Cost Comparison: RISE vs Own Infrastructure

Cost Comparison: RISE vs. Own Infrastructure (CapEx vs OpEx over 5–10 Years)

RISE with SAP converts a traditional SAP deployment’s capital expenditures (CapEx) into an all-in-one operational expense (OpEx) subscription. For more information, please read ‘What is SAP RISE?’

This offers lower upfront costs and bundled services, but CIOs and CTOs must carefully weigh short-term cash flow benefits against long-term total cost of ownership (TCO).

Over a 5–10 year horizon, RISE can accelerate cloud adoption and simplify operations; however, the cumulative subscription fees may approach or exceed the cost of owning infrastructure outright.

In short, thorough TCO analysis and strategic alignment are essential to determine whether SAP’s RISE subscription or a self-managed environment delivers better value for your enterprise.

Read SAP RISE: Licensing, Components, and Cloud Deployment Options.

CapEx vs OpEx: Understanding the Trade-off

CapEx (Capital Expenditure) refers to large upfront investments – in the SAP context, this includes purchasing perpetual software licenses and investing in servers, storage, and data center facilities.

Traditionally, companies would pay millions upfront for SAP licenses (which could be capitalized on the balance sheet) and purchase hardware that is depreciated over the years.

The benefit is ownership: you own the licenses indefinitely, and the infrastructure is yours to use as needed. However, CapEx-heavy projects can initially strain budgets and require executive approval for significant one-time expenditures.

OpEx (Operational Expenditure) refers to ongoing costs.

With RISE with SAP, the model shifts entirely to operating expenses (OpEx). Instead of buying software and equipment, you pay an annual (or monthly) subscription fee that covers software usage, cloud infrastructure, and SAP’s support.

There’s no big upfront license cost; expenses are spread out as regular operating charges. This can be attractive for organizations preferring a predictable expense stream and easier budget approvals (OpEx often comes out of operating budgets with less red tape than capital budgets).

RISE essentially turns your ERP into a utility-like service: you pay as you go, and SAP and its partners handle the underlying infrastructure and maintenance.

Key trade-off: 

The CapEx model (own infrastructure) may have a higher initial cost but potentially a lower run rate later on. In contrast, the OpEx model (RISE) improves cash flow early but requires ongoing payments.

It’s akin to buying a house vs. renting – buying (on-premises) means upfront investment and ownership equity, while renting (RISE subscription) means no upfront cost.

Still, you never build an asset, and rent can increase over time. CIOs must determine which financial model best aligns with their company’s priorities and accounting preferences.

Total Cost of Ownership Over 5–10 Years

When comparing RISE versus on-prem infrastructure, it’s crucial to model the total cost of ownership (TCO) over a multi-year period, not just year one.

SAP has marketed RISE as potentially 20% cheaper in TCO over 5 years for S/4HANA Cloud compared to a traditional deployment.

This claim assumes that in an on-premises scenario, you incur all typical costs (hardware refreshes, software updates, high-quality infrastructure, and support) that RISE would bundle more efficiently.

In some 5-year comparisons, customers have indeed found RISE’s bundled offering to be 15–20% lower in cost than a like-for-like on-premises setup with premium infrastructure and services.

However, actual outcomes vary widely. Suppose your organization already operates a highly lean and optimized SAP environment (for example, utilizing cost-effective hosting and minimal staffing).

In that case, RISE might appear more expensive because you’re paying SAP for services you handled cheaply in-house.

On the other hand, if your current landscape is due for heavy investments – say your data center hardware is aging or an upgrade is looming – the “RISE package” can be financially attractive, avoiding a new capital outlay.

At the 10-year mark, the picture can change: an on-prem model might amortize those upfront costs and only incur lower incremental expenses (maintenance, incremental upgrades), whereas a subscription like RISE continues at full rate each year.

Many CIOs recognize that cumulative costs may converge or even tilt – what saves money at 5 years could cost equal to or more by year 10 if subscription fees escalate or if on-premises costs level off.

In short, short-term TCO vs long-term TCO can differ: RISE often wins on a 3-5 year horizon for full-service convenience, but beyond 5-7 years, you must scrutinize whether the ongoing subscription will outpace owning your licenses and infrastructure.

Smart enterprises model multiple scenarios (5, 7, 10 years) to identify the “crossover point” where the OpEx of RISE might exceed the cumulative CapEx and OpEx of on-premises solutions.

It’s not a given that RISE is cheaper – SAP’s promised savings “mirage” can fade if you’re not utilizing everything in the bundle or if your on-prem costs were lower than SAP’s assumptions.

Always validate with your numbers rather than assuming a generic percentage saving.

Learn more about negotiation strategies to reduce TCO.

Cost Breakdown: RISE Subscription vs. Self-Managed

To make an informed comparison, break down the cost components of each approach side by side.

Below is a high-level cost component comparison for an SAP S/4HANA landscape under RISE vs owning your infrastructure:

Table: 5-Year Cost Component Comparison – RISE vs. Traditional On-Prem

Notes: The table illustrates how RISE bundles many ongoing costs into a single fee, whereas the traditional model unbundles them, providing more control but also more responsibility for each line item.

For example, under RISE, you won’t have a separate bill for AWS/Azure hosting – it’s baked into the subscription – but you also relinquish the ability to bargain that piece down or scale it independently.

In a self-managed scenario, you might negotiate cloud infrastructure discounts or choose a lower-cost support model (including third-party SAP support to replace SAP maintenance).

These choices can lower cost but require effort and carry some risk (e.g., running without official SAP support).

Example: 5-Year TCO Scenario

To make the cost trade-off concrete, consider a mid-size enterprise example over 5 years:

• Traditional On-Premises Approach: Suppose you purchase SAP S/4HANA licenses for a large implementation, incurring a $5 million upfront cost. Annual maintenance is ~22%, resulting in about $1.1 million per year. You run the system on your infrastructure – perhaps a mix of existing data center hardware and cloud, with a budget of $600 per year in operational costs. Over 5 years, you will have spent: $5 M (license) + $5.5 M (maintenance) + $3 M (infra) ≈ $13.5 million total. At year 5, you own the licenses outright and your hardware (if purchased), but it may be due for a tech refresh soon; maintenance and cloud costs continue if you stay on this model. If you extend to 10 years, you might see another hardware upgrade cycle and continued support costs, but no further license fees.
• RISE with SAP Approach: For a similar scope, SAP may quote a subscription fee of around $2.5 million per year (this amount could vary significantly based on your user count and negotiated discounts). Over five years, that’s roughly $12.5 million in subscription fees. This fee already covers what the on-prem scenario paid separately: software, support, infrastructure, and SAP manages the environment. By year 5, the costs look slightly lower than the on-prem total in this scenario (and you had much less upfront outlay – you’ve preserved capital by not spending $5 M in year 0). However, at the end of 5 years, you do not own any licenses or infrastructure; if you want to continue, you must renew the subscription (likely at a revised rate). By year 10, assuming a similar rate (and that SAP doesn’t significantly raise prices at renewal), you’d pay about $25 million in subscription fees. The on-prem path by year 10 might total around $20 million (adding another 5 years of maintenance and infrastructure, plus possibly hardware refresh costs). In this simplistic comparison, the pendulum swings: RISE was more cost-effective in the first half (5-year) but becomes costlier by year 10.

Of course, these numbers are highly sensitive to the assumptions made. Factors such as negotiated discounts, growth in user count, changes in cloud infrastructure pricing, and additional needs (including extra systems, more storage, etc.) will shift the balance.

SAP often emphasizes the immediate savings (e.g., avoiding a data center upgrade or reducing IT workload), whereas CFOs will look at cumulative spend over time. Ensure you run scenarios for various timelines.

For some companies, the breakeven point between RISE and on-premises costs might be around 6-7 years; after that, owning may pull ahead in terms of cost savings. 

However, if you plan to modernize or switch systems before then, RISE’s flexibility could justify its cost.

Contract Commitments and Financial Flexibility

Choosing RISE means committing to a long-term contract with SAP for the full stack service.

Typically, RISE contracts run 3, 5, or even 7 years in length. From a cost perspective, a longer term can lock in better rates (SAP might offer a discount for a 5-year commitment versus a 3-year commitment), but it also locks you into a vendor and model.

Early termination is generally prohibitively expensive (you’d owe the remaining subscription fees or penalties), so you are financially bound to continue paying for RISE through the term even if your strategy changes.

This lack of exit flexibility is a cost risk – for example, if, after three years, you find a cheaper solution or your business needs change, you must still carry the RISE expense until the contract ends.

In contrast, owning infrastructure and licenses provides more flexibility to pivot: you can decide to drop SAP maintenance after a few years to save money (although this is not usually ideal, it’s an option), or move your systems to a different hosting provider if you find a better deal.

With RISE, SAP is your single provider for that period, so your cost fate is tied to them.

Another consideration is renewal risk. After the initial RISE term, you’ll have to renew to continue service, and SAP has leverage – migrating off RISE is not trivial, so you are somewhat at their mercy on price.

It’s critical to negotiate renewal price protections upfront (e.g., a clause that caps price increases at renewal to a certain percentage). Owning your environment avoids this scenario; once you purchase licenses, you can theoretically run them as long as you want without incurring additional costs from SAP (aside from optional maintenance).

Many businesses maintain SAP systems for a decade or more, specifically to maximize the value of their initial investment. With subscriptions, the “meter” never stops – you’re essentially renting the software.

On the other hand, RISE’s subscription contract offers cost predictability throughout the term. You know exactly how much you will spend on SAP system operation each year (barring usage overages for things like extra storage or BTP credits).

This can be helpful for planning and shields you from surprises, such as a sudden hardware failure cost or a spike in support labor – those risks are absorbed by SAP in the managed model.

Traditional deployments can incur unplanned costs (e.g., an infrastructure upgrade that is needed sooner, or hiring extra specialists during an upgrade crunch), which you must budget for as contingencies.

In a sense, RISE transfers some cost risk to the vendor: SAP is responsible for keeping the systems up-to-date and running within that fixed fee, which can be seen as a form of insurance.

Licensing flexibility: RISE utilizes a Full Usage Equivalent (FUE) metric for licensing, which means you contract for a specific total capacity of usage (combining heavy users, light users, etc., into FUEs).

This can simplify cost management – you’re not nickel-and-dimed by license type, and you can reallocate usage internally as long as you stay within your purchased FUEs.

In traditional licensing, you’d buy a specific number of each user type license (e.g., 500 Professional Users, 100 Limited Users, etc.) as a CapEx, and that can be inflexible if your needs shift (you might overspend on some types and underspend on others).

Learn more about understanding FUE and user counts for cost.

Cost impact: The FUE model can prevent “shelfware” (paying for unused licenses) because it’s more elastic.

However, you must forecast your FUE needs accurately – if you under-buy and need more during the term, you’ll have to spend more mid-term; if you over-buy, you’re stuck paying for capacity you don’t use.

In an on-premises scenario, unused licenses you bought are essentially sunk costs (shelfware sitting on the shelf). In contrast, in RISE, at least you can negotiate periodically to adjust subscription volumes.

Ensure that any contract allows for some adjustment of FUE volumes or tiered pricing if your user count is expected to grow – this will keep costs aligned to actual usage, a flexibility that pure CapEx lacks.

Hidden Costs and Overlooked Factors

When evaluating the cost of RISE vs own infrastructure, it’s important to look beyond the obvious line items.

Each model has “hidden” costs or savings that might not show up on the initial quote:

• Migration and Implementation Services: Moving to RISE does not magically include the work of getting there. Your organization will still need to invest in migrating from your existing system (ECC or other ERP) to S/4HANA, performing data cleansing, retraining users, and possibly reimplementing customizations. These are one-time project costs (often substantial) that are outside the RISE subscription – you’ll pay a systems integrator or internal project team. The same costs apply if you go on-premises with S/4HANA, of course. The key point is not to assume RISE’s price tag covers everything; budget for the transition costs, which can be millions in a large enterprise project.
• Organizational Change & Training: RISE introduces a new operating model (especially if you opt for S/4HANA Public Cloud with quarterly updates). Your IT team and end-users will face a faster cadence of changes and a different division of responsibilities. You may need to invest in training your IT staff to work effectively in a cloud-managed environment (e.g., learning how to manage through SAP’s cloud portal, new testing procedures for continuous updates, etc.). Your business users may need training for new features that are rolled out regularly. These change management efforts incur real costs (in terms of time, money, and focus). In an on-prem world, changes happen at your pace, which might reduce training frequency (but can also lead to skill stagnation). Consider the productivity impact – RISE could incur more ongoing training overhead (OpEx) to keep everyone up to speed with continuous innovation.
• Retention of Internal Staff: A common misconception is that “RISE will let us eliminate our Basis/technical team.” In reality, many companies find they still need a strong internal Basis and a SAP center of excellence. While SAP handles infrastructure and basis operations in RISE, your team still must coordinate deployments, oversee integrations, manage authorizations, and support business needs. Some organizations report that their Basis team becomes more of a coordination and validation team, ensuring SAP (the vendor) is doing things correctly and communicating business requirements to them. You might not reduce headcount as much as expected – those personnel costs remain. On the plus side, those staff can potentially focus on higher-value tasks (business process improvement, new features) rather than low-level patching and monitoring.
• Included vs Excluded Scope: Be very clear on what RISE includes. It bundles a lot (software, standard support, infrastructure uptime SLA, backup, etc.), but it does not include everything. For instance, many RISE contracts include a baseline amount of data storage and network bandwidth. If you exceed these limits (for example, if you need additional HANA memory or extra TB of storage for growth), you will incur additional costs. Similarly, RISE includes SAP’s standard support SLAs; however, if you require enhanced support or specific compliance certifications beyond the standard, additional costs may apply. On-premises, you would individually address these issues (e.g., purchasing additional disks for storage, upgrading to a higher support tier, etc.). In either case, extra requirements = extra costs, but ensure you’ve accounted for them when comparing. A hidden cost on the on-prem side is disaster recovery – do you maintain a secondary DR site or hot backup system? If not, RISE’s price might include a level of DR readiness that you don’t currently fund (meaning RISE’s cost is higher because it incorporates resilience). If so, then compare them as equivalent (RISE vs. on-prem, both with DR).
• Vendor Lock-In and Exit Costs: With your infrastructure, if you decide to switch off SAP or move to a different hosting, you have assets you might repurpose or resell (e.g., servers) and you own your licenses, which might have some residual value (or at least you don’t have to pay further). With RISE, if after the contract you want out, you face exit costs: migrating data out of SAP’s cloud, possibly purchasing new licenses (if you didn’t keep your old ones active), and maybe hiring staff to run systems again. These transition costs should be considered part of the total cost of choosing RISE (even if it’s an opportunity cost in the future). Essentially, repatriating from RISE later could be like a second migration project. That’s not a reason to avoid it, but a factor to weigh – if you go in, try to go in with eyes open and maybe negotiate support for off-boarding (or at least clarity on data extraction) as part of the deal.
• Technical Debt and Innovation: On the other side, running on your infrastructure can incur “hidden costs” in the form of technical debt. It’s tempting to skip upgrades or delay hardware refreshes to save money, but this can lead to performance issues, security vulnerabilities, or a costly and risky big-bang upgrade later. RISE forces a more up-to-date posture (which can be seen as a cost or a benefit). If you stay on-premises, allocate a budget for periodic upgrades and modernization. If you avoid these expenses, you may save money in the short term, but you will accumulate risk and incur future costs. Some organizations underestimate these on-prem ongoing investments when calculating TCO. Be honest in the comparison: if you wouldn’t spend on high-availability, DR, and frequent upgrades in your self-managed scenario, then RISE’s “all-inclusive” cost is partly paying for a level of service you might not have provided yourself. For some, that’s valuable (higher uptime, latest features, lower business disruption costs), for others, it’s overkill.
• Opportunity Cost of Focus: One often unpriced factor is the value of your IT team’s focus. In a self-managed model, a significant amount of effort is required to maintain operations – including managing hardware, applying support packs, tuning systems, coordinating with infrastructure vendors, and providing SAP support. That time might be redirected to more strategic projects if SAP takes over the commodity tasks via RISE. From a cost perspective, you could argue RISE’s higher expense is justified if it allows your team to deliver business innovation faster or avoid hiring extra specialists. Conversely, if your internal team is highly efficient and already delivering innovation and keeping systems running, you might not gain much productivity by offloading to RISE. Every company is different here. It’s hard to put a dollar value on it, but consider qualitatively: does running SAP in-house consume cycles that could be better utilized on digital initiatives? If yes, that tilts the equation a bit more in favor of RISE (even if it’s slightly pricier, the business value from IT focus could outweigh the premium). Gartner-style analysis often categorizes these as “soft benefits” of the cloud.

In summary, peel back the onion on cost considerations. Look at what each model truly requires beyond the invoice – training, staff, risk buffers, and flexibility. Many CIOs create a matrix of pros and cons with cost implications: e.g.,

RISE gives a single SLA for uptime (reducing the risk of downtime), and on-prem gives data locality control (reducing the risk of compliance fines, perhaps).

Not every benefit or risk has a direct dollar value, but they ultimately manifest in terms of cost or value. Include these qualitative costs in your decision criteria.

You should also read about the differences in digital access costs.

Recommendations

Based on our analysis, here are practical recommendations for CIOs/CTOs when weighing RISE vs. owning your SAP infrastructure:

• Perform a Detailed 5–10 Year TCO Analysis: Don’t rely on vendor promises. Rigorously model all costs for each option (licenses, maintenance, cloud fees, hardware, staffing, upgrades, etc.) over at least five years (preferably ten). This internal analysis will highlight the true cost difference and inform your decision with data.
• Align with Business Strategy and Finance Preferences: Consider your company’s strategic stance on cloud and financial policy. If you aim to minimize CapEx or have a “cloud-first” mandate, RISE aligns well with your goals. If owning assets and maximizing long-term ROI is a priority (or if you have a capital expenditure budget to allocate), a traditional model might be a better fit. Ensure Finance is involved – some companies prefer OpEx for flexibility, while others value CapEx investments; make the choice that aligns with your financial principles.
• Assess Internal Capabilities: Be realistic about your IT team’s strengths and gaps. If you lack deep SAP basis skills or data center expertise, RISE can fill those gaps (at a cost) and reduce the risk of failures. If you have a proficient, cost-efficient SAP operations team, leverage them – you might run on your infrastructure at a lower cost than RISE. Also, evaluate if current outsourcing partners could manage SAP for you on the cloud (as an alternative to RISE).
• Negotiate Contract Safeguards: If you pursue RISE, negotiate aggressively to secure the best possible terms. Lock in pricing for the full term and seek a cap on renewal increases (e.g., “renewal price shall not increase by more than X%”). Try to include flexibility, such as the option to adjust user counts or scale down non-production systems. Ensure that there are clear terms for data extraction and transition assistance if you leave RISE. Essentially, embed cost protections to prevent the predictable OpEx from unexpectedly increasing later.
• Consider a Phased or Hybrid Approach: You don’t have to go all-or-nothing. Some enterprises start a pilot on RISE (e.g., a new SAP module or a regional instance) while keeping core systems on-premises to compare performance and costs. Hybrid deployment can also be a deliberate strategy: keep certain systems in-house (where you see cost efficiency or need control) and utilize RISE for others (where agility and outsourcing of effort are more important). This can spread cost and risk, albeit with added complexity – ensure you have a clear integration and management plan if you mix models.
• Leverage SAP’s Motivations: SAP is highly motivated to sign RISE deals (it’s strategic for their cloud transition). Use this to your advantage in negotiations – solicit multiple quotes (RISE vs traditional conversion) and even let SAP know you have alternatives (staying on ECC longer, considering third-party support, etc.). This pressure can lead SAP to sharpen its pencil, perhaps offering credits (e.g., crediting some of your existing license value toward RISE fees) or additional services at no cost. A well-negotiated deal can significantly enhance RISE’s value.
• Plan for Long-Term Flexibility: Whatever choice you make, keep future options open. If you go with RISE, have an exit strategy in mind (even if it’s just theoretical) – for example, plan how you’d revert to on-prem or another solution after the term if needed, and avoid customizations in RISE that would make it hard to leave. If you stay on-prem, modernize in a cloud-ready way – e.g., consider hosting on a scalable cloud infrastructure or containerizing workloads – so you can transition to SaaS or RISE in the future if needed. Preserving flexibility will ensure you’re not stuck paying exorbitant costs down the line with no leverage.
• Budget for “Hidden” Items: Whichever route you take, set aside budget for the often-forgotten costs. In RISE’s case, earmark funds for ongoing user training, change management, and any additional services (such as extra BTP usage or storage beyond the default). In the on-prem case, budget for periodic upgrades, security enhancements, and potential cloud migrations for DR or test environments. By planning these costs, you prevent surprises and can truly compare apples to apples with RISE’s inclusive pricing.
• Monitor and Optimize Continuously: If you choose RISE, treat it not as “set and forget” – actively monitor your usage vs. what you’re paying for. Ensure you utilize the available tools and credits (e.g., if RISE includes specific BTP credits or network access, utilize them – get your money’s worth). If you stay on your infrastructure, continually seek efficiency: rightsizing servers, eliminating unused licenses, and negotiating better rates with vendors. Cost optimization is an ongoing task in either model. CIOs should review SAP-related spending annually to ensure the chosen model remains viable as business conditions evolve.

Learn more about Cloud vs on‑premise licensing cost differences.

FAQ

Q1: How does RISE with SAP differ from owning infrastructure in terms of cost structure?
A1: RISE with SAP is a subscription service – you pay a recurring fee that bundles software, infrastructure, and standard support into one cost (OpEx). Owning your infrastructure means paying upfront for software licenses and hardware (CapEx), followed by ongoing costs for maintenance, support, and operations (OpEx). RISE shifts all costs to an ongoing operating model, whereas owning has a big initial expense followed by smaller recurring expenses. Essentially, RISE is “all-inclusive rent” for SAP, while owning is “buy and maintain” with separate cost elements.

Q2: Is it true that RISE with SAP will save us 20% in total cost of ownership?
A2: SAP has advertised up to ~20% TCO savings in some cases, but this is not a universal truth. That 20% assumes you were going to spend a lot on high-quality infrastructure, continuous upgrades, etc., on-prem. In practice, some companies experience savings with RISE, especially in the first few years, while others find the cost to be about the same or even higher. It depends on your situation. You should calculate your own TCO – sometimes RISE is cheaper over 5 years, but by year 7 or 10, the subscription fees might outweigh on-prem costs. Think of 20% as a best-case marketing figure, not a guarantee.

Q3: We’ve already invested in SAP licenses and data center hardware. Does it make financial sense to switch to RISE now?
A3: It depends on how far along you are and what those sunk investments are doing for you. If you have already purchased S/4HANA licenses, moving to RISE means converting them to a subscription. SAP may offer credit for your existing licenses, but you essentially give up the perpetual rights in exchange for the cloud service. If your hardware is recent and not fully utilized, you might want to make the most of those assets for a bit longer (utilize what you paid for). However, if the cost of maintaining that environment and performing upgrades is high, RISE could still be a viable option. Financially, you’ll want to compare the remaining book value and operating cost of your current setup against RISE fees. Sometimes, staying on-premises until assets are depreciated (or until a planned tech refresh) maximizes ROI; then, switching to RISE aligns with avoiding a new capital expenditure cycle.

Q4: What are the hidden costs of choosing RISE with SAP that we should budget for?
A4: Key hidden costs include: implementation/migration services (RISE doesn’t include the consultants or effort to move you into S/4HANA – that project can be significant), change management and training (operating in the cloud model may require new skills and ongoing training for IT and users), and any add-ons beyond RISE’s standard scope (for example, extra data storage, higher SLA tiers, or premium features like advanced AI that might not be in your base package). You should also consider exit costs – although not a direct budget line, be aware that if you leave RISE in the future, you’ll incur costs to transition systems and data out. Finally, internal support isn’t zero: you will still have internal IT effort coordinating with SAP, doing testing on quarterly updates, etc., so factor in those staff costs (even if they shift roles). RISE reduces many overheads but doesn’t eliminate all work on your side.

Q5: How can we negotiate a better deal for RISE to ensure we don’t overpay in the long run?
A5: When negotiating RISE, treat it like any major vendor contract – push for discounts and protective terms. Compare SAP’s RISE quote with the status quo (your current costs) and share those comparisons to pressure SAP. Negotiate the initial price down (SAP might not give huge “percentage” discounts like with licenses, but focus on the total cost). Crucially, negotiate the renewal cap – get a clause that limits how much the price can increase when your term is up. Also consider negotiating for additional value: for example, ask for extra BTP (technology platform) credits, or services such as a free sandbox system or training vouchers to be bundled. These extras save you money you’d otherwise spend. Ensure that any existing investment (licenses you own) is accounted for – SAP can sometimes reduce RISE fees in exchange for you essentially shelving those licenses. And timing matters: SAP sales teams have yearly targets, so negotiating near quarter/year-end or before a maintenance renewal is due can give you leverage for a better deal.

Q6: What happens after the RISE contract term ends? Are we forced to renew at whatever price SAP asks?
A6: At the end of your RISE term, you have a few options: renew the RISE subscription (ideally at a pre-negotiated or market-informed rate), or exit RISE and do something else (move to on-prem or another platform). If you haven’t kept your old licenses active and you leave RISE, you will need to re-license or revert to a previous system, which is usually impractical. In reality, most will renew, so you want to avoid being at SAP’s mercy. That’s why negotiating renewal terms upfront is so important. If you do want to exit, you should plan it well in advance: extract your data, prepare an environment, etc. SAP will typically cooperate to transition you (they’ll give you your data, but not the software usage). It’s somewhat like leasing a car – when the lease is up, you either lease a new one, buy it out (which is not applicable here since you can’t “buy” the cloud service), or walk away (which means you need another vehicle). Therefore, plan for renewal discussions at least a year in advance of the term’s end to avoid surprises. And if you have a credible alternative (even moving to another cloud or competitor), you’ll be in a better position to negotiate the renewal price.

Q7: How do CapEx vs OpEx models affect our budgeting and financial approvals?
A7: This is more about internal company finance practice. Capital expenditures (CapEx, or the purchase of assets) typically require a large one-time approval, often as part of a capital project. This can be a hurdle if budgets are tight, but once approved, it becomes an investment that’s recorded on the balance sheet and depreciated over time. It can make your operating costs appear lower in subsequent years (since only depreciation and maintenance are included in OPEX). OpEx (subscription) means you avoid the big upfront spend, but you have a new recurring expense line. Some companies prefer OpEx because it’s more flexible – you can adjust year by year, and you’re not tying up capital.Additionally, OpEx may be allocated from departmental budgets and not require CFO approval for a large asset purchase. However, OpEx adds to ongoing operating expense commitments, which can affect EBITDA and other metrics. In short, CapEx provides an asset and potentially better long-term cost visibility, while OpEx offers flexibility and easier start-ups.

Q8: Can we adopt a hybrid approach (utilizing some systems on RISE and others on our infrastructure) to balance costs?
A8: Yes, many large enterprises do exactly this. For example, you might put your core S/4HANA ERP on RISE to offload most of the heavy lifting, while keeping certain satellite systems or highly customized, older systems on-premise or in a private cloud. This can optimize costs if, for example, some systems are inexpensive to run internally or aren’t supported by RISE. It can also serve as a transition strategy: gradually move to the cloud over time. The upside is you don’t have to “bet everything” on one model, and you can compare real performance and cost between the two. The downside is complexity – you’ll have a mixed operating model, which might reduce some of the simplicity benefits. Licenses can also become complex; for instance, integrations between RISE and on-premises systems need to be managed (and possibly licensed for indirect access, although RISE’s FUE model may cover that). From a cost perspective, ensure that the partial RISE scope is sized and priced appropriately (SAP can sell RISE for a subset of your environment). And make sure you’re not double-paying: if you keep some licenses on-prem, ensure you’re not also paying for them in the RISE subscription. A hybrid approach can save cost in the right scenarios – just go in with eyes open about managing two worlds and be vigilant that you’re achieving the cost goals (sometimes hybrid can inadvertently introduce inefficiencies if not managed well).

Q9: What are the biggest cost risks if we stick with owning our infrastructure?
A9: With a self-managed environment, the major cost risks include: unexpected capital needs (e.g. hardware failure requiring emergency purchases, or underestimating growth so you run out of capacity and must buy more hardware on short notice, potentially at premium), rising maintenance or support costs (SAP increases maintenance fees occasionally, energy/cooling costs for data centers might rise, etc.), and technical debt (if you defer upgrades to save money, you might face a very costly upgrade later or performance issues that hurt the business). There’s also the risk of inefficiency – if your utilization is low, you’ve spent money on hardware or licenses that aren’t fully used (wasted CapEx). And if your team isn’t fully up to speed, an outage or security incident could be costly to fix. In contrast, in RISE, SAP would bear some responsibility (with potential service credits, etc., albeit limited). Essentially, in the on-prem model, you carry all the risk of cost overruns – if something goes wrong or needs more investment, it’s on your budget. Good planning and management can mitigate these issues, but smaller IT organizations sometimes get caught off guard by surprises that a big vendor might absorb if they were in a cloud model.

Q10: Beyond pure cost, what other factors should we consider when choosing between RISE and on-prem?
A10: Important non-cost factors include: control vs convenience, speed of innovation, compliance and data control, and vendor dependency. With on-prem, you have maximum control (you decide when to upgrade, how to configure, and you can customize heavily). With RISE, you gain convenience (SAP handles a lot for you), but you relinquish some control (e.g., you must take upgrades on SAP’s schedule in cloud editions). Suppose your industry has strict compliance or data residency requirements. In that case, you’ll need to ensure that SAP’s RISE environment meets them (it typically can, but some governments or sectors may still prefer on-premises control). Consider the pace of innovation: RISE (especially public cloud) keeps you on the latest version – great for getting new features, but it means constant change. On-prem can be slower, which might be safer for a stable operation. The talent and support ecosystem is another factor: perhaps you have a trusted third-party support partner or a data center contract that is very cost-effective – sticking with them might be better than moving to RISE. Conversely, maybe SAP will provide a better overall service level. Lastly, consider the strategic direction: SAP is pushing cloud; some customers feel that being on RISE positions them for future SAP innovations (like easier access to new AI or analytics offerings). Others worry about being too dependent on SAP for everything. In sum, cost is crucial, but also weigh things like risk tolerance, flexibility needs, and the strategic value of one model versus the other. Often, a slightly more expensive option is still chosen because it aligns better with the company’s future roadmap or resource strategy.

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