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Optimize SAP Licenses Before Preparing for S4/HANA Migration

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  • License Optimization

Get your ECC in order to save on FUE 

Migrating to the SAP S/4HANA system is a step that more and more companies are taking to align their organization with the demands of the modern business world. However, before diving into this process, there's a crucial step that can lead to significant savings – optimizing your SAP licenses. 

Before you start pre-migration analysis:

Migrating to SAP S/4HANA is a process that requires careful planning and preparation. The transition to a modern ERP system can bring many benefits, but it can also be a challenge for the organization. Before starting the migration, it is worth paying attention to several important issues that can be crucial to the success of the entire project and, most importantly, bring tangible savings (compared to the value of the S/4 license in case of ineffective preparation). 

Step 0 - Get your SAP ECC licenses in order before you get a quote for SAP S/4HANA 

A classic example of migration is the one where you start mapping the current user licenses named in the ECC system to those present in S/4HANA.  

Watch out for these traps:

  1. New types of licenses - The difficulty of mapping user licenses directly. 
  2. Do all current users really need access to SAP? 
  3. Do current users have relevant license types (consistent with what they use today)? 
  4. Consolidation of users (for more production systems). 

Each of the above represents a separate level of challenge. Addressing these topics appropriately can reduce (in our experience - significantly) the number of licenses needed to purchase for the S/4 environment. So in sequence: 

1/ New types of licenses – Savings on the order of 10-30% 

The first thing that should catch our attention is that there are new user types. They do not correspond directly to those we are familiar with from SAP ECC environments. For simplicity's sake, we'll focus only on licenses for dialog named users (I'm skipping Engine Use, Technical Use and Engine Use). 

The new types of named user licenses (dialog, business users) are: 

  • Professional Use 
  • Functional Use 
  • Productivity Use 
  • Developer Use 

We immediately note the absence of Limited Profesional, which in itself may present the challenge of not being able to directly transfer the corresponding license to the new environment for those users who have SP today. 

As an additional example, in SAP ECC, all users involved in sales activities had to be assigned an expensive Professional User license. In the new environment, if a user is involved in some of the sales activities, there is no need to assign the highest license level to that user, because Functional Use already has those activities.  

Here is an excerpt from the standard SAP contract:

S/HANA Enterprise Management for Functional Use
– Sales (Sales Quotation Management, Sales Contract Management, Sales Order Management, Incentive and Commissions Management, Sales lead Management, Activity Management, Account and Contact Management, Sales Master Data Management, Sales Billing, Solution Billing, Sales Rebates Management, Claims, Returns and Refounds Management, Sales Monitoring and Analytics)

The next example - the Worker User license. Here, too, it is not possible to directly transfer the license from the old type to the new one. Depending on the activity of a given Worker User - it can be assigned in S/4 to Productivity or Functional Use.  

Here is an excerpt from the standard SAP contract:

S/HANA Enterprise Management for Functional Use
- Suply Chain (Goods Movement, Inventory Analytics, Returnable Packing Logistics, Warehouse Management, Delivery Management, Transportation Management, Available to Promise Physical Inventory, Handle Unit Management, Serial Number Management)

- Manufactoring (Material Requirements Planning, External Processing, Production Execution, Subcontracting, Just-in-time Processing, Kanban, Production Control, Repetitive Manufacturing, Quality Planning, Quality Improvement, Quality Inspection, Production BOM Management, Recipe/Routing Management, Manufacturing Analytics)

- Asset Management (Maintenence Planning and Scheduling, Maintenence Execution).

S/HANA Enterprise Management for Productivity Use
- Supply Chain (Goods Movement, Warehouse Management, Delivery Management, Available to Promise, Transportation Management, Physical Inventory, Handling Unit Management, Batch Management, Serial Number Management)

- Asset Management (Maintenence Execution).

- Manufacturing (Material Requrement Planning, Production Execution, Production Control).

Solution: 

Verify how your users behave. For an ECC environment, it is necessary to validate what transactions your users actually use. If you know the answer to this question (and it is in ST03, for example) you can proceed to step two - contextual validation of a specific license type.  

Rule-set transactions for the Professional user

In addition, it should look at those who have not logged into SAP for several months. Do they need a user? Maybe they are no longer working? Or are they external consultants who are no longer on projects? 

Solution: 

Regular analysis of inactive users. This will allow for an update that may result in the release of an unused license by a user. Or, in the case of moving from ECC to S/4, a contextual assessment of how and which users actually need a license on the new environment. 

3/ Does the user have the right license today? 

Savings of 5-15% 

In our experience, in any system that is not supported by automated identification of the correctness of the assigned license - there is a pool of users who are significantly assigned licenses that deviate from the optimal. 

If a user has an expensive and superfluous (to him) Profesional license on ECC, the corresponding license in the S/4 environment (Profesional Use) is also likely to be inappropriate (that is, too expensive, and unnecessary). 

Appropriate assignment of licenses today, therefore, may not so much save money for the current environment, but significantly affect the lower value of target licenses for S/4. Especially since in the case of the FUE model - fees are incurred monthly.  

It is worth noting the distribution of FUE weights: 

1 FUE = 0.5 SAP S/4HANA Cloud developer access
1 FUE = 1 SAP S/4HANA Cloud for advanced use
1 FUE = 5 SAP S/4HANA Cloud for core use
1 FUE = 30 SAP S/4HANA Cloud for self-service use 

Solution: 

On an ECC system, be sure to perform an analysis to answer the question of whether the type of license can be replaced (for a particular user) with another, more optimal, license. This will allow you to verify whether you can start saving money before moving to a new environment.  

4/ Consolidation of users - are users double counted? 

Savings of 5% (for 2+ production systems) 

For environments containing more than one production environment, it is necessary to implement consolidation. If your employees have users on more than one system, then (according to contractual provisions) the license should be charged only once. Only the one with the highest value is then taken into account.  

The example in the table below illustrates how the license is calculated for each user in a multi-system environment. 

Errors that result from incorrect consolidation (or, to put it simply, result from the lack of consolidation) are, for the above example, the following scenario:

Solution: 

The need to map employees to owned users on multiple systems. Only then are you able to guarantee that you are not paying for licenses where they are not needed. 

Summary 

In the case of migration to S/4, in addition to the obvious topics arising from the preparation of a functional roadmap for the new environment - a solid analysis of 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. 

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

From the above, you can see that after optimization, we are able to save 227 FUE while maintaining the number of users, and the licenses will directly comply with the subscription agreement.  

SAP licenses are a significant component of the costs associated with using that company's ERP system. Before migrating to S/4HANA, it is a good idea to carefully review your current licenses to ensure that they are optimized for the actual uses system. 

Join us for a webinar

On March 20 at 12:30 pm, our expert Tomasz Jurgielewicz will talk more about how to approach SAP license analysis and optimization before migrating to S4/HANA. Register now!

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Tomasz Jurgielewicz

Head of Security Department at Lukardi. For the past 10 years, he has led a team of SAP Security specialists, providing comprehensive services and tools to secure SAP systems and optimize licenses. Experience in the areas of: - identification of authorization conflicts and authorization reorganization, - identification of SAP vulnerabilities, - integration of SIEM solutions with SAP, - optimization of SAP licenses.