UK business, £1bn revenue - 9,000 employees, SAP Contracts – Contract Analysis, Usage Measurement, Negotiation Support
Challenge
Customer had very limited understanding of SAP licensing and recognised that they had never properly analysed their usage against entitlement. As a consequence having to increase licences based on SAP Audit results, each year. They had also not maintained accurate and up-to-date records of deployment associated with the contract and had not fully or correctly classified users. In addition they were in the process of moving their application and data hosting to a new vendor and upgrading much of the core SAP ECC system. This gave them concerns over licensing risks which the external vendors did not have the skills to address. They were also considering outsourcing the SAP Support to a third-party and moving it from SAP, but did not understand either the contractual implications or the future licensing risks.
Solution
We carried out contract analysis with supporting models and ran education sessions to improve the internal understand of SAP licensing basics. This was followed by accurately gathering usage data of all Named Users and Engines. We were then able to identify risks (financial exposure at the time and for the future) and opportunities (for optimisation to eliminate risks and reduce costs) which resulted in a plan. We then reviewed the Named User Classification rules and re-aligned this with both the contracts and the current position. In parallel we assessed the true use of Engines and correctly applied the contract metrics and rules for measurement. We developed this into models which could then be used for planning, forecasting and budgeting against future business requirements and expectations. Though acting behind the scenes we directly supported the negotiating team (legal, IT, Procurement & Commercial) to obtain the optimum results.
Results
The whole process took us about 3-4 weeks elapsed time and enabled the client to gain an accurate understanding of their true licence entitlement. They were also able to re-classify users to lower Licence Types removing the need to buy additional, higher level licences for at least the next 2 years, saving up to £1m. They were also able to implement our recommendations for robust processes for the future assignment of User Licences in line with their contracts, enabling them to remain compliant while achieving the maximum return on investment. N.B. We also assisted them with their future negotiation strategy with SAP which was more about reducing and eliminating future risks related to unplanned licence requirements and a focus on Terms and Conditions rather than absolute discount levels. They found this particularly beneficial.