Elimination of the product conversion

S/4 licenses

For all existing customers who have not yet purchased this 9,000-euro license, the only option is the so-called contract conversion. This is often really expensive: The change from the previous usage-based licensing to the new authorization-based licensing dramatically increases the licensing requirements for many customers. Previously very generous authorization models often cannot be changed, or can only be changed at great expense. Or there are individual absolutely necessary authorizations that require expensive license types. A former DSAG board member publicly described this as "fraud against SAP customers" in May 2023. Clear words!

The new S/4 license products, which are required by many existing SAP customers in addition to the named user licenses, often have less favorable metrics and have become more expensive. Long-standing customers often have more favorable arrangements with SAP, sometimes for indirect use, and often have special users in their inventory that differ from the price list. With the previous product conversion, existing rights and favorable licenses can be saved for the future.

Expensive Contract Conversion

For customers where a lot of shelfware exists, the runtime of the Compatibility Packs is not sufficient, many new or many SAP license products are used that no longer require a named user license in S/4, the Contract Conversion may be the better way. This needs to be examined and determined on an individual basis. Tools can help with this. The SAP Licensing Working Group team has many years of experience and creates transparency for its members. Experienced, reputable SAP licensing and contract consultants such as the HiSolutions team can advise companies effectively and efficiently on licensing SAP S/4 Hana and avoid bad investments with high follow-up costs.

With contract conversion, the existing SAP customer loses all old rights and switches to the current and often less favorable license model. Additional agreements in accordance with the old provisions can usually not be enforced, or only to a limited extent. In addition, the value of the new contract must be at least two percent of the list price of the included licenses higher than before, regardless of whether these license requirements actually exist.

Additional costs for the mandatory Hana database: Until now, SAP customers could use databases from various manufacturers and often license them more cheaply. With the compulsion to use the Hana database, not only does the cost block increase (by 15 percent in most cases), but also the dependency on SAP. The value of previous non-SAP database licenses is not taken into account by SAP and is forfeited without replacement. During the transition phase, which can sometimes last for years, maintenance costs are also incurred for both databases. 

SAP punishes those who are late

During a grace period of 90 days until July 16 of this year, companies can continue to purchase the SAP S/4 Hana Enterprise Management for ERP Customers (# 7018538) flat rate, even though it is already no longer included on the SAP price list. This is an option that does not have to be used immediately. In parallel - or even later - it can be evaluated whether, if necessary, Contract Conversion or Rise with SAP is the better option.

SAP Cloud - only or first

A turnaround due to sales pressure and tricks such as the elimination of product conversion? Already at the beginning of the year, it became known that SAP sales was focusing on the topic of cloud and significantly reduced the commission for sales of the proven SAP on-prem products. The current increase in the cost of converting to S/4 Hana increases the pressure on on-prem customers even more.

Audit revenue for SAP instead of added value and benefits for existing customers: During the pandemic, SAP had often dispensed with surveying. Now, it is not uncommon for measurements and audits to be carried out with a heavy hand. The focus here is on "misuse" of the Hana runtime database, developer licenses and indirect use. As a way of "curing" SAP license deficits, SAP sometimes also offers the conclusion of larger SAP cloud contracts, especially Rise with SAP.

Rise and Grow with SAP

With the complete package "Rise with SAP", SAP offers - as with "Grow with SAP" for public cloud - a new form of cloud transformation. Investments already made in on-prem software are not taken into account. The subscription model forces SAP customers into a permanent dependency and consistently generates profitable revenues for SAP. 

You can find out more about HiSolutions SAP SAM consulting at hisolution.com/sap. If you are looking for competent advice on SAP licenses and contracts, feel free to contact our experts: sam@hisolutions.com