Background and Challenges
The client is a California-based high-tech manufacturer with approximately 18,000 employees running SAP ECC (ERP Central Component) as the backbone of its operations. With SAP’s 2027 mainstream support deadline approaching, the organisation faced pressure to modernise its ERP landscape. SAP’s RISE with SAP offering — a bundled cloud subscription including S/4HANA Cloud, infrastructure, and managed services — was heavily promoted as the recommended transformation path.
However, the manufacturer’s IT leadership identified fundamental concerns with the RISE model that made it unsuitable for their specific situation.
Vendor Lock-In and Infrastructure Control
RISE required surrendering control of infrastructure to SAP’s managed cloud. The CIO described it as “an all-or-nothing proposition” — accepting SAP’s timeline, terms, and infrastructure decisions. The organisation had an existing data centre and trusted hosting partner, making a full handover to SAP unnecessary and undesirable.
Deep ECC Customisation
The SAP ECC system was extensively customised for manufacturing processes including real-time shop-floor connectivity, manufacturing execution interfaces, and production-specific workflows. A one-size-fits-all cloud subscription could not accommodate these requirements without significant compromise or costly reworking.
Long-Term Cost Uncertainty
RISE’s bundled pricing obscured individual cost components. The organisation could not achieve transparent cost visibility into what it was paying for infrastructure, licences, and managed services separately — making it impossible to benchmark or optimise individual elements.
Solution: Hybrid Hosting with Tier-2 Provider
Rather than signing onto RISE with SAP, the manufacturer designed a hybrid hosting strategy that preserved control, flexibility, and cost transparency while still enabling S/4HANA modernisation.
| Decision | What They Did | Why It Mattered |
|---|---|---|
| Hybrid cloud architecture | Critical production ECC remained on-premises; dev/test and new S/4HANA environments hosted with Tier-2 SAP-certified cloud provider | Maintained real-time shop-floor connectivity for production while gaining cloud benefits for non-critical and new workloads |
| Perpetual S/4HANA licences | Purchased S/4HANA licences outright using SAP’s conversion programmes from existing ECC entitlements, instead of RISE subscription | Preserved investment in existing licences; organisation owns its roadmap and migrates at its own pace with no subscription ticking clock |
| Independent cloud procurement | Negotiated cloud infrastructure terms directly with Tier-2 provider, separate from SAP software agreement | Secured competitive infrastructure pricing with full cost transparency; avoided RISE’s bundled pricing opacity |
| Strict SLA protections | 99.9% uptime commitment with financial penalties for missed targets; flexible exit clauses enabling workload rebalancing | Accountability that RISE’s managed service model may not match; exit flexibility to move workloads without heavy penalties |
| ECC support continuity | Standard support through 2027 with extended maintenance option through 2030 at standard 2% annual fee | Safety net allowing ECC to run until S/4HANA migration is fully complete; no forced timeline |
| Licence value carry-over | Negotiated to carry over unused SAP licence value into future purchases | Protected against shelfware waste; existing investment applied to new capabilities rather than forfeited |
The hybrid setup was enabled through SAP Business Technology Platform (BTP) connectivity and cloud connectors, ensuring seamless integration between on-premises and cloud components. Non-production and development S/4HANA systems were set up in the cloud first, while live ECC production remained stable on existing hardware.
Governance and Migration Approach
The manufacturer implemented a structured governance plan involving both IT and business stakeholders to decide which systems to move to the cloud versus remain on-premises. Decisions were based on latency requirements for factory operations, data sensitivity, and cost.
Manufacturing execution interfaces stayed on-premises. Real-time shop-floor connectivity required low-latency access that cloud hosting could not guarantee. These interfaces remained tied to the on-premises ECC instance throughout the migration.
Innovation moved to the cloud. New initiatives including advanced analytics and IoT integration prototyping were launched in the cloud environment via S/4HANA and SAP BTP services. This demonstrated tangible innovation without RISE — the organisation proved it could modernise and access SAP’s latest platform capabilities on its own terms.
Phased go-live planned. Once thorough testing is complete, the organisation plans a phased S/4HANA go-live in the cloud data centre, with legacy ECC components retired gradually. This avoids a risky “big bang” migration and allows the internal team to build S/4HANA expertise incrementally.
“We proved we could modernise without the RISE umbrella. We stood up S/4HANA in a cloud sandbox and started using SAP’s Business Technology Platform for analytics, all while our core ECC kept running. This hybrid approach lets us transform incrementally, which is huge for a manufacturing business that can’t afford disruption.”
— CIO, California Tech Manufacturer
Results and Outcomes
| Outcome | Detail |
|---|---|
| 20% lower 5-year TCO | Estimated 20% reduction versus the proposed RISE deal, achieved by reusing existing licences through SAP conversion programmes and securing competitive cloud infrastructure rates through direct Tier-2 provider negotiation |
| Full infrastructure control | Maintained control of IT landscape — decisions about where workloads run (on-premises vs. cloud), when to migrate, and which provider to use remain with the organisation, not SAP |
| Complete cost transparency | Separate contracts for SAP software and cloud infrastructure provide clear visibility into each cost component; the organisation pays only for cloud resources it actually uses |
| Customised SLAs and exit flexibility | 99.9% uptime with financial penalties; flexible exit clauses enabling workload rebalancing to on-premises or alternative cloud without heavy penalties |
| Phased S/4HANA adoption | S/4HANA and SAP BTP deployed in cloud for innovation (analytics, IoT) while core ECC processes remain uninterrupted; migration proceeds on business readiness, not vendor timelines |
| Support continuity through 2030 | Standard ECC support through 2027 with extended maintenance option through 2030; no forced migration deadline pressure |
| Improved dev/test performance | Modern cloud infrastructure for non-production environments delivered improved system performance and gave the operations team hands-on cloud experience |
RISE vs. Hybrid: Key Decision Factors
This case study illustrates the critical decision factors CIOs should evaluate when considering RISE with SAP versus alternative modernisation paths.
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Explore SAP Advisory Services →| Factor | RISE with SAP | Hybrid Hosting (This Approach) |
|---|---|---|
| Infrastructure control | SAP-managed; customer surrenders direct control of infrastructure decisions | Customer-controlled; full choice of provider, configuration, and workload placement |
| Cost transparency | Bundled pricing; individual cost components (licence, infrastructure, services) are opaque | Separate contracts; each element benchmarked and optimised independently |
| Migration timeline | SAP-driven timeline; subscription creates pressure to migrate within contract term | Customer-driven; migrate at business readiness with no external deadline forcing pace |
| Customisation flexibility | Limited; RISE favours standard S/4HANA Cloud with reduced custom code support | Full; perpetual licences and own infrastructure support deeply customised environments |
| Exit flexibility | Subscription lock-in for contract term; exiting mid-term is costly or contractually restricted | Negotiable exit clauses with cloud provider; workloads can be rebalanced freely |
| Vendor lock-in | Higher; infrastructure, licences, and services bundled through SAP | Lower; cloud provider can be changed independently of SAP software agreement |
| Innovation access | Included in subscription; SAP BTP and new capabilities are part of the bundle | Available separately; SAP BTP and S/4HANA capabilities can be purchased and deployed independently |
RISE with SAP can be the right choice for organisations seeking a fully managed, turnkey S/4HANA transformation — particularly those without deep IT infrastructure capabilities or existing data centre investments. However, for organisations like this manufacturer that have existing infrastructure, deep customisations, strong IT teams, and a need for cost transparency, the hybrid approach delivers superior outcomes. See SAP RISE independent SAP advisory services Services.
Lessons for CIOs Evaluating RISE with SAP
1. RISE is not the only path to S/4HANA. SAP’s marketing positions RISE as the default modernisation route, but perpetual licensing with independent hosting remains a fully supported option. Evaluate both models against your specific requirements before accepting RISE as the only choice.
2. Separate infrastructure from software decisions. Bundled pricing obscures individual cost components. By negotiating cloud infrastructure and SAP software separately, this organisation achieved transparent cost visibility and the ability to benchmark each element competitively.
3. Preserve existing licence investment. SAP’s conversion programmes allow organisations to apply existing ECC licence value toward S/4HANA. Negotiate licence value carry-over to protect against shelfware waste and avoid paying twice for capabilities already purchased.
4. Negotiate SLAs and exit clauses independently. RISE’s managed service model may not provide the same SLA specificity or exit flexibility available through direct cloud provider negotiation. Strict uptime commitments with financial penalties and flexible exit terms are achievable in direct provider relationships. See SAP Contract Negotiation Service.
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Take the Free Assessment →5. Migrate incrementally, not in a big bang. This manufacturer proved that deploying S/4HANA in a cloud sandbox for innovation while keeping core ECC running delivers modernisation benefits without business disruption. The phased approach de-risks the S/4HANA journey and builds internal expertise before full go-live.
6. Engage independent advisory before committing. SAP’s account teams are incentivised to sell RISE. Independent advisors evaluate RISE proposals against alternatives, benchmark pricing, identify negotiation leverage, and ensure the chosen path aligns with the organisation’s long-term interests. See SAP Licence Optimisation Services.