SAP’s core product ECC6 along with a number of SAP-produced and custom add-ons fulfil the needs of that thousands of businesses around the globe on a daily basis. Despite these facts, a recent study suggests that as much as half of all SAP projects fail by ending up over budget. From a business perspective, this is just not acceptable. In order for SAP to be useful to a company, it must benefit that company’s bottom-line. Sadly, based on the cost of licenses and the propensity for SAP projects to fail, it is becoming increasingly difficult to rationalize paying for these licenses. How CAN a company improve its ROI when using SAP?
The Temptation of Bundles
SAP has taken a page out of the book of many software companies today and have started to bundle a lot of their licenses and modules together in handy packages. Included in these bundles are many of their proprietary add-ons, either free of heavily discounted, which can be both a blessing and a curse. Based on the modules rolled out with any bundle install comes a maintenance fee that the company is still required to pay, even though it may not utilize any of the bundled resources. Sounds a bit like a bait-and-switch, but it’s actually in line with what SAP promotes as its business model (paying for service licenses), and since the companies accepted these bundles in the first place, they can’t afterwards say they were unaware of the presence of the modules. In order for businesses to trim the fat, they need to take a long, hard look at their SAP installation and see if it’s worth upgrading licenses year after year.
The Legal Ramifications of Improper License Use
In February 2017, alcoholic beverage giant Diageo lost a lawsuit against SAP for improper access usage. The licenses that SAP granted to Diageo were insufficient for what Diageo was intending to use SAP for. In order to make their system more efficient, Diageo decided to connect its Salesforce system to an SAP backend, thereby empowering its sales representatives and business level customers to create and maintain their own orders. However, the high court rules that Diageo’s usage was outside of the scope of the license they had paid for and determined that their use would require a professional license (the most expensive one granted by SAP) for each employee using the SAP system in order for the use to be deemed legal. Diageo was fined fifty-five million pounds in fines for the breach of license. This raises a question for companies as to whether their use of SAP falls under the license which they are granted and using or whether more widespread use of the software would require more costly licenses. SAP may be more useful in a number of scenarios, but in a license cost to profit analysis, are those licenses really being used to their fullest potential?
Trimming the Fat
The licensing question raises another issue with some businesses – the improper revocation of access. When a user moves on to another project or leaves the company completely, some companies don’t completely remove that user’s license privileges and simply order a new license for the replacement employee. This could lead to a lot of overhead that can be managed simply by implementing a configuration management database (CMDB) for use in controlling access to the system. An SEO Toronto company has successfully implemented this technique. Combining a CMDB with constant monitoring of usage of the system can help to limit the amount of licenses the company pays for and in so doing, cut expenditure for the department by ensuring only the amount of licenses the company needs are being paid for.
License Periods and Support
While most companies pay for SAP on an annual basis, the fact is that it may be more efficient for some companies to look at licensing on a quarterly basis. This may cut down on expenditure as well as free up some of the money dedicated to licensing to go elsewhere. Additionally, a company should take note of their SAP support calls, most importantly the complexity of the problems experienced and the number of calls to support. By using these metrics, a company can determine whether they need to renegotiate their maintenance contract or if it’s more financially viable to look at third party support providers.
Return on Investment through Responsible License Management
Overall, the cost benefit analysis of an SAP implementation is at the forefront of the decision-making process when it comes to what should be cut and what should be kept. The bottom-line is always a concern and by limiting the exorbitant expenditure from licensing, a company can see a shorter ROI period than it would if it simply went out and bought a license for every employee that claimed they needed one. Having a management system in place to deal with the distribution of those licenses (the CMDB) can assist greatly in realizing a larger per-quarter turnover and put the company’s SAP project into the half of projects that manage to succeed.