Differences Between SAP ECC and SAP S/4HANA Licensing

Differences Between SAP ECC and SAP S/4HANA Licensing

SAP ECC and SAP S/4HANA have fundamentally different licensing models that can impact costs and compliance.

SAP ECC (ERP Central Component) relies on traditional perpetual licenses (capital expenditure with yearly maintenance) and a complex array of named-user types and module fees.

SAP S/4HANA, the next-generation suite, introduces more flexible licensing options, including cloud subscription models (operational expenditure), simplified user categories, and a new digital access model for external usage.

Understanding these differences is critical for enterprises to optimize license costs, plan their IT budgets, and avoid compliance risks under SAP’s evolving contracts.

Read Top 20 Things Every ITAM Professional Needs to Know About SAP S/4HANA License Management and Negotiations.

Overview: Traditional ECC vs. Modern S/4HANA Licensing

SAP ECC Licensing:

SAP ECC (part of the older SAP Business Suite) is typically licensed on a perpetual, on-premises basis.

Companies pay a one-time license fee for software and then annual support (maintenance) fees (usually around 20% of the license cost every year).

Each user must have a named user license, and additional fees apply for specific modules or functional packages (engines) deployed.

The model is largely CapEx-driven – a significant upfront investment in licenses and infrastructure, followed by ongoing maintenance and periodic upgrade projects.

Indirect usage (when third-party systems access SAP data) in ECC traditionally required additional user licenses, leading to potential “indirect access” fees if not managed.

SAP S/4HANA Licensing:

SAP S/4HANA offers a more flexible and modern licensing approach, aligned with its cloud-ready architecture. While on-premise S/4HANA can still be purchased via perpetual licenses + maintenance (similar to ECC), S/4HANA also provides subscription-based licensing for cloud deployments.

This subscription model shifts costs to operational expenses (OpEx) with recurring fees that often bundle software, support, and cloud infrastructure.

S/4HANA’s licensing is designed to be modular and scalable: organizations can start with core functionality and add modules or users as needed (“pay-as-you-grow”), rather than purchasing a huge suite upfront.

In addition, SAP S/4HANA introduced new metrics, such as Digital Access (licensing based on the number of documents accessed or created by external systems) and Full User Equivalents (FUE), to simplify license management in certain editions.

Overall, S/4HANA’s model supports cloud, on-premise, and hybrid deployments, providing enterprises with more options for consuming SAP software.

On-Premises vs. Cloud Licensing (CapEx vs. OpEx)

One of the biggest shifts from ECC to S/4HANA is the availability of cloud licensing:

• ECC – On-Premise, Perpetual: ECC is almost exclusively deployed on-premise. Licenses are bought outright (perpetual) and installed on the customer’s servers. Budget-wise, this entails a one-time capital expenditure for licenses and hardware, plus annual maintenance fees (~20% of the license price) for support and updates. For example, if a company spent $1 million on ECC licenses, it’d likely pay around $ 200,000 per year in support. Upgrades to new versions (such as ECC 6.0 enhancement packs) are optional and require project effort, as well as sometimes new license conditions, which the customer manages on their timeline.
• S/4HANA – Cloud Subscription: With S/4HANA, SAP offers cloud ERP options (such as S/4HANA Cloud public edition or RISE with SAP bundle) where the software is delivered as a service. In a subscription, the company pays an annual or monthly fee per user or resource metric, which includes the software license, hosting on SAP’s cloud (or a partner cloud), regular updates, and standard support. There is no large upfront license cost – instead, costs are spread over time. This turns ERP licensing into a predictable operational cost. The trade-off is that over a long period (e.g., 5-10 years), subscription costs can accumulate to more than a one-time purchase, but they also include continuous upgrades and cloud infrastructure. Crucially, S/4HANA Cloud subscriptions mean SAP handles the updates and maintenance behind the scenes, so companies always run the latest version without a big upgrade project. This represents a shift from ECC, where upgrades were typically customer-run projects (and often deferred due to cost and effort).
• Hybrid and BYOL: SAP also allows a hybrid approach – e.g., a company might keep some systems on-premise (using existing licenses) while deploying new S/4HANA modules in the cloud. SAP’s “Bring Your License (BYOL)” model even allows customers to use their on-premises S/4HANA licenses in cloud infrastructure. The key is that S/4HANA gives more deployment flexibility, and licensing adjusts accordingly (perpetual for on-prem, subscription for cloud). In ECC’s era, such flexibility was limited or nonexistent.

Cost Structure Comparison: In simple terms, ECC licensing = upfront license purchase + yearly maintenance + customer-run infrastructure, whereas S/4HANA Cloud licensing = regular subscription fee (including software, support, and cloud infrastructure).

For instance, an ECC Professional User might cost approximately $3,000 one-time, plus approximately $660 per year in support.

At the same time, an S/4HANA Cloud professional user might be roughly ~$2,000–$2,500 per year subscription (which already covers support and hosting).

Over a 5-year span, the ECC user would cost ~$3,000 + (5*$660) = ~$6,300 (plus the hardware/IT costs to host it), whereas the S/4HANA cloud user at $2,500/year would be ~$12,500 over 5 years about double, but with no on-prem infrastructure needed and always on the latest software release.

Companies must weigh capital expenditures (CapEx) against operating expenditures (OpEx) and the value of included cloud services when comparing these models.

Named User License Types – ECC vs. S/4HANA

Both ECC and S/4HANA require named user licenses for individuals accessing the system, but S/4HANA has updated and simplified the user categories:

• SAP ECC User Types: ECC contracts typically define a range of user license categories with different access levels. Common ECC user types (perpetual licenses) included Professional User (full access to all SAP modules and functionality), Limited Professional User (restricted to certain modules or activities), Employee (ESS) User (self-service tasks only, like time entry or HR self-service), Developer User (for ABAP developers and technical staff), and various industry-specific or specialized roles (Logistics User, Warehouse User, etc.). Each user license type had a different price. For example, an ECC Professional user license might list for roughly $3,000 one-time, a Limited Professional around $1,500, and an Employee Self-Service user a few hundred dollars. Every unique login that consumes SAP functionality requires a license to be assigned, and companies often need to analyze roles to determine the appropriate (and least costly) license type for each employee.
• SAP S/4HANA User Types: S/4HANA’s on-premise named user licensing consolidates roles into fewer, broader categories to reduce complexity. The primary S/4HANA user licenses are typically categorized as Professional Use, Functional Use, Productivity (or Self-Service) Use, and Developer. Essentially, these correspond to the old categories but with clearer definitions:
  • Professional Use – full unrestricted access across all modules (similar to ECC Professional, and still the most expensive tier).Functional Use – a mid-tier license for users who work in a specific functional domain or a limited set of modules (analogous to ECC’s Limited Professional). For example, a sales clerk or a purchasing agent who only works in Sales or Procurement processes can be a Functional user, costing less than a Professional. Productivity Use – a low-level license for users who perform very limited, task-specific, or self-service activities (similar to an ESS or occasional user in ECC). These might cover employees who only enter their data or perform simple workflows (like approvals or timesheets).Developer – a technical user license for developers/administrators, providing broad system access for configuration and coding but intended for non-production use (in practice, many developers also need a Professional license if they execute transactions in production for support or testing). Developer licenses in S/4HANA are often priced on par with or slightly below Professional, reflecting their powerful access.
  The S/4HANA user categories are hierarchical; a Professional user can perform all the tasks that a Functional user can, and so on. This means that organizations should assign the lowest tier that meets each user’s needs to control costs. This simplification from dozens of ECC user types down to a handful in S/4HANA makes license management a bit easier and more standardized. It also forces a re-mapping: e.g., many users who were “Limited Professional” in ECC will be “Functional” users in S/4HANA; ESS users in ECC might map to “Productivity” users in S/4.

License Counting – Full User Equivalents (FUE):

In SAP S/4HANA Cloud (and the RISE with SAP offering), SAP introduced Full User Equivalents (FUE) as a metric for sizing and bundling user licenses.

Instead of buying a fixed number of each user type, customers purchase a certain number of FUE credits. Different user types “consume” a fraction of an FUE based on their scope:

• A high-level user (Professional/Advanced) may be counted as 1.0 FUE each.
• A Functional/core user might count as, say, 0.5 FUE.
• A self-service or light user might be counted as 0.1 FUE (for example).

This allows for mixing various user roles under a single pool of FUE licenses. For instance, 100 light users at 0.1 FUE each would consume 10 FUEs, whereas 100 professional users at 1.0 FUE each consume 100 FUEs.

The organization can allocate users flexibly without over-purchasing specific license types. It simplifies tracking because you’re managing one metric (FUE) instead of separate counts for each category.

In ECC, there was no equivalent concept – you had to count each named user by type. S/4HANA’s FUE model (used primarily in cloud subscriptions) offers more flexibility, though customers must carefully analyze user roles to estimate FUE needs.

It also means during contract negotiation, you might convert your existing named users into FUE credits if moving to a RISE with SAP subscription. (For S/4HANA on-premise, named user licenses are still used individually, as in ECC, just with the new categories above).

Indirect Access vs. Digital Access

Indirect access – a notorious topic for SAP ECC – refers to scenarios where users or applications that don’t directly log in to SAP still interact with SAP data.

In ECC’s licensing model, any use of SAP functionality or data required a named user license, even if it was via a third-party system.

This led to confusion and some high-profile audit penalties, where SAP charged customers for “indirect users” (for example, if a Salesforce CRM system queried SAP ERP data, SAP might insist each Salesforce user needed an ECC license).

Companies often struggled with this, as integrations could inadvertently trigger licensing compliance issues.

SAP S/4HANA Digital Access:

To address this, SAP introduced the Digital Access licensing model for S/4HANA. Instead of requiring a named user for every indirect usage, Digital Access allows licensing of the outcomes of digital integration – specifically, the creation or access of certain business documents in the SAP system by external systems.

SAP defines 9 document types (such as Sales Order and Invoice) that are counted when created indirectly. Customers can purchase a Digital Access license based on volume (e.g., packs of documents) to cover these scenarios.

The idea is to provide a more transparent, activity-based cost for third-party and IoT integrations, rather than counting technical users.

Key difference:

Under ECC/Indirect Access, if an external system generates 1,000 sales orders in SAP, you may need to license each external user or a blanket user, potentially incurring costs for many named users.

Under S/4HANA Digital Access, you would simply license the 1000 sales orders (documents) via a predefined rate. This shifts the model from user-counting to document-counting.

In theory, it can prevent unexpected licensing bills because you can estimate the number of documents your interfaces generate. SAP has even offered some incentive programs for existing customers to adopt Digital Access (like exchanging some old user licenses for a batch of document licenses).

Implications:

S/4HANA’s approach reduces the “indirect use trap” risk, but it introduces a new metric to monitor. Companies need to track document usage to ensure they stay within the bounds of their purchased licenses.

They also have a choice: S/4HANA can still be licensed in the traditional way (counting indirect users via a named user called a “Composite or Indirect User”) or via Digital Access.

It requires a conscious decision when migrating to S/4HANA on how to handle integrations.

The positive is greater clarity – you pay for what’s being consumed – and potentially lower audit risk, since SAP auditors now focus on document counts for indirect usage rather than trying to identify unlicensed users in external systems.

Modular Licensing and Engines

With ECC, the licensing model often involved purchasing the base ERP package and then adding on modules (engines) for specific functionalities. For example, core ECC included Finance, HR, Logistics, etc..

Still, if you wanted advanced warehouse management, supply chain planning (APO), or customer relationship management (CRM), these were separate products or modules, each requiring their license metrics (some based on users, some based on metrics such as the number of orders, revenue, etc.).

This made ECC licensing a complex mix of user licenses and package licenses, measured in diverse ways (from employee headcount to database size to transactions per year, depending on the component).

It was easy to either not buy something you needed (compliance risk) or over-buy modules that ended up underutilized.

SAP S/4HANA’s strategy has been to simplify and bundle many capabilities in the core product, while still offering modular extensions:

• Embedded Functionality: S/4HANA incorporates features that were previously separate. For example, S/4HANA comes with embedded analytics (which in ECC might have required SAP BW or separate BI tools), and some basic logistics add-ons like EWM (Extended Warehouse Management) and TM (Transportation Management) have versions integrated into the S/4 core (limited scope versions at no extra license cost). This means S/4HANA customers might not need to license as many separate products for equivalent functionality, if the embedded version meets their needs.
• Modular Add-Ons: For specialized needs, S/4HANA still uses engine licensing, where you only pay for what you use. For instance, advanced Cash Management, Treasury and Risk Management, or Trade Compliance in S/4 may be licensed as add-ons, each with its metric (e.g., the number of bank accounts managed for Treasury). The difference is that the pricing is designed to be more granular and flexible, allowing you to activate a module as needed. SAP often allows a trial or free use period for some new S/4HANA modules to encourage adoption, under the initiative that customers “grow into” S/4HANA capabilities.
• Third-Party Integration Costs: In ECC, connecting non-SAP systems might involve additional SAP interface licenses or simply risk indirect use charges. In S/4HANA, aside from Digital Access, SAP also offers cloud integration services and the SAP Business Technology Platform. Licensing those is separate, but they can facilitate building extensions or integrations without as many ECC license implications. Essentially, S/4HANA’s ecosystem is more open to extensions (e.g., using APIs), and the licensing model attempts to accommodate this by offering digital access or platform subscriptions, rather than penalizing the use of non-SAP tools.

For organizations, the takeaway is that S/4HANA licensing can be more modular yet more inclusive. You might not need to license certain things you paid extra for in ECC (because S/4 includes it), but you might choose to license new modular components that weren’t available before.

It’s essential to perform a gap analysis: list the functionality you use in ECC, along with the corresponding licenses, and determine how those map to S/4HANA.

Some ECC licenses can be retired or converted, while new ones might be needed for S/4 (for example, the SAP HANA database itself, which we cover next).

Database and Infrastructure Considerations

A subtle but crucial licensing difference: the database and underlying technology stack.

• Database Licensing: SAP ECC could run on various third-party databases (Oracle, SQL Server, IBM DB2, etc.). If a customer chose a non-SAP database, they either licensed it directly from that vendor or through SAP (SAP would charge a % uplift on the ECC license for the database usage, known as SAP Application Value). In contrast, SAP S/4HANA is only compatible with the SAP HANA database. This means if you move to S/4HANA on-premise, you must license HANA. SAP offers a couple of ways:
  • A HANA runtime license restricted to S/4 (cheaper, cannot use the database for non-SAP apps),
  • or a full HANA enterprise license (allows broader use of the in-memory database).
    Either way, database costs become part of the SAP license conversation, whereas with ECC, they might have been a separate line item with another vendor. For S/4HANA Cloud, the database is included in the subscription – you don’t separately see a HANA license, it’s part of the service. But on-premise adopters should budget for HANA licensing (which is often based on memory size, e.g., the amount of GB of HANA memory used can determine the price).
• Infrastructure and Hosting: Under ECC, since it’s on-premise, the customer covers all hardware and infrastructure costs (servers, storage, backups, disaster recovery, etc.) outside the SAP license. With S/4HANA Cloud, the infrastructure is bundled into the subscription fee. This is not a “license” cost per se. Still, it affects how you compare the economics – S/4 subscription might look more expensive than just SAP license fees, but remember it also covers hardware, data center, and often faster provisioning of systems (like quick spin-up of test environments, which in ECC you’d pay for hardware or cloud IaaS separately).
• Upgrades and Enhancements: In ECC, staying current meant planning for upgrades (which are included in support entitlement), but the effort and any new functionality licensing were the customer’s responsibility to manage. In S/4HANA, particularly cloud, upgrades are automatic and included. On-prem S/4 still requires you to apply upgrades or new releases, but SAP’s maintenance schedule for S/4HANA is more aggressive (yearly feature updates, etc.). There is also an S/4HANA compatibility license concept – SAP temporarily allows S/4HANA customers to use certain classic ECC functionalities (such as legacy finance or HR modules not yet migrated to S/4) at no extra cost for a limited time, to ease the transition. This type of provision is something to be aware of in S/4 contracts (not typically an issue in ECC days, where everything used was part of ECC).

In summary, moving to S/4HANA shifts some costs (from the database to SAP HANA, and possibly from infrastructure to SAP if it is in the cloud) but can reduce others (eliminating the need for separate database licenses or certain add-ons).

Licensing and contracting with SAP now covers more of the stack than before, which can simplify vendor management but also means you’re more tied into SAP’s pricing for those components.

Cost Comparison Examples

Below are illustrative examples comparing the licensing cost structure of ECC vs S/4HANA in real-world scenarios.

These are simplified for clarity (actual negotiations can yield different discounts), but they highlight how the models differ:

Example 1: Small Business, 10 SAP users (basic financials and sales):

• ECC 6.0 (On-Premise): The company purchases 10 named user licenses (perhaps 5 Professional and 5 Limited). The upfront license cost might be roughly $50,000 (for the ERP software and user licenses), and they pay approximately $11,000 per year in support. They also require a small server to run it and a database license (such as SAP’s ASE or SQL Server). Over three years, their total cost might be approximately $50,000 + $33,000 in support, plus hardware and database costs. They own the licenses perpetually, even if they stop paying maintenance (though then they lose upgrades/support).
• S/4HANA Cloud (Subscription): The company opts for SAP S/4HANA Cloud (public). There is no upfront license payment; instead, they sign a subscription for $20,000 per year, which includes 10 users, cloud infrastructure, and support. After three years, they have paid $ 60,000. They’re always on the latest version and don’t have to buy servers or a DB separately. If they decide to stop after 3 years, they have no software assets (access would end, since it’s a service).

Example 2: Large Enterprise, 500 SAP users (broad ERP scope: finance, logistics, HR):

• ECC (On-Premise): The company may have an initial license contract, such as $1 million for SAP ERP licensing (covering the necessary modules and supporting approximately 500 users of mixed types). Annual maintenance would be approximately $ 200,000. They run the system in their own data center – let’s estimate $ 150,000 per year in infrastructure and IT personnel costs to support it. Over the next 5 years, they’ll pay $1M + (5 * $200k) = $ 1 M in SAP fees, plus approximately $750k in internal infrastructure costs. They may also incur additional license costs if they expand usage (e.g., buying extra module engines or more users) and must manage indirect access risk to avoid surprise fees.
• S/4HANA (RISE Private Cloud or similar): The enterprise chooses a RISE with SAP subscription, which bundles S/4HANA licenses, hosting, and basic AMS services. SAP might price this around $1.2 million per year for a 5-year term for 500 users and equivalent scope (this number would include the HANA database, all core modules, and cloud operation). Over 5 years, that’s $6M total. This is higher than the ECC scenario in raw dollars, but it covers all infrastructure and the continual upgrades. Additionally, SAP might give credit for the customer’s existing ECC licenses (via conversion programs) to reduce the subscription price. The company benefits from not having to execute a major upgrade project or maintain data center hardware, but they pay a premium for the cloud convenience and SAP’s services.

Note: Actual SAP pricing varies greatly. Enterprise agreements often come with substantial discounts off list price (50% or more), and the exact numbers depend on negotiations, bundles, and whether it’s a net-new purchase or a conversion from ECC. The examples above are for illustration. What remains true in general is that S/4HANA’s subscription can have higher long-term recurring costs, but offers more value bundled (infrastructure, updates), whereas ECC’s model has higher upfront costs and more ancillary expenses left to the customer (but you have more control over how and when you spend on hardware, upgrades, etc.).

Recommendations

• Map Your Users to New License Types: Conduct an internal audit of all ECC-named users and map them to S/4HANA roles. Many users can be downgraded to cheaper license categories in S/4HANA if their scope is limited. Rightsizing before migration helps avoid overpaying for S/4 licenses you don’t need.
• Evaluate Deployment and Pricing Options: Decide early whether an on-premises S/4HANA or a cloud subscription (e.g., RISE with SAP) better fits your strategy. Compare the 5-10 year total cost of ownership. Leverage SAP’s conversion programs – SAP often provides credit for existing ECC licenses if you transition to S/4HANA. Use these to reduce duplicate spending.
• Negotiate Digital Access Carefully: If you have many integrations, consider opting into SAP’s Digital Access licensing model. Negotiate a sufficient document quota (SAP has offered promotions like a certain number of free documents in the past). If you opt for a named-user license for indirect use, be explicit with SAP on how third-party systems will be covered to avoid future disputes.
• Take Advantage of Bundled Functionality: S/4HANA might include modules or features your company previously didn’t license due to cost (e.g., embedded analytics or basic SCM functions). Review the S/4HANA scope to utilize what you’re entitled to, potentially eliminating the need for some third-party tools. Conversely, be aware of which S/4HANA add-ons incur additional costs, so you’re not caught off guard.
• Monitor License Utilization: Whether staying on ECC for now or transitioning to S/4, strengthen your Software Asset Management (SAM) practices. Use SAP’s License Administration Workbench (LAW) and user measurement reports regularly. In S/4HANA, monitor FUE consumption or document counts, if applicable, for those models. Proactive tracking will help avoid compliance issues and identify opportunities to drop unused licenses.
• Plan for HANA Licensing: If you opt for on-premises S/4HANA, remember to budget for the SAP HANA database. Engage SAP or partners to size your HANA memory needs accurately – this can be a significant cost element. For cloud, ensure your contract clearly states that HANA and related platform services are included, to avoid surprise limitations.
• Keep Contracts Flexible: Try to include clauses that allow some license swapping or growth. For example, as you roll out S/4, you might discover you need more Functional users and fewer Professional – a friendly contract can let you convert some licenses. Similarly, cloud contracts should have clear terms for adjusting user counts annually. Negotiate these terms up front.
• Stay Informed on SAP Policy Changes: SAP licensing is not static. SAP may introduce new license types or alter policies (for instance, phasing out certain user types or adjusting the digital access model). Keep in touch with SAP account representatives or independent advisors, especially through 2025–2027, as many ECC customers transition. An upcoming change could provide an opportunity to save or require action to maintain compliance.
• Engage Expert Help if Needed: Don’t hesitate to involve a software licensing expert or legal advisor when negotiating your S/4HANA contract. The differences in models (and the high stakes of enterprise license costs) mean that small contract details can have big dollar implications. Experts who understand SAP’s pricing structure can help craft a better deal and find hidden risks or opportunities in the terms.

FAQ

Q: Do I need to buy all new licenses for SAP S/4HANA if I already have ECC?
A: Not necessarily. SAP provides license conversion programs for existing ECC customers. You can “trade-in” your ECC licenses for S/4HANA licenses, often receiving credit value for the investment you’ve already made. In a contract conversion, SAP will map your old licenses (users and packages) to S/4HANA equivalents. It’s not 1:1 – you will likely end up with a different mix of licenses – but you do not have to pay full price from scratch. The key is to negotiate the conversion credit and ensure you’re not paying twice for overlapping rights. Always involve your SAP account team early to understand your options, and remember that moving to S/4 may still require some incremental spend (for new functionality or the HANA database).

Q: How is SAP S/4HANA’s subscription pricing structured – what am I paying for in a cloud subscription?
A: A cloud subscription for S/4HANA typically includes: the software licenses for the S/4HANA modules you’re using, the underlying HANA database, the infrastructure (servers, storage, network) to host it in SAP’s cloud (or hyperscaler if RISE), and standard support & maintenance. You pay per user (often categorized by type, like Professional or Functional) and sometimes a base fee for the environment. For example, you might pay a set annual fee that covers up to X users and a specific system size. The pricing can scale with metrics such as the number of users, volume of transactions, or revenue, depending on the terms negotiated. In short, the subscription is all-inclusive for running S/4HANA, which is why the sticker price may seem high compared to traditional licenses – it covers things you used to handle separately (hardware, database, support, etc.). Always break down a subscription quote to see how much is allocated to software, infrastructure, and services so that you can compare it with on-premises costs.

Q: What is SAP’s “digital access,” and do we have to adopt it when we move to S/4HANA?
A: Digital Access is SAP’s new model for licensing indirect usage in S/4HANA, where you license the system by the number of documents (such as sales orders, invoices, etc.) created or accessed by external systems, rather than by named users. Adopting Digital Access is optional – you can still stick with the traditional approach (named user licenses for any access, even indirect). However, SAP has encouraged customers to switch by offering conversion credits and simplifying the rules. Many new S/4HANA contracts default to Digital Access unless you negotiate otherwise. It can be beneficial if you have many non-SAP applications interfacing with S/4, as it clarifies costs upfront. You’ll need to estimate the number of documents those systems generate. If that number is huge, you might compare costs between the two models. It’s wise to assess your integration landscape; in straightforward cases, Digital Access often reduces audit risk and streamlines licensing.

Q: Are S/4HANA’s user licenses more expensive than ECC’s?
A: The price per user can be higher for S/4HANA, especially for cloud subscriptions. At list price, an S/4HANA Professional user subscription might run in the low thousands of dollars per year, whereas an ECC Professional user was a few thousand one-time (plus annual support). However, comparing them directly is challenging: the S/4 user subscription includes support and possibly additional capabilities. On the on-premise side, SAP’s price list for S/4HANA named users is comparable to ECC for similar user categories (a Professional user license in either might be approximately $ 3,000 list). SAP simplified and removed some old user types – for instance, the old “Limited Professional” category is essentially replaced by the “Functional” user type in S/4. If you had a lot of cheaper ECC user licenses (like ESS users at ~$300 each), those might map to slightly different models in S/4 (Productivity users or counted via FUE). Overall, you can expect to invest at least as much in user licensing for S/4HANA as for ECC, if not more, unless you significantly optimize and reduce the number of users. The advantage is that S/4’s user model can be more flexible (especially with FUE credits, one can accommodate changing roles without buying new licenses every time).

Q: What are the biggest licensing risks or “gotchas” to watch out for when transitioning to S/4HANA?
A: Several things:

Audit and Compliance: Don’t assume that moving to S/4HANA means SAP won’t audit you. They will, albeit the focus might change. You’ll need to demonstrate compliance with whatever new metrics (users, FUEs, documents) you agreed to. Ensure that user lists are cleaned up, users are properly classified into the new types, and license reports are regularly run in S/4. The good news is that if you do it right, S/4HANA’s cleaner licensing can reduce the gray areas that audits love to exploit.

Underestimating Digital Use: If you move to digital access, keep an eye on document counts – it’s easy to exceed your licensed volume if, say, an e-commerce site suddenly creates a surge of orders.

Shelfware in New Forms: Just as with ECC, buying too many S/4 user licenses or modules “just in case” can waste budget. The FUE model can help avoid this, but only if usage is accurately forecasted.

Contract Rigidities: Some companies sign a 5-year S/4HANA SaaS contract that doesn’t allow for decreasing users or changing the module mix – then, if their business needs drop, they’re stuck overpaying. Negotiate flexibility where possible.

Legacy Use Rights: When converting, ensure your contract explicitly covers any ECC functionality you still need. Once you switch to S/4, using the old ECC system beyond a certain timeframe or for certain functions might require permission (SAP typically grants legacy usage rights for a transition period – make sure you have those if you plan to run ECC in parallel or keep historical access).

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