There has been lot of changes in the way services in SAP Cloud Platform (SAP CP) are being priced. I have been asked several questions in last few weeks on this topic and hence I thought I outline some of the key facts here which will help customers be more informed and make the right decision.
SAP CP has over 50 services today and since the beginning customers could access it via a subscription-based model.
Typically when a customer wants to implement a particular SAP CP use case, they would contact the SAP Account Executive(AE), discuss the required SAP CP services, commercials/discounts and then sign a contract for a fixed period (typically 1-3 year period). On the contract start date, SAP CP services would be provisioned to the customer’s SAP CP Global Account. Its important to note that few services could be subscribed based on user metric or resource metric. For example, Portal service could be based on number of site visits or user metrics. Resource-based metric is more common when dealing with large number of users – for example suppliers accessing a portal to interact with your organization. Sometimes, it may not be possible to predict how much resources would be required upfront for a 3 year period. Customers get to view the resource consumption (on a monthly basis) within their own SAP CP account. When the resource usage exceeds due to changing circumstances, they would contact their SAP AE and raise an additional order. At the end of the subscription period, contracts can be renewed.
Customers can also plan to have a ramp-up subscription model. For example, they plan to subscribe to SAP CP services for $500,000 spread over a 3 year period. They could split the allocation over the 3 year period. For example – $50,000 in the first year, $100,000 in the second year and $350,000 in the third year. This model is good when you want to scale your project over a period of time.
In the subscription-based model, customers get access to SAP CP bundles/packages. For example, App Service Packages which come with all the required SAP CP services to extend and build new apps. This is exclusive to subscription-based model. Most of time, this works out to be cost effective when compared to subscription to individual SAP CP services.
This model is provided under “Cloud Platform Enterprise Agreement” (CPEA). This agreement entitles customers to an annual amount of consumption of cloud services. Customers purchase annual cloud credits (prepaid) for a fixed period (generally 1-3 year period). Unused cloud credits expire at the end of each credit period. For example, the customer signs up for CPEA for a value of $100,000 for a 3-year period. The first year, they turn on few services and start to consume the cloud credits. If they have only used $80,000 worth of cloud credits the first year, the remaining $20,000 of cloud credits gets expired and does not get carried forward.
Similar to the subscription model, you can plan to have a ramp-up CPEA model too. At any point in time, if the customer wants to buy additional cloud credits to support new projects, they can reach out to their SAP AE and purchase additional cloud credits by placing an additional order, so called Top-up Cloud Credit.
You can also check which services support both Subscription and Consumption model by navigating to the SAP Cloud Platform website and selecting an individual service. If the service supports Cloud Credits, you will be able to select it and also look up all the regions/providers which offer this service.
As mentioned earlier, you can also do a cost planning by using the Estimator. This will be able to give you an idea of the cost associated with each service.
CPEA is a great initiative as SAP is decoupling the procurement process from the actual usage. Once customer signs up for this model, they get access to all the eligible services in their SAP CP cockpit and can enable a services whenever they want. They don’t need to approach SAP AE for accessing any of the new services.
Customers will also get access to the new services which would be rolled out in the future too. In this model, customers pay for only what they used and consumed. Similar to the subscription-based model, customers get access to view all the consumption and remaining cloud credits. It’s important to note that there is a minimum threshold for CPEA program which can be obtained from the SAP AE. Excess usage is billed to the customer.
Which model works for you?
The subscription model works well for those customers who know exactly which SAP CP services are required for their projects and don’t have the need to subscribe to anything additional for the fixed contract period. This also would work out well for customers who are subscribing to bundle/packages which are only available in this model.
The consumption-based model is suitable for those customers who want more flexibility/agility and be able to turn on new SAP CP services for some of their new initiatives. This is ideal for customers who are not sure what type of innovative projects they are going to commence in the next few months.
Customers can turn service on in any of the supported providers. For example, you can choose to turn on services whether it is AWS and/or Azure under the CPEA agreement. Customers can also choose between DCs and the self-service tool in Cloud Cockpit to activate the relevant services.
It’s also important to understand that CPEA covers SAP CP services in both Neo and Cloud Foundry environment. Hence, customers can turn on services in both the environment and cross-consume them. For example, mobile service in Neo environment and HANA service in CF environment can be used together.
If you are in the middle of a subscription-based model and would like to convert to a consumption-based model, there is a trade-in program available. You would need to reach out to your SAP AE to check for entry criteria and discuss how you can participate in the CPEA program. More details can be found here.
What’s also interesting to note is that there are new SAP CP services like Personal Data Manager, Consent repository (SAP CP Business apps) in the SAP CP Service Description and these are only available in the consumption-based model. You will find more info on these services in the Service Description.
SAP Enterprise Support, cloud editions is embedded within the scope of the SAP cloud services in both subscription-based model and consumption-based model. You can refer to it in this link.