Reduce SAP Spend — The Cost of License Ratios Revealed

If your SAP contract specifies a required ratio for Professional User licenses to Limited Professional User licenses, you may be overspending big time. It all depends on what you are really using, compared to the imposed contractual ratio. As an illustrative example, let’s say Professional Licenses cost 2.5X Limited Professional Licenses and your contract with SAP requires a ratio of 1 to 1. Let’s also assume each Professional License costs you $4000 USD and you have a 4062 licenses total.

The ratio would require 2031 Professional licenses and 2031 Limited Professional Licenses. Your spend for these licenses would be $11,373,600 ($4000*2031 + $4000 / 2.5 * 2031).

But, what if you really only needed 1354 Professional Licenses and 2708 Limited Professional Licenses after measuring how all your licenses are really being used? This would make the optimized license ratio 1 to 2. This means you are over paying by quite a bit—$1,624,800 or ~14.3% (see Table 1 highlight) of your total spend (~.143 * $11,373,600).

Flexera’s FlexNet Manager for SAP Applications will reveal what your optimized license ratio should be based on actual usage. Armed with this data you’ll be prepared for your next negotiation with SAP. Or if you are purchasing SAP for the first time, you will have a million reasons to negotiate the license ratio out of your SAP contract.

SAP License Ratios
Table 1

Notes
1. If your Professional Licenses cost more than 2.5X Limited Professional Licenses, the overpayment as % of spend will be higher. If less than 2.5X, the overpayment as % of spend will be lower.

2. Percentages were rounded for display; the highlighted cell is really 14.2857%

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Readers may also be interested in viewing our on-demand webinar:  SAP Software Licenses Could be Costing You

 

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