Carrot and stick

With Rise with SAP, SAP offers its existing and new customers business transformation as a service. In other words: everything from a single source with more or less a single contract. It means that existing customers migrate their old ECC contracts via a contract conversion and run their S/4 solution in the cloud. There are a number of framework conditions that need to be taken into account during the contract conversion. For example, SAP requires, among other things, an extended investment and a minimum term of three to five years. Prior to conversion, SAP customers are required to complete a license audit that must not be older than six months.

In addition, there are a number of options that can be aligned and selected specifically to meet one's own requirements. Continuing to purchase add-ons from SAP partners or the free choice of cloud provider are such options. Rise with SAP currently consists of the following components: S/4 Hana in the public or private cloud, embedded services and tools, SAP Business Process Intelligence, SAP Business Technology Platform and the SAP Business Network. SAP S/4 cloud licensing is subscription-based and divided into four areas: User Access (Advanced Use, Core Use, Self-Service Use), Digital Access (via APIs), Add-on Modules (Industry and LoB Solutions) and Infrastructure Add-ons.

Carrot and stick

The carrot is handed in the form of full usage equivalence in User Access. All S/4 Cloud usage types can be purchased via a license material number (8010836): Rise with SAP S/4 Cloud. The metric is Full Use Equivalent (FUE). An FUE can be allocated to different usage types throughout the term with a specific weighting factor. It is interesting to compare costs to find out where the journey is going. For example, if one acquires 1750 FUEs (35 must be acquired as a minimum), then according to PKL Q2/2021, these cost a total of 2,940,000 euros per year (1 FUE costs 140 euros per month in the corresponding scale). This could be broken down as follows: 10 for S/4 Hana Cloud, Developer Access (20 FUEs), 900 for S/4 Hana Cloud, Advanced Use (900 FUEs), 1000 for S/4 Hana Cloud, Core Use (200 FUEs) and 18,900 for S/4 Hana Cloud, Self-Service Use (630 FUEs).

What would that cost for S/4 Hana on-premises? Using the above figures, a total investment of around 10,080,000 euros plus 2,217,600 euros for maintenance equals 12,297,600 euros in the first year. However, subscription-based offerings and on-premises licenses are only comparable to a limited extent. So draw your own conclusions from the comparative calculation.

All roads lead to S/4

There is no way around the change or migration to S/4 Hana. It is obvious that SAP wants to get you to go to the cloud. Being able to switch between the different user license types indefinitely via the FUE metric is a very good offer. Using an external SAM tool to determine the license types needed before and after migration therefore makes sense in the cloud as well. However, the pressure to migrate within the next six years is not taken off with Rise with SAP.