RISE with SAP: Tips to streamline SAP Cloud licensing

SAP describes itself as “The Cloud Company” and has greatly expanded its range of cloud-based solutions in just a few years. With the introduction of SAP S/4HANA Cloud Public Edition and, in particular, RISE with SAP, the German software giant has underpinned its cloud-first approach.

Significant effects for ECC customers

There is no doubt that RISE with SAP has significant effects for ECC customers that should not be overlooked.

• ECC maintenance ending by 2027-2030
• Halted ECC innovations
• Annual 5% maintenance fee hikes

If you're contemplating migrating to SAP Cloud using the RISE program, it's imperative to meticulously assess various factors to optimize benefits. If you are an existing ECC customer considering a migration to SAP Cloud using the RISE program, you should carefully consider a number of factors beforehand in order to get the best possible value.

What is RISE with SAP?

RISE with SAP aims to simplify cloud migration for customers and provide personalized support throughout the journey to becoming an "intelligent" enterprise. It's more than just moving to SAP S/4HANA: It's about enabling continuous digital transformation with cloud-focused solutions, services, and tools.

Initially, the offering included five core elements: SAP S/4HANA Cloud, Business Process Intelligence (BPI), SAP Business Technology Platform (SAP BTP), access to the SAP Business Network, and various integrated tools and services. RISE with SAP operates on a subscription basis with a service level agreement (SLA), bundling components into a single package at a fixed price. SAP manages solution operation and troubleshooting.

Infrastructure hosting options include SAP or hyperscalers like Google Cloud, Amazon Web Services, or Microsoft Azure. According to SAP, RISE with SAP can cut total cost of ownership by up to 20% compared to on-premises SAP S/4HANA implementation, inclusive of migration expenses.

RISE with SAP, SAP S/4HANA Cloud – where’s the difference?

RISE with SAP is closely tied to SAP's strategic pivot toward cloud computing, specifically the SAP S/4HANA Cloud. It's tailored to aid companies in transitioning to the cloud with a plethora of innovations and solutions. The SAP S/4HANA Cloud, available as both public and private cloud options, stands as a cornerstone of RISE with SAP.

While RISE with SAP offers a comprehensive cloud solution, it's important to note that it's not mandatory for utilizing SAP's cloud offerings. Companies can access solutions like SAP S/4HANA Cloud, Public Edition, and SAP S/4HANA Cloud, Private Edition independently, "without RISE."

Furthermore, since the start of 2023, the GROW with SAP commercial package has been available, particularly catering to new customers in the midmarket segment. Through GROW, organizations can opt for SAP S/4HANA Cloud Public Edition, where the cloud ERP's infrastructure and software capabilities are shared among SAP customers and managed directly by SAP.

The FUE model - opportunity or cost trap?

Can you remember the current use type scenario with SAP S/4HANA on-prem? SAP distinguishes six application scenarios: Developer Use, Professional Use, Functional Use and Productivity Use (as the most important Use Types), Engine Use and Technical Use.

Copyright: USU Software AG

The new "Full USe Equivalent" (FUE) model at RISE with SAP is different. With RISE with SAP S/4 HANA Cloud, SAP has taken a step towards user licensing making license management easier. Instead of purchasing exact numbers of specific user license types, SAP customers can purchase so-called FUEs, Full Use Equivalents.

FUE is a fictive number that corresponds to the theoretical number of individuals authorized to access the full solution capabilities. Individuals with less authorizations are taken into account by calculating the corresponding FUE by using a conversion factor. It’s defined as follows:

1 FUE =

• 1 SAP S/4HANA for Advanced Use
• 5 SAP S/4HANA for Core Use
• 30 SAP S/4HANA for Self-service Use

The FUE model is a flexible way to use user licenses for different use types. With a RISE with SAP contract, there is no need to specify the relationship between the different use types. It offers great flexibility: Savings can be achieved without reconfiguration right or contract renegotiation. FUE is available with different tiers, such as:

1001-2000 Users: USD 178 / FUE / Month (Private Edition) or USD 147 / FUE / Month (Public Edition).

However, a solid analysis of the previous named user licenses is needed so as not to generate unnecessary costs. Implementing pricing without contextual analysis of assigned license types can drastically affect the final amount of FUEs purchased. USU’s SAP-certified SAP software optimization tool can show calculated FUE values on a dedicated results page.

Below is a customer sample for an environment of 1,000 users before and after license optimization.

As you can see, the customer realized savings of 227 FUE while maintaining the number of users.  

In our above example of 1,000 licenses the achieved savings were USD 33,310 per month (Public Edition).

SAP user licenses are a significant component of the costs associated with S/4HANA. Before migrating to S/4HANA, it is a good idea to carefully review your current licenses to make sure they are optimized for actual system usage.

Conclusion

Managing SAP licenses is a major challenge for many customers, whether in the traditional on-premises world or in dynamic cloud environments. Standard contracts from RISE with SAP include licensing based on authorization instead of usage.

This has an impact on the price: authorization-based licensing is on average 50 - 150% more expensive than usage-based licensing. This significant price increase is just one example of some of the pitfalls that customers will have to watch out for in the future.

As an SAP customer, you still have a lot of influence over the conditions and scope of the SAP products you want. It is crucial that you understand and actively manage the SAP offering. This enables you to find the best options for you that really meet your ERP requirements and budget.

With our SAP-certified SAP software optimization tool and expert in-house team, we can help you optimize your ECC licenses and customize your ideal S/4HANA system or FUE licenses based on actual usage and entitlements.

Our advice to SAP customers: Don't leave the wheel to your software provider, stay in control.

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