SAP S/4HANA Licensing — Strategy, Pricing, Audit Risk & Optimisation

1. The Big Shift from ECC — What Has Changed

Transitioning from SAP ECC to S/4HANA is a fundamental shift in pricing models and risk exposure. Under ECC, companies managed perpetual licences with named user types and annual maintenance. S/4HANA introduces subscription models (RISE), Full User Equivalents (FUE), Digital Access, and mandates SAP HANA as the database.

Dimension	SAP ECC	SAP S/4HANA
Licence Model	Perpetual + 22% maintenance	Perpetual OR subscription (RISE)
User Metrics	Named users (Professional, Limited)	Named users or FUE (cloud)
Indirect Access	Ambiguous — led to lawsuits	Formal Digital Access (9 document types)
Database	Choice (Oracle, SQL, DB2)	SAP HANA mandated

An ECC licensing strategy applied to S/4HANA will result in surprise costs and weaker negotiation positions.

Read: CIO Playbook: SAP S/4HANA Deployment Models

2. The Licensing Spectrum — Perpetual, Subscription, Hybrid

Three primary models exist in 2026:

• Perpetual On-Premise: One-time CapEx + 22% annual support. You own the licence. Best for long-term stability and control.
• Subscription (RISE with SAP): Annual OpEx per FUE. Bundles software, infrastructure, support. Best for speed and OpEx preference. Risk: vendor lock-in, no mid-term reductions.
• Hybrid: Mix of on-prem and cloud. Common during migration. Risk: dual-running costs and complex governance.

5-year TCO example (500 users): Perpetual = ~$10.5M | RISE (negotiated) = ~$2.7M + migration + BTP + renewal escalation. Always run complete 5-year and 10-year TCO models before committing.

Read: RISE vs. On-Premise Licensing | SAP RISE Negotiations Guide

3. Digital Access Deep Dive

SAP's Digital Access model charges by documents created in SAP via non-SAP systems. Nine document categories are defined, with tiered pricing and 0.2 weighting for Material and Financial documents. This is now a top audit focus area in 2025–2026.

High-risk scenarios: Salesforce creating orders, RPA bots generating transactions, IoT devices producing material documents, and any scenario with thousands of external users indirectly accessing SAP.

Read: DAAP: How to Evaluate and Negotiate

4. FUE in Action — Calculations, Risks & Optimisation

Full User Equivalent (FUE) is the primary metric for S/4HANA Cloud and RISE: 1 Advanced = 1 FUE | 5 Core = 1 FUE | 30 Self-Service = 1 FUE.

Example: 50 Advanced (50 FUE) + 200 Core (40 FUE) + 1,500 Self-Service (50 FUE) = 140 FUE total

Key risks: mis-estimating your user mix, minimum commitments (40+ FUE for private, 35+ for public), and no reduction during term. Right-size from the start.

Read: FUE Licensing: User Classifications and Optimisation

5. 2025 Price Dynamics

SAP's pricing is deliberately opaque, but discounts of 30–70% are common in enterprise deals. Key dynamics: volume tiers, block pricing for Digital Access, true-ups, 22% support inflation, and 5–7% cloud renewal uplift. Always pre-negotiate growth pricing and renewal caps.

Read: S/4HANA Licensing: Models, Costs & Strategic Considerations

6. Common Failure Points

• Shelfware: Buying more licences than needed — paying support on 300+ unused licences
• User misclassification: Assigning Professional licences to users who only need Limited or Self-Service
• Cloud creep: Uncontrolled addition of users, integrations, modules
• Wrong package: Buying top-tier edition with modules you'll never deploy
• Dual-running costs: Running ECC + S/4HANA simultaneously for 12–24+ months

Read: S/4HANA Licence Optimisation Strategies

7. Matching Licensing to Corporate Strategy

Align licensing with M&A plans (consolidate contracts post-merger for volume discounts), cloud strategy (negotiate ability to trade perpetual licences for cloud credits), and AI/RPA deployments (bots require Digital Access or named-user licences).

Read: Modelling S/4HANA Licensing Costs After ECC Migration

8. Red Flags and Deal Killers

• Signing without a 5-year TCO model
• Accepting SAP's first offer (discounts of 40–70% are normal)
• Ignoring Digital Access exposure
• No renewal price protection (5–7% annual increases compound fast)
• Surrendering perpetual rights for RISE without verified economics
• No M&A or divestiture clauses

9. Negotiating a Better S/4HANA Deal

Tactic	Expected Impact
Aggregate all SAP purchases into one deal	10–20% better discount vs. piecemeal
Create competitive pressure (third-party support, Oracle/Workday alternatives)	Unlocks SAP's best discounts
Lock renewal pricing (max 3%/year caps)	Prevents 25–35% cost escalation
Pre-negotiate growth pricing	Same discount on mid-term additions
Negotiate dual-use rights (12–18 months)	Eliminates $1M+ dual-running costs
Address Digital Access proactively	Avoids audit exposure, best pricing

Timing: Negotiate in SAP's Q4 (October–December) for maximum leverage.

Read: SAP Contract Negotiation Playbook

10. Action Checklist

1. Run a complete licence baseline — map every user, transaction usage, and licence type
2. Assess Digital Access exposure — count documents from non-SAP systems
3. Model your 5-year TCO — perpetual vs. RISE vs. hybrid with realistic assumptions
4. Review contract terms for gaps — renewal caps, M&A clauses, dual-use rights
5. Engage independent advisory — benchmark pricing, identify savings, strengthen negotiation