SAP Private Cloud vs DIY Hosting – The Strategic Decision
SAP offers two distinct models for running its enterprise software in the cloud:
- SAP-managed private cloud (e.g., RISE with SAP or SAP HEC) – SAP bundles the software, infrastructure, and services into a subscription offering.
- DIY deployment on a public hyperscaler (using providers like AWS, Azure, or Google) – You host and manage SAP systems on your chosen cloud platform using your own software licenses.
For many CIOs and IT strategists, this choice boils down to RISE vs self-managed SAP – essentially the classic SAP private cloud vs hyperscaler decision.
That decision hinges primarily on licensing and cost considerations. These two factors, in turn, influence how much control and flexibility you maintain and the degree of vendor lock-in you might accept.
In short, whether you let SAP handle the environment or opt to manage it yourself will dictate your autonomy and leverage with vendors.
For more insights, RISE with SAP & Private Cloud Negotiation Playbook: Licensing, Pricing, and Strategy.
Licensing Impact of Each Model
Licensing is one of the most significant differences between RISE and DIY hosting models.
RISE Private Cloud Subscription: Under RISE, software licensing shifts to a subscription model. You no longer own the software; instead, you pay subscription fees to use it during the contract. Your existing licenses are put on hold while you’re on RISE. You relinquish license ownership for the term – when the subscription ends, your usage rights end too. Bottom line: with RISE, you rent the software instead of owning it.
DIY on Hyperscaler (BYOL): In a DIY scenario, you pursue an SAP BYOL (bring-your-own-license) strategy. You continue to own your licenses and pay annual maintenance for support. For example, on Azur,e you only pay for infrastructure – your SAP license covers the software. This preserves your investment – even if you stop maintenance, you retain the rights to run the software. Bottom line: you keep ownership of your SAP software licenses.
The contrast is clear: RISE’s subscription means giving up license ownership and relying on SAP’s terms, while a BYOL approach lets you retain software ownership and flexibility in the future.
Cost Model Comparison – RISE vs DIY
Under RISE, all costs are rolled into one bundled fee. This single payment includes the software subscription, the cloud infrastructure, and standard SAP support services.
It’s a pure OpEx model with no large upfront license expense. You pay a consistent annual amount for SAP’s all-in-one service – simplicity that comes at a price (the bundle often carries a premium for convenience).
By contrast, a DIY hosting model separates the cost components. You invest in the software licenses as CapEx (buy or reuse licenses), then pay the cloud provider for infrastructure usage (OpEx). You may also pay a partner or use internal staff for ongoing support.
With DIY, each cost element can be optimized independently. You might negotiate better cloud rates, adjust resource usage on the fly, or shop around for support services – instead of accepting a fixed bundle.
Over a multi-year horizon, the total cost of ownership (TCO) can differ dramatically between the two models. RISE offers a smoother, more predictable expense and potentially lower costs in year one, but cumulative subscription fees can exceed a well-optimized BYOL approach over time.
It’s critical to perform a detailed side-by-side TCO analysis (e.g., a 5-year comparison) of RISE vs DIY before committing.
Sometimes the convenience premium of RISE is worth it; other times, running SAP natively on a hyperscaler yields far greater savings.
Cost optimization levers in a DIY approach include:
- Hyperscaler Discounts: Cloud providers give substantial savings for committed usage (reserved instances, enterprise agreements, etc.). An enterprise with a large Azure or AWS deal can apply those discounts directly to SAP workloads. In a SAP hyperscaler cost comparison, the DIY model can leverage these incentives, whereas RISE’s bundled pricing might not pass all the savings through.
- Efficient Resource Use: Self-managing on a public cloud allows you to right-size infrastructure and eliminate waste. For example, you can shut down non-production systems during off-hours or scale environments up and down as needed. RISE customers have less control here – SAP pre-allocates resources and charges a fixed fee regardless of actual usage.
- Competitive Partner Pricing: If you need third-party help, the DIY model lets you shop around. You could use a global systems integrator, a specialist cloud MSP, or your own staff – choosing whichever provides the best value. By contrast, RISE bundles these services into its fee, so you pay SAP’s rates with limited flexibility.
In summary, RISE delivers simplicity, albeit at a premium, while DIY requires more effort but can unlock significant savings through optimization. Be sure to factor in all costs (including personnel and project work) when evaluating the trade-offs.
Flexibility & Control Differences
The two approaches also differ in how much flexibility you have over your SAP environment:
- SAP-Controlled Environment (RISE): With RISE, SAP manages the infrastructure and keeps things standardized (handling upgrades, patches, monitoring, etc.). However, this comes with constraints on customization and choice. You can’t freely choose or change the underlying cloud platform – SAP dictates where and how your systems run. Any changes to system sizing or special configurations must go through SAP. In essence, you trade away some flexibility for a vendor-managed experience.
- Customer-Controlled Environment (DIY): In a DIY model, you retain full control over infrastructure and configuration. You choose the cloud provider and tailor the environment to fit your needs – from resource configurations to security settings. You can scale resources or implement custom integrations without SAP’s approval. Because you bring your own license, you’re not locked into SAP’s hosting contract, giving you freedom to move systems to another cloud or back on-prem if needed.
SLA and Support Considerations
Support and service level agreements differ between the two approaches:
- Single-Vendor Accountability (RISE): With SAP’s private cloud, you have a single accountable provider (one throat to choke) for the entire stack and its SLA. Any issues are handled through one support channel, with SAP coordinating the infrastructure – so there’s no cross-vendor finger-pointing. However, the SLA is on SAP’s standard terms. You have little ability to negotiate custom service levels, and remedies for downtime are typically limited to service credits.
- Multi-Vendor Management (DIY): In DIY, you handle multiple support relationships (cloud for infrastructure, SAP for application, etc.). When issues arise, you may need to coordinate between these parties, so clearly defined responsibilities are critical to avoid blame-shifting. You can also tailor each layer of support – you might opt for enhanced support or design a redundant architecture for higher uptime. DIY can deliver stronger SLAs and more resilience, but it also means more responsibility for your team.
The trade-off is clear: RISE gives you simplicity with one vendor in charge, while DIY offers the potential for customized SLAs and architectures if you can manage the complexity.
Migration Dynamics – Incentives and Complexity
Migrating SAP to the cloud is a significant project, and each model approaches it differently:
- RISE Migration Incentives: SAP often sweetens RISE deals with incentives – e.g., credits for unused maintenance, license conversion discounts, or bundled migration services. In some cases, SAP (or its partners) will handle much of the migration and assist with the S/4HANA conversion. For organizations with limited in-house expertise, this can feel close to a turnkey solution. These incentives and SAP-led support can significantly reduce the effort for your IT team.
- DIY Migration Autonomy: A DIY migration is more hands-on but gives you maximum flexibility. You can plan a phased move to the hyperscaler – for example, migrating non-production systems first as a pilot – and choose your migration partners or in-house experts, controlling the timeline yourself.
However, with that autonomy comes added complexity: you must design the cloud environment, manage the data migration, and handle any required S/4HANA upgrades. Unlike RISE, you won’t get vendor freebies beyond possible cloud credits. The DIY approach suits organizations that want a gradual transition, but it demands strong project management and technical know-how.
SAP will certainly try to make the RISE path attractive with incentives and assistance. Still, some enterprises prefer the control of charting their own migration path despite the extra work upfront.
When to Choose RISE Private Cloud
RISE with SAP’s private cloud subscription may be the better choice in scenarios like:
- Limited Cloud Expertise: Your organization doesn’t have a strong internal cloud or SAP Basis team and would prefer not to build that capability. RISE provides a fully managed solution with SAP’s experts taking care of the infrastructure.
- One-Contract Simplicity: You want one contract and one accountable vendor for everything (infrastructure, software, support). This single-throat-to-choke setup simplifies vendor management and oversight.
- Speed and SAP Guidance: You have a tight timeline to move off legacy systems and want SAP’s direct involvement. RISE often means SAP is hands-on during migration, enabling a faster, cleaner cutover to S/4HANA in the cloud.
- Bundled SAP Incentives: SAP is offering attractive incentives or add-ons for choosing RISE (e.g., subscription discounts, cloud credits, or inclusion of SAP Business Technology Platform services). If those extras provide significant value, they can tip the decision toward SAP’s all-in-one offering.
- Focus on Core Business: Your strategy is to outsource technical infrastructure so that IT can focus on higher-value, business-facing projects. You’re willing to pay a bit more for a turnkey service that reduces the operational burden on your team.
When DIY Hyperscaler Hosting Wins
A self-managed “bring your own license” deployment on a public cloud tends to win out when:
- Strong Internal/Partner Capability: You have a capable internal IT team or a trusted integration partner with deep SAP and cloud expertise. This gives you confidence to run SAP on a hyperscaler without relying on SAP’s managed service.
- Maximizing License Investments: Your company has a large investment in existing SAP licenses (e.g., a substantial ECC footprint), and you want to maximize the value of those licenses. DIY lets you keep using what you own instead of paying again for a subscription.
- Leverage with Cloud Providers: You already enjoy significant discounts or strategic commitments with a cloud provider (AWS, Azure, GCP). Adding SAP workloads under that agreement can be very cost-effective, and you want to capitalize on those low infrastructure rates.
- Need for Infrastructure Control: Your business requires custom infrastructure setups, special compliance environments, or tight integration with other systems in the cloud. Managing SAP in your own cloud environment lets you architect solutions exactly as needed, without vendor-imposed constraints.
- Avoiding Vendor Lock-In: You prioritize keeping your options open. By retaining your licenses and controlling the infrastructure, you maintain the flexibility to pivot in the future – whether switching providers, scaling down, or even returning to on-premises if necessary.
Checklist – Deciding Between RISE and DIY
Before making the final decision between SAP’s private cloud subscription and a DIY hyperscaler approach, run through this checklist:
- License Audit: Inventory your current SAP licenses and contracts. Are they perpetual licenses that would need to be surrendered or converted under RISE? Determine what happens to those licenses in each scenario.
- 5-Year TCO Analysis: Model the total 5-year cost of both options, including everything – RISE subscription fees, cloud infrastructure costs, SAP maintenance, third-party support, and internal staffing. A side-by-side comparison will reveal any “RISE premium” you’d pay for convenience.
- Lock-In and Exit Clauses: Review the contract terms carefully. With RISE, what are your exit options after the term? Will you retain any rights to the software if you leave, and how easily can you extract your data? Also, check renewal terms or price caps that could impact long-term costs.
- Support & SLA Needs: Weigh your support requirements against what each model provides. Will SAP’s standard RISE SLA and support meet your needs? If you opt for a DIY approach, can you assemble equal or better support through the cloud provider and your own team or partners? Make sure you won’t be compromising on critical SLAs.
- Strategic Fit: Align the choice with your broader IT strategy. Does your organization prefer to keep tight control over systems (pointing to DIY), or is it embracing outsourcing and simplicity (favoring RISE)? Consider the cultural and strategic fit, not just the technical merits.
Five Recommendations for CIOs & Procurement Leaders
Finally, keep these tips in mind to get the best outcome regardless of which path you choose:
- Treat the initial RISE quote as a starting point. Don’t accept SAP’s first offer at face value – there’s usually wiggle room. Negotiate price and terms to improve on that initial proposal.
- Always compare against a DIY benchmark. Even if you’re leaning toward RISE, get a detailed cost estimate for a BYOL scenario on a hyperscaler. Use it as a reality check and leverage in negotiations to ensure SAP’s offer is truly competitive.
- Leverage hyperscaler incentives in talks. If AWS, Azure, or GCP will offer credits or discounts to host your SAP systems, bring those numbers to SAP. Demonstrating a viable DIY option with concrete pricing strengthens your bargaining position.
- Negotiate exit and renewal protections. If you choose RISE, push for terms that protect you long-term – e.g., caps on renewal price increases, clear exit clauses, and provisions to reinstate or transfer licenses if the contract ends. Don’t let a short-term deal create lock-in without safeguards.
- Pilot on a hyperscaler if unsure. If you’re undecided, try running a small SAP workload on a cloud platform (with your own licenses) as a pilot. Migrating a dev/test system or a minor application can reveal practical challenges and costs. Insights from a pilot can inform your decision and give you confidence (and credibility) in negotiations.
Making this choice is a pivotal decision for your ERP landscape. By doing your homework on licensing, costs, and operational implications – and negotiating hard – you can strike a deal that balances cost, risk, and flexibility. In the end, the right choice is the one aligned with your company’s long-term strategy and that delivers the performance and value you expect from your SAP investments.
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