RISE vs on premises: the 2026 TCO white paper.

RISE with SAP rarely beats a well run on premises estate on raw five year TCO; it wins, when it wins, on exit from hosting contracts, upgrade debt, and capital cycles, and the contract terms decide which story you get.

What does RISE with SAP actually include and exclude?

RISE with SAP bundles the S/4HANA license, hyperscaler infrastructure, technical managed services, and standard support into one subscription priced per Full User Equivalent. The official scope is published on the SAP RISE product page, and what it excludes matters more than what it includes.

Application management, functional support, integrations, testing, and most migration work stay with the customer or a partner. The subscription replaces the license and hosting lines, not the SAP operating cost.

• Included: S/4HANA subscription rights, infrastructure, technical operations, standard support.
• Excluded: application management, functional changes, integration builds, test cycles, data work.
• Repriced: digital access, add on engines, and SAP BTP consumption arrive as separate or bundled line items.

What is an FUE and why does it matter?

Full User Equivalents convert named user categories into one metric: one advanced user equals one FUE, while core and self service users convert at published ratios. The conversion table you sign, not the headcount, sets the bill.

How does the five year TCO math really compare?

On a like for like five year model, an already licensed on premises estate carrying only maintenance and infrastructure usually beats RISE subscription pricing. The RISE case improves when a hardware refresh, a hosting exit, or a major upgrade lands inside the window.

When does RISE win the model honestly?

RISE wins when the counterfactual includes a funded hardware refresh, an expiring hosting deal at above market rates, or an S/4HANA migration the business has already committed to. Without one of those, the subscription premium buys convenience, not savings.

What costs does the SAP proposal usually omit?

Integration rework, regression testing, retained basis skills, and parallel run periods. In our 2024 to 2025 file these added 20 to 35 percent to the customer side of the model once counted.

Which RISE contract terms decide the outcome?

Four terms separate a defensible RISE deal from an expensive one: the renewal cap, the FUE conversion table, the exit and data egress language, and the credit treatment of existing licenses. SAP publishes its general terms through the SAP agreements library, but the order form is where these four live.

• Renewal cap: uncapped RISE renewals took 15 to 30 percent uplifts in our file; capped ones did not.
• Conversion credit: get the credit stated as a durable discount percentage, not a one time gesture.
• Exit terms: data egress, hyperscaler portability, and license repurchase pricing belong in the signature set.
• Digital access: settle the indirect use position before conversion, not under audit pressure after.

Why does the year six question matter most?

Perpetual licenses survive a failed strategy; subscriptions do not. Whatever the five year model says, the year six position, renew under a cap, renegotiate, or repurchase, is where RISE economics are actually decided.

How do you negotiate a RISE deal from the buyer side?

Treat RISE as a conversion negotiation, not a product purchase. SAP's cloud revenue targets make signed conversions valuable, and that value is your discount budget.

1. Build the honest counterfactual model first: tuned on premises with maintenance.
2. Demand the FUE conversion table early and test it against real user counts.
3. Anchor the conversion credit as a percentage discount that survives renewals.
4. Cap renewal uplifts and fix the FUE unit price for at least one renewal term.
5. Write exit terms, egress, and repurchase pricing into the order form.
6. Time the close against SAP quarter end with a walkable alternative on the table.

Does staying on premises remain viable through 2030?

Yes for most estates. Mainstream maintenance for S/4HANA on premises runs into the next decade, and ECC deadlines have repeatedly proven negotiable. The burning platform is a sales narrative; your timeline should come from your own roadmap.

Where the common advice on RISE TCO comparisons is wrong

The standard analyst framing treats RISE versus on premises as an infrastructure TCO question. We disagree. In roughly 25 to 35 RISE evaluations Fredrik Filipsson advised in 2024 to 2025, infrastructure was never the deciding cost; the contract terms were. An uncapped renewal clause moved more money than any hosting efficiency, and a weak exit clause converted a five year decision into a permanent one. The buyer side move is to negotiate RISE as a terms problem, with the TCO model as the walk away evidence, not as a spreadsheet contest SAP's proposal team is trained to win. The cheapest RISE deal is the one with the strongest year six position.

What the engagement data shows

Three cuts of our advisory engagement file frame the size of the opportunity.

What to do next

Five moves turn this analysis into a lower invoice on the next renewal.

A sequence you can run this quarter

1. Build the tuned on premises counterfactual before opening the RISE conversation.
2. Request the FUE conversion table and validate it against actual user counts.
3. Quantify the costs RISE excludes: AMS, integration, testing, retained skills.
4. Settle the digital access position before any conversion discussion.
5. Negotiate renewal caps, durable credits, and exit terms in the order form.
6. Model the year six exit and renewal scenarios before signing year one.

Frequently asked questions

Is RISE with SAP cheaper than staying on premises?

Usually not on raw five year TCO. In roughly 7 of 10 models we built in 2024 to 2025, an already licensed, stable on premises estate was cheaper. RISE wins when a hardware refresh, hosting exit, or committed S/4HANA migration sits inside the window.

What does RISE with SAP exclude from the subscription?

Application management, functional support, integration builds, testing, and most migration effort stay with the customer. These omitted costs added 20 to 35 percent to the customer side in our engagement file.

What happens to existing SAP licenses under RISE?

Their value converts into a subscription credit or discount. Negotiate that credit as a durable percentage, because perpetual rights generally terminate at conversion and the credit is what survives.

What is the biggest RISE contract risk?

Uncapped renewals. RISE contracts without renewal caps took 15 to 30 percent uplifts at year four in our file. The renewal cap and the exit terms decide the real cost more than the entry price.

Does digital access go away under RISE?

No. Indirect use is repriced into the RISE bundle rather than eliminated. Settle your digital access position before conversion so it cannot be used as negotiation pressure.

When is the best time to negotiate a RISE deal?

Against SAP's quarter end, with a credible stay on premises model on the table. SAP's cloud conversion targets make signed RISE deals valuable, and that urgency is the buyer's discount budget.