Negotiation Tips for Your S/4HANA Conversion Contract
Introduction: Why S/4HANA Conversion Negotiation Matters
SAP ECC’s end-of-support in 2027 is looming, and SAP is aggressively pushing customers to move to S/4HANA – especially via its RISE with SAP cloud offering.
This shift isn’t just a technical upgrade; it’s a license and contract reboot. If you simply accept SAP’s first S/4HANA conversion offer, you risk overpaying and locking yourself into rigid terms.
CIOs, CFOs, and procurement leaders must approach S/4HANA conversion deals with a skeptical and strategic mindset. Read our overview of SAP S/4HANA Migration Contracts & Negotiation.
The goal: maximize credits for your past investments, avoid double-paying for the same functionality, and secure flexible terms that protect you as your business evolves.
In short, negotiating your S/4HANA contract is crucial to getting a fair deal and future-proofing your SAP investment.
Trade-In Credits in SAP S/4HANA License Conversion
When converting from ECC to S/4HANA on-premise, SAP offers license trade-in credits for the investment you’ve already made in licenses. Essentially, you “trade in” your old ECC licenses and get a discount on the new S/4HANA licenses. However, how SAP calculates these credits is often opaque.
The credit usually depends on the book value of your existing licenses and how many of them you actually use (SAP won’t give credit for unused shelfware).
Historically, SAP even capped these credits – for example, up to 90% of the new S/4HANA contract value could be offset by credit, now reduced to ~80%, meaning you’ll pay at least 20% new spend.
Always demand transparency in these calculations so you understand how much credit you’re getting and what it’s based on.
Comparison: ECC License Trade-In Credit Example (On-Premises Contract Conversion)
| Legacy ECC Maintenance Base | New S/4HANA License Value | Credit Applied (80%) | Net New Cost (20%) |
|---|---|---|---|
| $1,000,000 (value of ECC licenses) | $1,200,000 | $960,000 credit | $240,000 net cost |
In this scenario, SAP credits 80% of the new S/4HANA license cost based on your existing ECC investment, so you only pay 20% of the new contract.
Negotiation tactics to maximize your SAP license conversion discount:
Don’t accept SAP’s first credit offer – it’s negotiable, just like a discount. Come prepared with data on your current licenses and usage.
Show SAP that most of your licenses are actively used to justify a higher credit.
Clean up shelfware ahead of time (more on that later) so you’re only trading in licenses that deliver business value. Emphasize your long-term commitment to S/4HANA and mention any other SAP projects in the pipeline – leverage the full future relationship to push for a better credit percentage.
And remember timing: aligning your negotiation with SAP’s quarter-end or year-end sales crunch can pressure them to sweeten the deal. Finally, get all agreed-upon credits in writing in your contract or order form.
If SAP says you have a $2M trade-in credit, make sure it’s explicitly listed, so there’s no confusion later. A well-negotiated trade-in credit can slash your S/4HANA license costs significantly (30% or more), so fight hard for every dollar.
Read about hidden costs, Hidden Costs and “Gotchas” in SAP S/4HANA Migration Deals.
Negotiating SAP Dual-Use Rights for Migration
One key term to negotiate in your S/4HANA conversion contract is dual-use rights. During your migration, you will likely run SAP ECC and S/4HANA in parallel for testing, data validation, training, or phased go-lives.
Without explicit dual-use rights, you could be forced to pay for both systems or risk compliance issues while they overlap. SAP’s default position might be unclear on this, so you need to secure dual-use (transition) rights in writing.
This clause should allow you to continue operating your legacy ECC system for a defined period alongside S/4HANA, without additional licensing fees.
Typically, SAP will agree to a grace period (e.g., 12-24 months) of parallel usage if you negotiate it. Make sure the contract outlines what happens if timelines slip – for example, if your S/4HANA go-live is delayed, you can extend ECC use without incurring penalties.
Insist that dual-use rights cover the same user counts and modules you had, so you aren’t effectively paying twice for the same users as you cut over.
In summary: negotiate dual-use rights up front to avoid a scenario where you’re caught paying double during the transition or scrambling for an extension. This is a common ask and one that SAP will typically grant if pressed – but they won’t volunteer it in their standard terms.
S/4HANA User License Mapping and FUE Negotiation
Migrating to S/4HANA means remapping your users and licenses to a new model. Under ECC, you might have had dozens of user types (Professional, Limited Professional, Employee Self-Service, etc.), but S/4HANA simplifies this into broader categories – commonly Professional (full access), Functional (limited to certain modules), Productivity (self-service), and Developer users.
Don’t let SAP simply “convert” your old named users one-for-one without scrutiny. Carefully map each user to the appropriate S/4HANA license type based on their actual role.
A common pitfall is misclassifying too many users at the highest tier. For example, many ECC “Professional” users might only need a Functional user license in S/4HANA if their activities are limited to a department or single module.
Misclassification can lead to overspending. Conversely, check if any users actually need an upgrade (maybe some power users were on too low a license before).
The negotiation here is to ensure optimal user mapping; you want the majority of users assigned to the lowest-cost license that meets their needs. Don’t be afraid to challenge SAP’s recommended mapping if it seems too expensive; provide your own usage analysis.
If you’re moving to RISE with SAP (S/4HANA in the cloud), user licensing shifts to the Full User Equivalent (FUE) model.
Instead of classic named-user licenses, SAP will convert your users into FUEs – a metric where different user types have different weights. (For example, in RISE, an “Advanced” user might count as 1.0 FUE, a “Core” user as 0.2 FUE, etc., so 5 Core users = 1 FUE.) Negotiating the FUE count and pricing is critical.
First, audit and eliminate unused users before SAP calculates your FUE total – otherwise you’ll pay for shelfware in the subscription.
Second, understand the FUE weighting for each role and see if you can adjust the classification to reduce the total. For instance, ensure casual/light users are categorized in the lowest tier (Self-Service), which might be 30:1 FUE weight, so they minimally impact your count.
Third, negotiate the FUE price and any tier discounts. SAP’s cloud pricing often has volume breakpoints – the more FUEs, the lower the per-unit price. Use this in negotiation: if you’re close to a tier, push for the lower rate or commit to slightly fewer FUEs to stay efficient.
Also, try to negotiate a buffer of FUEs included (or the ability to flex up/down) so you’re not immediately charged the minute you exceed your subscribed count.
In summary, optimize user license mapping in on-prem contracts and negotiate FUE terms in RISE deals to ensure you’re not overpaying for user access.
Timing Your S/4 Contract Negotiation with SAP
Timing is a powerful lever when negotiating with SAP. SAP’s sales teams have quarterly and annual targets, and they are often under intense pressure at quarter-end (especially Q4, the fiscal year-end) to close deals. You can use this to your advantage.
By strategically timing your S/4HANA conversion negotiations to coincide with SAP’s end-of-quarter or year-end, you increase your chances of getting better discounts and concessions.
For example, initiating final talks in late Q4 when the representative is trying to meet a quota can motivate SAP to offer an extra license conversion discount or include free extras to secure your signature.
However, be cautious not to let their deadlines rush you into a bad deal. SAP might dangle “time-sensitive” incentives (“this discount only if you sign by December 31”) – recognize this as sales pressure. Prepare your counteroffer and walk-away points well in advance, so when the deadline crunch hits, you’re negotiating from a position of strength.
Another timing factor: keep an eye on SAP’s broader strategy and announcements. If SAP is heavily pushing cloud adoption this year, they may have extra incentives for RISE deals right now (and you can compare an on-prem offer against a RISE offer to make them compete).
Conversely, as 2027 draws nearer, the value of your ECC credits may diminish (SAP has been reducing the credit percentages over time), so waiting too long to convert could cost you. In short, start the planning early, but execute the deal at a time when SAP is hungry to close – it can significantly improve the terms you get.
Protecting Flexibility in S/4HANA Conversion Contracts
SAP’s standard contracts often lock you into what you purchase, with little room to reduce or adjust later. A savvy negotiator will fight to include flexibility clauses in the S/4HANA conversion contract to protect against over-commitment and future changes.
One key area is the ability to adjust scope or drop unused licenses/modules post-migration. For on-premise conversions, once you sign the new S/4 contract, you normally can’t simply shed licenses you don’t use – you’re stuck paying maintenance on them.
To avoid that, negotiate scope-adjustment rights or a “true-down” opportunity: for example, a clause allowing you to eliminate or swap out certain user licenses or modules without penalty after a defined period (say 12-18 months post go-live) if they turn out not to be needed.
This helps mitigate SAP shelfware risk in S/4HANA – the last thing you want is to carry over unused licenses into the new environment and pay for dead weight.
Another flexibility tactic is to negotiate license swap or conversion rights for the future. As your business evolves, you might acquire a new company or divest a division, or you might adopt new SAP products. Push for terms that let you reallocate or swap licenses toward other SAP products down the line.
For example, if you drop a legacy SAP module, you could apply its value toward another S/4HANA module or even cloud credits.
While SAP won’t advertise this, customers have negotiated special clauses to swap out licenses or redistribute value later as needs change. For RISE contracts (subscriptions), try to negotiate the ability to adjust user counts or subscription levels periodically.
You might secure the right to reduce your FUE subscription if your user count drops, or at least the right to re-balance between user types once a year.
Also, insist on price protection for growth – if you need more licenses or FUEs later, they should be priced at the same discounted rate as the initial purchase (or with a capped uplift), rather than at list price.
The overarching principle is to avoid being stuck with a static contract that assumes your current forecast is 100% accurate. Businesses change, projects get delayed, or not all functionality gets used. Negotiate flexibility upfront so you can fine-tune and course-correct after the migration has occurred.
SAP will resist open-ended flexibility, but you can often carve out specific concessions (like a one-time post-migration adjustment, or predefined swap rights).
These clauses can save you millions in the long run and prevent the common regret of overspending on S/4HANA licenses that turn into shelfware.
Read about license migration options, ECC to S/4HANA Migration Licensing: All Options Explained.
Checklist: Key S/4HANA Conversion Negotiation Tactics
- Demand full transparency on trade-in credits: Insist SAP shows how your ECC license value translates to S/4HANA credits. Don’t accept vague discounts – get numbers and formulas.
- Secure dual-use rights in writing: Ensure your contract explicitly allows parallel ECC and S/4HANA use during migration without extra fees or compliance risk.
- Optimize user license mapping: Analyze roles to map users to the lowest appropriate S/4 license type. Don’t let SAP default everyone to Professional if many can be Functional or Productivity users.
- Negotiate FUE buffer and rates (RISE deals): For RISE with SAP, negotiate a cushion of Full User Equivalents and volume discounts. Lock in favorable FUE pricing and include flexibility to adjust if user counts change.
- Leverage timing for discounts: Schedule final negotiations near SAP’s quarter or year-end. SAP’s sales urgency can translate into better discounts or freebies – use their timeline against them.
- Push for price protection on growth: Negotiate caps or fixed discounts for future license purchases or subscription expansions, so SAP can’t gouge you later when you need more.
- Include flexibility clauses: Add terms allowing you to drop or swap unused licenses post-go-live (reduce shelfware). Build in a true-down or swap provision so you’re not stuck overpaying for unneeded capacity.
FAQ: S/4HANA Conversion Contract Negotiation
Q1: How are ECC licenses converted to S/4HANA?
A1: Through a contract conversion, you trade in ECC licenses for S/4HANA. SAP offers credit for your legacy licenses’ value – but you must negotiate the amount.
Q2: Do I lose my ECC licenses if I move to RISE?
A2: Yes. In a RISE with SAP deal, you typically surrender your ECC perpetual licenses (and stop paying maintenance) in exchange for a subscription model (FUE-based).
Q3: What are dual-use rights in S/4HANA migration?
A3: Dual-use rights let you run ECC and S/4HANA in parallel during the migration without double-paying. They’re not automatic – you need to negotiate them into your contract.
Q4: Can I negotiate SAP license conversion discounts?
A4: Absolutely. SAP’s initial offer is just a starting point. You can negotiate higher trade-in credits, additional discounts, and better terms – especially with competitive pressure and timing.
Q5: How should I map users to S/4HANA license categories?
A5: Analyze each user’s role and usage. Avoid rubber-stamping everyone as a top-tier user. Many ECC Professional Users can be downgraded to cheaper S/4 license types if their access needs are limited.
Q6: Can I reduce S/4HANA licenses after migration if we bought too many?
A6: Not by default. SAP contracts don’t allow for reducing license counts easily. That’s why you must negotiate a flex-down or adjustment clause during the contract phase to enable dropping unused licenses later.
Q7: When is the best time to negotiate an S/4HANA conversion deal?
A7: Ideally, before SAP’s quarter or fiscal year-end. SAP reps have sales targets, so they’re more flexible and generous with discounts as end-of-quarter pressure mounts.
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