S/4HANA on premise vs cloud TCO over five years. Where RISE and ownership each cost less.

RISE with SAP costs less in year one because there is no license fee up front. Over five years, Customer Managed S/4HANA often costs less for stable workloads with a mature Basis team, and the renewal terms decide the rest.

What are the real options for SAP S/4HANA, on premise or cloud?

Two commercial paths change your cost structure. On the Customer Managed path you buy S/4HANA licenses outright and run the system wherever you choose. With RISE with SAP you pay one bundled subscription that covers the software, the infrastructure and SAP's managed services.

SAP markets four options. Two are hosting variants of Customer Managed, one is the RISE product, and the fourth is a different product:

• On premises. Customer Managed, in your own data center.
• Customer managed private cloud. The same licenses, hosted on AWS, Azure, Google Cloud or a private cloud provider.
• S/4HANA Cloud, private edition. The RISE product, which SAP now markets as SAP Cloud ERP Private.
• S/4HANA Cloud, public edition. Standardized multitenant ERP sold through GROW with SAP, a separate decision from the one this page covers.

What do you buy on the Customer Managed path?

• S/4HANA licenses. Bought outright on the SAP order form, as a perpetual right to use.
• A HANA database license. Either the runtime license, which limits the database to SAP applications, or the full use Enterprise Edition.
• Your choice of host. Your own data center, a private cloud, AWS, Azure or Google Cloud.
• Your choice of operator. An internal Basis team or a systems integrator runs the system.
• Annual maintenance. SAP Enterprise Support at 22 percent of the net license price, every year you keep it.

What do you buy on RISE with SAP?

• One subscription SKU. A single line covering S/4HANA Cloud, private edition.
• HANA Enterprise Cloud infrastructure. Hosted in an SAP data center or on a hyperscaler, with SAP managing it either way.
• SAP Enterprise Cloud Services as the operator. SAP holds the operational SLAs for the technical layer.
• A three to five year term. Usually with an annual escalator on the subscription line.
• A conversion credit for existing licenses. Variable, negotiated and time bound.

The SAP knowledge hub has more on each product.

How do S/4HANA license costs compare between on premise and RISE?

RISE looks cheaper in year one because there is no license fee up front. Over five years the result turns on two numbers: the discount SAP gives on the Customer Managed quote and the escalator written into the RISE contract.

Customer Managed license lines

1. S/4HANA user licenses. Named users priced by user type: Professional Use, Functional Use, Productivity Use and Developer Access. The mapping of your ECC users sets most of the bill, so review how legacy users map to S/4HANA roles before you ask for a quote.
2. HANA runtime. Priced as a share of HANA SAP Application Value (HSAV). SAP's published basis is 15 percent of HSAV. Our runtime versus full use guide explains what the runtime license does not allow.
3. Digital Access. Documents created in S/4HANA by third party systems through SAP APIs, licensed per document.
4. Annual maintenance. Enterprise Support, charged every year on the net license value.

RISE subscription lines

1. FUE inside the subscription. One price per Full Usage Equivalent per year. One FUE covers 1 Advanced Use user, 5 Core Use users or 30 Self Service Use users, and a Developer Access user counts as 2 FUE. Our FUE sizing guide shows how to count them.
2. HANA bundled. No separate database SKU. Memory beyond the contracted system size is sold as an add-on.
3. Digital Access on its own line. Still counted on documents. SAP's private edition pricing material lists "SAP S/4HANA Cloud, Digital Access, private edition" as a separate item, so check whether your quote includes it and at what volume. See how Digital Access applies to S/4HANA and RISE contracts.
4. Annual escalator. Typically 3 to 5 percent a year on the subscription line.

How do infrastructure and run costs compare over five years?

Compare run cost net of the operations effort, because infrastructure list prices on their own mislead. On Customer Managed you pick the host and the operator. RISE puts both inside SAP's managed envelope, and you pay for them whether or not you already have spare capacity.

When does each path win on run cost?

• Greenfield migrations favor RISE. With no infrastructure baseline to reuse, SAP's run service absorbs the setup work.
• An existing hyperscaler footprint favors Customer Managed. Adding S/4HANA to AWS or Azure capacity you already run costs you the marginal capacity only.
• Basis skill gaps favor RISE. If you have no internal HANA Basis team, or a partner you cannot rely on, SAP ECS fills the gap.
• A mature Basis team favors Customer Managed. Your existing people absorb the run work that RISE charges for.

What does a five year S/4HANA TCO comparison look like in numbers?

Take a hypothetical company, with round numbers chosen to show the shape of each cost curve. For your own answer, put your quotes into the RISE TCO calculator.

• Customer Managed quote. S/4HANA user licenses at $5,000,000 net. HANA runtime at 15 percent, $750,000, treating HSAV as equal to the application license value for simplicity. Total license $5,750,000.
• Maintenance. 22 percent of $5,750,000, which is $1,265,000 a year, held flat.
• Customer Managed run cost. Hyperscaler hosting plus a partner Basis contract at $900,000 a year.
• RISE quote. $3,400,000 in year one with a 5 percent annual escalator, and no conversion credit.

RISE costs $4,515,000 less in year one. By the end of year four Customer Managed is cheaper on a cumulative basis, and after five years the gap is $2,212,146. Year six shows the gap that carries forward: $2,165,000 on Customer Managed against at least $4,132,721 on RISE, before any renewal increase.

How much do the discount and the escalator change the result?

Either one can flip the result, so both deserve negotiating time. Cut the RISE escalator to 3 percent and the five year RISE total falls to $18,051,062, still $1,476,062 above Customer Managed.

Now weaken the license discount so the user licenses cost $6,500,000 net. HANA runtime rises to $975,000, maintenance to $1,644,500 a year, and the five year Customer Managed total reaches $20,197,500. RISE at a 5 percent escalator now wins by $1,410,354.

Does implementation cost differ between on premise and RISE?

Mostly it does not. Moving from ECC to S/4HANA takes the same project work on either path, and the systems integrator's quote is independent of the commercial model. The difference sits in the operational handover.

Which implementation costs are the same on both paths?

• Business process redesign. Independent of where the system is hosted.
• Data migration. An ECC to S/4HANA conversion or a greenfield rebuild.
• Custom code remediation. ABAP cleanup and Fiori UI work.
• Integration platform. SAP Integration Suite or external middleware.
• Change management and training. The cost of user adoption.

Where do implementation costs diverge?

• Infrastructure setup. RISE absorbs it. Customer Managed prices it separately.
• Cutover Basis support. SAP ECS on RISE, an internal team or partner on Customer Managed.
• Test environment provisioning. RISE allocates test systems inside the subscription. Tiers beyond those on the order form are extra, in sizes from XS to 4XL.
• Post go live operations. SAP ECS on RISE, a managed services contract on Customer Managed.

Budget the implementation once and add it to both columns. Count any RISE migration incentive as a year one reduction, after reading its conditions.

What happens at the end of a RISE term, and how do you exit?

When a RISE term ends, the subscription stops and your right to run the software stops with it. Customer Managed licenses stay with you indefinitely. That asymmetry is where the long term cost is decided, because SAP prices the renewal knowing how expensive it is to move an ERP system.

What are the three exit scenarios?

1. Renew RISE at term end. SAP holds full pricing power. The typical pattern is a discount cliff, where the first term discount does not carry into the renewal.
2. Convert RISE to Customer Managed. SAP charges a repurchase price for the underlying licenses.
3. Drop SAP support on Customer Managed. A third party support provider keeps you running on the licenses you own. Our third party support comparison covers the providers.

Which exit clauses should you negotiate before signing?

• Renewal pricing cap. A maximum percentage increase for the next term, so the first term discount is more than a one time event.
• Escalator cap. 3 percent a year, or a published index. In the example above, cutting the escalator from 5 to 3 percent saves $736,084 over five years.
• Conversion credit at term end. Subscription fees already paid, credited against a later Customer Managed purchase. This caps the cost of changing course.
• Data extraction rights. The format and the time limit for getting your S/4HANA data out.
• Termination for convenience. A window with a pro rata refund on cancellation.
• Contracted system sizes. Tiers and memory listed on the order form, with add-on prices fixed for the term. Our RISE negotiation guide covers the order in which to ask.

RISE wins on speed and on year one cash. Customer Managed usually wins by year five for a company with a mature SAP Basis function, and the exit terms decide which path is cheaper over the life of the system.

Why we disagree with judging RISE on its entry price

The usual advice is to set the RISE subscription against the year one cost of licenses plus hosting and take the lower number. We disagree, because year one is the year RISE is built to win.

The larger cost arrives with the second term, when the first term discount falls away and leaving costs the most. Model years six to ten as well, and put a price on the exit before you sign.

How do ECC and S/4HANA support dates change the TCO?

They set the timing, and SAP uses them to push decisions. What each date costs depends on the path you choose.

• End of 2027. ECC mainstream maintenance ends. Our 2027 planning guide covers the options.
• End of 2030. Optional extended maintenance for ECC ends. It costs 2 percentage points more than your current maintenance rate.
• 2033. The SAP ERP, private edition, transition option keeps ECC supported to the end of 2033. It is a RISE subscription, it requires HANA, and the system must move to SAP ERP, private edition before the end of 2030.
• End of 2040. SAP's maintenance commitment for S/4HANA, which includes the on premise product.

The 2033 option matters if your S/4HANA project will not finish by 2030. Price it into the RISE offer and set it against extended maintenance or third party support on the Customer Managed side.

What will SAP's account team say, and how should you answer?

Expect these lines in most RISE sales cycles.

• "RISE is cheaper than running S/4HANA yourself." Ask for the inputs behind SAP's comparison: user counts, system sizes, your assumed hosting and Basis cost, and the escalator. Then run both paths through your own model.
• "The conversion credit expires at quarter end." Ask for the value and expiry in writing, with an expiry that matches your decision date.
• "ECC support ends in 2027, so you need to sign now." Only mainstream maintenance ends then. Extended maintenance and third party support are priced alternatives, and your real deadline is the date your project must start.
• "Digital Access is covered in RISE." Ask to see the line on the order form, the document volume included and the price per additional document.
• "The escalator is standard in every contract." Standard wording can still be changed. Put a price on each point of escalator over the full term and table the cap from the clause list above.

What do we see when companies compare RISE with Customer Managed?

When we review a RISE proposal against a Customer Managed quote, the same gaps show up in SAP's sales spreadsheet. It compares the two paths on year one, and it treats the renewal as if nothing changes.

• Year five looks different. RISE is rarely cheaper at year five once the escalator has compounded and the renewal price is modeled.
• The renewal carries the risk. A discount cliff at the RISE renewal is the typical pattern, so a first term price says little about the second term.
• Conversion credits fall short. They rarely cover the full residual value of the ECC licenses you already own, so value the credit against what those licenses are still worth to you.

How do you check your own numbers before comparing?

Start from measured usage and your actual cost base.

• USMM and SLAW. User measurement in each system, consolidated across systems, gives the user type counts for the Customer Managed quote and the starting point for FUE. See our guide to USMM, LAW and SLAW.
• SAP Readiness Check for SAP S/4HANA. Shows custom code, add-ons and simplification items, which size the implementation for both paths.
• Digital Access estimation. SAP's estimation report for ECC, or its Digital Access Evaluation Service, counts documents created by third party systems. Our page on Digital Access measurement tools explains how to read the output.
• Hosting invoices. Hyperscaler bills, data center depreciation and disaster recovery.
• Basis headcount and partner contracts. The people and contracts RISE would replace. Application management stays with you or your partner on both paths.

How does Redress help with an S/4HANA TCO decision?

We build the five year model for both paths, benchmark the Customer Managed discount and the RISE subscription, and negotiate the exit terms before you sign.

• Where the work sits. Inside the Vendor Shield subscription, the Renewal Program, the Benchmark Program and the Software Spend Assessment.
• Further reading. Our SAP services page, the white paper SAP RISE vs On Premises TCO 2026 and how our benchmarking works.
• Who we are. Read about us, find our locations, or contact us.

What to do next

1. Count users by persona. Build the user type and FUE counts from roles and actual activity, not from headcount.
2. Build the five year run model. Both paths on the same timeline and scope, with years six to ten added.
3. Price the Customer Managed quote. Benchmark the discount on user licenses plus HANA.
4. Price the RISE quote. Subscription plus escalator, the Digital Access line, the system tiers and the cost of exit.
5. Stress test the renewal cliff. Model a discount drop at the RISE renewal in years four to five.
6. Reconcile SAP Basis capacity. Assess what your internal team can run today and what it would need.
7. Lock the exit clauses. Agree them before you sign the order form.

Frequently asked questions