How much does S/4 HANA cost?
SAP S/4 HANA typically costs anywhere from $250,000 in the first year to hundreds of millions of dollars for both licensing and implementation.
How does SAP S/4 HANA pricing work?
Here's a breakdown of some of the key elements that can impact the pricing of your SAP S/4 HANA implementation:
Deployment Options
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On-Premise: This is the traditional deployment method where you install the software on your own servers. You usually pay a one-time licensing fee for the software, but there are also maintenance costs to consider.
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Cloud: You can choose a cloud deployment, which is generally subscription-based. Here you pay a recurring fee that includes both the software license and the cost of hosting it.
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Hybrid: Some organizations opt for a mix of both, perhaps keeping some modules on-premise and others in the cloud.
Licensing Models
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Named User Licenses: Pricing can depend on the number of users who will be using the software. Often there are different types of user licenses based on roles, with each type having a different cost associated.
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Engine & Component Licenses: Apart from the user-based licenses, organizations might need to pay for additional engines or components based on their specific requirements.
Modules
SAP S/4HANA consists of various modules like Finance, Human Resources, Supply Chain Management, etc. The cost can vary significantly based on the modules your organization needs.
Additional Costs
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Implementation: The cost of consultants, training, and other resources needed to get the system up and running.
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Data Migration: If you are moving from another system, there might be costs involved in migrating your existing data to SAP S/4HANA.
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Custom Development: If you need additional functionalities that are not available out-of-the-box, you may need to pay for custom development.
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Maintenance and Support: Ongoing costs to keep the system up-to-date and to resolve any issues.
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Hardware: For on-premise solutions, you might need to invest in servers, storage, and other infrastructure.
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Updates and Upgrades: For on-premise deployments, new versions or functionalities could require additional investment.
Indirect Access
SAP had previously made headlines for charging for "indirect access," where even systems or users that interact with SAP data (but don't directly log into the SAP system) could incur additional licensing costs. However, SAP has made efforts to clarify these policies.
SAP S/4 HANA Price List:
| Cost Component |
On-Premise (One-Time Fee) |
Cloud (Monthly Subscription) |
Notes |
| Basic License |
$100,000 - $1,000,000 |
$20,000 - $100,000 |
Based on the number of users, modules, and other functionalities |
| Named User Licenses |
$1,500 - $4,000 per user |
$100 - $250 per user |
Varies by user roles |
| Engine & Component Licenses |
$10,000 - $200,000 |
Included or extra |
E.g., advanced analytics, IoT capabilities |
| Implementation Costs |
$50,000 - $500,000 |
$10,000 - $100,000 |
Costs for consultants, training, etc. |
| Data Migration |
$10,000 - $100,000 |
$5,000 - $50,000 |
If migrating from another system |
| Custom Development |
$20,000 - $200,000 |
$10,000 - $100,000 |
For functionalities not available out-of-the-box |
| Maintenance & Support |
18-22% of license fee annually |
Included or extra |
Ongoing technical support |
| Hardware |
$50,000 - $500,000 |
N/A |
Only for on-premise; cloud is generally hosted |
| Updates and Upgrades |
$5,000 - $50,000 |
Included |
For on-premise, based on new versions or functionalities |
Does S/4 HANA have hidden costs?
While SAP S/4HANA is a powerful and comprehensive enterprise software, it's essential to be aware that the headline costs of purchasing and implementing the system may not capture the entire financial picture. Here are some "hidden" or often-overlooked costs that organizations might incur:
Implementation Costs
- Consultants and Experts: The fees for hiring SAP consultants can sometimes exceed the actual software costs, depending on the complexity of the project.
- Data Cleansing: Prior to migration, existing data may need to be cleaned and standardized, which can be time-consuming and costly.
Training
- User Training: Employees need to be trained to use the new system, and this training can be expensive and time-consuming.
- Ongoing Training: As the system gets updated or new modules are added, additional training may be needed.
Customization and Integration
- Custom Development: If your business needs are not met with the out-of-the-box features, custom development will add to the costs.
- Integration: If you're using other software (CRM, HR, etc.), integrating them with SAP S/4HANA can incur additional costs.
Licensing
- Indirect Access: Although SAP has clarified its policies around this, indirect access can still be a cost. This is when non-SAP systems/users interact with SAP data.
- Add-ons and Plugins: Some features may require additional licenses or third-party add-ons.
Maintenance and Support
- Annual Maintenance: For on-premise solutions, annual maintenance fees are generally 18-22% of the license cost.
- Support Packages: Premium support packages might be offered at an additional cost.
Operational
- Downtime: Any system downtime, whether for maintenance or due to unexpected issues, could result in operational costs.
- Retirement of Old Systems: Costs related to decommissioning old systems and data migration.
Upgrades and Future Proofing
- Upgrade Costs: For on-premise deployments, upgrades can require additional investment.
- Hardware Upgrades: May be required for on-premise solutions.
Miscellaneous
- Audit Costs: Compliance and audits related to the new system might add costs.
- Change Management: Costs related to managing organizational change can often be overlooked.
