How engine licenses, HANA runtime vs. full-use databases, and indirect access fees create hidden expenses in S/4HANA deals — and how to avoid them.
Migrating to SAP S/4HANA isn't just a technical upgrade — it's a license overhaul. Many enterprises budget for the core S/4HANA software but underestimate the costs of add-on engines and databases.
SAP's licensing model has evolved since ECC, introducing new fees that IT executives must plan for. S/4HANA only runs on the SAP HANA database, so you must license HANA — often an unseen cost for ECC customers previously on Oracle or SQL Server databases.
Additionally, advanced features that were optional or unavailable in ECC are now available as separate S/4HANA add-ons, each carrying its own price tag. These hidden costs, if not understood, can lead to unbudgeted true-up fees or compliance penalties.
SAP uses a two-part licensing approach: named users (people accessing the system) and engines (functional or technical components measured by usage metrics). Engine licenses are essentially add-ons priced based on business metrics or system capacity rather than per user.
Common S/4HANA add-ons requiring separate engine licenses include:
| Add-On / Engine | Typical Metric | Hidden Cost Risk |
|---|---|---|
| Extended Warehouse Mgmt (EWM) | Warehouse transactions or locations | Basic warehousing is included; full EWM is a paid engine |
| Transportation Management (TM) | Shipments or freight orders | Often assumed to be included in logistics |
| SAP Payroll | Number of employees | Headcount growth = unplanned license cost |
| Global Trade Services (GTS) | Trade documents / declarations | Scales with global trade volume |
| Supply Chain Planning | Revenue or planning objects | Business growth directly increases IT costs |
These add-ons can be expensive — hundreds of thousands of dollars for a single engine module with broad usage. Engine licenses often fly under the radar during budgeting until an audit flags that you activated a module without the matching license.
Every S/4HANA on-premises deployment needs an SAP HANA database license. SAP offers two flavors: HANA Runtime (restricted use) and HANA Full-Use (unrestricted). Choosing the wrong one leads to wasted spend or compliance trouble.
| HANA License Type | Allowed Usage | Pricing Model | Example Cost |
|---|---|---|---|
| HANA Runtime | SAP applications only (S/4, BW). No direct external use. | ~15% of S/4HANA license price | $1M in S/4 licenses → ~$150K runtime fee |
| HANA Full-Use | Any application or data source (SAP + non-SAP) | Based on memory size (64 GB blocks) | 256 GB → ~$480K+; 1TB+ → several million |
Many organizations start with the HANA runtime license to keep costs down. Hidden costs emerge when that assumption breaks — for example, connecting a Power BI report directly to HANA triggers a requirement to upgrade to full-use, potentially a multi-million-dollar surprise.
If you expand your S/4HANA footprint (more users or modules), the runtime license cost increases since it's a percentage of SAP software value. With full-use HANA, data growth drives up costs if your in-memory footprint exceeds what you licensed.
Even after covering user licenses, add-on engines, and the HANA database, there are still unexpected fees to watch for. The biggest one is indirect access — when non-SAP systems or external users interact with data in S/4HANA.
SAP introduced Digital Access licensing for S/4HANA: instead of counting users, you license specific document types (Sales Orders, Invoices, Purchase Orders) that external systems generate in SAP, in predefined blocks.
The hidden cost arises when companies ignore indirect access — either by sticking with outdated licensing assumptions or underestimating the number of documents their integrations create. The result can be an audit finding tens of thousands of unlicensed documents.
Another fee to plan for is annual maintenance on new licenses. SAP charges ~20–22% of the net license value every year. A $2M license purchase adds ~$400K per year in mandatory support fees. Over 5 years, maintenance costs can exceed the initial license cost.
For RISE with SAP cloud subscriptions, these costs don't disappear — they're baked into the subscription. Watch for price escalation clauses (e.g., 5% per year increases) and usage entitlements to avoid overage fees.
To control S/4HANA costs, CIOs and procurement leaders need a proactive stance in budgeting and negotiating these licenses.
Start by performing a thorough requirements analysis: which add-ons will your business use in the next 3–5 years? Engage each functional team (finance, supply chain, HR) to identify modules that might be added later. It's often cheaper to include an add-on in your initial S/4HANA purchase than to buy it piecemeal post go-live.
Negotiate with foresight: SAP sales reps are eager to close S/4HANA deals before the ECC 2027 deadline — use that leverage. Negotiate not just the upfront price, but also future cost protections:
• Price locks on additional users or GB of HANA for the next few years
• Tiered pricing for engine metrics to accommodate growth
• An audit clause allowing true-ups at discounted rates instead of list price penalties
Conduct regular internal audits and optimizations every 6–12 months. Review what you've deployed vs. what you need. Are there unused licenses you can terminate or redeploy?
Based on our experience advising hundreds of Fortune 500 enterprises on SAP licensing, here are our key recommendations:
Map Your License Needs Early: Before signing any S/4HANA contract, list all required modules and engine licenses. Don't assume a feature is included — double-check if it's an add-on.
Choose the Right HANA License: If you will only use HANA for SAP systems, opt for the more affordable runtime license. If there's any chance you'll use HANA for other purposes, consider a full-use license upfront to avoid compliance issues.
Negotiate Growth Provisions: Secure pre-agreed pricing for extra users, transactions, or HANA memory. This avoids paying full list price as your business grows.
Leverage SAP Programs: Take advantage of conversion credits or promotions. SAP often offers credits for old ECC licenses or discounts when purchasing certain engines with S/4HANA.
Monitor Usage and Stay Compliant: Implement internal license audits. Track engine metrics and HANA memory usage. Early warning lets you purchase additional capacity at a better price rather than after an audit.
Educate Business Stakeholders: Ensure non-IT executives understand that new business initiatives can carry SAP licensing costs. Launching a B2C portal might trigger digital access fees.
Use this checklist before and after signing your S/4HANA deal:
| # | Action | Detail |
|---|---|---|
| 1 | Inventory SAP Usage | List all modules and add-ons your enterprise uses or plans to use. Include potential future needs. |
| 2 | Get Pricing for Each Component | Obtain quotes for HANA database (runtime or full), digital access, and all engine licenses. |
| 3 | Forecast Growth Metrics | Project key usage metrics (users, documents, transactions, data size) 3–5 years out. |
| 4 | Negotiate Contract Terms | Push for volume discounts, future growth allowances, and include needed add-ons now rather than later. |
| 5 | Implement License Governance | Set up regular compliance checks. Assign owners to monitor user counts, engine metrics, and HANA capacity. |
Engine licenses are SAP licenses for specific functional components or add-ons, measured by usage metrics (documents, employees, orders, etc.) rather than per user. They enable advanced modules like Warehouse Management or Treasury not included in the base S/4HANA license. You must purchase them separately if you use those functions.
You have two options. The HANA runtime license is a lower-cost restricted license that lets you use HANA only for S/4HANA (priced ~15% of your S/4 license value). The HANA full-use license is higher-cost but unrestricted, measured by memory size in GB, and allows HANA for any purpose including custom analytics and third-party apps.
It depends on your needs. Runtime is cheaper and fine if you just run standard SAP on HANA. Full-use is necessary if you plan to use HANA as a general-purpose database for custom analytics or third-party apps. Many start with runtime but must ensure they don't accidentally use HANA beyond its allowed scope.
Digital Access is SAP's licensing model for indirect use of S/4HANA. Instead of requiring a user license for every external user or system, SAP allows you to license the documents (sales orders, invoices) created by external systems in SAP. If you have non-SAP applications feeding data into S/4HANA, you likely need a digital access license.
Proactive management is key. Before contracting, negotiate provisions for future growth and understand all components. After deployment, continuously monitor license usage against entitlements. Keep track of business changes — mergers, new channels, and major projects — as they can drive up usage.
Connecting any non-SAP tool directly to HANA when you have a runtime license is a compliance violation. SAP's audit tools can detect non-SAP data access, potentially requiring you to purchase a full-use license — a multi-million-dollar surprise. All access must go through SAP applications with a runtime license.
Yes. Beyond the initial license purchase, SAP charges ~20–22% annual maintenance on all licenses. A $500K engine license adds approximately $100K per year in perpetual support fees. Over 5 years, you'll pay more in maintenance than the original license cost.
RISE simplifies budgeting by bundling costs into a subscription. However, watch for price escalation clauses (e.g., 5% annual increases), usage entitlements, and limits on storage or peak memory. Exceeding contract limits can trigger unexpected charges. Always negotiate caps and clarify inclusions.
This article is part of our SAP S/4HANA pillar. Explore related guides:
Redress Compliance has helped hundreds of Fortune 500 enterprises — typically saving 15–35% on renewals and new deals.
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