SAP S/4HANA contract conversion programmes are the commercial routes SAP offers customers who already hold SAP Business Suite or SAP ERP (ECC) licences with a current support agreement. Instead of buying SAP S/4HANA as new software, they can carry part of their past investment into it. SAP has described two on-premise routes, SAP S/4HANA Product Conversion and SAP S/4HANA Contract Conversion,[1] and cloud routes that convert on-premise support fees into subscriptions, namely the Cloud Extension Program and the time-limited RISE with SAP Migration and Modernization program.[5][6] SAP does not publish the conversion contract itself. The on-premise credit mechanics below come from an SAP presentation dated 2020-10-07, which states that it is informational and may not be incorporated into a contract. The cloud thresholds come from the current Supplement and Service Description Guide.
Editions
The conversion routes target the following editions:
| Route | Target | Contract basis after conversion |
|---|---|---|
| Buy S/4HANA for existing ERP customers (“Option A”) | SAP S/4HANA Enterprise Management for ERP customers, material 7018538, on a flat fee | Existing contract; S/4HANA Enterprise Management used through classic SAP Named Users |
| SAP S/4HANA Product Conversion (“Option A+”) | S/4HANA line-of-business and industry engines equivalent to owned classic engines | Existing contract and SUR |
| SAP S/4HANA Contract Conversion (“Option B”) | S/4HANA Enterprise Management for Professional use (7018652), Functional use (7018654), Productivity use (7018653) and S/4HANA engines | New S/4HANA Software Use Rights |
| SAP Cloud Extension Program | Cloud subscriptions such as SAP Cloud ERP Private or RISE with SAP | Cloud Order Form, Supplement and SDG |
In each route the database is licensed separately as SAP HANA runtime or enterprise edition. SAP’s 2020 slides show “HANA Run-time or Enterprise Edition” on the post-conversion bill of materials.[1] See SAP HANA runtime and full-use licensing.
Metrics
Conversion changes which metrics apply. Under Option A, the flat-fee Flat Fee S/4HANA Enterprise Management licence gives no user rights of its own, and access runs through the customer’s classic SAP Named Users. The 2020 overview adds that SAP Named Users are not required to access S/4HANA line-of-business and industry add-on engines, but are required for remaining classic engines and for S/4HANA Enterprise Management. After a full contract conversion to S/4HANA Enterprise Management for professional use, SAP Named Users are not required to access licensed S/4HANA Enterprise Management, S/4HANA line-of-business or industry engines, or any licensed classic engines.[1] In the cloud routes, the core metric becomes the Full Use Equivalent (FUE). See RISE with SAP and GROW with SAP commercial constructs.
Customers whose contracts date from June 2014 or earlier may hold previous user types (mySAP.com Users, SAP Business Suite Users, SAP ERP Users and others). The SUR allows them to license more of the same types, but “Such Customers are not permitted to license SAP Named Users within their existing license contract”.[3] Moving these customers to current Named User or S/4HANA use types therefore requires a new contract basis, which is the situation a contract conversion is designed for.
Counting / floors
Product conversion
SAP’s 2020 overview describes product conversion as a phased, line-item route (Product conversion: 100% line-item credit, no partial conversions):[1]
- Conversion is 1:1, from classic engines to their S/4HANA equivalents only, and requires line-item mapping. Customers cannot convert into products they do not already own.
- The customer keeps its existing contractual agreements and SUR.
- The customer received a 100% line-item credit in 2020, with the 2021 level shown as “tbd”. The maintenance base carries forward at 100% and may never be reduced.
- There are no partial conversions: “conversions are always 100%”.
- SAP Named Users do not convert, except Retail, Banking, Healthcare/Clinical and Industry Named Users, which convert when their engines convert.
- Product conversion can be combined with the Cloud Extension and On Premise Extension policies.
Contract conversion
Contract conversion is a one-time, wholesale event that moves the customer to new S/4HANA Software Use Rights without line-item mapping (Contract conversion credit: lesser of 100% maintenance base or 90% of net new). The 2020 overview states the credit as “the lesser of 100% of prior maintenance base or 90% of net payable of the new transaction”. SAP describes the route as a way to reconfigure the landscape and eliminate shelfware, which it calls the “milkshake concept”: credit from unused licences can be applied to new, unrelated software. Contract conversion can be combined with the Cloud Extension Policy.[1]
For example, if a customer’s current maintenance base is 1.0 million and the net new S/4HANA licence fee for the target bill of materials is 1.5 million, the published formula gives a credit of the lesser of 1.0 million (100% of the base) and 1.35 million (90% of the new fee), which is 1.0 million. If the new fee were only 1.0 million, the 90% cap would bind and the credit would be 0.9 million. Actual credit terms are set in each conversion contract.
Dual use
On 2020-02-11 SAP announced that customers executing a product or contract conversion receive dual use rights for SAP Business Suite 7 and SAP S/4HANA “until completion of their transition”, replacing the earlier limit of end-2025. Customers with signed conversion contracts could ask their account executive to have the new policy reflected in those contracts (Conversion customers keep dual use rights until transition completes).[2] The same announcement placed mainstream maintenance for Business Suite 7 core applications until end-2027, followed by optional extended maintenance until end-2030.
Compatibility Packs
Compatibility Packs let classic functions run on an S/4HANA installation during the transition. On-premise, an S/4HANA Compatibility Pack may be used as an S/4HANA Package if the customer holds a licence to the classic solution and the prerequisite listed in the matrix attached to SAP Note 2269324. While the classic solution is deployed only as the Compatibility Pack on an S/4HANA installation, it requires no Named User licences, and use ends at the matrix expiration date (On-premise Compatibility Packs: classic license required, no Named Users, matrix expiry). S/4HANA Enterprise Management customers are deemed to have the right to use the ERP Compatibility Pack.[3] SAP’s 2020 slides add that Compatibility Packs are needed only for on-stack installations; a classic solution running side by side with S/4HANA does not need one.[1]
In the private cloud tailored option, Compatibility Packs may be used through 2033-12-31, subject to SAP Note 2269324. Using them with on-premise systems requires converting at least 50% of the annual on-premise SAP Support Fee via the Cloud Extension Program on the Order Form effective date. Customers who subscribed before 2025-01-01 may instead hold an Annual Fee of at least 50% of that support fee (Tailored option Compatibility Packs through 2033; on-premise use needs 50% conversion). A specific Compatibility Pack can be extended further only by subscribing, via the Cloud Extension Policy, to its Corresponding Cloud Service for at least 3 years and in sufficient volume (Compatibility Pack extension needs a 3-year Corresponding Cloud Service).[4]
Cloud / BYOL
The cloud routes convert support fees, not licences. No SAP document cited here allows on-premise S/4HANA licences to be brought into RISE or GROW as licences. Instead, the Cloud Extension Program lets a customer end support on part of its on-premise estate and redirect that spend to cloud subscriptions. SAP does not publish the program terms on its agreements pages, but its current cloud documents set explicit thresholds:
- SAP AI on on-premise systems. For customers first subscribing to Core Cloud ERP on or after 2024-10-07, SAP AI Technology may extend to on-premise systems only after at least 50% of the annual on-premise support fee has been converted via the Cloud Extension Program. Earlier subscribers may instead hold a Core Cloud ERP Annual Fee of at least 50% of that fee (SAP AI on on-premise systems requires 50% support conversion).[5]
- Compatibility Packs in the tailored option, as described above.
Programs
- SAP S/4HANA Product Conversion and SAP S/4HANA Contract Conversion are the on-premise conversion programs described above.
- SAP Cloud Extension Program, also called the Cloud Extension Policy in the tailored option SDG, converts on-premise support fees into cloud subscriptions.
- RISE with SAP Migration and Modernization program was announced on 2024-01-30. It offered credits “Through the end of 2024” to SAP ECC and S/4HANA customers moving to RISE with SAP or GROW with SAP, applicable to maintenance, cloud services or cloud subscription, which SAP said could reduce migration cost by up to 50% (RISE Migration and Modernization credits were time-limited to 2024). It also introduced the SAP S/4HANA Cloud Safekeeper service, which gives RISE customers on older S/4HANA releases in customer-specific maintenance two more years of updates and patches.[6]
For customers who have converted, SUR Exhibit 3 §5.17 offers SAP ERP, limited runtime edition to S/4HANA customers only. It may be used only to the extent other licensed software technically requires ERP functions, and it does not require a Named User licence.[3]
Out of scope
- Technical conversion paths (system conversion, new implementation, landscape transformation), which SAP’s slides show only as context.
- Credit percentages after 2020 and any current incentive programs not published on SAP-owned sites.
- The On Premise Extension Policy, which SAP’s 2020 slides name without defining.
- Digital Access conversion offers (Digital Access Adoption Program), which are historical. See SAP Named User and Digital Access licensing.