If you are in the midst of migrating to S/4HANA or, even better, still in the business case phase, then you have a unique opportunity to rationalise your SAP licence inventory and dramatically reduce the cost of your SAP investment for many years to come.

SAP are giving all existing ECC customers the opportunity to rightsize their current licence inventory as part of the new contract options that come into play with S/4HANA; something they refer to as the “Milkshake Concept”.

This concept allows you to release any value held in shelf-ware, such as unused products. The highest amount of ‘released value’ however is most likely to come from optimising your named user licences.

Licence Optimisation is the process of analysing your existing employees' SAP usage and then allocating them the lowest value licence type that still allows them to perform their duties within SAP. Most companies by far massively over-allocate their Professional Licences to employees that simply do not use or require them.

The example below shows the typical licence inventory value released with an optimisation factor of 25% of Professional Licences and 10% of Limited Professional Licences - percentages that we often experience when we perform SAP Licence Optimisations for our customers. Some of the largest SAP estates can easily release millions of pounds worth of over-allocated licences.

Some of the largest SAP estates can easily release millions of pounds worth of over-allocated licences.

There is a second reason why licence optimisation is crucial when moving to S/4HANA and that is because the Named User licence model that is used with ECC is being replaced with new “Direct Human Access’ licences.

SAP ECC had 5 main Named User licence classifications; Developer Users, Professional Users, Limited Professional Users, Employee Users and ESS users. With S/4HANA this is being replaced with 4 types; Developer Users, Professional Users, Functional Users, and Productivity Users.

The Limited Professional licence classification does not exist in S/4HANA so any users of this type will be rolled up to Professional. Bearing in mind that a Professional licence can be twice as expensive as a Limited Professional licence then even more reason to make absolutely sure that you have optimised your existing employees.

Another major licensing change within S/4HANA is with the introduction pt of Digital Access licensing, sometimes referred to as Indirect Access. Digital Access is when processing occurs within your SAP system as a result of a third party system interface. For instance, if you have a third-party web based Sales Ordering system that interfaces to SAP and automatically creates a new sales order when your customer hits the BUY button then Digital Access has occurred. With ECC there was no specific licence available to provide for this so essentially, every single person using the above Sales Ordering system would require their own Professional or Limited Professional SAP licence.

The new Digital Access licence that is available when you move to S/4HANA is “outcome” based rather than “named user” based which means that a licence fee is based upon the volumes of documents being created within SAP, such as a Sales Order documents. There are 9 document types that form part of a Digital Access licence (see other article) and you will need to size your Digital Access licence based upon the volume of documents you create. It is optional so you if Digital Access is not something that you currently do, or if you’re happy to perform Digital Access via Named User Licences, then you do not need to change.

SAP have announced a Digital Access Adoption Programme (DAAP) to encourage movement to this licensing model. If you do want to have a Digital Access licence then SAP have provided a utility to calculate the number of documents that you will need to be licenced for.

However, be careful that you do not over-licence yourself here too - The tool is not going to specifically tell you how the total number of documents were created - such as how many documents are already being created via a third party system (for instance our web based Sales Ordering system) by employees that already have a named user licence?
In such a case then this usage is going to be counted twice and lead you to being over licensed and paying excess maintenance, possibly for many years to come.

So, do not waste this opportunity to get your SAP licensing correctly aligned with your business. Feel free to contact us and we can help you maximise your SAP licence inventory value.

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