European Retail Chain Avoids $10M Penalty and Cuts RISE with SAP Renewal Costs by 20%
Industry: Retail (Multi-Channel) | Location: United Kingdom (EMEA) | Employees: 30,000 | Annual Revenue: $10+ Billion
Background: A large European retail group with hundreds of stores and a thriving e-commerce business had been an early adopter of RISE with SAP. Three years ago, they migrated from SAP ECC to S/4HANA Cloud under a RISE contract.
As the end of the initial term approached, the company faced its first RISE contract renewal. Their SAP landscape included core S/4HANA for finance and inventory, SAP Commerce for online sales, and integrations with warehouse and point-of-sale systems.
Challenges:
- SAP’s renewal quote was roughly 25% higher per year than the original contract. The retailer’s growth in transactions and data led SAP to push them into a higher subscription tier, far above expectations.
- Compliance Surprises: During pre-renewal discussions, SAP auditors flagged that the company’s booming e-commerce operations were generating digital access documents beyond the scope of the original agreement. SAP hinted at a potential $10 million back-charge for these “extra” documents unless addressed in the renewal. This compliance surprise felt like a heavy-handed tactic to push the customer into an even pricier deal.
- Limited Leverage: With everything already in SAP’s cloud, the retailer felt stuck, and SAP was aware of this. The client feared they had no choice but to accept SAP’s terms. Time was short, since any delay in renewing risked disrupting critical systems.
How Redress Compliance Helped:
- Contract & Usage Audit: Redress Compliance stepped in to perform a rapid audit of the existing RISE contract and the retailer’s current usage. They pinpointed where SAP’s proposed numbers were inflated. Redress discovered the client was paying for more users and cloud capacity than were actually in use. This insight set the stage to negotiate a lower baseline for renewal.
- Negotiating Away Penalties: Redress directly challenged the threatened $10M digital access penalty. By providing evidence of how the retailer’s systems were configured and arguing that the original contract’s terms were ambiguous, they convinced SAP to waive the back-charge. Furthermore, Redress ensured the new contract explicitly included sufficient Digital Access licenses (documents) to cover the high e-commerce volumes in the future – eliminating this compliance risk.
- Leveraging Alternatives: To counter SAP’s assumption that the client had no alternative, Redress helped devise a contingency plan. They calculated the costs and timeline for moving SAP systems to an independent cloud or back on-premises if necessary. This viable fallback gave the client credible leverage. SAP recognized that the retailer might prefer a gradual transition over accepting a poor deal, motivating greater flexibility.
- Improved Renewal Terms: Armed with data and options, Redress led the negotiations for renewal. They secured a price reduction of roughly 20% off SAP’s initial renewal ask. Equally important, Redress negotiated flexible terms: a shorter renewal period (3 years vs. 5) to prevent the client from being locked in for too long, and a clause allowing for a ±10% user count adjustment annually without incurring contract penalties. These provisions enable the retailer to adapt to business changes without incurring additional costs.
- Vendor-Agnostic Advocacy: Throughout the process, Redress served as the retailer’s advocate and voice of skepticism. They questioned every line item, pushed back on one-sided clauses, and kept the client’s interests front and center. This vendor-agnostic stance put SAP on notice that the customer would not simply roll over.
Outcome and Impact:
- Cost Avoidance: The final renewal came in ~20% below SAP’s initial quote, saving about $8 million and restoring cost predictability. Moreover, the $10M proposed penalty was completely avoided.
- Optimized & Flexible Contract: The 3-year term provides an earlier chance to reassess strategy, and a ±10% user fluctuation clause gives breathing room to adapt to market swings. These concessions restore some leverage even as they remain on RISE.
Read about other Rise with SAP Case Studies.
Client Quote:
“Redress Compliance transformed our RISE renewal from a potential minefield into a manageable negotiation. They helped us avoid a huge penalty and secure a fair deal moving forward. It was invaluable having an independent expert solely in our corner – we ended up with significant savings and a contract that truly fits our business,” said the CIO.
Call-to-Action: Whether you’re facing an initial RISE with SAP contract or a daunting renewal, don’t go it alone.
Contact Redress Compliance for a complimentary RISE with SAP assessment and let independent experts help ensure you secure the best terms, cost savings, and peace of mind.
Read about our Rise with SAP Contract and Licensing Advisory Services.
