How an 18,000-employee high-tech manufacturer rejected SAP's all-in RISE subscription, purchased S/4HANA licences outright, partnered with a Tier-2 cloud provider, and achieved 20% lower 5-year TCO — while maintaining full infrastructure control and a phased migration path.
| Profile | Detail |
|---|---|
| Industry | High-Tech Manufacturing |
| Location | California, USA |
| Employees | 18,000 |
| Current ERP | SAP ECC (deeply customised for manufacturing) |
| SAP Proposal | RISE with SAP (S/4HANA Cloud subscription) |
| Chosen Path | Hybrid hosting with Tier-2 cloud provider + perpetual S/4HANA licences |
A California-based high-tech manufacturer running SAP ECC faced pressure to modernise its ERP landscape ahead of SAP's 2027 support deadline. SAP's RISE with SAP offering — a bundled cloud subscription including S/4HANA Cloud — was heavily promoted as the transformation path.
However, the manufacturer's IT leadership grew concerned that RISE's one-size-fits-all approach would limit flexibility. Their SAP ECC system was deeply customised for manufacturing processes, and they wanted a hybrid cloud strategy to gradually leverage cloud benefits without fully abandoning on-premises systems.
RISE required surrendering infrastructure control and accepting SAP's timeline, terms, and bundled pricing. The CIO described it as "an all-or-nothing proposition" that would eliminate flexibility.
RISE's bundled subscription model obscured true infrastructure costs and made long-term TCO difficult to forecast. The company wanted transparent, controllable cost components.
The SAP ECC system was heavily customised for manufacturing execution, shop-floor connectivity, and real-time production processes — requiring careful, phased migration rather than a "big bang" switch.
The company had a functioning data centre and a trusted hosting partner. Handing everything to SAP's managed cloud meant abandoning infrastructure investments that still delivered value.
Rather than signing onto RISE, the manufacturer opted for a hybrid hosting strategy — combining its own data centre with a Tier-2 SAP-certified cloud provider. This allowed modernisation on their own terms.
| Workload | Hosting Location | Rationale |
|---|---|---|
| ECC Production | On-premises (existing data centre) | Stability, real-time shop-floor connectivity, zero disruption |
| S/4HANA Dev & Test | Tier-2 cloud provider | Modern infrastructure, rapid provisioning, cloud skills development |
| SAP BTP & Analytics | Cloud (SAP BTP) | Innovation workloads — IoT prototyping, real-time analytics |
| Manufacturing Execution | On-premises (tied to ECC) | Latency-sensitive, direct factory connectivity required |
| Future S/4HANA Production | Tier-2 cloud (phased go-live) | Planned migration after thorough testing — no forced timeline |
The hybrid setup was enabled through SAP Business Technology Platform (BTP) connectivity and cloud connectors, ensuring seamless integration between on-premises and cloud components.
A regional SAP-certified hosting partner was selected over hyperscalers — delivering personalised service, custom backup schedules, on-demand scalability during quarter-end production spikes, and better infrastructure pricing through direct negotiation.
Non-production S/4HANA systems were deployed in the cloud first, while live ECC production remained stable on existing hardware. New initiatives (advanced analytics, IoT integrations) launched in the cloud via S/4HANA and BTP — proving cloud value without risking core business processes.
The commercial strategy was built on three pillars: own the licences, separate the infrastructure deal, and protect the exit.
| Dimension | RISE with SAP | Hybrid Approach (Chosen) |
|---|---|---|
| Licensing Model | Bundled subscription (no ownership) | Perpetual S/4HANA licences (outright purchase) |
| Infrastructure | SAP-managed (limited control) | Customer-controlled (on-prem + Tier-2 cloud) |
| Cost Transparency | Opaque bundled pricing | Fully transparent — licence and infrastructure costs separated |
| Flexibility | SAP's timeline and terms | Self-determined roadmap — migrate when ready |
| Exit Options | Subscription termination = loss of access | Perpetual licence retained; cloud provider switchable |
| 5-Year TCO | Higher (bundled premium) | ~20% lower |
S/4HANA licences were purchased outright using SAP's ECC-to-S/4HANA conversion programme — preserving the investment in existing licences and avoiding ongoing subscription dependency.
By dealing directly with the Tier-2 cloud host, the company secured better infrastructure pricing and full cost visibility — something they would have forfeited under RISE's bundled model.
The cloud provider contract included 99.9% uptime commitments with financial penalties for unmet service levels — ensuring system reliability and accountability.
The contract included provisions to re-balance workloads on-premises or to another cloud provider in the future — without heavy penalties.
Standard ECC support was maintained through 2027, with the option to extend through 2030 (at the standard 2% annual fee). This allows ECC to run until the S/4HANA migration is complete.
The SAP agreement was amended to carry over unused SAP licence value into future purchases — protecting against shelfware waste during the transition period.
| Outcome | Detail |
|---|---|
| 5-Year TCO | ~20% lower than the proposed RISE deal — achieved by reusing existing licences and securing competitive cloud rates |
| Infrastructure Control | Full control retained — hybrid mix of on-premises and cloud, switchable without vendor lock-in |
| Cost Transparency | Complete visibility — pays only for cloud resources needed, licence and infrastructure costs fully separated |
| SLA & Support | 99.9% uptime SLA with financial penalties; ECC support through 2027 (extendable to 2030) |
| S/4HANA Progress | Phased migration underway — dev/test in cloud, innovation via BTP, core ECC stable |
| Cloud Readiness | Operations team gained cloud experience; improved dev/test system performance on modern infrastructure |
By reusing existing licences and securing competitive infrastructure pricing through direct negotiation with the Tier-2 provider, the company achieved an estimated 20% lower total 5-year cost versus the proposed RISE deal.
Flexible exit clauses and perpetual licence ownership mean the company can re-balance workloads between on-premises and cloud — or switch cloud providers entirely — without commercial penalties.
The hybrid model de-risked the S/4HANA journey. The company can pilot new capabilities and only switch over production when confident — no ticking clock forcing migration before they're ready.
Advanced analytics, IoT prototyping, and SAP BTP services were launched in the cloud environment — demonstrating tangible innovation and building internal cloud skills without the RISE subscription.
Enterprises can modernise to S/4HANA without committing to RISE's bundled subscription. Perpetual licences, hybrid hosting, and SAP BTP provide the same capabilities with greater control and cost transparency.
Unbundling the licence purchase from the infrastructure deal enables independent negotiation of both — typically yielding better pricing and more favourable terms than RISE's all-inclusive model.
Regional SAP-certified hosting partners can deliver personalised service, flexible SLAs, and competitive pricing that hyperscalers or SAP's centralised cloud may not match — especially for mid-market manufacturers.
For manufacturing environments with deep customisations and real-time shop-floor dependencies, a phased hybrid approach is safer than a "big bang" cloud migration forced by RISE timelines.
Flexible exit clauses, perpetual licence ownership, and extended maintenance options (through 2030) ensure the company is never locked into a single vendor's timeline or commercial model.
Before you commit, get an independent assessment. We'll analyse your RISE proposal against hybrid alternatives, model the 5-year TCO, and identify risks — typically within 48 hours.