Executive Summary
SAP HANA is the in-memory database at the heart of every modern SAP system. Any organisation adopting S/4HANA, BW/4HANA, or SAP's next-generation platforms must run them on HANA — making database licensing a critical cost and compliance consideration. SAP offers two primary licensing models: HANA Runtime (restricted to SAP applications only, priced at approximately 15% of the application licence value) and HANA Full-Use (unrestricted usage for any application, priced per memory capacity block).
The choice between runtime and full-use can mean the difference between a $150,000 database licence and a $600,000+ investment for the same environment. This guide provides CIOs, IT procurement leaders, and SAP administrators with the strategic analysis needed to make the right decision — and avoid the compliance traps that catch the unwary.
Runtime: Fraction of Full-Use Cost
Runtime licences cost ~15% of the SAP application's licence value — typically 3–4× cheaper than equivalent full-use licensing.
Memory-Based Full-Use Pricing
Full-use HANA is licensed per 64 GB memory block. The larger your database footprint, the higher the cost — with limited discount flexibility.
Strict Runtime Restrictions
Runtime licences prohibit all non-SAP usage: no custom schemas, no third-party tools, no direct SQL queries outside SAP applications.
Audit Focus Area
SAP audit teams actively check HANA usage — detecting unauthorised schemas, third-party connections, and memory overages on runtime and full-use licences.
HANA Runtime Licence Explained
A HANA runtime licence is a cost-effective way to licence the HANA database exclusively for SAP applications. It is valid only when HANA serves as the underlying database for SAP software — such as S/4HANA, BW/4HANA, SAP Business Suite, or other SAP products. If your usage is confined to standard SAP applications, the runtime licence covers your needs at a fraction of the full-use cost.
💲 Pricing: Percentage of Application Value
The runtime licence is priced based on the value of the SAP application it supports — not on the HANA hardware size directly. A common approach is approximately 15% of the SAP application's licence cost. For example, if you purchased an S/4HANA software package for $1,000,000, the HANA runtime database licence would cost roughly $150,000 as a one-time fee. Annual support fees (~22% of the licence fee per year) apply on top, but the base cost remains a fraction of what a full-use licence would require for the same environment.
🚫 Usage Restrictions: What You Cannot Do
The runtime licence comes with strict contractual limitations. All data in the HANA database must be accessed and manipulated through the SAP application's own interfaces and tools. Under a runtime licence, you cannot: build custom applications that directly query HANA tables; connect third-party reporting or BI tools (such as Tableau, Power BI, or Python scripts) directly to the HANA database; create custom schemas or load external data into HANA outside the SAP application; or run any non-SAP workloads on the same HANA instance.
Violating these terms — even inadvertently — constitutes a licence breach. A common compliance trap occurs when a well-meaning developer connects a data visualisation tool directly to HANA because it is technically straightforward, not realising it violates the licence. SAP auditors specifically look for such unauthorised connections.
🎯 What CIOs Should Do Now — Runtime Licensing
- Choose runtime whenever feasible: If your HANA usage is confined to standard SAP applications, always opt for runtime. Do not let SAP upsell you to full-use "just in case."
- Implement access controls: Restrict HANA database credentials to authorised SAP Basis administrators only. Block the creation of custom schemas in production environments.
- Educate IT staff: Ensure developers and power users understand that direct HANA connections are prohibited under runtime licensing.
- Document your licence scope: Maintain records of which SAP systems are covered by each runtime licence for audit preparedness.
HANA Full-Use Licence Explained
A HANA full-use licence unlocks the complete SAP HANA platform with no usage restrictions. Under full-use licensing, HANA can serve as the database for SAP applications and for any other applications, custom developments, or third-party tools. This is the model required when you intend HANA to function as an enterprise-wide data platform — not merely an SAP application backend.
📦 Pricing: Memory-Based Capacity Blocks
Full-use HANA licensing is based on the size of the HANA database, measured in memory capacity. You purchase HANA in fixed blocks — commonly 64 GB increments — at a list price of approximately $50,000+ per 64 GB block. For a 256 GB HANA instance, that is 4 blocks at roughly $200,000 list price. Larger environments can easily reach seven figures. SAP offers limited discounting on HANA full-use compared to application licences, making it one of the most expensive line items in an SAP landscape.
📊 When Full-Use Is Required
You need a full-use licence in any scenario where HANA usage extends beyond supporting standard SAP applications. Common triggers include: building custom applications that run on HANA for high-performance needs; using HANA as a consolidated data platform pulling data from non-SAP systems for real-time analytics; running third-party software on HANA; connecting external BI tools directly to the HANA database; or consolidating multiple SAP products onto a single HANA instance (which runtime licences generally cannot cover).
Technology Company: Custom Analytics on HANA
Situation: A SaaS company uses S/4HANA and wants to build a custom real-time analytics application that directly queries HANA tables alongside IoT sensor data from non-SAP sources. They estimate needing 512 GB of HANA memory.
Analysis: The custom analytics application and IoT data integration both require direct HANA access outside SAP application boundaries. A runtime licence would be in violation. Full-use licensing for 512 GB (8 × 64 GB blocks) at list price: approximately $400,000.
Takeaway: Only pay the full-use premium when you have concrete, funded plans for non-SAP usage. The flexibility is genuine — but so is the cost.
Pricing Comparison: Runtime vs Full-Use
| Aspect | HANA Runtime Licence | HANA Full-Use Licence |
|---|---|---|
| Allowed Usage | SAP applications only — no third-party or custom direct use | Any application — SAP, third-party, or custom with no restrictions |
| Pricing Model | ~15% of SAP application licence value (one-time) | Per 64 GB memory block (~$50K+ per block list) |
| Upfront Cost | Lower — fraction of full-use | Significantly higher — scales with memory |
| Annual Support | ~22% of runtime licence fee | ~22% of full-use licence fee (higher absolute $) |
| Scalability | Not tied to specific GB — grows with SAP app usage | Explicitly memory-sized — must purchase more blocks as data grows |
| Ideal Use Case | SAP-only environments (ERP, BW) | Mixed: SAP + custom apps, analytics, third-party tools |
| Upgrade Path | Can convert to full-use (pay the delta) | Already unrestricted |
Licensing Scenarios to Watch
📌 S/4HANA On-Premise Deployments
For on-premise S/4HANA implementations, a HANA runtime licence is almost always the most cost-effective choice — unless you have concrete plans to extend HANA for non-SAP workloads. Critically, the runtime licence for S/4HANA does not automatically cover other SAP systems. It is tied to that specific S/4HANA environment. A separate BW/4HANA system, for example, would require its own runtime licence.
📌 BW on HANA / BW/4HANA
SAP Business Warehouse running on HANA can use a runtime licence restricted to BW workloads. However, be cautious with scenarios where BW and another SAP application share a HANA instance. SAP's policy is generally one runtime licence per product per HANA instance. If you attempt to run BW and S/4 on the same HANA database, runtime licences may not suffice — SAP could require a full-use licence. Mixing workloads or building custom BW-based data marts may also push you towards full-use.
📌 Non-SAP and Custom Applications
This is the single most common compliance trap. Any time you plan to use HANA for something other than an SAP application, you need a full-use licence. Even if a third-party tool reads data from S/4HANA's tables, if it connects directly to HANA (bypassing SAP application interfaces), SAP views this as unlicensed usage under a runtime agreement. Factor full-use costs into any project involving external analytics tools, custom applications, or third-party integrations at the database level.
📌 Cloud Deployments: BYOL vs Pay-As-You-Go
Deploying HANA on AWS, Azure, or Google Cloud offers two paths. BYOL (Bring Your Own Licence) lets you reuse an existing SAP licence on a cloud VM — same terms, different hardware. This is typically more cost-effective for steady production workloads. Pay-As-You-Go from hyperscaler marketplaces includes HANA licensing in the hourly rate — convenient for prototyping or variable workloads, but substantially more expensive over the long term for stable production systems.
📌 RISE with SAP and HANA Cloud
Under RISE with SAP, the HANA database is delivered as part of the subscription service — you do not separately licence HANA. However, your existing on-premise HANA licences become potential shelfware once you go live on RISE. When negotiating RISE contracts, always negotiate credit or trade-in value for existing HANA licences to avoid double-spending. If you adopt SAP HANA Cloud as a standalone BTP service, note that on-premise HANA licences do not carry over — it is an entirely separate subscription model.
🎯 What CIOs Should Do Now — Deployment Strategy
- Isolate SAP workloads per HANA instance: Each production SAP product requires its own HANA runtime licence. Don't attempt to consolidate different SAP systems on one HANA instance under runtime licensing.
- Audit third-party connections: Check whether any non-SAP tools are connecting directly to HANA databases licensed as runtime. Remediate before SAP's auditors discover the breach.
- Negotiate RISE trade-in value: If moving to RISE, ensure existing HANA licence investments are credited against your subscription fees.
Optimisation and Cost Control Strategies
Choose Runtime Whenever Feasible
If your HANA usage is confined to standard SAP applications, always opt for the cheaper runtime licence. The cost difference is substantial — often 3–4× lower than full-use for an equivalent deployment. Start with runtime to minimise costs; you can upgrade later if genuinely needed.
Right-Size Your Memory (Avoid Over-Provisioning)
For full-use licensing, memory equals cost. Work with your SAP Basis team to estimate HANA memory requirements using SAP's sizing tools and conservative growth projections. Do not over-size with a large safety cushion "just to be safe" — every unnecessary 64 GB block is real money wasted. You can purchase additional capacity later, but you cannot refund unused licensed capacity.
Implement Data Tiering and Archiving
Not all data needs to reside in expensive in-memory storage. Use HANA's Native Storage Extension (NSE), warm/cold data tiering, and aggressive archiving policies to keep your active memory footprint lean. Archiving five-year-old transactional data out of HANA could save you from licensing an additional 128 GB block — potentially $50,000+ saved per year in support alone.
Negotiate Future Growth Upfront
When making the initial HANA deal, lock in pricing for future memory expansions. If you anticipate doubling your HANA capacity in 2–3 years, negotiate the option to purchase additional blocks at the same discount rate. Without this, SAP may charge list price for new capacity when you have less leverage. Large S/4HANA migration deals are the ideal moment to secure these terms.
Monitor Usage Continuously
Treat HANA licence management as an ongoing operational task. Use SAP's system measurement tools, HANA cockpit views, and SQL queries to track memory consumption and connected users. Early detection of compliance issues — an unauthorised schema, a rogue BI tool connection, memory creeping past the licensed amount — allows remediation before audit pressure makes it expensive.
Leverage SAP Programmes and Bundle Deals
SAP periodically offers promotions — free runtime licences for customers migrating from legacy systems, bundle pricing for S/4HANA + HANA + BTP, or conversion credits. Talk to your SAP account executive about available incentives, but always decompose bundle pricing to confirm it truly delivers value rather than hiding costs behind a single number.
"The most expensive HANA licensing mistake is not choosing the wrong model — it is failing to enforce the boundaries of the model you chose. A runtime licence that quietly acquires third-party connections costs far more to remediate in an audit than a proactively licensed full-use environment."
HANA Licence Compliance and Audits
SAP is known for its strict licence compliance audits, and HANA has become a focus area in recent years. SAP's audit tools and system measurement scripts can detect: the amount of memory installed versus what is licensed (for full-use); whether unauthorised users, schemas, or connections exist (indicating non-SAP usage on runtime); and whether specific features are being used beyond your licence edition's scope.
📌 Consequences of Non-Compliance
If an audit reveals you are exceeding your licensed entitlement — whether through memory overage on full-use or unauthorised usage on runtime — SAP will typically require you to purchase the necessary licences retroactively. This includes back-dated maintenance fees for the period of non-compliance. For example, if you had a 256 GB full-use licence but were actually using 300 GB, SAP will demand you purchase an additional 64 GB block and backdate maintenance to when the overage began. If runtime usage violations are discovered, SAP may require a full conversion to full-use licensing — an unplanned expense that can reach hundreds of thousands of dollars.
Manufacturing Firm: The Accidental BI Connection
Situation: A manufacturer runs S/4HANA on a HANA runtime licence. A data analyst connects Tableau directly to the HANA database to build executive dashboards — technically straightforward but contractually prohibited.
Audit Discovery: SAP's system measurement detects the external schema and user created for Tableau. The audit team classifies this as unlicensed full-use consumption.
Takeaway: Implement governance controls that prevent direct HANA connections under runtime licensing. Education and access restrictions are far cheaper than audit remediation.
Cloud Transition: What Happens to Existing HANA Licences
Many SAP customers are transitioning to RISE with SAP, SAP HANA Cloud, or IaaS deployments. Planning the fate of existing HANA licences during these moves is essential to avoid wasting prior investments.
RISE with SAP — Shelfware Risk
RISE includes HANA as part of the subscription. Your existing on-premise HANA licences become unused assets unless you negotiate trade-in credits. You may continue paying maintenance on idle licences unless you actively terminate them.
BYOL to Hyperscaler Cloud
Reuse existing HANA licences on AWS, Azure, or GCP VMs. The licence is not hardware-bound — as long as the cloud VM is HANA-certified, your entitlement carries over. This maximises your existing investment whilst gaining cloud flexibility.
SAP HANA Cloud (BTP)
On-premise HANA licences do not carry over to SAP HANA Cloud service. If adopting BTP-based HANA, negotiate conversion rights or cloud credits during your transition deal to avoid paying twice for database capability.
🎯 What CIOs Should Do Now — Cloud Transition
- Negotiate trade-in value: When discussing RISE contracts, insist on credit for existing HANA licence investments. SAP has programmes for this — but they are not proactively offered.
- Retain licence rights: If going to RISE, negotiate a clause allowing you to resurrect on-premise licences if you later decide to insource or move off SAP's cloud.
- Avoid double-spending: Track which HANA licences are actively deployed versus idle. Terminate maintenance on genuinely unused licences to stop the cost bleed.