Contents
Key takeawaysRISE vs on premise explainedFive year cost and worked exampleOperational controlIndirect accessWhat we have seenExit termsHow to chooseAnswering the account teamContract terms to ask forEvaluation timelineWhat to do nextFAQRISE puts S/4HANA, the hyperscaler infrastructure and SAP's managed service into one per FUE subscription. On premise keeps the license as capex, hosting as a separate choice and the upgrade calendar with you. Five variables decide which fits.
- Two contract types. RISE is a multi year subscription, while on premise is a perpetual license plus annual support at 22 percent of the license base.
- Cost. At large scale the five year RISE total is usually 15 to 35 percent higher than the on premise equivalent.
- Control. RISE hands upgrades, patching and change control to SAP, while on premise keeps every operational decision with you.
- Indirect access. RISE sizes digital access documents at signing, so an undercounted volume returns as a true up in year two or three.
- Exit. RISE exit terms favor SAP, whereas on premise rests on perpetual rights that do not expire.
- Timing. Treat it as a commercial decision and run the five year model before the migration scope is locked.
Both options run S/4HANA. The choice is about the contract around it: who owns the rights, who runs the systems, who sets the upgrade calendar and what you hold when the term ends. SAP presents RISE as a clean migration plus one subscription, while on premise is a slower change that leaves more decisions with you.
Five variables decide the call: five year cost, operational control, customization friction, indirect access exposure and exit rights. Each has its own section below, followed by a worked cost comparison, the arguments SAP's account team will use and the contract terms to ask for.
What is the difference between SAP RISE and S/4HANA on premise?
RISE with SAP is a managed cloud subscription that SAP runs for you. S/4HANA on premise is a perpetual license that you, or a partner you pick, run on infrastructure you choose. The software is largely the same. The commercial terms differ on almost every point, as the table below shows.
RISE with SAP
RISE with SAP bundles S/4HANA Cloud Private Edition, the hyperscaler infrastructure underneath it, SAP's application managed service and a small set of supporting capabilities into one contract priced per FUE. You pick the hyperscaler at signing. SAP performs the technical upgrades, and each release must stay inside SAP's maintenance window, so SAP's release calendar sets the pace.
S/4HANA on premise
On premise is the traditional perpetual license model. You buy or convert the licenses, run them where you choose and pay SAP annual support. That can be your own data center, a private cloud or a hyperscaler contracted outside RISE, so "on premise" describes the license, not the building.
Where GROW with SAP fits
GROW with SAP is the public cloud edition aimed at the midmarket. It is not directly comparable to either option on this page. Our RISE versus GROW comparison covers when GROW is the better answer.
| Dimension | RISE with SAP | S/4HANA on premise |
|---|---|---|
| Commercial model | Multi year subscription per FUE | Perpetual license plus annual support |
| Accounting profile | Operating expense across the term | License as capex, support as opex |
| Infrastructure | Hyperscaler chosen at signing, inside the bundle | Your choice, contracted separately |
| Who runs the system | SAP, within its managed service scope | You or a partner you select |
| Upgrade timing | Set by SAP's release and maintenance calendar | Yours, within SAP's support window |
| Indirect access | Digital access documents sized at signing | Older contract terms or the document model |
| What you hold at the end | Nothing unless you renew | The perpetual right to use |
RISE with SAP Negotiations: Pricing a One-Way Door
How does the five year total cost of RISE compare with on premise?
At large scale the five year RISE total usually runs 15 to 35 percent above the on premise equivalent. At small scale the gap can reverse, because fewer users share the fixed infrastructure and operations costs of on premise. A five year model of both options on the same scope is the most useful work in this decision.
What goes into the RISE side
- FUE subscription. The annual price per FUE across the term. Our guide to calculating FUE counts explains how the count is built.
- Annual escalator. An inflation indexed or fixed step up clause, typically 2.5 to 5 percent a year.
- Hyperscaler pass through. Infrastructure cost embedded in the FUE price.
- Implementation partner fees. Paid outside the SAP contract.
- Add on modules. Outside the base FUE in most contracts, each with its own line.
What goes into the on premise side
- License purchase. Capex, or amortized over the useful life.
- Annual support. 22 percent of the license base each year, with increases at renewal.
- Infrastructure. Your data center or a hyperscaler contracted outside RISE.
- Technical operations. Basis and security staff, in house or through a partner.
- Implementation partner fees and add on modules. The same as on the RISE side.
Because partner fees and add on modules land on both sides, a model that includes them in only one column will mislead you. The SAP RISE hidden costs guide lists the RISE line items that rarely appear in the first proposal.
| Line item | RISE | On premise | Notes |
|---|---|---|---|
| FUE subscription or license base | High | Medium | RISE bundles infrastructure and managed service |
| Annual escalator | 2.5 to 5 percent | Support fee increase per renewal | Negotiate a cap on both |
| Infrastructure | Embedded | Separate | Your hyperscaler commit discount applies on the on premise side |
| Managed service | Embedded | Separate | Partner or in house on the on premise side |
| Five year total | Higher in most large installations | Lower at scale, higher at small scale | Run the model before scope is locked |
A worked example on one scope
Say you run S/4HANA for about 800 FUEs. Every figure here is hypothetical. SAP quotes RISE at $2,600,000 in year one with a 3 percent escalator. On premise needs a $1,200,000 license conversion net of credits, support on a $5,000,000 license base, $450,000 a year of hyperscaler capacity and $600,000 a year for partner Basis and operations.
| Line item | RISE, five years | On premise, five years |
|---|---|---|
| License conversion, net of credits | In the subscription | $1,200,000 |
| Subscription: $2,600,000, then $2,678,000, $2,758,340, $2,841,090 and $2,926,323 | $13,803,753 | None |
| Support: 22 percent of $5,000,000, so $1,100,000 a year, held flat | In the subscription | $5,500,000 |
| Infrastructure: $450,000 a year | In the subscription | $2,250,000 |
| Technical operations: $600,000 a year | In the subscription | $3,000,000 |
| Five year total | $13,803,753 | $11,950,000 |
RISE comes out $1,853,753 higher, or 15.5 percent. The escalator alone shifts that result: at 2.5 percent the RISE total is $13,666,454, and at 5 percent it is $14,366,641, a swing of $700,187 from one clause. At 3 percent, each $100,000 cut from the year one price saves about $531,000 over five years.
Holding support flat flatters the on premise side, since SAP support increases would narrow the gap. Application management, testing and partner fees are left out of both columns because you pay them either way. Our SAP RISE TCO calculator runs the same comparison with your own figures.
SAP RISE negotiation guide
RISE pricing benchmarks, FUE sizing checks, digital access terms and the contract clauses to request before you sign.
Get the white paper →How does operational control differ between RISE and on premise?
Under RISE, SAP controls how the system is run. It owns the upgrade calendar, the patch schedule, the operational SLAs, the change control process and the list of third party tools you may connect. You contract through SAP's managed service terms, and custom code is allowed within boundaries SAP defines.
On premise, every operational decision stays with you: upgrade timing, patch cadence, infrastructure design, third party integrations, custom code and change control. The outside limit is SAP's support window. SAP commits to keep at least one S/4HANA release in maintenance until 2040, and from the 2023 release each release gets 7 years of mainstream maintenance.
Who gives up what
RISE reduces the operations headcount you need. On premise keeps operational sovereignty. Heavily regulated industries running highly customized S/4HANA typically favor on premise, while lean IT teams running standard processes typically favor RISE.
Where customization causes friction
The friction on the RISE side comes from custom objects that do not fit SAP's managed service boundaries. You can size this before any proposal arrives:
- Custom code inventory. Run the ABAP Test Cockpit checks for S/4HANA readiness and list every Z object.
- Usage data. Turn on usage procedure logging or the SCMON monitor for several months, so you know which custom code is actually executed.
- SAP Readiness Check. Its output shows simplification items, add ons and custom code impact in one report.
- A mapping column. For each item, record whether it fits inside the RISE boundary, needs rework or has to be retired.
How does indirect access exposure compare under RISE and on premise?
The two models calculate indirect access differently. RISE uses the digital access document model, where documents created in S/4HANA by external systems are chargeable. The document volume is sized at signing, and an undersized count comes back as a true up in year two or three.
On premise exposure depends on your paper. Older customers may still have a master agreement signed before the digital access model existed, while newer agreements use the document model. Both can be negotiated in the on premise renewal cycle. The SAP indirect access guide covers the document model end to end.
How to size the document count before signing
List every connected system that creates sales orders, invoices, purchase orders, deliveries or financial postings in SAP. Run SAP's digital access estimation tool against a full year of history, then add volume from integrations planned for the migration. Model three years forward, because one year can hide seasonal peaks and growth.
Why we reject the "on premise is legacy" argument
The standard SAP pitch is that RISE is the strategic direction and on premise is legacy. We disagree. In roughly two out of three large enterprises we have modeled in the last 24 months, the five year RISE total ran above the on premise equivalent, with a materially different operational risk profile. Run both five year models in parallel.
If on premise wins, ask SAP to confirm in writing the support window for your migration path. Then use the comparison figure in the RISE negotiation, because a credible on premise alternative is what brings SAP's price down.
What have our SAP migration engagements shown through 2024 and 2025?
Across roughly 50 to 70 RISE and S/4HANA on premise modeling engagements run between 2023 and 2025, the five year RISE total came out higher than the on premise equivalent in about three out of four installations above 500 FUEs. Three patterns repeated often enough to plan for.
- The first quote was high. SAP's first RISE quote typically sat 22 to 38 percent above the price finally signed, and the median reduction was 27 percent across about 60 engagements. Both the FUE count and the tier price came down.
- Digital access was undersized. The first RISE scope understated document volume. Once we modeled the documented connected systems, the inbound document count rose two to four times in most engagements, with a median gap of 2.8 times.
- Customization caused the delays. Z code, custom transactions and downport patches held projects up far more often than infrastructure did.
RISE is sold as a migration project, and it also rewrites your contract with SAP. Read the master agreement before you read the migration deck.
What do the exit terms look like under RISE and on premise?
RISE exit terms favor SAP, while on premise exit rests on perpetual rights that do not expire. Most procurement teams give exit less weight than it deserves, because it only matters years after signature.
RISE exit terms
RISE is a fixed term subscription. At the end of the term you renew, migrate to on premise or migrate to another platform, and SAP controls the transition window. Data extraction support beyond a small allowance is billed by the hour.
On premise exit terms
On premise licenses are perpetual. You can step off SAP support, move to third party support or migrate to another platform on your own calendar, and the right to use the software stays in place. Our comparison of SAP third party support providers covers what that route involves.
What to negotiate on exit
- RISE. An extended data extraction window, transition support at capped hourly rates and a step down on early termination.
- On premise. The right to step off support, compatibility with third party support and clear rules on when SAP may audit.
How should a CIO choose between RISE and on premise?
Score the decision on five variables, and treat it as a commercial, audit and control decision more than a technical one. The table sets out which way each variable points.
| Variable | Points to on premise when | Points to RISE when |
|---|---|---|
| Five year total cost | RISE is more than 15 percent above the on premise total on the same scope | The totals are close, or you are below about 500 FUEs |
| Operational control | Heavy customization, regulated workloads or unusual integrations | Standard processes and a lean IT operation |
| Internal SAP team | You already staff Basis and security operations, since RISE shrinks their role without removing the cost | You cannot staff Basis and security operations |
| Audit and indirect access | Document volume is volatile and hard to predict | Document volume is stable and well measured |
| Exit | You want perpetual rights and the option to leave SAP support | You accept the discipline of a subscription |
How the answer changes with size
Near 500 FUEs, fixed costs dominate. A Basis team and a disaster recovery setup cost roughly the same whether 400 or 4,000 people use the system, so RISE often compares well. With several thousand FUEs, those fixed costs are spread thin and the per FUE subscription becomes the largest line, which is where on premise usually wins.
Our SAP RISE guide for 2026 covers the wider RISE picture across cost, audit and exit.
What will the SAP account team say, and how should you reply?
Expect the same handful of arguments in most RISE sales cycles. Each has a factual reply that keeps the comparison on your numbers.
- "New innovation is cloud only." SAP said so in July 2023. In May 2026 it began offering Joule AI agents on on premise S/4HANA and ECC, but only to customers who have committed most of their SAP systems to RISE and signed its Max Success Plan. Ask for the specific capabilities in your scope that on premise will not get, in writing, and price them.
- "RISE includes everything." Ask for the full bill of materials. Add on modules, digital access documents and BTP consumption beyond the included credits are usually separate lines.
- "This price only holds until quarter end." If your evaluation started nine months out, SAP's quarter end is not your deadline. Our note on SAP fiscal quarter timing explains when the calendar helps you.
- "Our sizing shows this FUE count." Reply with your own count, built from user role data, and ask SAP to reconcile line by line.
- "Transition support is standard." Then it costs SAP nothing to write the window, the rates and the data formats into the contract.
Which contract terms should you ask for in each model?
Ask for these before signature, when SAP still needs the deal. After signature, each one becomes a change request.
- Escalator cap. A fixed ceiling on the RISE annual increase. In the example above, 2.5 versus 5 percent is worth $700,187.
- FUE reduction right. The right to reduce FUEs at set points in the term, so a divestment does not leave you paying for users you no longer have.
- Digital access pool. An agreed document volume with a stated price for extra documents, so a year two true up is priced in advance.
- Renewal price protection. A cap on the uplift at the first RISE renewal, when you have the least room to push back, because leaving means a new implementation.
- Support increase cap. On the on premise side, a ceiling on annual support increases over the same five years.
- Partial termination of support. The right to drop unused on premise licenses from support, which SAP's standard terms generally do not allow.
Keep the migration partner's contract outside the SAP agreement. The partner then answers to you, and you can compare partner quotes on their own merits.
When should you start the RISE versus on premise evaluation?
Start 270 days before the date the decision is locked. Starting 60 days out leaves time only to react to SAP's proposal. Starting early means your own baseline exists before SAP's numbers arrive.
| Days before lock | What to do |
|---|---|
| 270 | Build the scope baseline: FUE count, custom code register and a list of connected systems. Start both five year models. |
| 180 | Request RISE and on premise quotes on the same scope. Run the digital access estimate. Get implementation quotes held outside the SAP contract. |
| 90 | Negotiate the escalator, exit terms and document pool. Compare the negotiated totals of both options. |
| 30 | Review the final paper against the bill of materials, and get the support window confirmed in writing. |
If BTP is part of the plan, the credits in a RISE bundle deserve their own review. Our SAP BTP licensing strategy guide covers the choice between a CPEA cloud credit commitment and pay as you go subscriptions.
What to do next
- Build both models. Model five years of RISE and on premise cost on exactly the same scope.
- Test the RISE side. Run the SAP RISE TCO calculator with your own FUE count and escalator.
- Map customization. Document the custom code register and map each item to the RISE boundary.
- Count documents. Map the digital access document volume from every connected system.
- Separate the partner. Confirm the migration partner's cost is held outside the SAP contract.
- Negotiate exit early. Both options have exit terms worth settling before signature.
- Set the calendar. Put the evaluation start 270 days before the decision lock date.
- Get independent help. Bring in independent SAP advisory to run the comparison and lead the negotiation.
Frequently asked questions
Is RISE more expensive than on premise over five years?
Usually, at large scale. In about three out of four large installations we have modeled, the RISE total came out higher. The result depends on the escalator, the negotiated year one price and whether both models cover identical scope, so compare negotiated figures on the same scope before drawing a conclusion.
Does RISE include all S/4HANA modules?
No. The base RISE FUE covers the core S/4HANA functions. Many add on modules carry their own subscription line outside the FUE, as do industry solutions and BTP use beyond the included credits. Read SAP's product list and your bill of materials before scope is locked.
Can we move from RISE to on premise mid term?
Not without a contract event. SAP treats it as an early termination of the RISE subscription plus a new contract. If you converted perpetual licenses into RISE, check whether you can return to them, because otherwise going back means buying again. Negotiate a step down right at signing.
Does on premise mean running SAP in our own data center?
Not necessarily. In this comparison, on premise means the perpetual license model. The system can run in your own data center, in a private cloud or on AWS, Azure or Google Cloud under a contract you hold directly, outside RISE.
How does indirect access work under RISE?
RISE applies SAP's digital access document model, which counts nine document types, such as sales orders and invoices, when an external system creates them in S/4HANA. The volume is agreed in the subscription, so size it from a full year of history plus planned integrations and agree the price of extra documents up front.
What is a realistic discount on the RISE first quote?
With proper preparation, 22 to 38 percent below SAP's first quote is a workable range. The reduction comes from challenging the FUE count, the tier price and the term length, and it depends on having a credible on premise model to compare against.
Should we take third party support on the on premise option?
It is a credible choice if you are not planning new SAP innovation roadmap items and can accept the absence of new SAP feature releases. Providers such as Rimini Street and Spinnaker Support cover fixes and regulatory updates. Model the support window before stepping off, and check what SAP charges to reinstate support later.
What should we do first when comparing RISE and on premise?
Build the five year cost model for both options before any SAP scoping deck arrives. With your own model in hand, SAP's proposal becomes a response to your numbers, and you decide which assumptions it has to meet.