RISE with SAP Strategies and Alternatives

Rise with SAP: Strategies and Alternatives

Executive Summary:

SAP’s “RISE with SAP” program bundles S/4HANA Cloud, infrastructure, platform services, and support into a cloud subscription, promising rapid access to new features.

CIOs must weigh this bundled convenience and innovation access against higher long-term subscription costs, lock-in, and stringent contract terms.

This advisory compares RISE vs. traditional SAP licensing and third-party support, outlines alternative paths (on-prem S/4HANA, extended maintenance, or other ERP), and provides practical recommendations for negotiation and planning.

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RISE with SAP: Cloud ERP Transformation

Rise with SAP is SAP’s all-in-one cloud subscription for S/4HANA.

It shifts SAP ERP from an up-front license model to an OpEx model, packaging application software, HANA database, infrastructure (via a cloud hyperscaler), platform services (SAP BTP credits), and managed support into one contract.

SAP pitches RISE as “business-transformation-as-a-service” – a single-vendor solution with one vendor bill and included migration tools.

Key features often highlighted include fully managed cloud hosting, continual updates (no major upgrade projects), and bundled access to new innovations (e.g, advanced AI or analytics tools released first to RISE customers).

However, RISE typically requires a multi-year commitment and trades some flexibility for this convenience.

• Bundled Services: One subscription covers S/4HANA Cloud (private edition or public edition), basic support, and often one production + non-production system. Additional environments or add-ons may cost extra.
• Innovation Access: SAP reserves some of the latest features (AI, sustainability tools, industry extensions) for cloud ERP; on-premise customers often get these later or not at all.
• Customization Model: RISE enforces a “clean core” approach. Extensive custom code and deep on-premise extensions are discouraged; instead, customers use SAP BTP (cloud extensions) or rebuild processes as standard configurations.

RISE aligns with SAP’s cloud-first pivot. CIOs should confirm whether their business needs (e.g., real-time analytics, scalability) justify the shift, and whether existing customizations can be re-implemented in a cloud model.

The key trade-off is simplicity vs. control: RISE is simpler (one bill, managed services) but means ceding some control over infrastructure and innovation roadmap to SAP.

Read RISE with SAP License Costs and Enterprise Benchmarks.

Cost and Licensing: TCO and Models

RISE changes how SAP costs are calculated. Instead of a large upfront license fee + yearly 22% maintenance, you pay a fixed subscription (often per Full-User Equivalent or capacity) that includes software, hosting, and standard support.

In many cases, this lowers initial capital outlay, but spreads costs out. A rough Total Cost of Ownership (TCO) comparison highlights this shift:

(Illustrative example for a 1,000-user company. The traditional model assumes a $4M initial license + 22% annual maintenance.; RISE subscription estimated ~$2M/yr. Actual costs vary by deal.)

In this example, RISE’s 3-year cost is about 15–20% lower, thanks to no big upfront license and hardware spend.

By year 5 the gap narrows: the perpetual license’s cost is amortized and on-prem support/hardware add up, roughly equaling the RISE spend.

Key insights:

• Short-term vs Long-term: RISE can yield quick savings by converting CapEx to OpEx. But over longer terms (5–7+ years), owning the license often breaks even or is cheaper, especially if maintenance fees are managed or third-party support is used.
• Billing Structure: RISE fees are locked in for each contract term. Avoid stopping the subscription, or the rights to use S/4HANA are lost. Traditional licenses are permanent; you could theoretically pause maintenance (sacrificing upgrades) if needed.
• Licensing Metrics: RISE uses Full-User Equivalents (FUE) for S/4, a weighted mix of user types. This often simplifies contracting, but can be expensive if many idle users are licensed. By contrast, on-premise licensing is named-user plus possible engine-based metrics. Companies should carefully size users in RISE contracts.
• User License Pricing: Indicative prices (negotiable): a Professional user might be $3,000–6,000 one-time (with ~$600–1,300 support/yr) on-prem, versus about $2,400–3,000 per year in the cloud (roughly $200–$250/month). A Limited/Employee user costs $500–1,500 one-time (~$100–300/yr support) vs. $600–1,200/yr for cloud. Self-Service or indirect users are often bundled (e.g., 30 employee users = 1 FUE). These ranges illustrate the shift from CapEx to recurring charges and underscore the importance of right-sizing licenses.

Contract Terms and Risks

RISE contracts are comprehensive and can introduce hidden costs or risks if not negotiated tightly.

Key factors CIOs and procurement must watch:

• Commitment and Renewal: RISE is typically a 3–5-year subscription. This fixes spending short-term but creates renewal risk. SAP can raise renewal prices, and by then, alternatives diminish. In on-prem perpetual deals you own the license; after Year 1 you could stop maintenance (though risking no support) or find third-party support. With RISE, stopping means migrating off the platform.
• Scope of Services: Don’t assume everything is included. A standard RISE deal usually covers one production server, one sandbox, standard Basis support, and certain SAP BTP services. Extras (additional test systems, high-availability, non-SAP integrations, or hyperscaler services beyond baseline) can be extra. Clearly define service levels, responsibilities (SAP vs customer), and what constitutes “included maintenance” (for example, SAP won’t customize your business processes).
• Vendor Lock-In: RISE tightly couples you with SAP’s ecosystem (and chosen hyperscalers/SIs). Retaining any on-prem licensing rights often requires “retiring” or trading in old licenses. Ensure you negotiate license conversion credits for unused SAP products. If strategic flexibility is important, keep leverage by holding onto perpetual licenses (use them for internal use or trade-in value).
• Compliance and Audit: Even in the cloud, SAP audits. RISE contracts include audit clauses and usage metric tracking. Pay special attention to indirect access (Digital Access) rules. SAP now requires licenses for many non-SAP systems that create documents (orders, invoices, etc.) in S/4HANA. Ensure all interfaces are documented and either licensed or redesigned, or use SAP’s discounted Digital Access program to avoid surprise audit costs.
• Data and Exit: Check data ownership, relocation rights, and export formats. Understand the 90-day notice rule for leaving SAP’s support (even third-party support requires notice). Plan an exit strategy: migrating off RISE (to on-prem or another ERP) can be very expensive and disruptive, so build contingency time and budget.
• Inflation and Escalators: SAP has been increasing maintenance fees (~1–2% above inflation). In RISE deals, demand caps on annual price hikes. Negotiate any built-in escalators in the subscription or renewal caps based on CPI or contract. Locking in a longer term at a negotiated rate can hedge against future increases.

Alternatives and Support Options

Facing RISE’s commitments, some enterprises choose different paths. The main alternatives include:

• On-Premise S/4HANA (Self-Managed): Continue with your own data center or a private cloud. You’ll buy perpetual S/4HANA licenses and pay ~22% annual support. This gives maximum control: full custom code, selective upgrades, and the ability to engage multiple vendors. If you have already invested heavily in ECC/S4, this avoids rewriting processes. However, you must handle hardware, Basis staffing, and upgrades yourself. Over 5–10 years, owning licenses can be cheaper, especially if you defer non-critical upgrades or negotiate a lower support level. For example, some companies “sweat” old hardware and skip BI upgrades to lower costs.
• Third-Party Support for ECC/S4: Firms like Rimini Street, Spinnaker Support, and others offer independent maintenance at ~50% or more cost savings over SAP. They support older ECC or even S/4HANA systems beyond SAP’s end-of-life (ECC support ends 2025/2027). This delays a forced move and buys time to plan. Third-party support also often includes security patches and limited enhancements. The trade-off is losing direct SAP updates and facing possible denial of certain SAP-led innovation, but it can align with an “if it ain’t broke” strategy. Some large customers map out multi-year roadmaps where core ERP stays on-prem under third-party support, while new functions (e.g, HCM, CRM, analytics) migrate to SaaS tools (SAP or others).
• Hybrid and Private Cloud: If full RISE is too rigid, consider SAP HANA Enterprise Cloud or hosting S/4HANA on AWS/Azure yourself. You run S/4 on your chosen cloud, paying only for infrastructure on top of perpetual licenses. This way, you get some cloud benefits (scalability, managed infra) without signing the full RISE bundle. However, you’ll still manage software updates or hire a basis team. Alternatively, split the landscape: keep finance and manufacturing on-prem, but move HR/Service modules to cloud suites or RISE where it fits best.
• Switching ERP Vendors: As a last resort, some consider moving entirely off SAP. Microsoft Dynamics 365 or Oracle Cloud ERP are common alternatives. These are cloud-native and may have lower subscription costs, but involve a full re-implementation of all business processes – a massive undertaking. Niche vendors (Workday for HCM, Salesforce for CRM) can cover specific functions without touching core ERP. This option may deliver modern functionality, but should only be on the table if SAP’s roadmap no longer aligns with business needs after careful evaluation.
• License Optimization: Don’t forget internal alternatives like converting user types. For example, SAP’s “digital access” is only one model; in some cases, sticking with classic indirect-use licenses or negotiating specific interface agreements can be cheaper long-term. Audit your current usage: eliminate unused licenses (“shelfware”) to free up budget for critical needs.

Read SAP Private Cloud RISE FAQs.

Recommendations

• Conduct a multi-year TCO analysis: Build a detailed 5–7 year cost model comparing RISE subscription vs. perpetual license + maintenance + hosting + internal support. Include best-case and worst-case scenarios (e.g., minimal vs. full upgrades). Use realistic discounting and factor in potential price hikes or support reduction strategies.
• Negotiate contract terms rigorously: Set caps on annual price increases and lock currency and term for renewals. Confirm exactly what RISE covers (number of non-prod systems, landscape topology, SLA) and put any exclusions in writing. Insist on flexibility: the ability to decrease FUE count mid-term if usage falls, or to transfer subscription if you consolidate systems.
• Optimize license and usage: Audit all indirect access and digital document flow before signing. If necessary, reduce document counts (e.g., via data caching or process changes) or take advantage of SAP’s ongoing Digital Access discount program. Convert any redundant licenses to credits on the RISE deal. Plan for usage-based billing (e.g,. BTP credits) so you don’t exceed quotas unknowingly.
• Maintain exit options: Keep legacy licenses and know their trade-in value. Even if you move to RISE, do not scrap old perpetual contracts hastily; these provide leverage or an escape route. Document your integration architecture (APIs, data lakes, etc.) in case you need to decouple quickly.
• Consider a phased or hybrid approach: If possible, pilot RISE with a limited scope or for new subsidiaries only. Keep core, highly customized processes on-premise longer. This spreads risk and cost, and lets you compare actual performance.
• Evaluate support alternatives: Solicit bids from third-party maintenance providers, especially if your ECC system is stable and you don’t need aggressive innovation. Compare their service offerings and track record against SAP’s. A short-term third-party contract can bridge a gap while you plan your SAP strategy.
• Stay informed on SAP policies: SAP’s rules (e.g., digital access, mandatory upgrades, license usage) evolve quickly. Use SAP’s evaluation tools, monitor SAP user group updates, and budget for audits. In negotiations, incorporate flexibility for these potential changes (e.g., include clauses for new license models or givebacks).
• Engage cross-functional leadership: Involve finance and business stakeholders early. RISE shifts spend from CapEx to OpEx, which may affect budgeting. Ensure procurement, finance, and IT agree on the spend profile and that any credit to the balance sheet is understood.
• Leverage expert advice: Use third-party SAP licensing advisors or law firms for deal review. They can spot unusual clauses (e.g., auto-extensions, data exit fees, audit triggers) and benchmark your deal against market norms.
• Align with business strategy: Ultimately, the choice should support your company’s goals. If rapid innovation and simplification are top priorities (and the budget allows), RISE may be right. If preserving assets and maximizing return on existing investments is key, a more cautious path might be better. Let long-term agility and Total Cost of Ownership, not just SAP marketing, guide your decision.

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