Rise with SAP Case Study: Swedish Pharma Company Cuts RISE Costs by 33% and Gains Exit Flexibility
Background
A Swedish pharmaceutical company, known for its innovative drug research and global distribution, was in discussions to adopt RISE with SAP for its ERP environment.
The move promised modern cloud infrastructure and simplified IT management. However, the pharma firm was wary of the cost and rigidity of SAP’s initial RISE offer.
Long-term lock-in was a particular concern, as the company valued the option to switch strategies if the RISE model didn’t pan out or if better solutions emerged.
Challenges
The initial RISE proposal came with a steep price tag and a multi-year commitment that left little room for change. For a pharma company investing heavily in R&D, committing excessive budget to ERP licensing would detract from research funding.
The challenge was to slash the RISE costs (by roughly one-third) while also building in contractual exit flexibility – essentially an option to re-evaluate or exit the RISE contract after certain milestones without crippling penalties.
Achieving this required in-depth knowledge of SAP’s willingness to negotiate terms and the ability to present compelling arguments for why the standard offer didn’t fit the client’s needs.
Solution (How SAP Licensing Experts Helped)
- Critical Needs Analysis: SAP Licensing Experts began by reviewing the pharma company’s actual needs. They pinpointed which SAP modules and services were truly essential under RISE and which were “nice-to-haves” or could remain on-premises. This analysis revealed that the company could operate with a leaner RISE package than quoted, especially since some manufacturing systems had to stay on-site for regulatory reasons (meaning they shouldn’t pay for those in the RISE scope).
- Total Cost of Ownership (TCO) Modeling: The team prepared a TCO model comparing the 5-year cost of RISE (as offered) versus a hybrid approach (keeping some systems in-house, or even using an alternative cloud provider). This model armed the pharma company with a credible case that they had alternatives and that SAP’s price needed to come down significantly (33% or more) to be competitive.
- Exit Clause Negotiation: A major focus was the contract’s flexibility. The experts drew on precedent where SAP had granted mid-term termination or step-down rights to certain customers. They crafted proposed contract language that would allow the company, for instance, to exit the RISE agreement after 3 years if it chose to, or to drop certain services without full-term payment. Presenting this to SAP required careful justification – the argument was that the fast-evolving nature of the pharma industry and cloud technology warranted a safety valve for the client.
- Direct Negotiation & Leverage: The SAP Licensing Experts led high-level talks with SAP’s account and commercial teams, framing the deal as one that could either become a showcase win-win or a stalled opportunity. By emphasizing the client’s strategic importance (pharma sector reference customer potential) and willingness to invest if terms were right, they incentivized SAP to find creative solutions. SAP eventually agreed to substantial price concessions and an unprecedented flexibility clause allowing the customer to reduce their RISE scope after a set period.
- Finalize Optimized Contract: The final contract was tailored to the pharma company’s needs: it had a ~33% lower cost, achieved through a combination of discounts, removal of unneeded components, and leveraging existing perpetual licenses as credits. It also contained an exit option clause that gave the company confidence it could pivot if necessary, greatly reducing the risk of moving to RISE.
Outcome and Savings
With the new agreement, the Swedish pharmaceutical firm achieved a 33% reduction in RISE with SAP costs, equating to substantial savings in the millions over the term of the contract.
This dramatic cut met the company’s budget targets and ensured that capital could be preserved for core research and development activities.
Importantly, the exit flexibility built into the contract proved just as valuable: the company’s CIO commented that having a “safety net” allowed the executive board to green-light the RISE project in the first place.
In effect, SAP showed willingness to break from the one-size-fits-all approach and accommodate a customer’s strategic needs when pressed.
This case stands as an example that even in rigid offerings like RISE, customers can negotiate cost and terms improvements that make a transformative project feasible.
“We secured a RISE deal that was not only a third cheaper but also adaptable to our future needs. It gave us confidence that we weren’t locking ourselves into a bad deal. The cost savings are huge, but the flexibility we gained is priceless,” — CIO, Pharmaceutical Company
