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License Optimization - Named Users and Digital Access

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SAP system was created in the 1970s, triggering a technological revolution on the world stage. For decades, the system has been consolidating its place in the technology market. The SAP system consists of a number of fully integrated modules that cover virtually every aspect of business management.
SAP is number 1 in the ERP market

It is said that nothing in SAP has changed since then and everything has stayed the same except for a few updates and improvements. 

However, SAP is constantly evolving. In addition to the version itself, which the visible element on the design side is the migration from ECC to S/4HANA,
then additionally SAP has in its portfolio of solutions one that goes well beyond the ERP layer. In all areas, there are challenges from the access and auditing side of license measurement.
Today we will focus on the ERP layer itself. 

Not to be outdone - below is a 2022 Fortune Business Insights report describing the major players' share of the ERP market.

S4/HANA

Support for SAP Business Suite 7, which includes the flagship SAP ERP 6.0 solution, will end at the end of 2027. Some companies will be able to extend it until the end of 2030 for more money, but after that only one option will remain - SAP S/4HANA. Support for this system has been extended until at least the end of 2040. 

It seems like there's nothing to worry about: the ERP system you ran at the beginning of 2000 is working fine, everything is configured and everything is familiar. But if you work with an ERP system for years and don't update it, such a "frozen" system becomes more and more obsolete every year. The cost of maintaining it keeps rising. When you finally decide to migrate to S/4HANA, you are bound to encounter many unpleasant nuances: somewhere the version doesn't match, somewhere you can't run validation, modules don't work. All this will make the migration very difficult or very expensive. Here the important element is to choose the right migration method: green or brown field.
This is directly related to the very implementation of the project vis-à-vis business requirements.

New challenges of ECC migration to S/4HANA

 

A system that is obsolete today will be obsolete in 7 years. It's better to spend that time not on costly maintenance of your old ERP, but on learning about new S/4HANA features that will benefit your business. S/4HANA offers high performance, real-time analytics, seamless integration with the Internet of Things and Big Data platforms, the ability to use cloud solutions and a simple, user-friendly interface. 

The year 2027 is not as far away as one might imagine. Starting the migration to SAP S/4HANA too late may make it impossible to complete it in time. By starting the process a few years before support ends, you could spend a year preparing and then another year upgrading modules and system components. You won't have time for a smooth migration to SAP S/4HANA. 

And you still have things to do: you have to do bookkeeping and tax returns, order materials and equipment, hire new employees, and contract with partners. Your ERP system is updated daily with new data. A huge amount of data has been accumulated over the years, and there will be much more in the next 7-10 years. Migrating the accumulated historical data to the new version of SAP S/4HANA is one of the key tasks of a system upgrade. The smaller the volume of this data, the cheaper and faster the migration to S/4HANA will be. On top of that, there are the costs of upgrading hardware or archiving existing, ever-increasing data volumes in order to keep ERP system performance at an acceptable level. That's why it makes sense to start now with a technical assessment of the transition to S/4HANA.

SAP license optimization - two approaches and challenges

Typically, S/4HANA licenses cost 35% more., so it is essential that customers understand exactly what they have now and what they will need in the future, to achieve the best possible outcome in SAP contract negotiations.

To do so, you need to track the opportunities to optimize the value of licenses (note that both areas do not only apply to migration to S/4, but will also be reflected in the ECC environment.  

There are two main areas with considerable potential for SAP license optimization:

     

      1. Digital Access - The area related to the generation of data in SAP from external systems (outside the SAP ecosystem)
      2. Named User - accesses and assigned SAP licenses adequate to the accesses. 
     

    Area one - Digital Access 

    In 2018, SAP introduced a requirement for customers to have what it calls a ""customer experience. indirect access licensing, which resulted in the need for customers to pay additional payments related to the use of systems that: 

    - do not require direct login to the SAP system, 

    - are not SAP applications, 

    - integrate with SAP systems. 

    Previously, it was licensing under indirect access, named users, P2P and O2C. The topic of indirect access was made famous in the

    [https://lexplorers.pl/sap-vs-diageo-czyli-ile-moze-kosztowac-indirect-access/].  

    The situation and SAP's emphasis on auditing indirect access, caused a wave of negative discussion among SAP customers. As a result, SAP began looking for an alternative so that it could continue to charge for indirect access licensing, but build it in such a way that it could be monitored in a more technically sophisticated way. The previous indirect access licensing formula was highly opaque and time-consuming. It required too much material to analyze, with material that could not be analyzed automatically. 

    SAP has unveiled a new concept for indirect access management calling it Digital Access. The previous formula was built only on named users, the new concept proposes 2 solution paths at once. This is the aforementioned access based on named user and based on Document. 

    According to this concept, there are 9 different types of documents that may be subject to fees in the future.

     

    Each type of document has its own weight identifier, where the last two types of documents my five times less than the others.  

    The above-described proposal in April 2018 was still an idea to which a concept named Estimation note. In May 2019. SAP has developed another addition called Passport solution.  

    What is an SAP Estimation Note? 

    The estimation tool is provided by SAP through SAP Notes. It is designed to provide an estimate of the number of documents that will be created in SAP directly and indirectly. The Estimation Tool measures documents created directly and indirectly. This, in turn, introduces a requirement to perform further analysis to properly estimate documents created indirectly. 

    To use the function Estimation note, The customer should know which system and mandate it wants to verify. In addition, SAP technical users who are associated with non-SAP applications (outgoing technical user) should be analyzed and verified. We put the analyzed data in Estimation note and we can review the documents. This function does not include history, so if we want to do an overview of the data, we need to call up the report and save the results to a file. It is not possible to call up reports in bulk for several SAP systems.

    What is SAP Passport Solution?

    In the simplest terms, all documents, regardless of which systems they come from (SAP or non-SAP) go into the databases. The Passpot function gives each document a flag to distinguish between documents created directly or indirectly. And this is all so that you can (in theory) determine the right number of documents.  

    The flag assigned by SAP Passport is simply the corresponding data structure. Technically, it is added as a header to the received document by communication protocols (for example, RFC, HTTPS). 

    Passporrt Solution is still relatively new and has already received a number of updates. The tool is not foolproof. Analysis of the data produced by the system requires additional analysis to be able to extract the relevant information needed to accurately count documents. 

    Pros and cons of both approaches

     Pros Minuses 
    Estimation Note - low implementation effort, - possible measurement immediately based on historical data. - required initial analysis needed to select technical user - no ability to differentiate between direct and indirect - additional analysis required - estimate calculations - can lead to overly high values - no archiving of report - each new view must be generated anew - reprocessing of estimate can take up to 4 months (the larger the organization, the more work) 
    Passport Solution - more precise measurement than EN, - possible distinction between direct and indirect, - low preparation effort (e.g., no initial user analysis) - detailed level of information for document numbers - available measurements from historical - High implementation effort - measurement begins only after system upgrade and configuration - No information available about the user who created the document - Tool is still not reliable. Requires independent analysis after receiving output. SAP is likely to release several updates to improve this tool. - To be able to get accurate figures usually takes about 1 year to get meaningful results 
    Pros and cons of the Estimation Note and Passport Solution approaches 

    In summary, if a company has multiple channels of communication between external applications and SAP, this can lead to high costs. In addition, if the company creates only a few or even no documents in the sense of Digital Access, but only edits or deletes such documents in the sense of updates - such activities are not subject to counting. 

    Remember - in Digital Access only the creation of a Document is counted. No fees are charged for Document updates. Do your due diligence to identify updates and count only the initial creation of the Document. 

    Area Two: Named Users 

    Below we will present a license optimization scenario in SAP when migrating from ECC to S/4HANA. 

    Step 1 What licenses the client has assigned to users. 

    Step 2 How these named users consume their privileges (how much of the license pinned to a user is relevant to that user's needs) 

    Step 3 Simulate license levels during SAP migration based on actual accesses used by users.

    Summary

    It is worth acknowledging that migration to S/4 HANA gives customers not only a new landscape and new functionalities, but also a new price list for SAP services and products.  

    It is extremely important to understand that the SAP licensing terms negotiated earlier for ECC will not be the same for S/4 HANA. Prices for licenses of the new SAP version have changed, so when you purchase S/4 HANA, you will need to do these negotiations again.  

    In addition, named user types are also changing in the S/4HANA world. For example, there is no Limited Proffesional User in S/4. The proper allocation of LPU users with ECC on the S/4 environment may therefore necessitate a significant cost increase when consuming that user's PU license on S4.

    Alina Bączek