How to Calculate SAP S/4HANA Licensing Metrics
- Identify user roles: Match roles to the required licenses (e.g., Professional, Productivity).
- Evaluate modules: Determine the business modules in use (e.g., Finance, Logistics).
- Assess transactions: Track specific transaction types and volumes.
- Use SAP’s tools: Use SAP’s License Administration Workbench (LAW).
How to Calculate SAP S/4HANA Licensing Metrics
SAP S/4HANA is an advanced ERP solution that has become the backbone of many businesses. However, understanding the complexities behind its licensing structure is often challenging.
In this article, we break down how to calculate SAP S/4HANA licensing metrics to ensure you maximize value while keeping your costs in check.
We’ll cover the core concepts of licensing and different license types and provide examples to illustrate these points clearly.
1. SAP S/4HANA Licensing Models
SAP offers a variety of licensing models for S/4HANA, each tailored to different business needs. Licensing models generally fall into two main categories:
- Subscription Licensing: This model is often used for SAP S/4HANA Cloud versions. Users pay a recurring fee, typically monthly or annual, depending on their usage requirements.
- Perpetual Licensing: Common for on-premise deployments, the perpetual model involves paying a one-time fee and annual maintenance costs.
Understanding licensing metrics is critical for budgeting, compliance, and optimizing your usage in both models. Let’s explore the key components.
2. Key Licensing Metrics for SAP S/4HANA
To effectively manage your SAP licensing, it’s essential to understand the key metrics that determine the costs:
- Named Users
- Digital Access (Document-Based Licensing)
- Module-Specific Licenses
2.1 Named Users
Named user licenses are assigned to individual users who access the system. Each user is assigned a specific type of license, which determines their permissions and access level. There are different types of named user licenses, such as:
- Employee User: Designed for employees accessing limited functions like time tracking or viewing basic reports.
- Professional User: This is for users who perform extensive tasks like data entry, configuration, or management reporting.
- Developer User: Suitable for developers making changes to SAP applications.
Example: If your company has 50 employees using SAP S/4HANA for different purposes:
- 10 employees need basic reporting functionality (Employee User)
- 30 employees need transactional capabilities (Professional Users)
- 10 employees are developers working on SAP customizations (Developer User)
The licensing costs will vary based on the number and type of users.
2.2 Digital Access (Document-Based Licensing)
Digital access licenses cover the indirect use of SAP, meaning interactions that do not involve direct human activity within the SAP system. This type of licensing is typically document-based, meaning it measures the number of certain documents processed by the system, such as:
- Sales Orders
- Purchase Orders
- Invoices
Example: If your e-commerce system creates 10,000 sales orders per year integrated into SAP, these documents must be counted toward your digital access metric.
How to Calculate Digital Access Costs:
- Identify the types of documents involved.
- Count the number of each type of document generated annually.
- Use SAP’s pricing table to determine the cost per document type.
2.3 Module-Specific Licenses
SAP S/4HANA includes different functional modules, such as Finance, Sales, Manufacturing, etc. These modules often require specific licensing based on your company’s needs.
- SAP S/4HANA Finance: Licenses are needed if your organization requires advanced financial planning, accounts payable/receivable, or asset management.
- SAP S/4HANA Sales: This license allows users to manage sales orders, pricing, and customer relationship management.
Each module has a pricing structure based on the number of users and the depth of functionalities required.
3. Step-by-Step Guide to Calculating SAP S/4HANA Licensing Costs
Here’s a structured approach to calculating SAP S/4HANA licensing metrics for your business:
Step 1: Define Your Requirements
- Identify User Roles: Determine how many users will need access and what type of access they require. Categorize them by license type (e.g., Employee, Professional, Developer).
- Evaluate Digital Access: Understand the types of non-human interactions with your SAP system and estimate the document volume.
- List Modules Required: Based on your business processes, make a list of the SAP S/4HANA modules your organization needs.
Step 2: Count and Categorize Users
- Create a detailed user inventory.
- Assign each user to a license category based on their job role.
- Use tools like SAP License Audit Management (LAM) to assess current usage.
Example: If your company has 100 employees and you categorize them as follows:
- 20 Basic Users (e.g., time tracking)
- 60 Professional Users (e.g., sales, finance transactions)
- 20 Developer Users
This breakdown will help you accurately estimate your costs.
Step 3: Calculate Module Licenses
- Identify the specific SAP S/4HANA modules needed (Finance, Manufacturing, Sales, etc.).
- Determine the number of users who need access to these modules.
Example: If 40 employees need access to the Finance module, you must include the licensing costs for those users.
Step 4: Estimate Digital Access Costs
- Calculate the number of documents processed annually.
- Use the SAP digital access cost calculator to estimate costs for these documents.
Example: If your system processes 5,000 purchase orders and 10,000 sales orders per year, you will need to calculate the cost per document type.
4. Common Challenges in SAP Licensing
4.1 Indirect Access
One of the most common challenges in SAP licensing is indirect access. This occurs when third-party applications interact with SAP without direct user login.
SAP has introduced digital access licensing to address this issue, but understanding what qualifies as indirect access can still be complex.
Solution: Always analyze third-party integrations and determine how data flows between systems. Track any systems that create, read, or update documents in SAP.
4.2 Over-licensing and Under-licensing
- Over-licensing: Paying for more licenses than you need can increase costs unnecessarily.
- Under-licensing: Not having enough licenses could lead to compliance issues and potential penalties.
Tip: Conduct a regular audit of your SAP environment. Utilize tools like SAP License Audit Management to match actual usage with purchased licenses.
5. Tips for Optimizing Your SAP Licensing Costs
- Regular User Audits: Perform regular audits to determine if named users are active. Remove or reassign licenses as needed.
- Use License Management Tools: Tools like Snow Software or Voquz can help you track and optimize SAP license usage.
- Negotiation: Always negotiate with SAP for the best deal, particularly when expanding your user base or adding new modules.
- Leverage Business Roles: Align user licenses with actual business roles to avoid assigning costly Professional licenses to users who only need basic functionality.
Example: You might find that several employees initially categorized as Professional Users only require basic data access, allowing you to downgrade their licenses and reduce costs.
6. Practical Example: Calculating Licensing for a Medium-Sized Company
Imagine a medium-sized company with the following requirements:
- 150 Total Employees:
- 50 Basic Users (HR and basic operations)
- 80 Professional Users (Finance, sales, and operations management)
- 20 Developers
- Modules Required:
- SAP S/4HANA Finance (for financial operations)
- SAP S/4HANA Sales (for managing customer orders)
- Digital Access:
- Processes 20,000 sales orders and 15,000 invoices annually.
Step-by-Step Calculation:
- Named User Licensing:
- 50 Basic Users: €X per user
- 80 Professional Users: €Y per user
- 20 Developer Users: €Z per user
- Module Costs:
- SAP Finance: Module cost is based on the number of users needing access.
- SAP Sales: Module cost for users in sales and customer relationship management.
- Digital Access:
- Calculate the cost per document for the 35,000 documents processed annually.
Read about SAP S/4 Hana Best Licensing Practices.
FAQ: SAP S/4HANA Licensing Metrics
What are SAP S/4HANA licensing metrics?
Licensing metrics define how licenses are allocated, such as by user type, data volume, or transactions.
How does SAP categorize users for licenses?
SAP categorizes users as Professional, Productivity, or Occasional based on system access needs.
Can licensing costs vary by module?
Yes, costs depend on activated modules, such as HR, Supply Chain, or Finance.
How do transactions affect licensing?
Some licenses are tied to transaction volumes or specific business processes.
What is the role of the License Administration Workbench (LAW)?
LAW consolidates system data to determine license requirements.
Do indirect access scenarios require licensing?
Yes, third-party system integration may require additional licenses under SAP’s Digital Access model.
Can SAP licensing metrics change over time?
Yes, metrics may evolve as SAP updates its policies or introduces new services.
How are engines or packages licensed in SAP S/4HANA?
Engines are licensed based on usage metrics like revenue, throughput, or active records.
Is it possible to audit licenses?
Yes, SAP regularly conducts audits to ensure compliance with licensing agreements.
How does the industry affect licensing?
Industry-specific solutions (e.g., utilities, retail) may require additional modules or engines.
Are developer licenses separate from user licenses?
Yes, developer licenses are separate and typically needed for custom code development.
What happens if licensing metrics are exceeded?
Exceeding metrics may result in additional charges or penalties during an SAP audit.
How can companies track user license compliance?
Regular internal audits and tools like SAP’s System Measurement Program help maintain compliance.
Can license usage reports be automated?
Yes, automated reports can be generated using SAP tools like Solution Manager.
How does the HANA database affect licensing?
HANA database licensing is based on memory usage and is independent of user access licenses.
