SAP S/4HANA Indirect Access Licensing

SAP S/4HANA Indirect Access Licensing

• Data Integration Costs: Licensing applies when non-SAP systems interact with SAP data.
• Named User Requirement: Users accessing indirectly still require licensing.
• Types of Access: Classify as direct (user-based) or indirect (system-based).
• Automation Considerations: Indirect use includes automated processes.
• Third-Party Interactions: Ensure licensing for external system connections.

SAP S/4HANA Indirect Access Licensing

Transitioning to SAP S/4HANA can be a big step for many organizations, but a critical part of this journey is understanding Indirect Access Licensing.

The complexities of indirect access can make navigating challenging, but getting a firm grasp on how it works can save your organization from unexpected costs and potential compliance headaches.

This article provides a thorough guide to SAP S/4HANA indirect access licensing, breaking it down in a way that’s easy to digest and full of actionable insights.

What is SAP S/4HANA Indirect Access?

Indirect Access refers to scenarios where non-SAP applications or third-party systems interact with SAP data. Instead of direct interaction by a user logging into the SAP system, indirect access often happens through automated processes, apps, or middleware that pull or push data from SAP.

Example: Imagine a scenario where your company has an e-commerce platform that processes orders. This platform interacts with SAP S/4HANA to update inventory, process invoices, or retrieve pricing information. Even if no one logs directly into SAP, the system still uses SAP data—this is indirect access.

Understanding this concept is essential because it determines how you will be charged for these interactions. Without clarity on indirect access, businesses could face large, unexpected costs.

Key Types of Indirect Access Scenarios

Indirect access can be a bit murky, but breaking it into common scenarios helps:

• Read-Only Scenarios: Where external systems read data from SAP but don’t modify it. For instance, pulling sales data for a reporting tool.
• Write Scenarios Where data is written into SAP systems, such as sending sales orders from a web application.
• Mixed Scenarios: Reading and writing often occur when an external app pulls SAP data to make calculations and then pushes new information back into SAP.

Each type may be treated differently in licensing discussions, so it’s vital to identify which kind of scenario applies to your systems.

How SAP Calculates Indirect Access Charges

SAP introduced Document-Based Licensing as a simplified approach for handling indirect access. This model assigns licenses based on the number of documents generated by an indirect access interaction. Let’s break it down.

• What is a Document? In the context of SAP, a document could be a sales order, an invoice, a purchase order, etc. Each document type has its own licensing weight.
• Document-Based Licensing: Instead of counting users, this method calculates the number of documents created by external systems interacting with SAP S/4HANA.

Example: If your e-commerce platform processes 10,000 orders per month, each order generates a sales document in SAP, and those 10,000 documents may contribute to your overall licensing metric.

This document-based model was designed to add more predictability than the previous user-based licensing model, which caused confusion and unpredictability when applied to indirect access cases.

Read about specific SAP S/4 Hana Industry License models.

Indirect Access Licensing Models: Explained

Understanding different licensing models helps in deciding what fits your organization best:

1. Traditional User-Based Licensing:
   • Charges are based on the number of users accessing the system, directly or indirectly.
   • Historically, this was controversial for indirect access as it wasn’t always easy to attribute interactions to a specific user.
2. Document-Based Licensing:
   • The newer model focuses on the number of documents being created.
   • Pros: Predictable, simple to audit, less reliance on user tracking.
   • Cons: Depending on the document volume, organizations with many transactions may pay more.
3. Engine-Based Licensing:
   • Some specific processes or SAP engines might have their licensing metrics.
   • This model is used less often but may apply if you use special engines like SAP CRM or SAP APO.

SAP’s Move to Document-Based Licensing: Why It Matters

SAP introduced Document-Based Licensing to reduce the friction and uncertainty around indirect use. Before this, many customers felt vulnerable to audits, fearing that any external system touching SAP data could incur excessive costs.

Benefits of Document-Based Licensing:

• Transparency: It provides a clear metric (documents) that companies can track more easily than counting indirect users.
• Lower Audit Risk: With a clearer definition, companies feel more secure using third-party applications.

But be careful—it’s not always cheaper. High transaction volumes can lead to substantial costs, so organizations must calculate potential document creation volumes carefully.

Common Challenges with Indirect Access Licensing

Organizations often call SAP licensing a ‘black box’ because of the complexity and ambiguity surrounding indirect access.

Here are some typical challenges:

• Unclear Boundaries: Many businesses aren’t sure where the line between direct and indirect use falls, especially when involving multiple layers of systems.
• Integration Growth: As businesses scale, third-party apps and automated systems grow. Due to these new indirect access points, companies often find themselves unexpectedly non-compliant.
• Audit Surprises: SAP audits can lead to unexpected licensing fees, sometimes in the millions, when indirect access isn’t properly licensed.

Example: A mid-sized manufacturing firm was integrating SAP with third-party logistics software for faster delivery. An audit found that the indirect usage hadn’t been licensed correctly, leading to a $500,000 compliance bill. The company thought only direct users needed licenses but overlooked how its logistics software generated SAP documents.

How to Mitigate Risks and Optimize SAP Licensing

To navigate indirect access smoothly and avoid unexpected costs, consider the following steps:

1. Map All Third-Party Interactions:
   • Identify all systems that interact with SAP S/4HANA, whether they read or write data.
   • Example: List every middleware, e-commerce platform, reporting tool, and IoT device interacting with SAP.
2. Understand Your Transaction Volume:
   • Track document creation as a key metric.
   • Use SAP’s tools or partner solutions to estimate document volumes.
3. Regular License Audits:
   • Conduct internal audits annually to ensure compliance.
   • This reduces surprises during SAP’s official audit and helps avoid any issues.
4. Engage with SAP Early:
   • When integrating new third-party systems, engage SAP or licensing experts to understand the licensing implications upfront.
5. Negotiate with SAP:
   • If you are about to purchase SAP S/4HANA or have your renewal coming up, discuss indirect access terms explicitly.
   • SAP has sometimes offered more favorable terms to customers who negotiate licensing based on predicted indirect access scenarios.

Best Practices for Managing Indirect Access

Managing indirect access effectively is more than compliance—ensuring you get the most value from SAP without overpaying.

Here are the best practices to consider:

• Use Middleware Wisely: Middleware that integrates external systems can simplify tracking. A central middleware can make it easier to quantify document interactions.
• Leverage Tools for Visibility: Use SAP’s License Administration Workbench (LAW) or third-party tools to gain visibility into document creation and use.
• Optimize Integration: Where possible, minimize document creation. If this aligns with your business processes, batch orders instead of sending individual records.

Example: An insurance firm used middleware that allowed its customer service app to interact with SAP. By batching claims into fewer documents, it reduced document creation from 5,000 to 1,000 monthly, leading to a significant drop in licensing costs.

SAP’s Position on Indirect Access: Changing Over Time

In the past, SAP’s indirect access policy was a major pain point for many of its customers. High-profile legal cases, such as Diageo vs. SAP, brought attention to the challenges where the company faced enormous fees for indirect use. These cases led to customer dissatisfaction and forced SAP to reconsider its approach.

2018 Policy Change: In response to the backlash, SAP introduced its Digital Access Adoption Program (DAAP), which allowed customers to transition to document-based licensing at discounted rates, providing more predictability.

This shift represents SAP’s broader move to align with customer demands for simplicity and transparency. However, customers need to remain vigilant to ensure that the new terms actually cost-effectively match their usage profiles.

Real-World Example: Company X’s Indirect Access Journey

Consider Company X, a large retail chain that used SAP S/4HANA and several specialized retail solutions to manage online orders, inventory, and customer services.

• The Issue: Initially, they assumed only their direct SAP users required licensing. After an internal review, they realized their order processing system generated thousands of monthly purchase order documents in SAP without proper indirect access licensing.
• The Solution: They engaged an SAP licensing expert who helped map out all third-party interactions and estimated the number of documents generated. They negotiated with SAP to move to document-based licensing, reducing their risk of unexpected compliance fees.
• The Result: Although they had to pay some backdated fees, their predictable document-based model allowed them to budget accurately for SAP costs going forward. They also restructured some integrations to limit unnecessary document generation.

FAQ: SAP S/4HANA Indirect Access Licensing

What is SAP S/4HANA Indirect Access?
Indirect access refers to using SAP data or functionalities by non-SAP systems without direct user interaction with SAP interfaces.

How does SAP define indirect usage?
SAP categorizes indirect usage as scenarios where external systems interact with SAP data through automated processes or third-party platforms.

Do I need licenses for indirect users?
Users accessing SAP indirectly through other systems require appropriate licenses, typically measured by volume or system integration.

Are third-party integrations always subject to licensing?
Most external connections to SAP data require licensing; the cost depends on the nature and volume of data exchanged.

What types of access are considered indirect?
Examples include external application integration, robotic process automation (RPA), and other systems pulling or pushing SAP data.

How can I classify access types?
SAP recognizes direct (user-based) and indirect (system-based) access. When assessing licensing needs, ensure clarity on the distinction.

Is API usage included under indirect access?
Yes, API calls interacting with SAP data count as indirect access and require appropriate licensing provisions.

What factors influence the licensing model?
SAP considers access volume, the role of external systems, and how data flows between SAP and other platforms.

Do bots or automated tools need licenses?
Yes, SAP licensing applies to automated processes and bots if they interact with SAP systems.

How can companies track indirect access?
SAP provides tools and reports to monitor and classify access patterns, helping businesses assess compliance.

What happens if indirect access isn’t licensed?
Non-compliance with indirect access policies can lead to audits, fines, and potential service disruptions.

Are non-SAP users subject to licensing?
Even users interacting indirectly with SAP data through non-SAP platforms require valid licensing.

How can organizations calculate licensing needs?
SAP offers licensing guidance based on transaction volume, number of users, and system interaction specifics.

Does indirect access apply to cloud-based systems?
Cloud integrations that access SAP systems or data also fall under indirect licensing policies.

Can licensing terms vary by region?
SAP licensing models are typically standardized, but regional variations in enforcement or interpretation may exist.