In the digital era, where cloud migration dominates the conversation, many organizations still rely on on-premise licensing. This licensing model involves purchasing the right to use SAP software on your infrastructure, allowing in-house management and maintenance. Here’s everything you need to know about managing SAP ERP on-premise licenses effectively.

Understanding SAP ERP Licensing Models

SAP ERP employs a two-tier licensing model:

1. Named User Licenses: Access depends on the user’s role, such as professional, employee, or worker.
2. Engine Licenses (Line-of-Business Solutions): Metrics vary for each engine, such as transactions, orders, or CPU usage.

This structure requires careful monitoring and management to optimize usage and prevent non-compliance.

Common Challenges in SAP ERP Licensing and How to Address Them

1. Maintaining a Comprehensive License Inventory

• Challenge: Overlooking licenses and contracts, especially in large organizations.
• Solution:
  • Designate a Software Asset Management (SAM) professional to liaise with IT, Business, and Procurement teams.
  • Request an updated list of active contracts from your SAP Account Manager—exercise caution to avoid triggering an audit.
  • Use SAM tools to consolidate license data but ensure proper oversight.

2. Managing User Access Levels

• Challenge: Assigning appropriate license types based on user roles and activities.
• Solution:
  • Regularly review user roles and authorizations.
  • Use transaction-level data (T-Codes) in SAP systems for detailed analysis.
  • Establish a role design framework aligned with licensing rules.

3. Tracking User Activity

• Challenge: Licenses assigned to inactive users.
• Solution: Implement a process to deactivate users who haven’t logged in for 90 days.

4. Addressing Unlicensed Engine Usage

• Challenge: Unlicensed engines appearing in measurement results.
• Solution:
  • Determine if usage is intentional or due to errors.
  • Refer to relevant SAP notes before running USMM to avoid false positives.

Enterprise Metrics: A Critical Consideration

SAP licenses engines using measurable metrics (e.g., user count, revenue, or installations). As your business grows, exceeding these metrics requires purchasing additional licenses.

Pro Tip: Align additional license needs with new purchases to leverage better discount rates.

Navigating Indirect Access Risks

With SAP’s S/4HANA Digital Access licensing, interactions with non-SAP applications are licensed based on document usage. To avoid over-counting:

• Identify documents created by users already licensed for SAP.
• Use integration architecture diagrams to exclude redundant counts.

Preparing for S/4HANA Migration

SAP’s ECC mainstream maintenance ends in 2027, with extended maintenance costing 2% more. Migration to S/4HANA (on-premise or cloud) requires cross-department collaboration, including IT, Finance, Legal, and Procurement.

Migration Best Practices:

• Analyze current installations to exclude inactive users and unused products.
• Perform a clean-up to optimize costs and ensure a smooth transition.

Conclusion

SAP ERP licensing presents complexities that demand proactive management. By understanding common challenges and implementing strategic solutions, businesses can optimize costs and maintain compliance.

📩 Need tailored advice on SAP licensing? Contact us at for expert guidance.

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