As SAP ends mainstream support for its legacy Business Suite (SAP ECC) in 2027, organisations face a licensing transformation alongside the technical migration to S/4HANA. This guide covers conversion programmes, credit values, migration paths, timing strategies, and negotiation best practices.
This guide is part of our SAP Licensing Knowledge Hub. See also: SAP Licensing Guide | S/4HANA Cloud vs On-Premise Licensing | SAP RISE Advisory.
The new product line carries different licence SKUs, updated user definitions, and often a shift toward subscription models, meaning existing perpetual licences cannot simply be carried over. SAP offers conversion programmes to credit existing investments, but the terms are time-sensitive and diminishing: credit percentages have dropped from 90% to 70-80% and will continue to fall.
| Conversion Path | How It Works | Advantages | Disadvantages |
|---|---|---|---|
| Product Conversion | Line-by-line conversion of current ECC licences to S/4HANA equivalents; allows phased migration | Least disruptive; carries forward existing contract structure and discounts; allows phased approach | Largely discontinued since 2023. SAP removed the primary product conversion SKU from its price list. Unavailable for customers who did not act early |
| Contract Conversion | Terminate or sunset old ECC licence agreements and purchase new S/4HANA licences; SAP calculates credit for existing licence value to offset new costs | Clean slate: simplifies complex legacy contracts; opportunity to eliminate shelfware; restructure licensing completely | Credit percentages diminishing (90% to 70-80% to lower); requires careful analysis for functional coverage; forces renegotiation of all terms |
| RISE with SAP (Cloud) | Subscription bundle including S/4HANA software, cloud infrastructure, and services; shifts from perpetual licences + maintenance to term-based subscription | OPEX model; SAP manages infrastructure; includes credits/incentives for existing investments; aligns with cloud-first strategy | Cedes infrastructure control; subscription resets licensing entirely; different metrics (consumption, user bands); periodic renewal required |
When available, product conversion was the least disruptive path. Contract conversion provides the opportunity for a fresh start but requires maximising credit value before percentages drop further. RISE aligns with cloud strategy but fundamentally changes the licensing and operational model. Always evaluate all paths side by side before committing.
| Challenge | Why It Matters | Risk if Unmanaged |
|---|---|---|
| Diminishing credit value | SAP reduces the percentage of existing licence value creditable toward S/4HANA each year | Delaying to 2027 may result in only 50-60% credit, leaving significant existing investment unrecovered |
| Functional coverage gaps | S/4HANA is not a one-to-one match with ECC. Modules are merged, split, or new. Licence mapping requires meticulous analysis | Missing a component during conversion means purchasing new licences later at unfavourable pricing |
| Dual environment costs | Running ECC and S/4HANA in parallel during testing, phased rollouts, or extended migration periods | Paying maintenance on both simultaneously without negotiated transition rights |
| New licence metrics | S/4HANA and RISE introduce updated user definitions, subscription metrics, and consumption-based models | Unexpected cost increases if new metrics count users or usage differently than legacy contract |
| Shelfware carry-over | Converting unused ECC licences to S/4HANA equivalents perpetuates waste instead of eliminating it | Continued maintenance payments on products providing no value in the new environment |
| SAP sales pressure | SAP reps push RISE or contract conversion aggressively with end-of-quarter urgency and diminishing incentive warnings | Rushing into a multi-year commitment without thorough analysis; locking in unfavourable terms for years |
| Timing | Strategy | Credit Impact |
|---|---|---|
| Convert early | Converting well before 2027 locks in higher credit percentages (currently 70-80%, previously 90%). Some enterprises convert licences before the technical migration is complete, holding S/4 licences while still running ECC, to capture a better financial deal | Maximum credit recovery. Requires coordinating maintenance on both during overlap |
| Convert at midpoint (2-3 years before 2027) | Balances credit value against technical readiness. Credit percentage will be lower than early movers, but gap between licence conversion and technical migration is shorter, reducing dual-maintenance costs | Moderate credit recovery. Shorter dual-maintenance window |
| Delay to deadline (2026-2027) | Risks credits dropping to 50-60% or lower. Combined with time pressure, negotiating leverage diminishes. SAP knows deadline-driven customers have limited alternatives | Diminished credit. Less favourable terms across pricing, flexibility, and contractual protections |
If your organisation is committed to S/4HANA, there is a financial argument for converting licences now rather than waiting. The credit percentage SAP offers for existing investments decreases each year. Some enterprises convert licences early while still technically running ECC to capture a better deal, then complete the technical migration on a separate timeline.
| Practice | Detail |
|---|---|
| Start with thorough inventory and usage analysis | Catalogue all existing SAP licences: type, count, maintenance cost, and actual usage. Identify shelfware that should be eliminated rather than converted. Project future needs. S/4HANA may make certain legacy components unnecessary |
| Request formal conversion proposals early | Ask SAP: "If we convert now, what would our new S/4 entitlement look like, and what credits would we get?" This establishes a baseline. If the first offer is not favourable, you have time to negotiate or explore alternatives |
| Evaluate all paths side by side | Request proposals for contract conversion, RISE subscription, and (if available) product conversion. Compare total cost of ownership over migration period including new licence costs, one-time fees, ongoing maintenance/subscription, and implementation |
| Negotiate transition rights for dual environments | Secure written rights to run ECC and S/4HANA concurrently for a defined period without paying duplicate licences. Include fallback provisions if the S/4 project is delayed |
| Maximise credit for existing investments | Drop unused licences (shelfware) before conversion so their value can be credited rather than carried forward as waste. Push for the highest offset SAP will allow |
| Clarify maintenance on new licences | New contract maintenance is typically 22%. Ensure this is calculated on the discounted licence value, not list price. Confirm the maintenance base reflects your negotiated discounts |
| Build flexibility into the new contract | Divestiture rights for reallocating licences, true-down capability after each migration phase, ability to adjust counts if needs change. Long-term agreements without flexibility become costly constraints |
| # | Recommendation | Detail |
|---|---|---|
| 1 | Treat licence migration as a project, not an afterthought | Assign dedicated ownership with clear timeline. Licence decisions during S/4HANA migration can lock in costs for 5-10 years. They deserve the same rigour as the technical migration |
| 2 | Convert early to capture maximum credit value | If committed to S/4HANA, there is a financial argument for converting licences now. Every year of delay reduces the credit percentage SAP offers |
| 3 | Eliminate shelfware before converting | Audit current usage and identify unused licences, modules, and user types. Remove them before conversion. Converting shelfware to S/4HANA equivalents perpetuates unnecessary cost |
| 4 | Do not accept SAP's first offer | Initial conversion proposals are starting positions. Negotiate credit percentages, pricing, transition rights, contract flexibility, and maintenance terms. Market benchmarks and competitive alternatives strengthen your position |
| 5 | Secure transition rights in writing | Dual-environment periods are inevitable. Without negotiated transition rights, you risk paying double maintenance. Ensure the new contract explicitly permits continued ECC use for a defined period |
| 6 | Involve all stakeholders | Procurement drives negotiation; ITAM validates licence mapping; finance approves the business case; functional leads verify new licences cover all required capabilities. Missing any stakeholder risks gaps or overspend |
| 7 | Document the mapping from old to new | Maintain a clear record of how new S/4HANA entitlements map to former ECC licences. Supports operations teams, helps with future audits, and demonstrates good-faith conversion |
| 8 | Engage independent expertise for high-value migrations | SAP licence conversions involve millions over multi-year terms. Independent advisors bring market benchmarks, conversion programme expertise, and negotiation leverage. ROI typically exceeds 10x the advisory cost |
Organisations that achieve the best outcomes convert early, eliminate shelfware first, evaluate all paths comparatively, and negotiate every term. Organisations that accept SAP's default proposal without independent analysis consistently overpay. Licence migration is one of the most consequential financial decisions in the S/4HANA journey, yet it is consistently treated as a secondary workstream behind the technical migration.
Product conversion was a line-by-line swap of ECC licence SKUs for S/4HANA equivalents, preserving historic contract structures and discounts. It was largely discontinued in 2023 when SAP removed the primary conversion SKU. Contract conversion is a fresh start: you sunset the old ECC agreement and purchase new S/4HANA licences, with SAP calculating credit for your existing investment. Contract conversion offers the opportunity to eliminate shelfware and restructure, but credit percentages are diminishing each year.
Credit percentages have dropped from 90% (for early movers) to the current 70-80% range, and they will continue to fall. By 2026-2027, credits may drop to 50-60%. The exact percentage depends on your deal size, timing, negotiation leverage, and whether you are moving to on-premise S/4HANA or RISE. Always negotiate for the highest credit percentage available and consider converting early to lock in better terms.
Yes. Some enterprises convert licences to S/4HANA well before the technical migration completes, holding S/4 licences while still running ECC. This captures higher credit values while delaying the technical work. The trade-off is dual maintenance costs during the overlap period. Negotiate transition rights allowing concurrent ECC and S/4HANA use without paying duplicate licence fees.
If you convert shelfware to S/4HANA equivalents, you perpetuate waste in the new environment and pay maintenance on products providing no value. The better approach is to audit usage before conversion, identify unused licences and modules, and eliminate them. Their value can then be credited toward licences you actually need rather than carried forward as dead cost.
RISE shifts from perpetual licences plus maintenance to a term-based subscription. SAP offers credits and incentives for existing investments when adopting RISE, but the subscription resets your licensing entirely with different metrics. Existing perpetual licences become potential shelfware unless you negotiate trade-in credits. Always compare RISE total cost of ownership against contract conversion to on-premise S/4HANA before committing.
Redress Compliance provides independent SAP licensing advisory for S/4HANA licence conversions, RISE evaluations, contract negotiations, and migration planning. We benchmark SAP's proposals against market data, maximise credit for existing investments, and negotiate flexible terms. 100% vendor-independent. Fixed-fee engagement.
SAP Licence Optimisation ServicesIndependent SAP advisory. Licence conversion strategy. RISE evaluation. Credit maximisation. 100% vendor-independent, fixed-fee engagement.