S/4 Hana transformation from a licensing perspective

In 2030, the last hour will strike for the aging but still most widely used SAP ERP. Until then, the corresponding support can continue to be used via additional fees.

It is unclear whether the additional time will sufficiently help companies migrate to the S/4 Hana world. In any case, SAP is making an effort to present a simpler product portfolio for the future, but the change of track will therefore by no means be simple.

Licensees should therefore prepare for the upcoming change in good time, as there are a number of changes that need to be taken into account.

The first simplification awaits companies when selecting a database. The innovative in-memory technology is mandatory with the Hana database; third-party providers are no longer required.

Instead of the 131 historically grown named-user license types (NUL), S/4 offers four direct-user access licenses for the so-called digital core use. These are one developer user and three enterprise management users, which in turn are assigned more functional authorizations in ascending hierarchical order.

This may simplify commercial license management, but additional agreements may still be included in the contracts. The four new license types are no longer attributable to natural persons, but are linked to the user accounts in the system at the technical level.

The Line of Business (LoB) Solutions have also been slimmed down. Here, there is a smaller engine portfolio with fewer customer- and industry-specific modifications than in the traditional concept. Licensing is based on value-based metrics.

Thus, as a rule, only the respective LoB license is required for use. In theory, these applications can therefore also be used with accounts without user access licenses. In practice, however, it must be demonstrated that user accounts only use LoB functionalities and do not access the Digital Core.

A tidy portfolio is a welcome change, but how do you transfer a license structure that has been cemented for years into the S/4 Hana world? SAP makes it simple and offers the crediting of licenses already in possession. However, the accurate allocation of existing NULs to the new S/4 users poses challenges for many customers.

Supposedly identical NULs can be assigned to different S/4 Hana users (depending on usage behavior). The conversion should therefore be evaluated for each user account. In fact, it is possible that some NULs will even become useless because the matching product counterpart no longer exists in S/4 or the use of the functionality does not require an additional user license.

In addition to special arrangements on the part of SAP, two transformation models offer methodical approaches for coping. The greenfield (new implementation) and brownfield (software upgrade and data transformation) approaches both offer a range of advantages and disadvantages for a wide variety of business scenarios, and these must be evaluated on a case-specific basis.

SAP also offers a number of tools (for example, the S/4 Hana Migration Cockpit) that are best used with the help of appropriate experts for planning implementation.

How could a license allocation for user accounts in S/4 Hana look like and which Line of Business Solutions should be strategically selected? What could suitable license conversions and contract conversion look like? A lot is still uncertain, especially since some options also depend on the decisions of the users.

Only those who have optimized their licenses and maintain an overview will not pay more than necessary and risk additional payments. It should be noted that the job of all license managers remains as exciting as ever!