SAP RISE Negotiations
Introduction: RISE with SAP is an all-in-one cloud offering, or “business transformation as a service,” that simplifies the transition to S/4HANA. It packages software licenses, cloud infrastructure, and SAP services into one contract and subscription.
Read our Negotiation with SAP – CIO Playbook.
This guide helps CIOs and procurement professionals understand SAP RISE, key negotiation strategies, cost factors, alternative options, and recommendations to ensure you get the best deal.
1. What is SAP RISE?
RISE with SAP is delivered via a single subscription contract that bundles multiple components (ERP software, infrastructure, platform services, tools, and business network access) to support a company’s transition to S/4HANA Cloud.
What RISE Is:
RISE with SAP combines SAP S/4HANA Cloud (your core ERP in the public or private cloud), cloud infrastructure, managed services, and additional features like SAP Business Technology Platform (BTP) credits and a Business Network Starter Pack.
Instead of buying and running software licenses yourself, you pay SAP a subscription fee to provide and operate the software on a hyperscaler of your choice, such as AWS, Azure, or Google. SAP takes responsibility for system availability, technical support, and updates under a single SLA. It shifts SAP from a software vendor to a full-service provider.
How It Differs from Traditional SAP Licensing:
Traditionally, SAP sold perpetual licenses (CapEx) and annual maintenance, and customers ran SAP on their own (or hosted) infrastructure. With RISE, licensing moves to a subscription (OpEx) model – you don’t own the software outright; you pay to use it. SAP introduced the Full User Equivalent (FUE) metric for RISE, which combines user license types into a single metric for flexibility.
This is a shift from buying specific user types under on-prem models. Also, in a RISE deal, infrastructure and basic technical services are included in the price, unlike the separate hosting or data center costs in traditional setups.
Importantly, RISE is cloud-only, so you must migrate to S/4HANA (public or private cloud edition). You’re essentially outsourcing a chunk of IT operations to SAP. This can accelerate the adoption of new features (SAP handles upgrades), but it also means less direct control, as SAP dictates the environment’s standards and timelines.
Key Choices When Considering RISE:
If you consider RISE, you’ll need to make several decisions up front:
- Deployment Option: Choose between a Public Cloud (multi-tenant S/4HANA with standardized processes) and a Private Cloud Edition (single-tenant S/4HANA, allowing more customization). This will affect flexibility and cost.
- Hyperscaler: You can choose the cloud provider (e.g., Azure, AWS, GCP) for deployment. SAP manages that relationship, but the choice may depend on factors such as latency, data residency, or your existing cloud preference.
- Contract Length: RISE contracts are multi-year, often lasting 3 or 5 years. Determine an optimal term. Longer terms may get better pricing but reduce flexibility. Ensure you understand renewal conditions before locking in.
- License Conversion: Existing SAP customers must decide how to transition licenses. You can convert perpetual licenses into a RISE subscription (SAP may offer credits or incentives, such as BTP consumption credits). Evaluate the trade-in value and what you might give up, such as perpetual rights.
- Included Services Scope: Clarify what services are included. RISE bundles many services, including basic support and monitoring, but implementation services are not included. You choose to add additional services (such as extra environments or enhanced support) to the contract.
Remember, RISE is not mandatory—it’s just one option for getting to S/4HANA. You can still run S/4HANA on-premises or in the cloud without RISE. Understanding RISE’s value compared to other options is crucial before making a commitment.
Read RISE with SAP vs Traditional On-Premise SAP Licensing.
2. Negotiation Strategies
Entering a RISE contract involves negotiating software, cloud services, and support all at once.
Here are key areas to focus on in negotiations, important contract clauses to watch, and common pitfalls to avoid:
Key Factors to Negotiate:
- Pricing and Discounts: RISE pricing is typically quoted as an annual subscription, based on the number of FUEs and the chosen services. Push for transparency and discounts. For example, SAP can be asked to break down the cost components (licenses vs infrastructure) to benchmark them. Negotiate the overall fee to a competitive level – SAP often has leeway, especially if they’re eager to win your business. Use any leverage (e.g., existing ECC maintenance spending or a competitive alternative) to get a better price. Aim for a compelling total cost; some sources indicate that RISE can potentially lower TCO compared to on-premises by up to 20%, but this likely assumes a good discount and full utilization.
- Renewal and Escalation: These are two of the most critical terms. Negotiate caps on renewal price increases. Without a cap, SAP could raise fees significantly after your initial term (you’ll be dependent on them by then). Try to include a clause limiting annual price escalation (e.g., tied to inflation or a fixed percentage). Also, clarify the renewal process – ensure you have the right to renew on agreed-upon terms or, at the very least, a first opportunity to negotiate before any price increase. Don’t let the protections you had (like volume discounts or price locks) disappear in the new contract; incorporate them explicitly.
- Usage Flexibility (Scaling and Changes): Negotiate the ability to adjust your subscription as needs change. For instance, if you need to add more users or extra systems, have predefined rates. Likewise, discuss options if you downsize – SAP may not allow you to reduce commitments mid-term. Still, you might be able to negotiate some flexibility at renewal or the ability to repurpose unused subscriptions. Ensure the contract isn’t rigid in a way that penalizes you for business changes. RISE’s cloud model is marketed as flexible, but you want that in writing (e.g., the ability to true up annually at the same discounted rate).
- Service Level Agreements (SLAs): SAP’s standard SLA for RISE, for example, may not meet your business needs(e.g., approximately 99.5% uptime). You can negotiate a higher SLA or specific performance metrics if required. More importantly, ensure meaningful SLA remedies: if SAP fails to meet the SLA, what credits or termination rights do you have? Negotiating stronger remedies or slight SLA improvements before signing is easier than trying to get compensation after an outage. Also, clarify support response times for critical issues as part of the service level agreement (SLA).
- Exit and Termination Terms: Plan for a possible exit before you sign. Negotiate an exit clause that allows you to retrieve your data and transition off RISE at the end of the term (or if things go badly). You might not get a full “termination for convenience” without fees, but at least ensure that end-of-contract transition assistance is included. Since opting for RISE often means giving up your perpetual licenses, ask what happens if you leave RISE – can you revert to on-prem licensing (often not easily). Perhaps negotiate a right to purchase a perpetual license for S/4HANA at the end of the contract for continuity. The goal is to avoid being completely locked in with no exit strategy.
Specific Clauses to Watch:
- Bundling & Scope: The contract should list which products and services are included. Watch out for any gaps. (For example, are DEV/QA systems included or extra? Is disaster recovery included? What about interface maintenance?) Clear up ambiguities now to avoid surprise charges later. Ensure the contract’s service description matches your expectations of SAP’s responsibilities.
- Price Increase Uplift: If the contract mentions an automatic annual uplift (e.g., 3% per year), try to remove or minimize it. Aim for fixed pricing over the term or very low escalation. Also, negotiate that any additional purchases (more users, etc.) inherit the same discount percentage as the initial purchase, so you’re not paying full rate for expansions.
- Renewal Notice: Include a clause that requires SAP to provide written notice of renewal pricing well in advance (e.g., 6 months). This gives you time to negotiate or consider alternatives if the renewal price isn’t acceptable, avoiding a last-minute scramble.
- Data and Intellectual Property: Ensure you retain ownership of your data and any customizations you make. The contract should affirm that your data is yours and that you can obtain a copy in standard format at any time. For custom developments on BTP or similar, ensure you have the rights to them even if you leave RISE.
- Liabilities and Indemnities: Review how responsibilities are handled, such as in the event of a data breach or if SAP fails to meet a critical compliance requirement. While SAP’s standard contracts limit their liability, it’s worth discussing scenarios that are important to you and seeking appropriate coverage or commitments.
Common Pitfalls (and How to Avoid Them):
- Over-focusing on upfront price: Don’t neglect terms like renewal caps, SLA, or scope because you’re fixated on the initial price. An attractive first-year price means little if it doubles later or exposes you. Balance negotiating both cost and terms.
- Assuming “SAP will handle it”: Some customers think RISE = SAP takes care of everything. Your team will still be involved in application management and projects. Pitfall: not clarifying roles can lead to gaps. Avoidance: explicitly document who is responsible for what (e.g., responsibilities in upgrades, testing, security) so nothing falls through the cracks.
- Vendor lock-in trap: Surrendering perpetual licenses and moving to bundled cloud can make it hard to disentangle later. Avoid blindly committing without an exit plan. Keep an eye on future flexibility – even during negotiations, make it clear to SAP that you have alternatives (such as staying on-premises) to maintain leverage. Don’t let the sales pitch rush you; take time to evaluate if RISE truly fits, and only commit when the terms address your long-term concerns.
You can turn the RISE contract into a balanced agreement that protects your interests while delivering SAP’s promised benefits by negotiating diligently on these fronts.
3. Cost Analysis and Calculation
Adopting RISE with SAP significantly changes your cost structure.
Here’s how RISE pricing works and how to break down and analyze the costs:
RISE Pricing Structure:
RISE is sold as a subscription, typically billed annually (or quarterly) for a bundle of services. The primary pricing metric is the number of Full User Equivalents (FUEs), which correlates to users with different roles. Essentially, you purchase a block of FUEs that cover your users’ access to S/4HANA. The subscription fee per FUE can vary depending on the volume tier and whether you choose the public or private cloud edition (the private edition is pricier).
For example, one report indicated list prices of around $178 per FUE per month for a Private Edition deployment, compared to $147 for Public Edition at a certain scale, although your negotiated rates may differ. In addition to user-based fees, adding extra components (such as SAP SuccessFactors or Ariba via RISE) will incur their subscription fees.
The bottom line: RISE pricing is a packaged OPEX that bundles software license, standard support, hosting, and basic admin services into a single line item. This contrasts with traditional setups where you’d have separate capital costs and operating expenses for each element.
Key Cost Components: To analyze RISE costs, decompose the bundle into logical parts:
- Software Subscription: A portion of the fee covers the S/4HANA software rights (and possibly other SAP software included in the bundle). This replaces what would have been license + maintenance in an on-prem model. The cost will depend on the scope of SAP modules and the number of users (FUEs). If you negotiated any discounts, they typically apply here.
- Infrastructure & Hosting: A portion of the subscription covers cloud resources and SAP’s basic and technical services. SAP charges for the underlying HANA database instances, compute, storage, backups, and maintaining the system. The size of your system (in terms of database size and transaction volume) and the required environments (Prod, QA, Dev, etc.) influence this cost. It’s useful to estimate the cost on a hyperscaler directly for similar resources to gauge the premium (if any) you’re paying to SAP.
- SAP BTP Credits: RISE includes credits for SAP’s Business Technology Platform (e.g., for use in extensions and integrations). These credits have a monetary value. If you plan to use them fully, they offset some costs you would otherwise have to fund. If not, their value might go unrealized. Understand how many credits you get and what they equate to (in service hours or transactions).
- Business Network fees: The starter pack for SAP Business Network (Ariba, etc.) is included, usually covering a basic level of documents or trading partners. Heavy use beyond that incurs additional fees, which are not included in the base RISE fee. So, if your procurement network usage is high, you should estimate those costs separately.
- One-Time Costs: Remember to account for one-time migration and implementation costs in your analysis, which are not included in the subscription. RISE doesn’t magically include your integration work or data migration—those require a project budget. Sometimes, SAP offers separate incentives, such as discounts on services or partner packages—include those if applicable when comparing scenarios.
Financial Considerations (RISE vs On-Prem vs Cloud DIY): When comparing RISE to other models, do a multi-year total cost of ownership (TCO) analysis:
- RISE: All subscription fees over the term + any extra consumption fees (excess data, network transactions) + implementation. RISE may also reduce internal costs, such as fewer hardware refreshes and potentially fewer staff members. Factor those savings in. Also, consider the cost of giving up perpetual licenses – you can add value to the flexibility you lose. RISE can sometimes be more expensive in pure dollars than running SAP yourself, but companies justify it with the value of faster innovation and outsourced responsibility.
- Traditional On-Prem: Sum up license amortization (or depreciation), annual maintenance fees, hardware and data center costs (spread over their lifespan), and IT personnel costs. If you stay on-premises, don’t forget the cost of periodic upgrades (project effort). On-prem might appear cheaper yearly, but it spikes whenever hardware is renewed or upgrades are done.
- Self-Managed Cloud: This includes SAP license and maintenance costs (if you already own them), cloud infrastructure costs (e.g., your AWS or Azure bills), and any fees for managed service providers or internal operations staff. Sometimes, hosting on a hyperscaler with a good contract can be cheaper than SAP’s bundled price. The trade-off is that you manage more vendors.
Consider an example: If your RISE quote is $2M/year and your analysis shows that on-premises would cost $1.5M/year equivalent, is the $0.5M premium justified by the benefits and risk reduction? If not, negotiate the RISE price down or reconsider.
Also, account for intangible benefits: Under RISE, SAP bears certain risks (such as system downtime—although you suffer the business impact, SAP may owe credits). Financially, also plan for post-term costs: After 5 years of RISE, would you need to invest in licenses or infrastructure if you leave? That future cost should be part of today’s decision considerations.
In summary, break the RISE bundle into parts that you can evaluate and compare over time. Use that analysis to decide if RISE makes sense and drives negotiations. Show SAP where RISE isn’t cost-competitive so they can sharpen their pencil.
Use SAP’s value calculators, but validate with your data. A well-informed cost analysis will prevent surprises and ensure you know what you’re paying for.
Read about SAP Rise vs Grow.
4. SAP RISE vs. Alternative Deployment Models
It’s vital to compare SAP RISE with other deployment models – namely, keeping SAP on-premise or using a self-managed cloud – to make an informed decision.
Below is a quick comparison of the financial and operational impacts of each approach and their pros and cons:
RISE with SAP (Vendor-Managed Cloud):
- Pros: Simplified engagement (single contract and throat to choke), faster time to value on S/4HANA (SAP handles technical migration and upgrades), and reduced need for in-house infrastructure and basic expertise. New cloud-only features and innovations, such as AI and continuous updates, are available immediately. Financially, costs are predictable OPEX and aligned to usage.
- Cons: Potentially higher cost over the long term (you pay for convenience and SAP’s margin). Loss of license ownership – you become a “renter” and risk future price hikes. Flexibility is limited; you must fit into SAP’s cloud frameworks, especially in the public edition, where customization is more limited. There’s also vendor lock-in – core systems and data are tied into SAP’s environment, making it hard to switch providers or back out. All change management and issue resolution go through SAP processes, which might be less agile for some needs.
Traditional On-Premises (Customer-Managed):
- Pros: Full control over systems and customizations. You schedule upgrades on your timeline, tailor the environment as needed, and integrate with anything without SAP’s permission. You keep perpetual licenses, providing long-term usage rights and the option to use third-party support or run the system as long as it works (for example, many ECC customers are extending their life beyond SAP’s support). Costs can be lower if infrastructure and support are optimized, with no cloud vendor margin. Ownership can mean no mandatory recurring fees beyond maintenance (which you can even drop if you choose to forgo updates).
- Cons: Requires significant internal resources or hosting partners. You handle all backups, disaster recovery (DR), monitoring, and compliance, which can be complex. Upfront investments are large (such as licenses and hardware), and upgrades can be expensive. Slower adoption of new features – some innovations SAP releases won’t come to on-prem (cloud gets priority). Also, running on-prem in the long run might mean running on outdated technology if you defer upgrades, which could pose business risks. Essentially, you carry the operational risk.
Self-Managed Cloud (Customer on Hyperscaler or Private Hosting):
- Pros: A mix of control and cloud benefits. You can take existing SAP licenses to the cloud or even subscribe to S/4HANA software-as-a-service without going through RISE (SAP does offer S/4HANA Cloud contracts outside of RISE). This way, you negotiate with infrastructure providers directly, potentially getting better rates or using the cloud credits you have. You maintain flexibility in choosing your support providers (e.g., SAP Basic support plus third-party managed services). It avoids being tied into SAP’s all-in-one bundle – for instance, you can scale infrastructure on your terms. Many large enterprises prefer managing cloud contracts to avoid the layer of SAP in between.
- Cons: You assume integration responsibility. If performance issues arise, you may need to coordinate with SAP (for software issues) and the cloud provider (for infrastructure issues). It’s not as “one-hand-to-shake” as RISE. You also might miss out on some bundled perks of RISE (like included BTP credits or network access – those you’d license separately). Operationally, you need cloud-savvy staff or a partner, so the onus of success is on you rather than SAP.
Which one should you choose? It depends on your organization’s priorities: if speed, simplicity, and having SAP accountable end-to-end are critical, RISE is a good option. If cost control, flexibility, and avoiding lock-in are more important, you might lean toward on-premises or a self-managed cloud. Many enterprises use a hybrid approach: for example, they keep critical or highly customized systems on traditional setups while running standard workloads on RISE. SAP even allows certain hybrid scenarios (part on RISE, part not) , though you’ll lose some single-contract simplicity.
When comparing, also consider the internal capabilities: an organization with a strong IT infrastructure team might favor self-managing to leverage that strength, whereas an organization looking to outsource and focus on core business might value RISE’s convenience. Financially, compare each scenario’s 5-10-year costs as discussed.
Also, consider gauge risk: RISE transfers some risks to SAP (they manage outages, etc.), while on-premises, you carry those risks but have direct control to mitigate them. There is no universal right answer; the best choice aligns with your business strategy, risk tolerance, and financial goals.
Read our SAP Rise Negotiation FAQs.
5. Recommendations for CIOs and Procurement
Finally, here are actionable recommendations and a checklist for making your decision and negotiating your SAP RISE deal:
Assessing Fit: Evaluate RISE as a technical solution and a business move. Ask: Does RISE’s model align with our IT strategy and culture? If your company is cloud-first and wants to innovate rapidly on SAP, RISE could be a strong enabler. If you have a complex SAP landscape with many integrations or highly specialized customizations, check whether they can be supported in RISE or if it would require painful changes. Also, consider timing – if you must be off ECC by 2027, you have a compelling event; otherwise, you might have more leverage to wait or negotiate.
Preparation and Negotiation Strategy: Start engagement with SAP early and do your homework. Develop a clear list of requirements and “non-negotiables” before seeing SAP’s offer. For instance, determine the max budget you aim for, the SLA you need, etc. Internally, align IT, finance, and procurement on these goals so you present a united front. Leverage independent expertise if possible – benchmarks or advisors can tell you what discounts and terms similar companies achieved. Also, maintain competitive tension: Even if you lean towards RISE, let SAP know that you are examining other options, up to and including staying on-premises or considering other vendors for certain functions. This mindset often leads SAP to improve its proposal.
Securing the Best Terms: When negotiating, address both cost and contract terms as equally important. Highlight the areas you need to improve in SAP: e.g., “We need a better renewal cap and a slightly lower per-user cost to get this approved.” Use quarter-end or year-end to your advantage – SAP may offer extra incentives to close the deal before their fiscal deadlines. Ensure all promises are captured in writing – if the sales team says “We’ll include X,” get it in the contract or an addendum. Don’t hesitate to ask for protections – even if SAP’s initial response is no, it opens the door to compromise (maybe they won’t offer a no-penalty termination, but they might agree to a data export and support period at the end of the term, which is something).
Final Decision Checklist: Before signing the RISE contract, run through this brief checklist:
- ✅ Business Case Verified: You have compared RISE to alternatives, and the value proposition is clear, with costs justified by benefits or intangibles. All stakeholders (CIO, CFO, etc.) agree on the rationale.
- ✅ Scope of Contract Understood: The contract covers all necessary components (ERP modules, environments, integrations), and you’re aware of any exclusions. No “to-be-decided” gaps remain.
- ✅ Key Terms Locked In: Negotiated items – discounts, renewal terms, SLA levels, exit clauses – are explicitly written in the contract. You have minimized open risks, such as uncontrolled renewals or undefined responsibilities.
- ✅ Transition Plan: You have an implementation plan (who will do the migration, timeline, and costs) because RISE is the start of a journey. Also, an internal team is assigned to vendor management to work with SAP after the signature.
- ✅ Exit Strategy: While you hope not to use it, you know what you’d do if you needed to leave RISE after the term. Data export and continuity options are considered, and you’ve retained any rights possible (even if it’s just the knowledge of how to license S/4HANA on-prem if needed).
By following these recommendations, CIOs and procurement teams can approach SAP RISE negotiations with clarity and confidence. The aim is to strike a deal where your organization gains the cloud advantages promised, on terms that safeguard your interests.
With careful planning, thorough negotiation, and a clear understanding of both costs and benefits, you can ensure that if you choose RISE with SAP, it will truly be a rising tide that lifts your business forward – and not a decision you regret down the line.
