09 Oct

5 signs you could be non-complaint with SAP Licensing

Indeed, there are many technical reasons why you could be non-compliant on SAP licensing. However, SAP licensing compliancy is as much to do with attitude and awareness as it is to do with knowledge and technical expertise.

There are many common misconceptions and assumptions that result in customers falling into a false sense of security and not taking the necessary precautions to protect themselves against licensing non-compliance. This article addresses the common predispositions that represent the biggest barriers to identifying risk and taking the necessary action with some tips at the end on how you can dig a little deeper.

1 – We have an excellent/special relationship with SAP…

An excellent relationship with SAP probably means you are spending money with them or at least they are still actively trying to court your organisation into buying more of the software products that you haven’t already bought! But what happens when your spending slows down, your SAP landscape stabilises or your ERP strategy changes? Maybe their position will change once your spending patterns change and you are no longer seen to be “aligned” with the strategic corporate product roadmap they would otherwise have you aligned to.

JNC has assisted many customers in this exact position angry and frustrated with an apparent change of tact by SAP and the way that non-compliancy claims suddenly arise. Some of SAP’s biggest global customer have fallen foul of non-compliancy to the tune of 10’s of millions. What happened to their special relationship? What makes you think that your “Special relationship” with is any more steadfast than theirs? If you are being told you have a “special relationship” and you are one of their “best customers”, just consider how many 1000’s have heard the same story. Always keep your software vendors at arms-length and don’t be lured into a false sense of security


“JNC have assisted many customers in this exact position angry and frustrated with an apparent change of tact by SAP”


2 – We deal directly with SAP for our licensing…

So does everyone, that is apart from those who buy through a third-party reseller, which itself probably leaves you vulnerable to even more risk. They get commissions and rebates from re-selling so the more you spend the more they make. SAP is the vendor so the majority of customers will deal directly with them via an account manager, but what difference does that make? All the more reason to think you are probably not getting the best deal if you are relying solely on the advice of the organisation selling you the product. There are numerous ways of getting a better deal and better value from your investment in SAP and this usually involves good vendor, supplier and procurement management, which means getting tough and not eating out of the palm of their hand.

JNC have observed some clients who have not been sold the right licensing in the first place, leading to future non-compliancy issues. Take sales and service order processing. JNC have seen a number of clients whose original system was designed to process sales and service orders, however, they weren’t sold the S&SOP Package license. These customers were charged many years later for this “under-licensing” despite having run SAP for years and despite submitting their LAW reports every year. Your sales exec is also very keen to make a sale so don’t rely on the vendors to have only your best interest at heart.


“JNC have observed some clients who have not been sold the right licensing in the first place, leading to future non-compliancy issues”


3 – We have been running SAP for years and have never had any issues…

This is potentially worse than if you had been notified of some minor issues along the way. At least then you would know where you stood and would be more mindful of the issue going forward. Otherwise, you could be non-compliant with no view of the extent of any issue and completely unaware of a hidden liability. If SAP has a positive account relationship to protect, i.e. a spending customer, they could allow non-compliancy to accrue without acting, as not to rock the apple-cart. From JNC’s experience there seems to be a lower limit to the value of SAP under-licensing claims so perhaps it has to reach a certain level before it becomes worthwhile.

Some of the biggest disputes that we have seen have hit customers who have been running SAP for 10, 15, 20 years who have used SAP for several years without any history of non-compliance. This could put you at greater risk. Has SAP issued you a certificate of compliance? Have they send you a letter or e-mail giving you a green light or clean bill of health following your annual measurement. Unlikely, and just because they haven’t said anything doesn’t mean there isn’t something there. So best you find out yourself where your business stands to protect yourself from large unexpected and unbudgeted costs creeping up and biting you.


“Some of the biggest disputes that we have seen have hit customers who have been running SAP for 10, 15, 20 years who have used SAP for several years without any history of non-compliance”


4 – We are running this and that SAM tool…

SAM tools certainly help make intelligence driven license management decisions, however software code is not intelligent by nature and I haven’t yet seen any AI SAM tools hit the market. JNC would certainly recommend some SAM tools for SAP as they can add value, however, we would never recommend relying completely on a SAM tool for SAP licensing compliancy. Human intelligence is always the key and always will be. SAM tools must be functionally capable, configured correctly and used correctly to be effective. SAM tools can’t adapt to complex contractual setups involving dozens of contract documents (i.e. they can’t just be fed in and uploaded) so SAM tools must be set-up and configured to measure against the actual license assets they have. Any what about the ever-changing license metrics and the varying written descriptions of any given license metric form contract to contract? Installing the software and getting it measuring your usage across complex data centre environments and systems landscapes also pose its challenges.

Once you do get set-up what happens when you buy more licenses and different types of licenses various complexities? What happens when SAP realise you have been using MySAP Business Suite licenses for use of SAP Business Objects when you should be using Business Analytics Expert Users licenses and they whip out the terms of use from 2005 and use them against you? What happens when you trade or terminate licenses form various agreements or agree on conversion credits for some of your perpetual license value towards cloud subscription licensing? How will you keep your SAM software up-to-date with what is invariably a moving feast? JNC have audited, and provided audit defence services, to several customers who were found to be significantly non-compliant despite running some of the best-known SAM solutions on the market. So, just because you have a SAM tool doesn’t mean you are compliant. To find out more about the strengths, weaknesses, Pros, and Cons of today’s top SAM tools you can read our article – The Truth About SAM Tools – which is dedicated to the topic and written by one of JNC’s leading consultants who has seen the effects of poorly chosen, implemented and managed SAM tools.


“JNC have audited, and provided audit defence services, to a number of customers who were found to be significantly non-compliant despite running some of the best-known SAM solutions on the market”


5 – Our support partner looks after our licensing for us…

Firstly, you may have lost control of your license management, putting blind faith in another organisation to get it right. Almost all of JNC’s customers (with licensing issues) have worked with a major SI or prominent SAP support partner and that didn’t prevent them falling non-compliant. We would gladly reference any particular provider who we observed bucking that trend but at present, there are none to speak of.

JNC have seen some serious cases of non-compliance where the partner has actually been culpable. We have even been in the middle of an audit simulation when serious levels of risk have been realized through poor administration as we were auditing, which didn’t go down well with anyone. So what assurances do you get from your support partner that your licensing is in order? What assurances do you have that they are right? The help of expert third-party support is always there for you if you want to know exactly where you stand. Assurance is a powerful thing.


“JNC have seen some serious cases of non-compliance where the partner has actually been culpable”


So, there you have it, some of the most common assumptions that prevent SAP organisations taking the necessary action to address SAP licensing and compliancy properly. Is your business guilty of any of these? Think hard about what factual evidence you actually have from properly qualified experts, demonstrating a compliant licensing position. If not you might want to think hard about getting specialist help with your SAP Licensing.

How to test your License Manager has their finger on the pulse…

Here are some questions you can ask your internal teams or support partner resources, and if you don’t get a straight, concise, and quantified answer then you could well have a problem.

What is our current entitlement utilisation as a % of our total SAP licensing entitlement?

Licensing entitlement units vary from metric to metric so the only consistent measure is value. So, if you have £5 million worth of SAP license assets a viable answer could be 80% meaning you are utilizing £4 million worth of your overall entitlement. For example, you may have 250,000 worth of GRC entitlement purchased on the revenue metric at 50,000 per billion. As your revenue is only 4 billion you are only utilizing 80% of your entitlement.

What is that figure split by named-user license and package licenses?

Just a further test of the above and how accurately they understand the licensing position in terms of the two license classes.

What is the value split between named-User and package licensing? Are we user or package heavy?

This really gives your business an indication of where to focus your attention. Managing a user heavy license estate and a package heavy license estate involve different processes, procedures, and techniques. Package and named-user licensing are completely different ways of licensing so software so it does make a difference.

Tell me the top assets nearing maximum utilization?

This is an indication that utilization levels are being monitored regularly. It is important to know when for example you have placed your 95,000th sales order when you hold entitlement for 100,000 sales orders. This is an indication you need to buy more otherwise you can fall non-complaint. If you fall non-compliant discount will be revoked and it can cost anywhere from 50% to 200% more to buy those licenses depending on the discount level that is revoked.

What is the split of our SAP package licensing between USMM Measurable, Self-Declaration business metric, and self-declaration technical (i.e. value derived from the system)?

This should be known as part of your measurement planning and a pre-requisite for a well organised, accurate and timely submission of your annual measurement.


These are all standard things that your licensing managers and administrator should know. They most certainly should if they are on top of things and if they are new they most certainly should be getting on top of them sooner rather than later.


Related Services:

SAP License Audit Simulation – Provides an accurate enterprise-wide view of your licensing compliancy position.

SAP Licensing Training – Contact JNC to speak to us about our training and competency development services.

 

James Cochlin on EmailJames Cochlin on Linkedin
James Cochlin
Principal Consultant - SAP Licensing and Compliancy at JNC Consultancy
James Cochlin is Principle Consultant and Head of Audit & Compliancy Services at JNC, A company which has been providing SAP License Management services since 2009. In total James possesses over 12 years’ experience in SAP License Management and Auditing with significant knowledge and experience in SAP security, Authorisations and GRC. In the past, James was an SAP License Auditor for Deloitte. As Global Technical Lead James audited clients around the world on behalf of SAP, and was involved in the development of SAP’s License Audit Methodology. Now James works with customers helping reduce their risk of non-compliance, identify cost savings and avoid the pit-falls of licensing SAP estates. Throughout his consulting career, James has worked at some of the largest clients of SAP helping them solve complex licensing problems whilst helping them regain control of SAP Licensing and Compliancy. James continues to train SAP Consultants on SAP licensing to the highest standards, he was the lead architect of a well know SAP Software Asset Management tool, and is held in high esteem internationally as a leading SME and authority on SAP License Management.
Share this