Rise with SAP: how to optimize operational costs associated with the SAP BTP platform

The next step is to plan for use together with S/4 HANA Cloud Private Edition y subscribing to the right business model for SAP BTP.However, there are many activities where the use of SAP BTP is not discussed in advance and is “parked” for review after the S/4HANA system goes live. 

this lack of long-term vision It could result in operational costs that need to be paid attention to. Let's see why.

A new way of reporting IT spending

Gartner in a research note reported by The Register highlights how, with the private cloud variant, the very way IT spending is accounted for is changing: in fact, we are moving from a traditional capital expenditure (Capex) model to an operational expenditure (Opex) model.

With the cost of operations now borne entirely by SAP and the TCO of the ERP system equivalent to the total cost of RISE services, IT must be more aware than ever of two things:

• total cost of operations expectations must be in line with operational needs
• one must consider viable options for exiting the contract if one no longer needs Rise with SAP

From a practical standpoint, one must keep these aspects in mind when managing SAP's BTP services to choose the business model most in line with one's needs.
 

SAP BTP Business Models

SAP offers three types of pricing models for consumption of cloud services. Among them, we have three models consumption-based model, subscription-based model , and Pay-As-You-Go. 

• Consumption-based

the consumption-based model is what is known as the Cloud Platform Enterprise Agreement (CPEA). Most of the services in the SAP BTP Extension and Integration suites are available for CPEA using SAP Cloud Credits so this solution is ideal for integration, environment extension, analysis and proof of concept.

This solution requires a minimum prepaid cloud credit equivalent to $10,000 for the term of the contract with an annual commitment to consume SAP BTP services. It is billed annually in advance with a monthly statement that provides information on the consumption of each service and related costs. The total monthly cost is deducted from the cloud credit balance and any overcharges are charged in arrears at the list price.

This model is suitable for customers who have well-defined and planned use cases and who want the flexibility to turn services on and off and switch between services, without the commitment of being tied to a single service for the duration of the contract.

• Subscription-based
  
  

the subscription-based model allows you to use specific cloud services at a contractual costYou pay a fixed fee for services (over 40) and consumption under the contract, with monthly payments advanced at the beginning of the contract period and automatic renewal at the end of the period. In this type of model you can use all the services subscribed, regardless of consumption.

The downside is that you have to decide in advance which services you want to access and how many you will use. If you go beyond that, you have to change the contract, for example in case the architecture of the solution changes a few months later.  

the consumption-based model has a minimum annual contract, while the model has a minimum of three months. In both cases, it is necessary to have a well-defined project roadmap with a clear understanding of the functionality required. The second model is more scalable, being renewable contracts in a shorter time frame.

• Pay-As-You-Go

The third model, which is always consumption-based, is Pay-As-You-Go and is ideal for short-term and small-scale pilot projects.You can access all the services available in SAP BTP but with the difference that it is a highly flexible, zero-commitment model: you pay nothing up front and there is no minimum usage requirement or annual commitment.

You pay only for the SAP BTP services you want (obviously without any level of discount), when they are used: in fact, billing occurs one month in advance for services used in the previous month.

This low-risk model is suitable for customers with undefined use cases who are interested in running a proof of concept in a production environmentIn fact, this model offers the flexibility to turn services on and off and to switch between services as needed throughout the duration of the contract (minimum three months with automatic renewal with the same duration when the contract expires), and you can seamlessly switch to the CPEA model, provided you have no other CPEA-based global accounts.

Our Support

At WEGG we are experienced consultants in in optimizing costs related to SAP licenses and contracts so if in your company you plan to use SAP BTP together with the S/4 HANA Private Cloud Edition suite we can help you:

• to identify the best subscription model for managing the licensing of the cloud ERP suite (the Rise with SAP offering, in fact, has several licensing elements to consider that are tied to SAP's digital “core” including the calculation of FUE metrics, digital access, for add-on modules and additional infrastructure)
• to keep operating costs under control by choosing the most appropriate business model to enable services on SAP BTP

Regarding the second point, let's check together the project objectives in the short and long term before signing any user contracts.