Understanding the intricacies of SAP Licensing can be daunting for many businesses. The complexity of the licensing model, the variety of licenses available, and the different deployment methods can often lead to confusion and misunderstanding.

This comprehensive guide aims to demystify these complexities and provide a clear and concise understanding of SAP Licensing.

Introduction to SAP Licensing

Understanding SAP Licensing

SAP, which stands for Systems, Applications, and Products, is a global leader in enterprise software solutions. Businesses of all sizes use their software across various industries to improve operational efficiency and business processes. However, to use SAP software, companies must navigate the complex landscape of SAP Licensing.

SAP Licensing is how businesses obtain the right to use SAP software. This involves understanding the different types of licenses available, how they are priced, and how they can be deployed within the business. The complexity of SAP Licensing often stems from the variety of options available and the flexibility of the licensing model.

The Complexity of SAP Licensing

The complexity of SAP Licensing is often attributed to its flexibility and the variety of options available. SAP offers a range of licenses to cater to different business needs and usage scenarios. These licenses can be categorized into two main types: Package Licenses and Named User Licenses.

Package Licenses are related to the specific software functionality that a business needs. They are modular and can be combined in various ways to meet the particular needs of a business. On the other hand, Named User Licenses are associated with the individuals using the software. Each user within a company must have a Named User License.

Why SAP Licensing is Considered Complex

SAP Licensing is considered complex due to the variety of options available and the flexibility of the licensing model. Businesses must understand the different types of licenses, how they are priced, and how they can be deployed. They must also keep track of their license usage to ensure compliance and avoid unnecessary costs.

In addition, SAP Licensing involves understanding and managing indirect Access and Digital Access, which can add another layer of complexity. Indirect Access refers to using SAP software by third-party applications, while digital Access refers to using SAP software to access digital content. Both of these can lead to additional licensing costs.

Despite these complexities, with the proper knowledge and resources, businesses can effectively navigate the SAP Licensing landscape and optimize their license usage.

The SAP Licensing Model

The SAP Licensing Model is a flexible and modular system allowing businesses to choose and pay for only the necessary functionality. This section provides a detailed overview of the SAP Licensing Model, including its essential components and structure.

Critical Components of the SAP Licensing Model

The SAP Licensing Model has two main components: Package Licenses and Named User Licenses.

Package Licenses are related to the specific software functionality that a business needs. They are modular and can be combined in various ways to meet the particular needs of a business. For example, a company may need a package license for SAP’s financial accounting module, another for its sales and distribution module, and so on.

Named User Licenses are associated with the individuals who are using the software. Each individual user within a business must have a Named User License. SAP offers a variety of Named User Licenses, each designed for specific roles within an organization. For example, there are Named User Licenses for developers, professionals, limited professionals, employees, etc.

Modular Structure of Software Licenses

The modular structure of SAP Software Licenses allows businesses to choose and pay for only the functionality they need. This structure provides flexibility and scalability for businesses of all sizes. Each module or package license corresponds to a specific business function or process, such as financial accounting, human resources, or supply chain management.

For example, a small business may only need a basic package license for financial accounting and a few Named User Licenses for its employees. As the business grows and its needs become more complex, it can add more package licenses for additional functionality and more Named User Licenses for other users.

This modular structure allows businesses to scale their SAP software usage as they grow without paying for unnecessary functionality or licenses.

Types of SAP Named-User Licenses

SAP offers a variety of Named User Licenses, each designed for specific roles within an organization. Understanding these different types of licenses is crucial for managing SAP Licensing costs and ensuring compliance.

Developer

A Developer Named User License is designed for individuals involved in software development activities. This includes tasks such as coding, testing, and debugging. Developers often need Access to a wide range of SAP software functionality, making this license one of the most comprehensive.

Professional

A Professional Named User License is designed for individuals who perform operational-related and system administration roles. This includes configuring and managing the SAP system, performing business processes, and generating reports. Professionals often need Access to a wide range of SAP software functionality, making this license one of the most comprehensive.

Limited Professional

A Limited Professional Named User License is designed for individuals with limited operational roles. This includes tasks such as data entry, viewing reports, and performing specific business processes. Limited Professionals have Access to a subset of SAP software functionality, making this type of license less comprehensive than the Professional Named User License.

Employee

An Employee Named User License is designed for individuals who perform basic tasks such as viewing reports and entering data. Employees have Access to a limited range of SAP software functionality, making this type of license less comprehensive than the Professional and Limited Professional Named User Licenses.

Employee Self-Service (ESS)

An Employee Self-Service (ESS) Named User License is designed for individuals who perform self-service tasks such as viewing their data, submitting time-off requests, and accessing payroll information. ESS users have Access to a minimal range of SAP software functionality, making this type of license one of the least comprehensive.

Worker User

A Worker User Named User License is designed for individuals who perform specific operational tasks such as data entry and report viewing. Worker Users have Access to a limited range of SAP software functionality, making this type of license less comprehensive than the Professional and Limited Professional Named User Licenses.

Logistics User

A Logistics User Named User License is designed for individuals who perform logistics and supply chain management tasks. This includes managing inventory, processing orders, and planning deliveries. Logistics Users have Access to a specific range of SAP software functions related to logistics and supply chain management.

Management Self-Service User (MSS)

A Management Self-Service User (MSS) Named User License is designed for managers who perform self-service tasks such as approving time-off requests, viewing team data, and generating reports. MSS users can Access a specific range of SAP software functions related to management tasks.

Read Only

A Read Only Named User License is designed for individuals who only need to view data and reports. Read Only users have Access to a minimal range of SAP software functionality, making this type of license one of the least comprehensive.

Service User

A Service User Named User License is designed for individuals who perform specific service tasks such as processing service requests, managing service contracts, and tracking service performance. Service Users have Access to a specific range of SAP software functions related to service tasks.

How to Deploy SAP

SAP can be deployed in three main ways: On-Premises Deployment, Hosted Private Cloud Deployment, and Public Cloud Deployment. Each deployment method has advantages and considerations, and the choice of deployment method will depend on a business’s specific needs and circumstances.

On-Premises Deployment

On-Premises Deployment involves installing and running SAP software on servers within a business’s facilities. This deployment method gives companies complete control over their SAP system, including the hardware, software, and data. However, it also requires firms to have the IT infrastructure and expertise to manage and maintain the system.

Indirect Access occurs when third-party applications or systems interact with SAP software. This can lead to additional licensing costs, as these interactions are considered usage under SAP’s licensing model. For example, if a business uses a third-party application to extract data from its SAP system for reporting purposes, this would be considered indirect Access and could incur additional licensing costs.

Hosted Private Cloud Deployment

Hosted Private Cloud Deployment involves running SAP software on servers located in a private cloud, which is hosted and managed by a third-party provider. This deployment method provides businesses with the benefits of cloud computing, such as scalability and cost efficiency, while maintaining high control and security over their SAP system.

Public Cloud Deployment

Public Cloud Deployment involves running SAP software on servers in a public cloud, which is shared with other businesses and managed by a third-party provider. This deployment method provides businesses with the benefits of cloud computing, such as scalability and cost efficiency, but with less control and security over their SAP system compared to a private cloud deployment.

SAP License Models

SAP offers three main license models: Perpetual Licensing Method, Subscription Licensing Method, and Consumption-Based Licensing Method. Each model has its benefits and is suited to different types of businesses and usage scenarios.

Perpetual Licensing Method

The Perpetual Licensing Method involves indefinitely paying a one-time fee to use the SAP software. This license model is typically used by businesses that want to invest long-term in SAP software and have the necessary IT infrastructure and expertise to manage and maintain the system.

Subscription Licensing Method

The Subscription Licensing Method involves paying a recurring fee to use the SAP software for a specific period. This license model is typically used by businesses that want to minimize upfront costs and have the flexibility to scale their SAP software usage up or down as their needs change.

Consumption-Based Licensing Method

The Consumption-Based Licensing Method involves paying a fee based on the actual usage of the SAP software. This license model is typically used by businesses that want to align their SAP software costs with their actual usage and have unpredictable or fluctuating usage patterns.

Other Cost Items in SAP Licensing

In addition to the basic license costs, there are other cost items in SAP Licensing. These include Engine usage, Standard packages, Special packages, Indirect Access, and Digital Access. Each of these items can significantly impact the total cost of SAP Licensing.

Engine Usage

Engine usage refers to additional software components, or “engines,” that provide specific functionality and are charged separately from the basic licensing fees. Examples of engines include:

The SAP HANA database engine.
The SAP NetWeaver application server engine.
The SAP Business Warehouse data warehousing engine.

Standard Packages

Standard packages are pre-configured bundles of software functionality that are designed to meet the needs of specific industries or business processes. These packages are charged separately from the basic licensing fees and can add significant value to a business’s SAP system.

Special Packages

Special packages are custom-configured bundles of software functionality designed to meet a business’s unique needs. These packages are charged separately from the basic licensing fees and can add significant value to a business’s SAP system.

Indirect Access

Indirect Access refers to using SAP software by third-party applications or systems. This can lead to additional licensing costs, as these interactions are considered usage under SAP’s licensing model. Businesses must carefully manage and monitor their indirect Access to avoid unexpected expenses.

Digital Access

SAP Indirect Use and Digital Access Licenses

Understanding Indirect Access and Digital Access is crucial for managing SAP Licensing costs and ensuring compliance. Indirect Access refers to using SAP software by third-party applications, while Digital Access refers to using SAP software to access digital content.

Understanding Indirect Access

Understanding Digital Access

Digital Access refers to the use of SAP software to access digital content. This can include accessing, creating, or updating digital documents or records. Like Indirect Access, Digital Access can also lead to additional licensing costs. For example, if a business uses SAP software to access digital documents stored in a third-party document management system, this would be considered digital Access and could incur additional licensing costs.

How to Measure SAP Digital Access

Measuring SAP Digital Access can be a complex task. It involves tracking the number of digital documents or records accessed, created, or updated using SAP software. This information is crucial for managing Digital Access licensing costs and ensuring compliance.

Alternatives to SAP Passport

In addition to the standard SAP Passport, there are other options for accessing SAP software. One such option is HANA Database Licenses, which provide Access to SAP’s in-memory database platform.

HANA Database Licenses

HANA Database Licenses provide Access to SAP’s in-memory database platform, SAP HANA. This platform offers high-performance data processing capabilities for transactional and analytical workloads.

HANA Database Licenses are charged separately from the basic licensing fees and can add significant value to a business’s SAP system.

FAQ: Oracle SAP Licensing Management

Why is SAP licensing considered complex?

SAP licensing is considered complex due to the variety of products and license types offered by SAP, including more than 3,000 products and 24 user license types, as well as 100 engine metrics. Companies may struggle to align their license inventory with their actual licensing needs, leading to over-licensing and excessive spending on SAP applications.

What are the three pillars of SAP licensing?

The three pillars of SAP licensing are product selection, deployment options, and license models.

What are named-user licenses?

Named-user licenses are licenses that are assigned to individual users and make up approximately 40-70% of the total costs in an SAP contract. There are various categories of named-user licenses with different levels of authorization and features, with the most expensive being the Developer and Professional licenses.

What are the deployment options for SAP software?

The deployment options for SAP software include on-premises, hosted, and cloud-based deployments.

What is indirect access in SAP licensing?

Indirect access occurs when SAP data is accessed, created, or modified from outside without an SAP user license. Indirect use is often not negotiated and can result in additional payments during an SAP audit..

What is digital access in SAP licensing?

Digital access is an optional licensing method for indirect usage, which requires the creation of 9 pre-defined document types to be licensed if triggered by external (non-SAP) applications. It is not based on the number of users and does not require a chargeable license for activities such as data updates, information exchange, or data deletions in the SAP.

How can companies measure SAP digital access?

Companies can measure SAP digital access through the Digital Access Estimation Report (SAP Note) or the SAP Passport program.

Need expert help with SAP licensing?

Our SAP license optimization service offers the following to help companies comply with SAP’s software usage and licensing guidelines:

Analysis of current SAP landscape to identify areas of over-utilization or under-utilization of licenses
Recommendations for optimizing license usage and adjustments to the SAP system to ensure compliance
Regular check-ins to consider any changes in business processes or system usage and make necessary adjustments
Help to avoid potential fines or penalties by ensuring compliance with SAP’s licensing guidelines.

Introduction to SAP Licensing

The SAP Licensing Model