SAP license audits are on the increase – Are you ready?

August 19, 2020

by

Jan Cook

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SAP Audit

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SAP Licensing

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SAP Advisory

Software license audits have been and always will be a major source of revenue for all the major software publishers. In today’s economic climate all the major software vendors, including SAP, will be down on revenue targets and will be resorting to license audits in order to identify new license revenues.

It was the same story during the previous economic crash in 2008-2009. Vendor audit activity dramatically increased and many customers were left flat-footed and ill prepared for what was to come. Faced with exorbitant bills customers were often forced to settle without properly establishing if the license fees being charged were legitimate or if there were any savings to be made. The exact same picture is emerging today. At VOQUZ Labs, enquiries around audit support and audit defence are significantly up. Partner organizations and independent consultants alike all offer the exact same feedback.

SAP audit season is also fast approaching. SAP license audits are typically scheduled in Q4 mainly in October and November so in the next 3 months SAP customers can expect license audit activity to rise even further. It is therefore crucial that SAP customers understand the risks and take proactive steps to address licensing compliance across their businesses.

What is particularly notable is the tactics that sales and audit teams are resorting to in order to try and charge additional SAP license fees. I have witnessed first-hand customers being deliberately misled regarding SAP licensing policies, certain products being targeted where metrics, definitions or use-rights are vague enough to make a case for additional fees, and of-course  SAP indirect access.

With SAP there are two different types of SAP license audits; Annual Self-Declaration and Enhanced License Audit (ELA). The annual self-declaration is based on the customers own configuration of the systems and allocation of SAP licenses. Customers use SAP’s License Audit Workbench (LAW) to gather usage data and send it to SAP for review. Only a certain portion of your SAP estate will be in scope of the self-declaration and SAP can only review the data provided. An ELA on the other hand is where SAP interrogate usage data themselves, often sending skilled auditors on-site to review specific configurations and data-tables to establish their own view of software use and licensing requirements. With an ELA all SAP products are in-scope and so latent compliance issues yet undiscovered can soon rise to the surface and cause real financial risks.

One simple illustration of the difference comes by way of SAP user licensing assessment. LAW only shows SAP how a customer has licensed users, which may well closely match the inventory. However, a deep-dive analysis of transactional use and/or assigned authorizations reveals how users should have been licensed. If customers have failed to do any SAP license optimization or license according to their contracts compliance gaps can quickly emerge and the license fees can be significant.

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What customers need to understand though is that SAP license audits are a legitimate business activity. The primary function of a SAP license audit is to ensure customers have licensed the software they are using and are not using licensed software in excess of the licensed level. Where this is the case SAP most certainly have the right to charge additional license fees. Using un-licensed software is, technically speaking, software theft although paying the fees you owe is normally the accepted remedy! Typically, under-licensing is inadvertent as opposed to deliberate license fee avoidance and SAP do allow customers to resolve non-compliance directly with them as a first pass. However, unoptimized licensing can lead to settlements that result in costly over-licensing.

Where disagreements occur on SAP licensing compliance it is typically down to poorly negotiated contracts. This is where the contractual terms themselves give rise to additional fees being due. Customers are then left to argue that licenses were mis-sold or that terms don’t reflect the intent for which they were purchased at the time, but SAP remain firmly in the driving seat when it comes to settlement. Some disagreements go all the way to court however most are buried under the proverbial carpet and settled hastily often leaving customers with SAP licenses they don’t actually need or having paid far too much.

Why leave yourself exposed to a negative SAP license audit? Simply accepting user classifications as they are is not acceptable. Users need to be monitored continuously to ensure they have the right SAP license at all times. User activity needs to be monitored to ensure unused accounts are properly expired. Common administration issues can lead to users inadvertently consuming a higher priced license type than necessary. You also need to know exactly how you are using all SAP products and identify licensing risks before it is too late.

Getting to grips with SAP license management can be made easy if you use a software asset management tool like samQ. VOQUZ Labs also offers a SAP License Audit Optimization service to help you prepare for an up-coming SAP license audit. samQ’s automated analysis and clean-up makes the process of preparing for a SAP license audit quick, easy and efficient. samQ will help identify SAP compliance risks and allow you to automate the SAP license optimization and clean-up process to mitigate risks. The service also gives you transparency around SAP licensing costs in advance of the audit and puts you firmly in control of the SAP license audit process.

ABOUT THE AUTOR

Jan Cook

Jan Cook has been Practice Director for VOQUZ Labs inthe UK since 2019. Jan is responsible for sales and delivery operations within the UK market and also operates as Senior Consultant for VOQUZ labs advisory serving customers across EMEA and globally.

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