SAP S/4HANA Licensing Overview

SAP S/4HANA Licensing Overview

SAP S/4HANA is SAP’s next-generation ERP suite, and understanding its licensing is crucial for CIOs, IT licensing managers, and procurement leaders. Unlike the older SAP ECC (ERP Central Component), S/4HANA introduces new licensing models and a simplified structure.

This overview explains how S/4HANA licensing works, the types of licenses (Enterprise Management vs. Line-of-Business solutions), the Full User Equivalent (FUE) concept, key differences from ECC licensing, and how S/4HANA’s simplifications impact licensing.

We also provide real-world examples, practical tips, and recommendations for effectively managing S/4HANA licenses.

How S/4HANA Licensing Works

SAP S/4HANA offers both perpetual licensing (on-premises) and subscription licensing (cloud), giving organizations flexibility in how they pay for and deploy the software.

In all cases, S/4HANA licensing is essentially based on two dimensions:

• Software Components (Product Scope): What functionality are you entitled to use (e.g., core ERP vs. add-on modules).
• User Access: How many users (and of what type) can access the system?

For on-premises deployments (or RISE with SAP private cloud), licensing often follows the traditional model: you purchase a perpetual license for the software and several user licenses, then pay for annual support.

For cloud services (public cloud or RISE with SAP), licensing is typically subscription-based, where you pay a recurring fee that covers software usage (often measured in FUE, explained later) and includes cloud infrastructure and support.

Key points in S/4HANA’s licensing structure:

• Named Users / User Licenses: In S/4HANA on-prem, each person accessing the system needs a user license. Users are classified into license types (detailed below). In cloud editions, users are counted via the FUE metric rather than individual named licenses.
• Core vs. Extended Functionality: S/4HANA comes with an Enterprise Management (Digital Core) license that covers the essential ERP functions. Additional Line-of-Business (LoB) or industry solutions, such as advanced supply chain, retail, or industry-specific modules, are licensed separately as needed.
• Indirect Access: Like ECC, S/4HANA requires licenses not only for direct users but also for indirect usage (e.g., if external systems create SAP transactions). To simplify this, SAP introduced a Digital Access model in S/4HANA, where indirect usage can be licensed based on documents (e.g., the number of orders or invoices created via external systems) instead of requiring named user licenses for external systems.

In summary, to properly license S/4HANA, one must license both the software components (the core and any additional modules) and the users accessing the system, under either a perpetual or subscription model.

License Types: Enterprise Management vs. LoB Solutions

SAP S/4HANA Enterprise Management (Core): This is the foundational license for S/4HANA, often referred to as the “Digital Core.” It includes a wide range of core ERP modules and functional capabilities across finance, sales, procurement, manufacturing, supply chain, asset management, human resources, and more.

Essentially, the Enterprise Management license gives you the right to use S/4HANA’s standard business processes (analogous to what SAP ECC 6.0 core ERP provided, plus many enhancements).

Typically, a one-time fee (for perpetual on-prem) or an included element of the subscription covers this core ERP functionality.

Line-of-Business (LoB) and Industry Solutions: Beyond the digital core, SAP offers extended modules for specific lines of business or industries.

These include solutions like Advanced Supply Chain (e.g., Extended Warehouse Management and Transportation Management), Industry-Specific add-ons (for retail, utilities, etc.), and specialized functionality (such as Treasury and Risk Management and advanced planning).

Each line of business (LoB) or industry solution typically has its licensing metric, often based on business metrics such as the number of orders, revenue, or other usage measures, or a separate subscription component.

• LoB Engine Licensing: These add-ons are often referred to as “engines” and are licensed separately from the core software. For example, suppose you need SAP Extended Warehouse Management (EWM) or SAP Transportation Management (TM) embedded in S/4HANA. In that case, you might pay for the module based on metrics, such as the number of warehouse transactions or freight orders. Importantly, S/4HANA’s LoB/industry solutions no longer require additional named user licenses – a user who is already licensed for the core can use the add-on if the engine itself is licensed. This is a shift from the ECC era, where add-ons typically required both an engine license and appropriate user licenses. S/4HANA simplifies this: you license the engine, and any appropriately licensed S/4 user can access it.
• Scope Inclusion: S/4HANA’s core license is broader than ECC’s out-of-the-box scope. Some functionality that used to be separate products in ECC (for example, certain CRM or SRM features, basic warehouse management, etc.) is now embedded in the S/4HANA core. This means you might not need as many separate licenses as before unless you require advanced capabilities. On the other hand, truly specialized or premium capabilities (often labeled as “Advanced” or “Extended” in S/4) will require a Line of Business (LoB) license.

Example: If a company uses basic procurement and sales functionality, the Enterprise Management license covers that.

But if they need Advanced ATP (Available-to-Promise) or Demand-Driven Replenishment, those might come as separate LoB solution licenses.

A retail industry customer might license the Retail add-on for specialized retail capabilities on top of the core. Each of these would be an add-on license in addition to the Enterprise Management core license.

In practice, a S/4HANA license contract lists the core S/4HANA Enterprise Management software and any specific line of business (LoB) or industry solutions the customer chooses to use, each with its pricing metric.

The good news is that the core license covers a lot, and you can only add LoB licenses if you truly need those extended features. Users who only use a LoB solution and not the core may not even need a core user license.

For instance, an employee using a standalone SAP industry solution could potentially be licensed only for that solution. However, most users eventually interact with the core ERP processes, so generally, organizations license a sufficient number of core users.

Named User License Categories in S/4HANA

For on-premises S/4HANA (or private cloud under RISE), SAP still uses a named user licensing model, but it has been greatly simplified compared to SAP ECC’s model.

Under ECC, SAP had a large number of user types, including dozens of different roles such as Professional, Limited Professional, Employee Self-Service, and Warehouse Operator. S/4HANA consolidates these into a few main user license categories for the core:

• Professional Use: This is the broadest and most powerful user type. A Professional user can perform unrestricted tasks across all core S/4HANA functional areas. These are your “power users” or heavy users – for example, a finance manager posting journals, an SAP BASIS administrator, or a supply chain planner with access to advanced features. Professional Use licenses cost the most per user, but they allow full access to the digital core.
• Functional Use (Limited Professional): A Functional user (sometimes referred to as a Limited Professional user) has access to a defined set of modules or processes related to their job role, but not full enterprise-wide access. For example, a procurement officer might use only procurement and inventory modules, or an HR specialist might use only HR and payroll functions. The Functional user license is priced lower than the Professional because it restricts users to specific business areas or transactions. This category is meant for users who need more than self-service but less than full control.
• Productivity Use (Employee Self-Service): A Productivity user is essentially a light user. These are often employees who use the system in a limited capacity, such as entering timesheets, creating expense reports, requesting leave, viewing payslips, or basic data entry and inquiry. In S/4HANA, this covers what was previously called Employee Self-Service (ESS) or other lower-level roles. These licenses are the least expensive per user.
• Developer and Other Roles: S/4HANA also typically includes a Developer user license type (for individuals who only build and maintain the system, but don’t execute business transactions) and may also include some technical users or engine-specific users. Developer users often have deep technical access but are typically limited to development and configuration activities. (In some contracts, developer licensing may be bundled or treated separately.)

User License Hierarchy: These user types are hierarchical – a Professional user can do everything a Functional user can, and a Functional user can do everything a Productivity user can.

This means if someone has a Professional license, they don’t need any lesser license; their one license covers all. It also means assigning the appropriate minimum-level license to each user based on their needs to control costs.

Misclassifying users with a higher license type than needed can significantly drive up costs. For instance, if a casual user is given a Professional license unnecessarily, the company pays a premium for that access.

The best practice is to map each role in your organization to the correct license type and periodically review usage.

Under a perpetual license model, you would purchase a specific number of each type of user license (e.g., 50 Professional licenses, 200 Functional licenses, 1,000 Productivity licenses, etc.).

SAP also charges annual support, typically around 20% of the license cost, for these. Optimizing the count and type can yield ongoing savings.

Named User vs. S/4HANA User: It’s worth noting the terminology: in ECC, these were referred to as SAP Named Users, and each user required a license for core functionality and possibly additional licenses for add-ons.

In S/4HANA, they are often just called S/4HANA users.

Crucially, if a S/4HANA user has a license for the core, they don’t require separate named-user licenses for each add-on module they use – the add-ons are covered as long as the engine itself is licensed.

This reduces the “double licensing” that could occur in ECC days.

Full User Equivalent (FUE) – Subscription User Licensing

In SAP S/4HANA Cloud (and the RISE with SAP offering), SAP introduced a new way to measure users: Full User Equivalent (FUE). This concept is designed to simplify how customers license users under a subscription model:

What is FUE? It stands for Full User Equivalent, essentially a normalized unit of user licensing. Instead of buying discrete licenses for each category of user, a company purchases a certain number of FUEs – a pooled entitlement.

Each user type (Advanced, Core, Self-Service, etc.) “consumes” a fraction of an FUE based on its weight.

SAP defines conversion ratios for user types under Fuel Usage Efficiency (FUE). For example (illustrative typical values):

• 1 Advanced User = 1.0 FUE. An Advanced user is roughly analogous to a Professional user with full functionality.
• 1 Core User = 0.2 FUE. A Core user might correspond to a Functional user; five of these equal 1 FUE.
• 1 Self-Service User = 0.033 FUE. This means about 30 self-service/light users equal 1 FUE.
• (Developer or technical users in the cloud are usually assigned a small fixed FUE value as well, often similar to or less than a core user.)

When you subscribe to S/4HANA Cloud, you commit to a certain number of FUEs. You can then allocate those FUEs across your user population as needed.

For instance, if you have 100 FUEs, you could license 100 advanced users (100 * 1.0), or 500 core users (500 * 0.2 = 100 FUE), or 3,000 self-service users (3000 * 0.033 ≈ 99 FUE), or a mixture (e.g., 50 advanced + 250 core + 1500 self-service might together consume around 100 FUE).

Benefits of FUE:

• Flexibility: You’re not locked into exact counts of each user type. As your needs change, you can reallocate FUEs within the agreed-upon ratios. If more users need advanced access tomorrow, you can convert some of your FUE capacity to cover them (usually by reducing the number of core or self-service users, as long as you stay within your total FUE pool).
• Simplicity: It consolidates licensing into one metric. You negotiate one number (FUEs) rather than juggling numbers for professionals, functions, etc. This can simplify the contract, such as “all you can eat” up to X FUEs.
• Cost-Alignment: Companies with many occasional or light users can save money. Instead of paying a full license for each user, you pay fractional amounts. For example, 30 self-service users counting as 1 FUE can be cost-effective compared to buying 30 separate licenses in a traditional model.

Cautions with FUE:

• Capacity Planning: Determining the right number of FUEs requires analyzing your user base. You must forecast how many of each type of user you will have. If you miscalculate, you could end up short (having to buy more FUEs) or overcommitted (paying for unused capacity).
• Mostly Heavy Users: If your company mostly has heavy (advanced/professional) users, FUE may not offer savings, since each heavy user is 1 FUE; it’s effectively one-to-one. In such cases, a traditional model or simply understanding that the FUE count will equal the number of users is key.
• Changing Ratios: The ratios (weights) are defined by SAP in the contract. Typically, they are as above, but they could vary. Ensure you understand how many of each type equate to 1 FUE in your agreement.
• Tiered Pricing: SAP often offers volume discounts on FUE subscriptions. The price per FUE can drop if you purchase higher tiers of FUEs. Paradoxically, buying a bit more FUE than you need could sometimes reduce your overall cost per unit if it crosses a discount threshold. Always evaluate the pricing tiers when negotiating.

In essence, FUE is aimed at cloud subscriptions to give customers a more consumption-based licensing approach. It is a key difference from the purely named-user model of the past.

Many organizations find FUE convenient, but it does introduce a new layer of complexity in forecasting and monitoring usage.

S/4HANA Licensing vs. SAP ECC Licensing – Key Differences

S/4HANA’s licensing model carries forward some principles from ECC but also introduces significant changes.

Here’s a comparison highlighting major differences:

In summary, S/4HANA licensing is generally more streamlined – fewer user types to manage, a more unified core license, and clearer options for indirect use.

However, the introduction of cloud subscription models and FUE adds a new dimension that ECC, which was mostly perpetual, didn’t have.

Companies must now decide between staying with perpetual licenses or moving to subscriptions, which may be influenced by whether they want to run on SAP’s cloud or continue on-premises.

How S/4HANA Simplifications Impact Licensing

SAP S/4HANA was marketed as a “simplified” version of SAP’s ERP, and this extends to licensing in several ways:

• Simplified User Classification: As noted, the consolidation of numerous ECC user types into three main types (plus a developer) in S/4HANA makes license management simpler. It’s easier to classify users and understand the cost implications. This was done to cut through the complexity of ECC’s 100+ user definitions. Impact: Organizations can more clearly delineate who needs a full license versus a limited one. The simplification reduces the risk of mislicensing due to the need to choose between dozens of categories.
• Streamlined Product Portfolio: S/4HANA eliminated or merged many overlapping modules. For instance, SAP CRM’s core sales and service functionalities can now run directly on S/4HANA; no separate CRM server is needed in many scenarios. SAP SRM’s supplier management features are largely absorbed into S/4’s procurement. This streamlining of modules means that customers no longer have to license and integrate multiple separate products. Impact: From a licensing perspective, some customers find that functionality they used to pay extra for in ECC is included with S/4HANA Enterprise Management. However, if you need the full advanced capabilities of those former products, you might license a LoB solution (e.g., SAP Customer Experience for advanced CRM, Ariba for procurement, etc.). Overall, the core ERP license in S/4 covers more ground, making it a cost-efficient option.
• Value-Based Metrics for Add-Ons: The LoB solutions in S/4HANA use more standardized, business-aligned metrics, such as the number of users, orders, and revenue, instead of some of the obscure metrics used in the past. This is an attempt to make licensing more transparent and tied to business value. For example, instead of licensing a supply chain add-on by a technical metric, you might license it by the number of warehouses or deliveries processed, which aligns with business scale.
• Digital Core vs Extensions: SAP’s philosophy with S/4HANA is “clean core.” The core license covers what most businesses need on a day-to-day basis, and extensions (LoB modules or cloud services) cover specialized needs. This modular approach allows a base license and optional add-ons. Impact: You can better tailor your license to what your business uses. If you don’t use a particular set of functionality, you don’t license it separately. In ECC, you may have paid for some modules as part of a broader package, even if usage was low. S/4 encourages more granular additions, with the trade-off that you need to be aware of what’s included and what’s not.
• Indirect Use Clarification: The introduction of the Digital Access model simplified (in principle) how to handle indirect usage licensing. Instead of debating whether a Salesforce or e-commerce user accessing SAP data needs a named user license, SAP provides a measurable approach: count the documents generated and license those. This was an attempt to simplify and provide transparency (though customers still need to estimate document counts, which can be tricky). SAP even ran adoption programs to help customers convert to this model.
• Fewer Surprises (In Theory): With S/4HANA, SAP has aimed to prevent customers from accidentally using unlicensed software. For example, S/4HANA comes with a Feature Scope Description document that clearly outlines which features are core (included) and which require an extra license. By consulting this, companies can know ahead of time if a function they’re enabling will trigger a licensing need. This level of documentation helps licensing managers stay compliant and avoid post-implementation shocks (e.g., “Oops, using this advanced scenario means we should have bought a license for component X”).

Real-World Simplification Example: Under ECC, if a company wanted to implement SAP’s Transportation Management, they often needed a separate SAP TM installation with its own license and user licenses, and to integrate it with ECC.

In S/4HANA, basic transportation management functionality is embedded in the core, without requiring an extra license. For advanced routing or optimization, the company can activate the S/4HANA Supply Chain for Transportation Management LoB component.

They pay for that component (e.g., number of freight orders), but their existing S/4 users are still allowed to use it. The project is simpler, as it uses the same S/4 system, and licensing is more straightforward than managing ECC and TM user licenses.

Real-World Examples and Practical Tips

To make these concepts concrete, here are a couple of scenarios and tips drawn from real-world S/4HANA licensing experiences:

Example 1: Migrating from ECC to S/4HANA On-Premises – A global manufacturing company has 1,000 users on ECC. They currently have 600 Professional, 300 Limited Professional, and 100 Employee Self-Service user licenses in ECC, as well as licenses for ECC core and various add-ons, including Warehouse Management and APO for planning.

As they plan the move to S/4HANA, they discover that basic warehouse management is included in S/4’s core, and APO’s functionality is partially replaced by embedded PP/DS in S/4 (which requires an add-on license).

They perform a license mapping exercise: many Limited Professional users will fit into S/4HANA Functional user licenses, and ESS users correspond to Productivity users.

They decided to purchase 500 S/4 Professional, 400 Functional, and 100 Productivity licenses, which more accurately reflect their usage (fewer full Professional licenses since some previous power users now only need a limited scope).

They also license the Production Planning & Scheduling (PP/DS) Line of Business solution for advanced planning (metric: number of plants). Because they engaged in a contract conversion program with SAP, they got credits for their old licenses, reducing the net cost. Post-migration, they carefully monitor usage.

Some users who rarely use the system are downgraded to Productivity licenses at the annual true-up, which saves on maintenance fees. The company also enabled SAP’s Digital Access license to cover orders coming in from their e-commerce site, ensuring indirect usage is compliant.

Example 2: New S/4HANA Cloud Implementation (FUE Model) – A services company opts for SAP S/4HANA Cloud, public edition under a RISE with SAP contract. They calculate that they have about 50 heavy users (finance professionals, project managers, and procurement leads) and around 300 light users (consultants entering time and expenses and managers approving workflows).

Under FUE, heavy “Advanced” users are 1 FUE each, and light self-service users are 0.033 FUE each. If all 50 heavy and 300 light are active, that’s roughly 50 + (300 * 0.033) ≈ 60 FUEs. They contract for 60 FUEs per year.

During implementation, they realize some consultants need more access than self-service (they need to create project invoices), so they plan to upgrade 30 of those to “Core” users (0.2 FUE each).

The flexibility of FUE allows for this adjustment as long as it stays within the total FUE purchased. They also notice that if their usage grows, buying an extra block of FUEs to reach 80 FUEs will give them a better price per FUE, due to a volume discount tier.

They decide to contract 80 FUEs, giving headroom for growth and potentially connecting an external CRM system via digital access without worrying about hitting a ceiling.

Tip: They periodically review how many users of each type are active. If, for instance, the self-service users were overestimated and only 200 are actively using them, they might reduce the FUE subscription in the next term or allocate those FUEs elsewhere, such as by enabling an extra module.

Practical Tips for SAP Customers:

• Assess Your User Base: Before finalizing licenses, do a thorough analysis of user roles and activities. Determine how many truly need full (Professional/Advanced) access versus limited. Align job roles to the appropriate S/4HANA user type. This prevents over-licensing. For example, give read-only or reporting users a Productivity license, not a Professional one.
• Leverage SAP’s tools and programs: SAP provides tools like USMM/LMS (license measurement) and newer utilities to simulate FUE consumption or check authorization usage. Use these to estimate license needs. If you’re moving from ECC, ask SAP about conversion programs; they often provide credit for unused ECC licenses or attractive bundles to switch to S/4. Take advantage of any promotions, such as the Digital Access Adoption Program, if indirect usage is significant.
• Mind the LoB Features: Make a list of which S/4HANA modules you plan to use and cross-check with SAP’s feature scope description or price list. Ensure you have licensed any necessary LoB solution. On the flip side, don’t pay for what you don’t need—if a certain advanced module isn’t in your roadmap, you can always add it later. Start with the core and most critical extras.
• Consider the Future (Cloud vs. On-Prem): The S/4HANA licensing choice is intertwined with your deployment strategy. If you anticipate benefiting from SAP managing your infrastructure (and you prefer an OPEX subscription model), consider evaluating RISE or S/4HANA Cloud licensing. If you have an established data centre and want more control (and have sunk costs in perpetual licenses), staying on-prem with perpetual licenses might be cost-effective. Some enterprises even do a hybrid: e.g., keep some licenses on-prem and some in the cloud for different divisions – but be cautious, as you’ll need to manage both models.
• Stay Compliant with Indirect Use: Map out scenarios where external systems interact with S/4HANA, including third-party apps, portals, and IoT devices. Work with SAP to either license these via the Digital Access model or ensure that access is covered by existing named users. Proactively addressing this is far better than being caught off guard during an audit. If you opt for document licensing, monitor the document counts regularly to avoid overages.
• Regular True-Ups and Monitoring: S/4HANA licensing isn’t a “set and forget” process. Business growth or changes can lead to more users or the introduction of new modules. Conduct periodic internal audits: Are all the people with Professional licenses still in roles that need them? Has a department started using a part of S/4HANA that we didn’t license (e.g., using Treasury functions without a license)? Catch those early to adjust licenses or retrain users. SAP typically allows license adjustments at renewal or with additional purchases – it’s easier to adjust proactively than to pay back maintenance in an audit.
• Negotiation and Bundling: If you’re in negotiations with SAP, remember that S/4HANA is a centrepiece of SAP’s strategy. They often bundle incentives, such as including access to a cloud platform or discounting LoB modules when you buy a core, etc. Enterprise Agreement styles (a pool of money to spend on licenses) could offer flexibility. Ensure all promised usage rights are clearly in the contract. For example, if you expect a test system or a sandbox, ensure the license includes it. Typically, SAP licenses include non-production usage rights, but clarify the limits on user counts in those environments.
• Educate Stakeholders: Licensing should be understood not just by procurement but also by implementation teams. When new functionality is enabled, the team should check if it’s covered under your license. For instance, turning on an S/4HANA Fiori app that provides an advanced feature may require a LoB license – the IT team should verify this before enabling it for end-users. Establish a governance process for this.

By following these practices, companies can avoid common pitfalls such as over-licensing (buying more than needed), under-licensing (using features without proper entitlement), or simply overspending due to a lack of clarity on SAP’s rules.

Recommendations

For CIOs, IT Licensing Managers, and Procurement Leaders evaluating S/4HANA licenses, here are actionable recommendations:

1. Develop a License Baseline: Start by documenting your current SAP usage (if coming from ECC) – users by role, modules in use, and transaction volumes. Use this baseline to plan your S/4HANA licensing requirements. If you’re a new SAP customer, map out business processes and estimate user counts by role.
2. Choose the Right Licensing Model: Decide between on-premises vs. cloud (subscription) early, as it impacts how you’ll license (named users vs. FUE). Consider the total cost of ownership over the long term. For example, if you prefer CAPEX and owning licenses, a perpetual option is suitable; if you want flexibility and SAP-managed infrastructure, a subscription might be better. Align this decision with your IT strategy: are you aiming to move to the cloud or keep your systems in-house?
3. Optimize User License Mix: Right-size your user licenses to ensure a balanced mix. Ensure each user is assigned the lowest-cost license type that meets their needs. Create internal policies to govern who gets a Professional vs Functional license, etc. If using FUE, translate your user counts into FUE consumption to verify you’re purchasing an appropriate number of FUEs. Don’t just accept SAP’s initial recommendation – do your analysis or use a third-party licensing expert if needed.
4. Include Indirect Usage in Planning: Proactively address licensing for any indirect access. Engage with SAP about the Digital Access license if you have scenarios like third-party apps creating orders or queries to S/4HANA. It may be wise to incorporate a certain volume of digital access documents in your license deal to cover these scenarios. This avoids compliance issues down the road.
5. Leverage SAP’s Conversion Programs: If you are an existing ECC customer, use SAP’s Product Conversion or Contract Conversion offerings to transition to S/4HANA. These programs can provide credit for your existing licenses (often up to the value of your current maintenance subscription) when you purchase S/4HANA. Essentially, you don’t pay twice for functionality you already own in ECC. Work with your SAP account executive to maximize these credits and ensure a smooth conversion of licenses.
6. Audit and Clean Up Before Migration: Conduct an internal license audit before migrating to S/4. Identify any shelfware (licenses or modules you aren’t using) – those could perhaps be dropped or swapped during a contract negotiation. Also, check for any inactive users for whom you’re maintaining licenses unnecessarily. Going into S/4HANA licensing with a clean, optimized user list will save costs.
7. Understand Your Contract Terms: When signing S/4HANA agreements, read the SAP Software Use Rights document for S/4HANA and ensure you understand terms such as license metrics, restrictions (e.g., a developer user license may be for non-productive use only), and how upgrades or expansions are handled. Negotiate any ambiguous points. For instance, clarify if you can reuse a license when an employee leaves and is replaced (typically yes, since named user licenses can be reassigned over time, but ensure the contract doesn’t overly restrict reallocation).
8. Monitor and Govern Post-Go-Live: After deploying S/4HANA, set up a governance process to continuously monitor license compliance and usage. Use SAP’s audit tools or third-party solutions to track how many users of each type are consuming the system and whether any usage of unlicensed components is occurring. Report on this regularly to IT leadership. This way, when annual true-ups or SAP audits happen, there are no surprises because you have already been keeping tabs and can make adjustments proactively.
9. Budget for Growth: S/4HANA often becomes a backbone for digital transformation. As your business grows or you roll out S/4 to more divisions, anticipate the need for additional licenses (users or FUEs) or perhaps new line-of-business (LoB) modules. Include a buffer or plan in your IT roadmap (and budget forecasts) for incremental licensing. It’s easier to justify and secure funding if it’s planned rather than as an emergency purchase. Also, when negotiating the initial deal, try to lock in pricing for additional licenses in the future (for example, an agreed-upon price per FUE or user if you buy more within a certain number of years).
10. Seek Expert Advice if Needed: SAP licensing can be complex, and it’s okay to seek outside expertise. Many organizations consult SAP licensing specialists or use advisory services to validate their licensing strategy. This can be especially useful during contract negotiations or when preparing for an SAP audit. A small investment in expert advice can prevent costly mistakes or oversights in a multi-million-dollar SAP licensing deal.

By following these recommendations, organizations can better align their SAP S/4HANA licensing with actual business needs, control costs, and ensure compliance.

Licensing should be a strategic planning element of your S/4HANA program, not an afterthought. Being proactive and informed is the best way to maximize value from your SAP investment.