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The most important transition factor in SAP S/4HANA Cloud through RISE with SAP is licensing. For those businesses eager to capitalize on the force of the robust cloud ERP solution developed by SAP, proper licensing goes together with smooth sailing, controlled costs, and optimal business growth. Here’s an easy-to-understand guide through the basics of SAP S/4HANA Cloud licensing under the umbrella of RISE with SAP.
What is RISE with SAP?
But before we jump into the details on licensing, let’s quickly understand what RISE with SAP is. In essence, at its core, RISE with SAP is all-in-one business transformation that makes it easy for your company to move to the cloud by consolidating cloud infrastructure, software, and support services into one easy-to-manage subscription model – in effect freeing you from much of the complexity associated with contracting separate cloud providers, support teams, and software licenses.
The intent of RISE with SAP is to help companies streamline their digital transformation, reduce up front and ongoing cost, while at the same time providing flexibility to scale. In this context, we want to dive into the various licensing options that apply to SAP S/4HANA Cloud users.
Types of Licensing in SAP S/4HANA Cloud
In simple terms, licensing SAP S/4HANA Cloud under RISE with SAP can appear quite complex at first glance, but stripped down to its most basic level, it really isn’t all that complicated, fitting into two big models: subscription-based licensing and modular licensing.
1. Subscription-Based Licensing
This is the most widely used licensing model under RISE with SAP, especially by businesses transitioning to the cloud. In this model, instead of buying software as a whole, you pay for it through subscription payments made periodically. This makes budgeting much easier for businesses and gives them flexibility in terms of usage.
Key Features:
Pay-as-you-go model: Without an up-front payment, the subscription licensing helps pay out over time. Definitely is helpful when it comes to handling cash flows of small and medium-sized enterprises.
They have an all-in-one deal: Your subscription will cover SAP S/4HANA Cloud software, plus cloud infrastructure servers, storage, ongoing support services, plus maintenance services. Everything is covered in one predictable fee.
Scalability: If the company grows, your subscription can be scaled to accommodate more users or access more modules. Only what you need is paid for, and you can scale with the changing needs and requirements of the company.
2. Modular Licensing
For businesses having more defined needs, SAP offers modular licensing. This allows companies to license only the modules or components that they need. That is why the modular licensing is often more customized than the broader subscription model.
Key Features:
Flexibility: Modular licensing provides you with the opportunity to customize your SAP S/4HANA Cloud experience by choosing only the specific tools that you need. If you are running a business that needs only financial or procurement modules, you can choose only those modules and eschew all extra, unrequired facilities.
Cost control: Here, you only pay for what you use, and thus, through modular licensing process, firms can save money, especially in small businesses that have unique needs and don’t need any of those features.
Industry focus: Most industries have specific functionalities, such as advanced production planning in manufacturing or compliance tools in healthcare. Modular licensing will ensure you don’t end up paying for features that have no relevance to your business model.
The Role of User-Based Licensing
There will also be user-based licensing, which is based on the number and types of users accessing the SAP S/4HANA Cloud system. Besides that, businesses will have to consider subscription and modular licensing options.
User Types
Licenses in SAP S/4HANA Cloud are based on users, which are customized towards organizational-specific user roles. This will assist you better in the allocation of licenses and in managing vast numbers of licenses.
Professional Users: These are the power users who need full access to all modules and functionalities within SAP S/4HANA Cloud. In most cases, these individuals consist of decision-makers, managers, or any expert who depends greatly upon the system for a wide range of activities.
Functional users: They have fewer permissions, and only certain modules would be available to them based on the specific jobs they may do. Let’s take the example of someone in your finance department. This user is going to use only financial tools, whereas the fellow who is involved in procurement is mostly going to use supply chain functionalities.
Employee Users: These are usually the ones who utilize the system simply for basic purposes like checking payslips, submission of timesheets or expense reports. Because the user interaction is simpler, employee user licenses for an employee user will be less expensive as compared to a professional or functional user.
Classification of your workforce and subsequent selection of your corresponding license will ensure that the system is effectively used without major cost implications.
What’s Included in SAP S/4HANA Cloud Licensing?
What you are getting beyond access to the software with SAP S/4HANA Cloud licensing under RISE with SAP goes beyond that. Here’s the breakdown of what is usually included in your license:
Core Software Access: SAP S/4HANA Cloud ERP is part of your subscription. It can be a full suite or selected modules according to your choice of license.
Cloud Infrastructure: SAP would do the hosting as well as the storage, which would save the heavy cost of servers and maintaining such on-premises infrastructures. It is very handy for those companies who wish to reduce the burden of on-premises systems.
Maintenance and Upgrades: SAP is constantly enhancing its software to stay technology advanced. From the subscription that you pay, you get the upgrade without any extra charge to keep your system optimized and secure.
Technical Support Services: The license for SAP will have technical support. Depending on the level of need, several levels of support exist so that the system will run error-free with support just a call away.
Security and Compliance: Its package ensures security, such as data encryption, user authentication, and compliance with industry standards. SAP ensures secure data and regulatory compliance, so less internal work is burdened by your internal IT staff.
Considerations When Choosing a Licensing Model
The many considerations to help you decide on the best SAP S/4HANA Cloud licensing model for your business under RISE with SAP include:
1. Company Size and Potential
Subscription-based license plans will come in handy for small firms since they can be relatively cheap and scalable. Large enterprises would depend on specific industry requirements, but generally, modular licensing is the way to go with RISE and provide a customized option.
2. Industry Requirements
Modular licensing allows you to target what matters most for your industry-specific compliance requirements or the need to deal with specialized tools. This would save you from unnecessary spending on irrelevant features that don’t apply to your business.
3. Flexibility in Budget
Subscription-based licensing offers a predictable, all-inclusive cost structure, making it excellent for budgeting. However, if you are looking for a much more customized solution, modular licensing could possibly offer better control over your spending by capping your costs only for strictly necessary features.
4. Scalability
Subscription-based models allow you to add or drop users and modules in a snap if your business is expanding or rapidly changing. It allows you maximum flexibility without having to constantly renegotiate new contracts.
Conclusion
It will make sense to fully grasp the SAP S/4HANA Cloud licensing model under the newly introduced RISE with SAP, for which SAP is aiming and trying to play its part by totally transforming the existing traditional way of experiencing a mighty ERP solution. Whether it’s a subscription-based or modular license, it always matters in choosing the right approach to handle and effectively reach your desired business objectives.
RISE with SAP provides flexibility, so now companies of all sizes can take control over their digital transformation. That is because you can select the right user types for scaling, managing costs while gaining maximum value by tapping into the support and security in the license.
The right moment to grasp your business requirements to match them with the proper licensing model will be worthwhile for long-term success. Your business can thus be empowered to thrive in this increasingly digital world through SAP S/4HANA Cloud, all under the right licensing.
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