Getting the Best Deal on SAP Analytics Cloud: User vs. Capacity Licensing Explained
SAP Analytics Cloud (SAC) offers two distinct licensing models: user-based and capacity-based, each with implications for cost and flexibility.
Understanding the differences between paying per user vs. paying per usage is crucial for enterprises seeking the best deal.
This advisory explains SAC’s pricing models, how to leverage bundling strategies, and provides negotiation tips to help you optimize costs while meeting business needs.
Understanding the SAP Analytics Cloud Licensing Landscape
In an enterprise, SAP Analytics Cloud licensing has a direct impact on your analytics budget and agility.
SAC is sold as a subscription service (no perpetual licenses) with two main approaches:
- Per User – pay a set subscription fee for each named user.
- Capacity-Based – pay based on usage (such as data volume or compute resources consumed).
Choosing the right model shapes how you scale analytics and control costs. Align the licensing with your usage patterns to avoid paying for unused licenses or incurring surprise overage fees.
By understanding both models and SAP’s bundling options, you can negotiate a flexible, cost-effective agreement.
User-Based Licensing: Paying per Named User
Most organizations license SAP Analytics Cloud by the number of named users. In this model, you purchase a subscription for each individual who will access SAC:
- Named users and tiers: All SAC access is tied to specific individuals (no license sharing). SAP offers user license tiers – for example, a standard BI user license versus a higher-cost planning user license – so you only pay for advanced planning capabilities when needed.
- Subscription term and scale: User licenses are typically sold in 1–to 3-year terms. You can add users mid-term (with a prorated cost), but you generally cannot remove or reduce licenses until the term ends. Plan your license quantities carefully to avoid over-commitment.
- Cost management: Per-user pricing makes costs predictable (e.g., 100 users × unit price). However, it can lead to “shelfware” if you overestimate usage. It’s best to start with what you need and expand later, rather than paying upfront for users who never log in. Regularly review usage and reassign or eliminate unused licenses.
Example: A manufacturing firm licenses 150 SAC users for its analytics initiatives. Only 20 users require advanced planning features, so they buy 20 planning licenses and 130 lower-cost BI licenses – ensuring they pay premium prices only for the people who truly need that functionality.
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Capacity-Based Licensing: Paying for Usage
For certain scenarios, SAP offers SAC licensing based on consumption. Instead of per-user fees, you pay according to the resources used:
- Usage metric & unlimited users: Capacity licensing ties costs to system usage (for instance, data storage size or processing hours). SAP may provide this via cloud credits (through the SAP Business Technology Platform), where SAC draws down against a prepaid capacity. There’s no hard user limit – any number of users can access the system as long as total usage stays within your purchased capacity.
- Flexibility vs. variability: This model provides flexibility to offer SAC access broadly without a per-user charge, which can save money if many users are infrequent viewers. However, costs become variable – a surge in data or activity can spike your fees. Careful monitoring is critical. Ensure the contract clearly defines how usage is measured and outlines the consequences of exceeding the limits (e.g., burst capacity, overage fees).
- When it makes sense: Capacity-based SAP Analytics Cloud licensing is typically offered in large or strategic deals. It’s ideal if you have thousands of potential users who only occasionally use analytics, such as casual business users or extended enterprise scenarios. If usage is high and continuous (e.g., an analytics team doing heavy reporting all day), a flat per-user deal might be more cost-effective. Always analyze the break-even point between the models for your case.
Example: A global retail chain wants 5,000 store managers to occasionally view sales dashboards. Rather than purchasing 5,000 user licenses, the retailer negotiates a capacity-based SAC subscription tailored to its overall data volume and monthly query volume. This way, any manager can log in when needed, and the company pays for the aggregate usage instead of individual licenses.
Comparing User vs. Capacity Licensing Models
Each model has advantages and trade-offs. The table below highlights key differences:
| Factor | User-Based Licensing (Per User) | Capacity-Based Licensing (By Usage) |
|---|---|---|
| Cost Metric | Fixed subscription fee per named user. | Fees based on consumption (data, compute, etc.). |
| Cost Predictability | Predictable – costs scale linearly with number of users. | Variable – costs fluctuate with actual usage levels. |
| Scalability | Must buy more licenses to add users; unused licenses still incur cost. | Add unlimited users until capacity is reached (then buy more capacity). |
| Ideal Use Case | Steady or mission-critical users (known team of active users). | Broad, sporadic use (large audience of occasional users). |
| Key Advantages | Simple model, easy to budget. No surprises if user count is stable. | Flexible access for many users; avoids paying for each light user. |
| Key Drawbacks | Can overpay for idle users; need to wait for renewal to downsize. | Unpredictable spend if usage spikes; requires monitoring and custom terms. |
Which to choose? Evaluate your user volumes and usage intensity. If most value comes from a core group of analysts or planners using SAC daily, a user-based deal offers simplicity and clarity.
If you anticipate expanding SAC access to hundreds or thousands of users who currently use it infrequently, capacity licensing may lower your total cost.
It’s wise to run cost scenarios for both models – find the point where the two options break even. Armed with that insight, you can approach SAP for the model (or combination) that best fits your needs.
Bundling Strategies to Maximize Value
When negotiating, remember that SAP may provide better pricing for SAP Analytics Cloud if it’s part of a bigger package:
- Include SAC in larger deals: If your company is adopting a major SAP solution (for example, RISE with SAP for ERP or a multi-product enterprise agreement), consider bundling SAC into that deal. SAP often gives a discount or extra cloud credits for SAC when it’s included in a broader commitment. This can reduce the standalone price of SAC.
- Take advantage of promotions: Ask about migration incentives. SAP sometimes allows customers to convert existing investments into SAC credits – for instance, by applying unused SAP BusinessObjects maintenance or licenses toward SAP Analytics Cloud subscriptions. Such promotions accelerate cloud adoption and can significantly cut your net cost.
- Enterprise agreement leverage: If you’re purchasing or renewing multiple SAP products, negotiate them together and leverage your total spend. Bundling SAC with other licenses (such as database or ERP) can increase your discount through volume pricing. Ensure that every component in the bundle is something you need (avoid paying for unnecessary items in a bundle). Additionally, aligning contract end dates for bundled products provides an opportunity to renegotiate as a whole and maintain favorable terms.
Recommendations
- Assess your usage profile: Analyze how many users truly need SAC and how they will use it. Tailor the licensing model to this profile (e.g. heavy daily users vs. occasional report viewers).
- Start small and scale up: Avoid overbuying on day one. It’s easier to add licenses or capacity later than to pay for unused excess. Pilot SAC with a smaller group, prove the value, then expand as needed.
- Optimize your license mix: Match each user to the right license type. Give expensive planning licenses only to planners or power users, while assigning lower-cost BI licenses to users who just need dashboards. This prevents paying for features that go unused.
- Consider a hybrid approach: In some cases, a mixed strategy works – for example, license your core analytics team on a named-user basis and use a capacity model to extend SAC access to a wider audience. See if SAP will support a custom arrangement and run the numbers for both parts.
- Leverage bundles and credits: Bundle SAC into bigger SAP deals or use existing SAP credits. For instance, use BTP cloud credits to fund SAC consumption, or negotiate SAC as part of an RISE with SAP package. Similarly, utilize any conversion credits from legacy tools to offset the costs of SAC.
- Negotiate flexibility and protections: Push for contract terms that allow adjustments. Seek the right to swap metrics (user to capacity) or reduce licenses at renewal if needed. Also, aim for multi-year price locks or caps on price increases so you aren’t hit with a sudden cost jump later.
- Monitor and adjust: Continuously track SAC usage throughout your contract. Identify if adoption is lower than expected (so you can scale down at renewal) or if usage is trending high (so you budget for additional capacity or licenses). Managing the deployment proactively will ensure you get value from every dollar spent.
- Stay informed about SAP pricing: SAP’s cloud offerings and licensing programs are constantly evolving. Stay up-to-date with the latest SAP Analytics Cloud licensing updates, new bundles, and pricing programs. This knowledge enables you to negotiate intelligently and capitalize on any new opportunities that could benefit your organization.
Checklist: 5 Actions to Take
- Map your requirements: Document how many people will use SAC and what they need it for (viewing only, creating reports, planning input, etc.). Categorize users by role or use case to determine the mix of license types you require.
- Request both pricing options: Ask SAP for quotes under both licensing models – one quote for a certain number of named users, and another for an equivalent capacity metric. Ensure the capacity quote specifies the usage limits. Compare these to see which aligns better with your expected usage and budget.
- Simulate your costs: Project your 1–3 year SAC costs under each model using your data. For example, calculate what you’d pay for X users vs. what you’d pay for the equivalent usage volume. Identify breakpoints (e.g., at what user count the capacity model becomes more expensive, or vice versa). This analysis will inform your decision with data-driven insights.
- Plan your negotiation strategy: Before engaging SAP, define your goals (target price, desired contract length, necessary flexibility). Gather leverage – for instance, highlight your long-term commitment to SAP or readiness to bundle SAC with other purchases. Go into negotiations with a clear walk-away point and stick to it if your requirements aren’t met.
- Scrutinize the contract: Once you have a proposed contract, review all terms in detail. Confirm that pricing, discount percentages, and any special terms (like the ability to adjust licenses or use credits) are explicitly documented. Check for any automatic renewals or penalties. Involving your legal or procurement team will ensure that the final agreement accurately reflects the promises made.
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FAQ
Q1: What is the difference between user-based and capacity-based licensing in SAP Analytics Cloud?
A: User-based licensing means you pay a subscription fee for each named user of SAC – simple to track, but costs rise with every additional user. Capacity-based licensing means you pay according to how much the service is used (for example, data processed or reports run), regardless of how many users you have. This allows unlimited user access, but your bill varies based on actual consumption.
Q2: How do we determine which licensing model is more cost-effective for our organization?
A: It comes down to numbers. If you have a relatively small or stable group of heavy SAC users, the per-user model is often more straightforward and cost-effective. However, if you need to provide occasional analytics access to a very large population, a capacity model may be more cost-effective overall. The best practice is to compare scenarios: calculate what you’d pay for the expected number of users versus what you’d pay for the expected usage volume. Whichever yields a lower total cost (with some buffer for growth) is likely the better fit.
Q3: Can we change our SAC licensing model later or use both models simultaneously?
A: Generally, your contract will specify one model at a time, but you might negotiate a custom solution. Some enterprises arrange a base of named user licenses plus an add-on capacity block for broader occasional use. Switching entirely from one model to another usually occurs at renewal time or when signing a new contract. If you think your needs might change, consider negotiating flexibility upfront – for example, an option to convert some user licenses into capacity credits (or vice versa) under specific conditions.
Q4: How can bundling SAP Analytics Cloud with other purchases help us get a better deal?
A: Bundling SAC with larger SAP investments can improve your pricing. SAP often provides discounts when SAC is included as part of a big multi-product deal or cloud transformation initiative. For example, adding SAC to your S/4HANA Cloud or RISE with SAP agreement may provide you with preferential pricing or free usage credits. The key is to ensure the bundle makes financial sense – the combined deal should offer real savings on SAC compared to buying it standalone. And be sure to utilize all parts of a bundle so you’re not paying for something you don’t use.
Q5: What pitfalls should we avoid when negotiating SAP Analytics Cloud licenses?
A: Avoid buying far more than you need “just in case” – excess licenses or capacity will become wasted spend. Be mindful of renewal terms: a great first-year discount can vanish if a steep increase hits later. If you choose capacity licensing, set safeguards to prevent a usage spike from blowing your budget (for instance, by using alerts or predefined overflow terms). Also, don’t negotiate SAC in isolation; instead, consider bundling it with other SAP deals to achieve better leverage. In short, use data to inform your purchase quantity, secure price protections for the future, track your usage, and maximize your full relationship with SAP to secure the best overall deal.
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