S/4HANA vs ECC Licensing Differences: What Changes When You Migrate

Migrating from SAP ECC to S/4HANA isn’t just a technical upgrade — it’s a licensing transformation. SAP has overhauled its licensing model for S/4HANA, often steering customers towards subscriptions and its RISE cloud offering.

This shift can catch organizations off guard with new costs, metrics, and contractual considerations.

In short, S/4HANA may simplify the IT architecture, but it complicates licensing in new ways. CIOs and procurement leaders must understand these differences early to prevent unpleasant cost surprises during their S/4HANA migration.

To navigate this change, let’s break down how key aspects of licensing differ between ECC and S/4HANA, what to watch out for, and how to mitigate risks. For an overview, read our SAP S/4HANA Licensing Guide: Models, Costs, and Migration Insights.

ECC vs S/4HANA Licensing at a Glance

SAP ECC (ERP Central Component) used a straightforward model: you purchased perpetual licenses for named users and additional “engine” or package licenses for specific add-ons or modules.

You paid a hefty annual maintenance fee (typically 22% of license value) for support and updates. Critically, you had flexibility in infrastructure (running on databases like Oracle, SQL Server, or IBM DB2) and even the option to use third-party support to reduce costs.

SAP S/4HANA, in contrast, introduces both new technical requirements and new commercial models. If you deploy S/4HANA on-premise, you still buy perpetual licenses for named users and engines (with annual maintenance).

However, S/4HANA’s core requires the SAP HANA database, so you must license HANA – usually as an additional cost based on memory size. If you choose RISE with SAP (S/4HANA Cloud), the model shifts to subscription: you essentially rent the software as a service, measured in Full User Equivalents (FUEs) instead of individual named users.

The subscription includes software, infrastructure, and support bundled together. This cloud model trades upfront cost for ongoing commitment (and potential lock-in).

In summary, ECC vs S/4HANA licensing differences:

Despite SAP’s marketing of “simplified” S/4HANA licensing, many customers find the new model more confusing. Named user categories have been renamed and regrouped. Engine metrics have changed. And the introduction of HANA and cloud subscriptions means license costs are driven by new factors (like database size or FUE calculations). The next sections detail these changes.

What Changes in User Licensing

Under ECC, companies licensed a mix of classic user types: e.g., Professional Users, Limited Professional Users, Employee Users, Developer Users, etc. Each user needed one of these named-user licenses, and each type had a different price point. You might have optimized your ECC contract by having, say, 500 Professional and 1,000 Limited users, aligning costs to user roles.

With S/4HANA on-premise, SAP updated and “simplified” the user categories – but beware: the mapping isn’t one-to-one. Professional licenses still exist (covering full use of the system) and remain the most expensive. Limited Professional might be rebranded as Functional or Core users with a defined scope (e.g., a procurement or sales role).

There are also Productivity users for light-use scenarios and Employee Self-Service users for very limited self-service tasks. At first glance, there are fewer categories, but the permissions and usage rules may not align exactly with the old ECC definitions.

For example, an ECC Limited Professional user might map to a higher-tier S/4 user depending on their activities, potentially increasing cost if not negotiated carefully.

In S/4HANA Cloud (RISE), SAP moves away from counting each named user license. Instead, it uses the Full User Equivalent (FUE) metric, which aggregates users into standardized units.

For instance, 1 Professional user might equal 1.0 FUE, while 1 Employee Self-Service user could be 0.1 or 0.2 FUE. SAP defines how many of each user type add up to one FUE. You then subscribe to a total number of FUEs for your S/4HANA Cloud contract.

This approach hides some complexity (you just manage a total FUE pool), but it also reduces flexibility. Since different roles consume different fractions of an FUE, changing your user mix can effectively require more FUEs.

For example, if you planned for mostly cheap employee self-service users but later need more full users, your FUE consumption can spike. Also, FUE rounding can lead to over-licensing: ten low-level users might equal 2 FUEs, but eleven could require 3 FUEs, meaning you pay for an extra fraction that isn’t perfectly utilized.

Key impacts on user licensing:

• Re-mapping roles: Expect to reclassify your users. Your ECC Professional/Limited/Employee designations won’t exactly match S/4HANA’s categories or FUE values. A careful mapping is needed to avoid automatically upgrading users to more expensive types.
• FUE model limitations: The FUE system simplifies billing but can mask over-licensing. It’s harder to adjust individual user counts mid-term. Downgrading a user type (e.g., from Professional to Functional) won’t immediately reduce cost unless you reduce total FUEs in your contract.
• Cloud vs on-prem: On-prem S/4HANA still provides perpetual user licenses that you own (with support fees), whereas cloud subscriptions require continuous payments and do not offer long-term assets. Over a decade, subscription costs can be significantly higher if not managed, though they offer short-term flexibility.

Checklist – Managing User License Changes:

• Map ECC to S/4HANA roles early: Identify how each existing ECC user type will translate to S/4HANA’s license types or FUE units. Don’t rely on SAP’s generic mapping tables alone; base your decisions on actual user activities in your organization.
• Validate user counts and ratios: Your current mix (e.g., 20% power users vs 80% occasional users) may shift under S/4HANA licensing. Ensure the ratio you’re being sold (or converted to) makes sense. If SAP’s proposal assumes more high-level users than you actually need, push back.
• Obtain SAP’s mapping in writing: During conversion discussions, ask SAP to provide the detailed user mapping and FUE calculations in writing. This helps you verify that no “extra” users have crept into the quote and serves as evidence if counts are disputed later.

Read about Cloud vs On-prem licensing, S/4HANA Cloud vs On-Premise Licensing: Subscription vs Perpetual Models Explained.

Database Licensing: The HANA Factor

One of the biggest technical changes with S/4HANA is the compulsory use of the SAP HANA database for the ERP system.

Under ECC, you had the freedom to run on third-party databases (and you might already own licenses for Oracle or SQL Server). Moving to S/4HANA means locking into HANA, which introduces a new license cost component.

HANA licensing is typically based on the memory size (in gigabytes of RAM) required for your database. This is a fundamentally different metric from named users. Essentially, even if your user count stays the same, the size of your HANA database can drive up cost. SAP usually charges for HANA runtime licenses as a percentage of your S/4HANA software value or on a per-GB basis. A common benchmark is roughly a 15% uplift in license fees for the HANA database runtime rights. For large enterprises, the HANA database license can run into millions of dollars, especially if the system requires a high memory footprint (e.g. hundreds of GB or multiple TB of HANA).

“Every gigabyte of HANA memory is a license cost decision.” In S/4HANA, technical sizing directly impacts your wallet.

For example, if your ECC database was 2TB on Oracle, migrating that to HANA isn’t just a technical exercise – you’ll need to license perhaps 2TB of HANA memory.

This puts pressure on teams to optimize data volume and memory usage before migration. Archiving historical data or tiering to cheaper storage can have a real payoff by reducing HANA size needs.

Action Points for HANA Licensing:

• Align sizing early: Get your basis and infrastructure teams to project the memory requirement for HANA based on current data and growth. Challenge any oversizing – every extra 64GB block of HANA might carry a significant cost.
• Negotiate growth buffer: If your contract includes HANA runtime licenses, negotiate terms for future expansion. For instance, secure a price lock or discount for additional HANA capacity, or a flexible allowance to increase memory by a certain amount without a new purchase.
• Consider HANA license type: SAP offers HANA runtime licenses (cheaper, only to run SAP apps) and full-use HANA licenses (more expensive, if you want to build custom apps on HANA). If you only use HANA for S/4, opt for runtime licenses. And ensure any HANA cloud sizing in RISE is right-sized – cloud subscriptions might bundle HANA, but you’re still paying for the size you provision.

Engines and Packages: Changed, Renamed, or Split

Beyond user licenses, SAP ECC had many engine or package licenses – essentially for specific functional modules or technical components (like SAP SD, SAP Payroll, Warehouse Management, etc.).

These were often measured with their own metrics (e.g., number of orders processed, number of employees, CPU capacity, etc.) and purchased à la carte. When moving to S/4HANA, many ECC engines have been restructured, which can complicate your conversion.

Some ECC modules have been consolidated into broader S/4HANA licenses, but others have been split or renamed into multiple components.

For example:

• The ECC Sales and Distribution (SD) module might translate to several S/4HANA products: a core Sales module, plus separate licenses for Advanced ATP (Available-to-Promise) or advanced billing capabilities that were once part of SD.
• ECC’s Materials Management (MM) could become separate S/4HANA Procurement and Inventory Management licenses. What was once one engine might now be two line items.
• ECC HR (Human Resources) functionality is largely replaced by SAP SuccessFactors (a cloud SaaS product) in the S/4 world. That means your on-prem HR licenses can’t simply convert; you may need to subscribe to SuccessFactors, which has a completely different licensing model (often per employee per month).

The risk is that even if you’re using the same functionality, you may have to license more pieces in S/4HANA. A direct 1:1 conversion of engines is rare. SAP might claim a certain engine is “equivalent” in S/4, but on closer inspection, you might need an additional add-on for full parity. This can lead to an unanticipated uplift in cost or user counts.

Be especially cautious with any “Digital Access” or indirect usage aspects: ECC contracts typically didn’t factor in external access explicitly, but S/4HANA contracts often introduce Document-based licensing for indirect access (SAP’s Digital Access model counts certain document types like sales orders or invoices created via non-SAP systems). If your ECC environment had a lot of interfaces, moving to S/4 could trigger SAP to insist on a digital access license purchase – an engine that didn’t exist in ECC days.

Negotiation tip: Always challenge SAP’s 1:1 mapping claims for engines. If SAP says your ECC package X converts fully to S/4 package Y, double-check if S/4 package Y covers all features or if you also need package Z. Often, there’s a hidden “1 to 1.3” uplift, where one old license turns into more than one new license. Insist on getting a detailed mapping of old to new functionality, and push for license credits if you’re forced to adopt multiple licenses to cover one ECC module.

Maintenance and Support Differences

Licensing cost isn’t just about the upfront purchase or subscription – support fees and maintenance terms play a huge role throughout the software’s lifespan.

In ECC’s perpetual license model, customers pay annual maintenance (support) fees equal to a percentage of the software license price (standard 22% per year for SAP Standard Support).

In exchange, you get software updates, patches, and the right to contact SAP support. Over a typical 5-year period, maintenance can cost more than the initial licenses themselves.

However, customers had flexibility: you could choose not to renew maintenance on unused components, or even drop SAP support entirely and go with a third-party support provider (like Rimini Street or Spinnaker) to save cost – albeit losing upgrade rights.

With S/4HANA, especially under RISE or cloud subscriptions, support is bundled into the subscription fee. You pay one combined amount for the software and its support.

This means you cannot unbundle or reduce the support portion even if you have modules you rarely use – there’s no concept of dropping support for a discount.

The upside is that you always have access to updates (since cloud systems are updated by SAP regularly). Still, the downside is less flexibility and potentially higher cost if you don’t need all that bundled support. Essentially, you’re locked into SAP’s support (no third-party support option in RISE), and you’re paying for it continuously.

For on-premise S/4HANA (perpetual licenses), the maintenance model continues similarly to ECC (still ~22% per year of the license value). However, note that S/4HANA’s maintenance might be calculated on a higher base if your license value went up.

Additionally, S/4HANA introduces mandatory pieces (like HANA) that themselves might carry support fees or a higher support base. For example, if your S/4HANA software license and HANA database license are bundled, maintenance is applied on the combined value.

Key differences and considerations:

• No support savings in the cloud: Under subscription, you cannot cut support costs. Even if usage drops, you’re locked into the full bundle until contract renewal.
• Dual maintenance during migration: Without negotiation, you could end up paying maintenance on your old ECC system and the new S/4HANA licenses simultaneously during the migration period. This overlap can last months or even years in phased rollouts, effectively double-paying for support. It’s crucial to negotiate a “dual use” period where you’re not charged twice.
• Maintenance fee increases: SAP has signaled standard support fee increases (recently around 5% increase year-over-year tied to inflation). On subscription contracts, SAP may build in annual price escalators. Ensure you understand any such clauses in a RISE deal – the “all-inclusive” price might climb each year.
• Third-party support cutoff: If you were considering third-party support to extend ECC’s life (perhaps to delay S/4HANA), note that once on S/4HANA or RISE, third-party support is not an option for the core system. This is part of SAP’s strategic push to keep customers within their maintenance revenue stream.

Conversion Scenarios – Brownfield vs Greenfield

When transitioning from ECC to S/4HANA, there are two broad approaches, not just technically but also commercially:

• Brownfield License Conversion: This is where you attempt to convert your existing ECC licenses into S/4HANA licenses. SAP historically offered conversion programs (often called Product Conversion or Contract Conversion). The idea is to credit the value of your existing investment toward equivalent S/4HANA licenses. In practice, you will map each ECC user and package to a S/4HANA counterpart. SAP may provide conversion credit for what you’ve already paid, reducing the cost of the new licenses. However, this process is fraught with complexity. Every user needs reclassification, and some old licenses have no direct S/4 analogs (especially if certain ECC functionality has moved to a new product or cloud service). Recently, SAP has tightened the rules – for instance, as of mid-2023, the most generous conversion deals (like one that let you simply swap licenses without extra cost) have been retired. Now, to get full credit, customers often must purchase additional S/4HANA licenses amounting to 20–30% of their current spend. This means a “convert and uplift” model: you convert what you have, but SAP requires you to purchase additional resources to reach parity. The rationale given is to cover new functionality, but it often feels like a tax for moving late.
• Greenfield (New Licensing Contract): In some cases, especially if your ECC landscape is a mess of shelfware and unused modules, it might be cleaner to start fresh with a new S/4HANA contract. This means picking exactly the licenses you need for S/4HANA and negotiating a new deal, while scrapping (or shelving) your old ECC licenses. The benefit is legacy allocations do not constrain you – you can drop things you don’t use. And if SAP is offering promotions (like RISE incentives or competitive pricing for net-new S/4 customers), a greenfield license deal might be attractive. The downside: you effectively write off the money spent on ECC licenses (aside from any trade-in discount SAP might give for being a loyal customer). Also, if you’re still using ECC during the migration, you’ll be paying for two sets of licenses in parallel.

In either scenario, a critical contractual point is to manage the overlap period. Ensure you have a written agreement that ECC maintenance charges stop (or are deeply discounted) once your S/4HANA system is live.

Without this, we’ve seen companies inadvertently keep paying annual maintenance on their old ECC licenses even while fully operating on S/4HANA – essentially wasting money.

SAP will not automatically terminate ECC maintenance; it must be formally addressed in your contract or a side letter. Ideally, negotiate a “dual usage” grace period where, for say 12-18 months of migration, you can run ECC and S/4HANA concurrently but only pay maintenance on one environment.

Financial and Contractual Implications

Licensing changes bring significant financial and legal implications. Here are four major considerations when planning the move from ECC to S/4HANA:

1. Subscription vs Perpetual Cost Impact: If you switch to a subscription model (RISE or S/4HANA Cloud), your cost profile changes from a large upfront capital expense (CapEx) to an ongoing operational expense (OpEx). Subscriptions can smooth out cash flow and often include infrastructure and support, but over a 5-10 year period, they might cost more than owning licenses. Perpetual licenses with 22% maintenance can be cheaper long-term if you keep the system for many years and can maximize the use of the assets. Consider the time horizon and whether you value owning the licenses outright. Also, subscription means if you stop paying, you lose the software access (no perpetual rights to fall back on).
2. Dual Maintenance Trap: As mentioned, without careful handling, you might pay double maintenance during the migration. For example, if it takes 1 year to fully cut over to S/4HANA, that’s a year of paying ECC support and S/4HANA support unless you negotiated relief. This is a hidden migration cost that can be substantial (millions for large customers). Ensure your contract or migration agreement includes a temporary dual-use license clause that permits running both ECC and S/4HANA for a defined period without additional license fees, ideally with only one maintenance charge.
3. Indirect Access Re-evaluation: Moving to S/4HANA is an opportunity (for SAP) to revisit your indirect access licensing. You may have legacy third-party systems interfacing with ECC. In S/4, SAP will encourage adopting the Digital Access model (licensing by documents like orders, invoices, etc., created via non-SAP systems). Even if you had an indirect use agreement or were “safe” under ECC, the new contracts might introduce fresh indirect use terms. Be cautious: some integrations that flew under the radar could now incur costs. It’s wise to audit all connections to SAP and either license them appropriately (perhaps using the discounted Digital Access Adoption Program if still available) or redesign interfaces to minimize exposure.
4. License Conversion Clauses and Use Rights: When converting licenses, ensure the use rights carry over. Sometimes, older ECC contracts had special rights or discounted metrics that SAP’s standard S/4 terms don’t include. For instance, global use rights, dev/test system usage, or duplication rights might change. Don’t assume everything is identical – explicitly confirm that the new S/4HANA licenses allow what your ECC licenses did. Also, put a cap on conversion costs: if the usage grows during migration, do you have to true-up immediately? Try to negotiate a cap or freeze on additional license fees during the project. Lastly, if you end up with unused ECC licenses (maybe you drop some users or modules in the move), push for a credit or refund on those – SAP sometimes issues a credit memo or discount on the new purchase for retiring licenses early, but only if you ask.

Checklist Before Signing S/4HANA Contracts:

• Dual-use period: Get at least 12 months of dual usage rights in writing, with maintenance fees waived or charged as a single fee during that time.
• Credit for legacy licenses: If you’re not converting certain ECC licenses to S/4 (or not using them), negotiate credits. Every shelfware license you leave behind is valuable to SAP – ensure you get some benefit, like a reduced S/4 cost.
• Future cost protections: Include caps on annual subscription increases (e.g., limit price hikes to a few percent), and a clause that any additional licenses during the migration are offered at the same discounted rate as the initial purchase.
• Retain documentation: Document all mappings, assumptions, and special terms agreed upon in the conversion. This protects you if SAP’s account team or policies change mid-project.

ECC to S/4HANA Example Scenario

To illustrate the impact of these licensing changes, consider a hypothetical example:

A multinational firm currently runs ECC with 3,000 Professional users and a suite of modules including Finance (FI), Sales & Distribution (SD), and Materials Management (MM). They also have an Oracle database under a separate license.

As they plan an S/4HANA migration, SAP provides a proposal:

• User licenses: Convert the 3,000 ECC Professional users into an equivalent of 2,500 Full User Equivalents (FUEs) under a RISE with SAP subscription. (SAP assumes not all ECC Professional users were fully utilized, and that some can be categorized as lower roles in FUE terms.)
• Engine licenses: Replace ECC FI, SD, MM, etc., with the S/4HANA Enterprise Management package plus additional licenses for Advanced ATP (for complex availability checking) and Extended Warehouse (splitting out some MM functionality).
• Database: License 1 TB of HANA memory to support the new system (since their database size and growth projections indicate needing about 1TB in memory).
• Cloud infrastructure & support: All included under the RISE subscription, with a 3-year contract term.

Result: Even though the user count (in FUEs) is slightly lower, the net cost comes out about 25% higher than the status quo with ECC. Why? The mandatory HANA license added a significant new cost. The FUE model also rounded up certain usage – for instance, some light users that were essentially free in ECC now counted towards FUE consumption. Moreover, splitting modules into separate licenses meant the company was paying for a few new components (like Advanced ATP) that were bundled in their old ECC pricing.

The company’s IT and procurement teams push back and enter negotiations. They manage to achieve two key concessions:

• Dual Maintenance Waiver: SAP agrees that during the 12-month migration period, the company will not pay ECC maintenance fees while the new S/4HANA subscription is in effect. This saves a substantial sum and avoids double-paying for support.
• Inactive User Credit: The company identified 500 ECC Professional users that were inactive or could be downgraded (for example, users who left or only needed occasional inquiry access). They negotiated a credit for these licenses, reducing the FUE count and securing a lower subscription price for that portion. Essentially, they didn’t blindly carry over all 3,000 users to S/4 if only 2,500 were truly needed.

After these adjustments, the cost increase was contained to a more manageable level (nearly flat with ECC), and the company ensured they weren’t overspending on unused capacity.

Read our FAQ for CIOs, SAP S/4HANA Licensing FAQ for CIOs: What Every Executive Should Know Before Migration.

5 Actions to Control ECC-to-S/4HANA Licensing Risk

Finally, as you approach an ECC to S/4HANA migration, take these five actions to keep licensing under control:

1. Proactively map your ECC entitlements to S/4HANA equivalents. Don’t wait for SAP’s proposal – do your own homework. Understand exactly what licenses you own today and how each will be handled in the S/4 world. This prevents SAP from dictating the narrative (which may conveniently up-sell you). Know your starting point to negotiate better.
2. **Right-size and optimize HANA early. Before signing anything, invest in sizing exercises for HANA. Clean up data, archive aggressively, and optimize code to reduce memory footprint. Every gigabyte you eliminate is direct savings. Specify the HANA license size you need and include buffer terms so you’re not forced to buy an oversized database “just in case.”
3. Negotiate dual-use rights for the transition period. Ensure your contract allows you to run ECC and S/4HANA in parallel without double licensing. A common ask is 12-18 months of dual-use at no extra cost. This way, you can migrate in phases or fallback if needed, without financial penalty. It removes time pressure and prevents paying maintenance on two systems at once.
4. Get all conversion credits and terms in writing. If SAP promises credit for your existing licenses or offers special conversion discounts, make sure it’s documented in the contract or an addendum. Verbal assurances or slide decks don’t count. Also, clarify any odd cases (e.g. how unused licenses are treated, what happens if the project is delayed). Lock in those credits so they can’t be retracted or “re-interpreted” later.
5. Audit your users and engines before migration. Do an internal license audit on ECC – identify unused accounts, duplicate users, and inactive modules. Clean that up before you negotiate S/4HANA licenses. A fresh baseline ensures you’re not buying more than you need. If your SAP user audit shows 10% of users never log in, you can potentially save by not carrying them into S/4. Similarly, if certain ECC add-ons aren’t heavily used, maybe you can drop them or replace with cheaper alternatives in S/4. Knowing your real usage gives you leverage and avoids an inflated licensing deal driven by outdated assumptions.

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fredrik.filipsson

Fredrik Filipsson is the co-founder of Redress Compliance, a leading independent advisory firm specializing in Oracle, Microsoft, SAP, IBM, and Salesforce licensing. With over 20 years of experience in software licensing and contract negotiations, Fredrik has helped hundreds of organizations—including numerous Fortune 500 companies—optimize costs, avoid compliance risks, and secure favorable terms with major software vendors. Fredrik built his expertise over two decades working directly for IBM, SAP, and Oracle, where he gained in-depth knowledge of their licensing programs and sales practices. For the past 11 years, he has worked as a consultant, advising global enterprises on complex licensing challenges and large-scale contract negotiations.

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