What is licensing by concurrent users?
In this method of licensing, the organization is buying an amount of users who can work simultaneously. If the organization has bought X concurrent users, then, when the X+1 user tries to log-in, he or she will be turned off and will have to wait until another user logs out.
Each license based on this method would cost considerably more than licensing by named users. However, there will be significantly fewer licenses needed, so, it is a more "honest" approach, and it makes more sense to organizations. Furthermore, you would be able to support different SAP systems with different numbers of licenses for each system.
The idea is: "if you don't need a license, don't pay for it", especially when dealing with very expensive licenses.
SAP has been using "licensing by named users" for years. This model was developed to support SAP product development – from a single R/3 machine back in 1993 to a package-based named 'user licensing' in 2010. This method allows multiple usernames for each employee for use in multiple SAP systems, and 5-10 different types of licensing for each organization. Complex methods like this cause frustration among customers - and many organizations do not understand what they are paying for. They need a special tool to handle their SAP usernames.
In fact, organizations with more than 1,000 SAP users who use this method of licensing (and there's no other type,) MUST use a dedicated software program (for example, ProfileTailor LicenseAuditor) to control their licensing situation and reduce unused, underused and misclassified users.
I have recently been hearing about some "new winds" blowing inside SAP regarding new licensing models for very large enterprises -- I am proud that we support these trends and enable the possibility of concurrent users licensing in SAP.