ECC to S/4HANA Migration Licensing: All Options Explained

ECC to S/4HANA Migration Licensing

Introduction: Why SAP ECC to S/4HANA License Conversion Matters

SAP ERP (ECC) is nearing end-of-support, with mainstream maintenance ending in 2027 (extended support possible to 2030).

This looming deadline makes planning an SAP S/4HANA migration a pressing priority for enterprises.

At the same time, SAP is heavily promoting its “cloud-first” agenda – in particular, the RISE with SAP subscription offering as the default path for customers moving off ECC.

Many CIOs and IT leaders are understandably skeptical of vendor-driven cloud deals and want a clear-eyed view of their choices. Read our overview of SAP S/4HANA Migration Contracts & Negotiation.

Choosing the right SAP ECC to S/4HANA license conversion approach is as critical as the technical migration. The licensing model you select will dictate not only costs but also flexibility, risk, and your strategic control over the ERP landscape.

With millions of dollars at stake, picking the wrong S/4HANA migration licensing options could lead to overspending or being locked into an unfavorable contract.

Below, we break down all the options – on-premise, RISE, SaaS, and more – explaining their pros, cons, and cost implications so that you can plan a smart S/4HANA transition without vendor spin.

SAP S/4HANA Migration Licensing Options

When moving from ECC to S/4HANA, you have several licensing paths. The main options include:

• On-Premise S/4HANA (Perpetual License + Maintenance): Convert your existing ECC licenses to S/4HANA licenses and continue with a perpetual licensing model. You own the software and pay annual maintenance, running S/4HANA on your own infrastructure (or cloud infrastructure of your choice) with full control.
• RISE with SAP (Subscription Model): A bundled subscription service where SAP provides S/4HANA software licenses, cloud infrastructure (private cloud hosting on SAP or hyperscaler data centers), and basic managed services under one contract. You pay a recurring subscription fee (OpEx) instead of owning licenses.
• SAP S/4HANA Cloud (Public SaaS): A multi-tenant Software-as-a-Service version of S/4HANA hosted by SAP. Licensing is subscription-based per user (no perpetual licenses). It offers standardized processes with faster innovation cycles, but with limited customization compared to other options.
• Private Cloud Hosting (Customer or Partner Managed): A middle-ground approach where you deploy S/4HANA in a private cloud environment (e.g., on a hyperscaler or SAP HEC), but licensing can be either perpetual or subscription. For example, you might bring your own perpetual S/4HANA licenses to a cloud infrastructure, or use a partner’s subscription offering. This provides cloud benefits without fully signing up for SAP’s all-in-one RISE program.

Each of these SAP S/4HANA migration paths has a different cost structure and contractual implications.

In the sections below, we dive deeper into each option and compare them to help you determine the best fit.

Staying On-Premise: S/4HANA Perpetual Licensing

One route is to stick with a traditional on-premise deployment of S/4HANA using perpetual licenses. This means you convert your ECC licenses to S/4HANA equivalents and continue under a similar licensing model as before.

SAP license conversion credits: SAP provides mechanisms to map and credit your existing ECC investments toward S/4HANA licenses.

In practice, this can happen via a product conversion or contract conversion. With a product conversion (where available), you keep your existing SAP contract and swap ECC software components for S/4HANA versions one by one.

All your negotiated discounts and terms carry forward, and SAP often grants a 100% license credit for equivalent functionality – essentially, you don’t pay again for modules you already own.

If a one-to-one swap isn’t feasible, a contract conversion lets you trade in your ECC licenses for S/4HANA licenses

under a new contract, giving credit based on the net value of what you owned. In both cases, the goal is to protect your prior investment: you shouldn’t have to repurchase ERP capabilities you’ve already paid for.

With on-premise S/4HANA, you continue to pay annual support maintenance fees (typically ~20-22% of the license value) to SAP. Your total cost over time is largely this maintenance, since the initial license outlay is behind you (aside from any net new licenses for additional users or functionality).

While maintenance is a significant cost, it often grows at a predictable rate (inflation or index adjustments) and can be easier to forecast than cloud subscription hikes.

Key advantages of staying on-premises include flexibility and control. You can customize S/4HANA extensively, just as you did with ECC, without the constraints of a SaaS environment. You decide when to upgrade or apply patches, aligning with your business schedule rather than a vendor’s timetable.

Existing contractual terms (discounts, usage rights) remain in effect if you did a product conversion. For example, if you previously negotiated special user license types or a cap on indirect usage fees, those carry over. This path also inherently enables dual-use rights during the migration.

Because you maintain your ECC contract during the conversion, you are typically allowed to run ECC and S/4HANA in parallel for a transition period under the same licenses. This avoids paying double while switching systems (more on dual-use rights later).

However, the on-prem approach means you are responsible for infrastructure and operations. Whether you keep physical servers or use cloud IaaS, those hosting costs and IT management duties are on you (outside of SAP’s purview).

Perpetual licensing is also less “elastic” – you pay for a certain number of users upfront. If your user count drops or you have shelfware, you generally can’t get money back (though you can stop paying maintenance on unused licenses in some cases, it’s often tricky).

Also note, SAP’s newest innovations may appear first in cloud editions; on-prem customers might have to wait or do more integration to use certain cloud-only services.

Despite these considerations, SAP on-premise vs cloud deployment remains a viable debate – owning licenses gives you long-term control and potentially lower TCO if you efficiently use what you bought.

Read our commercial tips, Negotiation Tips for Your S/4HANA Conversion Contract (On-Prem or RISE).

RISE with SAP Licensing Model Explained

RISE with SAP is an offering introduced by SAP to accelerate cloud adoption.

Under RISE, instead of buying S/4HANA licenses and running them yourself, you purchase an all-in-one subscription that includes the S/4HANA software, infrastructure, and selected services in one package. Essentially, SAP becomes both your software vendor and your cloud service provider.

The RISE with SAP subscription model covers: S/4HANA software (typically the Private Cloud Edition, which is functionally equivalent to on-prem S/4HANA), hosting on SAP’s chosen cloud (e.g., hyperscalers like AWS/Azure but managed by SAP), system maintenance and upgrades, and basic support services.

You no longer pay a separate maintenance fee – support is bundled. This is an OpEx model (monthly/annual fee) rather than a CapEx license purchase.

A key aspect of RISE licensing is the Full User Equivalent (FUE) metric. Instead of the traditional named-user licenses in dozens of categories, SAP consolidates them into a unified metric.

Different user types and usage levels are translated into several FUEs. For example, a heavy “Professional” user might count as 1.0 FUE, a lighter “Employee” self-service user might be 0.1 FUE, etc. Your subscription is priced based on the total FUEs purchased.

This can simplify user licensing on paper, but it requires analyzing your user base carefully; misestimation can cause over-licensing or surprise costs if you exceed FUE counts. SAP typically helps convert your existing user licenses into FUEs during the contracting process.

RISE vs on-prem S/4HANA – pros and cons:

The RISE with SAP model offers a single point of convenience. You have a single SLA with SAP covering application and infrastructure. It can reduce the internal effort of managing servers, backups, and technical upgrades – SAP handles those (though you still manage application configurations and business processes).

RISE also includes some extras like baseline cloud platform services (SAP may provide credits for SAP Business Technology Platform, and other tools like SAP Signavio or SAP Ariba starter packs, depending on the deal).

From a risk perspective, RISE can simplify compliance since SAP sizes and provides the systems, potentially reducing indirect usage exposure if everything runs under SAP’s umbrella.

However, cost and lock-in are major considerations.

RISE subscriptions often carry a premium. Over a 5- or 7-year period, many companies find the total cost in subscription fees is higher than if they had stayed on-premise with existing licenses – especially after any initial RISE discounts expire.

You are essentially renting what you previously owned. Additionally, when moving to RISE, you typically surrender your old ECC perpetual licenses.

In a contract conversion, SAP will give you credits for your ECC license value to offset the RISE subscription price (often this comes as a discounted first-year rate or other incentives).

But those perpetual licenses usually cannot be used productively once you sign onto RISE – they’re put on ice. If you ever decided to exit RISE and go back to on-prem, you would need to reactivate or repurchase licenses (unless you negotiate a fallback clause). This contractual lock-in means less flexibility if you change strategy.

Another concern is control. While RISE’s S/4HANA private cloud edition does allow full customization (unlike the public SaaS, you can implement custom ABAP, mods, and so on), SAP dictates certain aspects like the cloud environment and upgrade schedule (usually, you get a say in timing, but SAP will enforce that you stay within supported versions).

You also depend on SAP for the performance of the underlying infrastructure – some customers have experienced challenges in responsiveness or support resolution since everything is funneled through SAP.

In summary, RISE offers a faster path to the cloud with less technical overhead, but it can be more expensive in the long run and gives SAP significant control over your ERP environment. Enterprises must weigh these trade-offs carefully, rather than assuming SAP’s subscription is the only path.

S/4HANA Cloud (Public SaaS) vs Private Cloud vs On-Prem

How do the licensing and deployment models compare across S/4HANA Cloud (public SaaS), private cloud options (like RISE or similar), and on-premise?

The table below summarizes key differences:

Each model has its niche. S/4HANA Cloud (public edition) might suit companies that want a pure SaaS ERP with minimal IT footprint and are willing to adopt SAP’s standard best practices with little variation.

On-premise (or customer-managed in private cloud) is often preferred by large enterprises with complex processes requiring heavy customization, or those aiming to maximize cost control by leveraging existing licenses.

RISE with SAP sits in between – giving you cloud infrastructure and managed service convenience, while still allowing a customized single-tenant S/4HANA, but at the cost of a subscription commitment.

Hybrid & Phased Migration Licensing Scenarios

Not every organization will flip the switch from ECC to S/4HANA overnight.

Many pursue a phased migration – for example, running ECC and S/4HANA in parallel during a pilot, or migrating business units in waves. Licensing during a hybrid ECC/S4 period is tricky and must be handled strategically to avoid unnecessary costs.

SAP dual-use rights come into play here. Dual-use means you are allowed to use both the old ECC system and the new S/4HANA system concurrently for a temporary period without paying twice for licenses.

Under a product conversion approach, dual-use is inherently granted: the users and modules you converted can be used in both environments until you fully cut over.

However, if you do a contract conversion or move to RISE (where technically you start a new contract), dual-use rights are not automatic – you must negotiate them.

SAP’s standard policy has evolved, but as of now, customers can often get 6-12 months of dual usage for free if it’s agreed upon up front in the migration deal. Always ensure this is documented in your contract or RISE agreement.

Risks of double-paying during transition: Without dual-use provisions, you could end up paying maintenance on ECC and subscription for S/4HANA simultaneously for the same users. For instance, if you keep ECC running for reporting or fallback while S/4 is live, SAP might consider that two productive systems.

The cost impact can be huge – essentially doubling your ERP cost during the overlap.

To avoid this, plan the overlap period carefully and align with SAP on license usage. It may be worth timing contract changes (such as terminating ECC maintenance) to coincide closely with the S/4 go-live date, to minimize any gap in double payments.

Some tips for hybrid scenarios:

• Negotiate dual-use rights explicitly. Get SAP’s sign-off that for X months, you can run both environments for migration purposes without extra license fees. If you have global rollouts, you might need a longer overlap; make the case based on project timelines.
• Don’t over-provision users in both systems. Ideally, as users move to S/4HANA, they are removed from ECC. If you keep full ECC user licenses active “just in case,” you may get flagged in an audit. Use temporary project licenses if needed or phase the license transition.
• Maintain only what’s necessary in the old system. After migrating certain modules or divisions to S/4, you might be able to drop some ECC components from maintenance (if allowed) to save costs. Be mindful that SAP often bundles maintenance at the contract level, so reductions might not be straightforward – but it’s worth exploring.
• Plan for read-only access if needed. Many companies maintain the ECC system’s accessibility for historical data after going live on S/4HANA. If it’s read-only and not production transactional use, negotiate with SAP whether that requires a license or can be covered under your S/4 licenses. Sometimes SAP will permit an archived instance access without a full license if no active use.

The bottom line: a phased SAP S/4HANA migration path can be smooth from a licensing perspective if proactively managed. Leverage SAP’s own policies (and push where needed) so you aren’t penalized for taking a safe, staged approach to migration.

Cost Implications of Each Licensing Option

Cost is often the driving factor in licensing decisions. At first glance, SAP perpetual license vs subscription models can be hard to compare, so it’s crucial to evaluate the total cost of ownership (TCO) over a multi-year period.

Below is a comparison of typical cost elements over a 5-year horizon:

Hidden costs to consider in any scenario: The migration project itself is a major cost (often equal to 1x-3x the software costs in consulting and internal effort) – this isn’t directly a licensing cost, but it affects ROI.

Data volume and storage: In cloud models, if your database size or throughput exceeds certain thresholds, SAP may charge extra, or you may need higher subscription tiers. Digital Access (Indirect Use): S/4HANA introduced a new licensing approach for indirect usage (documents created by non-SAP systems).

If you haven’t already addressed this under ECC, moving to S/4HANA might surface new costs for things like third-party integrations, printers, or e-commerce platforms accessing SAP data.

SAP has offered digital access licenses and sometimes promotional credits during conversions – be sure to negotiate how indirect use will be licensed to avoid surprise bills.

Finally, compliance and true-up risks remain in all models – regular license audits can occur, so budget some contingency for any gaps identified after you go live on S/4 (especially if your usage grows or differs from initial assumptions).

In summary, S/4HANA licensing costs in 2025 and beyond will depend greatly on your chosen path.

A careful TCO analysis of perpetual vs subscription for your specific situation is essential. Don’t just look at the Year 1 project, the costs out 5+ years, including all ancillary expenses, to truly compare apples to apples.

Negotiating S/4HANA Migration Licensing Contracts

No matter which option you lean toward, remember that SAP migration contract negotiation can significantly improve your position.

SAP is eager to move its customer base to S/4HANA (preferably in the cloud), and that leverage can be used to your advantage.

Here’s a checklist of negotiation levers and strategies for an ECC to S/4HANA migration:

• Maximize SAP license conversion credits: Push for the highest possible credit for your existing ECC licenses when converting to S/4HANA. Aim for a 100% like-for-like credit on functional equivalents. Highlight the maintenance fees you’ve paid for years – SAP should recognize that value in your new deal.
• Avoid forced license upgrades: SAP may claim that certain ECC user types or engines need to be “upsized” to more expensive S/4 versions. Challenge this. If you had 500 Professional users in ECC, you shouldn’t have to suddenly pay for 500 Enterprise Management Professional users at a higher price unless there’s new functionality. Insist on retaining equivalent license types and quantities whenever possible. Do not let the migration become an upsell opportunity for SAP to sell you things you don’t actually need.
• Negotiate dual-use rights for phased migrations: As discussed earlier, get a written agreement for dual-use periods. If your migration will take 12 months, ensure you have at least that long where ECC and S/4 can coexist without extra fees. This includes clarifying the status of your ECC maintenance during the overlap – possibly you continue paying it but are allowed concurrent use, or if you move to RISE, maybe a grace period where ECC can run read-only. The key is to avoid paying double and to have the flexibility to roll back if something goes wrong during the go-live process.
• Secure price protections in subscriptions: If you opt for RISE or SaaS, lock in pricing terms beyond the initial contract period. Negotiate caps on renewal increases (for example, no more than a 5% increase year-over-year after the initial term) or, even better, pre-negotiate renewal rates. Be wary of agreements that give a great first 3-year price only to jump dramatically later. Also, try for the ability to true-down in case your user count drops (so you’re not stuck overpaying for unused capacity).
• Leverage RISE vs on-prem in negotiations: Engage SAP on multiple fronts – get quotes for both an on-prem S/4HANA conversion and a RISE subscription. Pit them against each other. Often, SAP’s cloud sales team and on-prem license team are separate; by evaluating both, you can create competition. For instance, if the RISE offer is too costly, show interest in staying on-prem – SAP might improve the RISE discount. Conversely, having a RISE offer can be used to negotiate a better maintenance cap or conversion deal on the perpetual side. Use the fact that you have options to get concessions, whether it’s additional free user licenses, extended support, or lower fees.
• Don’t forget indirect access and future needs: As part of your contract negotiation, clarify how new S/4HANA licensing terms (like digital access documents or new cloud services) will apply. Negotiate some free allotment of digital access documents or a discounted package if you suspect high indirect usage. Also consider inserting clauses that allow you to adopt new SAP innovations (e.g., new modules, cloud services) at predetermined discounts, so you’re not blindsided later with full list price.

In essence, approach S/4HANA licensing discussions as a strategic negotiation, not a formality. SAP representatives might push the “standard” route, but virtually everything is negotiable if you have insight and a willingness to walk away.

Engage your procurement team and perhaps third-party licensing advisors to benchmark offers. The goal is to minimize TCO and retain as much flexibility as possible while achieving the transformation to S/4HANA.

FAQ: ECC to S/4HANA Licensing Options

Q1: What happens to my existing ECC licenses if I move to RISE with SAP?
A1: Typically, you surrender your ECC perpetual licenses for credit value. They’re essentially retired, and you transition to a subscription (measured in FUEs) under the RISE model.

Q2: Can I keep my perpetual licenses if I move to S/4HANA on-premise?
A2: Yes. You convert your ECC licenses to S/4HANA licenses (via SAP’s conversion program) and continue on perpetual licensing. You retain ownership and just pay maintenance annually.

Q3: What is the difference between S/4HANA Cloud (public SaaS) and RISE with SAP?
A3: S/4HANA Cloud (public edition) is a multi-tenant SaaS ERP managed entirely by SAP with standardized processes. RISE with SAP is a private cloud subscription where you get a dedicated S/4HANA instance (full functionality) plus infrastructure & services bundled; it’s more customizable but also more complex than pure SaaS.

Q4: Can I run ECC and S/4HANA in parallel during migration?
A4: Yes, but ensure you have dual-use rights. With proper licensing arrangements, SAP permits ECC and S/4HANA to run concurrently for a limited time without double licensing fees. Without such an agreement, running both could mean paying for both.

Q5: Is RISE with SAP always cheaper than an on-premise S/4HANA deployment?
A5: Not necessarily. RISE includes cloud hosting and services, but over several years, its subscription cost can exceed the combined cost of on-premise license maintenance and self-managed infrastructure. It depends on your situation – always compare the long-term TCO, not just the upfront costs or convenience.

Q6: Can I negotiate my S/4HANA migration licensing terms with SAP?
A6: Absolutely. Everything, from conversion credits and user counts to dual-use periods and subscription price locks, can be negotiated. SAP will have a starting offer, but savvy customers will counter for better terms to control costs and risks.

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