ERP Cost of Ownership Model

SAP S/4HANA licensing and 5-year cost of ownership model

SAP does not publish S/4HANA prices, so this model takes the numbers from your own SAP order form, RISE with SAP proposal or contract conversion offer. Enter users by use type (Professional, Functional and Productivity on-premise, or Advanced, Core and Self-Service FUEs in RISE), the HANA database license, hosting, digital access and an implementation scope built from S/4HANA business areas. It returns a year-by-year table comparing on-premise, customer-hosted private cloud and RISE private edition, and shows which lines drive the total.

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On-premise, perpetual licenseCustomer-managed private cloud (own license on IaaS or hosting)(verify with vendor)RISE with SAP S/4HANA Cloud, private edition (subscription)

Users by type

How many people and connections you license, by the user types that matter in SAP S/4HANA.

On-premise: S/4HANA Enterprise Management for Professional use (all role-required operations, including management and system administration). RISE: advanced use, weighted 1 user = 1 FUE. Finance users typically need this type.

On-premise: Functional use (for example sales order management, service, project control, quality inspection, master data maintenance, plus Productivity scope). RISE: core use, 5 users = 1 FUE. Planners, sales and R&D users typically fit here.

On-premise: Productivity use (goods movement, warehouse and delivery tasks, production execution, maintenance execution, time sheet, self-service requisitioning, display rights). RISE: self-service use, 30 users = 1 FUE.

S/4HANA developer access for ABAP and configuration developers. In the 2021 SAP RISE deck, one developer equals 2 FUEs. Check the weighting on your order form.

Starting counts are a sample company size so the effort model shows hours straight away. Replace them with yours.

5-year total cost

Implementation
3,422 h
Per user per year
$0

No amounts entered yet

The effort model already shows 3,422 hours. Add a quote in step 2, a blended rate in step 4 or staff cost in step 5 and the totals fill in as you type.

Vendor SaaS: year by year

All amounts in USD. Implementation and contingency are placed in year 1.

CategoryYear 1Year 2Year 3Year 4Year 55-year
License or subscription-----$0
Vendor maintenance-----$0
Infrastructure and hosting-----$0
Database-----$0
Implementation-----$0
Internal staff-----$0
Support (AMS)-----$0
Total$0$0$0$0$0$0
Cumulative$0$0$0$0$0

Cost drivers

Share of the vendor saas 5-year total.

Drivers appear once amounts are entered.

What to check in a SAP S/4HANA quote

  • Use type mix: the gap between Professional (Advanced) and Functional or Productivity (Core or Self-Service) is the largest user lever. Map roles to capabilities from the use type definitions before you sign, not after go-live.
  • This model prices per user. For RISE, enter price per FUE per month times the FUE weight of each type (1 for advanced, 1/5 for core, 1/30 for self-service, 2 for a developer in the 2021 SAP deck).
  • Digital access: count the document items that interfaces, EDI, portals and bots create in the nine counted document types. Financial and material documents count at 0.2x, the rest at 1x. Price it as an extra license line.
  • LoB and industry solutions (EWM, PP/DS, Treasury, Central Finance, Advanced Variant Configuration and others) are separate lines on their own metrics. Price each one you scope.
  • SAP HANA: on-premise and customer-hosted options need a HANA runtime or full use license and servers sized for memory. RISE includes HANA use rights and infrastructure.
  • Basis and operations: on-premise and customer-hosted private cloud need Basis staff for upgrades, patches, transports and monitoring. Add them as infrastructure FTE. In RISE, SAP technical managed services cover much of this; confirm which tasks (for example transport imports and role authorizations) stay with your team.
  • Custom code: ECC custom code must be checked against S/4HANA simplification items. Price remediation as customization hours.
  • ECC timing: Business Suite 7 mainstream maintenance ends December 31, 2027, and extended maintenance to 2030 costs an additional fee. Include that fee in a do-nothing comparison.

Sensitivity

Move a driver and every number above updates. 100% is what you entered.

100%
100%
100%
100%

Effect of +/- 20% on the 5-year total

Enter amounts to see which driver moves the total most.

SAP S/4HANA licensing explained

In words, from vendor documentation. Follow the source links before you rely on a point in a negotiation.

On-premise use types (perpetual)

For new on-premise customers, direct user access to the S/4HANA digital core (Enterprise Management) is licensed per named user in three use types: Professional use, Functional use and Productivity use, plus S/4HANA developer access. Each type lists the solution capabilities it covers, and every type includes display rights to all transactional and master data.

Source
Four dimensions of S/4HANA licensing

SAP describes S/4HANA licensing in four parts: direct user access to the digital core (users), Line of Business and industry solutions (for example EWM, Treasury and Risk Management, Cash Management, PP/DS), each priced on its own value metric and not requiring named users, digital access (indirect use through documents), and the SAP HANA database.

Source
Full Usage Equivalents (FUE) in RISE

RISE with SAP S/4HANA Cloud is bought as one license material, SAP S/4HANA Cloud for Enterprise Management, with the metric FUE. FUEs are allocated to use types by weight: advanced use 1:1, core use 1:5, self-service use 1:30, and developer access counts as 2 FUEs per developer. Users can be re-allocated between use types during the subscription. The 2021 deck lists a minimum of 40 FUEs for the private edition; check the current minimum with SAP.

Source
Digital access (indirect use)

Access to S/4HANA by third-party systems, bots or interfaces is licensed by documents, not users. Only the creation of document items for nine document types counts: sales, service and maintenance, invoice, manufacturing, quality management, purchase and time management documents at 1x, and financial and material documents at 0.2x. Reads, updates and deletes are not counted.

Source
SAP HANA database licensing

A HANA runtime or full use license is required to run S/4HANA on-premise. SAP's slides show HANA runtime (REAB) priced as a percentage of the HANA SAP Application Value (HSAV) and HANA Enterprise Edition (full use) priced by GB of memory. RISE private edition includes HANA database use rights.

Source
Moving existing ECC licenses

SAP's 2020 deck describes two paths for ECC customers on support: product conversion (piece-meal 1:1 conversion of LoB engines, with S/4HANA Enterprise Management for ERP customers as a flat fee used with classic named users) and contract conversion (one-time wholesale move to the new use types, credit in that deck limited to the lesser of 100% of the maintenance base or 90% of the new net license fee; SAP has since reduced the conversion credit in later price lists). The Cloud Extension Policy replaces on-premise licenses with a 3 or 5 year RISE subscription and ends on-premise use rights and maintenance at the termination date. Confirm current terms with SAP.

Source
Maintenance horizon

SAP's release and maintenance strategy commits maintenance for a sequence of S/4HANA releases until December 31, 2040, with dates per release in SAP Note 2900388. SAP Business Suite 7 (ECC 6.0 on the latest three enhancement packages) has mainstream maintenance until December 31, 2027 and optional extended maintenance at an additional fee until December 31, 2030.

Source
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Using this for a budget, a renewal or a cloud decision? An engineer can check the license metric, user mix and effort assumptions against how you run SAP S/4HANA.

How to use the SAP S/4HANA cost model

  1. 1

    Classify users by use type

    Map each role to the lowest S/4HANA use type that covers its tasks: Professional or Advanced for finance and full transactional work, Functional or Core for planners, sales and engineering, Productivity or Self-Service for goods movements, time sheets and requisitions. Count developers separately.

  2. 2

    Enter the quotes you have

    For on-premise or customer-hosted private cloud, enter the perpetual price per user from your SAP order form and the annual maintenance percent from your support agreement. For RISE private edition, convert the price per FUE per month into a price per user with the FUE weighting on your order form.

  3. 3

    Add HANA and infrastructure for self-managed options

    S/4HANA runs on SAP HANA only. Enter the HANA runtime or full use license, application and database servers or hyperscaler hosting, and backup and disaster recovery from your own invoices or provider quotes. RISE private edition includes the infrastructure and HANA use rights, so leave those empty there.

  4. 4

    Scope the implementation

    Pick the S/4HANA business areas in scope and set company codes or plants, integrations, custom objects (WRICEF) and data migration objects. Adjust the hours per unit and the blended rate to match your system integrator's estimate.

  5. 5

    Read the drivers and test the range

    Check the digital access, Basis staffing and custom code lines, use the sensitivity sliders to see how the 5-year total moves with license, effort and rate, then export the model or save it to your account.

SAP S/4HANA pricing and licensing questions

How much does SAP S/4HANA cost?

SAP does not publish S/4HANA list prices. The cost depends on the use type mix (Professional, Functional and Productivity on-premise, or FUEs in RISE), LoB and industry solutions, digital access volume, the HANA license, deployment and your negotiation. This model does not guess a price: enter the figures from your quote and it builds the 5-year total around them.

What are the S/4HANA on-premise user license types?

For new on-premise customers SAP licenses S/4HANA Enterprise Management for Professional use, Functional use and Productivity use, plus S/4HANA developer access. Professional use covers all role-required operations including administration, Functional use covers a defined list of capabilities such as sales order management and quality inspection, and Productivity use covers tasks such as goods movements, production execution and time sheets. All include display rights.

What is an FUE in RISE with SAP?

A Full Usage Equivalent is the metric for direct user access in RISE with SAP S/4HANA Cloud. One FUE covers one advanced use user, five core use users or thirty self-service use users, and a developer counts as 2 FUEs according to SAP's 2021 licensing deck. You can re-allocate FUEs between use types during the subscription to avoid shelfware.

What is SAP digital access and how is it counted?

Digital access licenses indirect use of S/4HANA by external systems, bots and interfaces. Only the creation of document items in nine document types counts. Sales, service and maintenance, invoice, manufacturing, quality management, purchase and time management documents count at 1x; financial and material documents count at 0.2x. Viewing, updating and deleting are not counted.

Is SAP HANA included in the S/4HANA license?

Not on-premise. SAP's licensing material says a HANA runtime or full use license must be purchased to run S/4HANA. In SAP's slides the runtime edition is priced as a percentage of SAP application value and Enterprise Edition (full use) by GB of memory. In RISE with SAP private edition, HANA database use rights are included in the subscription.

What does RISE with SAP private edition include?

RISE bundles the S/4HANA Cloud subscription with infrastructure on the hyperscaler of your choice, which SAP owns and manages, plus SAP's service level, cloud operations and technical support. SAP's 2021 deck also lists BTP credits, Business Process Intelligence reports and a Business Network starter pack. Digital access and LoB solutions are separate lines in SAP's example bill of materials, and you should confirm with SAP which Basis and application management tasks are in scope.

Can I convert my ECC licenses to S/4HANA?

SAP has offered product conversion (convert LoB engines one by one and keep classic named users with a flat-fee Enterprise Management license), contract conversion (a one-time move to the new use types with a credit capped at the lesser of 100% of the maintenance base or 90% of the new net fee, per SAP's 2020 deck; SAP has since reduced that credit) and the Cloud Extension Policy into RISE. Ask SAP for the terms that apply to your contract today.

How accurate is this model?

The arithmetic is exact for the numbers you enter. The default effort hours are planning assumptions, not benchmarks, so replace them with your system integrator's estimate when you have one. Ask an engineer to review the result if you are using it for a budget or a RISE versus on-premise decision.

Sources

Netray is an independent ERP consultancy. Product and licensing names belong to their owners; confirm terms against your own contract.