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Business Suite by 2027 means increasing cost risk

The maintenance extension for Business Suite 7 means good news for SAP customers who are still in the early stages of their S/4 Hana migration efforts. Likewise, the cost risk for third-party databases increases.
Felix Baran, Complion
April 30, 2020
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Licenses
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This text has been automatically translated from German to English.

It is well known that databases from third-party providers can be acquired as so-called runtime usage rights via SAP, but are then limited to exclusive use with the respective SAP software.

Over time, SAP has sharply increased the price premiums for these databases in favor of its Hana DB (up to 25 percent on the software application value (SAV) for Oracle).

With the purchase of the first license for Hana, Runtime Edition for Applications and SAP BW (REAB), the assessment basis for license and support fees for third-party databases changes.

This is because the Hana DB license value (currently 15 percent of the total Hana-relevant software application value (HSAV)) is also added to the SAV and thus has the additional effect of increasing the license and support fees for third-party databases.

This so-called "full option" is most frequently offered by manufacturers, but from the customer's point of view it is usually the most expensive variant. Instead, the purchase of a Hana REAB partial license can provide a remedy. This license covers only those parts of the SAP landscape that are technically based on a Hana database.

Accordingly, the calculation basis is reduced to the acquired usage volume (HSAV) of the corresponding SAP software components. In total, a maximum of 75 percent of the total HSAV can be licensed in this way; beyond this, a switch must be made to a full option license.

If Hana is initially only to be used for SAP Business Warehouse (BW), a runtime license for SAP BW with a surcharge rate of "only" 8 percent can also be considered.

As a prerequisite for partial Hana licensing, systems (installations) based on Hana must be separated from those based on third-party databases. In addition, communication between the separated systems may only take place at the application level using APIs.

A third alternative can be the purchase of a direct license from the database manufacturer. However, the IT infrastructure of SAP databases is usually not license-optimized if it was previously covered by runtime licenses (for example, if Oracle databases are used under VMware). For this reason, an assessment of the technical adaptation effort should always be made before changing the license model.

An additional cost risk is that the procurement and future support for third-party database licenses beyond 2025 have apparently not yet been clarified.

SAP note 2881788 provides the following information: "Runtime licenses for third-party databases are not affected by this new maintenance strategy of Business Suite 7. Treatment of third-party runtime databases after 2025 will be announced once coverage from these vendors is confirmed."

It is quite possible that Oracle, IBM, and Microsoft see this as the last chance to make a big dent in the fees for renewals before the foreseeable departure of their products from the SAP world.

Costs that SAP will then willingly pass on to its customers, especially since any increase in the cost of competing products is the best argument for its own Hana database.

The parallel operation of Hana and third-party databases can result in very high licensing costs. This is particularly the case if there is no clear demarcation in licensing.

The still unclarified contractual relationships for the period up to 2027 between SAP and the third-party providers further increase this cost risk. Solutions here could be partial database licensing or direct procurement from the database manufacturer.

If you are planning to migrate to S/4 in the medium term anyway, it may also make sense to push ahead with the complete migration to Hana and to take the first migration step in the direction of S/4 with Business Suite on Hana.

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Felix Baran, Complion

Felix Baran is co-founder and Senior License Expert at Complion.


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Work on SAP Basis is crucial for successful S/4 conversion. This gives the so-called Competence Center strategic importance among SAP's existing customers. Regardless of the operating model of an S/4 Hana, topics such as automation, monitoring, security, application lifecycle management, and data management are the basis for the operative S/4 operation. For the second time already, E3 Magazine is hosting a summit in Salzburg for the SAP community to get comprehensive information on all aspects of S/4 Hana groundwork. With an exhibition, expert presentations, and plenty to talk about, we again expect numerous existing customers, partners, and experts in Salzburg. E3 Magazine invites you to Salzburg for learning and exchange of ideas on June 5 and 6, 2024.

Venue

Event Room, FourSide Hotel Salzburg,
At the exhibition center 2,
A-5020 Salzburg

Event date

June 5 and 6, 2024

Tickets

Early Bird Ticket - Available until 29.03.2024
EUR 440 excl. VAT
Regular ticket
EUR 590 excl. VAT

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Venue

Event Room, Hotel Hilton Heidelberg,
Kurfürstenanlage 1,
69115 Heidelberg

Event date

28 and 29 February 2024

Tickets

Regular ticket
EUR 590 excl. VAT
The organizer is the E3 magazine of the publishing house B4Bmedia.net AG. The presentations will be accompanied by an exhibition of selected SAP partners. The ticket price includes the attendance of all lectures of the Steampunk and BTP Summit 2024, the visit of the exhibition area, the participation in the evening event as well as the catering during the official program. The lecture program and the list of exhibitors and sponsors (SAP partners) will be published on this website in due time.