Examples of SAP Package Licenses

Examples of SAP Package Licenses

SAP Package Licenses

SAP’s on-premise ERP solutions (ECC and S/4HANA) require not only named-user licenses but also SAP package licenses (often called engine licenses) for certain functional add-ons. Usage metrics rather than per-user fees measure these package licenses.

Below, we explore real-world examples of how key SAP modules—SAP Payroll, SAP CRM, SAP EWM, and SAP GTS—are licensed by specific metrics.

We also note differences between standard and enterprise editions where applicable.

Each example illustrates how the licensing metric ties to business usage, ensuring that costs scale with the scope of activity.

SAP Payroll Processing:

SAP’s payroll engine is typically licensed based on the number of employees or payroll master records being processed.

In practice, a company purchases the Payroll engine for a certain headcount band (for example, up to 5,000 employees, up to 10,000 employees, etc.).

This metric aligns cost with workforce size—a larger workforce means more payslips and thus a higher license tier. There is usually no formal “standard vs. enterprise” version of Payroll; the differentiation is in volume tiers.

However, an enterprise-scale license would cover a higher employee count (suitable for large corporations), whereas a smaller package might suffice for mid-sized firms.

The metric definition is crucial: typically, it counts active employee records processed in the payroll system (often measured at peak usage in a year).

Companies must monitor their HR headcount closely because growth through hiring or acquisitions can quickly push them into a higher licensing bracket.

For example, if an organization licenses SAP Payroll for up to 5,000 employees and then grows beyond that, it would need to upgrade to a higher tier.

This model ensures that a company with 50,000 employees pays more for payroll functionality than one with 500, reflecting the engine’s business value.

Read Common SAP Engine Metrics.

SAP Customer Relationship Management (CRM):

SAP CRM (the on-premise CRM component of SAP Business Suite) historically required a separate engine and user licenses. Unlike many other engines, SAP CRM’s licensing often involves a mix of metrics.

The primary driver is typically the number of CRM users (sales, service, marketing personnel using the CRM system), each needing the appropriate named-user license.

Regarding package licensing, SAP CRM may also be tied to metrics such as the number of active business partner records (customers) or annual sales revenue managed through the CRM, depending on the contract.

For example, a contract could specify that the SAP CRM engine covers up to a certain number of customer accounts or a revenue volume for loyalty management purposes. As a “standard” edition, a base CRM license might include core sales, service, and marketing functionalities.

An “enterprise” CRM package could refer to licensing additional advanced components (such as SAP Trade Promotion Management or advanced marketing analytics), which might carry their own metrics.

However, in the ECC era, CRM was often just one package; clients could license individual CRM modules (Sales, Service, Marketing) as needed.

In S/4HANA, some basic CRM capabilities (such as customer management) can be embedded in the core. Still, full-fledged CRM functionality would require licensing either SAP’s cloud CX products or an external add-on.

Key point:

The SAP CRM engine exemplifies that even when user counts drive costs, SAP may still consider a usage metric (such as the number of customers or orders) to size the license appropriately for the business.

This ensures a large enterprise with millions of customers and high transaction volumes pays more than a small business using the same CRM software with a modest customer base.

SAP Extended Warehouse Management (EWM):

SAP EWM offers advanced warehouse and distribution capabilities that extend beyond basic inventory management in the core ERP.

There are notable license editions for EWM in S/4HANA:

Basic EWM (embedded in S/4HANA Enterprise Management license with limited scope) and Advanced EWM (a separately licensed engine for more complex needs).

The licensing metric for EWM is generally tied to warehouse activity volume.

In older ECC contracts, EWM could be licensed based on the number of delivery line items processed annually or the number of storage bins managed, depending on the scenario.

For instance, a “shipper” scenario (typical for manufacturers) might measure the count of outbound delivery items (each unique material in a delivery) over a year, whereas a “3PL warehouse” scenario might measure handling units or storage slots utilized.

Under S/4HANA, SAP offers basic embedded EWM for free but with limits (for example, it may support only a certain number of warehouse orders or exclude advanced features like automated material flow).

The company must license the EWM engine (Advanced EWM), which uses a metric such as the number of warehouse objects or annual documents to go beyond these limits.

A real-world example: a firm might obtain Basic EWM for a small warehouse, but if they operate a large distribution center processing 1,000,000 delivery items per year, they require the Advanced EWM package, which may be sold in blocks (e.g., per 100,000 or 500,000 delivery documents).

The “enterprise” version (Advanced EWM) thus handles high-volume, complex warehouses and might allow unlimited locations, whereas a “standard” included version is for low-volume use in a single ERP instance.

The difference ensures that companies pay proportionately for how intensively they use warehouse management functionality.

SAP Global Trade Services (GTS):

SAP GTS is a customs and trade compliance engine. Its licensing is typically based on transaction or document volumes or the scope of trade operations.

A common metric for GTS is the number of international trade documents (import/export declarations) processed annually.

For example, a company might license SAP GTS for up to 20,000 customs declarations yearly, with higher volumes requiring additional licenses.

SAP has offered different editions of GTS; notably, a limited “SAP GTS, Export for Midsize Companies” edition exists, which caps the usage to a certain scope (for instance, it might allow only up to 3 countries for export processing).

This can be seen as a “standard” smaller package targeting mid-market firms with simpler needs. The full GTS (enterprise edition) has no such country limitation and can handle global trade volumes across dozens of countries, but is correspondingly priced higher.

Another metric variant could be annual trade volume in value or the number of legal regulations supported, though documents/transactions are the most common, as they directly reflect system usage.

In summary, a firm with relatively low international shipping volume might opt for the limited GTS package (lower cost, limited scope).

In contrast, a multinational with heavy trade compliance requirements would need the unrestricted GTS engine licensed, perhaps in volume bands of documents.

The license cost will increase if the multinational doubles its export orders, as more trade documents will flow through GTS. This metric-driven model aligns the cost with how much value the company derives from automating global trade processes.

Comparative Summary:

The table below compares these engines and their typical license metrics, highlighting any standard vs. enterprise distinctions:

Each example demonstrates SAP’s approach of tying license fees to a concrete business metric. Organizations need to understand the precise definitions (e.g., what constitutes an “employee” or a “document”) in their contracts.

Misinterpreting a metric can lead to compliance issues, such as counting only full-time staff.

Still, excluding contractors from a payroll metric could be an audit risk if the contract includes both.

Similarly, using an engine beyond its “standard” edition limits (like exceeding the embedded EWM’s allowed throughput) effectively means using unlicensed capacity.

Recommendations:

• Align License Choice with Your Needs: Select the appropriate edition or package size tailored to your business. If you operate on a smaller scale, consider standard or limited packages (when offered) to save cost. If your operations are growing or already large, it’s safer to opt for the enterprise-scale license upfront to avoid overage penalties.
• Understand Metric Definitions: For each engine, ensure that you clearly define its metric as specified in your SAP contract or Software Use Rights. Know exactly what is counted. This clarity will help you manage your usage effectively. For example, confirm whether the “number of employees” metric counts contractors or only active payroll employees.
• Monitor Usage Against Entitlements: Maintain an internal log of the relevant metrics (e.g., employee count, documents, revenue). This allows you to see if you are nearing the licensed limit. If you approach a threshold (e.g., 90% of licensed documents used in GTS), you can start discussions to extend the license or take corrective action before an audit finds you non-compliant.
• Leverage Volume Tiers: If SAP offers volume-based tiers (such as blocks of 1,000 employees or 100,000 documents), negotiate a tier that provides a buffer. It can be more cost-effective to buy a slightly higher block now than to frequently true-up small overages. Conversely, avoid paying for an enterprise license that exceeds your needs – tailor the contract to your realistic usage with some room for growth.
• Review “Free” Embedded Functionality: In S/4HANA, identify which engines include a basic version (such as EWM or Transportation Management). Review their usage limits (transaction caps, restricted features) and ensure your usage stays within those if you haven’t licensed the full engine. This may mean consciously avoiding the use of certain advanced features until you have acquired the license. Setting governance here prevents accidental scope creep into unlicensed territory.