SAP licensing is a complex topic for many organizations – and the transition to SAP S/4HANA brings additional challenges. However, the migration also offers an opportunity to optimize your existing license inventory and reduce SAP license costs.
This article provides an overview of SAP user licenses and their role in managing access and controlling costs in SAP environments, especially in S/4HANA. It explains how user licenses work in SAP S/4HANA and why effective license management is crucial during migration.
To gain deeper insights and discover practical strategies for optimizing SAP license management, we recommend downloading our White Paper. It provides valuable guidance on how to effectively reduce SAP license costs, ensure compliance, and make the most of your license strategy during the transition to SAP S/4HANA.
User licenses are specific SAP licenses assigned to individual users. The type of SAP user license is determined by the authorizations a user has. The required access to functions and modules influences which license type is needed – for example, a Professional User for full access or a Functional User for core business tasks. User licenses allow tailored licensing per user and enable precise control over SAP authorizations by limiting or extending access rights. Paying only for authorized application that are truly needed helps organizations optimize SAP license costs. In addition, aligning licenses with actual employee roles ensures that only authorized users have access to sensitive data. This way, companies can effectively control SAP licensing costs while also strengthening system security.
SAP S/4HANA introduces unique licensing concepts that directly impact license management. These include new licensing models and user license types designed specifically for S/4HANA – such as Digital Access and authorization-based license measurement:
With SAP S/4HANA, the number of deployment options has increased, providing organizations more flexibility to adapt their IT landscape to specific needs. However, this variety also makes it more challenging to choose the right licensing model – especially considering the associated costs.
In on-premise license models, SAP software and data are hosted within the organization. These licenses typically involve higher upfront costs and require internal maintenance. This option suits companies that want full control over their data and infrastructure.
Cloud-based licensing models provide access to SAP software through the cloud. The provider handles hosting and maintenance, while customers pay a monthly or annual fee. These models offer scalability, flexibility, and lower initial investments.
Hybrid models combine on-premise and cloud environments, allowing organizations to keep certain systems on-site while leveraging cloud scalability. This option is ideal for businesses seeking both data sovereignty and cloud flexibility.
SAP S/4HANA offers several user license types based on user roles and access needs:
SAP license metrics define how licenses are measured and billed. In SAP S/4HANA, key metrics include:
SAP license measurement analyzes the actual license usage versus assigned licenses. This quantitative review primarily serves compliance purposes.
The measurement is conducted annually using SAP tools such as LAW (License Administration Workbench). Every three years, SAP typically performs an extended license audit.
With S/4HANA, the process is shifting from usage-based to authorization-based measurement.
License violations in SAP S/4HANA can occur for several reasons. Understanding common violations is essential, as lack of awareness does not protect against potential back payments.
| Over- and Under-Licensing |
Accurate license allocation helps reduce expenses, ensure compliance, and mitigate risks. |
| Incorrect License Assignment |
| Assigning the wrong license type – one that doesn’t reflect the user’s actual authorizations or usage – can lead to non-compliance and audit penalties, even if enough licenses exist. Proper mapping of license types is therefore key to avoiding extra costs. |
In SAP S/4HANA, indirect access can lead to additional costs if third-party applications connect to the system without proper Digital Access licensing. Companies must ensure all external integrations are covered to prevent violations.
The shift to SAP S/4HANA fundamentally changes licensing structures. Migration provides an opportunity to review existing licenses and optimize the SAP landscape.
However, the complexity of S/4HANA products, metrics, and engines often creates a lack of transparency in SAP license management. This can lead to unnecessary expenses due to over-licensing.
Proper licensing offers multiple benefits:
Migrating to S/4HANA comes with complex licensing challenges. Xiting helps organizations overcome these challenges and optimize costs through a SAP S/4HANA License Analysis.
The analysis is based on SAP’s licensing framework and provides a comprehensive overview of your current license landscape as well as future requirements in S/4HANA.
With the Xiting Authorizations Management Suite (XAMS), our service includes a pre-analysis, detailed evaluation, target calculation, and forecast of your required user licenses. You’ll receive full transparency through a clear, data-driven report and presentation.
With XAMS License Analysis, you can successfully align SAP user licenses with your business needs – protecting your organization from excessive costs, security gaps, and compliance risks.
User licenses are individual licenses assigned per user. They define which functions and modules each user can access within the SAP system.
License costs vary based on the license type and scope of access. Professional licenses are more expensive, while limited-use licenses are more affordable.
There are two ways to transition existing licenses to S/4HANA:
