SAP HANA Database Licensing and Options
Introduction
SAP HANA has become a cornerstone of SAP’s technology stack, offering high-performance in-memory data processing.
However, licensing the SAP HANA database can be complex and costly. IT leaders and procurement managers must understand the different licensing models and options to ensure compliance and optimize costs.
This advisory-style guide explains the differences between SAP HANA runtime and full-use licenses, pricing (focusing on memory-based costs), how HANA licensing fits into broader SAP software agreements, and strategies for selecting the right model.
We also provide real-world examples, tips on negotiating terms and optimizing usage, and dispel common misconceptions. The goal is to equip CIOs and procurement teams with clarity and actionable recommendations when planning for SAP HANA.
SAP HANA License Models: Runtime vs. Full-Use
SAP offers two primary HANA database licensing models: a restricted Runtime license and a more flexible Full-Use license (often called “Enterprise” or “full-use HANA”). Understanding the difference is critical:
- HANA Runtime License (Limited Use): This model permits using HANA only in support of SAP’s applications. In other words, the HANA database can only be used by SAP software (such as SAP S/4HANA, SAP Business Suite on HANA, SAP BW/4HANA, etc.) that you have licensed. All data access, modeling, and administration must occur through the SAP application layer or SAP-provided tools. This license does not allow direct access to HANA (outside of the SAP app) or use by any non-SAP application. It’s essentially a bundled database engine for SAP apps.
- HANA Full-Use License (Unrestricted Use): This model allows for the unrestricted use of the HANA database in any application, including SAP, third-party, or custom-developed applications. Organizations can load non-SAP data directly into HANA, perform native SQL queries, create custom schemas and tables, and use HANA’s full capabilities (e.g., advanced analytics, machine learning libraries) independently of SAP business applications. It provides full flexibility to use HANA as a general-purpose database platform beyond just SAP ERP or BW.
Read SAP HANA Runtime vs. Full-Use License.
Key differences at a glance: The runtime license is more restrictive but typically costs less, while the full-use license is more flexible but comes at a premium.
Below is a summary comparing the two models:
- Allowed Usage: The runtime is limited to SAP application use only, whereas Full-Use permits both SAP and non-SAP usage (custom apps, third-party tools, direct data access).
- Data Access and Modeling: At runtime, data can only be accessed and modeled through the SAP application’s logic or ABAP layer—no direct SQL or ODBC connections are allowed from outside tools. Full-Use imposes no such restrictions—data can be accessed or manipulated directly in HANA by any authorized client or developer tool.
- Features: Both licenses technically use the same HANA software, but certain features (e.g., direct native development, certain advanced engines) are only legally usable with Full-Use. (SAP does not technically disable those features in runtime systems, but using them outside the SAP app’s context would violate the license terms.)
- Typical Purpose: Runtime is intended for customers who only need HANA to run SAP applications, such as an S/4HANA ERP system or a BW data warehouse. Full-Use is for those who want to build new applications or analytics on HANA, integrate non-SAP data, or leverage HANA as an enterprise database platform in other ways.
- Cost Basis: This is a major difference, which will be detailed in the next section. Runtime is priced as a percentage of the SAP application value, whereas Full-Use is priced based on memory (the size of the HANA database). This influences not only cost but also how you plan capacity.
In summary, the HANA Runtime license is a cost-effective choice when you need HANA to support SAP software and don’t intend to use HANA beyond that scope.
The HANA Full-Use license is appropriate when you require the flexibility to use HANA for any purpose, such as consolidating data from multiple systems, custom development, or third-party applications.
CIOs should carefully evaluate current and future use cases. If there is a need to go beyond standard SAP application usage (either now or in the foreseeable future), a Full-Use license may be necessary to avoid compliance issues.
Licensing Metrics and Pricing: From Value-Based to Memory-Based
SAP HANA licensing uses two very different metrics depending on the model:
- HANA Runtime License Pricing – Percentage of SAP Application Value: The gigabyte does not sell the runtime license. Instead, it’s typically priced as a percentage of the SAP software value running on HANA. SAP often refers to this as “HANA SAP Application Value” (HSAV). For example, if you license SAP applications (ERP, BW, etc.) worth $1 million, a runtime HANA license might cost roughly 15% of that value (i.e., $150,000) to cover those applications’ use of HANA. In practice, SAP has different percentage rates for various scenarios. Commonly cited figures are around 8% for certain BW-only usage or older runtime deals and about 15% for the full SAP Apps runtime. This percentage-based “database surcharge” means the cost of HANA runtime scales with your SAP software investment, not directly with technical metrics like memory or CPU. If you expand your SAP footprint (by buying additional modules or adding more user licenses), the HSAV – and thus the HANA runtime fee – can increase accordingly. The runtime license is often considered a “database tax” on SAP software: it applies to the privilege of using HANA instead of a third-party database for your SAP products. Also, SAP typically treats the runtime DB fee as non-discountable, meaning that the percentage is fixed in your contract, and SAP won’t usually apply typical discounts to it. Pricing Example: A company licenses SAP S/4HANA and other SAP modules, totaling $5 million in license net value. Opting for a HANA runtime license, for instance, at 15% HSAV, would cost approximately $750,000 for the HANA database license. This fee allows those SAP applications to run on HANA regardless of the actual memory size used. If the company buys an additional $1 million of SAP licenses later, they would likely owe an additional $150,000 (15%) to cover HANA runtime for that increment. There is generally no explicit cap on HANA memory usage in this model – the assumption is that the HANA instance is only used for the licensed SAP apps, which require the necessary hardware resources.
- HANA Full-Use License Pricing – Memory (GB): The full-use HANA license is measured by the memory capacity used by the HANA database, typically in gigabytes. SAP sells this in fixed blocks or memory units. Historically, HANA was often sold in 64 GB license blocks, meaning each “unit” was 64 GB of HANA memory. Customers would estimate the amount of in-memory data their systems need and purchase an appropriate number of blocks. For example, a 1 TB HANA environment would be 16 units of 64 GB. The cost is then calculated per unit, with a list price that can be quite high. However, SAP usually provides tiered pricing for larger volumes: the more memory you license, the lower the cost per GB or unit in higher tiers. This means the price versus memory size is not strictly linear – larger HANA deployments receive incremental volume discounts. Pricing Example: (For illustration) SAP HANA Enterprise Edition might have a list price like $120,000 per 64 GB block for the first 10 blocks, then drop to $100,000 per 64 GB for the next set, $60,000 per block for larger quantities, and so on in tiers. So, a customer needing only 64 GB pays $ 120,000 for that single block, whereas a customer licensing 1,024 GB (16 blocks) might pay an average rate of significantly less per block, because after the first 10, the next six are cheaper. In high volumes (multi-terabyte), the per-GB price can decrease further. The key point is that full-use HANA licensing costs scale with the memory footprint. You must purchase additional capacity if your data grows and requires more in-memory space. SAP usually measures usage by peak memory utilization over a specific period (for example, peak usage in 12 months) to determine if you are within your licensed amount.
Read about SAP Hana Memory-Based Licensing and Sizing.
Annual Maintenance: Note that in a traditional perpetual license model (common for on-premises), whichever license you choose, you will also pay SAP annual maintenance (typically ~20% of the net license fee) for support.
So, a larger license cost will also incur a higher ongoing maintenance fee.
Cloud/Subscription
Note: In cloud subscription models, such as SAP HANA Cloud or S/4HANA Cloud via RISE with SAP, the HANA database cost is bundled into the subscription price as “capacity units” or a similar unit. In those cases, you pay a recurring fee for a certain memory capacity rather than a one-time license, but the principle of more memory = higher cost still applies.
For this article, we focus on on-premise and perpetual licensing concepts. Still, IT leaders should know that cloud offerings change the cost model to an operating expense.
Implications of the Two Pricing Models:
- The runtime (HSAV-based) model aligns cost with your investment in SAP applications. It can be advantageous if your HANA database is very large relative to your SAP software spend (for example, if you retain tons of historical data in memory, you don’t pay more unless that data also increases your SAP app licensing). It also means your DB cost is predictable if you’re stable regarding SAP license count. However, it effectively charges you even if your HANA memory usage is small – it’s tied to software, not usage. It can also penalize the expansion of the SAP footprint since every new SAP module or user adds to the base for the percentage calculation.
- The full-use (memory-based) model directly ties cost to technical usage. It can be fairer if you have a lean SAP environment but want to utilize HANA for heavy non-SAP data or custom apps – you pay for what you use in memory. It also allows you to add new SAP software without extra database fees (assuming your HANA memory doesn’t need to be increased). However, if your data volumes balloon, costs can rise quickly. Large enterprises with multi-terabyte HANA systems can end up with multi-million-dollar DB licenses. Tiered pricing helps somewhat, but HANA is still known as a premium product. Also, because list prices for HANA memory units are often non-discountable, it’s challenging to negotiate lower rates – instead, savings come from the structured volume discounts or by optimizing memory usage (discussed later).
In practice, organizations should conduct careful sizing exercises and model out costs under both scenarios when possible.
For example, if you plan to run a 500 GB HANA instance purely for S/4HANA, compare the cost of a runtime license (15% of S/4HANA license value) vs. a full-use license for 500 GB. The breakeven can vary depending on your SAP application costs and how heavily you utilize HANA’s capacity.
This analysis will inform you which licensing metric is more economical.
HANA Licensing in the Context of SAP’s Broader Licensing Strategy
SAP’s broader licensing strategy and product roadmap heavily influence how HANA licensing is positioned:
- SAP S/4HANA and Business Applications: SAP’s flagship ERP (S/4HANA) runs exclusively on the HANA database. If you adopt S/4HANA on-premises, you face a choice: stick with the included HANA runtime license for S/4 (usually offered as part of the S/4HANA licensing package for an additional fee), or purchase a full-use HANA license. Most customers moving to S/4HANA initially opt for the runtime license, as it is the path of least resistance and has a lower upfront cost when just running SAP’s ERP. SAP often bundles or prices the HANA runtime license as a percentage add-on to the S/4HANA package. CIOS must verify what’s included in an S/4HANA deal – in many cases, the quote will include a line for “HANA runtime database” at 15% of the software value. Ensure this is accounted for in your budget. Suppose your organization plans to use S/4HANA and build custom extensions or analytic solutions on the same HANA instance. In that case, you may need a full-use license instead of (or in addition to) the runtime license. Not realizing this until later can double your database licensing costs unexpectedly.
- SAP Business Suite on HANA (SoH) and BW on HANA: Before S/4HANA, some customers migrated their older SAP Business Suite (ECC) or SAP BW systems to run on HANA. These scenarios also used the runtime licensing model, often at 15% of the ECC license value. The same restriction applied: HANA could only be used for the SAP system for which it was licensed. If those customers later wanted to use that HANA database for other purposes (like a “sidecar” custom data mart), they would have had to upgrade to full use. SAP’s sales strategy was to encourage the adoption of HANA by making the runtime license relatively affordable compared to Oracle and IBM DB renewals, but with the trade-off that it is limited in scope.
- Multiple SAP Applications on one HANA: If you run several SAP products (say, S/4HANA, BW/4HANA, SCM, etc.) on one HANA database, technically, each application’s value would contribute to the HSAV base. SAP often expects you to license runtime HANA for each major product unless you have an enterprise agreement. This can be complex – some clients consolidate multiple SAP workloads on one HANA platform for technical efficiency. Still, licensing-wise, you must make sure all are properly covered (which sometimes leads companies in that situation to lean toward a full-use license covering the combined memory rather than paying 15% on each app’s value).
- Non-SAP Applications and Mixed Workloads: One of the main reasons to consider a full-use HANA license is if you envision non-SAP data or applications using HANA. For example, some companies use HANA as a real-time analytics engine (“sidecar” scenario), bringing data from SAP and non-SAP sources together. Another case is using third-party or open-source applications that connect directly to the HANA database for reporting or data science. SAP’s runtime license strictly forbids these uses – even if the data is part of an SAP system, if you access it outside the SAP application server (e.g., connecting a Python app directly to HANA), you are out of compliance. SAP’s broader strategy is clear: if you want HANA to be your central data platform beyond SAP’s apps, you must pay for the full-use licensing.
- SAP Cloud and Hybrid Scenarios: In recent years, SAP has been pushing cloud offerings like RISE with SAP (which packages S/4HANA Cloud and HANA infrastructure in a subscription) and SAP HANA Cloud (database-as-a-service on SAP Business Technology Platform). In those models, the licensing of HANA is embedded in the subscription, often measured in capacity units or tied to user metrics. For instance, RISE with SAP includes the HANA database for S/4HANA as part of the service – you don’t see a HANA license separately, but you pay for the overall subscription resources. However, large enterprises often have a mix of on-premises and cloud solutions. You may have both licensing models in use if you maintain some on-premises HANA systems (e.g., for legacy systems or edge scenarios) alongside those in the cloud. It’s important to align your strategy: if you intend to move entirely to SAP’s SaaS/cloud, investing heavily in full-use on-premises licenses might be a short-term move. Conversely, if you want to keep control on-prem for the foreseeable future, negotiating perpetual HANA licenses can protect against future price hikes.
- Audit and Compliance Focus: in recent years, SAP has sharpened its HANA usage auditing because it is a significant revenue lever. Many companies have been caught in audits using HANA runtime licenses in ways that violate the terms (e.g., creating custom schemas or running third-party reporting tools on the HANA database). SAP’s broader strategy is to ensure customers stay within permitted use or upgrade to full-use licenses. As a result, compliance is not just a legal concern but also a budgetary one – an audit finding can lead to an unplanned purchase of a full-featured license. Therefore, aligning your HANA licensing with your actual usage is part of a prudent SAP license management strategy.
Bottom line: When planning an SAP landscape (e.g., migrating to S/4HANA, deploying new SAP modules, or building analytics), licensing the database is a key part of the overall SAP strategy.
If HANA solely underpins your SAP applications with no external use, the runtime license offers cost savings and simplicity, with one vendor and integrated support. Suppose your vision is to use HANA as a data hub or innovation platform; factor in the full-use license from the start.
Also, consider SAP’s future roadmap – for example, if you adopt SAP’s cloud services, consider how your on-prem HANA licenses might transition (or whether you negotiate conversion rights).
Read Licensing HANA for Non-SAP Applications.
Use Cases and Examples: Choosing the Right License Model
To illustrate the decision between runtime and full-use HANA licensing, consider these common scenarios:
Example 1: “SAP-Centric” Company (Runtime License Scenario)
A mid-size manufacturing firm is implementing SAP S/4HANA for ERP and plans to use SAP’s BW/4HANA for data warehousing. These SAP systems will address all its enterprise data needs.
They do not plan to use any non-SAP tools directly on the database—users will access data via SAP Fiori apps, SAP Analytics Cloud (which connects through SAP frameworks), or standard SAP GUI reports. In this case, a HANA runtime license is well-suited:
- The HANA runtime covers S/4HANA and BW/4HANA usage as long as those systems are licensed. The company would pay roughly 15% of the S/4HANA and BW software license cost to use HANA underneath.
- They save on database costs compared to buying a full-use license for the large memory footprint that these systems might consume. The runtime fee was relatively predictable and likely bundled in their SAP purchase agreement.
- All data modeling is done using SAP’s ABAP logic or BW’s modeling tools, ensuring compliance. Even if they load external data into BW, it is done via SAP BW interfaces, which still comply with runtime terms.
- Result: Lower cost and simplicity since the HANA DB is an embedded part of the SAP solution. The trade-off is that if, down the road, they want to do something outside SAP’s scope (say, connect a third-party AI tool directly to the ERP database for real-time analysis), they would either have to forego that or convert to full-use licensing.
Example 2: “Data Innovation” Company (Full-Use License Scenario)
A global retailer runs SAP S/4HANA for core finance and inventory, but it also has a rich e-commerce platform and IoT sensors streaming data. The retailer wants to consolidate SAP and non-SAP data in HANA to perform advanced analytics and machine learning and gain real-time customer insights.
They plan to build custom apps on HANA and use third-party analytics tools that query HANA directly.
This company opts for a HANA full-use license:
- With full-use licensing, they can ingest e-commerce and IoT data directly into HANA and join it with SAP transactional data for a 360° view. They leverage HANA’s native functions and even create custom calculation views in HANA to support data science teams.
- They deploy a HANA data mart as a sidecar to S/4HANA. Even though S/4HANA can run on a runtime license, the sidecar environment requires full use, and they choose to license HANA broadly to cover both for flexibility. This avoids any gray area—HANA’s ERP and custom analytics are fully licensed under the memory metric.
- Cost trade-off: They had to budget for several hundred GB of HANA licensing. Initially, this was expensive (full-use licenses cost more than a runtime would have), but it enables their innovation. They also took advantage of volume tier discounts by licensing a larger block of memory upfront, anticipating growth.
- They negotiated with SAP to get credit for the originally included runtime license towards the full-use upgrade. This softened the financial impact and allowed for a seamless transition without overpaying.
- Result: Higher database licensing costs but maximum flexibility to use HANA. This investment is justified by the value gained from advanced analytics and integration across systems. They also significantly reduced compliance risk, since they are fully licensed for all usage, they don’t worry about inadvertently breaching runtime terms.
Example 3: “Growing Footprint” Scenario (Staying Runtime vs. Switching Later)
Consider a services company that started with SAP ERP on HANA runtime. Over time, they acquired smaller companies and introduced new data sources. Initially, the runtime license covered their needs (just SAP ERP).
After an acquisition, they often need to combine SAP data with data from an external CRM system for reporting. They face a choice: extend SAP’s capabilities only using SAP tools (to try to remain within runtime limits), or upgrade to full use and build a more direct integration.
- Suppose they attempt to stay with the runtime license. In that case, they might use SAP’s Data Intelligence or SLT replication to bring external data into SAP tables, keeping all interactions within the SAP stack. This could work, but it might be a bit convoluted technically. They must be careful that external users or systems only access the data through SAP’s application server.
- If this becomes too limiting, they might engage SAP to convert to a full-use license. In negotiations, SAP may allow the money spent on the runtime license to count as credit toward purchasing a full-use license. This way, the company doesn’t feel it “wasted” the initial investment. SAP, on the other hand, gains a higher recurring maintenance base from the full-use license.
- Such a switch could “double” the database cost, but it may be necessary for the business’s flexibility. Proper stage planning and justification (e.g., showing how full-use enables a new business initiative) can sometimes result in SAP offering promotions or better terms for the conversion.
- Lesson: It’s important to plan for organizations in growth mode or with evolving requirements. Starting with runtime is fine, but having a roadmap is better. If you foresee needing full use in a couple of years, it might be better to negotiate it upfront or ensure contractual agility to switch later without punitive costs.
These examples highlight that the right HANA licensing model depends on use cases. Pure SAP environments gain cost efficiency from runtime licenses, while diverse or innovation-driven environments need full use despite the higher price.
It’s common for companies to start with runtime licenses for SAP projects and realize they need full use for additional flexibility. Awareness and proactive planning can prevent compliance issues and budget surprises.
Read Upgrading to HANA from Other Databases.
Negotiating HANA Licensing and Optimizing Costs
Procuring SAP HANA licenses is often a significant negotiation in any SAP deal. Here are strategies for negotiating favorable terms and controlling costs, particularly for the full-use model:
Negotiation Strategies
- Bundle HANA in Enterprise Agreements: If you are undertaking a large SAP purchase or migration (such as moving to S/4HANA or a broad digital transformation), try to negotiate HANA licensing as part of the overall package. SAP sales reps often have flexibility in how they allocate discounts. While the HANA DB license might be “list price” (non-discountable on paper), you could negotiate a greater discount on application licenses or services to offset it. Alternatively, in an enterprise license agreement (ELA) or a migration program, SAP can request to include a certain amount of HANA full-use capacity as a bundled item.
- Assess Future Needs – Don’t Underbuy or Overbuy Memory: Work with your technical teams to conduct a thorough HANA sizing exercise. Determine how much memory is needed now and in the next few years. Use SAP’s sizing reports and tools to estimate memory requirements based on data volume and growth. This helps avoid buying an excessive HANA license (shelfware) or under-licensing and facing a true-up. SAP licenses full-use HANA in blocks, so you might buy slightly more than you need to accommodate growth, but not so much that you have a lot of unused capacity. If you expect significant growth, negotiate pricing tiers up front (lock in a better per-GB rate for additional units you’ll buy later).
- Leverage Conversion Credits: Bring this up during negotiations if you already paid for HANA runtime licenses as part of previous deals and now realize you need full use. SAP has been known to offer conversion programs or credits to customers who move to full use. Essentially, part of what you spent on runtime can be credited toward the cost of the full-use license, making the switch more palatable. Get any such arrangements in writing, and ensure you understand whether converting to full-use nullifies the runtime license (it usually does, as you won’t need the runtime once full-use is in place).
- Consider a Phased License Approach: Some organizations license a mix of HANA editions. For example, they might keep a runtime license for their main S/4HANA system but purchase a small full-use license for a separate HANA instance that hosts certain custom applications or a data mart. SAP generally requires full use if any non-SAP usage is needed on a given HANA instance, but you could architect your landscape such that only specific instances require full use. When negotiating, clarify with SAP how this scenario will be handled regarding contracts. You may need separate license materials for each HANA instance type. This approach can optimize cost by only paying the premium for the systems that truly need it.
- Maintenance and Renewal Negotiation: Remember that annual maintenance on HANA licenses is substantial. If you have a large HANA deployment, the yearly support cost is 20% of the license fee, which can be significant. Sometimes, you can negotiate multi-year maintenance caps or tie maintenance fees into the broader support agreement. Also, if you move to a subscription model later (like RISE), find out if any credit is given for existing on-premise licenses (SAP sometimes offers to convert perpetual licenses into cloud subscription credits).
- Audit Protection Clauses: Given the compliance risks associated with HANA runtime, some customers negotiating large deals seek contractual assurances or clarifications. While SAP will not permit outright non-compliance, you might negotiate a clause that gives you a period to remedy any license breach (for example, if an audit finds unintentional misuse of HANA runtime, you get 90 days to purchase the necessary license at standard terms without penalty, instead of back-dated penalties). This term can protect you from heavy back-license fees if you correct the course.
Read Managing HANA License Costs.
Optimizing Memory Usage (Technical Cost Control)
Since the cost of HANA full-use licensing is directly tied to memory, technical optimization of memory usage translates to cost savings.
Even with a runtime license (where the cost isn’t directly based on GB), efficient memory use can help avoid needing larger hardware or additional licenses for performance.
Key practices include:
- Data Archiving and Aging: Not all data needs to reside in memory. Implement data archiving policies for old transactional data or infrequently used records. SAP provides Data Aging for S/4HANA and archiving tools that move data out of the active HANA memory into cheaper storage while still being retrievable if needed. By trimming the live dataset, you reduce the HANA memory footprint needed. For example, archiving financial documents older than 7 years could significantly cut memory usage in an ECC or S/4 system.
- Use Native Storage Extensions (NSE) and Tiering: SAP HANA has capabilities like Native Storage Extension (NSE), which allows certain data to be kept on disk with a buffer cache instead of fully in memory. This is essentially a warm tier of data. Using NSE for large, less-frequently accessed tables can reduce the licensed in-memory requirement (you might only license the memory for the cache, not the full size of that data). Similarly, consider a tiered storage architecture: hot data in HANA memory, warm data in NSE or extension nodes, cold data in a data lake or cheaper database. Only the hot tier needs full HANA licensing. SAP’s Data Hub or other tools can help manage such tiers transparently.
- Housekeeping and Compression: Ensure you are using HANA’s compression effectively – HANA stores data columnar and usually compresses it automatically, but monitor if any tables are uncompressed or if delta merge settings are suboptimal. Regular housekeeping tasks, such as purging temporary data, removing obsolete data, and compressing tables, can free up significant memory. HANA’s internal monitoring tools (HANA Cockpit or Solution Manager) can identify the largest tables, fragmentation, and other issues to target optimization.
- Scale-Out vs. Scale-Up Considerations: HANA can scale out to multiple nodes, but licensing is typically based on the total memory across all nodes. Sometimes, keeping a system on a single node (scale-up) with the same total memory might be more license-efficient than multiple smaller nodes due to how SAP licenses certain editions. Always confirm with SAP how a multi-node (scale-out) HANA deployment is licensed – it’s generally a bit more complicated. The decision should be primarily technical, but be aware of any licensing nuances (for example, each appliance instance might need to be licensed). Avoid over-provisioning nodes with more memory than is licensed, as audits may sometimes check the installed capacity against the licensed capacity.
- Monitoring and Alerts: Treat HANA memory usage like a purchased capacity. Configure monitoring to alert if memory usage approaches the licensed limit (in full-use scenarios). HANA provides a license usage overview that shows your memory usage against the licensed amount. Catching a trend of increasing usage early allows you to clean up data or budget for additional blocks. Don’t wait for an audit to discover you accidentally exceeded your licensed memory.
- Test and Size before Production: When implementing new modules or large projects, run sizing simulations or Proof-of-Concepts to estimate the data growth. For instance, if you’re adding a new SAP BW data model that will bring in billions of records, gauge how much memory that will consume. This way, you can plan license needs rather than reactively buying additional blocks in a rush (which might be at a less favorable price if not pre-negotiated).
By negotiating smartly and continuously optimizing your HANA environment, you can contain the costs of HANA licensing. It’s a combination of commercial strategy and technical discipline.
Companies that actively manage both aspects tend to have fewer budget shocks and better ROI on their HANA investment.
Common Misconceptions and Pitfalls
Several common misconceptions about HANA licenses often arise in the complex realm of SAP licensing. IT leaders should be aware of these and avoid the pitfalls:
- “The HANA Runtime license covers anything as long as we own SAP products.”
Misconception: Some believe that once they have a HANA runtime license, they can use that database for any purpose (analytics, custom extensions, etc.) as long as it’s within their organization.
Reality: The runtime license is strictly limited. It only allows usage of HANA with the specific SAP applications you’ve licensed. You cannot, for example, connect a third-party reporting tool directly to the HANA SQL port or build a custom data mart schema on the side. Doing so requires a full-use license. It’s easy to violate this inadvertently – for instance, giving an external data science team read access to HANA for SAP data analysis would break the rules if they are not going through an SAP application. Always double-check usage rights; the rule is that if an interaction with HANA is not through an SAP-provided application interface or tool, it’s likely not allowed under runtime. - “If SAP sold us HANA with S/4HANA, it must be full-featured, and we can use all HANA capabilities.”
Misconception: A variant of the above, where companies assume that the HANA that comes with S/4 can be used for things like additional schemas, custom stored procedures, or even running a small non-SAP dataset, since the software technically allows it.
Reality: Technically, the same HANA software is installed, but license-wise, you are not entitled to use certain capabilities. SAP doesn’t always disable features in its software; it relies on contractual terms. For example, HANA includes powerful predictive analysis libraries. Under a runtime license, those might only be used if called via an SAP application (and if that application usage is allowed); you couldn’t directly call them from your program. Don’t confuse technical possibility with legal entitlement. Always refer to SAP’s Software Use Rights document, which outlines what is included in the runtime edition. - “Memory licensing is linear – if we double the memory, we double the cost.”
Misconception: Companies might assume HANA full-use licensing costs scale 1:1 with memory, leading to linear budget forecasts.
Reality: SAP’s tiered pricing means the cost per GB decreases as volumes increase. This is good news for scaling, but smaller deployments are relatively expensive per unit. Conversely, very large HANA deployments benefit from economies of scale in licensing. However, one should also not assume infinite scaling yields infinite savings – floor prices exist. The misconception can go the other way, too: some assume they’ll get a discount if they only need a little memory (not really – there’s usually a minimum of 64 GB unit). Always consult the current price list and understand the volume discount breakpoints. And note, while not strictly linear, HANA is still expensive – doubling memory might not double the cost, but it will certainly increase it (just slightly less than double due to tiering). - “We have a HANA runtime license, so there’s no memory limit – we can load as much data as we want.”
Misconception: Because runtime isn’t sold by GB, some assume they can expand their HANA database without any constraints as long as it’s for SAP apps.
Reality: While no direct license enforcement of memory for runtime, practical limits still apply. Your hardware and performance needs will dictate how much you can load. Importantly, if your SAP application requires significantly more data or users, that likely increases your SAP application license costs, which raises the HSAV base and indirectly costs more for the runtime DB. So you’re not exactly getting “free” extra memory; you paid for it via application growth. Also, extremely large HANA instances might push you into scenarios where SAP could insist on a different licensing approach (in edge cases). In summary, don’t let the lack of a GB metric lead to uncontrolled data growth – manage data volume for performance and good hygiene, if not for direct license reasons. - “Switching to full-use later will be impossible or unbearably costly, so we must decide perfectly now.”
Misconception: This can cause analysis paralysis—the fear that if you choose runtime now, you can never change it later without astronomical cost, or vice versa.
Reality: While planning is important, SAP does provide paths to change your licensing model. As noted, many have switched from runtime to full use when business needs changed. Yes, it will cost more at that time, but often, you won’t pay double for the same thing – you pay the difference (since runtime fees cover part of it). It requires negotiation and a solid business case, but it is not “impossible.” On the other hand, if you over-invest in full-use and realize you never needed it, you can’t easily downgrade to runtime (you’d have already paid for the perpetual license). In a subscription scenario, you might scale down. So, make the best decision with the available information, but know that you can course-correct if needed, with some effort. - “All SAP HANA editions are the same – just pricing.”
Misconception: Assuming that runtime vs. full-use is just a pricing construct and that all HANA features are always included.
Reality: There are different HANA editions, especially on the full-use side, such as HANA Platform Edition and HANA Enterprise Edition, each with different included components, including replication tools, provisioning tools, and rules frameworks. The runtime license generally corresponds to a subset of features that SAP applications need. The full-use license may be available in Standard or Enterprise editions, where Enterprise includes additional capabilities, such as smart data integration and extra engines. Make sure you understand which edition you are buying. For example, if you need a feature like HANA Graph Engine or Data Lake, confirm it’s part of the edition you license. Do not assume every feature of HANA is automatically yours — check the license inclusions. Working with your SAP account team or a licensing advisor to map needed features to the right edition is wise.
By dispelling these misconceptions, CIOs and procurement managers can approach HANA licensing decisions with a realistic understanding and avoid costly mistakes or compliance issues down the road.
Summary and Key Takeaways for CIOs and IT Procurement
SAP HANA licensing requires a balance of technical insight and commercial acumen. The following key takeaways summarize best practices and recommendations:
- Choose the Right License Type Aligned to Usage: Carefully evaluate whether a Runtime license (SAP-only use) suffices or if you need Full-Use for broader requirements. If your HANA database will strictly serve SAP applications (such as S/4HANA and BW) with no external access, the cost advantage of runtime is significant. However, if any current plans involve non-SAP data or custom development on HANA, opt for full use or plan how to upgrade when needed. Align the choice to your IT strategy (SAP-centric vs. data platform).
- Understand Pricing and Plan for Costs: The HANA runtime is priced as a percentage of SAP software value, and is charged by memory GB with tiered pricing. Model out the total cost of ownership for both scenarios over the system’s life. Include initial license fees and ongoing support. If using full use, right-size your memory footprint and know how adding more memory or users will translate to additional costs. Don’t assume linear scaling; leverage tier discounts and plan capacity upgrades in stages.
- Integrate HANA Licensing into SAP Negotiations: When making any major SAP purchase or renewing agreements, negotiate HANA licensing in context. For new S/4HANA projects, ensure the HANA runtime fee is transparently included and at the expected rate. If you anticipate needing full use, try to negotiate it upfront or secure flexibility, such as conversion credits, in the contract. Treat the HANA license as a strategic component of your SAP relationship, not an afterthought.
- Stay Compliant – Know Your Boundaries: If you have a runtime license, implement governance to ensure that no one uses the HANA database illegally. Communicate the restrictions to your IT teams and consider internal audits. If in full use, ensure you’re not exceeding licensed memory. Use SAP’s measurement tools regularly. Being proactive avoids audit surprises. In case of audits, maintain clear records of what licenses you have and how HANA is used. An informed and prepared stance can turn audits into non-events.
- Optimize to Save Money: Encourage your IT and business teams to continuously optimize HANA’s memory usage. Techniques like archiving old data, purging unused data, and leveraging HANA’s native storage extension for warm data can reduce license needs. Also, consider consolidating systems on a single HANA instance only if licensing allows. Sometimes, having separate, smaller HANA instances (each under a separate runtime for its own SAP apps) can be cheaper than a single, full-use instance, or vice versa. Evaluate architecture choices with licensing in mind.
- Monitor and Revisit License Needs Over Time: HANA usage isn’t static – new projects, acquisitions, or business models can change requirements. Make it a practice to review your HANA license strategy annually. If your organization’s direction changes (for example, a new big data initiative), reassess if your current licensing still fits. It’s better to proactively approach SAP about adjusting licenses (possibly negotiating an expansion or upgrade) than to be caught reactive. Similarly, if you move to the cloud or RISE, plan how on-premises licenses will be sunset or converted.
- Consult Experts if Needed: The nuances of SAP licensing can be tricky. Don’t hesitate to involve SAP licensing specialists or advisory firms to validate your strategy. Firms with experience in SAP contract negotiations or software asset management can identify optimizations or risks that internal teams might miss. Given the high stakes – HANA licenses can run into millions for large enterprises – an expert second opinion can be worth it. Additionally, peer networking— talking to other CIOs who have gone through HANA licensing decisions —can yield valuable insights and lessons learned.
By following these guidelines, CIOs and procurement leaders can turn SAP HANA licensing from a potential minefield into a well-managed asset.
The key is aligning licensing choices with business needs, negotiating smartly, and continuously managing usage.
When correctly licensed and utilized, SAP HANA can deliver tremendous value as a high-performance data platform supporting your digital enterprise.
