Rise with SAP Case Study: New York Hospital System Cuts RISE with SAP Pricing by 27%
Background
A major hospital system in New York – encompassing several hospitals and clinics – was evaluating RISE with SAP, SAP’s cloud-based ERP subscription service.
The healthcare provider saw value in moving to the cloud for improved agility and reduced infrastructure management, but initial pricing from SAP for RISE was prohibitively high.
To ensure funds remained available for patient care initiatives, the hospital system needed a better deal on its SAP cloud transition.
Challenges
The out-of-the-box RISE with SAP proposal did not account for the healthcare provider’s budget realities or existing investments.
The quoted subscription fees were inflated by elements the hospital didn’t fully require, and there were concerns about being locked into a long-term contract without flexibility.
The challenge was to negotiate a RISE contract that significantly lowered the cost (targeting a reduction of around 27%) and to incorporate terms suited for the healthcare sector, such as flexibility in scaling and data residency compliance.
Solution (How SAP Licensing Experts Helped)
- Baseline Assessment: SAP Licensing Experts first worked with the hospital’s IT and finance teams to understand the scope of their planned RISE migration. They catalogued which SAP modules and user counts were in play, identifying areas where SAP’s proposal was over-scoped. For example, SAP had included extra cloud services and large user bundles beyond what the hospital system needed.
- Benchmarking and Pricing Analysis: The experts conducted a benchmark analysis, comparing the SAP proposal to industry standards and what similar organizations were paying. They used their knowledge of SAP’s pricing flexibility in the healthcare sector and past negotiation precedents to set target prices for each component of RISE.
- Contract Term Adjustments: A key negotiation point was contract flexibility. The advisors pushed for terms that allowed the hospital system to scale down or adjust services in case of budget cuts or strategy changes (important in the unpredictable healthcare environment). They also addressed data security and compliance clauses to meet healthcare regulations.
- Negotiation Strategy: Presenting a unified front, the SAP Licensing Experts led discussions with SAP’s sales team. They highlighted that the hospital had alternatives (such as sticking with on-premise systems or considering other cloud solutions) if the RISE offer wasn’t improved. This leverage, combined with the benchmarking data, pushed SAP to reconsider its pricing. The negotiation entailed multiple rounds, focusing first on removing unnecessary components (to drop the price) and then on applying healthcare discounts and incentives that SAP sometimes provides (like credits for existing licenses or special pricing for public sector/health institutions).
- Customized RISE Package: Ultimately, a customized RISE package was crafted. It aligned closely with the hospital’s actual usage forecast, meaning they weren’t paying for unused capacity. It also included a shorter renewal cycle with an option to re-evaluate pricing after a couple of years, giving the hospital an “out” if the cloud benefits weren’t as expected.
Outcome and Savings
The negotiation was a clear success: the New York hospital system secured a 27% reduction in RISE subscription costs compared to the initial quote.
This translates to millions of dollars saved over the contract term, funds that could be redirected to patient services and medical technology upgrades. Beyond cost savings, the hospital gained a contract with greater flexibility — a rarity in many RISE deals.
They have the right to adjust user counts and even exit certain components of the service without severe penalties, reflecting a more partnership-oriented deal from SAP.
This case study shows that even a large vendor contract like RISE with SAP can be negotiated to better fit a customer’s needs, especially with expert help.
“Our goal was to move to SAP’s cloud without draining resources from patient care. Achieving over a quarter off the price, with more favorable terms, was crucial. We wouldn’t have gotten there without the expert negotiators guiding us,” — CFO, New York Hospital Network
