The Importance of understanding your SAP Bill of Materials




Too many organisations see their annual SAP licence audit submission as a technical process that is undertaken without senior management, contractual or commercial scrutiny of the final submission.


It is often left to the last minute - and then BANG! - an invoice arrives for often hundreds of thousands, or sometimes millions of pounds, with a demand to pay it within a matter of weeks.


In this second part of our series of articles about SAP Licence Audits we look at why it is vitally important to truely understand your SAP Bill of Materials.


SAP essentially only have 3 licensing methods - Direct Human Access (Named User Licences), Application Licences, and Digital Access Licences (which became available in 2018). When you first purchased SAP software there would have been some initial sizing performed to assess your requirements and build this into a Bill of Materials (BoM). However, from that point point forward, it is not uncommon for your actual usage to become significantly out of kilter with your original Bill of Materials - for that exact reason, you may have originally been sold a ‘flex’ agreement along with a future ‘true-up’ process to lock-in your final BoM.


Regardless of any looming SAP licence audit, It is essential to regularly check your actual usage against your BoM to ensure compliance. It is all too often the case that the technical team responsible for either allocating named user licences, or implementing new SAP interfaces, do not have the contractual insight to correctly assess the potential compliance and commercial ramifications of their actions. SAP Usage Rights are inherently complicated; Named user licences come with various nuances of usage rights, and application licences come with a myriad of different technical or business metrics which are largely misunderstood or confused, with sometimes incredibly expensive consequences.


Tools such as ProfileTailor LicenceAuditor and Azurious Wisdom not only provide an easily accessible dashboard of your Bill of Materials but they will also provide active alerting and modelling should any changes in usage be detected or modelled.


Grey Monarch and Azurious’s software and expertise develops a true, detailed understanding of your usage rights and compares it to your actual usage for all three methods of SAP Access - Human, Application and Digital. Some good news is that we inevitably find that most organisations significantly over allocate their most expensive human access licences (Professional User and Limited Professional User), thus wasting hundreds of thousands of pounds. This is largely because they are classifying users based upon ‘expected usage’ without ever re-assessing ‘actual usage’. Such detailed insight will provide you with a high degree of contractual and financial protection, ensuring compliance and highlighting potential exposure from such things as misunderstanding usage rights, over usage, or Indirect Access.


In the next article we will be looking at how SAP licence optimisation can return huge amounts of value back to your SAP BoM and how that value can be used to offset other usage and compliance issues.


Azurious and Grey Monarch provide software and expertise in all aspects of SAP Licensing, from licence requirements analysis, licence optimisation, preparations for licence audits and compliance, licence contract management, and compliance defence. Our services are tailored for each organisation and can range from ad-hoc advice to a fully managed service.


Please contact us for a no-obligation exploratory conversation.