Good news for SAP customers who haven’t transitioned to S/4HANA yet: On Feb 4, 2020, SAP announced that maintenance for SAP Business Suite 7 will be extended, while committing to SAP S/4HANA. In other words, SAP aims to give customers, in particular those running older ERP systems, a route to S/4HANA in a more realistic timeframe.
Even so, there’s no better time than the present to start planning your organization’s S/4HANA migration. Why the rush? Migrating, as we all know, is a time-consuming and costly process, so it’s no surprise the rate of adoption has been slow.
SAP is offering attractive financial incentives to move to S/4HANA to encourage adoption. It’s important to keep in mind that what SAP suggests won’t always be the right solution for you, or the most cost-effective. Getting your S/4HANA migration done correctly, for a fair price, means answering some crucial questions about your named users.
Here is a four-point guide to prepare for your own SAP S/4HANA migration.
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1) How many SAP users do I need today?
This sounds like a trick question, but it isn’t. Many SAP estates have more Named User licenses than needed or the licenses are authorized for more transactions than needed. So, the first question is finding out what you actually need of your legacy license model.
Analyzing your contracts and users’ usage is essential to understanding to your needs in the S/4HANA universe. You will know what you’re using, how it’s being used, and you might even find some forgotten entitlements.
Some SAP customers feel confident using spreadsheets to track their licenses or simply trusting SAP’s LAW. This is foggy, at best, and could lead to a costlier S/4HANA migration because if you’re paying more than you need to for your existing SAP estate today, then you’ll pay even more for S/4HANA tomorrow. There is also the maintenance impact: Even if your maintenance decreases from 22% to 15%, the maintenance will still be higher because the base cost is higher.
An SAP license management tool is essential for accuracy and comprehensiveness to answer this question and the next one…
2) How many SAP users will I need tomorrow?
At first glance, it seems simple: A Professional Named User in R/3 should be a Professional Use license in S/4HANA. Of course, this is SAP licensing, so it isn’t so simple.
Look a little closer and you’ll notice that converting your Named User licenses into S/4HANA Use licenses shouldn’t be a one-to-one process, if you’re interested in avoiding higher costs.
For example, if you have a lot of Limited Professionals to convert, you’ll need to find an alternative in S/4HANA because a similar Use license doesn’t exist.
The S/4HANA Functional Use licenses could work, and they’re the same price, but they have fewer authorizations than your Limited Professional Named Users, so they might not get the job done. Professional Use licenses would cover your Limited Professionals’ needed authorizations, and then some. But that means an added cost of €2,300 more per user license during your migration.
Despite what you might hear out there, migrating to S/4HANA isn’t simple or cheap. You’ll need to correctly translate your legacy licenses into S/4HANA licenses, which means you’ll have to answer another question.
3) What type of users do I need tomorrow?
Already, many Named Users are authorized for more transactions than they actually use in ECC. A simple rule of thumb is the more transactions or functions your Named Users are authorized for, the costlier they are.
Your S/4HANA migration is your chance to downgrade your over-authorized named users to (possibly) lower-priced, more appropriately authorized S/4HANA licenses. Looking at your SAP Named Users’ transactions in ECC and assigning licenses that fit those transactions in S/4HANA could lower your migration costs.
To go back to that Limited Professional Named User example, if you analyze those Named Users’ usage, you might find that they don’t need all those authorizations, so a Functional use license might fit. In that case, you’ve knocked down the price of your S/4HANA migration.
That means optimizing your Named User licenses, then closing the gap between your license authorizations and their use. Then, make a cost-effective decision to trade your unused legacy licenses for credit.
An SAP license management tool can map an SAP users’ actively used transactions, so you know what they use. Then you can compare that use with the S/4HANA licenses’ authorizations, prepare your S/4HANA authorization concept based on that and get the licenses you need in the future.
Once you know this, you can answer the question that’s probably been on your mind from the very beginning of this article.
4) How do I pay a fair price for S/4HANA?
Your S/4HANA migration is an opportunity to rebalance your business relationship with SAP. That starts with paying for the licenses you need, instead of overpaying for licenses you don’t need.
But here’s a reality check: Your S/4HANA Use licenses cost more than your Named User licenses. Even after you’ve optimized your current license estate. Here’s an example:
S/4HANA’s least expensive Use licenses (Productivity Use €300) are still more expensive than Named User licenses, so it’s a matter of keeping those migration costs as low as possible. How? If you were using Optimization for SAP, named user transactions would be mapped to a best practice ruleset using the S/4HANA Use license types. And it would look like this:
As you can see S/4HANA Use license costs more than Named Users – and this is just one facet of an S/4HANA migration. There will be SAP Engine costs, permission-based licensing, and possibly SAP cloud products to account for in a migration.
The costs for many SAP customers are intimidating. But it’s downright frightening if it isn’t done correctly. That’s why we advise following these steps before a conversion. Getting an automated analysis of your SAP named user licenses is crucial to understanding the cost impact of S/4HANA use licenses.
Seek out expert advice, and don’t rush into converting your current licenses into S/4HANA licenses. Taking the time for analysis in the short-term, will avoid higher S/4HANA costs in the long-term.
The foundation for the best S/4HANA license migration is an optimized authorization concept, which also takes your license metrics into account, Since there will be new transactions and old ones will become obsolete, the rights concept must also be technically reviewed and adapted – we advise that both of these are done at once.
Next steps for your S/4HANA migration
Your migration to S/4HANA is a huge task. Yet as we have seen, by starting now and optimizing your SAP licensing environment, you can smooth your S/4HANA migration path.
Consider an SAP license management solution that can integrate the traditional SAP licensing model of the on-premises world, while taking all the various possibilities for usage rights from the Price and Conditions List to simulate scenarios that show you potential savings.
Getting the right tool for the job will help you pay a fair price for your new S/4HANA license migration.
Get a Roadmap to plan your SAP S/4HANA migration: