The 3 Major SAP Licensing Models: ECC, S/4HANA, and RISE

Global IT and finance leaders face complex choices in SAP licensing across three major models: SAP ECC, SAP S/4HANA, and RISE with SAP.

Each model has distinct license structures and cost implications – from traditional perpetual licenses to modern cloud subscriptions.

This article compares these options, provides real-world cost examples, and offers practical guidance for optimizing SAP license investments.

SAP ECC Licensing: Traditional On-Premise Model

SAP ECC (ERP Central Component) uses a classic on-premises licensing model.

Companies purchase perpetual software licenses upfront (a capital expense) and then pay annual support fees (typically ~20% of the license cost) for maintenance and updates.

Key characteristics of ECC licensing include:

• Named User Licenses: Every individual who accesses SAP requires a license. ECC offers multiple user types (e.g., Professional, Limited Professional, Employee Self-Service, Developer), each at different price points. A Professional User license costs around $3,000 one-time, whereas a limited or self-service user license might cost $1,500 or less, respectively. Annual support adds ~20% to each license cost.
• Module/Engine Licenses: In addition to user licenses, certain functional modules (e.g., Advanced Warehouse Management, APO, CRM) or technical components are licensed separately by “engines” with their metrics (e.g., number of orders, revenue, cores). This can increase ECC costs if an enterprise utilizes those add-ons.
• Infrastructure & DB: ECC is deployed on customer-owned servers (or hosting of their choice). The company must license a database (such as Oracle or IBM) separately if it is not using SAP’s database. Infrastructure and IT staff costs to run ECC are borne by the customer.
• Indirect Access: Traditional ECC contracts required licenses even for indirect use (third-party systems or external users that interact with SAP data). This meant that if, for example, an e-commerce site or supplier portal touched ECC, those external users or system connections often required SAP user licenses, creating compliance risks and additional costs if not managed properly.

Example Cost: Consider a company with 500 ECC users. They might spend roughly $1 million upfront on ECC licenses (a mix of user types) and $200,000 per year on support. Over 5 years, that’s $1M + $1M in support = $2M paid to SAP, plus perhaps $150,000 per year in hardware and IT costs ($750k over 5 years).

In total, about $2.75 million over 5 years, not including any major upgrade projects.

The benefit is ownership of the licenses and full control of the system, but the downside is that the company manages everything (and must fund future upgrades to new SAP versions). Also, if too many high-cost user licenses are purchased but underused (so-called “shelfware”), money is wasted.

The goal in ECC licensing is to acquire the optimal mix of user types and engines to meet needs without overspending.

Note: SAP ECC is a legacy system—standard support ends in 2027 (with optional extended maintenance to 2030 for an added fee).

This looming deadline is pushing many enterprises to evaluate the next two models (S/4HANA or RISE) as they plan their IT roadmap.

SAP S/4HANA Licensing: Modern Options and Costs

SAP S/4HANA is SAP’s next-generation ERP, and its licensing model is more flexible, accommodating both on-premise and cloud deployments.

Organizations can still choose a traditional on-premises license for S/4HANA or opt for a subscription-based licensing model.

The major features of S/4HANA licensing:

• On-Premise Perpetual License: Similar to ECC, customers can buy S/4HANA licenses upfront and run the software in-house (or hosted). You pay a large one-time fee for the software and ~22% per year for support. Notably, S/4HANA requires the SAP HANA database, so you must license HANA as well (either a “runtime” license restricted to SAP use – roughly 15% of the S/4 application value – or a more expensive full-use HANA license if you plan to run non-SAP applications on it). This is a new cost factor that ECC customers on third-party databases have not faced. Apart from that, on-prem S/4HANA licensing and maintenance costs are akin to ECC (you still have named users, support fees, and your infrastructure).
• Cloud Subscription License: SAP also offers S/4HANA in a cloud subscription model (e.g., S/4HANA Cloud public edition, or private cloud via SAP HANA Enterprise Cloud). Instead of a big upfront buy, you pay an annual (or quarterly) subscription fee (operating expense) that typically bundles the software, infrastructure hosting, and standard support into one price. This subscription includes regular upgrades (SAP manages updates) and cloud operations. If you stop subscribing, you lose access to the software. This model adopts a pay-as-you-go approach, providing greater agility.
• User Types and FUE: S/4HANA simplified the named user categories. Common types are Professional (Full) for unrestricted access, Functional (Limited) for users in specific roles/modules, Productivity/ESS for self-service users, and Developer. On-prem S/4 uses these categories for named user licenses (with list prices roughly in line with ECC’s – e.g., a Professional user ~$3k+). In the cloud, SAP introduced Full User Equivalents (FUE) as a metric: you purchase a certain number of FUE,s which represent a bundle of user licenses. For example, 1 Professional user might consume 1.0 FUE, a Functional user might consume 0.5 FUE, and an ESS user might consume 0.033 FUE (30 ESS per FUE). Customers can allocate their pool of FUEs across user types as needed. This provides flexibility to mix user roles without buying each category separately, but it adds complexity in forecasting usage.
• Digital Access Licensing: To address indirect use in the S/4 era, SAP introduced an optional document-based licensing model called Digital Access. Instead of requiring a named user for every external system, Digital Access can license third-party interactions by counting specific document types (such as sales orders and invoices) created or accessed. Customers can purchase document “packs” or an unlimited document license (often priced at around 10% of the software contract value annually). This can mitigate the classic indirect access risk; however, companies need to carefully estimate their document volumes. If you don’t opt into digital access, indirect use will still need to be covered by named users or may trigger compliance issues during an audit.

Cost Considerations: With S/4HANA, companies must decide between the capital expenditure (CapEx)- heavy on-premises route and the operational expenditure (OpEx) subscription route.

On-prem example: A firm licensing S/4HANA for 500 users might pay on the order of $1 million upfront (similar to ECC), plus approximately $200,000 per year in support, plus the cost of HANA database licenses and ongoing infrastructure expenses.

Cloud example:

The equivalent S/4HANA Cloud subscription for 500 users might be quoted at around $300,000–$500,000 per year (depending on the user mix and discounts), which over 5 years could total approximately $1.5–$2.5 million.

In the first 5 years, these costs can be comparable to on-premises costs. Still, in year 6 and beyond, the on-premises costs drop to only maintenance (assuming no major upgrade project), whereas the cloud subscription continues to charge full fees every year.

In exchange, the cloud model includes all upgrades and hosting.

The S/4HANA model thus offers a trade-off: pay less upfront vs. potentially more over time. It also provides greater deployment flexibility (on-premises, public cloud, private cloud, hybrid).

Many enterprises perform a 5-10 year total cost of ownership analysis to decide which S/4HANA licensing approach aligns with their financial strategy.

SAP often provides conversion incentives as well, for instance, offering credit for the value of unused ECC licenses when you migrate to S/4HANA, to ease the transition.

RISE with SAP: All-in-One Subscription Bundle

RISE with SAP is a relatively new offering (launched in 2021) that bundles S/4HANA Cloud and related services into a single contract.

Think of RISE as “SAP S/4HANA as a Service” – it includes the software license, the cloud infrastructure, basic technical management services, and support in one subscription price.

SAP markets RISE as a turnkey solution to “business transformation,” aimed at simplifying the move to S/4HANA in the cloud.

Key aspects of RISE licensing:

• Single Contract, Pure Subscription: With RISE, you sign a single subscription agreement that covers everything, eliminating the need to buy licenses and infrastructure separately. There is no upfront license purchase – it’s all recurring operational expenses (OpEx). This typically has a multi-year commitment (e.g., 3 or 5 years) with a locked annual fee. The subscription includes S/4HANA Cloud (which can be SAP’s public cloud edition or a private cloud instance), the required HANA database, cloud hosting (on SAP’s chosen cloud or your preferred hyperscaler), and SAP Enterprise Support. You essentially “rent” the entire ERP system, and SAP runs it behind the scenes.
• Full User Equivalent (FUE) Metric: RISE uses the same FUE concept as S/4HANA Cloud for user licensing. You contract for a certain number of FUEs, which cover your user population. For example, if you have 100 heavy users and 400 light users, SAP might size that as, say, 200 FUEs total (since light users count less). This metric-based licensing allows some flexibility in user mix during the term, but you’re generally committed to the total FUE count. You can add more if needed (true-up), but reducing usually has to wait until renewal.
• What’s Included (and Not): RISE bundles core ERP functionality and standard infrastructure. However, it may not include every SAP product – if you require additional cloud services (such as Ariba, SuccessFactors, or SAP’s industry cloud add-ons), these could be separate subscriptions. Additionally, customization and extensions in RISE may be more restricted than in on-premises environments (especially in the public cloud version). Some customers opt for the RISE Private Cloud Edition for greater flexibility, enabling more customization and the option to select a cloud provider (AWS/Azure/GCP) managed by SAP. In any case, with RISE, you cede a degree of control: SAP handles updates on its schedule (you get automatic quarterly updates in public cloud), and you rely on SAP for operational support.
• License Conversion: If you’re an existing ECC customer, moving to RISE often means trading in your old licenses. SAP will typically offer a credit or conversion for the value of your unused ECC licenses to offset the cost of the RISE subscription. But note, those perpetual licenses effectively become retired once you’re on RISE – you’ve shifted to a subscription model. This can be a one-way move; if you later leave RISE, you would likely need to purchase new licenses or revert to an older ECC system without support. SAP’s goal is to lock customers into the cloud model, so evaluate this carefully.
• Cost and Commitment: RISE with SAP is generally priced at a premium for the convenience it provides. SAP often touts that RISE can lower the total cost of ownership by bundling and leveraging economies of scale, but real-world figures show that it can be more expensive over time than a well-run on-premises system. You are paying SAP to handle the heavy lifting (data center, upgrades, basis support). For example, one large enterprise with ~500 users was quoted roughly $1.2 million per year for a RISE contract covering S/4HANA Private Cloud, which is ~$6 million over five years. In comparison, as noted earlier, the same company might have spent around $2.5–$3 million over five years on ECC or on-premises S/4, including licenses and maintenance (although this excludes a potentially expensive S/4 migration project). In this case, RISE was nearly double the cost in pure dollars. The trade-off is that $6M includes everything (hardware, database, continuous upgrades, and SAP managing the system), and it avoids the large cost of the migration project. The company gets to always run the latest version without needing its upgrade initiatives. Enterprises must decide if the premium is worth the reduced operational burden and faster innovation cycle.

In summary, RISE with SAP is about convenience and simplification, converting SAP ERP into a service subscription.

It can accelerate cloud adoption and relieve internal IT teams, but it comes with vendor lock-in, potentially higher long-term costs, and less flexibility to tailor the environment.

It’s important to read the fine print – for instance, ensure the contract has provisions for growth, and understand if any capabilities are limited. (One example: certain new SAP offerings like embedded AI features may incur extra charges on RISE.)

Cost Comparison of ECC vs S/4HANA vs RISE

To visualize the differences in cost structure between these licensing models, consider the following comparison:

Note: Example figures are illustrative for a mid-sized enterprise (≈approximately 500 users) and assume list prices before any discounts. Actual costs vary based on negotiated discounts (commonly 50% or more off the list price for large deals), user mix, and specific deal terms.

Key Takeaways:

SAP ECC and S/4HANA on-premise involve a higher upfront spend but lower incremental costs later, whereas RISE (and S/4 cloud) spreads costs over time with a lower upfront commitment but a higher ongoing run rate.

The best choice depends on an organization’s financial preferences (CapEx vs OpEx), existing investments, and strategic priorities.

Always perform a multi-year TCO analysis.

For instance, on a 5-year timeline, the costs may seem similar between owning vs. subscribing, but on a 10-year timeline, owning licenses could save money if you utilize them fully and manage infrastructure efficiently.

Conversely, if your company values agility, always-current technology, and offloading IT overhead, the subscription model may justify its cost.

Managing SAP License Costs: Drivers and Pitfalls

Regardless of the model you choose, enterprise SAP licensing is complex, and costs can escalate if not proactively managed.

Here are some key cost drivers and common pitfalls to watch for:

• User License Optimization: A major cost driver is the mix of user license types. Paying for too many expensive user licenses (e.g., Professional users that aren’t needed) can waste millions. Conversely, under-licensing (issuing a license at a lower cost despite utilizing high-level functions) can lead to compliance issues and audit penalties. It’s crucial to analyze user roles and assign the appropriate license type. Regularly review user lists to “right-size” licenses as roles change. For example, if 500 employees only need self-service access, assigning them low-cost ESS licenses ($100 each) instead of Professional licenses ($3,000 each) would save a fortune (and avoid paying ~22% support on those unnecessary licenses every year).
• Indirect Access & Integration: Ensure you have a strategy for indirect access. Under ECC and traditional licensing, any system or user that indirectly interacts with SAP may require a license, which is a notorious source of unplanned costs (e.g., a CRM system creating an order in SAP could trigger licensing requirements). In S/4HANA and RISE, SAP’s Digital Access model offers an alternative: licensing by documents. This can be cost-effective if you have numerous external touchpoints; however, you must estimate document volumes and potentially negotiate a blanket allowance. Pitfall: Failing to address indirect use in your contract can result in a surprise audit bill. Always clarify how APIs, third-party applications, customer/partner portals, and other similar services are licensed.
• Shelfware (Underutilization): Enterprises often purchase more SAP licenses or modules than they use (perhaps anticipating growth or due to bundle deals). These unused licenses (also known as shelfware) represent sunk costs. For on-premises solutions, they also incur annual maintenance fees, despite not providing value. To avoid this, consider buying in phases if possible (“pay as you grow”) and utilize contractual protections, such as usage audits or swap rights, to mitigate risk. In cloud subscriptions, shelfware can occur if you overestimate the number of users or commit to more capacity than needed, as you typically cannot reduce the subscription until the next renewal. Keep a close eye on license utilization metrics (SAP provides tools like LAW – License Administration Workbench – to measure users in ECC/S/4 on-prem, and cloud dashboards for FUE consumption).
• HANA Database Costs: When moving to S/4HANA on-prem, don’t overlook the cost of the HANA database. SAP pricing for HANA can be either a percentage of your application value (for a limited-use license) or based on memory capacity (for a full-use license). Either way, it can be significant, especially for large data volumes. Ensure that you size your HANA requirements carefully. In RISE contracts, the HANA cost is bundled, but there may be limits on memory or throughput in your chosen cloud “size” – exceeding those can trigger extra charges.
• Cloud Subscription Escalators: Subscription agreements (including RISE) often have built-in price escalations. For example, SAP may increase the fee by 3-5% per year after the initial term or at the time of renewal. Additionally, SAP’s standard cloud contracts don’t allow reducing the user count during the term. If your user numbers drop, you’re still paying for the committed volume. This lack of flexibility is a cost risk. Always negotiate caps on annual price increases and seek the ability to adjust volumes at renewal. If you anticipate growth, lock in rates for adding users. If you anticipate potential downsizing, consider negotiating some rightsizing options or shorter renewal cycles.
• Maintenance and Support Changes: SAP has been raising maintenance fees on older products – for instance, standard support for ECC got a 5% price increase in 2024, and extended maintenance (2028-2030) comes at a premium (adding 2% to the maintenance rate). These policy changes are designed to encourage customers to adopt the cloud. Be aware of them in your cost planning. If you choose to stay on ECC past 2027, factor in higher support costs or consider third-party support providers as an alternative to contain costs.
• Contractual Pitfalls: Always Read the Fine Print. Watch out for clauses around indirect use, license audits, and termination. For RISE or cloud deals, understand what happens if you terminate – you may need to pay significant termination fees or lose certain privileges. Check for any services or components that are not included in the base price (e.g., some advanced features, integrations, or future innovations may incur additional costs). Ensure the contract clearly defines how new functionality is licensed to avoid surprise fees later (for example, if SAP releases a new AI module, will it be included or charged separately?). Having the right contract terms can prevent cost shocks down the road.

By anticipating these challenges, enterprises can mitigate risks. The overarching theme is active license management – SAP licensing is not a “set and forget” area.

It requires ongoing attention to user usage, contract terms, and SAP’s evolving policies to avoid overspending and compliance issues.

Recommendations

To help IT and finance teams navigate SAP licensing effectively, here are some expert tips and best practices:

1. Map and Right-Size Your Users: Conduct a thorough internal audit of SAP users and their actual system usage. Align each person with the correct license type (e.g., don’t default to a Professional license for everyone). Rightsizing licenses (downgrading where possible) before a contract renewal or migration can yield significant savings.
2. Evaluate ECC vs S/4 vs RISE Strategically: Don’t rush into a new model without a business case. Compare the total 5-10 year cost of staying on ECC (with upgrades) versus moving to S/4HANA on-prem or RISE. Consider both financial impacts (CapEx vs. OpEx) and operational impacts (control vs. outsourcing). Ensure the CIO and CFO agree on the approach that aligns with the company’s strategy.
3. Leverage SAP’s Conversion Programs: If you plan to migrate to S/4HANA or RISE, engage with SAP early to discuss conversion credits or promotional programs. SAP often allows you to credit the value of existing licenses toward the new subscription. Take advantage of this to avoid “double-paying” for licenses. Additionally, inquire about trial or ramp-up licensing that allows you to run S/4HANA temporarily alongside ECC during migration without incurring additional costs.
4. Negotiate Digital Access Upfront: If you have multiple interfaces with SAP (such as portals and middleware), address indirect usage in the negotiation. If opting for Digital Access licensing, negotiate a sufficient number of document licenses or a reasonable flat fee. Ensure the contract language covers all known third-party integrations to avoid unexpected charges in the future.
5. Secure Price Protections: Treat your SAP deal like any large procurement – lock in terms that protect you. For on-prem, negotiate caps on maintenance fee increases (or commit to longer maintenance with a capped increase). For cloud services, negotiate limits on annual subscription escalations and the right to renew at favorable rates. If possible, get flexibility to adjust user counts at renewal or to transfer unused allocations to other SAP products. These protections can save millions over the life of the contract.
6. Plan for HANA and Infrastructure Costs: Budget for all components of S/4HANA. If on-prem, include HANA hardware and license costs in your project budget (they can be sizable). If considering RISE, compare the cost of SAP’s included infrastructure to your own cost of running systems – sometimes, large enterprises find they can run systems cheaper in-house or on a cloud of their choice. Use that analysis as leverage in negotiations (e.g., if your internal cost is lower, request a discount from SAP).
7. Consider Phased Adoption: You don’t have to do everything at once. Some companies extend ECC’s life (perhaps via third-party support to avoid high SAP maintenance fees) while they prepare for S/4HANA. Others migrate core ERP to S/4 but keep certain modules (like HR or CRM) on separate systems or cloud apps. SAP licensing allows for hybrid scenarios. Negotiate contracts that accommodate a phased approach (like the ability to reduce ECC spend as you increase S/4 usage).
8. Engage Expert Help if Needed: SAP licensing and contracts are specialized domains. Consider consulting independent licensing experts or legal advisors before signing major contracts. They can often identify hidden risks or opportunities (e.g., an overlooked clause or an incentive SAP can provide) that an in-house team might miss. The cost of expert advice can be far less than the cost of a bad deal or an audit penalty.
9. Monitor and Govern Continuously: After the contract is signed, establish robust governance. Use SAP’s tools (LAW reports, user analytics) or third-party software asset management tools to track usage vs. entitlements. Review these reports annually (or more frequently) to ensure compliance and identify unused licenses that could be terminated or reallocated. Proactive management will also strengthen your hand in the next negotiation, as you’ll know exactly what you need (and don’t need) from SAP.
10. Stay Informed on SAP Policy Changes: SAP frequently updates its licensing policies (e.g. new user definitions, new offerings like RISE, changes to support costs). Keep an eye on communications from SAP, user groups, and industry analysts. For example, if SAP announces an end-of-support for a product or a new cloud bundle, you’ll want to evaluate the impact on your licensing strategy. Being informed early allows you to adapt your plans and negotiate from a position of knowledge rather than reacting under time pressure.

By following these recommendations, enterprises can make more informed decisions, avoid common pitfalls, and ensure they’re getting the best value out of their SAP agreements.

The key is to treat SAP licensing as an ongoing strategic management area – not just a procurement task every few years, but a continuous part of IT financial planning and vendor management.

Checklist: 5 Actions to Take

If you are responsible for SAP licensing in your organization, here is a simple step-by-step plan to get started:

1. Assess Your Current State: Document all your existing SAP licenses (ECC or S/4), their types, and current annual costs. Use SAP’s measurement reports to gauge actual usage. This baseline will reveal any obvious misalignments (e.g., excessively high-level licenses or unused modules).
2. Define Your Future Plan: Collaborate with your stakeholders to determine the direction of your SAP landscape. Will you remain on ECC for now, upgrade to S/4HANA on-prem, or move to a cloud solution like RISE? Clarify the target timeline (keeping in mind ECC’s 2027/2030 support deadlines) and the business drivers (budget, innovation needs, risk tolerance).
3. Perform a Cost Comparison: For each option (stay on ECC, migrate on-premises, or RISE cloud), model the total costs over a multi-year period (5-year and 10-year outlook). Include all relevant factors: license fees, maintenance, hardware or cloud subscriptions, implementation or migration project costs, and even personnel. Identify which scenario offers the best value and aligns with financial preferences (CapEx or OpEx).
4. Engage SAP (and Possibly Partners): Reach out to your SAP account executive to discuss your plans. If moving to S/4 or RISE, request a detailed proposal or sizing exercise. Also, consider engaging an independent licensing advisor or your SAP user group for an unbiased perspective. As you gather proposals, pay attention to the terms (not just the costs). Start mapping out negotiation points, such as credits for existing licenses, contract flexibility, and any additional components you may need.
5. Negotiate and Execute a License Plan: Enter negotiations with a clear goal in mind, based on your thorough analysis. Whether it’s a renewal of ECC support or a new RISE contract, negotiate aggressively on both price and conditions. Aim for protections against cost increases and ensure all usage scenarios are covered (including indirect access and future growth). Once the deal is signed, implement strong internal governance to manage the licenses. Educate your teams on license policies (so they don’t inadvertently violate terms), and set up regular audits of license usage. This will keep you compliant and ready to adjust when it’s time to renew or expand your SAP agreement.

By completing these steps, you’ll create a solid foundation for SAP license management and position your enterprise to control costs while meeting business needs.

FAQ

Q1: What are the main differences between SAP ECC and SAP S/4HANA licensing?
A: SAP ECC uses a traditional perpetual licensing model – you buy licenses upfront and pay annual support, and it’s typically on-premise only. It has many specific user license types and often additional licenses for add-on modules. SAP S/4HANA, on the other hand, offers more flexibility: you can still do on-premise perpetual licensing, but you also have cloud subscription options. S/4HANA simplified the user categories and introduced the Full User Equivalent (FUE) metric for cloud licensing. Another big difference is the database – ECC can run on third-party databases (licensed separately), whereas S/4HANA requires SAP’s HANA database (which adds to licensing considerations). Overall, S/4HANA licensing can be either CapEx (if purchased like ECC) or OpEx (if subscribed), and it comes with new metrics, such as digital access (document-based licensing for indirect use), which were not part of ECC’s model.

Q2: Is SAP’s RISE with SAP offering more expensive than traditional licensing?
A: It can be, but it depends on the scenario. RISE with SAP is a bundle that includes S/4HANA software, infrastructure, and services in one subscription price. In pure dollar terms, when comparing 5- or 10-year costs, RISE often appears more expensive than owning licenses and running them yourself – because SAP charges for the convenience and cloud services. For example, companies have found a RISE subscription might cost nearly double over 5 years what they’d pay just in SAP license and support fees on-prem. However, that comparison doesn’t account for the extras RISE includes (like hardware/hosting, ongoing upgrades, and SAP managing the system). If those services are something your company would struggle with or pay a lot for anyway, RISE’s premium might be justified. The key is to do a case-by-case analysis. Some enterprises value the agility and reduced IT burden of RISE enough to pay more, while others find they can run SAP more cost-efficiently on their own. Always negotiate the RISE price as well – SAP may offer discounts or incentives, especially if you are migrating from ECC, to make the deal more attractive.

Q3: What happens to our existing ECC licenses if we migrate to S/4HANA or RISE?
A: If you move to S/4HANA on-premise, you can often convert your existing ECC licenses via SAP’s conversion program. Essentially, SAP will map your old licenses to equivalent S/4 licenses (since S/4 has different product SKUs and user categories) – sometimes this is done at no net license cost if you’re under maintenance. Still, you might need to purchase additional licenses for new functionality or users. You generally won’t “lose” your investment; it’s more of an upgrade. If you go to RISE with SAP (cloud subscription), it’s a bigger shift: you won’t be using your perpetual licenses anymore because RISE is a subscription. Typically, SAP will give you credit for the value of your existing licenses to offset the RISE subscription fee (especially if those licenses are still under maintenance). During the transition, SAP may allow a dual-usage period (so you can run ECC until cutover to RISE). After that, your ECC license entitlement might be placed in retirement or suspension – meaning you can’t actively use those licenses in production once you’ve moved to RISE, unless you exit the RISE contract later and re-license. It’s essential to obtain clarity from SAP on any give-back requirements, as some RISE deals require you to terminate maintenance on your existing licenses (essentially relinquishing them) as part of the new agreement. Always understand the fine print to determine if your existing licenses can be reused, credited, or if they’ll remain unused during the subscription.

Q4: How does SAP’s “Digital Access” (indirect document) licensing work, and should we consider it?
A: Digital Access is SAP’s new model to handle indirect use in the S/4 era. Instead of requiring a named user license for every external user or system, SAP identifies certain business documents (such as Sales Order, Invoice, and Purchase Order) and charges licensing based on the number of those documents created or accessed by external systems. You can buy, say, a package of 100,000 documents, or negotiate an enterprise deal for unlimited documents (often priced as a percentage of your contract value annually). The idea is to simplify and reduce costs compared to the old method of licensing potentially thousands of external users. Whether you should consider it depends on your integration landscape: if you have a large number of non-SAP applications interacting with SAP, Digital Access can provide cost predictability and potentially lead to significant savings. SAP has at times offered promotions (like some free document counts or conversion deals to move to this model). If your indirect usage is minimal (e.g., just a handful of interfaces or low document volumes), you might choose to stick with named user licensing for those users/systems. The key is to assess the number of documents generated by your external processes. If you do opt in, negotiate a sufficient volume and include that in the contract so you don’t receive an unpleasant surprise later. And remember, even with Digital Access, you should periodically review usage – it’s possible to exceed your licensed document count if your business grows, which would require a true-up purchase.

Q5: What are some effective ways to reduce SAP licensing costs for an enterprise?
A: There are several strategies to manage or reduce costs:

• First, optimize your license mix: Ensure each user has the lowest-tier license that still covers their needs. This avoids overpaying for functionality not used. Many companies save 15-20% by cleaning up user assignments.
• Second, consider third-party support if you’re staying on ECC without new enhancements – companies like Rimini Street or others offer support at roughly half the cost of SAP’s maintenance. This does mean you won’t get new SAP updates, but if your system is stable, it can be a bridge to save money for a few years (especially until you’re ready to move to S/4).
• Third, negotiate multi-year and bundle discounts: SAP often offers significant discounts (50% or more off the list price) if you commit to a large purchase or a longer-term subscription. Just be cautious not to buy more than you need (avoid shelfware).
• Fourth, use SAP’s license audit as an opportunity: Rather than dreading SAP audits, prepare for them by doing your measurements. If you identify areas of non-compliance, address them proactively or negotiate a suitable arrangement. If you find unused licenses, consider terminating maintenance on those to save costs. Being on top of your usage data gives you a competitive advantage.
• Lastly, stay current on SAP’s licensing programs: SAP sometimes introduces new licensing models (like RISE or incentive programs for cloud transitions). Early adopters can sometimes benefit from introductory pricing or special terms and conditions. Engage with your SAP account team and user group community to hear about such opportunities. And always benchmark – knowing what similar companies are paying (if you can get that insight through networking or consultants) will strengthen your negotiating position to get the best possible deal.

Each of these approaches requires careful consideration of trade-offs (e.g., third-party support saves money but forfeits SAP updates).

However, a combination of license optimization, savvy negotiation, and strategic planning can significantly reduce your SAP Total Cost of Ownership (TCO) while maintaining compliance and agility.

Read about our SAP License Optimization Service.

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