Moving to S/4HANA? Be prepared for a smooth transition

In commercial terms, a move from ECC to S/4HANA can be viewed in two ways – it is either another way for SAP to extract significant revenue from an existing customer, or a wonderful opportunity for a customer to right-size their environment, remove shelfware and risk, obtain favorable terms and conditions, and safeguard their SAP investment for the future. Working together with experts means you have the skills and experience to achieve the second outcome.

Any customer planning to move from an SAP on-premises ECC environment to S/4HANA (on-premises or in the cloud), is highly recommended to engage with experts to perform a) a software license reconciliation/ baseline, including Indirect Access b) a full contract assessment, c) an analysis of future demand and d) an overall assessment of the future BOM and Order Form.

The above work is needed to determine the following:

• The terms and conditions of existing SAP licenses. Obviously, these terms dictate the way in which customers can use the software and engage with SAP today, but you should already be thinking ahead to your S/4HANA negotiation. Which terms do you want to keep, what terms expose you, and how can you leverage and disregard these as appropriate in the new world?
• Current usage and compliance situation. If a customer doesn’t know what it is actually using, and where it has risks and opportunities, chances are that SAP will seek to use current non-compliance to increase the price and drive the negotiations from a much higher cost point than expected. Customers should seek to optimize its environments, mitigate risk, and remove any leverage that SAP may try to capitalize on.
• The future usage requirements. Linked to current usage – if a customer doesn’t know what it needs for the future, at least to cover itself for the next 5 years (including Indirect Use), then the likelihood is that it comes out of the negotiations with a poorly constructed BOM, with T&Cs beneficial to SAP, and might even find itself non-compliant almost immediately.
• The financial impact of moving to S/HANA – moving to S/4HANA is not a version upgrade and means spending money – potentially lots of money. In many cases it involves a complete re-contracting of SAP software with a myriad of additional T&Cs. Understanding the desired outcome before engaging SAP means that the customer drives the conversation, not SAP.

Evaluating and assessing the SAP commercial, contractual and licensing situation is highly recommended not just prior to a S/4HANA migration but remains relevant for all those customers that maintain the Perpetual License Model, deploying it either on a Cloud Provider such as Azure or AWS, or on-premises.

The core elements of the S/4HANA licensing models will still rely on following licensing pillars:

• Core Access: Direct User Access to Digital Core
• LOB and Industry Solutions
• HANA Database
• Digital Access / Indirect Use

As a result, all customers choosing to stay with the Perpetual License Model, will be facing similar licensing challenges as experienced until now with SAP. Among other, this includes:

• Dealing with the yearly audit process from SAP
• Mastering the challenges with Indirect Usage (at least those customers that performed a Product Conversion and decided not to adopt Digital Access)
• Ensure Software Compliance while taking advantage of any optimization opportunity

Regardless of where you are in your SAP Transformation Journey, SoftwareOne can help you make the right decisions for your organization. Don’t hesitate to reach out to us; our specialists will support you navigate the SAP challenges.