SAP S/4HANA and HANA Database Licensing – Runtime vs. Full Use

SAP S/4HANA and HANA Database Licensing – Runtime vs. Full Use

All SAP S/4HANA systems run on the HANA database, but licensing the HANA database is a separate (and sometimes overlooked) aspect of your SAP investment.

This article breaks down the two main ways to license SAP HANA for S/4HANA: the HANA Runtime license (a cost-effective option restricted to SAP applications) and the Full-Use HANA license (which allows broader use but at a higher cost).

We explain the differences, typical pricing models, and how to choose the right approach for your enterprise. CIOs and IT procurement heads will learn to avoid overpaying for database capacity and ensure their HANA license aligns with business needs, especially as they plan S/4HANA deployments on-premise or in the cloud.

Why HANA Licensing Matters for S/4HANA

When moving to SAP S/4HANA, many organizations focus on application and user licenses, but forget about the database license.

Unlike older SAP ERP (ECC), which could run on third-party databases (Oracle, SQL Server, etc.), S/4HANA is designed exclusively for SAP’s HANA in-memory database.

This means you must have a valid license for the HANA database underneath your S/4 system (unless you’re in a SAP-hosted cloud where it’s included). The cost of HANA licensing can be a significant part of overall S/4HANA TCO; sometimes, it can rival the application license cost.

Moreover, the type of HANA license you choose will determine what you can do with the HANA database. For instance, if you plan to use HANA not just for S/4 but also as a data warehouse or to support custom analytics, the license type matters greatly.

In short, understanding HANA licensing is crucial to avoiding compliance issues (using HANA beyond your license scope) and controlling costs.

There are two flavors: a cheaper “SAP HANA Runtime” license restricted to S/4HANA usage and a more expensive “Full Use” license that lets you leverage the database for any purpose. Choosing the wrong one can unnecessarily inflate costs or limit your architecture flexibility.

Read Migrating from SAP ECC to S/4HANA – Licensing Conversion.

HANA Runtime License (SAP Application Limited Use)

The SAP HANA Runtime license is a discounted database license intended only for SAP applications.

If you get a HANA Runtime license, you are contractually allowed to use HANA solely as the database for SAP software like S/4HANA (and related SAP modules).

You cannot build custom non-SAP applications on that HANA or use it as a standalone database for third-party or in-house systems.

Key characteristics of HANA Runtime licensing:

• Pricing Model: HANA Runtime is typically priced at a percentage of the value of the SAP application it supports. A common figure often cited is 15% of the S/4HANA license value. For example, if your S/4HANA Enterprise license costs $1 million, a HANA Runtime license might cost around $150,000 (one-time). This is considerably cheaper than licensing HANA independently. The idea is that SAP gives a break since you’re effectively “locking” the use of HANA to their application. Annual support on the runtime license is extra (usually 22% of its price, so $150k would incur about $33k/year in support).
• Use Restrictions: You cannot directly access the HANA database for custom applications. All access must be through the SAP application logic. Practically, you shouldn’t build custom reporting or ETL tools that query HANA tables directly unless those queries go through SAP’s published interfaces. The runtime license typically prohibits using HANA for non-SAP data or as a generic DB platform. If SAP were to audit and find you have a custom app reading/writing to HANA tables, that could be flagged as a license violation (because that scenario requires full-use licenses).
• Ideal Use Case: Companies that use HANA exclusively to run S/4HANA (and perhaps tightly integrated SAP products like embedded analytics in S/4). If you have no intention of using HANA as a general database and want the lowest cost entry, runtime is the way to go. It’s essentially a “bundled” DB license for S/4. Many traditional SAP customers fall into this category: they just need HANA to make S/4HANA work and don’t plan to do anything fancy with HANA itself.
• Example Cost Scenario: Suppose a mid-sized enterprise buys S/4HANA licenses for $2 million. A HANA runtime license might be around $300,000 (15% of 2M). Suppose their HANA database size needed for S/4 is 256 GB of memory. In that case, this one-time fee covers it (SAP often doesn’t explicitly cap runtime by memory in the contract – it’s implicitly sized using S/4). They’d then pay roughly $66k/year in support for the HANA runtime license and S/4 support.

One nuance: the 15% metric is an example – SAP can adjust this percentage. Sometimes, SAP calculates runtime cost based on the number of user licenses or other metrics. But generally, it remains significantly cheaper than full use.

Full-Use HANA License (Enterprise Edition)

A Full-Use (Enterprise) HANA license allows you to use the HANA database for any purpose, not just SAP applications.

This is essentially the “standalone” HANA license one would buy if using HANA as a general database or for custom applications, SAP Business Warehouse, SAP Data Hub, etc., in addition to or instead of S/4HANA.

Key characteristics of Full-Use HANA licensing:

• Pricing Model: Full-use HANA licenses are often priced based on hardware capacity (memory size). SAP sells HANA in blocks of memory (commonly 64 GB increments, though this can vary by region or specific license). As an illustration, a 64 GB HANA license block might have a list price around $40,000 – $60,000 (this is an approximation, as SAP’s price list is not public, and discounts are common). If you need a 1 TB HANA database capacity, that’s roughly 1024/64 = 16 blocks, which at say $50k each would be $800k list price. These numbers can vary but show how costs scale with data size. Plus, 22% annual support is available on your license fee.
• No Usage Restriction (technically): With full use, you can run any number of applications on HANA – SAP, non-SAP, custom, etc. For example, you could have S/4HANA and a separate custom analytics app that connects to the same HANA instance. Or use HANA as a data mart for IoT data. The only limitation is your purchased technical capacity (the memory amount or CPU metric, depending on the deal). You’re paying a premium for this freedom.
• When Full-Use Makes Sense: If your enterprise strategy is to utilize HANA as a central platform beyond just the ERP. For instance, some companies consolidate multiple systems’ data into HANA for real-time reporting. Or if you have SAP products like SAP BW/4HANA (data warehouse), SAP Business Technology Platform services, or other tools that need direct HANA access, full use may be required. Also, if you think down the line you’ll develop custom sidecar apps that read/write to the S/4HANA database directly (for performance reasons), you would need full-use licenses.
• Cloud Consideration: If you plan to deploy S/4HANA on a hyperscaler (AWS, Azure, GCP) by yourself (not via RISE), you might consider a pay-as-you-go HANA license from the cloud marketplace or bring your own license. SAP has allowed HANA to be available as a cloud service, but typically, you need a full-use license unless it’s included in a platform-as-a-service model. Some cloud providers let you rent HANA by the hour – essentially a full-use license embedded in the hourly price.
• Example Cost Scenario: A large enterprise wants to use HANA for S/4HANA and as a platform for a custom analytics app. They estimate that 512 GB of HANA memory is needed to start. If the list price per 64 GB is $50k, that’s $400k. Perhaps they negotiate and get 30% off, so $280k net, with $61.6k/yr support. Over time, if their data grows and they add more use cases, they might need to buy more blocks. It’s a bigger upfront cost than runtime, but they can use HANA for whatever they want.

HANA Licensing: Runtime vs Full-Use Comparison

To summarize the differences, here’s a comparison:

One thing to note: these are licensing distinctions, not technical. Technically, HANA is the same product in both cases. The difference lies in your legal rights.

It’s possible (and not uncommon) for companies to start with a runtime license and later upgrade to a full-use license if their needs expand, but that will involve paying the difference in cost.

Choosing the Right HANA License for Your S/4HANA Deployment

The decision between runtime and full use often boils down to current needs and future plans:

• Assess your Landscape: List all the systems that might use HANA. If S/4HANA is the only one, the runtime is likely sufficient. If you are also implementing SAP BW/4HANA for data warehousing, check its licensing: BW can run on HANA runtime if it’s part of your SAP bundle, but advanced scenarios might require full use. If you aim to develop sidecar applications (custom apps that sit alongside S/4 for specialized tasks), consider if they can operate via S/4’s built-in logic or if they’d hit the HANA DB directly. The more you answer “yes, we’ll need direct DB access from outside S/4”, the more you lean toward full use.
• Cost vs. Flexibility Trade-off: Many CIOs initially opt for runtime to save cost, especially if budgets are tight and they don’t foresee needing HANA beyond ERP in the short term. It’s a valid strategy – potentially saving hundreds of thousands in license fees. However, remember that if you suddenly need a full-use license two years down the road, you’ll have to pay for that then (perhaps with less negotiating leverage at that time). Suppose full-use capability is mission-critical from day one (for example, you know you’ll integrate a non-SAP system closely with S/4 at the DB level). In that case, it’s better to incorporate that in the original deal when you have maximum leverage.
• Check Bundled Offerings: If you’re going with RISE with SAP or S/4HANA Cloud, you don’t directly buy a HANA license – it’s included in the subscription. Essentially, SAP provides the HANA database as part of the cloud service and manages it for you. The cost is baked into your user subscription price. In this case, the runtime vs full distinction doesn’t apply to you; it’s only for those managing their own S/4 environment (on-prem or IaaS). One less thing to worry about in the cloud, though you might pay a premium for the convenience.
• Memory Sizing Matters: If you choose full-use, spend time with your Basis team or SAP architects to size the HANA memory accurately. Unlike traditional databases, HANA is in-memory, so memory = performance = cost. Don’t grossly overestimate “to be safe” because each memory block costs money. SAP usually licenses full-use HANA in predefined slabs (e.g., 64GB). If you need 200GB, you’d pay for 256GB (4 blocks) unless they have a smaller increment. There’s also the aspect of HANA Appliance vs. TDI (Tailored Datacenter Integration) – basically, whether you buy certified hardware or size flexibly – but from a licensing view, memory is memory.
• Future Growth & Upgrades: Consider where your company is heading. Suppose there’s an initiative to consolidate databases or use HANA as an innovation platform. In that case, investing in full use upfront might be more cost-effective in the long term while negotiating the initial S/4 deal (when SAP is likely to give better discounts). If you foresee mostly standard ERP usage, stick to runtime to keep costs low.

HANA Licensing in Cloud and Hybrid Environments

Many enterprises now take a hybrid approach—some systems are on-premise, some in the cloud. How does HANA licensing work there?

• BYOL (Bring Your Own License) to Cloud: If you deploy S/4HANA on a cloud infrastructure (like AWS/Azure) without RISE, you typically BYO HANA license. So if you bought a HANA license on-prem, you can use it on cloud VMs (as long as the hardware meets SAP’s specs). Ensure your contract doesn’t restrict usage to a site – usually, it doesn’t; you own the license outright.
• SAP HANA Cloud Service: SAP also offers HANA as a cloud service (part of SAP Business Technology Platform), a different model that is more consumption-based (per memory and time, etc.). But that’s more for custom apps or analytical scenarios rather than running S/4 (S/4 won’t run on SAP HANA Cloud currently; it uses its own HANA instance). Just be aware that there are various HANA-based offerings; we’re discussing the license for the database under S/4HANA itself.
• Mix of Runtime and Full-Use: You may have both in your company. For example, you might have one S/4HANA system using runtime (no external use), and another system or landscape where you decided to get full use for flexibility. There’s no rule that you must standardize on one or the other across all your deployments. Just keep track of your license entitlements, which systems are covered by which license type, to remain compliant.
• Audit Perspective: SAP will audit HANA licensing similar to applications. They might look at your HANA database usage and ask: Are there any non-SAP schemas in the database? Are third-party tools connecting? If you have runtime, these could raise flags. They’ll also check if your memory usage exceeds what you licensed (for full use). It’s a good practice to monitor usage – e.g., if you licensed 512GB and you’re consistently at 90% utilization, plan to purchase additional capacity to avoid an infraction.

Recommendations

• Match License to Use Case: Choose HANA runtime if S/4HANA is the sole use case—it will save significant costs. Opt for full use if you plan to run multiple applications or custom solutions on HANA. Don’t buy a more expensive license “just in case” if you have no clear need.
• Negotiate HANA as Part of the S/4 Deal: Don’t treat the HANA DB license as an afterthought. Bundle it in your S/4HANA negotiations. SAP might be willing to give a better discount on HANA if it knows it’s critical to closing the S/4 sale. For example, negotiate the runtime license percentage down, or get a couple of HANA capacity blocks free on a full-use deal.
• Clarify Usage Rights in Contract: Ensure the contract wording for the HANA license is clear. For runtime, explicitly note it’s restricted to S/4HANA use, so you know the boundaries. Ensure the metric (memory amount, etc.) and what happens if you exceed it (true-up process) are documented for full use.
• Plan for Future Demand: If you anticipate data growth or new projects, consider scaling your HANA license in phases. You might start with a smaller memory allocation and now negotiate a price for future increments (e.g., lock in price per 64GB for the next 2 years). This avoids paying a premium later when you’re locked in.
• Monitor Your HANA Usage: Post-implementation, monitor HANA memory and how it’s being used. Implement governance so that developers don’t connect unauthorized tools to a runtime-licensed HANA. Internally flag if someone tries to use HANA for something outside of S/4—you may need to revisit licensing if that’s truly required.
• Leverage SAP Programs: SAP sometimes offers HANA consumption models or cloud credits. If you’re in a transformation program, ask SAP if there are any promotional offers (for instance, some customers moving to S/4 got a HANA runtime license for free or at a discount as part of a broader deal).
• Evaluate Third-Party Alternatives Cautiously: In some edge cases, companies consider running S/4 on HANA without buying a license by using SAP’s developer edition or other tricks – these are not legal for production. Don’t risk compliance; it’s better to get the appropriate license.
• Training and Awareness: Ensure your DBA and development teams know your chosen license. If running, they should be aware of the restrictions. Often technical folks might innocently connect PowerBI or a Python script directly to HANA – if not allowed by license, that’s a problem. License education is part of compliance.
• Periodic Reviews: As part of annual SAP license compliance checks, include the HANA license. True up your HANA usage if you’re on full use and add more memory to your environment. It’s cheaper to voluntarily purchase what you need than to be found out of compliance in an audit.
• Consider Engineered Deals: If your organization is a heavy SAP shop, sometimes SAP will offer a broader deal (for example, an S/4HANA license + HANA database + some cloud platform in one bundle for a flat fee). These can simplify things, but always break out the implied costs to ensure they’re favorable compared to buying individually.

FAQ

Q: Is a HANA database license included when we buy SAP S/4HANA software?
A: Not for on-premises. Buying S/4HANA software licenses does not automatically include the HANA database license (unless explicitly stated as a bundle). You must license HANA separately, either via the runtime or full-use options. You cannot buy it separately if you choose a SAP-hosted cloud subscription (like RISE or S/4HANA Cloud), where SAP provides the infrastructure and database as part of the service.

Q: What exactly does a “15% of application value” runtime license mean?
A: This means the HANA runtime license cost is roughly 15% of whatever you paid for the SAP application that will run on HANA. For example, if you license $500,000 worth of S/4HANA modules, 15% would be $75,000, which would be your HANA runtime license fee. This is a common ratio SAP has used, though it’s not always exactly 15%. The percentage might vary slightly, and SAP could change the model, but the core idea is that the runtime is significantly discounted to make adopting HANA for SAP apps easier.

Q: If we have a HANA runtime license for S/4HANA, can we use the same HANA instance for BW/4HANA or other SAP systems?
A: Generally, not on the same instance unless SAP explicitly allows it. A HANA runtime license is tied to one SAP application’s usage. If you want to run multiple SAP products on one HANA, SAP typically expects either each to have its own runtime license or for you to get a full-use license covering both. Some nuances exist: e.g., BW/4HANA has its own runtime license if used stand-alone. If you plan on a scenario like sidecar BW on the S/4HANA HANA database, clarify with SAP – it might require full-use licensing because now two distinct products (S/4 and BW) are hitting one DB.

Q: What happens if we use the HANA database beyond the scope of our license?
A: If you have a runtime license and you use HANA for something else (say a custom app or third-party tool connecting directly), in an audit, SAP could claim you need to license that usage – effectively pushing you to buy a full-use license (and possibly back-maintenance on it). If you have a full-use license but exceed the licensed memory (e.g., you licensed 256 GB but are using 300 GB), SAP would likely require you to purchase the additional capacity plus potentially back-support on the overage. In short, using HANA beyond your entitlement is a compliance violation. SAP’s license auditing tools and scripts can detect non-SAP schemas or unusual DB users, so it’s important to stay within bounds or proactively upgrade your license if your needs change.

Q: Can we start with a HANA runtime license and upgrade to full use later?
A: Yes. Many companies do this. You might begin with runtime (cheaper) and later find you need full use. SAP will be more than happy to sell you the full-use license then. They may even credit what you paid for the runtime toward the full-use license (since you’re essentially expanding rights). For example, if you paid $200k for runtime and now need full-use, which costs $600k for your scenario, they might offset the $200k so you pay an additional $400k (these numbers will depend on negotiation). It’s not an automatic upgrade – a new license purchase with some consideration, but a known and permissible path.

Q: Does RISE with SAP include a full-use HANA license or runtime?
A: In RISE (and S/4HANA Cloud), you don’t get a “license” for HANA – SAP just runs the system for you. Effectively, you have the rights equivalent to runtime (since you can’t directly use the database for other purposes in a SaaS model). Suppose you need some custom database usage in an RISE environment. In that case, you’d likely have to use SAP’s BTP or other cloud services – you can’t just directly interface with the HANA database outside of what SAP provides. So, while not explicitly stated, you can think of the HANA underpinning RISE as restricted to that service. If later you left RISE and went on-prem, you’d then have to procure a HANA license at that point.

Q: How is HANA licensing handled for non-production systems (dev, test, QA)?
A: Generally, SAP licenses are counted per production system usage. If you have a dev or test environment, SAP allows you to use the HANA license to set up those as long as they’re for non-production and tied to your licensed application. You typically do not need to pay separately for dev/test HANA instances if they are purely for supporting the licensed production system. They’re considered covered under your main license (this applies to runtime; for full-use, if your dev/test is installed on separate hardware that doubles the memory footprint, you might need to discuss how that is covered – usually, SAP is reasonable about not charging full price for non-prod, but it might need an explicit mention). Always clarify in your contract or with SAP account reps – sometimes they’ll note that you’re entitled to three non-prod instances for each prod. The key is that non-production cannot be used for commercial processing beyond testing/training.

Q: We have existing HANA appliances from a past project – can we reuse them for S/4HANA?
A: If you mean hardware appliances, you can reuse the servers if they meet S/4HANA specs. But if you mean HANA licenses from another project (like you bought HANA licenses for a cancelled project), in theory, you could repurpose a full-use license if it’s not tied to something else – licenses are generally not tied to a specific use, it’s about capacity. However, legally, licenses are tied to your organization and not to a specific application, so if you have a full-use HANA license that’s not being used, you could deploy S/4HANA on it without buying a new license (ensuring you have enough capacity). If the other project used a runtime license for a different SAP app, you cannot use that runtime license for S/4 – runtime licenses are tied to the specific app. This is a scenario to discuss with SAP: you don’t want to double-pay if you already have idle full-use HANA capacity. In an ideal case, you inform SAP that you plan to use your existing HANA license for S/4 – they should be fine with that, as long as usage aligns with what’s allowed.

Q: Are there any special HANA licensing options for startups or smaller deployments of S/4HANA?
A: SAP has, in the past, offered some HANA Express or smaller edition for non-production or trials, but for production S/4HANA, the main choices are runtime vs full-use. SAP sometimes prices things flexibly for very small customers or two-tier scenarios (e.g., a smaller business unit might get a bundle deal). There isn’t a “lite” license beyond runtime, though. One thing to note: S/4HANA comes in different editions (essentially the same product, but sometimes packaged differently for mid-market vs enterprise) – however, the HANA licensing approach remains runtime or full. If you’re a smaller enterprise, you will likely lean toward runtime to keep costs low, and SAP’s pricing team might calibrate the percentage or offer smaller blocks if needed.

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