Greenfield vs. Brownfield is not just an IT architecture decision — it’s a licensing strategy. Your S/4HANA migration path defines whether you reuse, convert, or repurchase SAP licenses.
Choosing incorrectly can lead to paying for two systems at once or forfeiting conversion credits. It even shapes your exposure to SAP audits and compliance risks.
For an overview, read our SAP S/4HANA Licensing Guide: Models, Costs, and Migration Insights.
Framing Insight: “SAP’s licensing model adapts faster than most customers’ migration plans — that’s the real risk.”
Understanding Greenfield vs Brownfield
Greenfield Implementation: A clean-slate S/4HANA installation that requires a new contract and fresh licenses (often via a RISE with SAP subscription).
You start with a blank system and modern governance, but must purchase S/4HANA licenses from scratch. This typically means a higher upfront cost and no automatic carryover of your ECC investments.
Brownfield Conversion: A system conversion upgrading your existing ECC system to S/4HANA. You aim to convert existing perpetual licenses into S/4HANA equivalents, often through SAP’s conversion programs.
The organization keeps its prior license contract (with amendments) and can receive credit for past investments. Technically, it’s more complex, but it leverages what you’ve already paid for.
Key Differences: The table below summarizes how these approaches diverge on major factors:
| Factor | Greenfield | Brownfield |
|---|---|---|
| License Base | New purchase | License conversion (reuse) |
| Cost Model | Subscription or new perpetual | Existing licenses + possible uplift |
| Maintenance | New terms (fresh maintenance) | Converted or extended under old terms |
| Credit Options | Limited (no ECC credits) | Yes (conversion credits available) |
| Complexity | Lower technically | Higher contractually (license mapping) |
Licensing Impact in Greenfield Implementations
Starting fresh with S/4HANA treats it as a net-new licensing project. There are no automatic conversion rights from ECC, so your legacy ECC licenses become potential shelfware unless negotiated otherwise.
Commonly, greenfield migrations are done under RISE with SAP (subscription cloud model) or via entirely new on-premise license purchases.
Key Features:
- You sign a brand new S/4HANA contract. Any existing ECC license entitlements are not directly applied to S/4HANA.
- All users and engines need new S/4HANA license types (e.g., Full User Equivalents, new SAP metrics). You pay for new user licenses or subscriptions.
- Often chosen for a move to the cloud or a clean architecture, which comes bundled with support and infrastructure (in RISE). Governance can be redesigned from scratch.
Risks:
- You lose the financial value of your legacy investment. SAP will not credit your previous ECC license spend toward the new system by default. The money spent on ECC licenses essentially doesn’t carry forward.
- Double maintenance costs are a real danger. If you keep ECC running in parallel during the migration (common for 12–24 months), you could be paying maintenance on both the old system and the new system. Without precautions, your IT budget might temporarily double-dip.
- A subscription model (as in RISE) can lock you into SAP’s pricing. Flexibility to adjust or reduce usage is limited once you commit, and you may face escalations after initial terms.
Negotiation Advice:
“If starting fresh, negotiate decommission credits for legacy entitlements — otherwise, you’re funding both systems.”
Checklist:
- Request a trade-in credit or rebate for retiring ECC licenses (even if SAP doesn’t offer it upfront, push for it in the deal).
- Ensure a dual-maintenance grace period in the contract so you’re not billed support fees on ECC and S/4HANA simultaneously during migration.
- Lock in the subscription price for 3–5 years to prevent steep annual increases after going live.
Read about Cloud vs On-prem licensing, S/4HANA Cloud vs On-Premise Licensing: Subscription vs Perpetual Models Explained.
Licensing Impact in Brownfield Conversions
In a brownfield migration, you convert your existing ECC licenses to S/4HANA, preserving earlier investments as much as possible.
SAP often provides “conversion credits” or contract amendments so you don’t pay twice for the same functionality. You maintain perpetual license rights, which can significantly reduce new spend if managed carefully.
Key Features:
- Your current ECC license contract acts as the foundation. Through SAP’s conversion program, you exchange ECC licenses for S/4HANA equivalent licenses. This often means signing a conversion agreement or contract addendum rather than an entirely new contract.
- Ideally, prior user counts and license types carry over with credits. You continue to own perpetual licenses, now mapped to S/4HANA. Maintenance fees continue on the converted licenses rather than starting from zero.
- This path protects prior investments – you’re leveraging what you already bought. A well-negotiated conversion can mean minimal net new license cost aside from any additional capacity or new modules you truly need.
Challenges:
- License mapping is rarely 1:1, and the old ECC named-user categories and engine metrics don’t align perfectly with S/4HANA’s licensing model. SAP may reinterpret or reclassify your licenses, often in ways that increase your counted usage. For example, a single ECC Professional User might translate to more than one S/4HANA FUE (Full User Equivalent) if you’re not careful. You’ll need to reclassify all users into the new S/4 license types and ensure engines (like SAP ERP Financials, SAP HR, etc.) are mapped appropriately.
- Some products cannot be converted and require new licenses. Classic SAP HR/HCM modules often require moving to SuccessFactors (cloud HR) which is a separate subscription. Similarly, BusinessObjects or BW may be supplanted by SAP Analytics Cloud (SAC), and supplier relationship management by Ariba. These modules are excluded from conversion and must be licensed anew or handled separately.
- The process is contractually complex. It may involve detailed negotiations and SAP auditing your current usage to determine credits. Any misunderstanding can lead to gaps—like paying for something you thought was covered or being out of compliance if a piece was not converted properly.
Negotiation Advice:
“In Brownfield, you’re not buying new licenses — you’re defending the value of old ones.”
Checklist:
- Validate SAP’s conversion mapping: Don’t accept SAP’s default license mapping blindly. Review the proposed S/4HANA product equivalents for each of your ECC licenses and ensure they truly cover your usage.
- Review excluded modules (e.g., on-prem HR, analytics, procurement). Plan for separate licensing of solutions like SuccessFactors, SAP Analytics Cloud (SAC), or Ariba if those ECC components can’t be carried over.
- Insist on a written credit memo or contract clause detailing the credit value for each retired ECC license. Make sure you get financial credit for the licenses you surrender.
- Secure dual-use rights for the transition phase, allowing you to run ECC and S/4HANA concurrently without additional fees. This should be clearly documented to avoid any compliance issues during migration.
Dual Maintenance and Transition Licensing
Running old and new systems in parallel is a common scenario.
Many enterprises end up operating ECC and S/4HANA side by side for 12–24 months during a phased rollout or testing period. Without explicit clauses, SAP’s standard policy would charge you maintenance on both sets of licenses during that overlap.
To avoid paying double maintenance, negotiate a dual maintenance waiver or grace period upfront.
For example, secure an agreement that maintenance fees on the ECC licenses cease once the S/4HANA system goes live or after a short overlap period. This way, you’re not penalized for prudent risk management in keeping the old system temporarily.
Another transition consideration is licensing for development and testing. During migration, you may need extra non-production environments (for sandbox, testing, training on S/4HANA) while ECC is still in use.
It’s wise to request no-charge development/test licenses for the S/4HANA environment during the project. SAP has been amenable to granting temporary developer or test system licenses to facilitate a smooth transition — but only if you ask and bake it into the contract.
Best Practice: Add a contract clause stating that maintenance charges on converted ECC systems stop upon S/4HANA go-live.
This ensures you’re not billed in parallel. Clearly define the timeline for decommissioning ECC to establish when those old licenses will be considered retired.
HANA Licensing Implications
No matter which path you choose, moving to S/4HANA means moving onto the SAP HANA database platform (since S/4HANA only runs on HANA).
HANA licenses are a separate consideration and can be a significant cost element.
- In Greenfield scenarios, especially with RISE or SAP S/4HANA Cloud, the HANA database cost is typically bundled into your subscription. You pay an overall subscription fee, which includes HANA usage, but it’s often opaque — you might not see a line item for HANA. The downside is that you have less visibility or control; if your database size is overestimated, you could end up paying for more HANA capacity than needed, with limited options to scale down.
- In Brownfield on-premise scenarios, you may already have a perpetual HANA runtime license (if you previously migrated ECC to HANA), or you might need to acquire a HANA license for S/4. SAP offers a HANA runtime license (cheaper but only for SAP applications) or a full use license (more expensive but unrestricted). If you’re converting, you might retain the runtime HANA licenses you had for ECC, which can be a cost saver versus buying new database licenses.
HANA is licensed primarily by memory size (for example, in 64GB blocks). Sizing estimates that overshoot your actual needs will inflate your costs dramatically. It’s crucial to get sizing right and include flexibility in the contract.
Consider negotiating the right to re-size the HANA license annually or after an initial period, so that if your memory usage is lower than anticipated, you can adjust the license down (or at least not be forced to buy more until needed).
Negotiation Tip:
Ask SAP for transparent HANA sizing metrics in the proposal. Understand how much HANA memory capacity they’ve assumed for your S/4HANA system and why. If possible, secure terms that allow you to true-up or true-down the HANA license based on actual usage in the first year.
Indirect Access and Integration Risks
Migrating to S/4HANA can unexpectedly reset your indirect access exposure. SAP’s approach to indirect/digital access changed with S/4HANA, introducing the Digital Access Document licensing model.
Under this model, indirect usage (e.g., third-party systems creating sales orders or invoices in SAP) is measured by document count rather than by named users.
What does this mean? Even if your integration architecture remains the same, S/4HANA may classify and count document interactions differently, potentially increasing your licensed volume.
For example, if an e-commerce platform creates orders in SAP, those might now count towards a document license count, whereas previously, you might have covered it with a single named user license.
For customers taking the RISE with SAP route (S/4HANA as a service), be aware that any prior indirect access agreements or grandfathered rights from your ECC contract will not carry over. A new contract means you start fresh under SAP’s current rules. If you had negotiated a special deal for third-party interfaces in the past, you’ll need to renegotiate those or face new charges for digital access.
Risks:
New integrations or expanded digital processes in S/4HANA can trigger unbudgeted costs if not licensed properly for indirect access.
Also, SAP audits for indirect usage have become more stringent with the digital access model – a surge in document counts could lead to compliance issues if you haven’t accounted for them.
Checklist:
- Document all interfaces and external systems interacting with SAP before migration. This inventory lets you assess where indirect access charges could arise in S/4HANA.
- Estimate document counts for digital access licensing. Use SAP’s estimation tools or your own usage data to project how many documents (orders, invoices, etc.) those interfaces generate annually. This will help model potential digital access costs under S/4HANA’s rules.
- Negotiate indirect access in advance: If you’re going with a subscription (RISE), try to include a certain volume of digital access documents or specific key interfaces in the base subscription fee. Essentially, get SAP to bundle the cost of your known integrations up front, or secure a discount for the digital access licenses you’ll need. On-premise customers converting licenses should consider SAP’s Digital Access Conversion Program to possibly convert some old user licenses into a buffer of document licenses.
Being proactive on indirect access ensures you won’t be surprised by a large bill or compliance problem after go-live. This is a common “gotcha” for S/4HANA projects, so it warrants careful attention.
Contract and Support Governance
The legal and support terms of your SAP agreement will shift depending on a greenfield vs brownfield approach. It’s not just about cost — it’s also about contractual control and legacy protections.
In a Greenfield move, you’ll be signing a new contract under SAP’s latest terms. This can wipe away any favorable clauses you previously had. For instance, your old ECC contract may have had specific volume discount arrangements, advantageous named user definitions, or even relaxed audit clauses.
A new S/4HANA contract (especially under RISE) will use SAP’s standard modern terms, which often favor SAP. You’ll likely be subject to the standard 22% annual maintenance (if on-premise perpetual) or the support terms embedded in the cloud subscription (which often equate to a similar percentage of subscription value).
Also expect strict compliance and audit terms in the new contract — review them closely because you won’t have the historical negotiated exceptions anymore.
Essentially, a greenfield resets your legal footing with SAP: you’re entering a fresh agreement that SAP’s legal team has probably optimized for their interests.
In a Brownfield conversion, there’s an opportunity to retain your legacy master agreement and simply amend it for S/4HANA. This can be very powerful from a negotiation standpoint. By keeping the same master contract, all those hard-won clauses and definitions you negotiated in the past remain in effect (unless explicitly changed).
For example, if you previously negotiated a cap on maintenance fee increases or secured special usage rights for a certain affiliate or process, those can carry over. Even if a full contract conversion is required, you should strive to carry forward prior concessions into the new deal.
Additionally, with a conversion scenario, you have more leverage to say “no” to unwanted changes. Since you’re not coming in as a net-new customer, SAP may be willing to grandfather certain terms to close the S/4HANA deal.
Support costs need scrutiny in either case. In a brownfield approach, if you maintain your existing licenses, you’re likely continuing with the existing maintenance you pay (potentially with an uplift if you acquire additional functionality).
Make sure any uplift is proportional and justified. Watch out for any support uplifts hidden in the conversion proposal. SAP sometimes tries to reset the maintenance base to a higher level if you’re essentially trading in old licenses for new ones.
On the flip side, in a greenfield scenario with new licenses, you’ll start paying maintenance or subscription on those from day one, while possibly still paying on ECC until it’s retired. Negotiating the dual maintenance grace (as discussed) is key to governance as well.
Finally, check the audit and termination clauses in whatever agreement you end up with. If you sign a new S/4 contract, ensure you have reasonable notice periods for any SAP audit and a clear remediation process, rather than automatic penalties.
For cloud contracts, understand what happens if you choose not to renew – how long SAP will allow you to access your data, and whether you can switch back to on-prem or another solution. These governance details can have serious financial implications if things don’t go as planned.
Tip: Brownfield keeps your legal footing; Greenfield resets it. Leverage the legal and commercial familiarity of your legacy contract whenever possible, and only agree to new terms if you’re compensated or it’s unavoidable.
Example Scenarios
Real-world scenarios highlight the cost implications of each approach:
Scenario 1 – Greenfield Subscription (RISE): A large retail company decides on a greenfield migration to S/4HANA Cloud using RISE with SAP.
They treat it as a fresh start, with all new S/4HANA licenses based on 2,000 Full User Equivalents being subscribed. The company retires its old ECC licenses entirely. SAP provides no credit for their previous ECC investments, since the move to RISE is considered a new subscription.
For a period, ECC is kept read-only for reference. Hence, the retailer pays a subscription for S/4 while still incurring some maintenance cost on ECC until decommission (they did not initially negotiate a waiver).
The outcome is a modern cloud ERP with predictable subscription fees, but it lacks the residual value from the millions spent on ECC licenses. The retailer essentially pays for a full set of new licenses, and the legacy licenses become shelfware once ECC is shut off.
Scenario 2 – Brownfield Conversion: A global manufacturer takes a brownfield approach, converting its 3,000 ECC users and numerous engine licenses into S/4HANA. Through tough negotiation, they secured an 85% credit on the value of their existing licenses.
In other words, if they had, say, $10M worth of ECC licenses, SAP credited about $8.5M toward the S/4HANA licenses, leaving only $1.5M of new license spend to cover new functionality gaps. They also ensured an 18-month dual maintenance waiver, so for the first year and a half of running S/4HANA, they are not paying maintenance on the old ECC system concurrently.
Additionally, the contract includes a clause allowing them to reclassify license types annually – recognizing that as their business changes, they might need to adjust the mix of user types (e.g., shifting some users from Professional to a lower category if usage drops).
The result is a significantly lower total cost of licensing over the migration period, while the company retains perpetual license control. They carry forward their investment into the new system rather than abandoning it, and they have the flexibility to optimize licenses as they go.
5 Licensing Lessons for Choosing Between Greenfield and Brownfield
- Brownfield preserves leverage – Greenfield resets negotiation terms. Reusing your contract gives you power; starting fresh means all prior deals are off the table.
- Secure written conversion credits before project kickoff. Get SAP’s promises in writing on how your old licenses translate into S/4HANA value (credits or swap ratios) to avoid disputes later.
- Always define a dual-maintenance grace period. Without it, you will pay double maintenance during transition. Nail down those terms so you only fund one landscape at a time.
- Re-map and right-size user types early. Don’t let SAP’s default user mapping inflate your counts. Clean up your user list and classifications before migration to avoid over-licensing and audit surprises.
- Model total cost over 5 years, not just year one. That shiny first-year quote can balloon with annual increases or subscription escalators. Compare the five-year TCO of subscription vs. perpetual to see the real impact – subscription inflation is real.
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