How a California Tech Manufacturer Negotiated Out of RISE with SAP and Cut 5-Year TCO by 20%

The Setup: SAP's Pitch and the Pressure Being Applied

In August 2025, SAP's account team initiated a RISE with SAP pitch to the California manufacturer, positioning it as the industry standard for ECC-to-S/4HANA migration. The pitch included business case models, reference customer calls, and explicit warnings: delay migration beyond 2027 (when ECC mainstream maintenance ends) and the company faces either expensive extended maintenance or risky legacy system operations.

SAP's approach was methodical. It leveraged three pressure points simultaneously: the December 2027 ECC end-of-support deadline (per Gartner, only 39% of SAP's 35,000 ECC customers have licensed S/4HANA), the organization's 35,000 perpetual licenses creating what SAP framed as "stranded license inventory," and the complexity of migrating a large-scale ECC deployment independently. From SAP's perspective, RISE eliminated complexity and risk. From the manufacturer's perspective, it eliminated alternatives.

Analysing the RISE Proposal: What Was Included, What Was Hidden, What Was Excluded

The manufacturer's procurement team deconstructed the RISE proposal line by line. This analysis proved critical to understanding where negotiating leverage existed.

What Was Included in RISE

SAP's RISE proposal included S/4HANA cloud infrastructure hosting on SAP's private cloud (powered by AWS but SAP-managed), bundled basis support and infrastructure patching, BTP credits for Clean Core customization migration, quarterly business reviews, and a fixed three-year contract with defined pricing escalation. The manufacturer was quoted approximately $1,240 per user per month in year one, declining to $840 per user per month in years two and three.

What Was Hidden in RISE

The manufacturer's analysis uncovered critical information SAP did not volunteer. First: SAP marks up hyperscaler infrastructure costs by 40% to 60% and does not pass through volume discounts available to large-scale cloud customers. For a 35,000-user deployment, this markup represented approximately $180,000 to $240,000 in hidden cost annually. Second: BTP customization migration costs in the proposal were underestimated by approximately 35%, based on the manufacturer's own project history. Third: SAP's pricing escalation clause (+3% annually) was presented as fixed, but SAP had flexibility to negotiate it downward in the presence of alternative proposals.

What Was Excluded from RISE

SAP's RISE proposal explicitly excluded: data migration services (separate, expensive scope), application layer customizations beyond Clean Core (vendor responsibility), integration with non-SAP systems, and training beyond the core migration team. Additionally, RISE committed the manufacturer to SAP's hosting only—moving infrastructure mid-contract incurred substantial penalties, effectively locking the customer into the arrangement regardless of performance or cost issues.

Building the Counter-Proposal: Own Licenses + Competitive Cloud + Modular Support

Rather than accept or lightly negotiate RISE, the manufacturer built a comprehensive alternative. The counter-proposal positioned three independent cost centers: perpetual S/4HANA licenses on post-maintenance fee basis, hosting from a tier-2 cloud provider at substantially lower cost than SAP, and basis support from a specialist provider with performance guarantees and exit clauses RISE did not offer.

The hybrid model's total cost was approximately 20% lower over five years, but more importantly, it created three independent vendor relationships with competitive leverage unavailable in a bundled RISE deal. The manufacturer could threaten to move hosting, replace basis support, or license terms to competing providers—each threat carried weight because the decision was no longer binary (accept RISE or face migration risk), but modular (optimize each component independently).

The Five Negotiation Tactics Used

The manufacturer deployed five specific tactics to move from RISE to the hybrid alternative.

Tactic 1: Quantify the Hidden Cloud Markup and Demand Transparency

The manufacturer presented SAP with a detailed analysis of hyperscaler costs (based on AWS public pricing for equivalent infrastructure), identified SAP's 40-60% markup, and explicitly requested SAP to provide itemized infrastructure cost breakdown. SAP's account team could not, because the markup is a bundled feature of RISE, not a transparent line item. This forced a conversation: either SAP discloses the markup (embarrassing), or acknowledges the hybrid model's infrastructure cost transparency as a negotiating point. The manufacturer framed the issue as risk management: "We need cost transparency to forecast five-year budgets. RISE bundling makes that impossible."

Tactic 2: Create a Competing Proposal with Detailed Economics

The manufacturer presented SAP with a fully detailed hybrid counter-proposal: perpetual licenses at negotiated post-maintenance rates, tier-2 cloud hosting at $180 per user per month (versus SAP's blended $280-320), and modular basis support at $45 per user per month. The counter-proposal included capacity planning, disaster recovery specifications, and support SLAs. Critically, it was cheaper than RISE by approximately $3 million over five years, but only if perpetual licenses were retained. This created a negotiating position: SAP could win either the hosting deal (with the hybrid model) or lose the entire account (if the manufacturer built the hybrid architecture independently).

Tactic 3: Exploit SAP's Fiscal Year Pressure (Q4 = Jul-Sep)

The manufacturer initiated negotiations in August 2025, during SAP's fiscal Q4 (July-September). RISE is classified as cloud revenue in SAP's annual reporting, and Q4 represents the final quarter for hitting annual targets. The manufacturer explicitly stated it would finalize the decision in November, after SAP's fiscal year closed (September 30). This timing created urgency for SAP at the deal closure but shifted power to the manufacturer after Q4. Delaying a decision beyond SAP's fiscal year-end removed Q4 revenue pressure and allowed negotiations to proceed on economic merit rather than quota pressure.

Tactic 4: Leverage the ECC Sunset and Migration Credits

SAP's standard migration credits reduce approximately 10% per year post-2025. The manufacturer identified that their ECC mainstream maintenance ends in December 2027 and positioned this deadline as a negotiating lever: "We have two years to migrate. SAP's migration credits decrease 10% annually. If we delay one year, credits decline by $X. If we commit today, credits are higher." Additionally, the manufacturer negotiated deployment credits toward the hybrid infrastructure (funding the tier-2 cloud setup) as an alternative to RISE hosting discounts. This converted SAP's loss of hosting revenue into a smaller upfront payment that still improved the hybrid model's economics.

Tactic 5: Establish Clear Walk-Away Terms and Communicate Them

The manufacturer established three non-negotiable terms: no three-year lock-in without pricing caps, no abandon of perpetual licenses without credit, and no BTP mandatory migration. These terms were communicated explicitly to SAP early in negotiations. They narrowed the negotiating range dramatically because SAP understood the boundaries. When RISE as presented violated all three, SAP had to move. The hybrid model met all three terms, creating a clear endpoint to negotiations.

The Final Deal Structure

After four months of negotiation, SAP accepted a revised licensing and services agreement. The manufacturer retained 35,000 perpetual S/4HANA licenses at post-maintenance fees ($72 per user per month). SAP provided limited deployment credits (approximately $240,000 total) usable toward third-party infrastructure. The manufacturer contracted hosting separately with a tier-2 provider and basis support with a specialist firm. Critically, SAP did not foreclose future purchasing decisions: the hybrid model positioned the relationship as modular, with each component subject to competitive renewal.

Applying This Framework to Your SAP Negotiation

Three principles from this negotiation apply broadly to large-scale SAP migrations:

Principle 1: Break Bundled Proposals Into Component Costs

Bundled proposals (RISE, SAP's E-Licensing, Microsoft's M365 security stack) obscure component costs and hide leverage points. Demand transparency on cloud infrastructure, support, and licensing costs. This transparency shifts power to the buyer because each component becomes independently negotiable.

Principle 2: Build a Detailed Counter-Proposal, Not a Discount Request

Asking SAP to "discount RISE" concedes SAP's framing. Building a detailed alternative (hybrid hosting, modular support) forces SAP to compete on economics, not just price. SAP is forced to either match the hybrid model's economics or lose the business. Discount requests are weaker because SAP can marginally improve RISE pricing without fundamentally changing the deal structure.

Principle 3: Use Timing Leverage (Fiscal Years, Support Deadlines, Calendar Pressure)

Most enterprise software negotiations contain hidden timing leverage—vendor fiscal year pressure, support deadline cliff faces, calendar-based quota cycles. Manufacturers facing ECC sunset in 2027 have leverage: they can migrate now (SAP wants it) or wait (SAP panics). Using this leverage explicitly in negotiation (not as a threat, but as a factual business reality) shifts power significantly.

Beyond RISE: Extended Maintenance and Long-Term Licensing

SAP's Extended Maintenance window (2028-2030) includes a +2% annual uplift on maintenance costs, approximately 24% of license value. The manufacturer's perpetual licenses will enter this premium window in 2028, at a higher cost. By then, the organization will have migrated to S/4HANA on hybrid infrastructure and will have clear visibility into long-term licensing economics. This visibility enables intelligent decision-making about perpetual license renewal versus third-party support (Rimini Street offers up to 50% below SAP's rates) or competing platforms. RISE would have locked this decision into SAP's ecosystem for the three-year term minimum.

Author Bio: Fredrik Filipsson is Co-Founder of Redress Compliance. 20+ years enterprise software licensing. 500+ engagements. Gartner recognised. 100% buyer-side. LinkedIn