This article was published in 2010 – read a new and updated 2015 version here.
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The SAP Licensing model is considered to be among the most complex and confusing in the generally bewildering area of software licensing. While many software vendors typically calculate their license fees by counting the number of active and inactive users, or by considering the number of servers and CPUs, SAP defines licenses according to usage — without really examining usage — an omission that may well be the root cause of the confusion. Adding to the lack of clarity are the issues related to “named users” – the basic unit of the SAP licensing model. For example, there are no real names behind named users — and, a named user can have multiple usernames in different systems. This article will describe the basic SAP licensing model, its difficulties, and how SAP customers typically handle the issue of licensing. In order to keep it simple, we will not include a discussion of “engines” (e.g., payroll, etc.), which are additional components that are charged separately, on top of the basic licensing fees.
SAP licensing is based on “named users”. Customers buy various types of “named users” from SAP, such as: Professional named users, Limited Professional named users, Employee named users, etc. Each “named user” may have a real username(s) attached to it at a given date. That means that throughout the specified period of time, if you purchased, say, 50 Professional type user names from SAP, you must not exceed the maximum of 50 usernames that are defined as Professional in your system. You can, it should be noted, switch the username(s) attached to a “named user” if, for example, the user has left the company or has changed his license type. Confounding the issue are the SAP definitions of user/license types, which are quite vague, as you can see from the following short versions of the definitions of the three most-popular SAP license types:
Distinguishing between and determining the correct classification for SAP users is fraught with difficulties. For example, if a user is using three different usernames in three different SAP systems –(1) a BI system for managerial reports, (2) an ERP system for stock transfer reports, and, (3) a second ERP system for monthly invoice approvals – should he be classified as an Employee, a Limited Professional or a Professional – or perhaps one of the many other license types that populate the SAP universe?
Unfortunately, SAP does not supply a simple tool to quickly classify users according to their de-facto activity. What SAP does supply is a standard SAP program (SAP transaction SLAW) to collect and consolidate the classifications that the customer has previously defined in all of the organization’s systems, and send them to SAP for annual inspection.
The issue of assigning license types to users becomes more crucial when we consider two issues: the cost of the licenses and the size of the companies involved. The difference between a Professional user license type (± US$ 4,000-5,000, plus 22% annual maintenance) and, say, an Employee license type (± US$ 1,000, plus 22% annual maintenance) is significant — and causes one to think twice before assigning a higher-level license type to a user. In addition, an average SAP customer has 3,000-5,000 SAP users – of which 300 are typically replaced each year, and another 700 change positions (and, thus, SAP usage) each year – making user classification a lengthy and Sisyphean task.
For all these reasons, SAP customers try to create simple, logical ways in which to classify their users … simple, in order to save time and resources – and logical, in order to maintain the spirit of SAP’s definitions. Over the years, SAP customers have successfully developed a number of informal methods to classify users.
Organizations often begin the search for a workable classification method by considering the classification of their users according to their “static” authorizations. In effect, this means that if a user is authorized to perform certain activities, he will be classified accordingly, even if he has never actually performed these activities. Organizations typically abandon this method rather quickly, since it is based on the assumption that users are using 100% of their authorizations, when, in fact, in most organizations, less than 10% of “static” authorizations are actually used. Having understood that this method will not deliver accurate results, they search for ways to classify users according to actual authorization usage, i.e., “dynamic” or “de-facto” authorizations.
Below are summaries of three of the most popular usage-based, customer-developed methods of classification.
Classifying users according to the above (and other) methods is, of course, much easier and more “logical” than classifying them according to the strict definitions of the SAP agreement. However, the use of these methods requires a significant investment of time and resources. Therefore, many SAP customers use automated tools that are dedicated to SAP licensing. A leading example of such a tool is LicenseAuditor by Xpandion.
Optimizing SAP Licenses over Time
Most SAP customers are large organizations that plan several years ahead. Therefore, they need a tool that will classify users according to an appropriate (and logical) method, will intelligently handle their license inventory over time, and will enable them to predict annual licensing expenditures for one, two, five and ten years down the road, in order to prepare accurate budgets. Since it is almost impossible to implement these methods using Excel, many SAP customers turn to automated tools like the ones mentioned above.
In an attempt to overcome the complexities inherent in the SAP licensing model, SAP customers have developed a number of informal methods for classifying users and assigning them SAP license types. Although these methods are simpler and more logical than the strict SAP definitions, their implementation requires the expenditure of significant organizational resources. However, help is out there — Automated tools are available that enable organizations to quickly and easily manage their SAP licenses – saving time and resources and enabling reliable budgetary planning.
Moshe Panzer owns a SAP consultancy firm and has, over the past 15 years, accumulated extensive experience in SAP Development, Security and Licensing. He is also the Founder and CEO of Xpandion, a company that develops automated management solutions in the areas of SAP licensing and SAP security, based on the visibility of actual real-time SAP usage.
This article was published in 2010 – read a new and updated 2015 version here.