Headquarters of SAP AG, located in Walldorf, Germany

This Quick Guide to SAP Licensing has been provided by Moshe Panzer of Xpandion.

This document is available as a PDF here.

Introduction

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.

The SAP Licensing Model

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:

1. “Professional User” is a named user who is authorized to perform operational-related and system administration / management roles supported by the licensed software, and has also been given the rights granted under the SAP Application Limited Professional User.
2. “Limited Professional User” is a named user who is authorized to perform limited operational roles supported by the licensed software.
3. “Employee User” is a named user who is authorized to perform the following roles supported by the licensed software, all solely for such individual’s own purpose and not for or on behalf of other individuals.

Classifying Users

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.

Classifying SAP Users by Authorizations

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 SAP Users by Usage

• Amount of Activity – The most popular method of assigning license types to users is by the amount of their activity. The more activity a user performs in the system, the higher the level of license type he should have. “Activity” is measured in SAP by “Dialog Steps”, which, in practical terms, are the number of key strokes and screens that are used. You can see these counts, for example, in SAP Activity ST03N (Workload Statistics). Using this method, the customer pre-sets a scale. For example, for users whose activity is up to 1,000 dialog steps per month, their license type will be set to “Employee”; for those with dialog steps totalling between 1,001 and 5,000, their license type will be set to “Limited Professional”, and so forth. The scale can be set for an entire year, as a monthly average, or as a monthly maximum (i.e., the maximum value for all months in the last year). For users with multiple usernames in multiple systems, it is common to consider the highest value as the user’s representative value.
• Number of Different Activities – Another method used for classifying users is according to the number of different activities. This is based on the assumption that the more different activities a user performs, the “more widely” he is using the system, and therefore should be classified as a higher level user type. As with the “Amount of Activity” method, here, too, the customer pre-sets a scale. For example, if a user has up to 2 different activities per month, the license type will be set to “Employee”; for between 3 to 10 activities, a user’s type will be set to “Limited Professional”, etc. With this method also, the scale can be set for an entire year, as a monthly average, or as a monthly maximum.  Though it is common – when classifying users with multiple usernames in multiple systems – to consider the highest value as the user’s representative value, the calculation is sometimes more complicated (mainly with BI or CRM systems) when using this method.
• Activity Group/Type of Activity – This method is considered to be the “closest” method to SAP definitions. However, it is also the most time-consuming to perform. The Activity Group method establishes the license level by the type of activity performed by the user.  Generally, more important activities require a higher-level license.  For example, only Professional users perform activities associated with monetary transfers, while Employee users would typically perform activities related to viewing reports. The Activity Group method requires a definition of groups, such as Create, Change, and Display. You can say, for example, that a user who uses activities from Group “Display” will be classified as “Employee” – while a user who uses activities from Group “Change” will be classified as “Limited Professional”. If a user is using activities in two or more Activity Groups, the license type would be set to the highest type attached to these groups. Some SAP customers include additional inspections when using this method – and may further classify users according to the number of different activities.

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.

Moshe Panzer, 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.

Wrap Up

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.

Microsoft Licensing Boot Camp

The Directions on Microsoft Licensing Boot Camp is a two-day workshop that gives you the information you need to intelligently evaluate your Microsoft licensing options and maximize the return on your software investment.
Topics:

• Microsoft licensing concepts, terminology, and models
• Evaluating and purchasing Software Assurance
• Licensing for the major products, such as Exchange and Windows Server
• Strategies to follow in your Enterprise Agreement (EA) evaluation process
• Licensing products for virtualized scenarios
• How to get answers to your daily licensing questions
• Choosing the right Microsoft volume purchasing plan for your business
• Architecting your solutions with licensing in mind for maximum cost savings
• Using a product roadmap to make better purchasing decisions

WHO

Independent analyst firm Directions on Microsoft.

WHEN/WHERE

Chicago, 2nd & 3rd November. Use promotional code ‘ITAM’ to save $100 on your registration.
Click here to download the brochure and register.

Sandi is the author of the “SAM Starter Kit” published by The ITAM Review.

Formalizing an ITAM practice to include a repeatable, auditing process is on most CIO’s lists of things to do. Unfortunately it’s often at the bottom of the list. Other technology projects take priority as they will help a business unit become more efficient, allow sharing or harvesting of information, or prevent a company from running into a disaster non-recovery nightmare. These projects are all important. However, the question that needs to be asked is why isn’t ITAM higher on the priority list?

We all know that there are only so many hours in a workday, only so many hands and minds available on the IT team, and only so much time available for purchasing or legal to deal with licensing matters. IT is often juggling multiple projects, so where is the incentive to add one more to the list? Especially one that no other business unit cares about? Or one that gets in the way of those other business units getting what they need?…right now?

From a budgeting and contract negotiation perspective, knowledge is power. If you know what contracts are due when, what purchases will need to be made throughout the year, what kind of support will be required and how many licenses are actually in use at any given time; you will be in a much stronger position to negotiate prices and specific terms required to customize a contract for your organization’s benefit.

If a software publisher or software watchdog group calls up looking for information, having it immediately available can prevent time consuming and costly audits. A medium sized organization (250-1000 PCs) without accurate records can expect a disruption of anywhere from 3 weeks to 6 months to respond appropriately to an audit request. Suddenly the priority is high to avoid litigation and the extra expense of an external auditor, which can significantly throw off other projects previously labelled as high priority.

Effectively managing lease returns and redeployed hardware and software also becomes much more challenging when a formal ITAM process isn’t in place. The costs of not returning hardware on time and of over purchasing hardware and software can become much higher than the cost of assigning a dedicated asset manager.

A few years ago, I worked with a large enterprise that had been buying software for each new employee based on a standard configuration. However, because they hadn’t worked through the entire asset management process, they didn’t realize they were not redeploying all of the assets. By guiding them through the asset management lifecycle and formalizing the process, we discovered the company was spending an extra $300,000 per year on extraneous software licenses. Creating a business case for ITAM was pretty easy after that.

This article has been contributed by Sandi Conrad of Conrad & Associates. Sandi is the author of the “SAM Starter Kit” published by The ITAM Review.

Sandi has been in the software business since 1991 and was one of the first Software Contract Administrators in Canada.

She has been providing consulting services since 1996, helping hundreds of clients to understand their obligations and rights under a myriad of contracts, and comparing licensing programs to find the most advantageous options for her clients.

~

The SAM Starter Kit

The SAM Starter Kit by Sandi Conrad has been endorsed by Microsoft.

Michael Beare, Worldwide Director for SAM, at Microsoft said:

“Microsoft is fully supportive of the efforts of The ITAM Review to enhance customer SAM capabilities worldwide. The SAM Starter Kit is a big first step. “

This SAM Starter kit will provide you with a process to set up your SAM program, templates to quickly create your business case, calculate ROI, create antipiracy statements and a video to educate your employees.

The Starter Kit should get your SAM program up and running quickly so you can start down the road to compliance and software savings.

Find out more here.

Brief History

• Founded 1985
• Acquired by Intel to form Intel LANDesk from 1991 to 2002
• 2002 – 2006 Standalone Company
• 2006 – Acquired by Avocent (Datacenter tools, KVM etc)
• 2008 – Avocent Acquired Touchpaper (ITSM)
• 2008 – Acquired by Emerson (Energy, Manufacturing, Technology)
• 2010 – Bought by Thoma Bravo

The Thoma Bravo software portfolio also includes Flexera Software. A mashup of LANDesk (which includes Touchpaper) and Flexera (which includes Managesoft) would make quite a powerhouse.

The word on the street in the UK channel is that it’s very much business as usual and no significant structural changes are planned. Keep calm and carry on.

I see this being a good move for LANDesk. Emerson is an über-conglomerate with fingers in all sorts of pies. The LANDesk division, despite being a key player in the IT Management space, was probably just background noise within the Emerson portfolio.

Press Release
LANDesk
Thoma Bravo

Photo Credit

Two potential sticking points with virtualization projects are:

• We dare not virtualize an application because of the licensing implications
• Or, Uh-oh – How do we license that application we just virtualized?

Workspace Discovery - Plotting TCO Forecasts using Free Tool

Centrix offer a free tool for building a business case for virtualisation candidates, allowing you to discover users, applications and devices, assign them categories for virtualisation and then plot likely cost scenarios.

I’ve written before about Centrix raising the bar when it comes to auditing virtual environments. Six months on and they continue to build a very solid proposition around application delivery.

The Centrix portfolio is roughly broken down into three groups:

1. A FREE tool to identify virtualization candidates and justify funding
2. IQ – Manage applications and usage
3. Workspace – Provides a webshop for application delivery. This is  a business layer that encompasses all applications delivered to end users regardless of their platform – desktop install, virtualized application, Citrix Session, Internal or External Web App etc. This is pretty smart and will be useful to anyone looking at presenting users with a service catalogue type choice of applications. It means the user is presented with an application gateway via the web. Behind the scenes the application delivery team can be virtualizing, outsourcing, insourcing or changing platforms whilst the user has a consistent experience.

Centrix is not the first vendor to offer a free version of their technology to entice you to sample their technology but I am quite surprised how much value they have crammed into their free offering. It is certainly an aggressive way to gain some attention and traction. The upgrade from the free tool exposes more detail about the discovered devices, allows management of entitlement and forecasts savings or risk reduction.

Find out more about Centrix Software here.

It currently has 86 different asset management software vendors from around the globe allowing visitors to dice and splice the ITAM software industry by customer size and product type.

Below are some of the early statistics based on visitors to the vendor directory.

In a nutshell: Mid-Market (250-10,000) Inventory and SAM searches remain the most popular.

Searches by Company Size (% of total visitors) *

1. 250 – 10,000 (52%)
2. 10,000 + (36%)
3. 1 – 250 (12%)

Searches by Product Type (% of total visitors) *

1. Inventory ( 29%)
2. ITAM (28%)
3. SAM (25%)
4. ITALM (18%)

Combined Searches (Top 5 most popular searches) *

1. SAM + 250 – 10,000 (21%)
2. SAM + 10,000+ (16%)
3. ITAM + 250 – 10,000 (15%)
4. Inventory + 250 – 10,000 (12%)
5. Inventory + < 250 (9%)

Top 5 Vendor Related Searches +

1. Snow Software
2. Express Metrix
3. Symantec Altiris
4. ManageSoft (now Flexera Software)
5. HP

Top 5 Industry Related Searches
1. IT Asset Management
2. ISO/IEC 19770
3. Microsoft SCCM
4. “Technology Review” Related Searches
5. SAM Practice Related Searches (Job Description, Policies, Training, Templates etc )

• * May 2010 – August 2010
• + November 2008 – August 2010

Photo Credit

While a few years ago you might have been able to justify buying a new jacket because a button fell off your last purchase, the recession has meant that most of us would now prefer to sew the button back on. And in business, we all resolved to learn the lessons of the credit crunch: don’t spend on over-complicated products, over-long contracts or over-priced services. Not that we intend to scrimp on the essentials – but now, more than ever, organisations need to avoid being taken in by big names and big promises, and focus on buying just what they need.

In IT, however, the big names still seem to rule the roost. Despite observing the lessons of the wider economic situation, those responsible for procuring software and services still seem to believe that a bigger name equals a better service. Buyers often find themselves locked in to one supplier, having been persuaded that it’s best to buy servers from the same place you buy security – even though they wouldn’t dream of buying home insurance and a holiday from the same company.

It is not the buyer’s fault: the IT giants have huge marketing budgets to spend on persuading companies that they are the safe choice. The old adage that ‘you’ll never get sacked for buying IBM’ (or insert any big player) has not gone away, as it has been easy to scare buyers into thinking that a smaller supplier would be more risky, less trustworthy and less likely to be compatible with existing systems.

The IT giants seem to be pulling the wool over business buyers’ eyes in three key areas:

1. Expensive equals a superior service
2. Bigger equals more innovative
3. More complex equals better

Let’s look at these one by one.

Value

In reality, more expensive just means more expensive. Big vendors are answerable to their shareholders, which means their revenue and pricing models are driven by financial results and designed to benefit shareholders, rather than customers. And those big marketing budgets have to come from somewhere – ultimately, sponsorship deals and fancy offices have been paid for by the customer.

Service

With a smaller supplier, companies are actually likely to get better service level agreements, because every customer matters, and represents a bigger proportion of their income. Service will also be more personal, attentive and responsive – which is what most people consider a ‘superior service’.

As well as service, big, expensive software operations would like you to think that the extra money you’re paying is going into increased research and development, resulting in a more innovative product. In fact, in large organisations innovation is often stifled: it can be easier to promote ‘tried and tested’ solutions internally and externally, and levels of bureaucracy can stop the best ideas getting through.

It is unlikely that a supplier’s vast product range has come from years of dedicated R&D: often, big vendors will buy companies to fill holes in the current tool sets, so they can offer everything to everyone. But when it comes to actually using the various systems and software, customers often find that not only are the various elements not intuitively interactive, but that they are faced with using multiple interfaces to access each part. Technology modules from the same vendor don’t always complement each other. People can find that instead of buying into an ‘end-to-end’ approach, they have received some old-fashioned building blocks covered in a lot of sticking plasters.

Bigger Does Not Mean Better

Christine Headford, RMS

This leads on to the final point, the false promise that more complex products are somehow better. It’s important to remember that areas such as service management are actually a fairly simple requirement for most companies. Getting it right is not rocket science and doesn’t always require the “strategic” approach big vendors offer. Unnecessary over-complication simply adds to the price tag. Indeed, with Information Technology Infrastructure Library (ITIL) in place to form a framework to help implementation, most organisations don’t then need a big strategic plan as well. Smaller vendors use ITIL very successfully, and while every customer will always need individual attention, customers often come to vendors with similar problems, which require a simple, standard approach.

Choosing a small, flexible player over a cumbersome, expensive mega-vendor may not be the right choice for everyone. But as the UK faces some tough choices on where to cut budgets at a personal, professional and country-wide level, 2010 should be the year to re-examine your options, and choose the provider that genuinely offers the most cost-effective option. The right button is a lot less expensive than the wrong jacket.

This article has been contributed by Christine Headford, CTO at RMS Services.

The Noticer by Andy Andrews

It is great to see IAITAM booking a heavy hitter to keynote their annual conference this year.  Andy Andrews is a New York Times best selling author and opens the IAITAM Conference on the 20th October in Nashville, Tennessee.

I recommend Andy’s book The Noticer. At times I found it a bit sugary for my tastes (To be expected from a British male immersed in the dry subject of ITAM?) and a little confusing as the story weaves in an out of fiction, but otherwise it is an easy, quick and enjoyable read.

Andy’s message is that “Sometimes, all a person needs is a little perspective”. I personally gained a great deal from his analogy of dialects and I believe there are nuggets of wisdom for everyone in his book, whether professional or personal, on how a change of perspective can help us all through challenges in life.

IAITAM Conference Details
The Noticer on Amazon.

Snow Software Vendor Profile

I am pleased to announce that Snow Software have completed an expanded vendor profile within the new Vendor Directory.

Unlike the rest of The ITAM Review, which aims to be educational and informative, the vendor profiles allow vendors to showcase their technology and detail their key strengths and differentiators – like a virtual conference booth.

The Swedish vendor are listed within the categories Inventory Tools, SAM Tools and ITALM Tools.

“Snow License Manager is the leading software license management solution enabling you to fully track your software and hardware inventory and easily manage the complete life cycle of all your software assets –from registration and contract management to re-harvesting and discarding of your hardware and software assets.”

Snow Software is one of the first vendors to offer an expanded vendor profile – stay tuned for further vendor profiles over the coming months.

Visit http://www.itassetmanagement.net/vendors/snow-software-2/ to view the profile.