VOQUZ Labs offers samQ License Optimizer. It provides a window into an organization’s SAP usage and provides options to reduce risk and bolster compliance. The software automatically optimizes SAP licenses to the most cost-effective level, while also ensuring that all access and capabilities requirements are met.

Many organizations struggle with indirect access management. When a third-party application or store accesses an organization’s system indirectly, this still counts as use. Organizations may grant more access to their SAP system than they realized. This can result in significant additional charges for an SAP user, depending on the license the enterprise has.

Companies with large and complex SAP landscapes require significant amounts of data face a difficult task trying to determine their licensing needs. They must have insight into each user and their operational requirements before making a decision. Trying to accomplish this manually is a massive investment of time and resources. However, samQ can automatically collect and synthesize this data and make a recommendation based on actual SAP usage.

In addition to evaluating an organization’s usage and needs, VOQUZ Labs’ samQ solution uses a dynamic transaction database known as the Optimization Engine. It is constantly updated to include changes to SAP’s price and condition lists so organizations have further insight into everything they are paying for.

“You need to know what each product is worth in your contract. If I need more of this product in the future or if I need more infrastructure, I want to know today what this will cost me,” said Hansen.

Migration

Moving to SAP S/4HANA provides a perfect opportunity for companies to evaluate their SAP landscape and determine if they need to tweak their licensing. Organizations should ensure that they balance cost considerations of licensing with a product that will make the most business sense for their organization to operate efficiently. Such strategic evaluations can be assessed with VOQUZ Labs’ tool visoryQ, which helps you determining the financial scenarios and costs of every specific ERP strategy option.

“On the tax management side, you have functionalities in S/4HANA that could help you save money that you can’t do on ECC, for example, extended warehouse management. I have seen projects where clients manage to reduce their stock, reduce their out-of-stock situations by setting up this new product. As long as you get additional savings and additional revenue, you could invest quite a lot in or appropriate amount on S/4HANA migration. But if this is only technology modernization for your company, how much is this worth? Is it 20%? It is 30% of what you’re paying for licenses?” said Hansen.

Conclusion

SAP is an essential engine that many top organizations around the world use to run their business-critical functions. It is always rolling out new products and licenses. With an ever-expanding portfolio of options, businesses may lose sight of how to best maximize their SAP landscape.

SAP license management presents a significant opportunity for savings – many organizations are overpaying for their services. Users may have access to capabilities they do not need, while companies might have access to an option for a different licensing model that could result in significant savings that they are not even aware of.

On the other hand, other companies may not realize they are providing indirect access to their SAP system, which can result in significant penalties from SAP following an audit. It is vital that companies review their SAP licensing practices and examine what other options they have. With SAP S/4HANA migrations ramping up, SAP organizations have a perfect opportunity to make certain that their SAP landscape will provide them with all the capabilities they need now and in the future, while also ensuring that they are only paying for the licenses and capabilities that they need.