SAP is basically less about software according to our SAP specialists, but more about infrastructure, because it is not plug-and-play software. In addition, it is not something that any user can just install and start using. The software is more of an ERP where the organizations use SAP to enhance their internal operations and processes or streamline them.
The legacy on-premise models of ECC, BPC, BW and there are a few others. These are the legacy models which came into place in the early 2000s. In an SAP traditional environment, there is an ERP central component also called ECC, which is usually deployed at all the customer on-premise SAP sites. Currently in the market, a lot of customers are transitioning to S/4HANA, a cloud solution provided by SAP. So, ECC is something that one will always come across in an SAP on-premise setup.
BPC is relevant to business planning and consolidation when a customer wants to improve their business processes or if the management wants to view certain data or dashboards through their SAP databases. This means that many customers have implemented BPC. Business Warehousing (BW) is another similar software legacy module, where a lot of information is stored in databases about their warehouses and manufacturing setups.
About eight years ago when SAP introduced the HANA database and this is the first legacy on-premises model for their own database. Before their own database, they had other databases that they leased and provided to customers, databases from IBM or Oracle, for this they basically used a third-party contract between Oracle, SAP, and the customer. Where clients were allowed to use other databases. But lately, they have their own database and many customers are moving to the HANA database where at the core an SAP solution remains on-premises, but the database of this solution goes to the cloud, which is an SAP cloud solution.
The latest development that SAP has now is S/4HANA, the cloud edition has one new release every quarter since 2016. That’s for the complete cloud solution and here all the applications and licenses are hosted in the cloud and managed through cloud solutions. SAP has support programs running to help companies transition from their on-premises setup to a cloud setup on S/4HANA.
Source of the used images: SAP
The first step towards SAP licensing starts with contract consolidation wherein all the purchases are summarized and the other terms and conditions from SAP contracts require clear understanding so that products can be deployed effectively and without non-compliance.
Because a lot of times, a software publisher mentions certain things and conditions that permit and limit a customer to certain usage of a product, the reason why contract summarization and analysis are very important.
Then there is consumption analysis which is more of understanding how many licenses are in use and if the number of licenses is correct, if they are classified in the right way, or if they are misclassified, or rather what is allowed versus what is being used. SAP Licensing is all about comparing these two: usage and permitted to use if bought.
Transaction codes (T-codes) are commands to quickly navigate and run various functions within SAP. An SAP developer configures these T-codes into modules that allow other users to perform business operations.
The complexity is due to SAP’s obnoxious T&C’s and the multi-dimensional approach in capturing values inside SAP systems and databases to derive license requirements.
The market is shifting more toward conversions of product licenses from SAP on-premises to S/4HANA cloud products.
You can also find more information in the following blog post: SAP Audits in Q3, what’s next?
And SAP licensing complexities is our top SAP blog of last year.
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