SAP is a widely used tool for businesses of all types. Almost all businesses operating in the manufacturing, oil & gas, retail, and healthcare sector rely on SAP, and it is estimated that 76,000 companies use some sort of SAP business platform. Being one of the most successful software companies in the world, SAP licensing doesn’t come cheap. The cost can be too much for some SMEs to bear. However, there are a few ways you can save money on the SAP license cost.

In most cases, minimizing costs depends on more efficient resource utilization and working on inefficiencies. For instance, 95% of organizations still pay for users that never use the SAP system. Other problems include a one-size-fits-all solution that gives high authorizations to all employees and the purchase of unneeded licenses. A study shows that the majority of organizations buy professional licenses for non-professional users, incurring unnecessarily high costs. Other problems include fines and penalties that stem from unwittingly committing fraud by deleting user IDs before audits. All these problems result in overspending and inefficiency, and this result in high licensing costs that eat into the budget.

However, there are a few tips to stop this from happening. Following them will potentially save millions of dollars for many corporations. It may also be the difference between the success and failure of certain SMEs.

Let’s go through them one by one.

Regularly Check for Dormant Users

It’s very important to check for users that are not using their profiles regularly. Make sure you do a check once every 2 or 3 months. By establishing this practice, you can weed out licenses that are just breaking the company’s bank.

Terminate All Dormant Licenses

Terminate all licenses that are no longer in use. You should determine the exact cause first and assure that it won’t be used again. You won’t get a refund for these licenses, of course, but you will avoid the charges for app maintenance and support.

Trade Surplus Licenses

SAP allows swapping unused licenses with new ones. This is at no additional cost, but the offer holds up for a limited amount of time. Don’t think of this as a standard practice, however. Check if your agreement includes a clause outlining this option. Otherwise, you may not be eligible for the exchange.

Classify Each User Under License Types

There are different types of licenses for SAP, including Professional, Limited Professional, and Employee. All these have different capabilities and varying levels of access and functionality. It’s a mistake to categorize all the users under just one of the three types of licenses.

Instead, every user should be judged on the capabilities that their job entails and the access they require. This is called the “Principle of Least Privileges” and it minimizes the chances of a breach within a system.

This way, the funds can be allocated more efficiently and limited access can minimize intrusions. Companies will also save a lot of money on licensing costs since different licenses carry different price tags.

Don’t Share IDs

Companies allow their employees to share their IDs. This is done to reduce operating costs and be more efficient. Perhaps two different employees with opposing shifts can use the same ID. However, this approach has a lot of risks involved.

Common IDs make it difficult to identify which user engaged in what activity. On top of that, SAP strictly forbids shared IDs and penalizes companies for it. Hence, it’s not only imperative that employees are discouraged to share their IDs, but companies should also build safeguards that render sharing impossible.

Don’t Delete a User ID

It’s common practice to delete user IDs when an employee leaves. However, that’s not the best use of resources. It’s much more efficient to deactivate the ID temporarily and remove all authorizations. This will limit the ID’s access to the system. This will retain the ID, but it won’t be counted during an SAP licensing audit.

Manage Licensing Costs and Stay Compliant

Non-compliance is extremely costly. It can incur fines from the government, private regulatory bodies, and even law enforcement agencies. Non-compliance can also result in payments to the software vendor for extra licenses and maintenance and subscription fees. It’s much more financially sound to manage your licenses from the get-go.

Try Cheaper Support Options

There are different types of support both in price and benefits with SAP. SAP Enterprise Support includes app maintenance and regular updates. It also includes enhanced usage rights for the Solution Manager. This includes business process optimization and custom code management.

However, the Standard Support Service includes much of that as well, but not baseline support services. Hence, you have a choice between the two. If you just need the most basic services, you can get the Standard Support version. Have your priorities in order.

Advice for First-Time Buyers

Don’t under-purchase in a bid to save money. Remember that you should go for all the essentials, and avoid the bells and whistles. Doing the reverse may result in your business hemorrhaging cash because of limited functionality.

Don’t over-purchase either. Getting everything you don’t need will burn a sizable hole in your wallet. No small business needs that.

Have a plan when purchasing SAP software for your company. Don’t just take a package deal. Instead, see if you can negotiate for custom packages.

Advice for Existing Customers

To reduce overall costs, or make things more efficient, you can negotiate a deal that dispenses with software baggage. Chances are if you’re a long-time customer, they’ll make changes according to your requirements.

You can also trade one set of functions for another to get what you need without spending a dollar. You may even save money going for an essential feature and terminating a useless one. Unneeded assets can often offset the cost of new additions to your platform.

These tips may help you save a lot of money on SAP license costs.