EY license compliance manager for SAP software. Forensic Technology & Discovery Services

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1 EY license compliance manager for SAP software Forensic Technology & Discovery Services

2 Overview In an increasingly complex world, where software deployment has become pervasive throughout business life, it is important to manage software assets properly. This creates the challenge of them being licensed correctly, yet avoiding overspend on licenses. Many organizations find that they lack the controls needed to meet these requirements and, as a result, find themselves on the receiving end of significant costs as a consequence of noncompliance. This is further hindered as software licenses become more complex to meet the demands of different deployment models, and, as a consequence, they become difficult to track and quantify. Additionally, licensing rules are dynamic and differ across publishers and products. Software vendors continue to rely upon license compliance audits and have increased their frequency, in order to protect investment in their intellectual property. The enterprise resource planning (ERP) conundrum ERP software is, by its very nature, critical for business processes; as a result, it has complex licensing and governance arrangements. Managing the use and licensing of ERP software is, therefore, a considerable challenge for teams not trained in this specific skillset. ERP licensing risk factors Lack of specialized knowledge and sophisticated tools Disputes and penalties Noncompliance and license wastage Unplanned expenditure hitting bottom lines

3 SAP license management: a specialized undertaking SAP applications are the most extensively used ERP software across the globe; furthermore, they have complex licensing models that are time- consuming to manage. Poor management of these licenses can result in considerable financial and legal exposure for organizations. This has created a dilemma for chief information officers (CIOs) and chief financial officers (CFOs), who have gradually realized how important it is to obtain accurate information from IT and license management teams before making investment decisions regarding SAP licenses. This has created a need for a different approach to license compliance one that is proactive and includes effective automation. SAP s standard licensing model comprises two fundamental elements: Software licenses and associated maintenance Support services Most SAP software licenses are perpetual rather than termlimited. The main license metric for SAP applications is based on named users and engine licenses. There are different varieties of named user licenses for customers to purchase from SAP, including professional, limited professional and employee. The simple process of measuring of licenses used compared with licenses purchased is a substantial task for any license manager. Based on our experience, we see that a number of important aspects of this process are often missed out, including indirect usage, license optimization to reduce cost, role optimization and correct role assignment. Such omissions can lead to a potential increase in the risk of noncompliance with licensing terms and conditions, and subsequent disputes during license-compliance audits, which can result in substantial financial and legal exposure for end users. An example SAP licensing challenge As a result of rapid growth, a company needed to review its SAP license contract to verify that it had sufficient licenses for its new employees. Unfortunately, an external license audit was undertaken before this review could take place and resulted in a significant noncompliance issue. This led to a potential dispute, as the company believed it had adhered to its contract and had remained compliant with its licenses, and was therefore not liable for the significant penalties levied as a result of the audit report. This proved to be a difficult situation, as the company did not possess enough accurate information on its licensing to prove its compliance. Accordingly, it needed to undertake a cumbersome and time-consuming exercise to collate the necessary licensing and usage data in order to respond to the audit report. The accuracy of this data could not be confirmed in such a way as to demonstrate to the vendor that its report was incorrect and should be discarded.

4 is an automated tool that has been developed to address the complexities of SAP licensing. It provides users with real-time diagnostics and metering. The tool comprises a set of features, functionalities and dashboards that help companies make better decisions, while gaining control of their SAP license costs, and facilitates cost reduction of licenses in real time. Combined with our experience and knowledge, it helps companies to avoid financial and legal exposure related to SAP licensing. Features of the tool Automated data injection Compliance License analytics Optimization Management information systems (MIS) dashboards Tool Portability and Flexibility Central repository Auto alerts Provides automated and seamless data upload of key data files from SAP system with little or no manual intervention. Performs ETL tasks on the data files in a seamless manner. Provides an up-to-date overview of all licenses purchased and deployed, i.e., the effective license position Tracks license usage against the license terms and conditions. Conducts advanced analytics on the licensing data with a specific focus on addressing the complex licensing challenges and any other issues that could potentially violate contract terms, such as indirect usage and users outside of the permitted jurisdiction Provides analytical results and insights into licensing issues of which organizations are either unaware or which they have not been able to address due to lack of automation, e.g., inaccurate categorization of user types based on their usage. Recommends an optimized licensing model on the basis of past usage patterns Optimizes license types that conform to contract definitions Helps prevent wastage of licenses and controls maintenance cost Reduces use of internal resources for SAP license compliance. Displays live dashboards that can be drilled down to perform further analysis of the root cause of the licensing issues Provides MIS reports to support better forecasting of license requirements Represents data graphically, to allow easy and smooth navigation of large sets of information. Tool is Web based and is platform independent. Application is portable wherein user can view the reports and data from the tool from any device such as mobile or touchpads. Database is designed to be flexible to handle large amounts of data. Provides flexibility in terms of customizations for adding new features based on the client s requirements. Tool provides a functionality for uploading the SAP Contracts, thereby providing a central repository for all license purchases. Helps in keeping track of all SAP contracts thereby reducing the overhead of manual tracking. Triggers automated alerts related to important compliance metrics, such as overuse or underuse of licenses, or incorrect usage type Includes an option to generate dashboard-related reports as alerts on a periodic basis, which supports timely tracking and effective decision-making by management. Issues addressed through the use of the tool Incorrect roles assignment License wastage Management of complex contracts and licensing terms and conditions Indirect access Multiple or concurrent logins

5 Addressing vulnerabilities was deployed to analyze a client s SAP license compliance position in a rapid-response manner. Simultaneously, EY professionals studied and identified gaps with the license contract and provided a service to fix them. They conducted an overall diagnostic of the SAP platform to understand system weaknesses and reveal control gaps that could result in noncompliance. The team prepared an independent report on the client s current licensing position and forensically identified past usage trends. The EY team then helped the client to reduce its costs significantly through more efficient allocation of its licenses. Outcome The client managed to reduce or nullify the financial risk of noncompliance significantly. Real-time reports from EY license compliance manager for SAP software allowed the client not just to prevent noncompliance, but also to undertake several cost-saving improvement measures. The time spent annually on SAP license management reduced significantly without increasing the risk of noncompliance. The client is now better able to manage its SAP licenses and has been able to improve its relationship with SAP due to enhanced proactive controls and monitoring. Our team: EY s software license forensics The Software License Forensics (SLF) Team offers a unique set of license compliance services: We have significant knowledge in helping organizations with their license compliance needs and issues for various specialized software. We can help you obtain knowledge of your licensing position by preparing an inventory of your usage and purchases. You are therefore able to achieve long-term proactive license management. Contact us Amit Jaju Partner Ernst & Young India LLP Direct tel: amit.jaju@in.ey.com Our experience includes dealing with a diverse set of SAP licensing issues spanning across various industries, such as utilities, fast-paced moving consumer goods (FMCG), telecommunications, manufacturing and IT services. Our services have helped clients: Address some of the most pressing and long-standing licensing issues Resolve licensing disputes arising out of complex and voluminous contracts We have also helped clients reduce costs by helping them with: Contract disputes negotiations License optimization Roles optimization has been successfully deployed at major organizations internationally. All the clients have been able to leverage features and functionalities provided by in order to manage their SAP license compliance dynamically and efficiently.

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