SAP Cloud Platform & SAP BTP Licensing – Clarifying PaaS Licensing for Custom Development and Integration
SAP’s Platform-as-a-Service has evolved from the SAP Cloud Platform (SCP) to the broader SAP Business Technology Platform (BTP), bringing new licensing models that can be confusing for CIOs and CTOs.
This article demystifies SAP BTP licensing, covering both consumption-based credits and traditional subscriptions, to help technology leaders plan custom development and integration projects with clarity and control over costs.
BTP as SAP’s PaaS for Development and Integration
SAP Business Technology Platform is the unified successor to SAP Cloud Platform, encompassing tools for custom application development, integration, analytics, and more.
BTP enables companies to build extensions (e.g., custom Fiori apps, workflows) and connect systems via integration services in the cloud.
Unlike SAP’s SaaS applications (such as S/4HANA Cloud or SuccessFactors), BTP is a PaaS offering —a toolkit of cloud services (databases, runtimes, integration middleware, AI services, etc.) that customers can use to develop and enhance their enterprise systems.
Why licensing is tricky:
SAP’s PaaS has expanded rapidly, and its commercial models have shifted from the old SCP days. There has been a shift from fixed service subscriptions to flexible consumption models.
This flexibility is powerful, but it also adds complexity. CIOs need to understand the options to avoid overspending or ending up with unused cloud credits.
Moreover, SAP often rebrands or bundles services (for example, “Extension Suite” for development tools or “Integration Suite” for middleware), each with its own licensing nuances. Clarity on these licenses is essential when budgeting for digital initiatives on SAP BTP.
SAP BTP Licensing Models Overview
SAP offers two primary licensing approaches for BTP services: consumption-based licensing and subscription-based licensing.
Both models can even be mixed within an enterprise’s BTP landscape:
- Consumption-Based (flexible pay-per-use):
- Cloud Platform Enterprise Agreement (CPEA)/BTP Enterprise Agreement (BTPEA): commit upfront to purchase a pool of cloud credits, which can be spent on any BTP services as needed.
- Pay-As-You-Go (PAYG): no upfront commitment; pay monthly based on actual usage at standard rates.
- Subscription-Based (fixed capacity):
- Service Subscriptions: traditional licenses for specific BTP services (or bundles) with a fixed fee for a defined capacity (e.g., a subscription for SAP Integration Suite or a set amount of database storage).
Each model has advantages. Consumption models offer high flexibility – ideal if you plan to use multiple services or have uncertain demand, as you can turn services on and off and only pay for what you consume.
Subscription models provide cost predictability for well-defined needs – you pay a fixed price, which can be economical if you consistently use the full allotted capacity of a service.
In practice, many SAP customers employ a hybrid approach: for example, they subscribe to one heavily used service while utilizing pay-per-use credits for experimental or infrequent needs.
Consumption-Based Licensing: CPEA and Pay-As-You-Go
Cloud Platform Enterprise Agreement (CPEA) is SAP’s flagship consumption-based license. Under a CPEA (or the updated BTP Enterprise Agreement), your company pre-pays for a certain amount of cloud credits (often measured in USD equivalent) for the year.
Those credits function like a spending account – as you use any BTP service (whether it’s app runtime hours, integration messages, database storage, machine learning API calls, etc.), the corresponding credits are deducted from your balance.
Key features of CPEA/BTPEA include:
- All-in-One Pool: A single credit pool provides access to over 90 BTP services. You aren’t buying individual licenses per service – you have the entitlement to enable any service and pay via credit consumption. This one-contract approach simplifies the addition of new services for development or integration as needs evolve.
- Annual Commitment: CPEA typically requires a minimum spend commitment (e.g., a contract may start at approximately $ 10,000 per year or more, depending on the region and deal). In exchange, SAP often provides volume discounts – the larger your commitment, the more credits you receive per dollar. This means unit costs under CPEA can be significantly lower than pay-as-you-go rates if you commit to a sizable spend.
- Use-It-or-Lose-It: Credits usually expire at the end of the contract period (usually 12 months). Unused credits don’t roll over, so right-sizing your commitment is crucial. If you underutilize (or overcommit), those dollars are wasted. On the other hand, if you exceed your credits, you incur overage fees monthly at the full list price (which can be expensive).
- Flexibility and Scale: With a credit model, you can start or stop services on demand. For example, you might spin up an SAP HANA Cloud instance for a project and later shut it down – you only pay for the hours and gigabytes used. This flexibility encourages innovation and allows for trying new BTP services without requiring separate licenses for each.
SAP BTP Pay-As-You-Go is the zero-commitment alternative.
It allows you to open a BTP account without any upfront cost; you are simply billed monthly in arrears for the services you consume. If one month you use nothing, you pay nothing.
If you ramp up usage, your bill scales accordingly (at standard list prices). Characteristics of Pay-As-You-Go (PAYG):
- No Minimum, No Prepay: Ideal for proofs-of-concept, startups, or initial cloud experiments. It lowers the barrier since you don’t need to convince the CFO to commit budget first – you can start building immediately and prove value.
- Full Service Catalog Access: A PayG account can activate the same wide array of BTP services as a CPEA account. It also automatically includes any free-tier service plans that SAP offers (for example, small free allowances for certain services). This means developers can try out services with free quotas and only incur costs when they go beyond the free tier.
- Higher Unit Costs: The trade-off for no commitment is that usage is charged at full price. There are no built-in discounts – think of it like paying on-demand cloud rates vs. getting a bulk rate. Over time, if your usage grows, PayG will become more expensive relative to an enterprise agreement. Many companies start on PayG for agility, then convert to a CPEA once they see sustained usage (SAP allows seamless conversion from PayG to a credit agreement when ready).
- Great for Unpredictable or Small-Scale Needs: If you only need, say, a small app or a few integration flows running, PayG might cost only a few hundred dollars a month, whereas a CPEA might require a larger annual commitment than you need. As a real-world example, a company looking to deploy a single modest Fiori app found that PayG cost them 5 times less than what a CPEA would have, because the CPEA’s minimum spend far exceeded their minimal usage. PayG is cost-effective until you hit a certain scale.
In summary, consumption licensing (credits or PayG) provides maximum flexibility to use SAP’s PaaS as you see fit, paying in proportion to usage.
The key for CIOs is to monitor usage and switch models when it makes financial sense (e.g., don’t stay on PayG once it consistently costs more per quarter than a discounted credit deal would).
Read Calculating Capacity Units and Cloud Credits in SAP BTP
Subscription Licensing and Bundled Options
Subscription-based licensing on SAP BTP is the more traditional model, where you purchase a specific service for a fixed term and a specific amount.
Instead of cloud credits, you might sign a 1-3 year subscription for an individual component of BTP.
Common examples include licensing the SAP Integration Suite or SAP HANA Cloud via subscription:
- With a subscription, you get a defined capacity or allowance. For instance, an Integration Suite subscription might entitle you to one integration tenant with up to N number of messages per month, or a HANA Cloud database subscription might include X GB of memory and storage.
- You pay a flat fee (often annually, though billed quarterly in some cases). This fee remains the same regardless of whether you fully use the capacity or not. If you underuse it, there’s wasted potential (but you still paid). If you need more than the subscribed amount, you typically must upgrade the contract or purchase an add-on; you can’t simply exceed the limit and pay extra on the fly (unlike the pay-per-use model).
- Cost predictability: Subscriptions excel when you require a steady, predictable level of usage. Many enterprises value the budgeting certainty – you avoid variable monthly bills. If you know, for example, that you will process ~1 million integration messages every month reliably, a fixed subscription might be negotiated to cover that for less cost than paying per message via credits.
- Limited Flexibility: The downside is rigidity. Your spend is locked into that service. If you want to shift those funds to try another service, you can’t – subscriptions are siloed. Additionally, some newer BTP services or features might not even be available under subscription at all, as SAP’s innovations often launch in the consumption model first.
- Bundled entitlements: SAP sometimes includes BTP services as part of bigger deals. For instance, RISE with SAP (SAP’s flagship S/4HANA cloud offering) might come with a bundle of BTP credits or a basic Integration Suite license to support the ERP deployment. Also, deals for cloud apps like SuccessFactors or Ariba occasionally “throw in” a limited BTP integration license to sweeten the deal. It’s crucial to note that these included subscriptions are usually restricted in scope. For example, an included integration license might only cover standard SAP-to-SAP integrations or a limited amount of usage. CIOs should confirm exactly what is included and for how long, as anything beyond that limit will require additional licensing. Don’t assume all of BTP is covered just because you got some free credits or an integration tenant in a bundle.
Read Monitoring SAP BTP Consumption and Avoiding Cloud Credit Overruns.
In practice, who currently uses subscriptions?
Often, companies with a single primary use for BTP (e.g., just needing an integration platform) tend to stick with a subscription to that specific service, especially if it was bundled in their SAP purchase.
Others with broader ambitions lean toward the consumption models. Notably, SAP’s strategy encourages customers to adopt a more flexible consumption approach – many new features and the free tier are only available with a consumption-based account (CPEA/BTPEA or PayG).
However, subscription licensing is still an option and can be cost-effective in the right scenarios.
Comparing BTP Licensing Models
To determine which model best suits your situation, consider the trade-offs among commitment, flexibility, and cost.
The table below summarizes key differences between Pay-As-You-Go, CPEA (consumption with commitment), and traditional subscriptions:
| Model | Upfront Commitment | Pricing Structure | Service Scope | When to Use |
|---|---|---|---|---|
| Pay-As-You-Go | None – start anytime | Pay per actual usage monthly at list prices (no discounts) | All BTP services (full catalog), includes free tier options | Best for initial POCs, small-scale projects, or uncertain demand. No upfront cost, but higher unit prices if usage grows. |
| CPEA / BTPEA | Yes – commit to an annual credit purchase (prepaid) | Prepaid credits with discounted rates (volume discounts for larger commits) | All BTP services in consumption catalog (broad entitlement to use any service) | Best for broad or growing BTP adoption across multiple initiatives. Upfront spend yields flexibility and better rates; monitor to use credits fully. |
| Subscription | Yes – contract for 1-3 years for a specific service | Fixed fee for defined capacity (use it or lose it; cost stable regardless of actual use) | Only the subscribed service (or pre-defined bundle); separate subscription needed per service | Best for very predictable, steady usage of a particular service. Provides budget certainty and potentially lower cost for that service if fully utilized, but inflexible for changing needs. |
Real-world example: Suppose your enterprise needs to build custom extensions and also integrate several systems:
- If you’re just starting with one small extension app and a couple of interfaces, Pay-As-You-Go might be most economical. You could run a development and production environment for maybe a few hundred dollars a month. There’s no point committing to a big contract until you validate the value.
- If you plan a large-scale integration project (e.g., replacing a legacy middleware with SAP Integration Suite, handling thousands of messages daily), a subscription for Integration Suite could make sense. For example, a standard Edition subscription (roughly in the tens of thousands of dollars per year for a base package) might cover your anticipated message volume at a fixed cost. You avoid per-message charges and can accurately budget the integration cost into your IT spend.
- If your organization intends to leverage multiple facets of BTP – including application development, data analytics, integration, and possibly AI services – then a CPEA/BTPEA consumption agreement is likely the best value. For instance, committing $200K in credits for the year (perhaps negotiated to effectively $220K worth of usage via discounts) would let all your teams experiment and build on any BTP service while staying within a committed budget. Just ensure those credits will be used – map out expected consumption (integration flows, app runtime hours, etc.) to size the commitment right.
The key is to align the licensing model with your usage profile and risk tolerance.
Companies often evolve their approach: starting with PayG for agility, moving to CPEA as BTP usage ramps up, and occasionally maintaining a couple of subscriptions for core services that are continually in high demand.
Read Allocating SAP BTP Costs Across Projects and Teams.
Key Considerations for BTP Licensing
Navigating SAP BTP licensing requires striking a balance between flexibility and financial discipline.
CIOs and CTOs should keep in mind a few critical considerations:
- Mind the Metrics: Every BTP service has its metric (or multiple metrics) for consumption. For example, the integration runtime might be metered by the number of messages or connections. At the same time, app development might incur charges based on the amount of memory or CPU provisioned for your app runtime. Understanding how each service you plan to use is measured and priced will prevent surprises. Use SAP’s Discovery Center pricing calculator to estimate costs for your architecture.
- Monitor Consumption: Treat BTP like any cloud platform – implement dashboards or alerts for usage. SAP provides tools in the BTP cockpit and monthly consumption reports for CPEA/PAYG accounts. Review these regularly. It’s easier to adjust mid-year (or mid-project) than to be blindsided by a large bill or a pile of unused credits at year-end.
- Governance and Controls: Establish governance to avoid runaway costs. This can include requiring approval before provisioning very large services (e.g., spinning up a huge HANA database instance), setting up internal cost chargebacks to business units for transparency, and training developers to be cost-conscious (for instance, use the free tier or smallest service plans for dev/test systems and only scale up in production when needed).
- Contract Nuances: When negotiating BTP agreements, remember you do have leverage:
- If committing to CPEA/BTPEA, negotiate for better discount tiers at higher spends and try to include terms like the ability to true-up mid-year (buy more credits at the same discounted rate if you run out) or flexibility to carry over a small amount of unused credits. SAP may not always agree to rollovers, but large customers have had success getting concessions on overage pricing or credit extensions in some cases.
- Ensure co-termination or alignment with other contracts if it benefits you. For example, aligning your BTP contract end date with your S/4HANA cloud renewal might strengthen your hand in enterprise negotiations. However, bundling everything can also reduce clarity on individual component pricing, so weigh the pros and cons.
- Utilize Free Resources: Take advantage of SAP’s free trials and free tier services for non-production work. BTP’s free tier lets you test many services at no cost up to certain limits – perfect for hackathons, training, or initial development. Be cautious when approaching the free limits to avoid accidentally triggering charges.
- Understand Included Entitlements: If you have SAP cloud packages, such as RISE, check what BTP usage is already included. For instance, you may have a few thousand BTP credits or an integration service entitlement included at no additional charge. Use them! Unused included credits are a lost opportunity. Also, plan for the future – if those included credits cover year one but not year two, you’ll need a budget to pick up where the bundle leaves off.
By staying informed and proactive, you can ensure that SAP’s platform works for you without incurring budget overruns.
BTP’s licensing may have a learning curve, but it ultimately offers the flexibility to support innovation on your terms once you configure the right model for your enterprise.
Read Negotiating BTP in Your SAP Deal: Securing Free or Discounted Credits with S/4HANA.
Recommendations
- Assess BTP Use Cases and Start Small: Begin with a clear inventory of how you intend to use SAP BTP (custom extensions, integrations, analytics, etc.). If you are new to BTP, consider starting with Pay-As-You-Go or a small credit commitment to gather usage data before scaling up.
- Choose the Right Model for Each Need: Match the licensing model to your scenario. Use consumption-based licensing (CPEA/BTPEA) for broad, evolving needs or multi-project flexibility. Opt for a subscription if you have one primary use case with steady requirements (e.g., a fixed integration workload) that warrants a dedicated license.
- Leverage Hybrid Licensing: Don’t hesitate to mix models. Many enterprises run a hybrid BTP environment – for example, subscribe to a large Integration Suite package to cover predictable message traffic, while using a pool of credits for variable or experimental use of other services. This can optimize costs.
- Negotiate and Right-Size Commitments: When committing to a CPEA/BTPEA, negotiate volume discounts and contract terms (such as the option to buy extra credits at the same rate). Aim to commit an amount you can fully utilize within the year. It’s better to slightly overcommit (to get discounts and headroom) than grossly underutilize and waste credits. Use data from pilots or analogous projects to inform your commitment size.
- Exploit Free Tiers and Trials: Make full use of SAP’s free tier allowances for development and testing, as well as any trial systems, to minimize paid usage for learning and prototyping. Encourage your teams to practice on these free resources – it reduces cost and builds expertise safely.
- Implement Usage Monitoring: Establish a governance process to review BTP consumption regularly (monthly). Monitoring helps avoid surprises and catch anomalous usage (e.g., a misconfigured app burning through credits). Use SAP’s tools or third-party cloud cost management tools to track usage per service and project.
- Educate Teams on Cost Implications: Ensure that developers and project managers understand that BTP resources have associated costs. Simple awareness (like knowing that leaving an app running overnight or sending extra test messages incurs charges) can lead to more mindful usage. Make cost an architectural consideration when designing solutions on BTP.
- Validate Entitlements in SAP Contracts: Review your existing SAP agreements to identify any BTP-related entitlements (such as included credits or integration licenses in a RISE with SAP deal). Plan to utilize those fully. If they are insufficient for your needs, factor that gap into your BTP licensing strategy early so you can budget or negotiate for additional capacity.
- Plan for Growth and Evolution: Revisit your BTP licensing on an annual basis. As your cloud adoption grows or new projects come online, reevaluate whether your current model remains optimal. For instance, after a year on PayG with multiple projects, moving to an enterprise agreement could save money. Conversely, if a specific project ends, you might scale down commitments. BTP usage and business needs will evolve – keep your licensing aligned with those changes.
Read SAP BTP Licensing Models: Pay-as-You-Go, Subscription, and CPEA Explained.
FAQ
Q: What changed from SAP Cloud Platform to SAP BTP in terms of licensing?
A: SAP BTP is the expanded evolution of SAP Cloud Platform, and along with the name change, SAP introduced more flexible licensing. Previously, you might have subscribed to individual services on SAP Cloud Platform. Now, SAP encourages consumption-based agreements (like CPEA/BTP credits and Pay-As-You-Go) covering the whole BTP portfolio. In short, BTP licensing offers broader access via cloud credits, whereas the old model was more siloed. CIOs should review BTP under the new models rather than assuming the old SCP subscriptions apply one-for-one.
Q: When should we choose a consumption-based model (credits or PayG) versus a subscription?
A: Use consumption-based licensing if you plan to use multiple BTP services or if your usage is expected to fluctuate. Credits or PayG give flexibility – great for innovation, varying workloads, or if you’re unsure which services you’ll need over time. On the other hand, consider a subscription for a service if you have a very stable, high-volume need for that single service and want price certainty (for example, a constant integration load where a fixed-cost Integration Suite license could be more cost-effective than a pay-per-use model). Often, a combination works best: subscriptions for the predictable core, and credits for everything else.
Q: How can we estimate our SAP BTP costs and avoid budget surprises?
A: Start by analyzing your planned usage. SAP provides a pricing estimator in the Discovery Center where you can input services (e.g., X GB of database, Y number of integration messages, Z hours of app runtime) to project costs. If you’re already using BTP in a small way, use that data to extrapolate. To avoid surprises, implement monthly monitoring of consumption. Set up alerts for unusual spikes. It’s also wise to include a buffer in your budget for growth or unexpected usage. Finally, engage with SAP or partners – they can help model scenarios or share typical usage patterns for similar projects, which can inform your estimates.
Q: Are any BTP services included for free with other SAP products (like S/4HANA or RISE with SAP)?
A: Yes, SAP often includes some BTP capabilities in larger deals, but they are limited. For instance, RISE with SAP subscriptions sometimes come with a small amount of BTP consumption credits or an integration service license to cover essential connections and extensions for your S/4HANA Cloud. Additionally, certain SAP SaaS products may include standard integrations (running on BTP) at no additional cost to the customer. However, these inclusions are usually just a starting point. Enterprises frequently outgrow the bundled capacity and need to purchase additional BTP credits or licenses. Always clarify with SAP what exact BTP entitlements you have in your contracts, and for what volume. That way, you can utilize them fully and plan for any additional licensing you may require beyond the free allotment.
Q: What are some negotiation tips for an SAP BTP licensing contract?
A: When negotiating BTP, treat it like any major cloud contract. Seek volume discounts – if you commit to a higher spend, you should receive better pricing (ensure SAP provides you with the benefits of higher tiers if you’re near a threshold). Try to negotiate flexible terms such as the right to buy additional credits at the same discount if needed (so you’re not penalized for success with higher list prices on overage). If you’re unsure about usage, consider starting with a shorter term or smaller commitment that offers the option to expand later without penalty. It’s also beneficial to align the timing with your other SAP deals – for example, negotiating BTP alongside an S/4HANA purchase might give you leverage to get a package deal or concessions. Finally, don’t forget non-financial terms: ensure the contract has clear SLA and support commitments, and that you’re comfortable with any usage reporting and true-up processes. Engaging an SAP licensing expert or consultant can be worthwhile for large agreements, as they can identify key negotiation points and benchmark what other clients are receiving.
Read about our SAP Advisory Services.
