SAP's RISE offering fundamentally transforms how enterprises licence and contract for SAP ERP. This guide examines the contractual changes between RISE and traditional perpetual licensing, highlighting financial implications, control trade-offs, and key considerations for CIOs and CTOs negotiating these agreements.
RISE with SAP bundles S/4HANA software, cloud infrastructure, and support into one subscription — eliminating perpetual ownership but simplifying operations. Traditional BYOL preserves licence ownership and infrastructure control but demands more management. Neither model is inherently better; the right choice depends on your organisation's priorities, existing investments, and strategic roadmap. Read Mapping Legacy SAP ERP Licences to S/4HANA User Roles.
RISE with SAP (introduced in 2021) packages S/4HANA with cloud hosting and support under a single contract and fee. SAP provides the software as a subscription, provisions and manages the cloud infrastructure (through hyperscaler partners or SAP's data centres), and includes standard support and maintenance. SAP also bundles extras such as limited BTP credits and business network starter packages. The result is an all-in-one offering where SAP is your primary vendor for software and operations.
Bring Your Own Licence (BYOL) refers to the traditional model: you purchase perpetual SAP licences and deploy them on the infrastructure of your choice (on-premises data centres or cloud platforms like AWS/Azure). In BYOL scenarios, the enterprise owns the software licence indefinitely and pays annual maintenance for support and updates. Infrastructure and hosting are contracted separately, and you retain direct control over how systems run.
Software, infrastructure, and support bundled into one recurring fee. SAP manages everything.
Perpetual licence ownership, separate infrastructure contracts, full operational control.
RISE shifts SAP software to a cloud subscription service, whereas BYOL maintains the classic ownership model. This shift has wide-ranging contractual implications — from cost structure to flexibility and risk. Read S/4HANA Digital Access Considerations for Indirect Use Compliance.
With RISE, licensing moves from a perpetual model to a time-bound subscription. Traditionally, buying SAP software meant a large upfront capital expenditure (CapEx) to own the licence indefinitely. Under RISE's OpEx model, there is no upfront licence purchase — you pay an annual subscription fee for the right to use S/4HANA during the contract term. You do not own the software licence; if the subscription ends, your usage rights also end.
This is a fundamental contractual change: in a BYOL scenario, even if you stop paying maintenance, you still retain the licence and could continue running the software without support. In RISE, stopping payments means losing access entirely — a true SaaS-like arrangement for core ERP.
The subscription covers S/4HANA software, standard support services, and underlying cloud infrastructure. SAP becomes both software vendor and cloud service provider. Instead of separate agreements for software and hosting, RISE rolls everything into one package.
Perpetual licences grant ownership certainty — you can run the software for decades. RISE grants temporary usage rights aligned with the contract term (typically 3–5 years). SAP has indicated that many new S/4HANA features will debut in cloud editions, potentially leaving on-premises holders with older feature sets unless they transition.
RISE is not just a different payment plan — it is a different licensing regime. SAP aims to continuously deliver innovation via cloud subscriptions, potentially leaving on-premises holders with older feature sets. CIOs should understand this when evaluating the long-term strategic implications.
Under traditional licensing, enterprises pay upfront for software (often millions) and then ~20% annually for maintenance, plus separate infrastructure costs. With RISE, those costs blend into a uniform yearly subscription — no big upfront licence fee, just predictable service payments. CFOs may favour the smoother expense line and the avoidance of depreciating a large licence asset.
However, long-term costs must be examined. A multi-year subscription, summed over 5–10 years, can equal or exceed the cost of a one-time purchase plus annual maintenance. SAP often touts that RISE can reduce TCO by ~20% compared to on-premises deployment — but results vary widely:
If your current environment is high-cost or due for upgrade (ageing hardware, expensive data centre contracts, large IT staff), RISE's bundle might save money by offloading those costs to SAP's economies of scale.
If you already run a lean, optimised operation (low-cost cloud hosting, automated management, minimal SAP support needs), RISE quotes may come in higher than continuing with BYOL. Some companies report initial RISE proposals exceeding their current costs.
SAP offers credits and discounts — crediting existing maintenance or giving first-year breaks — to make TCO favourable. These incentives can tip the scales but are often time-limited or contingent on longer contract terms.
In a BYOL model, your software licence never expires. You renew maintenance annually, but you're not forced to keep paying to use the software. You have the freedom to switch infrastructure providers or support vendors as needed.
RISE contracts are fixed-term subscription agreements — commonly 3, 5, or even 7-year commitments. During that term, you are locked into paying whether you use it fully or not. Early termination is generally not permitted without hefty penalties (essentially, you'd owe the remaining contract value). This means less flexibility if business priorities change mid-term.
At the end of a RISE term, you must renew or lose your core system. This gives SAP significant leverage. A traditional licence holder could stop maintenance and still keep running — RISE customers have no such fallback.
Without negotiated renewal caps, there's risk of a steep price increase after the initial term, when switching away is extremely difficult. Negotiate caps on subscription price at renewal (e.g., max percentage increase or tied to benchmark).
RISE bundles you into SAP's ecosystem contractually. You cannot move your production environment to another cloud mid-term — the SAP-managed infrastructure is a key component of the deal.
Since you won't have an on-prem licence for S/4HANA under RISE, plan an exit strategy upfront. Document what reversion would entail (cost to re-licence S/4HANA on-prem for your user count). Ensure the contract grants the right to retrieve your data and customisations from SAP's cloud in a usable format at term end. Read our RISE with SAP Contract & Licensing Challenges guide.
Need help negotiating RISE contract safeguards?
RISE Advisory Service →Moving to RISE means changing how you manage your SAP environment day-to-day. In BYOL, you (or your chosen partners) handle system administration. With RISE, much of that responsibility shifts to SAP and is governed by the contract.
SAP provides infrastructure as part of the service — you no longer sign contracts with AWS or Azure directly. SAP's contract includes SLAs for uptime (commonly ~99.7%) and disaster recovery. But scaling, adding capacity, or changing regions must go through SAP's contract terms. In BYOL, you scale cloud resources on your own terms.
In RISE, support is bundled — you cannot opt out or choose a third-party support provider for a discount. Large enterprises using third-party support (e.g., Rimini Street) in traditional models to save costs lose that option with RISE. Ensure the support SLAs meet your operational needs.
RISE comes in two flavours: public cloud (multi-tenant, standardised SaaS with limited customisation and automatic quarterly updates) and private cloud edition (single-tenant, allowing existing custom ABAP code and more tailored processes). Most large enterprises opt for private cloud to carry over customisations. In BYOL, you have full control over upgrade timing and can stay on a version for years.
RISE can keep you more current with less upgrade effort, but imposes a discipline of regular updates (and possibly constraints on heavy modifications in public cloud). Companies that highly value control may prefer BYOL to dictate their upgrade timelines; those valuing latest functionality and less internal burden may lean toward RISE. See our Retiring Old SAP Components During S/4HANA Migration guide.
Traditional SAP perpetual licensing uses Named User licences in various categories (Professional, Limited Professional, Employee Self-Service, etc.), each with different price points. It was complex and often inflexible — misjudging user type counts led to shelfware or shortages.
RISE simplifies this with a unified metric called Full Usage Equivalent (FUE). Instead of micromanaging user categories, you contract for a total number of FUEs, and all user types consume a fraction. For example, a heavy power user might be 1.0 FUE, a light user 0.1 FUE. You don't purchase "Professional" vs "Limited" users separately — you ensure total usage stays within the contracted amount.
As your user mix changes, you reallocate FUEs without buying new licence types. Indirect access is often bundled more straightforwardly.
Over-estimating FUEs means paying for unused capacity. Under-estimating means buying more mid-term at potentially higher rates.
| Aspect | RISE with SAP (Subscription) | Traditional BYOL (Perpetual) |
|---|---|---|
| Licence Ownership | No perpetual rights — usage only during subscription term. Must keep subscribing. | Perpetual licence — own software indefinitely. Can run unsupported if maintenance dropped. |
| Cost Model | Recurring subscription (OpEx). Includes software + infra + support. No large upfront cost. | Upfront licence (CapEx) + ~20% annual maintenance (OpEx) + separate infra costs. |
| Contract Term | Fixed 3–7 year commitment. Early termination costly or prohibited. Must renegotiate at renewal. | No fixed term for software. Annual maintenance renewal optional. More exit flexibility. |
| Infrastructure | Included and managed by SAP. Hyperscaler choice available. Changes go through SAP's contract. | Bring your own — on-prem or any cloud. Full control over infra decisions and scaling. |
| Support | Bundled in subscription. Cannot opt out or use third-party support. SLAs defined in contract. | Purchased separately (~20%). Can choose third-party support. You manage maintenance. |
| Customisation | Private Cloud: full customisation. Public Cloud: limited custom code, automatic quarterly updates. | Full freedom to customise and modify. You schedule upgrades on your own timeline. |
| User Metrics | Full Usage Equivalents (FUE) — unified metric. Flexible user-type allocation. | Named Users by category (Professional, Limited, ESS). Complex, rigid categorisation. |
| Lock-In | High. Bundled ecosystem, costly to exit. Reduced leverage at renewal. | Low. Modular — can change infra, support, or vendors independently. Perpetual rights preserved. |
| Innovation Access | Cloud-first features, continuous updates, latest capabilities included. | Must initiate upgrades to access new features. May lag behind cloud editions. |
Model out all costs of staying on traditional licensing vs moving to RISE over 5–10 years. Include software fees, infrastructure, personnel, upgrade projects, and intangibles. Use this analysis to drive negotiations — don't just take SAP's word for cost savings; verify with your data.
If you have a cloud-first mandate and need rapid innovation, RISE aligns well. If you require full control due to regulatory reasons or have custom processes that aren't ready to standardise, BYOL might be a better fit. Involve business stakeholders in the decision.
SAP is eager to transition customers to cloud subscriptions — use that as leverage. Engage multiple options (staying on-premises, using hyperscalers with BYOL) to encourage SAP's best offer. Ask about migration credits, discounted first-year fees, or bundling deals. See our SAP Licence Negotiation Guide.
Cap annual price increases and renewal rates. Secure the right to adjust FUEs downward if usage drops. Include clear exit provisions (data extraction, assistance, potential conversion to on-premises licence). These clauses can save millions or prevent future headaches. Read our SAP Contract Negotiation Playbook.
You don't have to go all-in at once. Start with a smaller landscape or non-mission-critical system as a pilot. Negotiate to only start paying for parts of RISE when they're actually in use. Phasing reduces risk and allows learning before a major cutover.
If you have strong SAP basis and cloud engineers, you might handle BYOL on the cloud efficiently. If not, RISE could fill a skills gap. Also consider if a third-party provider could offer similar managed cloud services — sometimes partners can run SAP in the cloud with comparable benefits to RISE.
If you choose RISE now, keep an eye on an exit strategy. If you stay on-prem, keep systems cloud-ready for a future move. Avoid contractual clauses restricting future choices. See our SAP Pricing Protections Playbook for long-term strategies.
Adopting RISE isn't just a technical shift — it's an operational change. Prepare your organisation for more frequent updates, a new support process, and potentially reduced hands-on control. Invest in training so your IT staff and end-users adapt smoothly.
If you go with RISE, establish KPIs and governance to track whether it's delivering as promised. Regularly review uptime, performance, cost adherence, and feature adoption. Engage SAP early if issues arise — hold them accountable through the contract and relationship.
Our independent SAP licensing experts help enterprises evaluate RISE vs BYOL, negotiate contract safeguards, and avoid lock-in — typically saving millions over the contract lifecycle.