One of the biggest criticisms of SAP is that the software is too expensive for small and medium-sized businesses. However, with different licensing models, the software is looking to dispel the myth that it’s only for blue-chip corporations.
SAP employ three different licensing models to ensure that they can offer fair and competitive prices to any business. These are:
- Perpetual – A one-time license fee that gives software use rights. Alongside this, there is an annual recurring fee for maintenance and support.
- Subscription – An annual recurring fee primarily used for cloud solutions. It provides software use rights, maintenance and support, hardware and application management.
- Consumption – Available for selected cloud offerings such as SAP Ariba and SAP Fieldglass, this no-commitment license bases the payment on actual usage.
With the benefits of SAP including increases in productivity, customer revenue and overall financial performance, the return on investment justifies the cost for SMEs. However, there are still more ways for businesses of any size to optimise the cost of SAP licensing, regardless of if they’re buying the software for the first time or looking to cut down on existing costs.
Cutting down costs for a first-time buyer
From SMEs to global business, SAP’s implementation has helped streamline and automate some of the most important processes within a company. From finance to customer retention, there’s no shortage of purposes for the ERP.
For companies to keep licensing costs under control, there needs to be a strong plan put in place that clearly identifies which SAP components are going to be required to support specific areas of a business.
By ensuring that the business blueprint can be translated into a roadmap that outlines the licenses now and, in the future, the company can purchase only what they need and make sure it fits into their budget.
A firm plan will also predict any future requirements that may arise and factor these into the overall budget. So, if in the future a company decides that they want to expand their SAP systems to help a growing supply chain, then they will have already ensured there are resources available for this SAP expansion.
However, when planning to integrate SAP into a business, there are two pitfalls that companies can fall into:
- Under-purchasing: While businesses want to save money, skipping certain licenses can create gaps in the SAP software running through the company. This can mean they’re not getting the most out of the ERP.
- Over-purchasing: This often happens through one-off deals and huge discounts that leave businesses with more SAP modules than they need and over-spending on their initial budget.
This can easily be solved by thoroughly preparing to integrate SAP and identifying the areas of a business that need it immediately. With this information, a scalable map can be created to help stick with an initial budget.
Cutting down costs for existing SAP customers
Existing SAP customers who are looking to cut down the costs of their licensing first need to decide if they are being over- or under-licensed.
If over-licensing is the problem, then the focus should be on managing the excess SAP licenses to release the capital tied up in the assets. However, software vendors typically don’t offer refunds for surplus software and so cutting down costs can rely on a bit of negotiation.
If you’re looking to expand your SAP offering in the future, then the unneeded assets could be used to offset the cost of new software.
However, not every scenario leaves businesses ready to expand their SAP licenses, some may be trying to reduce overall costs. Looking at the licensing models a company has and identifying subscriptions that can be terminated is a quick way to ensure there aren’t more assets than necessary.
If getting rid of specific licenses isn’t an option, then cancelling the maintenance on assets that aren’t currently being used can help keep costs low on perpetual licences. This is a good option for companies who can’t presently use these assets but intend to in the future.
When purchasing SAP software, optimising the licensing deal can lead to massive savings. This can only be done if a business has planned out what they need and their budget.
This ensures that when it comes to purchasing the licenses, the first stage of a roadmap can be achieved and with a variety of licenses being bought, a bulk value can be applied.
If you’re looking to further your career within SAP, then we have plenty of roles available for you. Alternatively, if you’re looking to recruit SAP specialists, you can get in touch with one our consultants today.