Most organizations in the 21st century now rely on more than one type of software application with many using multiple systems at the same time to manage and automate different business processes. Some systems are easier to use than others but the real challenge of using multiple applications is keeping track of what is installed and in use, and also any changes made by software publishing companies and the potential impact these could have on your business.
A recent example is the changes recently announced by SAP which will affect customers who are planning to migrate from SAP ERP Central Component (ECC) to S/4HANA on a product conversion. SAP has now removed the 7018538 SAP S/4HANA Enterprise Management for ERP customers from its price list, and this means customers will need to license 7018652 SAP S/4HANA Enterprise Management for Professional use.
SAP used to offer its existing customers with a current support agreement two primary ways of taking advantage of their previous investment and converting their SAP Business Suite licenses to SAP S/4HANA. The two previous options were product conversion and contract conversion.
Both product and contract conversion options came with limitations and benefits for customers. The main limitations of product conversion applied to the type of contractual agreements. Customers had to retain existing agreements. They couldn’t convert these into products they didn’t already own. The conversion required line-item mapping and there were no partial conversions, so these needed to be completed in their entirety.
The benefits for customers included permission to undertake a step-by-step conversion on a phased basis. This applied to engines equipped with S/4 products without the need for customers to re-license their entire landscape. Instead, they were permitted to leverage their incumbent ‘classic’ applications until the transition to SAP S/4 HANA had been completed.
In the case of contract conversions, the situation was different. Customers were obliged to complete full contract “wholesale” conversion, as a single, one-off project and this included migrating to new S/4HANA Software Use Agreement Rights.
The benefits for customers included upgrading to next-generation ERP and in-memory DB technology which provided the potential to reconfigure their existing landscape and retiring existing shelf-ware implementations. This option also enabled customers to simplify their SAP contract, negotiate more favorable commercial terms and adopt simpler S4 pricing. In a similar way to the product conversion option, customers could leverage their incumbent “classic” applications until the transition to SAP S/4 HANA had been completed.
The removal of 7018538 SAP S/4HANA Enterprise Management for ERP customers from the SAP Price List means that this particular offering is no longer available for purchase. Instead, customers will need to license 7018652 SAP S/4HANA Enterprise Management for Professional use, which is now the replacement for ERP customers. This change applies to new customers and existing ERP install base customers. It also means that customers on SAP ERP Central Component (ECC) have now only two options to move to S/4HANA; on a contract conversion basis or via the new RISE with the S/4HANA subscription model.
For existing customers, this means they will need to undergo a FULL S/4HANA CONTRACT Conversion (perpetual or via the new subscription-based- model RISE with SAP). This is a process of migrating from their existing ERP system deployments to the new cloud-based S/4HANA system. The existing licensing model is being retired with status A8 from the end of Q2/2023 onwards, which means that customers require special approval to continue using the previous offering.
It is important to note that the SUR (SAP Upgrade and Update Roadmap) and the S/4HANA Conversion Policy have also been updated. Customers will need to review these changes carefully to ensure they are aware of all the new requirements and processes involved in any planned conversions.
If you are moving towards a complex SAP S/4HANA landscape, the need for guidance has never been so important.
SoftwareOne has the ability and experience to help move your incumbent SAP ECC system towards the new SAP S/4HANA core. We will provide a clear picture of your licencing options to help you make the most out of existing and new investments in order to generate strong commercial value.
We can clearly explain the respective business benefits of the three conversion options – Product, Contract or RISE with SAP – from both a practical licensing and financial perspective and also communicate these clearly and simply to all stakeholders in your organization.
The first step in your migration journey is to speak with one of our expert SAP consultants. They can help you understand the options that are open to you and also guide you towards a solution that is absolutely right for your business.
Your S/4HANA migration plans are impacted by the SAP licensing change? SoftwareOne can support you to adapt and ensure a smooth migration:
Your S/4HANA migration plans are impacted by the SAP licensing change? SoftwareOne can support you to adapt and ensure a smooth migration:
