SAP S/4HANA Licensing Models and Conversions

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  1. What is SAP S/4HANA?
  2. On Premise Pricing Model vs SAP Cloud
    1. Difference between Classic vs. S/4HANA vs HANA 
  3. What are the challenges of migration to S/4HANA?
    1. What is the best way to migrate to SAP S/4HANA?
    2. Green field approach
    3. Brown field approach
    4. Landscape Transformation 
  4. S/4HANA License Conversion Overview 
  5. SAP S/4HANA Conversion Programs
    1. Individual product conversion or entire contract conversions 
  6. Conclusion 

What is SAP S/4HANA?

The most recent version of SAP's ERP software is called SAP S/4HANA. The program, which was released in 2015 as the fourth product generation, is based on the ground-breaking SAP Hana database technology. The SAP S/4HANA Cloud and On-Premise solutions are available to users.

For demand-driven business resource planning, an ERP system is employed. It is utilized to manage procedures and effectively connect many functional and departmental sectors. Applications for sales, production, marketing, and accounting are all included as separate modules. ERP software can also handle more difficult customer or supply chain management activities.

SAP S/4HANA, the replacement for SAP's flagship product SAP ECC, was introduced as the next-generation intelligent ERP system. Because of modern technology, the Software as a Service (SaaS) version is made to assist businesses with process standardization and the transition to digitalization.

While the most popular databases are supported by earlier versions of SAP ERP, only the SAP Hana in-memory database is used by SAP S/4HANA. Users gain from improved performance and the best technical benefit from this.

What does S/4 "S" Hana's and "4" stand for? In S4 Hana, the "S" stands for "simple," and the "4" denotes the generation order.

When compared to SAP ECC, which is still widely used in businesses, SAP S/4HANA offers a number of ground-breaking features that completely transform the system environment. By 2027, SAP intends to stop providing mainstream support for its current ERP products and thus the SAP ECC users are already thinking about making the switch to S/4HANA.

On Premise Pricing Model vs SAP Cloud:

Difference between Classic vs. S/4HANA vs HANA

One of the first on-premise ERP systems, SAP ECC is distinguished by its modular design. It consists of fundamental programs like CRM, SRM, and SCM. The fact that SAP S4 Hana only utilizes the Hana database, as opposed to the Business Suite, is one of the greatest differences between SAP S/4HANA and SAP ECC. Additionally, SAP ECC supports databases from other vendors like Db2, Oracle, and Informix.

Although the system has been used extensively, SAP S/4HANA will eventually replace it entirely. Future-focused work can be done both on-site and in the cloud thanks to the new system.

Due to its in-memory database, the intelligent ERP system SAP S/4HANA reacts significantly more quickly than SAP ECC. Another significant distinction is that SAP S/4HANA no longer separates OLAP and OLTP processes, enabling complicated analysis.

Repetitive data and interfaces are eliminated by simplifying the data model and the entire system landscape. Artificial intelligence and machine learning are also used in SAP S/4HANA. This encourages user-friendly operation, makes it possible for businesses to respond quickly to changes, and automates procedures.

The similar-sounding phrases quickly confound new ERP users who haven't dealt with the subject before. The distinction between SAP Hana and SAP S/4HANA is, however, rather straightforward. SAP S/4HANA is an ERP system created especially for SAP Hana, whereas SAP Hana is a database type.

Thus, SAP S/4HANA, the replacement for SAP ECC, makes use of the in-memory platform's infrastructure to facilitate quick access to and analysis of data. SAP Hana is a platform for user-defined applications in software development.

What are the challenges of migration to S/4HANA?

Many SAP Architects are getting ready for a transition because SAP will soon stop providing support for its current ERP systems. The migration to a new ERP system is not a conventional IT project; rather, it involves a fundamental system change, so there are certain difficulties in implementing it.

The findings revealed that the largest hurdles are currently complex IT landscapes, unclean master data, and company-specific ABAP code that is incompatible with S/4HANA. Additional worries lead to inconsistent business procedures that must be unified prior to relocation.

Additionally, change management lacks the knowledge required to create the ideal plan. Individual stakeholders who must participate in the coordination process occasionally slow down the migration process.

What is the best way to migrate to SAP S/4HANA?

Before implementing SAP S/4HANA, SAP System Experts must make a few crucial, essential choices that have an impact on the migration plan as a whole. For instance, a different strategy is needed while moving from SAP S/4HANA On-Premise System to SAP S/4HANA Cloud System.

Another important consideration is whether the current SAP ECC system, complete with its data and settings, should be migrated or not. In some circumstances, it may make sense to install a brand-new ERP system that will be less problems down the road. In any case, a transparent strategy that is clear to all business areas and stakeholders is required for successful migration.

According to the aforementioned study, selecting the appropriate enterprise architecture (EA) tools is crucial for a successful migration. EA tools are reportedly used by more than half of the companies in the survey to evaluate the present situation and plan the desired architecture. The EA tools also offer a thorough roadmap that breaks down the migration to SAP S/4HANA into individual steps as part of the business capability concept.

Green field approach

When a business chooses the greenfield approach, it does away with its current ERP system. This offers the benefit of enabling the implementation of a brand-new, standard system that only includes the procedures and information that are truly required. Innovations can be integrated more readily and a high level of usefulness can be attained if a corporation totally rethinks its enterprise architecture.
Only 14% of respondents in the aforementioned study opted for this strategy because it requires more work. However, because the systems must be entirely replaced when moving to the SAP S/4HANA cloud edition, the greenfield approach cannot be avoided.

Brown field Approach

The brownfield strategy involves converting the system. This implies that current business procedures are used and, if necessary, improved. The brownfield strategy is the most widely used migration strategy because the majority of businesses do not want to entirely give up their customized ERP system. In the survey, respondents chose this tactic in 44 percent to a combined greenfield and brownfield option in a 42 percent to ratio.

EA tools are used to segment the conversion into several phases in order to guarantee a smooth transition. The tools also make sure that outdated procedures are re-examined to prevent the adoption of redundancies and complexity. The benefit of the system conversion project is that it takes less time than the greenfield approach.

Landscape Transformation

Landscape transformation is not, strictly speaking, a separate migration strategy. It's just a way for big businesses with complicated system landscapes to get ready for migration. In actuality, this entails consolidating and cleaning up datasets to lessen their footprint prior to the move.

This strategy can be used by businesses to mix multiple ERP systems from various providers. It is also feasible to simplify things during the change itself. Depending on the target system and the system landscape, this may or may not make sense. An enterprise architect frequently combines all three methods to create the best strategy.

S/4HANA License Conversion Overview

mceclip0.pngSource: SAP Licensing models and conversions

SAP S/4HANA Conversion Programs

Individual product conversion or entire contract conversions

Contract Conversion

(Fully committed to moving on S4)

Product Conversion

(Phased approach)

1.        Intended for full contract “wholesale” conversions

2.       Customer gets pure S/4H contract

3.       Customer can reconfigure their landscape (re-allocate shelf ware)

4.      Does NOT require line-item-mapping

5.       Pilot Program in 2017, GA in 201

6.       Customer entitled to lesser of 100% credit for previous spend or 90% of net NEW payable


 1.        Intended for piece-meal conversions to S/4 over time

2.       Customer keeps same contractual agreements / SUR

3.       Cannot convert into products they do NOT already own

4.      Required line-item mapping

5.       Generally available program

6.       Customer is entitled to 100% credit i.e., Model 1


The SAP Cloud Platform gives businesses the chance to construct a unified and effective ERP system that, despite being tough to migrate to, will ultimately save money and time.

Customers who use the S/4HANA Cloud option free up their own server and do not have to worry about software maintenance, in contrast to the on-premise solution. Additionally, they profit from cutting-edge advancements, quick data processing, and adaptable pricing structures.

The use of relevant enterprise architecture tools with S/4HANA and a team of SAP specialists is necessary to ensure the transition to S/4HANA Cloud or On-Premise is seamless and transparent. These segment migration into various phases and guarantee that a business keeps track of its system reorganization.

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