IBM Internal compliance review

S/4HANA vs Classic

S/4HANA is SAP’s next generation application suite. It’s the new and improved version of the classic ERP Business Suite.

SAP considers S/4HANA to be a completely different product and not a legal successor to ERP, so as well as a full technical reconfiguration, there are also major changes in licensing. This means that if you are considering an S/4HANA migration, you have a great opportunity to move your licenses in a commercially advantageous way, particularly by reconfiguring long redundant assets.

We can give you a clear picture of all licensing-related changes in your current and future estate and offer best-in-class advice on engaging commercially with SAP.

  • Licensing

    S/4HANA is licensed similarly to the classic ERP, with a combination of packages, users and databases. There are some key differences to consider when migrating however, as the licenses cannot easily be matched up on a like-for-like basis:

    • Packages no longer require named-user licenses for access. Many have changed names or licensing metric while some are now included as standard in the S/4HANA digital core or other packages.
    • There are 4 standard license types for S/4HANA users (developer, professional, functional and productivity) most of which do not match up with the definitions of the previous named users.
    • S/4HANA runs only on HANA and does not support third-party databases.

    Without expert guidance, it can be a hugely complex task to make sure that your contracts post-migration are aligned to your business needs. We compare your current usage and license entitlements and scope out how your future license estate would need to look based on your internal SAP and wider IT roadmap.

  • The options

    SAP is only offering mainstream support for Business Suite until the end of 2027. As SAP is critical to the running of your business, we recommend moving over to S/4HANA before this end date to ensure you are under constant full support from SAP. The larger your SAP estate, the more complex your migration will be and the earlier you should consider switching. Plus, migrating sooner means you will experience more benefits of S/4HANA.

    Among other considerations is a move from on-premise to either SAP or third-party cloud. While not necessarily linked to an S/4HANA migration, this is typically a good time as commercial conditions can be optimized. The time may also be right to re-evaluate your indirect use licensing (given the changes in this area as well) and the impact an S/4HANA migration would have. For more details please see the Digital Access page.

  • What we do

    • The first step is to take you through what S/4HANA migration will mean for you from a licensing perspective. If you choose to migrate, you do not have to move entirely to S/4HANA in one go. SAP offers a complete contract conversion and a product conversion, which allows a piece-by-piece transition. While the latter may better align with your roadmap, the former has the best commercial outcome. We can help you find the optimal balance.
    • Before recommending any changes, we create a baseline state. We typically complete a full licensing analysis which includes reviewing contracts and evaluating usage of your packages and named users to compile an effective licensing position.
    • We then map your requirements to S/4HANA licenses. This includes re-evaluating any licenses with changed metrics, considering your future usage projections and comparing licensing options to create your future state. This is the bill of materials for your post-migration SAP estate.
    • Finally, we review this future state and provide commercial benchmarking, with cost modelling for deployment and purchase scenarios. These yield the commercial information that will help drive your negotiations with SAP and enable your business to get the best deal possible.
    • We also advise on licensing constructs that enable a phased and simplified technical migration path, which can be initiated before full contractual migration.

  • Benefits

    • Peace of mind that your S/4HANA migration is as cost-effective and as aligned with your business goals as possible.
    • Expert advice in license conversion to allow you to move forward with the correct information.
    • Benchmarking to ensure that you are paying the right price.
    • Extensive knowledge and experience to keep a handle on a complex change with several interdependent moving parts and shifting goal posts.
    • ITAA is completely vendor independent, so our advice and guidance are solely optimized to your business.