License measurement under SAP S/4HANA: In three steps to optimal licensing

Authorization instead of actual use

If you’re planning to introduce SAP S/4HANA, you should consider an SAP license strategy – it’s a crucial part of the migration project and a significant cost driver. A well-thought-out authorization and licensing concept can save a lot of money, better meet compliance requirements, and help avoid access risks.

With SAP S/4HANA, the licensing model has fundamentally changed. Anyone who switched from older SAP products to SAP S/4HANA before June 30, 2023, had the option to choose between two licensing models: Product Conversion, which allowed them to retain their previous license agreement, or Contract Conversion, where a new license agreement was established. However, SAP has now removed the flat fee for Product Conversion from the price lis – this model is no longer available.

Anyone moving to SAP S/4HANA now must use Contract Conversion. Existing contracts are replaced, and new licenses for SAP S/4HANA are issued under a new contract. The key difference from the old licensing model is that user classification is now based on assigned authorizations within systems, not actual usage. A generous authorization concept can quickly become very costly, not to mention the compliance risks. To ensure cost-effective licensing, regular measurement of license use is crucial. Results from these measurements help organizations to optimize and align license assignments across various systems, minimizing unnecessary costs and maintaining compliance.

New user types

With the new model, SAP has also reduced the number of user types to just a few, which mainly differ in terms of their authorizations and usage scenarios. The most common types are the Professional User, the Functional User, and the Productivity User. As a result, all users within the company must be reclassified. While the new classification is more standardized and straightforward, it offers less flexibility for individual customization.

A step-by-step approach pays off

Customers are responsible for complying with the license terms. However, SAP typically requests that its customers measure their licenses once a year or on specific occasions and submit the results to SAP. This ensures compliance with the license agreements or, in the event of breaches, prompts customers to purchase additional licenses or make adjustments. This process can be seen as an audit to verify proper license usage.

Companies can also use these measurement tools to optimize their license landscape, identify potential savings, and reduce compliance risks. The following three steps have proven effective:

1. Careful user classification

The first step is to prepare the system landscapes — this includes both the production and development systems — for measurement. This involves gaining an overview of the licenses and performing a user classification, where users are analyzed, and their access rights and required licenses are adjusted accordingly. All existing licenses should be thoroughly reviewed, for example, to correct blocked or inactive users and to ensure compliance. The goal is to avoid expensive licenses for unnecessary users and thus prevent additional licensing costs.

2. SAP S/4HANA license measurement

SAP S/4HANA license measurement is primarily a quantitative evaluation where the actual status is read. The measurement is carried out using tools such as USMM, which classifies users and measures the system, and SLAW (SAP License Administration Workbench), which consolidates the results from a system landscape.

3. License optimization

If the initial system measurement indicates under-licensing or reveals numerous inconsistencies, these should be reviewed and corrected, especially if the license quota has been exhausted and new licenses need to be purchased. Further potential for improvement often lies in incorrectly assigned licenses, for example, users with duplicate roles or inactive accounts. If users have been inactive for more than 90 days, they should be blocked, and their licenses reallocated to new users. After these optimizations, measurements are taken again using a dedicated tool, and the results are summarized in a report and sent to SAP. The optimized results are then compared with the license agreements and submitted to SAP.

Advantages of the new license measurement model

The new license measurement model provides a clearer view of the licenses in use, enabling companies to better understand their licensing situation and access critical information about license allocation. Regular measurements allow businesses to identify trends and changes in license usage and take action, for instance, when employees go on parental leave or resign. Since licenses remain valid, they can be redistributed based on the results of these SAP licencse measurements. The new model also allows for more precise allocation of licenses, making it easier to avoid over- or under-licensing. This process is supported by advanced technology to ensure accuracy and efficiency.

Experts for active license management

As an SAP customer, it’s best to seek external support from experts who understand the key aspects of the new model, ensuring compliance with licensing requirements and knowing how to manage active license management effectively. These experts can provide valuable information and services to help you navigate the complexities of the new system.

Whether you’re a consolut customer or a new client, we prepare your system landscapes for measurement, support you during the process, and optimize your license landscape afterward. Our service offerings ensure seamless access to expert guidance at each stage. We can also advise you on just one step or all of them – whichever you prefer.