Mapping S/4HANA Licensing Migration Paths
Migrating from SAP ECC to S/4HANA is not just a technical upgrade — it's a strategic business decision with significant licensing implications. Organizations typically consider three core migration paths, each with distinct cost models and benefits:
ECC License Conversion
Convert existing ECC licenses to S/4HANA on-premise equivalents.
RISE with SAP
Subscription cloud service bundling S/4HANA, infrastructure, and managed services.
On-Prem + Cloud Mix
Combination of on-premises licenses and RISE subscriptions.
Each model affects IT budgets, risk, and agility differently. A thorough upfront assessment ensures your migration path aligns with both your financial strategy and transformation roadmap.
ECC to S/4HANA: License Conversion Options
When converting legacy ECC licenses to S/4HANA, SAP offers two approaches — each with different impacts on cost and continuity:
Product Conversion
Replaces existing ECC licenses with equivalent S/4HANA licenses while maintaining your original contract terms intact. You retain negotiated discounts and replace ECC products with S/4HANA versions.
Contract Conversion
Replaces the entire contract — you terminate the ECC agreement and sign a new S/4HANA contract. SAP grants license conversion credits valued at your existing licenses.
Understanding RISE with SAP Licensing Model
RISE with SAP is a subscription-based cloud offering designed to streamline S/4HANA adoption. Instead of buying software outright, you pay a subscription fee that bundles the S/4HANA software, cloud infrastructure, and basic technical services (maintenance, updates, monitoring) under one contract.
A RISE subscription typically involves a multi-year commitment, shifting ERP spending from capital expense to operating expense. This OpEx model eliminates upfront license costs and can accelerate deployment since infrastructure and upgrades are handled by SAP. For many CIOs, the simplicity and agility are appealing — quick access to the latest innovations without internal infrastructure burden.
The Hybrid Model – Strategic Middle Ground
A hybrid SAP licensing model blends on-premise and cloud deployment strategies. For example, core systems might stay on-premises under perpetual licenses while new capabilities or regions are deployed via RISE. This is particularly suitable for phased rollouts or when certain systems must remain on-premises due to regulatory requirements.
The main advantage is flexibility — cloud benefits where they make sense, sensitive workloads in-house. However, flexibility introduces complexity. Managing dual license models requires vigilance to avoid inefficiencies.
Decision Frameworks – Perpetual vs. Subscription vs. Hybrid
| Dimension | Perpetual On-Prem | RISE Subscription | Hybrid |
|---|---|---|---|
| Cost Model | CapEx + annual maintenance | OpEx (ongoing subscription) | Mixed CapEx + OpEx |
| Control | Full (infra, customizations, timing) | Vendor-managed cloud | Split by workload |
| Flexibility | Lower (locked to own infra) | Higher (scale users/modules) | Highest (choose per workload) |
| Innovation Speed | Self-managed upgrade cycles | Always on latest version | Varies by component |
| Long-term Cost | Lower cumulative (if stable) | Higher cumulative over time | Depends on split |
| Licensing Complexity | Low (single model) | Low (single model) | High (two regimes) |
| Vendor Dependency | Lower | Higher (SAP platform + pricing) | Moderate |
| Best For | Stable orgs wanting control | Agility-first, cloud-ready orgs | Phased migrations, regulated industries |
The best path aligns with your financial strategy and transformation goals — balancing cost optimization with the agility and control your business requires.
Optimization Playbook for License Migration
Executing a smooth and cost-effective S/4HANA license migration requires diligent planning and negotiation. Use these best practices:
Inventory Current Entitlements
Begin with a full inventory of ECC licenses and users. Identify unused or underutilized licenses ("shelfware") and note maintenance costs. This baseline shows the true value of your entitlements and informs how much credit you can carry into S/4HANA.
Model the TCO for Each Path
Compare the multi-year total cost of ownership for staying on-premise, moving to RISE, or a hybrid mix. Include all costs: license/subscription fees, maintenance, infrastructure, and support. A 5- or 10-year projection highlights which option delivers better long-term value.
Leverage Timing and Incentives
Plan migration to coincide with SAP's incentive programs and deadlines. SAP often provides better conversion discounts at year-end or before support milestones. Lock in higher credit values and secure extras like migration service funding.
Negotiate Flexible Terms
Build flexibility into S/4HANA agreements. Ensure dual-use rights for parallel ECC/S/4HANA operation. If opting for RISE, negotiate provisions to scale usage and clarify pricing for future growth. Aim for safeguards against unexpected price hikes.
Need Help Navigating Your S/4HANA Migration?
Redress Compliance provides independent advisory on SAP licensing optimization, conversion strategies, RISE negotiations, and audit defense — helping enterprises maximize value and minimize risk.