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Analysis of Snow Software on SAM + SAP Square Peg Article

What This Article Covers

  • Article Quotations
  • As SAP Landscapes and Licenses Have Become More Complex
  • SAP Specific Issues for SAM
  • The Deploy Phase of SAM
  • High Effort Required to Manage SAP Licenses

Introduction

In 2016 Snow Software published the white paper SAM + SAP How Does the Square Peg Fit in the Round Hole?

In this article, we will analyze Snow Software’s white paper.

Article Quotations

As SAP Landscapes and Licenses Have Become More Complex

All around the world, enterprises are realizing that SAP’s growing offering of application software is they must employ Software Asset Management consuming an ever larger share of the enterprise IT(SAM) to assure compliance, improve procurement budget.

But what about SAP? Enterprises running SAP are now looking to SAM to help them better manage their usage and costs. Starting with their dominant position in Enterprise Resource Planning (ERP), SAP’s growing offering of application software is consuming an ever larger share of the enterprise IT budget. In fact, in the last decade, SAP customers have experienced double-digit increases in their annual costs through increased maintenance and licensing charges. In addition, over the past 10 years with Sarbanes-Oxley (SOX) and ISO/IEC 19770-1, managing IT and software assets has become critically important. Since SAP’s deployments are complex, understanding and managing SAP contracts, deployments and license usage can be challenging. Now, it is absolutely essential.

SAP’s footprint has become increasingly complicated in companies. SAP has also grabbed more and more of the IT spend. And, SAP’s support fees are continually increasing. They have moved from 15% to a minimum of 22% of the license price. SAP is increasingly looking to harvest its current account base and is one of the most difficult vendors to negotiate with.

SAM software is greatly underutilized.

SAP Specific Issues for SAM

For those who want to integrate SAP licenses with their Software Asset Management (SAM) best practices, there are challenges that must be overcome. Some consider this analogous to putting a square peg into a round hole. While it may not be as impossible as that, integrating SAP licenses into a SAM program must combine processes with powerful software tools to assist in discovery, metering, compliance, optimization and retirement/recycling. Several key considerations regarding SAP licensing from a SAM perspective are:

  • No support for Software ID Tags: As a result, inventory control and management is more challenging. SWID Tags are part of the ISO 19770 standards (ISO 19770-2 and 19770-3) and supported by vendors such as Microsoft, Adobe and Symantec. With SAP, each license is associated with a named user which can be used to identify and manage that license throughout the life cycle. Conventions and standards for the allocation of users and their names must be standardized. Discovery software is necessary to develop a SAM baseline of licenses that have been issued and deployed.
  • Different License Types: License types such as Professional, Limited Professional, Developer and Employee Self-Service have no clear-cut delineation between them. As a result, assessing compliance is difficult and puts enterprises at the mercy of SAP’s annual audit process. Software for metering of user-activity is needed to assure compliance and “best-fit” the license types through actual usage patterns.

  • Indirect Usage Fees: An increasing concern for SAP deployments, indirect usage fees are challenging to identify, assess and control. When 3rd party applications provide access to SAP data through the SAP application programming interface (API), an annual charge is applied. It’s critical for enterprises to track the level of activity and the financial exposure of these indirect license costs, which can come from B2B or mobile applications that are connecting to the backend SAP ERP system.

  • Challenge of Recycling SAP User Licenses: When an employee leaves a firm, that person’s license remains in use even though it may be marked “inactive” to prevent access to the system. Identifying duplicate, erroneous and obsolete user licenses requires sophisticated software tools that automate what can be a complicated, six-step process to recycle the license for future use.

SAP follows an approach of making license management as difficult as possible in order to gain the upper hand. The case of indirect access is a perfect example of how SAP keeps things deliberately opaque….when it benefits SAP to do so.

The Deploy Phase of SAM

  • Proper License Type for Each SAP User: Make sure the license supports the capabilities of each user. Compliance must be balanced against over licensing monthly self-audits of SAP license activity should be which can result in a 10X to 20X difference in price per carried out to best understand how the enterprise will license. Using powerful software, metering of the exact fare on an upcoming vendor audit. Usage optimization usage is the best way to “right-size” the license type. should be carried out to assess potential over-licensing from redundant, obsolete and erroneous users.
  • Indirect Usage: It’s a potentially explosive expense that must be understood and managed in the SAM context. SAP generally has a very novel provision in each of its contracts which says, “if a third party application uses the SAP system to access data, then an indirect user license is required for each user”. This can apply to mobile, B2B and B2C e-commerce applications, as well as internal portals and even point-of-sale (POS) systems. The Manage phase of an SAP deployment under SAM should involve a constant monitoring of both contractual activity and usage activity to assure the two are in balance. With automated software tools, monthly self-audits of SAP license activity should be carried out to best understand how the enterprise will fare on an upcoming vendor audit. Usage optimization should be carried out to assess potential over-licensing from redundant, obsolete and erroneous users. Metering should occur to assure both license type/role compliance and the “right-sizing” of license types. Finally, the Retire/Recycle phase of the SAM process for SAP is very important from both a financial and compliance perspective. It is not unusual for up to 25% of all SAP licenses to be obsolete, duplicate or erroneous. Following usage optimization, SAP administrators can use software tools to retire these licenses and recycle them for subsequent use. This will likely liberate some acquisition costs for new SAP licenses since the inventory on-hand should reflect the available retired and recycled licenses.

And in addition, as now SAP has every type of connection to SAP except for something called static read as being indirect access. SAP will apply indirect access when the sales it is currently obtaining and plans to obtain from an account is less than its Expected Sales Target.

High Effort Required to Manage SAP Licenses

Understanding what SAP licenses have been contractually purchased across a global enterprise and over several decades can be challenging. The deployment of SAP systems across the enterprise can also be remarkably complex and difficult to understand. Powerful discovery tools such as the Snow SAP Optimizer can be configured to look across dozens or hundreds of SAP systems within the enterprise, and create a coherent, unified and comprehensive inventory of licenses authorized for use within the SAP system.

Yes…and deliberately so. The more complex and time-consuming SAP can make license management, the more they can take advantage of the situation.

A discovery tool should generate a comprehensive summary of what user licenses have been allocated across the inter-linked SAP servers in your system.

Using automated SAP discovery software can also be helpful in understanding the license allocation by both the SAP license types and the department or cost-code. This more detailed summary information is essential during the SAM procurement phase where the enterprise has full knowledge of (a) what it has already contractually purchased, (b) what licenses have been deployed and are active, and (c) what the real usage profit is for each license.

Right, this is what SAM software can provide.

Conclusion

This is a good quality article from Snow that brings up the knowledge level of the reader.

References

Sikka, Brian. SAM + SAP How Does the Square Peg Fit in the Round Hole? Snow Software.

Analysis of Snow Software on SAP’s LAW Transaction

What This Article Covers

  • Article Quotations
  • Who Was the Law Transaction Designed For?
  • Pretending LAW is SAM
  • How SAP Presents the LAW Transaction to Customers
  • SAP’s Self Centered Approach to “Compliance”
  • The Idea that SAP Offers Everything You Need – – Even the Software to Negotiate Against Them
  • SAM Being Designed for the Customer
  • How SAP Keeps the Licensing Information at an Aggregate Level
  • Indirect Access and Snow

Introduction

Snow Software published the white paper SAP’s License Administration Workbench is NOT a Software Asset Management or License.

In this article, we will analyze Snow Software’s white paper.

Article Quotations

Who Was the Law Transaction Designed For?

C-Level management is increasingly scrutinizing the trajectory of spending on legacy platforms across the enterprise such as SAP. They are evaluating SAP licensing optimization and management tools, processes and solutions as a means to tackle the escalating costs.

We have LAW, which is free from SAP, why would we need another tool? are often the first words coming from the SAP Administration team. The problem with this response is that SAP’s LAW (License Administration Workbench) is a measurement and reporting tool, not an optimization tool. LAW makes plenty of assumptions that favor SAP, and provides almost no insight into the efficiency of the licensing assignments and deployment. As a self-audit tool, its primary purpose is to provide a foundation from which SAP evaluates the potential for an additional true-up of license sales annually.

True, LAW is for SAP’s use. Actually, SAP misrepresents what the LAW transaction is to customers in their online technical documentation in order to give customers the impression that LAW is for the customer, when in fact LAW is primarily for SAP.

Pretending LAW is SAM

SAP’s License Administration Workbench known as L-A-W is used as a tool to prepare audit data for SAP* to review. LAW collects and consolidates SAP license-relevant measurement data (users, engines, self-declaration products) for the component and central system.

System Administrators can get a more consolidated overview of the licenses provisioned and deployed. SAP uses LAW measurement data to bill customers when additional licensing is required. It’s important to note that LAW is NOT an optimization tool and does not indicate which users are inactive or over-licensed.

An SAP administrator at a large global enterprise commented recently that: LAW feeds SAP’s internal audit team of engineers, contract lawyers and salespeople with the data they need to escalate your charges every time.

That is a powerful assertion and one based as much on emotion as fact. But the passion does not belie the fact that SAP’s LAW tool and SAP-focused Software Asset Management/License Optimization solutions do very different things. Comparing the two is like comparing the proverbial apples and oranges.

This is all very much true. But SAP does not want its customers to know anything about this.

How SAP Presents the LAW Transaction to Customers

SAP describes its License Administration Workbench (LAW) with precision: The License Administration Workbench (LAW) is a tool for the central consolidation of license audit data and supports you in the SAP license audit process for complex system landscapes. In particular, the LAW simplifies the classification, combination, and consolidation of data for users that work in multiple systems and clients.

As you can see, SAP itself has never tried to position LAW as anything other than a tool to aggregate audit data for contract compliance.

I see it a bit differently. It looks like SAP intends to obscure who the LAW is there to serve. If you read the SAP text, it makes it seem as if LAW is for the customer. It is actually natural for the customer to come to that conclusion. That is why the next comment is not at all surprising.

However, in meetings between CFOs, CIOs and SAP administrators, you will often hear SAP administrators say something along these lines: We have the SAP LAW tool to manage our SAP users, engines and license types, so we don’t need a Software Asset Management/License Optimization solution.
Does this assertion stand up to the facts?

Exactly. The explanation of LAW by SAP leads SAP customers to do exactly what SAP wants them to do, which is to not investigate SAM tools.

The SAP contract expressly requires the customer to provide the LAW data as part of the audit process. In most cases, if the company is unable to provide this data, it will permit SAP to connect to its SAP systems to collect the data.

That is not a good idea. Companies don’t want SAP anywhere near its systems. This is the problem with Solution Manager as well. Solution Manager, if setup correctly to do so, allows SAP to monitor your system.

SAP’s Self Centered Approach to “Compliance”

We do not dispute that SAP’s LAW is used to help monitor compliance. If the company has users out of compliance, SAP will detect this and come up with a renegotiated set of fees for the company to bring itself back into compliance with its contract.

Which will in 100% of cases be highly SAP centric with SAP taking maximum advantage of any customer that does not offer resistance.

But what the LAW tool does not do is provide data for the purpose of optimizing the number of named SAP users, optimizing access and use of engines in a deployment, or optimizing the roles and license types assigned to users.

LAW does not provide information to the customer that they need to use against SAP. That is by design.

SAP’s LAW is classified as an audit compliance tool and serves that exact purpose.

As I said, I don’t see that SAP is being clear about what LAW is really designed for.

The Idea that SAP Offers Everything You Need — Even the Software to Negotiate Against Them

The data collected and painstakingly merged is used by SAP’s internal audit team to determine the company’s compliance with its existing contracts and to set out the best strategy moving forward to optimize additional revenue from the customer. In this respect, the emotional outburst from the SAP administrator quoted in the introduction is a fair reflection of the truth.

Right. But also, there is something else at play.

This issue extends out to software far beyond SAM. IT departments that use SAP have a very strong bias against non SAP tools. The idea is that even if the SAP tool that is offered lacks what the other tool has, one should always go with SAP. I have dealt with this sentiment repeatedly in my consulting experience.

More than half of SAP’s annual revenue and more than 75% of its profits come from its installed base of customers and the annual maintenance fees flowing from those contracts. SAP, not unlike any other software vendor, has a clear purpose for the audit data provided by the LAW.

SAP is increasingly relying upon its support revenue because it is selling less of its core products. In a word, it is saturated in its customers, and many emerging areas in IT, like IoT and Big Data have little to do with SAP or ERP systems generally.

SAM Being Designed for the Customer

The SAP user and usage data collected by the Snow Optimizer for SAP Software is substantially more comprehensive than the systems measurement data displayed by SAP’s LAW tool and can provide a substantially better picture of what usage is really happening across the company.

SAM software, unlike the LAW transaction, is actually designed for the customer.

How SAP Keeps the Licensing Information at an Aggregate Level

The License Administration Workbench does not provide a way to distinguish between a named user that logged into the system last week or two years ago, and is only focused on gathering (not analyzing or optimizing) audit-related data for future billing.

SAP does not want customers optimizing its use of licenses.

SAP’s LAW software can consolidate licenses across multiple SAP systems into a consolidated view based on the logon name and a number of other fields. By default, it aggregates user licenses by the logon name. LAW does this for audit purposes and does not provide any detailed information or analysis to isolate, detect or correct unintended duplicate users in the system.

In this case, a higher level of aggregation suits SAP, so that is what LAW provides.

Duplicate users involve one actual user having more than one unique named SAP user login. There may be valid reasons why a user has been assigned multiple SAP licenses, but in many cases, this was not the original intent.

A simple example is if a woman changes her last name after marriage and is assigned a new SAP login name. Care must be taken to consolidate these two user names into one by ultimately retiring the original one.

Again, there will be a major difference in the design of software if it is designed for the vendor to maximize their license draw from the account, versus designed for the customer and designed to minimize this draw. However, Snow’s examples here repeatedly show that the more detailed information provided by SAM software is actually more accurate.

Indirect Access and Snow

SAP’s LAW tool captures usage data which is analyzed by the SAP Audit team to determine if there is potentially indirect access activity occurring and if the enterprise is properly licensed for such activity. In most cases, the enterprise is not, and SAP will push for additional indirect license purchases which can add up to a meaningful cost.

The Snow Optimizer for SAP software collects the same usage data, and also looks to isolate potential indirect access violations. The difference is that with Snow Optimizer for SAP Software the company can (a) determine the exact source of the indirect access violation, and (b) be aware of it in advance of SAP and correct it ahead of the audit.

Brightwork publishes the most information on SAP indirect access. And indirect access is something that SAP (in our view) plans to increase in the future. Therefore, this functionality described by Snow is more important than ever.

The company may take licensing or programming action to address the compliance issues in advance of an on-site SAP visit. Companies should develop an architectural diagram of all applications and portals connecting to SAP that documents the inter-connection, the direction of the flow of information, and the number and type of users of the application.

Quite true.

Conclusion

This is a good quality article from Snow that brings up the knowledge level of the reader.

References

SAP’s License Administration Workbench is NOT a Software Asset Management or License, Snow Software.

Analysis of Snow Software on Determining SAP Indirect Access Exposure

What This Article Covers

  • Article Quotations
  • So What is Indirect Access?
  • SAP Add Ons
  • IoT and other Databases
  • Fee or No Fee?

Introduction

In this article, we will analyze Snow Software’s article on whether it is possible to determine your internet access exposure.

Article Quotations

SAP licensing is complicated. License entitlements can be open to interpretation and contract amendments can mean that financial liability for one customer may be very different in comparison to another, even if their usage and requirements are identical. It often depends on what deal was struck at the time of purchase.

Traditionally SAP licensing reviews and system measurements have focused on direct usage of an organization’s SAP environment. Direct usage on an individual level describes one user accessing SAP data directly through the SAP interface. The transactions which they perform determine what license type (or types) the user should be assigned. This in turn determines the associated cost for that user to perform their required tasks within the SAP system.

Even correctly managing licensing of direct users is more complicated than it might first appear. An organization with 10,000 users of its SAP environment could have many groups of users who transact in very different ways. The users may change jobs and so need to use the SAP environment differently from one year to the next. Other users leave the organization and of course it’s no longer necessary to have a license assigned to them.

Very true. Actually, most of what SAM software does is actually manage direct user licenses.

If your organization’s doesn’t keep on top of this and effectively manage licenses, you’ll almost definitely be paying over the odds for your licenses or you will be hit with a big fee following system measurement (LAW) submission or a more comprehensive SAP audit.

And this is in fact very common as most SAP customers do not use SAM software.

The risk becomes even greater when you consider Indirect Usage. That’s because you may face licensing liability for a far greater number of users compared to those who you know directly access the SAP system. That 10,000 user license requirement could two, three, even four times more if a third-party application accesses your SAP data.

There are really two ways to look at this. One is that the type of indirect access most often enforced by SAP is called Type 2 indirect access. Brighwork has repeatedly questioned the validity of SAP’s creation of Type 2 indirect access.

The second way of looking at it is that SAP does enforce Type 2 indirect access, although it does not actually have the right to do this.

One thing is clear. The better prepared your organization is, the better you understand overall usage of your SAP environment from every user and the better you can map this to existing entitlements, the stronger you will be when it comes to an audit or a negotiation. To do this effectively, you need a system that can automatically consolidate all of the necessary data and automate the required tasks.

That is certainly true.

So What is Indirect Access?

A simple example of Indirect Usage is where an SAP system is accessed or queried through a third-party application. The way in which that third-party system interacts with the SAP system, whether the interaction originates from a users’ actions and whether data is manipulated or changed within the SAP system all contributes to whether SAP defines the need for an additional license and, therefore, additional cost.

If you had to read that sentence twice, you’re likely not to be the only one. The fundamental issue is that SAP “Indirect Usage” changes definition from company to company and that is causing confusion amongst the SAP user community.

And the answer as to why is that SAP selectively applies indirect access in order to maximize the revenue taken from its customers. In some cases, it is not in SAP’s sales interest to bring up the topic, in other cases, it is.

In a rather ironic twist of fate, the push from the large SAP user communities across the globe for more clarity on Indirect Usage has actually led to potentially greater financial exposure. That’s because SAP made changes to their enforcement of the price and conditions list (PCL) in October 2016. More on this below. Indirect Usage is categorized in a few different ways depending on the technical method used to access the SAP environment. To add to the opacity around this, there is also a greater or lesser likelihood that SAP will choose to charge additional license fees dependent on the “type” of Indirect Usage there is.

That may be true. It seems that whenever SAP releases more information on indirect access, it expands what its definition of indirect access is.

External Third Party Systems

Common examples of this type of Indirect Usage include large ISVs like SalesForce.com, Workday and QlikView; Business Intelligence systems and payroll systems. This may also include smaller systems to perform a particular task not possible in default SAP software.

In this instance, the third party systems are accessing the SAP environment, pulling data and often writing it back via a connection to the SAP environment. Here a “user” must be set up to gain access to the SAP system. On the surface then it can appear like only one user (or a small number of users) is performing actions on the SAP system. In reality though, the “user” will be performing far more tasks than is possible for a single person to undertake.

Multiple users are indirectly using SAP data to perform tasks. The challenge that someone investigating this type of Indirect Usage often faces is that they are unaware of these third-party systems within their organization’s IT estate. To identify such systems requires either surveying application owners or looking for anomalous usage directly within the SAP system.

Once again, this is Type 2 indirect access. It is not historically what has been called indirect access.

Flags to look out for include:

#1: “Work time” check for all users: Checks rolling two-day time windows for constant activity without a pause of at least eight hours

#2: “Volume of work” check: Looks for users with an extraordinary amount of activity (measured by changed or newly created DB table entries)

#3: “Cross-component usage” check: Looks for users which changed DB table entries or newly created them from different SAP modules in the same second.

In practice, the interviewing process alone is insufficient and attempting to analyse the SAP system manually is impractical for a system with over a certain amount of users. This is because it requires manual consolidation of numerous data sources before any possible conclusions can be made.

The more efficient approach is to use a system which can automatically consolidate the data meaning that anomalous activity can be identified much faster.

This method of Indirect Usage is the clearest cut and we covered this in a lot more detail last year. If a system accesses SAP in such a way, you are likely to be financially liable. It’s extremely important to understand precisely how the interaction takes place, how may third-party users may require a license and what type of license they will require.

Yes, SAM software is one of the primary ways to determine the Type 2 indirect access that the customer is performing. Although this still may not provide the details of all the indirect access exposure.

SAP Add Ons

In October 2016, SAP made changes to their enforcement of the price and conditions list (PCL) with the intention of clarifying some of the definitions around SAP and based upon pressure from the various user groups across the globe. This is where the irony lies because it has, in fact, led to a new license requirement for third-party add-ons.

Within the PCL, SAP added that users, in addition to the Runtime usage right of the SAP NetWeaver Foundation, must acquire an additional SAP NetWeaver Foundation for Third Party Applications.

This means that users of a third-party system which is an add-on to SAP and installed via the NetWeaver platform must pay an additional license fee on top of their existing Named-User license.

So SAP charges double for NetWeaver? One to run SAP apps and one to run non-SAP apps. This double purchasing is very similar to SAP’s policy on HANA, which is covered in the article The HANA Police and Indirect Access Charges.

Many customers see this as a shift of the goalposts and it will be particularly frustrating to organizations who were recommended to develop customer-specific solutions into their landscape by SAP itself.

SAP has been constantly shifting the goalposts on the topic of indirect access. And this is something that my research indicates will continue in the foreseeable future.

Because this enforcement is new, many organizations will not be immediately exposed to financial liability and SAP typically takes a staggered approach to enforcing licensing rules.

The best advice and option would be not to rest easy because of the lag between rule creation and rule enforcement. Make sure that you understand what your potential liability might be. Consider whether there are named user licenses which are assigned to inactive users and making up shelfware. If there’s a potential for this shelfware to use a third-party add on, there may be a case for SAP to charge your organization the additional fee. If your shelfware is properly expired and retired, there is no risk. Again, an automated system which can do the leg work for you will ensure you are in a stronger, optimized position.

These are all very good points.

IoT and other Databases

The third and final category to consider is also the least well defined. However, it still absolutely should be taken into account. This category concerns “things” writing data to the SAP system. “Things” could mean sensors in a warehouse measuring temperature throughout the building and alerting when that temperature moves outside of defined parameters. It could mean data transferred from mining vehicles when they return to base, tracking usage of the vehicle and distance travelled to estimate when tyres need changing or when the truck must be serviced. In this real example, the customer wasn’t liable for any additional named user license because there is no human interaction. The data is transferred automatically when the vehicles cross a threshold.

On the other hand, a scenario where additional licenses were required was in a slightly different form of data exchange via Electronic Data Interchange or EDI. In this case, warehouse scanners were used to read data from barcodes into the SAP system. The difference was that humans click the button to read activate the scanner. The customer in this case was told that they needed named user licenses for each user who could potentially use the barcode scanner and hence “use” the SAP system.

The reason this requires drawing ludicrous distinctions is that SAP’s proposal on Type 2 indirect access makes no sense. If the scenario above means that SAP is owed indirect access fees, then all systems that connect to SAP also should receive indirect access fees as well.

”From a legal perspective, the issue of indirect usage and SAP’s respective license types is complicated as its assessment involves questions of contract law, copyright law and possibly also of competition law. What matters is that companies using SAP software are aware of the risk that is attached to indirect usage of the software.

In order to be able to evaluate such risks, technical tools that help to get an idea of the intensity of indirect usage helps. If a company believes that it has a high risk with regard to this issue and does not want to meet SAP’s additional payment request, an individual legal analysis may help to clear the picture.“

Fee or No Fee?

So that is the distinction. Involve a human user in some way and you may be asked to license that user. Remove any human interaction and you are unlikely to need to pay for additional licenses (at the time of writing). As in all of the examples above, however, this won’t stay the same forever and if your organization is embracing new technologies at a rapid rate, just remember that SAP might want a cut of the pie at some point down the line.

Again, the advice remains the same. Understand usage, understand the architecture of your environment and continually optimize. Do not let things change over time without tracking it. If you do, you could be faced with a substantial unbudgeted bill.

Conclusion

Snow Software has made a good effort in getting into the details and have provided some very good information in this article. There is a lot of detail in this article that does not appear to have been published elsewhere.

  • At Brightwork, our perspective on Type 2 indirect access enforcement by SAP is inconsistent with what all other software vendors do, and what has been the historical interpretation of indirect access.
  • It also is the case the indirect access is applied so differently by SAP based upon factors related to the sales situation at the customer, that it does not only come down to technically whether a customer meets the definition of Type 2 indirect access.

References

https://www.snowsoftware.com/int/blog/2017/01/30/sap-audits-it-really-impossible-accurately-determine-your-financial-exposure

Analysis of Snow Software on SAP Optimizer

 What This Article Covers

  • An Analysis of Snow’s Web Page on Snow Optimizer
  • SNOW OPTIMIZER FOR SAP SOFTWARE AT A GLANCE:
  • INDIRECT USAGE
  • INVENTORY & ANALYZE SAP USAGE TO ELIMINATE WASTED SPEND
  • MINIMIZE ONGOING SAP LICENSE ADMINISTRATION OVERHEADS
  • AVOID MISTAKES WITH ‘WHAT IF’ PLANNING

Introduction

Part of what we do at Brightwork Research & Analysis is review the accuracy of media output of IT entities. In this article, we will focus on Snow Software’s media output on SAP indirect access.

SNOW OPTIMIZER FOR SAP SOFTWARE AT A GLANCE

  • “View consolidated usage data across all SAP systems
  • Automate SAP user license administration
  • Identify and trace indirect usage
  • Centrally manage contracts and addendums
  • Contain HANA license costs
  • Optimize BusinessObjects licensing
  • Install and manage within the SAP environment (SAP certified)”

This is interesting in that it shows licensing for HANA and for BusinessObjects. It is curious that it is called out separately.

INVENTORY & ANALYZE SAP USAGE TO ELIMINATE WASTED SPEND

Snow Optimizer for SAP Software provides deep-dive analysis into transactional and individual usage data, identifying opportunities to reduce costs and liabilities by eliminating duplicate users and unused licenses.  The solution can automatically recommend ‘best-fit’ license types based on user behavior, making it easy to switch from expensive licenses to cheaper ones where appropriate.  Automatic monitoring frees up SAP administrators to focus on core duties and ensures information is always up-to-date in case of an audit or review. Contract Management and compliance reports can provide guidance and insight as well as help achieve savings through better negotiations with vendors.

This is what SAM software for SAP provides users. SAM software should allow companies to “right size” their licenses.

INDIRECT USAGE

Through this functionality, Snow Optimizer for SAP Software provides comprehensive data about Indirect Usage which enables the organization to significantly reduce financial exposure and to highlight risk in the future.

Another important reason for SAM software is indirect usage. Indirect usage from SAP comes quickly, which is why it is important to have SAM software already installed.

MINIMIZE ONGOING SAP LICENSE ADMINISTRATION OVERHEADS

Snow Optimizer for SAP Software maintains up-to-date details on all SAP license allocations, giving SAP administrators the ability to adjust license types and distribution on-the-fly. Automated rule sets quickly align individual users with the correct license in the correct system based on their activities.

Alerts can be triggered when the organization nears license limits under current contracts or specific activity restrictions.  Pre-defined rules help organizations prevent actions that would incur unexpected or unacceptable costs.

The concept of SAM software is that it is constantly used, to provide an accurate picture of usage versus the customer’s licensing. Alerts are particularly helpful in keeping logic working in the background that can tell the customer when a change occurs.

AVOID MISTAKES WITH ‘WHAT IF’ PLANNING

Snow Optimizer for SAP Software can be used to test a variety of “what-if” scenarios that enable the organization to model how changing the deployed license types would affect SAP licensing and support costs. Scenarios can be played out in the solution without making any changes on the live system until the organization is happy with the results, avoiding potentially costly licensing mistakes.

What if planning has quite a lot of uses. For instance, knowing what the costs will be when making changes to the software and the usage of the software that is planned.

References

https://www.snowsoftware.com/int/products/snow-optimizer-sapr-software

Analysis of Snow Software on Ways to Cut Spending

What This Article Covers

  • Quotes from Snow Software
  • Analysis of the Quotes

Introduction

Snow Software wrote a paper titled 5 Ways to Cut Spending on SAP Software. In this article, we will analyze this paper.

Quotes from Snow Software’s Article

SAP has more than 40 named user license types in its standard definitions, ranging in price from $60 to $7,000 per license. These license types determine what transactions the user is permitted to perform in the environment. SAP puts the onus on its customers to assign the appropriately named user license type to each user account. Without the right data upfront, the only way to do this is to generalize and attempt a best-fit. The work that individuals perform can change year on-year. This means that a license type which once fit well beforehand is no longer compliant

It is in fact quite interesting that SAP has such a broad continuum of user license prices.

Organizations typically end up overspending because they do one or both of the following:

  1. Purchase unnecessarily costly named user license types to ensure coverage of user’s requirements, but also cover them for use of transactions that they do not need.
  2. Keep user-license assignments static until the next SAPmandated system measurement, and then pay the fees that SAP requests for any shortfall.

So basically customers have a hard time optimizing their licenses. I think there is a common misimpression that the company’s contract or purchasing arm will perform license optimization. This is not the case. And one does require software to provide the necessary information. This also keeps SAP from leading the discussion, which will, of course, lead to more of what SAP wants, rather than what the customer needs.

During a proof of concept, Snow typically discovers around 20% of licensed users in an organization who have been inactive for more than 90 days. Users who have been inactive for more than 90 days (or whatever date is deemed appropriate) can have their license returned to a pool (re-harvested) for reassignment as and when they are required.

This was quite interesting. This means that many customers are over licensed. This is also interesting because SAP only ever discusses the potential of being “under licensed.”

This environment evolves over time as new systems are added. Users must be licensed to access these systems and so they are often provided with a new account, the username of which may be different from the username they have for other systems.

Another issue where SAM software can assist.

Indirect Usage is, in simple terms, where an SAP system is accessed or queried through a third-party application. The way in which that application interacts with the SAP system and underlying data can have a significant impact on licensing requirements and financial exposure at the point of audit. If any individuals are accessing SAP-stored data through third-party software, organizations must ensure that they have an SAP named user license of the right type provisioned for them.

Why this is true. The assumption presented here is that all integrations to SAP applications mean that the customer needs to have licenses. This is an endorsement of SAP’s Type 2 indirect access. However, Brightwork has repeatedly questioned whether this type of indirect access is even valid. This is the concerning feature of SAP, that they can make a proposal which breaks with the legal precedent in licensing, and pretty soon everyone from consulting companies to SAM vendors is repeating it.

Organizations should build up an architectural diagram of Indirect Usage across the SAP environment. This places them in a strong position when SAP audits because any additional fees are based upon real usage, not an estimated and perhaps overinflated value which is indefensible because of lack of visibility.

Yes, this is true, SAP sets about to cheat its customers whenever possible. So SAM software is necessary because the customer must have access to usage information that is independent of SAP.

SAP licensing is not only based on per-user metrics, but includes software engines as well. SAP engines (aka packages, modules and add-ons) are optional applications for which additional licenses must be purchased. The metric used for licensing differs by engine, and is based upon the objects that exist within that application or its total CPU consumption. For example, the metric for SAP Payroll Processing is number of master records, while the metric for SAP E-Recruiting is number of employees.

This is apparent from reading the SAP Price List. It is so complex to price many of SAP’s applications, that even account executives rely on a professional pricing expert that does nothing but pricing within SAP. What Snow software is saying is that this pricing is built into their software. We are not validating this, but if true it is an impressive accomplishment given SAP’s pricing complexity.

SAP licensing is both complex and open to interpretation. Typically, environments have been running for many years, so it is difficult to get a handle on which licenses are assigned to which users, whether those licenses are correct for the user and indeed whether a license is required at all.

This quotation highlights how licensing must be run occasionally as the usage of the SAP system changes over time.

Conclusion

Snow Software’s paper was quite helpful and educational. The indirect access quotations are a concern for reasons already listed in this article.

References

http://go.snowsoftware.com/rs/377-PWR-208/images/5Ways_To_Cut_Spending_On_SAP_Software_en_aug.pdf?aliId=12824339