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ABC of SAP IBP Licensing

Dear SAP Friends,

In this blog we will try to understand about the features that comes under SAP IBP license that will help us to understand on which license can be best fit for a specific business.  Let’s try to answer this question by analyzing these features

SAP IBP can provides you the opportunity to digitize your supply chain and help you to stay ahead in the integrated planning era. Now when it comes to IBP it has different licenses to facilitate different areas of your supply chain.

Below are the Independent licenses that you can opt from:


IBP Licenses

Now the questions arise

  1. Which license we should opt for? OR
  2. Which combination of independent license should we opt in order to best run the business processes?

In order to answer these questions in an effective manner we should understand the features and limitation that are the part of these different licenses

Briefly speaking it is important to understand two basic aspects first that can guide us to towards the conclusion, those are:


  1. Planning Algorithms available in the license
  2. Forecast Algorithms available in the license


1.    Planning algorithm based selection:

Most of the time we can take the decision by merely understanding the planning algorithms that seems relevant for the business requirement like whether cost optimization required?, Do we need to consider the resource capacity?, Do we need to prioritize the demand while supply planning? etc.

Based on that we can decide which algorithm we need from the list of algorithms that are available in each license. For details on the algorithms present in each license we can refer to the table 1.1 below:


X denotes -> Algorithm is available in the license

O denotes -> May or may not able available based on predefined condition



1.1 Planning Algorithms

Now let’s try to dig into these conditions where ‘O’ is marked in the table

a.      Time Series Heuristic (Supply Propagation) –

This algorithm is not the part of any license version 2002 onwards but the users who have licensed version on or before 2002 can still have this algorithm in their license if they have license of one of the S&OP, Response & Supply, and Edge edition

b.      Time series based Supply heuristic (Finite Heuristic) –

As we know SAP has introduced finite heuristic to achieve the basic prioritization which also respects few of the cost constraints and also considers the finite resource capacity. If we feel this is good algorithm for us then definitely we have to buy Response and Supply license but in addition to that we also have to buy S&OP license

c.      Time Series based supply planning optimizer –

It is going to be the part of response and supply but only if we have also purchased the license for S&OP. Also it can be the part of S&OP license only for customers who have licensed the product SAP Sales and Operation Planning 3.0 (or lower) before July 2014

I will conclude point ‘b’ and ‘c’ by saying if you want advance supply algorithms like Time series based Finite heuristic and/or Optimizer then definitely you have to purchase S&OP license as well along with Response and Supply license.


d.      Calculate DDMRP Buffer Levels  (DDMRP_BUFFER) –

This algorithm is the part of older Inventory license versions before 1905 release also this algorithm was the part of DDMRP license but is deprecated by SAP in 1911 release.

IBP has introduced enhanced version of algorithm Calculate DDMRP Buffer Levels algorithm in only DDMRP license and it is no longer the part of Inventory license


e.      Recommend Decoupling Points –

Similar to calculate DDMRP buffer levels this algorithm is also available in Inventory module in the versions before 1905 release and has deprecated from DDMRP in 1911 version however enhanced algorithm ‘Recommend Decoupling Points’ is the part of DDMRP license only.

I will conclude point ‘d’ and ‘e’ by saying these two algorithms are now the part of DDMRP and no longer will be the part of Inventory license

f.        ABC/XYZ Segmentation –

ABC and XYZ segmentation generally use to classification products with code A,B,C and X,Y,Z based on predefined conditions e.g. relative importance and forecastability etc which helps to focus on certain critical SKUs while planning

Here we have only one condition that is you will only be able to access both ABC and XYZ segmentation only if we have license for at least either one of the demand, inventory and DDMRP else we will only be able to perform ABC classification.


2.    Based on Forecast algorithm-

Now we have seen how we can decide a license based on planning algorithm available in them.

This particular section talks about the situation when the client wants to enable demand planning only. In IBP you get forecasting algorithms in the licenses S&OP, Demand and Edge. We can easily decide which license is good based on the forecast algorithms that are available in these licenses.

IBP Demand license provides advance algorithms like Demand Sensing, Gradient Boosting etc. but if the requirement is just to enable basic demand planning process then we can also look into the algorithms that are available in the S&OP and Edge edition license of IBP.


Below is the comparison of the algorithms that comes under Demand, S&OP and Edge edition of IBP


Forecast Algorithms


1.2 Forecasting Algorithms

Preprocessing and post processing Algorithms


1.3 Pre and Post Processing Algorithms


User can opt for one or multiple licenses based on their specific business requirement which can be compared by understanding the various aspects of these licenses starting from “Planning Algorithms”, “Forecast Algorithms” etc. Apart from this we can further dig on the level of specific applications/features/Fiori Apps that are the part of these licenses. For more information we can refer to the official SAP IBP help portal as mentioned in the references.



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