Case Study – Rise with SAP Advisory – U.S. Technology Firm Cuts 40% Off SAP’s Price and Safeguards Hybrid Flexibility with RISE with SAP
Background
A fast-growing U.S. software company (~4,000 employees) was evaluating SAP’s cloud offering via RISE with SAP. The firm utilized SAP ECC for finance and order management, with extensive customization to integrate with its own software products and customer portals.
SAP pitched RISE as an all-inclusive path to S/4HANA Cloud on SAP’s infrastructure. However, as a tech-savvy organization, the client could run SAP on their cloud and was hesitant to relinquish control. They also had significant investments in SAP licenses they didn’t want to abandon.
Challenges
- Excessive Cost vs. DIY: The initial RISE proposal was approximately $5 million per year for a three-year period. Their engineers estimated running S/4HANA on AWS would cost far less. SAP’s bundle carried a hefty convenience premium. The tech firm needed SAP to justify this premium or slash the price – otherwise, self-managing SAP in their cloud remained a strong alternative.
- Loss of License Ownership: Moving to RISE would convert the company’s perpetual SAP licenses into subscriptions. If they later left RISE, standard terms offered no rights to run SAP unless they reactivated old licenses. This license lock-in troubled the client. They wanted assurance that if the cloud arrangement didn’t work out, they could revert to on-prem or another hosting without having to repurchase licenses.
- Bundled Extras & Rigid Package: SAP offers bundles of multiple products (S/4HANA, BTP, analytics) and services in a single contract. The company was concerned about being tied to a monolithic agreement. For example, they utilized a third-party analytics platform and didn’t require SAP Analytics Cloud, which was already included in the bundle. They also required more than the standard three-system landscape for development and testing, which SAP would charge extra for. The client sought a leaner scope – dropping unused components and getting needed extras without outrageous fees.
- Service SLAs & Exit: As a tech provider, the client was skeptical of ceding too much control. The RISE contract lacked strong guarantees on performance and support. They needed better SLAs and even an exit option if SAP’s service didn’t meet their expectations, rather than being locked in regardless.
How Redress Compliance Helped
- Cost-Benefit Analysis & Leverage: Redress helped quantify the cost gap. The client’s estimate to run S/4HANA on AWS was far lower than SAP’s $5M/year quote, highlighting a major premium. Armed with this data, Redress negotiated a significantly better price with SAP, using the client’s ability to self-host as leverage. They made clear the client was ready to stick with its private cloud if SAP didn’t significantly improve the offer.
- Contract Unbundling: Redress negotiated removal or separate pricing of components the client didn’t need. They carved out unneeded pieces (like SAP’s analytics tool) so the client didn’t pay for shelfware. And for items the client did need – such as extra development and testing systems – Redress got them included at little to no cost. The result was a leaner, custom RISE agreement aligned with actual usage.
- License Safeguards: A major win was inserting a clause that if the client left RISE after the term, they would keep rights to their prior SAP licenses. In other words, the company wouldn’t be left empty-handed if the cloud path failed. Preserving this “license fallback” was crucial in alleviating the fear of being permanently locked into the subscription model.
- Enhanced SLAs & Flexibility: Strengthened support SLAs with clear penalties for SAP missing uptime or response targets. They even negotiated that if SAP failed to meet critical SLAs repeatedly, the client would gain the right to terminate the deal for cause without incurring heavy penalties. They also secured an option to renew on agreed terms so that the client wouldn’t face a surprise price hike at renewal time.
Outcome and Impact
After negotiations, SAP reduced its price to retain the customer: the final subscription cost is approximately 40% lower than the initially quoted amount, resulting in a savings of roughly $6 million over three years. This discount made RISE with SAP as economical as the DIY approach, but with SAP’s services included.
The contract was reshaped into a flexible partnership. The client will only pay for what they use, and crucially, they won’t be trapped if the arrangement doesn’t work out.
Thanks to the license retention and exit clauses that Redress secured, the company can revert to on-premises or switch providers later without losing its prior SAP investments. That exit strategy neutralized the fear of vendor lock-in.
Meanwhile, beefed-up SLAs give the firm confidence in SAP’s performance (with penalties if standards aren’t met), so they maintain control over service quality.
In the end, the tech company gets the best of both worlds: a modern SAP environment in the cloud at a right-sized cost, and the freedom to adapt its IT strategy in the future. They gained the cloud benefits (simplified infrastructure, regular upgrades) on their terms.
Read about other Rise with SAP Case Studies.
Client Quote
“We knew what it should cost to run SAP in the cloud, and initially SAP’s offer didn’t match that reality. Redress not only bridged that gap – they got SAP to concede on things we thought were non-negotiable, like letting us keep our license fallback and improving SLAs. It was like having an ace up our sleeve. We ended up with the cloud deal we wanted, at a price and terms that give us confidence and control, not lock-in.” – CTO, Software Company
Call-to-Action
Even a tech-savvy company benefits from having an SAP negotiation expert in its corner. If you’re considering RISE with SAP but worry about cost, lock-in, or losing flexibility, contact Redress Compliance for a complimentary consultation.
We ensure you get the cloud advantages without the downsides – on your terms.
Read about our Rise with SAP Contract and Licensing Advisory Services.
