S/4 Hana Transformation and SAP Licenses

In 2030, the final hour comes for SAP Business Suite 7. Until then, customers can leverage SAP support at a premium. It’s still unclear if more time will really help companies in migrating to S/4 Hana, even though SAP is trying to simplify its product portfolio.

Switching to the new software generation will be far from easy, however, and licensees should start preparing as soon as possible, as there are many changes to consider.

No NUL in SAP S/4 Hana

The first simplification comes with the choice of database. Switching to S/4 means switching to Hana as well, making third-party databases obsolete. Instead of 131 Named User Licenses (NUL), S/4 offers four Direct User Access Licenses for digital core use; one of which is a developer user while the other three are enterprise management users with varying authorizations.

Commercial license management can therefore be simplified, even though additional contract clauses can still be negotiated. The four new license types are not assigned to real persons but are instead connected to user accounts on a technological level.

Line of Business (LoB) solutions have been simplified as well. This means a smaller Engine portfolio with fewer customer and industry specific modifications. Licensing is value-based. Use generally only requires the corresponding LoB license. In theory, these applications can be used by accounts without User Access licenses. In practice, however, companies have to prove that user accounts only use LoB functionalities and don’t access the digital core.

What to do with existing licenses?

A simplified portfolio is a welcome change, but how can companies transfer their existing licenses to S/4 Hana? SAP yet again chose the simple route, crediting previous licensing investments.

However, many customers struggle with accurately assigning existing NUL to new S/4 Hana users. Similar NUL have to sometimes be assigned to different S/4 Hana users. Some NUL might prove worthless in the new system environment as the licensed product doesn’t exist anymore, or the use of one specific functionality doesn’t have to be licensed anymore.

Two transformation models offer methodical approaches to tackle these challenges. Greenfield (new implementation) and brownfield (software upgrade and data transformation) both have different advantages and disadvantages depending on individual business cases, making it crucial to evaluate on a case-by-case basis. SAP also offers various tools (like S/4 Hana Migration Cockpit) that should be used for planning and implementation.

Which existing licenses should be assigned to which user accounts in S/4 Hana? Which Line of Business solutions should be chosen? How would a successful contract conversion look? Many outcomes are still uncertain, as most of them depend on customers’ decisions. The only certainty: The work of all license managers will remain exciting!