Choosing RISE with SAP or Not: A CIO’s Guide to Licensing Strategy
SAP’s “RISE with SAP” offering bundles cloud infrastructure, software, and services into one subscription, promising faster ERP transformation.
However, choosing RISE versus traditional SAP licensing is a strategic decision.
This guide for CIOs and CTOs provides a checklist of when RISE makes sense and when a traditional licensing model may be the better fit.
RISE vs. Traditional SAP Licensing
RISE with SAP shifts you from owning software and managing infrastructure to an all-in-one cloud subscription. In a traditional model, you buy SAP licenses (CapEx) and run them on your own servers or cloud platform, paying annual maintenance and handling upgrades yourself.
With RISE (OpEx), you pay SAP a subscription that covers the S/4HANA software, cloud hosting through SAP’s partners, and SAP’s technical services for support and upgrades. Essentially, SAP becomes both your software vendor and infrastructure provider under a single contract.
Moving from SAP ECC to RISE with SAP can feel like leaping into a bigger bowl. RISE offers a managed cloud environment and rapid innovation, but CIOs must be cautious of potential pitfalls, such as vendor lock-in or reduced flexibility.
Deciding between RISE and traditional licensing means balancing the appeal of SAP-managed services against the need for control and customization.
With a traditional setup, you retain full control (and responsibility) over customizations, upgrade timing, and infrastructure choices. RISE offloads much of that work to SAP at the cost of some flexibility and autonomy.
Read SAP RISE: Licensing, Components, and Cloud Deployment Options.
When RISE with SAP Makes Sense
- Greenfield or fast transformation: If you need to modernize quickly (for example, migrating from an old ECC system), RISE provides a ready-to-run S/4HANA cloud environment in a single step. It accelerates your digital transformation without a lengthy on-premise upgrade project.
- Lean IT teams: If your organization lacks extensive SAP basis or infrastructure staff, RISE lets you outsource those duties to SAP. Your team can focus on business needs while SAP handles the technical heavy lifting of keeping the system running.
- Single vendor accountability: RISE means one contract and one “throat to choke.” SAP is accountable for software, infrastructure, and support, simplifying vendor management. This is valuable if coordinating multiple providers (hardware, hosting, support) has been challenging.
- OpEx Budgeting: Prefer Operating Expenses over Capital Outlay? RISE aligns with that. There’s no big upfront license cost – instead, you get predictable annual fees covering everything. This model can make budgeting easier and avoid large one-time IT expenses.
- Standardization & rapid innovation: Willing to adopt standard SAP processes and stay up-to-date? RISE keeps you on the latest version through SAP-managed updates. You’ll access new features faster and avoid falling behind on technology (though you sacrifice some flexibility to customize).
When Traditional Licensing is Better
- Heavily customized systems: If your SAP environment is deeply customized or integrates with many non-SAP systems, the traditional model is likely safer. RISE (especially the public cloud option) can’t accommodate extensive custom code or unusual configurations.
- Infrastructure control: Companies with significant data center investments or strict compliance needs often prefer to manage SAP on their own terms. Traditional licensing enables you to optimize and control infrastructure and data placement to meet specific requirements.
- Avoiding lock-in & vendor flexibility: Perpetual licenses give you more options. You can run SAP indefinitely (even without SAP support or with third-party support) and freely choose or change your hosting and service partners. With RISE’s subscription, you’re fully tied to SAP’s services — you can’t easily reduce costs or switch providers.
- Cost optimization: If you currently operate SAP at a low cost, RISE may not save money and could even incur additional costs once SAP’s margin is factored in. Many organizations find that sticking with existing licenses and infrastructure remains cheaper, especially if they’ve already optimized those investments.
Cost and Pricing Comparison
One major difference is how you pay over time. Here’s a high-level comparison:
| Cost Element | Traditional Model (Own & Manage) | RISE with SAP (Subscription) |
|---|---|---|
| Upfront License Fee | Yes – purchase licenses (CapEx) | No. Included in subscription (no upfront cost) |
| Annual Maintenance | Yes – ~20% of license price per year | Included. Support is bundled in subscription |
| Infrastructure | You manage (on-prem or your cloud) | Included. SAP provides cloud infrastructure |
| Upgrades | You plan and execute (periodic projects) | Included. SAP performs continuous technical upgrades |
| Flexibility | Own the software; can delay upgrades or cut costs (with trade-offs) | Must keep subscribing to use; limited ability to scale down cost |
Always run the numbers for your scenario.
Depending on your baseline, RISE might lower your total cost or come at a premium. SAP may claim a 15% TCO savings by bundling infrastructure and upgrades; however, your results may vary.
Some companies find that initial RISE quotes are higher than their current SAP run rate, becoming attractive only after additional discounts are applied.
Negotiate thoroughly and factor in all elements (including SAP’s incentives and possible price increases) when comparing options.
Also, secure contract safeguards like caps on renewal rate hikes — once you’re on RISE, you’re dependent on SAP’s services for the long haul.
Recommendations
- Perform a TCO analysis: Calculate the multi-year total cost of ownership for staying on-premises vs. moving to RISE. Include everything (licenses, hardware or cloud costs, support, upgrade projects) to base your decision on data.
- Align with your roadmap: Plan a move to RISE at a logical point – for example, when the hardware is due for a refresh, a major upgrade is needed or by SAP’s 2027 end-of-support deadline for ECC. Timing can maximize benefits and minimize wasted investments.
- Negotiate favorable terms: If you choose RISE, negotiate hard. Seek price protections (like a cap on annual increases) and get credit for existing license value. Ensure the contract spells out what SAP delivers (e.g., disaster recovery, performance SLAs) so you don’t have gaps in service.
- Manage customizations: Have a plan for your custom code and add-ons. Decide which customizations can be retired or replaced with standard functions. For those you must keep, consider using SAP’s Business Technology Platform for extensions or ensure they’re supported in a RISE private cloud environment.
- Reevaluate periodically: Keep an eye on SAP’s roadmap and your costs. New SAP cloud features or policy changes might shift the equation. Likewise, track your actual spending under RISE versus expectations and be prepared to adjust or renegotiate at renewal time.
FAQ
Q1: What does a RISE with SAP subscription include that a traditional license doesn’t?
A: It includes not just the S/4HANA software but also the infrastructure and operational services to run it. SAP provides the cloud servers (through a hyperscaler), handles installation, patches, and monitoring, and includes support and regular upgrades — all bundled in. With a traditional license, you would be responsible for arranging and managing all those elements yourself (or via third parties).
Q2: Is RISE more expensive than traditional SAP in the long run?
A: It depends. RISE transforms SAP into a service that you pay for on an annual basis. It can be cost-effective if you’re facing significant on-premises expenses (such as data center upgrades or major release projects), as it offloads those to SAP. However, if your current SAP operations are highly efficient and largely paid off, RISE may be more expensive. In many cases, after negotiation, the 5-year costs end up in a similar range, so the choice comes down to where you want to allocate resources and how much control you want. Be sure to run the numbers for your own situation.
Q3: What happens to our existing SAP licenses if we switch to RISE?
A: Typically, they get rolled into the RISE contract. You stop paying maintenance on the old licenses and start the RISE subscription. SAP will usually terminate or suspend your previous license agreements, and you may get a credit in the RISE deal for the value of your existing licenses. However, once you’re on RISE, you no longer have an independent license to run SAP outside of that subscription – if you ever left RISE, you’d need to negotiate a new agreement to keep using the software.
Q4: Can we still customize our system and control upgrade timing under RISE?
A: To a degree. In a RISE private cloud, you can carry over most of your existing customizations, but SAP will enforce some guardrails so that upgrades aren’t impeded. In the public cloud edition of RISE, you cannot alter the core code at all – only extend via SAP’s provided tools – so heavy customizations won’t carry over. As for upgrades, SAP decides the schedule (e.g., quarterly or semiannual updates). You can’t defer these indefinitely, so you’ll need to adapt to more frequent release cycles. In short, you sacrifice some control over modifications and timing in exchange for SAP handling much of the technical work.
Q5: How can we negotiate the best RISE deal with SAP?
A: Come prepared and compare options. Have SAP present both a RISE proposal and a traditional licensing proposal – seeing both helps you leverage the benefits of both. Highlight what you’ve already invested (licenses, infrastructure) and ask for credits or discounts reflecting that value. Negotiate a cap on future price increases and ensure that all necessary services (such as specific SLAs or integrations) are included in the contract. Make it clear that you’re considering all options (including staying on-premises or exploring other solutions) so SAP understands that they need to earn your business with a competitive offer.
Read about our SAP Advisory services for Rise.
