Introduction To SAP Licensing

SAP Licensing Basics

SAP Software is modular, adaptable, and wide ranging. It allows customers to only pay for what they require and determine what solutions based on their needs, how to deploy software, and the license type. (see Figure 1.).

Before you choose SAP licensing software, it is critical to consider the following three principles:

  • Software solution:​ Choose which software solution best matches your business needs.
  • Deployment options:​ choose how you want to deploy the software; on-premise, or in the cloud (publiccloud or private cloud).
  • Licensing models: ​Select the model that is appropriate for you such as the perpetual, subscription, or consumption model.

SAP software accommodates customers’ needs through its numerous licensing models and deployment Options.

SAP Software Solutions

SAP provides modular, compatible, and smart applications including SAP S/4HANA; SAP C/4HANA suite; SAP SuccessFactors®, SAP Ariba®, SAP Concur®, and SAP Fieldglase solutions; the SAP Integrated Business Planning solution; and SAP Digital Manufacturing Cloud solution. This suite of intelligent applications is complemented by a digital platform that manages data and coordinates the applications.

Deployment Options

Familiarizing yourself with the deployment options for SAP software and what they each entail is the next important step in building a successful deployment plan. When learning about them, ask yourself the following questions: Are you looking to lower your business’ IT usage? Do you need to customize your ERP solution? Do you need regular software upgrades? SAP provides a wide range of options spanning all of the applications and is deployable on premise or in a private or public cloud.

The following are descriptions of the SAP deployment options, as summarized in Figure 2.

  1. On Premise
    When customers choose SAP software to be deployed on their premises, they are in charge of installing it on their data center and then operating and managing it. They also typically have permanent software use rights since the majority of SAP software is licensed on a perpetual license model.
  2. Hosted Private Cloud
    SAP Also offers software deployment on a private cloud option, which is called the SAP NANA’ Enterprise Cloud. It is a single tenant hosted environment focused solely on the data and systems of the customer and is available for customers who choose a perpetual and subscription license. SAP supplies the hardware and offers to manage the applications for customers.
  3. Public Cloud
    Customers also have the option of deploying SAP Software on the public cloud. It is a secure platform and easily accommodates the needs of every user. Customers are granted access to the public cloud with a subscription license (SaaS) and SAP administers the software.

Licensing Models

In addition to providing customers the flexibility to leverage the above-mentioned deployment options, SAP also offers flexible ways to license SAP software under three different licensing models: perpetual licenses, subscription licenses, and consumption-based term licenses (see Figure 3).

SAP offers customers three licensing models that provide as many advantages as the deployment options: perpetual licenses, subscription licenses, and consumption-based term licenses (see Figure 3).

  1. Perpetual License Model
    With the perpetual license model, customers are authorized to use the software permanently for a one-time fee plus annual maintenance/support fee. Usually, perpetual licenses are used for on-premise deployment and give perpetual rights to a certain amount of software.
  2. Subscription License Model
    With the subscription license model, customers pay annually to have the right to use the software for a specific time, typically 3-5 years. The subscription fee covers the license and the support/maintenance fee.
  3. Consumption License model
    With the consumption license model, customers pay based on the consumption, its term license with no annual commitment.

How To Use SAP Licensing Products

In order to make sound investment decisions when buying software, it is essential to understand the licensing and pricing model your vendor is offering. This also guarantees that the software you purchase is appropriate for your business. Below is an explanation of SAP’s licensing model, main features, and benefits.

Core elements of the SAP Licensing Model

SAP’s standard licensing model consists of two components: ​software licenses​ and​ associated maintenance and support services​. As noted above, the majority of SAP software licenses are ​perpetual​, meaning that you have the rights to use them permanently.
In order to get the right to use SAP license, customers need to have both ​package licenses​ and ​named user licenses​ in order to maintain compliance. below are the definitions of each license metrics​:

  1. Package Licenses
    Package licenses authorize the use of all the functions included in the software required to run your business. Important business metrics—such as the number of orders processed, number of contracts tracked, gross written premiums, or patients treated—determine how much the package license costs. The license limits how much you can use the software. However, you can purchase an extension if your metrics go beyond the limit.
  2. Named User Licenses
    Named user licenses are required for every individual who uses the software. Named users are your employees or those who you have granted indirect or direct access to the software, such as your business partners. Another important aspect of these licenses is that SAP places users into groups such as “SAP employees” and “SAP Professionals” for users performing operational tasks. This makes clear what every users’ roles and tasks are. In addition, named user licenses are valid for multiple package licenses. The license price is determined based on the functionality of the users, i.e. “SAP employees” and “SAP Professionals”.
  3. Modular structure of SAP software Licenses
    SAP software licenses are not one-size-fits-all; they are modular, which enables you to choose and buy the right software to ensure your business thrives. The modular structure of SAP software licenses allows you to license and pay for only the functionality and users you require at any given time.

Alternative Licensing Models

SAP provides alternative licensing models such as software rentals and subscription-based licenses.

Support & Maintenance for SAP Software

  1. Mainstream
    Mainstream maintenance is the first maintenance phase for a release and starts on the release-to-customer date. During this phase, the customer receives the full scope of support.
  2. Extended
    After the mainstream maintenance phase ends, SAP may offer extended maintenance for selected software releases. The scope of support provided via extended maintenance is usually similar to that of mainstream maintenance, with some restrictions. Extended maintenance is optional and requires a separate additional support contract.
  3. Customer-specific
    A release enters customer-specific maintenance when:
    • The mainstream maintenance phase ends and no extended maintenance is offered
    • Mainstream maintenance ends and you do not sign a contract for extended maintenance
    • The extended maintenance phase ends
    • Your extended maintenance contract expires

Disclaimer: The information is provided for general informational and educational purposes only and is not a substitute for professional advice. The use or reliance of any information contained on this site is solely at your own risk. ​All information has been provided in good faith, however we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information, as the information provided does not contain software licensing advice.

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