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An introduction to SAP licensing

By Brian Skiba | June 17, 2014

While there are many constants in Software Asset Management (SAM) and Software License Optimization (SLO) best practices, having a good working knowledge of your individual software publishers’ licensing schemes is essential. As with our previous blog post on Oracle, SAP has its own rules and, in some ways, its own language. 

But most important, SAP has an approach to software licensing that is quite different to vendors such as Microsoft, Adobe and other predominantly desktop-focused publishers. For anyone new to SAP licensing, here’s a quick guide to the basics around how SAP allows you to consume its software.

Users are named

The first critical step with managing SAP licenses is to understand that everything begins with user-based pricing.  Each SAP license is created by an SAP administrator and contains a unique 12-character “name” and a license type. SAP does not assign the user name, the administrator does. Controlling the correct number of users is very important for contract compliance and software license optimization. A named user doesn’t even need to be a human. It could be a person, but just as easily it could be a barcode reader, a cash register or a gas meter, for example.

License Types

Along with each named user license is a license type.  While some people think of the SAP license type as determining what a person can do, this not correct - that is actually what roles (see below) are used for. The license type is a means from which to determine the cost of the license. Just to make life easy, there are more than 100 different SAP license types, with the least expensive listing for less than US$200, and the most expensive listing for more than US$9,000.

Setting the correct license type is thus extremely important from an overall cost optimization and compliance perspective.  For simple access to employee/HR functions, for instance, an Employee Self Service (ESS) license type is a relatively inexpensive solution. At the other end of the spectrum, a Professional User license provides (subject to roles applied) broad access to all functionality and use of an SAP system.


Authorization roles are used to limit or control what a named user can do. The roles are defined by the administrator, and should be thought of as part of the overall security and governance of SAP. By limiting the transactional capability of a user through roles, the integrity of the company’s data can be better secured. An SAP deployment can have an unlimited number of roles created and there is no direct relationship between license fees and user roles.

Indirect Licensing

If a third-party application (such as, a portal or a bespoke application accesses the SAP financial/ERP data, then the application and user accessing the SAP data requires an appropriate license to have compliant access to that data. SAP has specific indirect access licenses for individuals that are not assigned a named user license already.

Reporting the license position to SAP for Audits

Companies that use SAP software are obligated to provide an inventory of licenses and activities to SAP so they can carry out their license audit. This process can be very tedious and involves creating what is known as a system measurement for each SAP system (some organizations have hundreds or thousands of SAP systems), and aggregating those manually together into a software package provided by SAP called the License Administration Workbench (LAW). The LAW application consolidates all of the various system measurements together and sends this audit information onward to SAP.

Licensing optimization Considerations for SAP

SAP administrators and Software Asset Management (SAM) practitioners can optimize their SAP licensing by focusing on the key priorities outlined below. Powerful tools such as Snow SAP Optimizer can be used to analyse, optimize and manage SAP enterprise licensing.

  • Minimize the number of named user licenses by reducing or eliminating duplicate, redundant and obsolete user licenses
  • Reduce or eliminate roles that are not used and then assure the correct roles are assigned to users based on activities
  • “Rightsize” the correct SAP license type with each user license by correlating actual historic patterns of behavior
  • Identify potential contract compliance issues such as indirect licensing access through pre-audit activity and assure proper license compliance.

Summary There is no escaping the fact that SAP licensing is relatively complex. The basic information above focuses on the starting point for all SAP licensing programs – user licensing. Companies operating in certain vertical markets (e.g. Oil and Gas, Aerospace & Defense, Chemicals...) will have specific functionality provided by vertical solutions and what are known as “engines”. But that’s another topic for another time!

If you can’t wait for the next instalment, or need to get on top of your SAP licensing urgently, contact one of our Snow SAP experts today.

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