SAP Cloud Licensing Models Explained

SAP Cloud Licensing Models and 2025 Pricing Overview

SAP’s cloud licensing has shifted from traditional perpetual user licenses to a subscription-based model that measures usage more dynamically.

SAP Cloud Licensing Models center on subscriptions (like the all-inclusive RISE with SAP bundle or standalone SaaS licenses) and metrics like Full Usage Equivalents (FUE) to quantify user access levels.

This new model offers flexibility and scalability but demands careful management of user roles to control costs and ensure compliance.

From Perpetual to Subscription: SAP’s Licensing Shift

In the on-premises era, SAP licenses were purchased outright (perpetual) for named users and specific modules, accompanied by annual maintenance fees.

The cloud changed this paradigm. Now, most SAP products are offered as subscriptions – recurring fees that often include software, support, and infrastructure in one package.

This shift aligns with SAP’s move to cloud SaaS offerings, making costs more predictable and turning large upfront investments into ongoing operating expenses.

It also simplifies some aspects (by reducing the number of separate engine licenses) while introducing new metrics and contract terms.

• Perpetual (On-Premise) – One-time license purchase + yearly support; you own the license indefinitely. Requires managing your own hardware or cloud hosting, as well as separate support contracts.
• Subscription (Cloud SaaS) – Recurring (e.g., annual) fee for the right to use the software and receive support. Often includes cloud infrastructure and automatic updates. No upfront asset; instead, continuous access as long as you remain a paying customer.
• Why the change? SAP’s cloud push (e.g., S/4HANA Cloud) and programs like RISE with SAP bundle software and infrastructure. This encourages customers to migrate to the cloud, keeping SAP’s revenue recurring. It also addresses compliance and security needs by tying licensing to actual usage and roles (e.g., meeting new data access controls).

Read Cost Structures in SAP Cloud Licensing.

Key SAP Cloud Licensing Models

SAP offers various cloud licensing approaches to cater to different needs. It’s important to understand which model applies to your scenario:

• RISE with SAP – An all-inclusive subscription bundle introduced to simplify the move to S/4HANA Cloud. RISE packages the core ERP (S/4HANA Cloud in public or private edition) plus infrastructure (hosted on SAP’s or hyperscaler cloud), basic technical services, and often extras such as SAP Business Technology Platform credits or SAP Business Network starter access. You pay a single subscription price (typically a 3-5 year contract) that covers the software license, cloud hardware, support, and upgrades. RISE’s appeal is its “one contract, one responsible party” approach for the entire stack, making it easier for procurement and providing a smoother path to the cloud for many enterprises. It tends to be priced higher per unit but includes broad services and a guaranteed SLA by SAP.
• S/4HANA Cloud Subscription (Standalone SaaS) – Instead of the full RISE bundle, customers can subscribe to S/4HANA Cloud as a SaaS product directly. This is still a cloud subscription (covering software and standard support, and running on SAP’s cloud), but may exclude some of the extras in RISE (like bundled platform credits or integrated tools). It provides flexibility to select and choose add-ons or manage certain aspects independently. SAP has also introduced “GROW with SAP,” aimed at mid-sized firms – essentially a simplified S/4HANA Cloud public edition package (outside of RISE) with attractive terms to onboard new cloud ERP customers.
• Bring Your Own License (BYOL) in the Cloud. For certain scenarios, organizations with existing SAP perpetual licenses can utilize those licenses on cloud infrastructure (for example, running SAP on AWS, Azure, or Google Cloud). In a BYOL model, you continue to pay SAP maintenance for your perpetual licenses and separately pay the cloud provider for infrastructure. SAP’s HANA Enterprise Cloud (HEC) historically allowed hosting your SAP software on an SAP-managed cloud with BYOL. Today, if not adopting RISE, some enterprises choose to convert their licenses or use SAP’s Cloud Extension programs to apply on-prem investments toward a private cloud deployment. BYOL reduces the need to re-purchase licenses, but you miss out on the simplified single contract – you must manage infrastructure and possibly multiple support channels.
• Line-of-Business Cloud Apps – Aside from core S/4HANA, SAP’s portfolio includes cloud products such as SuccessFactors (HCM), Ariba (procurement), Concur (travel), and SAP Analytics Cloud, among others. These are also licensed via subscription, but each uses its own metric (often based on the number of employees, users, or transactions). For example, SuccessFactors might be priced per employee per month for various modules, and Ariba might charge by the number of documents or spending managed. These models are generally straightforward SaaS subscriptions for that specific application, separate from S/4HANA Cloud’s licensing. Enterprise customers often bundle several SAP cloud products, so it’s crucial to understand each metric to forecast costs.
• Consumption-Based Model (Cloud Credits) – For platform and tech services, SAP offers consumption licensing. The SAP Business Technology Platform (BTP), which includes integration services, databases, analytics, and more, can be licensed through the Cloud Platform Enterprise Agreement (CPEA). In CPEA, you purchase a pool of credits and consume them as you use various services (pay-as-you-go within the committed amount). This model provides flexibility to innovate on the SAP platform without a fixed license count, but it requires monitoring usage to prevent overages. Some SAP cloud services are also available in a pure pay-as-you-go model. This consumption approach is complementary to the core SaaS subscription – e.g., a S/4HANA Cloud customer might have an additional CPEA for extension apps or extra innovation on BTP.

Full Usage Equivalents (FUE) – Measuring Cloud ERP Usage

To make cloud licensing more usage-based, SAP introduced Full Usage Equivalents (FUE) as a unified metric for S/4HANA Cloud.

Instead of buying separate named-user types (as done in on-premise SAP), you estimate and pay for a total quantity of FUEs, which aggregate different user levels.

Each user in the cloud is categorized by role and counted as a fraction or multiple of an FUE, depending on how extensive their access is:

Table: SAP S/4HANA Cloud user license categories and their FUE weights. (Costs are example estimates assuming ~$150 per FUE/month; actual prices vary by contract and volume.)

Under this model, you don’t directly purchase “Advanced” or “Core” licenses in fixed numbers – you purchase a total FUE entitlement, and then you can mix user types as needed.

For instance, a subscription for 100 FUEs could cover 100 Advanced users, or 50 Advanced + 250 Core (since 250 core users = 50 FUE) + 150 Self-service (5 FUE), etc., as long as the weighted sum stays at or below 100 FUEs.

This provides flexibility in allocating licenses according to actual usage patterns. However, the highest level of access a user has dictates their weight. If a person has any permission requiring an Advanced user, that individual counts as 1 FUE, even if they mostly perform basic tasks.

This is why careful role design is critical: giving unnecessary high-level permissions can bump a user into a more expensive category. Companies must regularly audit roles to ensure that each user is assigned only the roles they truly need for their job.

FUE vs. Traditional Named Users: In legacy SAP ECC, you would buy a certain number of each user type (e.g., 100 Professional, 50 Limited). In S/4HANA Cloud, FUE consolidates this into a single metric.

It simplifies licensing by covering all functional access with the FUE count (no separate module engine licenses for standard features).

It also encourages the wider adoption of self-service features. For, employee self-service users are very cost-effective per head (often just a few dollars per month), making it feasible to license the entire workforce for basic functions.

The flip side is that heavy users (Advanced) are more expensive than before, and every named user still contributes to the subscription in some way, so idle accounts with high permissions can result in unnecessary expenses.

Comparing Cloud License Options

Enterprise buyers should compare the available models based on cost, control, and risk:

• RISE with SAP vs Standalone Subscription: RISE offers convenience – SAP handles cloud operations and acts as the single point of contact. It often includes extras (like tools for process analysis, Signavio, and some BTP credits). The cost per FUE for RISE is typically higher than that of a pure software subscription, as it bundles hardware and services. For example, a S/4HANA Cloud Public Edition via RISE might cost approximately $150 per FUE per month. In contrast, the Private Edition (RISE) could be $ 170 or more per FUE per month due to dedicated infrastructure. In contrast, if you license S/4HANA Cloud SaaS alone and host via SAP’s standard cloud, the pricing structure is similar to RISE public, but you may have to individually add any extra services you need. Large enterprises often choose RISE for simplicity, while some may opt out of RISE to negotiate infrastructure or manage custom requirements separately (especially if they have cloud expertise or existing hyperscaler contracts).
• Existing License Conversion: SAP provides programs to help convert on-premise licenses to the cloud. When migrating to S/4HANA Cloud, you can often get credit for your existing ECC licenses (the cloud extension policy). Essentially, the unused value of your old licenses and maintenance can offset the cost of the new subscription. This helps avoid double-paying during the transition. Be sure to evaluate this with SAP – it can significantly reduce your first few years’ subscription fees, easing the TCO comparison.
• Costs and Scale: SAP cloud deals are negotiated on a case-by-case basis. As ballpark figures, a mid-sized firm with ~200 users might spend a few hundred thousand dollars per year on S/4HANA Cloud. A large enterprise with 10,000+ users could see a contract in the $10–20 million per year range. The volume brings discounts: the per-FUE price drops as you commit to higher quantities. It’s common to negotiate tiered pricing (e.g., the first 100 FUE at one rate, the next 400 at a lower rate, and so on). Always look for any price escalation clauses – many subscriptions have a built-in annual increase (e.g., 3% per year). Try to negotiate caps or fixed renewals to avoid surprises. Also, clarify flexibility: can you decrease user counts at renewal if your needs drop? (SAP often allows increases during the term but decreases only at renewal and not below the initial committed FUE.)
• Add-Ons and Special Licenses: Understand what is included in the base cloud subscription. S/4HANA Cloud’s base subscription covers the “digital core” ERP modules. Some specialized industry or line-of-business functions might require add-ons. For example, advanced planning, advanced output management, or specialized industry solutions may be available as additional subscription items. Similarly, if you integrate other SAP cloud products (such as Ariba and SuccessFactors), those are separate. Under RISE, you often receive a starting quantity of these (such as a few Ariba network documents or a limited number of SAP Analytics Cloud users), but any additional allotment incurs extra costs. SAP Business Technology Platform (BTP) services often come with RISE as a small bundle of credits; heavy use beyond that is billed per consumption. Keep an eye on these usage-based components (analogous to AWS/Azure charges), as they can increase your bill beyond the core ERP fee if not properly managed.
• Compliance in the Cloud: Although the licensing model differs, SAP will still enforce compliance. Indirect access (external systems creating SAP data) in the cloud is managed through digital access provisions. In S/4HANA Public Cloud, SAP currently includes digital document access in the subscription, meaning you don’t separately license each document created by external systems as was required on-prem. This is a relief for customers worried about hefty indirect usage fees. Nonetheless, compliance risks remain: if you exceed your licensed FUE count or use the software beyond the agreed metrics, SAP can audit and charge fees. The cloud environment allows SAP to measure usage more directly (since it’s their infrastructure), so expect fewer hiding places for unlicensed use. Always ensure your contract terms cover new integrations or heavy system use cases.

Risks and Pitfalls

Managing SAP cloud licenses requires vigilance to avoid unexpected costs:

• Over-assigning Permissions: The most common mistake is giving too many users higher access than necessary. Remember, an occasional-use user with an advanced permission counts fully. Regularly review user roles, especially after personnel changes or project go-lives. Remove or downgrade access that isn’t needed to keep your FUE count optimized. Establish a Joiner-Mover-Leaver process so that when people change roles or leave, their SAP access is adjusted promptly. This prevents “permission bloat” that can inflate licensing costs over time.
• Outdated License Assumptions: Don’t assume old on-prem metrics apply. For example, on-premises, you might not have licensed certain infrequent users at all (if they used a shared account or indirect means). In the cloud, every individual accessing the system needs to be accounted for in FUE. Additionally, the concept of “concurrent sessions” is no longer in use; it’s all about named users. This can be a shock if not planned for, leading to a budget overshoot. Ensure your business case for the cloud includes licensing all the various user personas.
• Compliance Audits: While SAP is pushing the cloud, it doesn’t mean they won’t audit compliance. If anything, the cloud gives SAP more transparency into usage levels. Falling out of compliance (e.g., using more FUEs than contracted or using a service you didn’t subscribe to) can result in steep back-charges or compliance true-up fees. Treat the cloud license like a cap – implement internal monitoring to track how many FUEs you’re consuming as you add users or functionality. SAP provides some tools (like the S/4HANA Trusted Authorization Review (STAR) report) to simulate and check your FUE consumption. Use them to stay in check.
• Contract Lock-In and Flexibility: Be aware of the commitment you’re signing. A multi-year cloud deal is a commitment – you can increase usage, but reducing it is challenging until the renewal, and switching providers (or back to on-premises) is not a trivial task. Ensure the contract includes terms that align with your strategy (for example, if you plan phased rollouts, consider negotiating ramp-up pricing where you pay less in year 1 and more as users are added). If you simply sign a large 3-year deal and your deployment stalls, you could be overpaying for unused licenses. Conversely, if usage grows beyond expectations, be aware of how adding incremental FUEs will be priced (pre-negotiate those rates if possible).

Recommendations

To get the most value and minimize risk with SAP’s cloud licensing, consider the following steps:

• Align Licenses with Actual Roles: Map out user roles and needed access before finalizing the license count. Only assign “Advanced” level access to roles that truly require it. Use the Core or Self-Service levels wherever possible to cover casual users. This rightsizing can save significant costs.
• Regularly Audit and Clean Up Users: Institute quarterly or bi-annual reviews of SAP user lists and permissions. Disable accounts that are no longer in use and remove unnecessary permissions. This prevents creeping FUE usage from role drift. Automation tools or SAP’s built-in user reports can help flag anomalies.
• Leverage SAP Tools and Reports: Utilize SAP’s STAR report and other license analysis tools to understand your consumption. These tools can identify quick wins (e.g., which users are pushing you into a higher license tier). Address those by adjusting roles or reclassifying users if appropriate.
• Negotiate Contract Protections: When signing a cloud agreement, negotiate favorable terms to ensure optimal protection and security. Push for price protections (cap on annual increases), flexibility to adjust down at renewal, and include conversion credits for existing licenses. Also, clarify what happens if you need additional users mid-term – having pre-agreed pricing for extra FUEs can avoid a costly surprise.
• Consider RISE vs DIY Trade-offs: Evaluate if RISE with SAP is right for your organization. If you lack internal resources to manage infrastructure and updates, RISE’s bundled approach can be worth the premium. If you have strong cloud expertise or unique needs, a standalone subscription with your cloud strategy might give you more control or cost savings. Make this decision based on TCO over 5-10 years, not just year 1 costs.
• Monitor Consumption Services: If you are using SAP BTP or other consumption-based services alongside your ERP, set up alerts and governance for these services. It’s easy to spin up extra apps or integrations that start incurring charges. Treat cloud spend management as an ongoing discipline – involve your cloud center of excellence or finance team to monitor usage against budget.
• Stay Educated on Licensing Changes: SAP’s licensing policies are constantly evolving (e.g., new packages like GROW, changes in FUE definitions, or introduction of new cloud services). Keep in contact with SAP or a licensing advisor to stay up-to-date. For instance, if SAP adjusts the FUE ratios or introduces new functionality in base subscriptions, you should take advantage of it. Being informed will also help in renewal negotiations with SAP, as you can leverage the latest offerings or competitive information.
• Engage Expert Help if Needed: If your organization finds the complexity overwhelming, consider consulting an SAP licensing expert or firm. They can provide an independent view on whether your contract is optimized and help in negotiations. The cost of expert advice can be far lower than the consequences of a licensing mistake on a multi-million-dollar contract.
• Plan for Growth and Scalability: Design your license agreement to accommodate future growth or business changes. If you plan acquisitions or divestitures, discuss how those users can be merged or removed. Try to include headroom in your FUE count or easy options to expand so you’re not caught needing an unbudgeted expansion mid-term. Conversely, avoid overcommitting far above current needs – you can typically add licenses later, but you’ll rarely get money back for unused capacity.
• Ensure Compliance and Documentation: Maintain clear documentation of your SAP contracts, metrics, and entitlements to ensure compliance. Train your IT and procurement teams on the licensing rules (for example, how FUE works and what indirect use is allowed). If audited, having records and a clear internal understanding will make the process smoother. Good compliance hygiene also positions you better when it’s time to renew or expand your SAP footprint, as you’ll know exactly what you have and what you need.

FAQ

Q1: What are the main SAP cloud licensing models available?
A1: The primary models are subscription-based licenses for SAP’s cloud software. For core ERP, this includes S/4HANA Cloud (which can be purchased standalone or via the RISE with SAP bundle). Beyond ERP, each SAP cloud product (e.g., SuccessFactors, Ariba) has its subscription metric (typically per user or transaction). Additionally, SAP offers a consumption-based model for its platform services (SAP BTP), where you buy cloud credits and pay as you go. Traditional perpetual licensing is generally not offered for new cloud products; the cloud approach is mostly subscription-based.

Q2: How does RISE with SAP differ from a normal S/4HANA Cloud subscription?
A2: RISE with SAP is essentially a packaged offering that includes the S/4HANA Cloud software plus the infrastructure (cloud hosting) and basic technical management services, all under one contract. A standard S/4HANA Cloud subscription (outside of RISE) provides the software license and support; however, the customer (or a partner) may manage more of the infrastructure or additional services separately. RISE also often bundles in extra components (like some SAP Business Technology Platform usage, business process intelligence tools, and SAP support services). Think of RISE as a comprehensive “SAP-as-a-Service” bundle, whereas a standalone subscription is more just the software, and you have more responsibility to handle the rest (or source it elsewhere). RISE can simplify vendor management, but it may come at a slightly higher cost. A standalone approach might be more cost-effective if you efficiently handle the other pieces in-house or with a cloud provider.

Q3: What is a Full Usage Equivalent (FUE), and why does it matter?
A3: A Full Usage Equivalent (FUE) is SAP’s unit of measure for S/4HANA Cloud licensing. It’s a way to standardize different user types into a single metric. Instead of buying 100 licenses of type A and 50 of type B, you contract for several FUEs. For example, an advanced user = 1.0 FUE, a core user = 0.2 FUE, and a self-service = 0.033 FUE. SAP tallies up your users and their roles to calculate the number of FUEs you are consuming. It matters because it directly determines your subscription cost – you pay per FUE. It also emphasizes user role management: to control FUE consumption, you must ensure users are categorized correctly (and not given higher access than needed). FUE makes it easier to adjust your license mix (you just reallocate roles), but it can be unclear at first. Understanding FUE is crucial for avoiding overpayment and accurately forecasting costs as you add or modify users.

Q4: How is cloud licensing different from SAP’s old on-premise licensing?
A4: In on-premise SAP (like ECC 6.0), you typically purchased perpetual licenses for named users (various types like Professional, Limited, Employee, etc.) and possibly engine licenses for specific modules (like SAP Payroll or a certain number of SAPs for hardware sizing). You paid once and then annual maintenance (~22% of the license price) for support. In the cloud model (S/4HANA Cloud and others), you don’t buy the software outright – you subscribe to it. You pay yearly (or quarterly) for as long as you use it. There’s no separate maintenance fee; support is usually included. Another big difference is that the cloud subscription often covers the whole suite’s functionality (except add-ons) – you’re not picking individual modules to license. And the user licensing is now measured via FUE as an aggregate rather than discrete named user counts you own. Additionally, upgrades in the cloud are handled by SAP and come as part of the service (no more large upgrade projects just to stay supported). Financially, on-premises was a capital expense (CapEx) model with a depreciating asset; cloud is an operating expense (OpEx) – a continuous expense. This means that over a long period (say 5-10 years), the total costs might converge, but you shift from a lumpy upfront spend to a smooth recurring spend. Cloud licensing requires more ongoing management (to keep subscription optimized),

Q5: What factors drive the cost of an SAP cloud subscription?
A5: The biggest factor is the number of users and their usage level (which translates to FUEs for S/4HANA Cloud). More users or more “advanced” usage = more FUEs = higher cost. Other factors include the edition (Public Cloud vs Private Cloud – private is pricier because you get a dedicated system environment), contract term length (longer commitments can sometimes secure better discounts), and any extra components you include (for example, additional modules, or companion products like SAP Ariba or SuccessFactors will add to the overall bill). Your negotiated discount level plays a huge role – SAP has list prices, but most enterprise deals come with significant discounts based on volume and strategic importance. Additionally, if you opt for RISE, the bundling means the cost includes infrastructure and services, which may be higher than the cost of software alone. Lastly, support level (basic included vs. premium support at an extra cost) and factors such as currency or local pricing differences can also have an impact. It’s wise to break down the quote SAP provides to see how it’s constructed (FUE rate, any extra services, etc.) and compare it against doing certain pieces yourself.

Q6: Can I use my existing SAP licenses in the cloud (or do I have to buy new licenses)?
A6: You can leverage existing licenses in certain ways, but you generally can’t use an on-premise license to run the hosted SaaS version of S/4HANA. If you already own SAP ERP licenses, SAP offers conversion programs to transition those to S/4HANA Cloud subscriptions (often giving credits for the value of your unused on-prem assets). Suppose you want to stick with owning licenses but change the infrastructure. In that case, you can deploy your SAP software on cloud infrastructure (this is the BYOL scenario) – for example, run your SAP ECC or S/4HANA (private on-premises version) on an AWS or Azure VM. In that case, you’re not using SAP’s SaaS; you’re essentially using the cloud as hardware. You continue to pay maintenance for your licenses as before, plus the cloud hosting costs. Many customers moving to the cloud will either use RISE (a new subscription) or convert their licenses to a subscription. So, while you can’t simply apply an old license to SAP’s cloud subscription service, you can avoid a new purchase by converting or by self-managing in the cloud. Always coordinate with SAP on the best approach – they’ve been somewhat flexible in encouraging cloud moves, offering deals to offset your investment in legacy licenses.

Q7: What’s the best way to negotiate an SAP cloud license contract?
A7: Negotiating SAP cloud contracts involves striking a balance between cost and flexibility. First, do your homework on usage needs – know your required FUE count and growth expectations. Use that to push for volume discounts and ensure you’re not overbuying. Key points to negotiate: price per FUE (get benchmarks if possible; large deals might get well below list price), discounts on additional products you might add (bundle discounts), price increase caps (many SAP contracts have a clause allowing annual price increases; try to limit this or lock prices for the term), and renewal terms (have clarity on what happens after the initial term – no big surprises in year 4+). Also, negotiate terms for adding more users or new services mid-term (so you know the unit rates). Leverage competition – even if SAP is unique, they know you have choices like staying on ECC or using third-party support. If you’re considering RISE vs other options, get quotes for both; it can give bargaining power. Lastly, timing can be beneficial – SAP sales often have year-end targets, so deals closing in Q4 or around Sapphire (SAP’s conference) may yield extra incentives. In all, approach it as a strategic partnership discussion, but don’t hesitate to ask for concessions, whether that’s a larger BTP credit pool, free training, or contractual flexibility. Also, involve your legal and procurement teams to review terms such as liability, SLA, and exit options (including cancellation or downscale rights) in case things change.

Q8: How can we optimize costs after moving to SAP cloud licensing?
A8: Post-migration, cost optimization is an ongoing task. Start with license management: regularly review user allocations and remove any unnecessary advanced user assignments. If you find that you’re consistently under-consuming your FUEs at your next renewal, you might consider reducing the committed count (if allowed) to save money. Utilize the included tools – for example, if certain modules in S/4HANA aren’t used, ensure you’re not subscribing to unnecessary add-ons. Additionally, optimize your processes to utilize more cost-effective license types – for example, encourage casual users to use self-service interfaces and avoid requiring full SAP GUI access. On the cloud infrastructure side (if you manage any part, such as in a BYOL scenario), optimize your systems (e.g., turn off unused sandbox instances) to reduce costs. For consumption-based services (BTP), clean up unused resources (like development instances or excessive data storage) to stay within your credit allocations. Another avenue is training and change management: ensure employees know how to use the system efficiently, which avoids situations where they might seek workarounds that incur additional licensing (like exporting data to external apps unnecessarily). Finally, periodically benchmark your deal – SAP’s cloud prices have been known to adjust over time. If new customers are receiving better rates or if competitors’ offerings pressure SAP, you can bring this up in discussions for renewing or expanding at a more favorable cost.

Q9: What happens if we exceed our licensed user count or FUEs in the cloud?
A9: If you exceed your contracted FUE count (i.e., you have more users or higher usage roles than paid for), you are technically out of compliance. In practical terms, SAP won’t automatically shut down your system or cause any drastic consequences – the software will continue to run. However, during a true-up or audit, SAP will detect the excess usage. Typically, the resolution is that you’ll need to purchase the additional FUEs (often backdated to when you first exceeded). This can come at a poor negotiating time (SAP has the leverage then). Additionally, your ongoing subscription fees would increase to cover the higher count. It’s better to proactively monitor and purchase increments as your usage grows rather than letting SAP discover it later. Some contracts allow a grace or periodic adjustment – for example, you might be allowed to average usage or have a slight buffer. Always read your contract: some might say you commit to a certain number, and that’s fixed regardless of usage (meaning you shouldn’t exceed it at all unless amended). If you do go over, engage SAP early to rectify it – sometimes, they’ll simply amend the contract to add the users moving forward (especially if the number isn’t huge) rather than penalize. The key point: unlike on-prem, where you might get away with unlicensed users for a while, in the cloud, it’s more transparent, so aim to stay within bounds or officially expand your license when needed.

Q10: How do SAP cloud upgrades and new features work with licensing?
A10: One of the advantages of a cloud subscription is that upgrades are included and handled by SAP. S/4HANA Cloud, for example, has quarterly release updates that automatically bring new features and improvements. You don’t pay separately for these new versions – they’re included as part of your subscription fee. This differs from on-premises, where moving to a new version (e.g., ECC to S/4) was a significant project and sometimes involved new licensing. In the cloud, as long as you subscribe, you’re entitled to whatever enhancements come. However, note that if SAP introduces an entirely new product or module that isn’t part of your current subscription, you might have to subscribe to that separately. For instance, if you’re an S/4HANA Cloud customer and SAP releases a new add-on service (say a new AI-driven planning module) that is not in the base package, you would have to add that subscription if you want it. However, general core enhancements are included at no extra cost. It’s important to stay informed about what’s included in your edition – SAP often expands the scope of the base license over time (bringing more functionality into the standard offering). Make sure to take advantage of the new features you’re entitled to, as they could improve processes without incurring additional expenses. And plan your internal testing and training for those quarterly updates so you can quickly benefit from them. In short, licensing in the cloud is less about version management and more about scope management – upgrades are automatic, but keep an eye on new optional services that might require an additional license.