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SAP Licensing – is there an elephant in the room?

SAP and Oracle Licensing

“You can’t talk about SAP licensing without addressing the elephant in the room – indirect access”

Ahead of the SAM Summit taking place in Chicago, 23-25 June, I chatted to John Emmitt, Senior Marketing Manager at Flexera Software.  In this interview John shares his experiences with SAP and Oracle licensing, along with his advice for those struggling to understand and/or manage their licenses.

A lot of Oracle and SAP users do just ‘manage’ their licenses. Is this down to the complexities or lack of education around the licensing models?

There are several reasons for this. Some customers want to maintain a healthy relationship with their strategic vendors and not court potential conflict. Some customers underestimate their over-spending and the cost savings they can achieve through software license optimization.

It is also fair to say that license management for both SAP and Oracle is extremely difficult to do if you “go it alone” without investing in technology to help drive these optimization initiatives. So, lack of investment in the necessary license optimization technology may limit how much a customer can achieve for these vendors, due to the complexity of the problem. And, it’s not just license model complexity but also the complexity inherent in today’s virtual environments that makes it such a challenge.

What are the SAP licensing changes?

In late 2013, SAP announced licensing policy changes allowing customers to trade-in or partially retire existing licenses when consuming new innovations from SAP. The cloud policy extension entitles customers to replace on-premises licenses and maintenance with an equivalent cloud subscription, for example SAP HCM to SuccessFactors, albeit with an expanded investment and a minimal 5 year subscription term. The on-premises policy extension entitles customers to re-purpose a portion of their licenses and maintenance towards other on-premises solutions such as in-memory computing (HANA) and mobile.

How can those changes help SAP users save money and utilise their licenses?

These changes help customers to offset the cost of consuming new innovations from SAP by leveraging their existing software assets and eliminating ongoing maintenance costs associated with unused software. SAP has historically not allowed the parking or retirement of unused licenses, and these policy changes reward customers for optimizing their SAP license consumption by enabling unused licenses to be traded for other needed SAP products.

What is the biggest ‘gotcha’ you’ve encountered with Oracle licensing?

The biggest ‘gotcha’ is licensing within virtual environments. Oracle regards popular virtualization technologies such as VMware vSphere as soft partitioned, meaning that the full capacity of a physical host must be licensed, even if Oracle is only deployed to a single VM on that host. The implications are even more severe in cluster environments such as vCenter, where Oracle requires the entire cluster to be licensed if Oracle is deployed to a single VM on a single host.

What is the progression from ‘managing’ Oracle license to ‘mastering’ them?

There are many aspects to mastering Oracle licenses. Automation is extremely important. Oracle’s Processor license model is very sensitive to changes in the virtual environment, including hardware upgrades, virtual resource re-allocation and cluster changes, just to name a few examples. Automated Oracle license optimization solutions enable customers to keep track of their Oracle license consumption based on these and other changes, and ideally, allows organizations to simulate the licensing implications of each change before it is actually made.

Oracle Database has a myriad of other complexities including database clusters and backup and failover systems that have their own nuances relating to both inventory and licensing. Many Oracle products can be licensed using Processor or Named User Plus license models, so it is important to understand in which scenarios each model should be applied to minimize the associated licensing costs.

What is the best piece of advice you could give someone struggling with their Oracle licensing?

I highly recommend leveraging an inventory solution verified by Oracle License Management Services for managing Oracle licensing. Oracle accepts inventory data from these solutions during an audit, and knowing that your license calculations are based on the same data as Oracle’s audits is a very compelling risk mitigation. And while Oracle Database licensing is rightly the primary focus for most organizations, don’t neglect other high spend products such as WebLogic and E-Business Suite.

Licensing SAP can be a real headache for customers. If a user is struggling to manage their SAP licenses effectively, what advice would you give them?

SAP license management is very difficult and tedious. SAP requires their customers to assign a named user license type to every user account on every SAP system based on their role, with no hard enforcement to ensure that the correct license type is assigned. Building and maintaining these license assignments over time with any degree of accuracy requires automation. Automation to identify and retire inactive users. Automation to identify users who are being double-licensed. Automation to assign the right license type to each user.

SAP named user licensing is also usage-based, so license assignments should be based on real usage and not a preconceived notion of what a user might do at a single snapshot in time. And finally, you can’t talk about SAP licensing without addressing the elephant in the room – indirect access. Indirect access is a significant area of exposure for many SAP customers, and most organizations lack the technology and processes to effectively manage and optimize the license requirements of indirect access and mitigate the risk of a significant license compliance exposure.

With the recent licensing changes across major vendors (including SAP), where do you see the licensing models for SAP and Oracle to be in 5 years time?

Licensing will become increasingly complex and diverse, and increasingly value-oriented. The strong growth in cloud adoption means subscription license models are becoming more prevalent. As more customers transition to cloud solutions, SAP and Oracle are being forced to compete with other vendors to retain their customers during this transition and this should continue to influence their licensing policies. SAP’s recent policy changes are one of example of this happening right now.

Virtualization has required vendors such as Oracle to rethink their license agreements, particularly around capacity-based models. BYOD, VDI and mobile will continue to challenge traditional license models and vendors will need to consider the implications of these technologies in their models. It is an exciting time to be involved in software asset management and license optimization technology that helps manage this increasing complexity and provides the opportunity for significant cost savings.

Want to hear more? Join Martin Kurzinski, Senior Sales Engineer at Flexera Softwar4e at the SAM Summit where he will be providing a SAP and Oracle License Management Product Demonstration on 23rd June at 13:30 (Track 2). John Emmitt will also be presenting on the topic of SAP and Oracle License Optimization on 24th June at 15:45 (Track 5).

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About David Foxen

David Foxen is a Software Asset Management expert and enthusiast. He had a vast experience of successfully implementing SAM, SAM tools and also made huge cost savings. A member of the ISO Standards WG21, David is a massive ITAM geek, so uses any opportunity to talk about the subject to who-ever will listen. He believes that the industry needs to share its knowledge and success stories to help the SAM industry mature and become more effective. Always willing to help, his primary goal is to make a difference to organisations and the SAM industry so everyone will know how epic SAM is!

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