In our previous article, we looked into SAP’s Unlimited During Deployment (UDD) contract. This time let’s look at a different licensing model: Single Metric. Similar to UDD, many organizations opt for Single Metric for its perceived ease of use. No more counting of users, but a single organizational metric. This surely must reduce complexity, mustn’t it?
Once again, the answer isn’t as straight-forward as you may think.
A Single Metric contract means that you, the end-user, agree with SAP that instead of having multiple metrics (e.g.: Named User and Engine), only one metric is applied. This metric usually is an overall business metric, based on revenue or number of employees.
The Single Metric contract applies to a predefined set of products, for which the contract does mention agreed quantities and the standard metrics. These quantities, however, only come into play again at the end of the contract term. During the contract term, you can install and use the quantity of the Single Metric products that you need. The price of the corresponding licenses isn’t determined by your usage, but by the agreed metric. At the start of the contract, a cap for the metric is defined. If the metric exceeds the cap, the fees you pay to SAP for the licenses will increase proportionally. As long as the metric stays below the agreed cap, you don’t pay any additional fees for additional usage of the Single Metric software. In some cases, SAP allows to exceed the cap by a certain percentage before an additional payment is required.
As an example, suppose you have a Single Metric contract where the metric is revenue and the cap is 1 billion, which you are allowed to exceed by 10%. As long as your revenue stays below or at 1,1 billion, you can use as much of the Single Metric software as you want, without paying any extra fees. However, if your revenue increases to 1,2 billion and your software usages remains exactly as it was, you pay more to SAP, because you exceed the agreed cap.
Prior to the end of the term of the Single Metric contract, you will need to submit a self-audit report to SAP, which often turns out into a deeper audit by SAP – a so called “Advanced Audit” by SAP’s Global License Audit and Compliance (GLAC) team. This audit report will need to include your actual software use. Based on the report, an update to the order form will be made. This update shall reflect the greater of a) the active use identified during the audit, or b) the licensed quantity of the single metric software.
In practice this means that, even if your usage is lower than the licensed quantity, the fees you pay to SAP will never be lower than the fees agreed in the Single Metric contract. After the update of the order form, you will start paying based on the standard metrics mentioned in the order form as defined in the Single Metric contract.
During the Single Metric contract term, compliance indeed is rather straight forward. As long as you pay the fees corresponding to the agreed metric, you don’t need to count your actual usage. You might therefore be tempted to not be as diligent as you would normally be with regards to your user management for example. But don’t forget that there will be an audit and a resulting contract update at the end of the term of the single metric contract. Remember that if usage is lower than the quantities mentioned in your Single Metric contract, your payment to SAP will not go down to match the lower usage levels.
It is therefore in your interest to make sure that you use the SAP products licensed under the Single Metric agreement as close to the cap as possible. To make sure that you do this, you will need to measure your usage during the Single Metric contract term on a regular basis. This so that you have tangible information at hand, to provide insight and internal directions to adjust your usage of the different SAP products.
Also keep in mind that you want to make sure that you haven’t ‘accidentally’ enabled any functionality that is not covered by the Single Metric. This often happens when the technical and functional SAP managers aren’t aware of the details of the licensing agreement and want to test some functionality. This usage can lead to unexpected costs resulting from the audit at the end of the contracting term.
Single Metric certainly gives peace of mind during the contract term, but you still want to actively manage your software usage. This will enable you to get the most out of your Single Metric agreement without getting nasty financial surprises at the end of the agreement term.
A Single Metric contract will give you peace of mind during the contract duration. Keep in mind though that you will need to report actual usage at the end of the contract term. After reporting the usage, you will always end up paying at least as much as during the contract term and even more if your usage is higher than the quantities included in the contract. It is therefore in your interest to make sure that your usage is as close to these numbers as possible.
Avoid nasty surprises and conduct an internal audit 9-12 months before the Single Metric contract term ends. In this way you detect potential issues early enough to still be able to remediate them. If you need help with your internal audit and/or to prepare for a contract renewal, our SAP licensing experts are here to support you.
Wherever you are in your SAP journey, SoftwareOne has solved many of the problems you may face. Tell us about your business challenge, and we’ll get right back to you.
Wherever you are in your SAP journey, SoftwareOne has solved many of the problems you may face. Tell us about your business challenge, and we’ll get right back to you.
