The way is called S/4

Then your decision has just been simplified: Product Conversion as an option is off the table. I had just finished writing my article for the licensing column when the mail from DSAG e. V. about the new PKL Q2/2023 popped up: SAP S/4 Hana Enterprise Management for ERP customers is no longer included in the SAP price list. Therefore, I will address this topic in this license column, as some customers were very surprised by this decision.

You are still working with SAP ERP Central Component (ECC) and want to migrate to S/4 Hana? Then please note now that a product conversion is no longer an option if you do not already have S/4 Enterprise Management for ERP customers in your current Bill of Material.

The removal of SKU 7018538 SAP S/4 Hana Enterprise Management for ERP customers from the SAP price list means that this offering is no longer available for purchase. Instead, existing customers must purchase license 7018652 SAP S/4 Hana Enterprise Management for Professional, for example. This change applies to both new customers and existing customers of the ERP installation base.

Previously, customers could convert existing licenses for each product to the corresponding S/4 solutions step by step during a product changeover (one-to-one conversion). Companies thus had the chance to keep their existing contracts and framework agreements; ECC 6.0 and S/4 Hana solutions can be operated in parallel. However: Only those products that are also owned at the time of the transformation can be converted to the respective S/4 equivalents as part of the product conversion. The limitation here is on solutions that also already exist in S/4 Hana.

According to market researchers at Lünendonk, Product Conversion was the preferred path to S/4 Hana at 57 percent; after all, Product Conversion enabled customers to retain historically "good" license terms. It also offered existing SAP customers the opportunity to migrate to S/4 products at their own pace. There was previously no end date by which the transformation had to be completed. Compared to contract conversion, there was also the advantage for companies of being able to retain the favorable special user types.

The deletion of S/4 Hana Enterprise Management means that existing customers will have to undergo a "Full" S/4 Hana Contract Conversion, i.e. a conversion process from their current ERP system to the new S/4 Hana system. The license material will be locked with status A8 (Special Approval Required) starting at the end of Q2/2023, which means that existing customers will need a special approval to continue using the previous offering (in most cases, this will be a "More of the Same" arrangement where customers have purchased this SKU before).

It is important to note that the SUR (SAP Upgrade and Update Roadmap) and the S/4 Hana Conversion Policy have also been updated, so customers will need to review these changes carefully to ensure they are aware of any new requirements and processes associated with the conversion.

If you are about to migrate to S/4 and have considered product conversion, but do not have the license for S/4 Hana Enterprise Management for ERP Customers, the removal of an option adds an extra layer of complication, and negotiating a contract conversion becomes complex. Negotiations are difficult and the implications of the decision extend beyond the next few decades. Every customer knows SAP's preference on the cloud topic and that good prices are often only possible in combination with a cloud contract. But the relationship between cloud volume level, discounting for conversion and add-on products in line with contract history is complicated. Now it is even more important to develop the most sensible negotiation strategies in an optimal way.