Future Trends in SAP Licensing Metrics
- Shift to Usage-Based Licensing: Pay based on actual software usage.
- Emphasis on Cloud and Hybrid Models: Cloud-based metrics will grow.
- Increased Focus on User Roles: Licensing tied to specific user tasks.
- AI-Driven Licensing Models: Automation of license management.
- Real-Time License Tracking: Continuous monitoring for compliance.
Future Trends in SAP Licensing Metrics
The SAP licensing landscape transforms significantly as the software giant adapts to modern business needs and technological advancement.
With companies striving for digital transformation, cost optimization, and scalability, SAP’s licensing models are evolving to reflect these goals.
In this article, we will explore the emerging trends reshaping SAP’s licensing approach, focusing on authorization-based licensing, document-based digital access, cloud-centric models, AI influences, industry-specific solutions, and strategic planning for businesses.
Authorization-Based Licensing: A Fundamental Shift
One of the most notable changes is SAP’s gradual move from usage-based to authorization-based licensing.
This shift impacts companies with existing S/4, Rise, or Grow contracts and those planning to migrate once ERP/ECC 6.0 support ends.
In an authorization-based model, licensing costs are directly linked to user authorizations rather than simple log-in or system access metrics.
This change means that:
- Organizations must rethink their approach to license management.
- There is now a learner classification of license-relevant authorizations, helping companies manage licenses more effectively.
- Star Services provides a classification for nearly 3,000 authorizations, creating opportunities for optimization through proper authorization management.
While this transition may initially pose challenges in understanding and managing authorizations, it also presents optimization potential. Companies can mitigate risks associated with unnecessary license costs with a well-organized review of user authorizations.
Additionally, as companies adapt to this model, they must invest in training and technology to ensure that employees understand the implications of authorization-based licensing.
Companies that succeed in doing so will benefit from optimized license usage and improved compliance, while those that fail to adapt could face significant cost overruns.
Impact on License Management
The change to authorization-based licensing impacts how organizations approach license management. Previously, counting the number of users accessing a system was enough to determine license requirements.
Now, companies need to:
- Establish a clear classification of roles and authorizations.
- Regularly audit user authorizations to ensure compliance.
- Use data to identify optimization opportunities, such as redundant roles or excessive authorizations.
Proper management of user authorizations can help companies minimize over-licensing and reduce overall costs.
In addition, tools and automated systems can also play a vital role in streamlining the review process, making it easier to track which users have access to what resources and determine the necessity of such access.
Read about real-time monitoring of sap licensing.
Document-Based Digital Access: A New Pricing Model
The evolution toward document-based licensing represents a significant departure from traditional user-based models.
This new approach focuses on document types rather than individual users:
- SAP now charges based on nine distinct document types, each with its specific pricing multiplier.
- Charges apply only to the initial document creation; subsequent operations do not incur additional costs.
- This new model accommodates system-generated records, especially through third-party access.
This presents a significant shift in how organizations think about licensing costs. Instead of focusing solely on the number of users, companies need to monitor their document creation and integration activities closely to avoid unexpected licensing expenses.
A key advantage of this model is that it can reduce costs for companies that frequently interact with external systems or third-party applications.
Document-based pricing also encourages better management practices around system integration, where companies are incentivized to eliminate inefficient document generation or redundant processes that might add unnecessary costs.
Cloud-Centric Licensing Models
As SAP evolves, cloud-based licensing models are gaining traction. The rise of S/4HANA Cloud has introduced the concept of Full Use Equivalent (FUE) Licensing. In this model, licensing costs are calculated based on weighted user types:
- Different license types have different weightings, meaning fewer licenses may be needed than actual users.
- This provides more flexibility in the allocation of licenses and offers opportunities to optimize costs.
The shift to subscription-based licensing is another major trend. This model offers several key benefits:
- Greater flexibility in scaling up or down according to business needs.
- Lower initial investment, making it easier for companies to get started.
- Regular updates and innovations are provided automatically, ensuring that companies always have the latest SAP capabilities.
In a cloud-centric world, companies also benefit from the ability to quickly adapt their license usage to changing business conditions.
When combined with real-time analytics, cloud-based licensing gives companies the visibility they need to make informed decisions about license allocation, allowing them to adjust their licensing footprint to meet current demands without needing prolonged renegotiations.
AI and Automation: Impact on Licensing
With artificial intelligence and automation becoming more prevalent, SAP is adapting its licensing metrics to accommodate automated processes and machine-to-machine interactions. Key areas affected include:
- Bot activities and API-based integrations are now considered part of the licensing metrics.
- IoT device connections are also being considered, adding a layer of complexity to the licensing framework.
This means companies need to be more strategic about implementing automation and using machine learning within their SAP environment. Proper planning can help businesses avoid unnecessary costs and stay compliant.
Automated processes such as robotic process automation (RPA) also present new challenges and opportunities for license optimization.
Companies must determine which automated processes require licenses and under what conditions they can consolidate licensing requirements by optimizing workflows.
By clearly defining automation use cases and aligning them with SAP’s licensing policies, organizations can create opportunities for cost savings.
Consumption-Based Licensing Metrics
The future of SAP licensing is increasingly moving towards consumption-based models. This trend allows for a more dynamic measurement of actual usage, which brings several advantages:
- Real-time usage tracking lets companies understand their license needs better and make informed decisions.
- Flexible scaling allows businesses to increase or decrease their license usage based on their real needs rather than being locked into static models.
- More precise cost allocation ensures that companies only pay for what they use, reducing waste and inefficiencies.
Consumption-based models have become especially relevant in industries with highly variable demand. Companies can benefit from lower licensing costs during off-peak seasons while scaling up efficiently when business activity increases.
This model allows for better financial planning and transparency regarding how resources are used across the organization.
USMM 2.0: Enhanced Compliance and Optimization
SAP’s new USMM 2.0 tool represents a significant advancement in license management. Its key features include:
- Built-in authorization-based licensing guidelines, helping companies stay compliant with the new licensing model.
- Automated measurement capabilities make it easier for businesses to track and manage their licensing needs.
- Enhanced compliance monitoring reduces over-licensing risk and ensures proper alignment with SAP’s requirements.
However, this shift also brings optimization challenges:
- There is a risk of over-licensing due to authorization-based measurements.
- Regular authorization reviews are essential to ensure that users have only the authorizations they need.
- Proactive license management is necessary to minimize compliance risks and keep costs under control.
By leveraging USMM 2.0, organizations can gain deeper insights into license usage patterns, identify potential areas for optimization, and ensure that their SAP investments are being used effectively.
Furthermore, compliance monitoring is simplified, with automated checks ensuring users are allocated the correct authorizations based on their job functions.
Industry-Specific Licensing Metrics
SAP is developing more nuanced licensing metrics that cater to the specific needs of different industries. These industry-specific metrics may include:
- Number of employees or annual revenue as a metric for license allocation.
- Specific measurements, such as barrels of oil for the energy industry or storage volume for logistics companies.
- Processing capacity metrics, which could impact industries with high production volumes.
These specialized metrics allow for a more tailored licensing approach, helping companies in particular sectors avoid over-licensing and better align their SAP investments with their business operations.
For example, companies in the logistics industry might benefit from licensing metrics based on storage volume rather than traditional user-based metrics. This would allow them to scale licenses according to the size of their operations.
Similarly, manufacturing companies can adopt processing capacity metrics that align more closely with the production scale, creating opportunities to align licensing more accurately with business performance.
Hybrid Deployment Considerations
Many modern enterprises operate in hybrid environments, including on-premises systems and cloud solutions. SAP’s licensing models are adapting to accommodate these scenarios:
- Companies must consider multiple access paths, including on-premises systems, cloud solutions, and hybrid scenarios.
- Third-party integrations present additional complexities, particularly in terms of document-based access.
Organizations must be properly licensed across all deployment scenarios, avoiding potential compliance issues.
Hybrid deployments also require companies to implement robust monitoring systems that provide visibility into how users access SAP systems across different environments. This is especially important when users have multiple access points, leading to potential compliance risks if not managed properly.
Additionally, companies must understand the interplay between on-premises and cloud licensing metrics to avoid overpaying for licenses spanning both environments.
Businesses can ensure compliance while controlling costs by adopting a holistic licensing approach considering all potential access paths.
Read about SAP metrics for third party integrations.
Strategic Recommendations for Businesses
To successfully navigate these changes, companies should focus on both immediate actions and long-term planning:
Immediate Actions
- Conduct thorough authorization reviews: Assess all user authorizations and align them with actual roles and responsibilities.
- Implement robust license management processes: Regularly monitor usage, reassign unused licenses, and eliminate redundant authorizations.
- Prepare to transition to new licensing models by training staff and updating internal processes.
- Maintain clear documentation of system access patterns to help with future audits and compliance.
- Invest in technology solutions: Use tools and platforms that automate license tracking and make adapting to changing licensing requirements easier.
Long-term Planning
- Develop a comprehensive license optimization strategy to ensure your SAP environment is cost-effective and scalable.
- Invest in automated license management tools that simplify the process of tracking, managing, and optimizing licenses.
- Regularly review and adjust user authorizations to stay compliant and avoid over-licensing.
- Monitor emerging licensing trends and keep up to date with SAP announcements to prepare for future changes.
- Plan for hybrid deployment: Develop strategies to effectively manage licensing across cloud and on-premises systems, ensuring a unified approach to license management.
- Adapt to consumption-based licensing: Incorporate flexible models that align with business needs and understand how scaling requirements might impact licensing costs.
Cost Optimization Opportunities
Properly managing SAP licenses can result in significant cost savings. Here are some opportunities to consider:
License Consolidation
- Conduct regular user role reviews to identify users with excessive authorizations.
- Eliminate duplicate accounts and consolidate user roles to minimize license requirements.
- Classify user types properly and use limited access licenses strategically where possible.
- Align license requirements with specific job roles to avoid assigning high-cost licenses to users with minimal system interactions.
Digital Access Optimization
- Monitor document creation patterns to identify areas where costs can be reduced.
- Optimize third-party integrations to limit unnecessary document generation.
- Implement efficient document management processes to keep costs under control.
- Regularly review system-generated documents to identify and address any unnecessary or costly activities.
- Automate document processing to reduce errors and prevent unnecessary licensing costs from incorrect or redundant document creation.
FAQ: Future Trends in SAP Licensing Metrics
What is the shift toward usage-based licensing in SAP?
The trend moves away from fixed licenses to models where you pay based on actual software use. This allows businesses to scale costs with consumption.
How does cloud adoption impact SAP licensing metrics?
Cloud and hybrid environments change how SAP is licensed. Licensing will focus on cloud usage, resource consumption, and multi-cloud environments.
What role do user roles play in SAP licensing?
Licenses are now more directly tied to specific user roles. This ensures that you pay only for the needs of each user based on their tasks.
How is AI shaping SAP licensing models?
AI tools are increasingly used for automating license assignments, tracking usage, and adjusting costs dynamically. This reduces human error and helps optimize license allocation.
What is real-time license tracking?
Real-time tracking involves continuous monitoring of license usage. This helps ensure compliance and prevents over-licensing or under-licensing.
Are companies moving away from perpetual licensing?
The trend is shifting toward subscription or consumption-based models, providing more flexibility and cost efficiency.
How are hybrid models affecting SAP licensing?
Hybrid models combine on-premise and cloud-based licenses. This requires flexible licensing strategies to manage both environments effectively.
How will SAP’s licensing evolve with more automation?
Licensing will be more dynamic, adjusting automatically based on user roles, software usage, and system needs. This automation reduces administrative workload.
What impact do mobile and remote workers have on SAP licensing?
With more mobile and remote work, SAP will adapt to support licenses tied to users’ locations and devices, not just office access.
Is SAP moving toward a subscription-based model?
Yes, SAP is increasingly adopting subscription-based models, where businesses pay for the software based on usage over time.
How does SAP handle license compliance in a cloud-first environment?
Cloud-first strategies require more frequent tracking and adjustment of license assignments, ensuring that companies are not overpaying for unused services.
What is the future of SAP licensing audits?
As automation improves, audits will become more frequent but less disruptive, focusing on compliance in real-time.
How does data analytics impact SAP licensing?
Analytics tools help organizations track software usage patterns, allowing for better forecasting, more accurate licensing decisions, and cost savings.
What are the implications of AI-driven SAP licensing decisions?
AI can provide smarter recommendations for license allocation, reducing waste and ensuring that businesses only pay for what they need.
How does the move to digital transformation affect SAP licensing?
Digital transformation means SAP must adapt its licensing models to fit new technologies, cloud platforms, and flexible, on-demand usage.
