SNC is the only way. If you use the free SAP SNC library then you need Active Directory since AD is used to issue encryption keys to client and server during the logon. If you don't want to use AD and you don't want to pay anything then you need to develop your own SNC library that uses some other method to issue/manage encryption keys (this is not recommended and not easy). Or you can buy a product that includes SNC libraries and doesn't require AD (e.g. uses x.509 certificates).
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