SAP License Management in a Digital World

White Paper

SAP License Management in a Digital WorldSAP S/4HANA, Cloud, Indirect Access

ContentIntro 3

SAP License Management as an Opportunity 4

The First Steps to SAP S/4HANA Migration 4

SAP Cloud Products: A Trend Towards Simplification? 6

Cloud Credits – and How to Interpret Them 8

What is Changing? With SAP Hybris as an Example 9

Current and New Licensing Model, Indirect Access 13

Conclusion 21

White Paper | SAP License Management in a Digital World 3

Intro License Management for SAP – why?

SAP customers face major changes worldwide – new measurement methods and pricing models for indirect access, the upcoming migration to SAP® S/4HANA, the launch of countless new SAP cloud products, and the uncertainty between usage-based and rights-based user licensing – that catapult SAP customers into a licensing labyrinth.

Many customers have already lost track of the SAP licenses they require now, and in the future, often unknowingly. SAP license management is often not about keeping an overall perspective but getting one for the first time. In addition to clarity and transparency, it is also about investment protection and return on investment (ROI) – in short, avoiding unpredictable costs.

This white paper will help you take the first step in managing your SAP estate, to be aware of the new challenges, demonstrate approaches to a solution, and suggest actions.


SAP License Management as an Opportunity

Many SAP managers, along with CTOs and CIOs, are not yet aware of the great change their companies currently face. But right now, there is an opportunity to clean up legacy issues, revise outdated processes, and build a future-proof architecture. Software will ultimately become a competitive advantage that maintains a strong market position in the future.

It is important to make strategic business decisions with experience and know-how, but also have the courage to be creative and share a vision. This requires teamwork, because license management cannot be solved by one person or team. Support from specialized external consultants is increasingly important. They will be highly sought after in the coming years and scarce on the market.

The First Steps to SAP S/4HANA Migration

SAP recommends clients transfer to the new S/4HANA technology early, before the scheduled end of support for the classic SAP Business Suite in 2025. A complete transfer is estimated to last two to three years, depending on the size of the environment. With a greenfield approach, this can easily become five to six years. Alongside the technical migration, the SAP contract is also converted. It is great opportunity to clear up legacy issues – and this applies equally to processes, outdated in-house developments, unused licenses, and existing contracts.

Fundamentally nothing has changed with SAP’s measurement methods. There will still be user-based licenses and usage-specific metrics. The licenses can

be invoiced in three ways: purchase plus support, rental, or usage. The measurement also changes according to the type of purchase. This applies regardless of where the SAP systems are operated (on-premises, private cloud, public cloud). However, each type of license has its own measurement tools.

A notable example: licensing users based on their authorizations is mandatory for the customer – unless customers can negotiate this differently in their S/4 contract. The number of different user types is also significantly reduced, which in turn limits the possibility for differentiation. If these license types do not suit your business, you should customize them.

If you look at the Prices and Conditions List closely, you will realize that SAP is using the transition to redefine many details of the license metrics.

Guido Schneider, Senior Product Management Advisor SAP, USU


How will SAP accounts be measured in future?

SAP points out in its current Prices and Conditions List that usage of S/4HANA is based on potential use, which means that in S/4HANA systems, the authorizations assigned there for the necessary license types should be taken into consideration, and not the actual usage.

With S/4HANA Compatibility Packs, SAP offers customers an opportunity to continue using previously licensed functionalities in the new S/4HANA world. On migrating to SAP S/4HANA, in addition to the system requirements and components used, the authorizations must also be checked and adjusted if necessary. In SAP S/4HANA, some transactions have been replaced by new transactions and SAP Fiori apps, or deleted without replacement.

New: Professional Use, Functional Use, Productivity Use

With S/4HANA, there are three new user licenses: Professional Use, Functional Use, and Productivity Use. To use these correctly in the future, it makes sense to

ConclusionAn optimized authorization concept, which also takes the license metrics into account, is the foundation for the best S/4HANA license migration. Since there will be new transactions and old ones will become obsolete, the rights concept must also be technically reviewed and adapted. It is a good opportunity to do both at once. This saves time and money.

Three steps to successful license migration: 01 | Optimize the existing license requirements based on actual usage

02 | Introduce an authorization concept that accounts for license metrics and adjusts authorizations to usage

03 | Analyze the effects (on your license landscape) in an S/4 HANA migration

These three steps, and using an appropriate SAM tool to automatize the process, provide continuous transparency on your own user license requirements – even in the new hybrid system landscape.

adjust the authorization concept to the underlying solution functions. However, the organization must also fit to these new license types. It is foreseeable that this will not be the case for all customers, so it makes sense to negotiate with SAP over the functionalities of these three new types of license.


With this statement, SAP’s chief executive officer described the clear direction for SAP at the World Economic Forum in February 2014. The consequences of focusing on “Cloud first” has been keenly felt since. The takeover and integration of cloud-based providers such as Concur, Fieldglass, Hybris, Ariba, and SuccessFactors has made a significant contribution to this.

SAP Cloud Products: A Trend Towards Simplification?

SAP brings integrated enterprise to cloud.

Bill McDermott, 2014

SAP Cloud SaaS application licensing model

Business models

Rights to several services

Usage-based

Rental (individual services/package)

Cloud Credits

Cloud Credits

Pay as you go

Surplus

It’s clear the “rental price” is not the only license element to consider. In addition, a further license model – “the usage-based model” – with additional options comes into play.


The following elements should be considered with SAP Cloud SaaS licensing:

• Duration of the initial term (usually three to five years) and the extension period (often one to three years)

• Rental or usage-based model (for many products in the public cloud, such as SAP Fieldglass, SAP Ariba, and SAP Cloud Platform, you can choose between rental and usage-based licensing models)

• Usage-based model: Cloud Credits and/or Pay as you go

• SAP is also working on expanding the usage-based licensing model to products like SAP SuccessFactors

• Private or public cloud environment• Functionalities and services included in the annual

rental price (type of support, SaaS components in the chosen product)

• Price (per year/month or one-off) • License scope (monitored usage, graduated price

scale) • Licensing metrics (e.g. users, resources, devices,

transactions, etc.)

Rental model vs. usage model

Rental model(recurring annual fees)

Usage model(invoicing based on actual usage)

Examples: SAP S/4HANA; SAP C/4HANA; SAP Concur®,

SAP Ariba®, and SAP SuccessFactors® Solutions; SAP

Cloud Platform; and SAP BusinessObjects Solutions

Examples: SAP Cloud Platform, SAP Ariba, and SAP

Fieldglass® Solutions

Software usage rights

Software usage rights

Database Database

Maintenance, app mgmt & support

Maintenance, app mgmt & support

Hardware Hardware

• License scope• Metrics • Price • Contract length • Functionalities

• License scope• Metrics • Price • Contract length • Functionalities

Type of support (Enterprise/Premium)

Type of support (Enterprise/Premium)

Rental-based model versus usage-based model: For customers, there is greater complexity in the design of their system landscape and the license metrics to be used.


Cloud Credits – and How to Interpret ThemBy launching cloud credits with the usage-based licensing model, SAP is seeking to introduce flexible models and, at the same time, create transparency by providing customers with monthly information about usage of cloud credits.

Commercial aspects• Cloud credits are discount-relevant• Cloud credits are prepaid commitments for

a defined time period – unused cloud credits are retained

• Cloud credits can be topped up at any time

Usage aspects• Cloud credits give the right to flexible use of

all usage-based services in the SAP portfolio• Use of services is charged against cloud

credits• Excess use (“excess”) is invoiced

There is still a long way to go before customers can monitor the usage of an entire SAP portfolio in a transparent and efficient way.

This shows that SAP clearly favors the rental and usage model with the new licensing and, despite the desire to simplify, it is not reducing complexity here. In the SAP Ariba field alone, there are four different users and 26 usage-specific metrics. The combination of existing usage rights, such as SAP Process Orchestration, and new ones, like SAP Cloud Platform Integration Option, raises further issues because there are usually several options that the customer can implement technically and map from a licensing perspective.

ConclusionYour key goal as a customer should be complete, thorough transparency on your current costs, license volume, and actual usage. This is indispensable for an optimized cost structure and one of the core tasks of SAP license management in the future. SAP provides you with limited support, which makes the use of an independent solution absolutely necessary.

RecommendationConsider a tool-based SAM solution for SAP licenses. It must have the ability to integrate the traditional licensing model of the on-premises world, on the one hand, and cover the dynamic market of cloud scenarios and the existing usage models there, on the other.

Make sure the solution not only provides the current status of your license usage but knows all the various possibilities for usage rights from the Price and Conditions List and proactively shows you potential savings.


What is Changing? With SAP Hybris as an ExampleLet’s look at one of the biggest SaaS products: SAP Hybris, or C/4HANA, and its licensing model.

Following the introduction of SAP C/4HANA, “Hybris” should disappear from our SAP terminology and be marketed as in-memory customer experience (CX). Together with the most recent acquisitions – Gigya (customer identity management), CallidusCloud

(a solution that provides information, such as pricing, commissions and performance bonuses, to sales people) and CoreSystems (a field services module) – Hybris represents “SAP’s new CRM.”

SAP C/4HANA

SAP C/4HANA

SAP S/4HANA

SAP Customer Data Cloud

SAP Commerce Cloud

SAP Sales Cloud

SAP Service Cloud

Micro services SAP Cloud Platform Extension Factory Extensions

Internet of things Machine learning SAP Cloud Platform Chain track Integration

SAP Marketing Cloud


SAP C/4HANA comprises existing solutions from the Hybris worldSAP Marketing Cloud, also known as “SAP Hybris Marketing” – apart from rebranding, nothing has changed in the pricing model or the solution itself.

SAP Marketing Cloud Rental model of SAP Marketing Cloud

• Consumer and customer profiling• Segments, campaigns und customer journeys• Customer identity management• Lead management and nurturing• Marketing planning, performance, and analytics

Edition• Standard• Professional• Enterprise

Metrics • Contracts

Price • Graduated price scale

Fees • Monthly

SAP Commerce Cloud Rental model of SAP Commerce Cloud

• Supports B2C, B2B and B2B2C• Product content and order management• Pre-built integrations to other SAP systems• Flexibility for innovationen• Industry accelerators• Commerce for small and midsize enterprises

Edition• Standard• Professional• Enterprise

Metrics

• Orders• Gross value of

merchandise• Page views


Fees • Monthly

NB: As of July 2018

NB: As of July 2018

SAP Commerce Cloud, also known as “SAP Hybris Commerce” – as with SAP Marketing Cloud, nothing has changed except SAP Commerce Cloud will also be available on the Microsoft Cloud platform Azure.


SAP Sales Cloud comprises SAP Hybris Sales Cloud 4C Sales for sales force automation, Revenue Cloud for subscriptions, and CallidusCloud for commission settlement plus configure, price and quote (CPQ).

SAP Sales Cloud Rental model of SAP Sales Cloud

• Sales force automation• Sales performance management• Retail execution• Configure, price and quote• Subscription billing• Sales enablement and learning

Edition

• Standard• Professional• Enterprise• Private*

Metrics• Users• Flat fee*

Price • Per user

Fees • Monthly

SAP Service Cloud Rental model of SAP Service Cloud

• Comprehensive self-services• Customer service from anywhere• Integrated on-site service• Services process and operations• Automated AI customer service ticketing• Expedited, scalable issue resolution

Edition

• Standard• Professional• Enterprise• Private*

Metrics• Users• Flat fee*

Price • Per user

Fees • Monthly

NB: As of July 2018 *Only if SAP Sales Cloud and Service Cloud

are purchased together

NB: As of July 2018 *Only if SAP Sales Cloud and Service Cloud

are purchased together

SAP Service Cloud comprises SAP Hybris C4C Service and SAP’s latest acquisition, CoreSystems. This replaces the Field Service of C4C and caters to the operation of supply chain service processes.


SAP Customer Data Cloud involves Gigya solutions to handle all data protection topics, such as rights and authorization management.

SAP Customer Data Cloud Rental model of SAP Customer Data Cloud

• Secure customer identity• Enable customer consent• Single unified customer profile• Building digital relationships• Drive registrations and engagement• Address GDPR requirements

Edition • Not applicable

Metrics • Contacts


Fees • Monthly

NB: As of July 2018 Products: SAP Customer Identity,

SAP Customer Consent, SAP Customer Profile

ConclusionSAP products will continue to change in the future, it’s just happening at an ever-faster pace. SAP presents this as a major advantage, but new processes must always be introduced or existing ones changed. These products must first prove themselves and contribute to SAP customers’ revenue. Flexibility is good and important, but you should be careful not to lose sight of your goal. The customer is still always the focus – your customer!

RecommendationTake a step-by-step approach to new agile products, as you create added value with them. This allows you to convince colleagues and critics of their importance.


Current and New Licensing Model, Indirect AccessIn April 2018, SAP presented a new licensing model that involves changes around indirect access. Let’s look at the real fundamentals of indirect access and the essential features of the current and new licensing model. What challenges do you face as an SAP customer?


However, with indirect access there is deviation from this basic model in certain scenarios and under certain conditions. The three existing access types look like this:

Access types in the current licensing model

SAP ERP Digital Core S/4 HANA Document-based

(primary)User-based

named user license

*no additional ERP license required

SAP application access*

Indirect/ digital Access

Direct/ human access

Source: SAP, SAP Pricing Update 180420 PKL 02/2018, p. 16

Key exceptions: In most cases, no license fees are due if data is only read.

Package licenses Named user licenses

Priced by business metrics Priced by number of users

Current licensing modelThe current model basically provides a combination of a package license and named user license for use as a key factor in the licensing requirement.


Source: SAP, Indirect Access White Paper July 2017, p. 9

Indirect static read scenarioAn exception with regard to (for) defined users: If data from purchased software (with the exception of any SAP Business Warehouse software and/or third-party databases) is exported to non-SAP applications in line with a predefined query that (i) was created by a person who was authorized to use the software from which the data were exported and (ii) will be automatically executed in accordance with a set timetable, the use of such data by non-SAP

applications and/or their users as part of this agreement requires NO usage rights, insofar as such use does not infringe on updates to the purchased software and/or processing functions of the purchased software. “Non-SAP application(s)” refers to technologies that are not purchased software and for which the customer has purchased appropriate usage rights from a rights holder other than SAP, SAP SE and/or one of its affiliated companies and/or distributors.

Create queryInformation extracted

automatically on a scheduled basis

No updates to ECC system triggered by

3rd party app

SAP licensed user 3rd party application user 3rd party application user

SAP ECC or S/4 HANA Enterprise Management

Static data in 3rd party system


The new licensing modelEven after the rollout of the new licensing model, you will search in vain for a definition of indirect access in the SAP general terms and conditions and the SAP Price and Conditions List, which are usually part of customer contracts. There is also no definition of indirect access or indirect usage in the relevant legal foundations. If you look for the definition of “use” in the SAP Price and Conditions List to clarify the issue, there is scope for interpretation and critical explanation.

This is also supported by the way SAP describes indirect access in other SAP documents – albeit for information only, without being legally binding.

‘Use’ means to activate the processing capabilities of the software, load, execute, access, employ the software, or display information resulting from such capabilities. Use may occur by way of an interface delivered with or as a part of the software, a Licensee or third/party interface, or another intermediary system.

Source: SAP List of Prices and Conditions 2018/3, Part 2, 1.1.1 no. 7.

Indirect/Digital Access is when people or things use the Digital Core without directly logging into the system. It occurs when humans, any device, or system, indirectly use the Digital Core via non-SAP intermediary software, such as a non-SAP front end, a custom-solution, or any other third-party application.

Source: SAP ERP Pricing for the Digital Age, Addressing Indirect/Digital Access, April 2018

Overall, indirect access is understood to be a particular form of usage pursuant to the SAP Price and Condition List.


The new licensing model unveiled by SAP in April 2018 alters the provisions for the usage/access type of indirect access, which is now also referred to as digital access. However, nothing changes for the other two usage/access types: direct/human access and SAP

application access. Licensing of direct/human access is still based on the number of users, whereas SAP application access, or access by other SAP applications to the SAP’s digital core, does not have to be addition-ally licensed.

ERP Pricing model (available April 2018 onwards)

SAP ERP Digital Core S/4 HANA Outcome-based

(document license)User-based user license

*no additional ERP license required

SAP application access*

Indirect/ digital access

Direct/ human access

Source: SAP ERP Pricing for the Digital Age, Addressing Indirect/Digital Access, April 2018, PDF: SAP Pricing Update 180420 PKL 02/2018, p. 16

Indirect/digital access still requires a license, but the underlying license metrics change. Licensing is now based on the number of documents produced. The central factor here is still the initial production of a

document – subsequent reading, changes or deletions of the document do not increase the licensing require-ment. Nine different types of document are accounted for in different ways (counting level and multiplier).


Document type Payment level Multiplier

Sales document line items 1

Invoice document line items 1

Purchase document line items 1

Service & maintenance document document 1

Manufacturing document document 1

Time management document document 1

Quality management document document 1

Financial document line items 0.2

Material document line items 0.2

A specific number of documents are licensed, which can then each be “used” every year. There is a tiered pricing system for this of EUR 0.15 to EUR 0.50 per document produced.

in blocks of Metrics From To7019727 SAP Digital Access, up to 1000000 units 1 Documents 0.50 EUR One-time 1 1000000 1 N ERP Y Y All Y N N ALL [901]

7019728 SAP Digital Access, 1000001 to 5000000 units 1 Documents 0.40 EUR One-time 1000001 5000000 1 N ERP Y Y All Y N N ALL [901]





7019733 SAP Digital Access, above 60000000 units 1 Documents 0.15 EUR One-time 60000000 Infinite 1 N ERP Y Y All Y N N ALL [901]

Volume Tiers

Material Price List Item

Sales Unit

Price per Unit Fees RemarksMin. Blocks USR PRE SAV HSAV DB DSC TP LC CH

Source: SAP Price & Conditions List 03/2018


Contractual options for existing SAP customersWhereas new SAP customers only have the new licensing model, SAP is offering existing customers three different contractual options for the new licensing model:

ConclusionAlthough the new licensing model for indirect/digital access with a single document metric seems like a transparent simplification, existing SAP customers currently face some tough challenges. First, the insufficient measurability of the number of documents. You should always bear in mind that documents can be produced through all three types of access. But currently only documents produced via direct/human access are identifiable as such and excluded

from payment for documents relevant to indirect/digital access. Under the new licensing model, this must also be the case for other “SAP-friendly traffic” generated via SAP application access. However, this is not currently possible for technical reasons. SAP has announced it will remedy the situation, but this is still pending. For ERP ECC, a solution to the measurability issue described above will not be available until the first quarter of 2019.

Option 1:Do nothing

Option 2:License Exchange

• Credit of up to 100% of the value of the existing NUL and/or order licenses for “new” document licenses

Option 3:Contract conversion

• Credit of up to 100% of the value of the existing contracts for “new” S/4HANA contract

• Comprehensive configuration possibilities

Solutions

Order License

NUL

DB

Current Contract

Solutions

Order License

NUL

DB

Solutions

Documents

NUL

DB

License Value License Credit

Solutions

Order License

NUL

DB

Solutions

Documents

NUL

SAP HANA

Contract Value Contract Credit

Current Contract Current Contract

with Addendum

Current Contract Converted

Contract

Source: SAP ERP Pricing for the Digital Age, Addressing Indirect/Digital Access, April 2018, PDF: SAP Pricing Update 180420 PKL 02/2018, p. 23


RecommendationsDue to the uncertainty, existing SAP customers may not be able to make a valid cost comparison between the current and new licensing models. As an existing SAP customer, you shouldn’t make a hasty decision on the new licensing model. In-depth analysis of all available scenarios for indirect access should always be conducted first. This is clear where indirect access scenarios are distinct for the same existing SAP customer.

Some scenarios potentially involve many users and few documents, while other scenarios involve many documents and few users. The current or the new licensing model may be appropriate on a case-by-case basis. Comprehensive consideration and analysis

is all the more important here, especially as existing SAP customers must decide between the two licensing models, consistently for all scenarios – there is no provision for using both of them side by side.

Furthermore, legal considerations – already brought forward against the concept of indirect access under the formal licensing model – are not cleared up with the new model. In this context, we note the privileged treatment of SAP application access (“vendor login”), which is questionable from a competition law perspective. SAP license holders might be curious to know whether the courts will look at the topic and provide greater clarity and legal certainty.

Non-SAP applications

SAP Hybris

User-created documents (already measurable)

Document business logic

3rd party

SAP ConcurSAP Fieldglass

SAP Ariba

SAP price list

SAP NW and non-NW based

Source: SAP, SAP Pricing Update 180420 PKL 02/2018, p. 20

SAP FIORISAP SuccessFactors

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ConclusionAnalysis for your digital future: Optimization for SAP, a USU Software Asset Management solution Those who have achieved clarity and transparency will naturally not want to lose either again. This is where effective SAP license management comes into play. There are two aspects: Consulting, on the one hand, and a tool, on the other, which provides the required sustainability, monitoring, and analysis that would not otherwise be possible. The key factor here is not superficially scanning the greatest number of SaaS applications, but the depth of analysis of cost-intensive applications. Only based on this analysis can the right decisions be taken – today and in future.

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