Large SAP enterprise are increasingly choosing SAP’s UDD contract (Unlimited During Deployment) as their preferred way of licensing SAP software. Why? You pay a lump sum each year and you can consume as much SAP software as you like without needing to worry about compliance. Sometimes UDD contracts come with automatic increases applied to the lump or likewise the payment level can be fixed for a certain number of years.
At first glance, this seems tempting due the reduced licensing risks. As a company, you can use additional licenses without having to pay attention to the total quantities. Engines can be used without running the risk of over-use. It is even possible to include SAP Indirect Access use rights to the agreement! Sounds ideal right?
This particular variant of the SAP licensing agreement has a certain risk potential, which SAP customers should be mindful of at an early stage. Since the “carefree package” comes with very little risk and no need to worry about SAP licensing compliance, you might not be monitoring which licenses are actually used and who is active in SAP. After all, everything is covered!
This is true to an extent. Customers who opt for UDD contracts typically do so to support the business through a period of significant change, for example a global SAP roll-out program, where the end picture in terms of deployed software and used licenses cannot be known exactly from the beginning.
As customers pay a premium for the unlimited contract, it is typically understood that the contract will at some point be transitioned to a standard agreement at some point when the unlimited use rights are no longer required. SAP of course know this as well and they will typically perform a measurement exercise in advance of the contract renewal or re-negotiation to establish exactly the lay of the land.
Customers who have not been managing, monitoring and controlling SAP licensing effectively and optimizing their use of SAP can end up paying significantly more than expected when the time finally comes. When millions in SAP licensing costs are at stake companies should be tracking annually, quarterly even, their effective licensing position in order to forecast future SAP licensing costs and make effective licensing strategy decisions. However, for the duration of the unlimited agreement customers can most certainly feel secure.
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Even if you feel secure, the next negotiation with SAP is certain to come! At that point your “All you can eat” contract could become an unpleasant surprise. Especially if in the past year’s usage was not measured and exceeded the original estimations. At this point the SAP license landscape could presents itself in a completely new light; oversized, expensive and with a product landscape that was planned based on the wrong parameters.
If you decided to enter into a UDD contract with SAP, please don’t lose track of your licenses! You should still scan your license landscape regularly and keep an eye on how licenses are being used. You can use a software solution, like samQ, that automatically does the work for you in the background, leaving only limited additional effort and much greater control and transparency over SAP licensing costs. With the help of tools, you can keep track of usage and optimize the return on investment from your SAP UDD agreement. In addition, you can reduce administrative effort, achieve consistency, compliance, and license managers are always informed about the current licensing position and cost situation.
Best of all, with up-to-date total cost of ownership forecasts and cost modelling insights you will understand at what time you should be negotiating with SAP, typically at the tipping point when the cost of the UDD contract outweighs the business benefits.
samQ; little effort, big commercial impact!
Francisco Fernández Hansen is COO at VOQUZ Labs. His strength is his top management experience in a wide variety of industries without losing his eye for detail. In addition to his role as the company's COO, he leads the business and advisory team in North and South America. His deep background in IT management and delivery combined with over 20 years of experience in virtually every industry makes him your top-level SAP solutions contact. Strategic top-level solution development from a bird’s-eye view? Then Francisco :)
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