Rise with SAP Case Study: South African Mining Group Cuts RISE Costs by 29%
Background
A South African mining conglomerate, with operations across multiple African countries, was modernizing its IT landscape and looked to move core systems to the cloud via RISE with SAP.
The mining group’s operations involve heavy logistics and asset management, all managed in SAP.
While the cloud move promised better scalability, the initial cost estimates for RISE were a major concern given the company’s focus on cost control (especially important in the volatile commodities sector).
Challenges
SAP’s proposal for the RISE subscription was priced at a level that would significantly strain the mining group’s IT budget.
The quoted costs didn’t fully account for the mining industry’s cyclic nature (where usage might vary with commodity prices) and included services the company didn’t need.
The challenge was to reduce the overall RISE fees by roughly 29% to align with the company’s financial targets, and to ensure the contract allowed some flexibility for changing business conditions.
The group needed expert negotiators to navigate SAP’s terms and present a case for a leaner, more affordable RISE package.
Solution (How SAP Licensing Experts Helped)
- Requirements Rationalization: SAP Licensing Experts collaborated with the mining company’s IT planners to dissect the RISE proposal. They identified elements that could be scaled back – for example, the number of user licenses was overestimated by SAP, and certain advanced analytics services in the bundle were not immediately needed. By right-sizing the requirements, they built a revised model for what the mining group truly required.
- Highlighting Industry Context: The experts prepared negotiation points that highlighted the mining sector’s needs, such as the ability to handle fluctuating demand. They argued that the RISE offering should be adjusted to provide usage flexibility (like seasonal scalability without year-round charges) and that the pricing should reflect the fact that the client might not use full resources during down cycles. This context helped justify the ask for a nearly 30% cost reduction.
- Competitive Positioning: Although SAP was the chosen platform, the advisors subtly introduced the notion that the mining group had considered alternative cloud or ERP strategies if the RISE deal was too costly. This created leverage, implying that SAP could lose the cloud migration opportunity if it didn’t come to a more reasonable price.
- Negotiation Execution: In negotiations, the SAP Licensing Experts pressed for the removal or discounting of specific cost drivers. They secured agreement to eliminate some extra service fees and obtained a special discount structure given the client’s emerging market and long-standing SAP customer status. Additionally, they worked in provisions for the mining group to adjust certain aspects (like temporarily suspending some user licenses during prolonged mine shutdowns) without full charges – a nod to flexibility.
- Final Deal Restructure: The final negotiated RISE contract was slimmed down and repriced. The term lengths and payment schedules were adjusted to better match the mining group’s cash flow patterns, another subtle win extracted during talks.
Outcome and Savings
Upon signing, the South African mining conglomerate achieved a 29% reduction in its RISE with SAP costs relative to the initial proposal. This significant saving made the cloud transition financially viable and was celebrated as a major victory by the company’s finance department.
The reduced cost, coupled with contract tweaks for flexibility, meant the mining group could proceed with modernization without fear of overspending during lean periods.
The CIO noted that the expert-led negotiation not only saved money but also resulted in a more balanced partnership with SAP, as the final agreement acknowledged the client’s industry-specific needs.
This case is a testament to the power of informed negotiation, proving that even for essential IT investments, there’s room to tailor deals for both cost and practical fit.
“The original cloud quote was beyond what we could justify. Bringing in experts changed the game — we cut nearly a third off the cost. Now we can move to the cloud on terms that make sense for a mining business, not just SAP’s standard offer,” — IT Director, Mining Group
