SAP licensing for industry solutions includes:
- Tailored Licensing Models: Offers perpetual, term, and cloud subscription licenses.
- Industry-Specific Solutions: SAP Oil and Gas and SAP Consumer Products are tailored to meet specific industry needs.
- Flexible Usage Options: Based on the unique requirements of different industries like healthcare, automotive, or retail.
- Innovations for Transformation: Includes enhancements such as AI and cloud solutions for industry-specific growth.
- Customizable for Industry Needs: Designed to be adaptable as business requirements evolve within an industry
SAP Licensing for Industry Solutions
SAP’s software portfolio isn’t one-size-fits-all – it includes a range of industry-specific solutions tailored to sectors such as manufacturing, utilities, retail, pharmaceuticals, and many others.
These specialized SAP modules and products, often referred to as “Industry Solutions,” address the unique business processes and compliance needs of each industry.
However, with these powerful industry-focused tools comes the complexity of licensing them correctly. Licensing for industry solutions can differ from standard SAP ERP licensing, often involving a combination of traditional named-user licenses and package or engine licenses based on industry-specific metrics.
For Software Asset Management (SAM) and licensing professionals, it’s crucial to understand how SAP licensing works in your industry to ensure compliance and optimize costs.
At a high level, SAP offers both perpetual and subscription models for its solutions (on-premise vs. cloud), providing flexibility to combine user-based and metric-based licensing.
The key is to align your license entitlements with how your company uses SAP in your industry domain.
Let’s explore a few industries – manufacturing, utilities, retail, and pharmaceuticals – and examine how SAP licensing typically applies in each, with examples of best practices and potential pitfalls.
Overview of License Types for Industry Solutions
Before diving into each industry, remember that SAP usually licenses products in two ways:
- Named User Licenses: These are tied to individuals. Every person accessing SAP (directly or through specific interfaces) requires an appropriate named user license. In industry contexts, you may have different user categories (e.g., Professional, Functional/Limited, Employee) for various roles, such as a plant manager versus a shop floor worker. Named user licensing ensures people who use SAP have permission, regardless of which industry modules they use.
- Package (Engine) Licenses: These are usage-based licenses for specific SAP modules or functional “engines”. They are measured with metrics relevant to that module’s purpose. For industry-specific solutions, metrics are often tailored to the industry. For example, oil and gas solutions might be measured by the number of barrels produced or the number of wells managed, whereas a retail solution could be measured by the number of stores or the volume of sales transactions. These package licenses are typically purchased in blocks or tiers and are used in addition to named users (i.e., you need both enough users and the package itself licensed for the scope of usage).
Understanding this dual model is key – most industry solutions will require you to have sufficient named users for the people using the system, as well as an engine license that covers the transactional volume or business metric the solution handles.
Below is a summary of how this plays out in our example industries:
| Industry | Example SAP Solutions | Unique Licensing Considerations |
|---|---|---|
| Manufacturing | SAP S/4HANA Manufacturing (production planning, QM), SAP Manufacturing Execution (ME), SAP Integrated Business Planning (IBP) | Combination of user licenses for planners, engineers, and shop-floor operators, plus engine metrics like number of production orders or units produced. Indirect access can occur via shop floor devices or IoT systems creating production data. |
| Utilities | SAP for Utilities (IS-U ECC / S/4HANA Utilities for customer care, billing, asset management) | Heavy use of engine metrics reflecting operational scale (e.g. number of customer accounts, meter points, or billable consumption records). Named user licenses needed for customer service reps, field technicians, etc. High integration with customer portals means indirect access (customers initiating actions that hit SAP) is a key consideration. |
| Retail | SAP S/4HANA Retail (merchandise management, store operations), SAP Customer Activity Repository (CAR) | Large number of end users (store staff, planners) requiring careful user license classification (many may only need limited functionality). Engine metrics tied to point-of-sale data volume or number of stores; e.g. SAP CAR licensing can depend on data volume and number of retail locations integrated. Extensive e-commerce and POS integrations make Digital Access (document licensing for sales orders, etc.) important to manage. |
| Pharmaceutical | SAP S/4HANA with Life Sciences extensions, SAP Advanced Track and Trace for Pharmaceuticals (ATTP), SAP Quality Management | Strict compliance needs (validated systems). User licenses for production, quality, and compliance roles. Specialized engines for pharma compliance (e.g. ATTP for drug serialization) likely licensed by volume of managed serial numbers or transactions. Systems must support stringent audit requirements, so license compliance and documentation are critical. |
Next, let’s look at each of these industries in more detail.
SAP Licensing in Manufacturing
Manufacturing companies rely on SAP to manage core processes, including production planning, scheduling, inventory management, and plant maintenance.
SAP offers industry solutions, such as SAP S/4HANA Manufacturing (which encompasses production planning, quality management, and more), SAP Manufacturing Execution (ME) for shop-floor control, and SAP Integrated Business Planning (IBP) for advanced planning and forecasting.
Licensing considerations: In manufacturing, you will typically license a combination of:
- SAP ERP users include production planners, plant managers, maintenance technicians, and even machine operators who enter data into the system. Each needs an appropriately named user license. Often, planners and managers require Professional or higher-level licenses because they perform a broad range of transactions. In contrast, shop-floor operators or casual users may only require a limited license if they are only confirming operations or entering time data.
- Manufacturing engine metrics: Many manufacturing-intensive functions are covered by package licenses. For example, suppose you implement a production planning optimization module or SAP Material Management (SAP ME). In that case, there may be a metric such as the number of production orders processed per year or the number of plants or factories covered. According to SAP licensing experts, manufacturing engines are often licensed based on metrics such as total production orders or the number of units produced. A car manufacturer might license an engine for up to X vehicles produced each year. It’s vital to estimate these metrics accurately and purchase enough volume to cover peak production, and then monitor usage so you don’t exceed the licensed amount.
- Indirect access in manufacturing: Manufacturing often involves integration with equipment or shop-floor systems, such as IIoT devices, MES systems, barcode scanners, and updating SAP. If those integrations create or read SAP data (e.g., a sensor automatically creates a maintenance order in SAP), that is indirect usage. Under SAP’s rules, you must ensure such scenarios are licensed, either by having a generic user license for the device or, more commonly now, by counting the documents via SAP’s Digital Access model. Indirect digital documents common in manufacturing could include Production Orders or Inventory Movements. Companies should evaluate whether adopting the document-based licensing for these flows is cost-effective or if they can cover them with existing user licenses.
- Example: A mid-sized manufacturer running SAP S/4HANA might have 50 Professional user licenses for engineers and managers, 200 Limited Worker licenses for production staff, and a package license that allows up to 100,000 production orders per year. They might also use SAP IBP – licensed, perhaps for multiple forecasts or high data volumes. Regular internal checks, as discussed in the first article, are needed to ensure that the production order count or other metrics do not surpass entitlements.
Best practices for manufacturing licensing: Align license types closely with user roles – avoid giving a forklift driver the same license as a production planner.
Evaluate your actual production volumes against any engine metrics to determine the right level, with some buffer for growth.
Also, stay aware of SAP’s updates in the manufacturing portfolio, such as new cloud-based manufacturing suites, and how their licensing works.
Sometimes, SAP may offer incentive programs to move to newer solutions, which could affect your licensing strategy.
SAP Licensing in Utilities
Utility companies, such as those in the energy, water, and waste management sectors, typically utilize SAP for customer information management, billing, metering, and asset management.
In SAP ECC, this was delivered via SAP IS-U (Industry Solution for Utilities). In S/4HANA, there are enhanced SAP Utilities modules.
These handle the end-to-end “meter-to-cash” process, including managing meter readings, billing customers, processing service orders, and ensuring regulatory compliance (for example, energy market deregulation requirements).
SAP’s utilities suite includes components for customer service, device management (such as meters), billing and invoicing, and work management for field service.
Licensing considerations: Utilities have some unique licensing patterns.
Engine metrics for utilities:
SAP for Utilities introduces engines licensed based on the scale of operations.
A common metric is the number of “active customer contracts” or “active meter points” in the system.
Essentially, how many end-customers or connection points is the utility managing in SAP? For example, a water utility serving 500,000 households might need to license an engine for 500k contract accounts in the IS-U system.
Another metric could be the volume of billable consumption records processed per month. These metrics try to align cost with a utility’s size and throughput.
Similar to how SAP Oil & Gas licensing can depend on the number of wells or volume of oil, a utility’s license might scale with the number of customers
Many end-users across departments:
You’ll have customer service representatives using SAP CRM or IS-U to look up accounts and create service orders, as well as field technicians accessing work orders, billing analysts, and others. Each of these users needs a named user license.
Typically, roles in a utility vary widely – e.g., call center agents might only use a limited portion of functionality (perhaps a “Employee” or “Limited Professional” license if they only look up accounts and create simple orders).
In contrast, a billing supervisor or system administrator would need a Professional license. It’s essential to accurately classify these users to prevent over-licensing.
FAQ: SAP Solutions for Different Industries
What are SAP industry solutions? SAP industry solutions are specialized software packages designed to meet the unique needs of specific industries, such as finance, manufacturing, retail, and healthcare.
How do SAP solutions benefit the finance industry? SAP solutions for finance provide tools for financial management, accounting, treasury, risk management, and compliance. They help streamline financial processes, improve accuracy, and ensure compliance with regulations.
What are some key SAP solutions for the finance sector? Key solutions include SAP S/4HANA Finance, SAP Treasury and Risk Management, and SAP Financial Supply Chain Management, each offering specialized functionalities for financial operations.
How are SAP licenses structured for financial institutions? Financial institution licenses typically include named user licenses for financial professionals and package licenses based on transaction volumes or specific financial processes.
What SAP solutions are available for the manufacturing industry? SAP offers solutions like SAP S/4HANA Manufacturing, SAP Manufacturing Execution (ME), and SAP Integrated Business Planning (IBP) to support production planning, execution, and supply chain management.
What types of licenses are used in the manufacturing sector? Manufacturing licenses include named user licenses for planners, managers, and operators, as well as package licenses based on production orders, units produced, or the scope of operations.
How can manufacturers benefit from SAP Integrated Business Planning (IBP)? SAP IBP helps manufacturers with demand planning, inventory optimization, and sales and operations planning, enabling better alignment of production with market demands.
What is SAP S/4HANA Retail? It is a solution tailored for the retail industry, providing tools for merchandise management, store operations, customer engagement, and supply chain logistics.
How does SAP support the healthcare industry? SAP offers healthcare solutions, including SAP Health, which features modules for patient management, clinical data management, and healthcare analytics. These help providers improve patient care and operational efficiency.
What are SAP Consumer Products solutions? These solutions, such as SAP Consumer Products and SAP Customer Activity Repository, enable the management of production, distribution, sales, and customer engagement in the consumer goods industry.
How do SAP solutions cater to the energy sector? SAP offers solutions such as SAP Oil and Gas, SAP Upstream Operations Management, and SAP Downstream Operations to manage exploration, production, refining, and distribution processes within the energy sector.
What is SAP’s role in the utilities industry? SAP for Utilities includes tools for managing customer services, billing, asset management, and regulatory compliance, enabling utility companies to optimize their operations and service delivery.
Can SAP solutions be customized for specific business needs? Yes, SAP solutions are highly customizable, allowing businesses to tailor functionalities and workflows to meet their specific operational requirements and industry standards.
What support does SAP offer for implementing industry solutions? SAP provides comprehensive support, including consulting services, implementation guides, and technical assistance to help businesses successfully deploy and integrate their industry solutions.
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