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The cost explosion in SAP is worrying!

August 31, 2023

by

Peter Rattey

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SAPS/4HANA

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RISEwithSAP

The cost explosion in SAP is worrying!

Let us summarize the developments of the last few weeks in a nutshell:

  • SAP cancels product conversion and discontinues the product "SAP S/4HANA Management for ERP customer"
  • Overnight, SAP reduced the eligible license value for contract conversion to 80%
  • At the same time, SAP has announced its intention to reduce this figure by a further 10% per year
  • Maintenance fees were increased by a further 5.5%, following an increase of 3.3% at the beginning of the year
  • Rental prices for FUEs are raised on a regular basis
  • SAP is pushing to get customers to adopt costly licensing by entitlement

In general, it can be said that almost all products will become more expensive across the board under S/4HANA. The question here is how to at least partially counteract this development.

The switch to S/4HANA is inevitable. SAP recommends a direct switch to the cloud, preferably to the company's own expensive cloud. Compared to other providers, SAP often comes off as costly and unfavorable.

BROCHURE – the benefits of our products!

samQ® - License Optimizer for SAP® Software - VOQUZ Labs

samQ License Optimizer automates and centralizes all SAP licensing processes to optimize your costs, reduce risk and guarantee compliance.

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Chose the right migration strategy!

Therefore, choosing the right migration strategy is becoming increasingly important, and professional support can enable significant cost savings during the changeover, provided it is approached correctly. Over the past few years, we have successfully helped numerous companies switch to S/4HANA and achieved enormous cost savings. In all scenarios, optimization of the existing license structure was the basis, which we achieved with the help of our samQ optimization tool.

It often turns out that there are significant cost surpluses, especially in the area of user licenses. Through a careful strategy, we were able to keep the costs neutral. In a contract conversion, SAP demanded a 10% higher license quantity after the switch. Looking more closely at the future outlook, a switch to the S/4HANA world was possible without additional costs for the next few years.

However, SAP's aggressive pricing policy has put a stop to this approach. Only 80% of the old license quantity is credited, while SAP still demands an increase in the maintenance amount. In doing so, they are forcing companies to purchase more than 20% extra, possibly unnecessarily. The additional amount charged fluctuates arbitrarily and is dependent on SAP whims, without clear guidelines.

In particular, companies that do not expect any growth in the next few years will come under strong pressure here.

WHITE PAPER – enhance your knowledge!

S/4HANA Migration - Blessing or Curse?

Understand key SAP S/4HANA licensing risks

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What to do?

Professional support is essential during the transformation. This is where all the expertise on the subject comes together. By choosing the right rental products and appropriate terms, costs can be saved in the future. Do not hesitate to ask us how to do that.

Use the situation wisely and to your advantage. Demand clear, financially balanced guidelines. Refuse to increase the maintenance amount with only an 80% charge. This may be challenging, but if a critical mass is reached, concessions can be forced from SAP. The German-speaking SAP User Group (DSAG) should also be actively involved here.

We are at your side.
We are experts in SAP.
We have the appropriate tools to support you.

ABOUT THE AUTHOR

Peter Rattey

Peter Rattey is the founder of VOQUZ Labs. He invented samQ and is still intensively involved in samQ's further development. Peter is one of our most experienced advisors.

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