Key Commercial Terms to Negotiate in SAP RISE Contracts

Key Commercial Terms to Negotiate in SAP RISE Contracts

RISE with SAP is a bundled cloud offering that shifts SAP ERP to a subscription model, combining software licensing, infrastructure, and support into one contract.

For CIOs, IT leaders, and sourcing professionals, negotiating a RISE contract is not business as usual—it’s a strategic endeavor that will determine cost, flexibility, and risk exposure for years.

This executive advisory highlights the key commercial terms you must negotiate in a RISE deal to protect your interests:

• Contract Duration and Flexibility: Multi-year commitments are standard in RISE. Leaders must balance longer terms (which may come with discounts) against the loss of flexibility. Negotiating provisions for scaling usage or adjusting terms can save millions if business conditions change.
• Renewal and Exit Options: A RISE contract shouldn’t become a trap. Ensure you have built-in renewal protections (like caps on price hikes and rights to adjust scope) and a clear exit strategy for the end of the term. Without these, organizations risk “lock-in” with skyrocketing renewal costs or data stranded in SAP’s cloud.
• Payment Terms and Invoicing Structure: The way you pay for RISE can be as important as the amount you pay. By structuring payment schedules and invoices wisely, such as aligning payments with deployment milestones and demanding transparency in billing, CIOs can improve cash flow management and avoid unwelcome surprises.
• Price Increase Caps and Indexing: SAP’s initial quote is just the beginning; what happens in years 2, 3, and beyond is critical. Negotiate strict limits on any price escalations during the contract and at renewal. Tying increases to objective indices (or eliminating them for the term) safeguards your budget from inflation and vendor-driven hikes.
• Service Level Commitments (Availability, Response Times, Penalties): Service quality is non-negotiable when ERP is in the cloud. Standard SLAs in RISE may not meet enterprise expectations. Organizations should push for stronger uptime guarantees, faster response for critical issues, and meaningful penalties or credits when service falls short.

In summary, every clause in a RISE contract matters. This advisory provides a deep dive into these negotiation areas, with real-world scenarios and actionable recommendations.

By tackling these terms proactively – and leveraging independent licensing experts (e.g., Redress Compliance) for benchmark insights – CIOs can secure a RISE agreement that delivers the promised transformation without unwelcome surprises.

Contract Duration and Flexibility

Why it Matters: RISE contracts typically span 3 to 5 years. By dangling higher upfront discounts, SAP often encourages longer terms, but a long commitment can severely limit your agility.

Your business environment may change (acquisitions, divestitures, market swings) while you’re locked into a fixed user count and service scope. Negotiating duration and flexibility ensures the contract can bend without breaking when change inevitably comes.

Key Considerations:

• Optimal Term Length: Choose a contract length that aligns with your planning horizon. A 5-year term might yield better unit pricing, but ask: Can you accurately forecast your needs that far out? Many CIOs opt for a 3-year term as a safer balance—it provides a checkpoint to renegotiate or pivot strategy sooner. If you consider 5 years, insist on mid-term review clauses or adjustment options to avoid being stuck if circumstances change.
• Mid-Term Adjustments: Standard RISE contracts are inflexible – they lock in a fixed number of Full User Equivalents (FUEs) and resources for the entire term. You can usually add users or capacity (paying more), but cannot reduce your commitment until renewal. This rigidity means overestimating usage is costly. To mitigate this, negotiate provisions for at least one mid-term adjustment window. For example, you might agree that after 18–24 months, you can recalibrate the user count downward by a certain percentage if your needs were overestimated (or if a business unit was divested). SAP will resist any clause that lowers revenue, but even a one-time capacity adjustment or the ability to reallocate unused subscriptions can provide valuable breathing room.
• Ramp-Up and Right-Sizing: If you are migrating to RISE from on-prem, you may not use the full system capacity on day one. Negotiate a ramp-up schedule in the contract – e.g., pay for 50% of users in the first six months, then 75%, reaching 100% only when you’re fully live. This way, you’re not paying full price during implementation or pilot phases. Additionally, invest time upfront in realizing your needs: avoid overcommitting on users or cloud resources. One enterprise overestimated its RISE user count by 20%, leading to a multi-million dollar waste over the term since those licenses couldn’t be dropped mid-term.
• Flexibility to Scale Up or Down: While SAP touts cloud benefits, RISE’s contractual flexibility is not automatic – you must get it in writing. If you anticipate growth, pre-negotiate unit prices for additional users or extra storage so those expansions come at the same discounted rate as initial purchases. Conversely, for potential scale-down, you might seek a clause allowing you to “pause” or defer part of the subscription if business volumes decline (even if true termination isn’t possible). Creative options include tiered pricing (pay-per-use beyond a base commitment) or swap rights – the ability to exchange part of your RISE subscription for other SAP products. For instance, if in year 2 you realize you need fewer S/4HANA users but more SAP BTP services, a swap right would let you reallocate some of your subscription value accordingly. Such flexibility clauses are not standard, but savvy negotiators have secured them to ensure the RISE contract stays aligned with evolving needs.

Recommendations – Negotiating Contract Term & Flexibility:

• Keep Terms Manageable: Avoid overlong commitments. Opt for 3-year initial terms with extension options, unless a longer term comes with outsized discounts and fits a stable business forecast.
• Negotiate Adjustment Clauses: Push for at least one opportunity to adjust volume or mix of services mid-term without penalty. For example, a one-time reduction or service swap if business conditions (like a divestiture or new strategy) reduce your need for certain SAP services.
• Plan a Phased Ramp: Structure the deal so fees ramp up with usage or project milestones. Ensure you’re not paying full price during implementation lags or partial deployments.
• Right-Size from Day 1: Conduct a thorough internal analysis of users and systems before signing. It’s better to start with a slightly smaller commitment (with the ability to purchase more later) than to overcommit and pay for unused capacity. Remember – once you sign, you pay for all those FUEs whether you use them or not, so be conservative and data-driven in your estimates.

Renewal and Exit Options

Why it Matters: The end of your initial RISE term is a make-or-break moment. SAP holds all the cards at renewal without negotiated protections – they could impose steep price increases or unfavorable terms when you’re deeply dependent on their cloud.

Moreover, data migration challenges and losing your old ERP licenses can complicate transitioning off RISE (if you choose to). Negotiating renewal and exit terms upfront gives you leverage and an escape route, ensuring you’re not handcuffed to whatever SAP dictates after your contract expires.

Renewal Protections:

By default, many RISE agreements lack detail on renewal, which is dangerous. You should hardwire renewal terms now while you have negotiating power:

• Advance Notice: Include a clause requiring SAP to give ample written notice (e.g. 6-12 months) of renewal pricing and terms. This prevents last-minute surprises and gives you time to evaluate alternatives. For example, ensure the contract says SAP must present any renewal offer 12 months before term end, to allow your team to plan and, if needed, seek other solutions or benchmark deals.
• Renewal Term Caps: Negotiate a cap on price increases at renewal (details on pricing caps are covered in the next section, but it’s so critical it bears repeating here). Without a cap, you might face “sticker shock” – companies have seen renewal quotes 20-30% higher than their initial fees when no limit was set. A common protection stipulates that renewal pricing cannot increase by more than a fixed percentage (e.g., 5%) over the expiring rates. Some aggressive negotiators even lock in renewal at the same rate as the initial term, while SAP may not always agree, you might settle on a modest uplift far lower than the open market might yield.
• Right to Adjust at Renewal: Renewal is your chance to recalibrate, so ensure the contract explicitly allows you to resize or change your solution at that point. For instance, you want the right to reduce users or swap certain cloud services at renewal without punitive fees. If your company is downsizing or has completed a major project, you shouldn’t be forced to renew the same capacity. Negotiate flexibility such as: “Customer may decrease the number of users by up to 15% at renewal without penalty or additional one-time fees.” Similarly, secure the option to add new SAP offerings under the same agreement at pre-negotiated discounts when renewing, so you can evolve the solution per your IT roadmap.

Exit Strategy (End-of-Term or Early Termination):

No one likes to plan for a breakup at the start of a relationship, but failing to do so in an SAP contract can be catastrophic. Key exit considerations include:

• Data Retrieval and Transition Assistance: Ensure the contract obligates SAP to assist in a smooth handover of your data and system configuration if you leave RISE. This should include data export in a usable format and cooperation in transitioning licenses or interfaces. Without this, you risk downtime or data loss when moving away. Specify, for example, “SAP will provide all customer data in SQL export files and necessary schema within 30 days of contract termination,” and include support hours for technical transition as part of the deal (or at least available at predefined rates).
• Post-RISE Licensing Options: One unique challenge with RISE is that you likely surrendered your previous SAP perpetual licenses in the move to cloud (they are often converted or terminated). To avoid a dead-end, negotiate an option to continue running SAP if you exit RISE. This might be a contractual right to revert to on-premise licensing or purchase a perpetual S/4HANA license at a fair price if you decide not to renew the RISE subscription. Essentially, this is an insurance policy: if RISE doesn’t work out, you can still run your business on SAP without starting from scratch. For example, include language like “Customer may elect, at the end of the term, to acquire a perpetual S/4HANA license for X% of the subscription value, allowing continued system use outside of RISE.” Even if SAP doesn’t give an explicit price, getting a right-to-convert clause is hugely valuable leverage for renewal negotiations (SAP will know you have an alternative to staying on RISE).
• Termination for Convenience or Breach: True “termination for convenience” (ending the contract early without cause) is rare in SAP contracts, but you can try to negotiate softer landing options. Perhaps you won’t get a no-penalty early out, but you could negotiate pro-rated termination fees that decline over time. For example, if you needed to exit in year 2 of a 3-year term, you pay a fee equal to X months of service – a tough pill, but better than paying for years unused. At minimum, include strong termination for breach rights: if SAP fails to meet critical obligations (like sustained SLA failures – see SLA section), you should have the right to terminate the contract early without paying the remaining term fees. Spell out what constitutes cause (e.g., repeated SLA violations, security breaches, etc.) and the remedies, including your termination rights.

Real-World Scenario – The Locked-In Customer:

Consider a global manufacturer who entered a 5-year RISE deal without explicit renewal terms. At the end of year 5, after migrating fully to SAP’s cloud, they discovered SAP’s renewal quote came with a 25% price jump and no room to reduce user count despite business contraction.

Lacking leverage or alternate licenses, the customer had little choice but to accept or face an abrupt cutoff. This situation underscores why negotiating renewal and exit clauses in advance is vital. By securing caps and alternatives early, you retain negotiating power later rather than being handcuffed by the vendor.

Recommendations – Safeguarding Renewal & Exit:

• Build in Renewal Rules: Don’t leave renewal to chance. In the initial contract, define how renewal will work (timelines, maximum price increase, flexibility to adjust volume). This gives you predictability and leverage when the time comes.
• Insist on Price Protections: Always include a cap or formula limiting any renewal price hike (e.g., “no more than CPI or 5% per year, whichever is lower”). We’ll discuss specifics next, but make this a non-negotiable in your terms.
• Secure an Exit Path: Negotiate contractual assurances for the end-of-term, such as data export, transition support, and an option to continue SAP outside of RISE (via new licenses or extended access). An exit plan does not expect failure—it ensures business continuity no matter what.
• Avoid One-Sided Lock-In: Push back on clauses that automatically renew you without review or trap you into onerous penalties. If SAP’s standard terms feel one-sided (they often are), rewrite them for balance. For example, remove any automatic renewal with unknown pricing – require mutual agreement for renewal so you can walk away if the terms aren’t acceptable.

Payment Terms and Invoicing Structure

Why it Matters: How you pay for RISE can greatly affect your project cash flow and total cost. SAP may prefer annual upfront billing for subscriptions, which can strain budgets and front-load costs before you realize value.

Additionally, a RISE contract bundles many elements; without a clear invoicing structure, you might struggle to understand what you’re paying for each component or to hold SAP accountable for deliverables.

By negotiating payment terms and invoice clarity, you gain financial control and transparency, ensuring you only pay for what you use and expect.

Payment Schedule and Terms:

• Align Payments with Value Delivery: Avoid paying too much, too soon. If SAP’s standard is annual prepayment, negotiate for quarterly or monthly payments. Many enterprises have won more frequent billing cycles, which aligns cash outlay with actual consumption. This is especially important if you’re phasing your rollout. For example, if go-live is 9 months after contract start, paying monthly ensures you’re not giving SAP a full year of fees before the system is operational. It also improves your internal cash flow management. At minimum, ensure the first payment is not due until the contract starts or the service availability date (do not pay upon signing for a service you’ll use later).
• Milestone-Based Payments: Consider tying payments to project milestones or usage thresholds. Suppose your RISE deal includes some implementation services or technical setup by SAP. In that case, you might structure some fees to be due upon completing key milestones (like development system readiness, production go-live, etc.). This creates accountability – SAP is incentivized to meet timelines, and you don’t pay for work until it’s delivered. In a cloud subscription, this is less common, but for large, complex RISE projects, it’s worth discussing a payment moratorium or discount until the system is live. Some clients negotiate a “ramp discount” in the first year (e.g., 50% fee for the first 6 months) to acknowledge the onboarding period.
• Net Payment Terms: Negotiate the standard net payment period to fit your corporate practices. SAP often asks for Net 30 days on invoices. If your company operates on Net 45 or 60 with major suppliers, ask for it here, too. While a small detail, extended payment terms can improve your working capital. Also, clarify the currency of payment to avoid exchange rate surprises if you operate globally (locking in a currency or splitting by region if needed).

Invoicing Structure and Transparency:

• Itemized Invoices: Request that SAP provide itemized invoices or a breakdown of the RISE subscription components. RISE wraps software licenses, infrastructure (cloud resources), basic support, and perhaps SAP Business Technology Platform credits into one price. Insist on visibility: for instance, the contract or order form should list the annual cost for S/4HANA software, the cost for cloud infrastructure, and any additional services (like extra environments or Disaster Recovery). You want to see this detail for two reasons: (1) it helps in future negotiations or optimizations (e.g., if infrastructure costs drop or you trim users, you can expect the appropriate portion of cost to drop), and (2) it prevents SAP from quietly overcharging one component since you can benchmark each piece. An example approach is to include an exhibit in the contract that breaks down the total fee by major category. Even if SAP won’t price them separately from you, get a rough allocation. This also helps internal chargebacks (allocating costs to business units for software vs. infrastructure usage).
• No Hidden Fees: Ensure the contract language states that all necessary components for your intended use are included in the subscription fee. Spell out what is included to avoid later disputes. This ties into scope clarity – if you need certain integrations, environments, or security features, confirm they’re part of the package or list them as $0 line items. Real-world cautionary tale: one company assumed that a data migration service was included as part of RISE’s “business transformation as a service” promise. It wasn’t – and they were later hit with a $400,000 bill from SAP for migration assistance. To prevent such shocks, list out any one-time services (like data migration, extra sandbox systems, or training) and negotiate them into the contract or at least cap their costs upfront. The invoice structure should clarify the base subscription versus any extra work.
• Tax and Indexation Clauses: Examine any clause about adjusting fees due to taxes or indexation. For instance, if the contract allows SAP to adjust fees based on inflation or exchange rates, that’s essentially a price increase (see next section on caps/indexing). Try to remove or restrict such clauses under the payment terms. You want fixed, predictable payments. If SAP insists on an index for long-term deals (e.g. “fees will increase by local CPI after year 3”), negotiate a maximum cap on that (like “CPI up to 3% max”). Also, clarify if prices include all standard fees – SAP’s cloud subscriptions typically include the infrastructure cost, but confirm you won’t be separately charged for base cloud usage under RISE.

Recommendations – Controlling Payments & Billing:

• Favor Flexible Billing: Push for quarterly or monthly billing cycles instead of large upfront payments. This minimizes risk and aligns payments with the actual ramp-up of usage.
• Tie Payments to Go-Live: If possible, negotiate reduced fees until systems are live or outcomes are achieved. Avoid paying 100% when you’re only at 50% utilization.
• Demand Transparency: Insist on a detailed breakdown of what you’re paying for. A clear invoice = clear accountability. You should be able to explain to your CFO what each dollar of the RISE fee is buying.
• Lock Down the Scope: Document all included services in the contract. If something is left ambiguous, assume it’s not included and get clarity or add it. It’s cheaper to negotiate extras upfront than to pay out-of-contract rates later.
• Plan for No Surprises: Remove any open-ended charges. For example, eliminate clauses like “fees may increase with usage” unless accompanied by specific rates or caps. You don’t want a mystery invoice because you exceeded some unspecified limit. Everything chargeable should have a rate card or cap defined in the contract.

Price Increase Caps and Indexing

Why it Matters:

Negotiating the price today is only half the battle – what about next year’s price, or the year after? SAP’s subscription deals often contain built-in escalators or leave room for significant hikes at renewal if not controlled.

In an inflationary world, an unindexed, uncapped contract can become dramatically more expensive over its life. Price protections are mission-critical in a RISE contract: they ensure cost predictability and protect your TCO (Total Cost of Ownership) from unexpected spikes.

Annual Uplifts (During the Term):

Many cloud contracts include an annual uplift percentage – for example, a 3% yearly fee increase to account for inflation or “cost of service”. Always scrutinize the RISE proposal for such terms.

SAP’s standard RISE contract might propose a yearly increase (or sometimes they keep it flat for the initial term but plan increases later). Your goal should be to eliminate or minimize any in-term price increases.

Treat your subscription like a fixed-rate loan: lock the rate for the entire term whenever possible. If SAP insists on an annual index, negotiate it down sharply or cap it.

For instance, some customers have succeeded in removing the uplift entirely for the initial 3-year term, meaning the Year 1 price per unit is the same in Year 3, which directly saves money.

If a zero-uplift isn’t attainable, push for something like “increase not to exceed 1-2% per year,” which is likely below inflation and ensures efficiency gains are effectively passed to you. Also, clarify that any additional purchases (like if you add users mid-term) are priced at the same discount percentage or unit price as in the original contract, so SAP can’t sneak in a higher rate for expansions.

Renewal Price Cap:

We touched on this in Renewal Options, but to reinforce, the renewal period is when you’re most vulnerable to a price jump. Negotiate a hard cap on the renewal price now.

A common formulation: “Any renewal will be at a price no greater than X% above the price in the final year of the initial term.” The X% could be a total cap (e.g., 5% increase at renewal) or an annualized cap if you prefer (e.g., if a 3-year term, maybe 5% per year, compounding to ~15% max – though lower is better).

Having a number in the contract is far better than leaving it blank. As noted earlier, some customers even get the contract to say the first renewal will be at the same rates (effectively freezing price for 5-6 years).

This is ideal for budgeting, though SAP may require a strong business case or trade-off for a concession (perhaps a longer initial term or a larger scope). If nothing else, expect renewal to involve good faith negotiation concerning market benchmarks, not a blank check for SAP.

Indexing to External Rates:

Another fairness strategy is to tie any allowed increase to a public index, like inflation (Consumer Price Index) or a cloud services cost index. For example, “fees may increase at renewal in line with the CPI for the prior year, up to a maximum of 3%.” This way, if inflation is low (or in a deflationary year), you might see no increase, and even if it’s high, the cap protects you beyond a point.

Be cautious: SAP might prefer a broad index or a fixed uplift. Ensure the method is clear and beneficial to you (CPI or a local inflation index is often defensible as it reflects true economic conditions rather than an arbitrary number).

Also consider currency fluctuations: If you’re signing in a currency other than your local one and the term is long, discuss a clause to revisit pricing if exchange rates swing wildly. Otherwise, you or SAP could be unfairly disadvantaged. However, the simplest path is to fix the term’s currency and price/cap to avoid surprises.

Scenario – Uncapped = Unhappy:

A financial services firm signed a RISE contract with a low year-1 price, feeling victorious – but they missed that the contract allowed SAP to “adjust pricing upon renewal to then-current list rates.”

After three years, SAP’s renewal quote effectively doubled its fees, citing increased list prices and inflation. The customer had little recourse; moving off RISE in a few months was impractical, so they had to renegotiate under duress. Baking in a simple clause limiting renewal increases could have avoided this outcome. The lesson: negotiate the future price while you have leverage today.

Recommendations – Capping and Indexing Prices:

• No Surprises, No Uncapped Clauses: Never accept open-ended language like “SAP may increase fees after the initial term” without a specific limit. Insist on writing in a number or formula.
• Aim for Fixed Pricing: Ideally, secure flat pricing for the entire initial term – no annual uplifts. If an increase is unavoidable, keep it as low as possible and tied to a justification (like official inflation rates).
• Cap the Renewal: Treat renewal as part of the original deal. Agree on the maximum percentage increase (or no increase) well in advance. This turns a potential 20-30% price shock into a predictable, manageable figure.
• Mirror Discounts on Add-Ons: Include a clause that any expansions (additional licenses, extra systems) use the same discount % as the initial purchase during the term. This prevents “price creep” if you grow your footprint.
• Monitor Index Language: Choose a fair index and a cap if indexing is used. Don’t let vague terms like “market conditions” determine your costs. Lock it to a standard index with a ceiling to maintain cost control, even if economic factors change.

Service Level Commitments (Availability, Response Times, Penalties)

Why it Matters:

Handing your ERP to SAP’s cloud means trusting them with system availability and performance. A lapse in service can halt business operations, so the Service Level Agreement (SLA) is your safety net.

However, SAP’s default SLA in RISE might not match your business’s criticality; if they fail, the remedies (penalties) may be minimal unless negotiated. For CIOs, it’s imperative to align SLA commitments with business needs and secure enforceable penalties to incentivize SAP to meet those commitments (and you’re compensated if they don’t).

Availability (Uptime Guarantees):

Understand the standard: SAP’s out-of-the-box SLA for RISE production systems is around 99.7% uptime (and about 99.5% for non-production environments). While 99.7% sounds high, it allows for over a year, roughly 26 hours of unplanned downtime annually. Many industries consider 99.9% (or higher) as the benchmark, about 8.8 hours of downtime per year, meaning SAP’s base offering is below par.

You can negotiate higher availability if your operations demand it, but note that higher SLAs may come at a higher cost (SAP might require additional redundancy or premium services). It’s a negotiation: if, say, you run a global 24/7 manufacturing operation, you might push for a 99.9% SLA on production.

At the very least, discuss the architecture or service level needed to get that, and try to include it in the deal rather than as a future add-on. Additionally, clarify the contract’s definition of uptime/downtime – does the SLA exclude scheduled maintenance? (Typically yes.) How often can SAP take planned downtime, and when? You may negotiate that major maintenance windows be aligned with your off-hours and communicated well in advance.

Response Times (Support SLAs):

An often-overlooked part of service commitments is the support response time for incidents. RISE includes SAP’s support (usually similar to SAP Enterprise Support for cloud). Ensure the contract defines how quickly SAP must respond to critical issues (Priority 1, P2, etc.). For example, a P1 (production system down) might have a 1-hour response target in standard terms – confirm if that’s the case and if it meets your needs.

Gartner reports (and many customers have noted) that while SAP provides an initial response, the time to resolution can be long because multiple internal teams might be involved. While SAP might refuse to commit to resolution times (they typically commit to response, not fix times), you can still push for commitments like “SAP will engage resources 24×7 until resolution” for certain severity issues.

Also, set expectations for less critical issues (P2, P3) response, so you have a baseline. If your operations require on-site support or rapid resolution, consider negotiating for enhanced support services (like SAP MaxAttention or a dedicated support engineer) as part of the contract, or ensure you have skilled partners to escalate issues on your behalf. Defining an escalation path is important: e.g., if a critical issue is not resolved within X hours, it should be escalated to SAP management, etc., as part of the governance.

Penalties and Remedies:

An SLA is only as good as the remedy when it’s breached. If they miss the uptime SLA, SAP’s standard approach is to grant a service credit (often a small percentage of the monthly fee for that service, depending on the downtime). These credits are nice, but often don’t truly compensate for business loss. You should negotiate for stronger penalties to drive accountability.

Options include:

• Increased Service Credits: e.g., for every 1% below the SLA target, you receive a credit of X% of the monthly fee. Try to make it meaningful – if a major outage occurs, you may get a free month of service, etc. It won’t cover your full business loss, but it at least stings the provider enough to pay attention.
• Credits for Support Misses: A flat credit or a professional service freebie could be written in if SAP fails to respond to a critical ticket within a certain time. These are harder to quantify, but you can negotiate case-by-case remedies.
• Termination Rights for Chronic Failure: This is key. If SAP consistently fails to meet SLA (say they drop below SLA for three consecutive months or any 3 months in a rolling 12-month period), you should have the right to terminate the contract early without penalty. This may sound drastic, but it is a powerful protection – even if you never invoke it, its presence in the contract will ensure SAP’s teams prioritize your system reliability. For example, include a clause: “If system availability falls below the agreed SLA for three months in any 12-month span, Customer may terminate the RISE service with 60 days’ notice and receive a pro-rata refund of prepaid fees.” This clause ensures you’re not stuck for years with subpar service.

Service Credits Example:

Imagine an e-commerce company using SAP on RISE experiences an outage during peak season, taking down online orders for 8 hours. Under a weak SLA, they might get perhaps a 5% credit on a month’s fee – a token amount nowhere near the lost revenue. They’d recoup more substantially if they had negotiated a more robust SLA credit (say, 20% credit for an outage over 4 hours in a month). More importantly, knowing the financial consequences, SAP would be highly motivated to avoid such a breach. Always align the penalty to something that matters to SAP (money, contract extension, etc., not just a polite apology in the QBR).

Additional Service Considerations:

Don’t forget to clarify performance metrics if those are critical (for instance, if you have batch jobs that must complete in X time, ensure the infrastructure sizing and responsibilities are documented). Also, discuss disaster recovery (DR) and data protection. What is SAP’s commitment to RPO/RTO (recovery point and time objectives) in a disaster? If standard RISE doesn’t cover multi-region redundancy unless you pay more, decide if you need that and negotiate it upfront. Those aspects often tie into service levels and could be important for business continuity.

Recommendations – Strengthening SLAs:

• Match SLA to Business Needs: Don’t accept a generic 99.5% if your tolerance is higher. Negotiate the uptime percentage and the maintenance windows to fit your operational requirements.
• Define Support Expectations: Ensure the contract lists response times for critical issues. Push for clarity on 24/7 support availability and escalation procedures. You should never guess how to get help in a crisis—it should be in the contract.
• Enforce with Penalties: Move beyond toothless SLAs. Attach meaningful service credits or fee reductions to any performance miss. The goal is to make SAP share the pain of downtime, aligning their interests with yours.
• Include Exit for Breach: As a safety valve, negotiate the right to walk away (or at least not pay termination fees) if SAP fails badly and repeatedly. This keeps the vendor accountable and lets you know whether the service is consistently poor.
• Continuously Monitor: Once the SLA is in place, treat it as living: Monitor SAP’s performance via their dashboards or third-party tools. Hold regular service reviews (quarterly business reviews should be included in the contract), where SAP reports on SLA adherence. This ensures issues are caught early and addressed; if credits are due, you claim them.

Summary Recommendations

Negotiating a RISE with an SAP contract is a complex price, risk, and flexibility dance. Focusing on the key commercial terms above can significantly improve the outcome.

As a final summary, here are the top recommendations for CIOs and IT sourcing professionals entering a RISE deal:

• Treat the RISE Contract as Strategic, Not Tactical: Don’t rush into SAP’s RISE offer without due diligence on each term. This is not just a license sale – it’s a long-term outsourcing of critical infrastructure and software. Involve stakeholders from IT, procurement, finance, and legal early to vet the terms and identify deal-breakers.
• Negotiate with Foresight: Anticipate where you’ll be in 3-5 years and ensure the contract can accommodate that future. Build in flexibility (scaling, swapping, adjusting) so the contract serves your evolving business, not just today’s snapshot.
• Lock Down Costs and Future Increases: Fixed pricing and capped renewals achieve cost predictability. Your CFO will thank you when you show a stable IT cost curve. Remember that any cost not negotiated upfront (such as future increases or out-of-scope fees) will certainly be higher later. Prevention is cheaper than a cure.
• Safeguard Service and Quality: Demand accountability from SAP by strengthening SLAs and remedies. If your SAP environment is mission-critical, the contract should reflect that with appropriate high-availability architecture and penalties for downtime. Don’t accept “trust us” – get performance obligations in writing.
• Avoid Vendor Lock-In Traps: Maintain leverage by securing exit options and alternatives. Whether it’s retaining rights to your data, the option to self-host later, or simply time to transition, these clauses motivate SAP to continue earning your business rather than assuming they have it in the bag.
• Leverage Independent Expertise: SAP’s sales team negotiates RISE deals daily – you likely do it once. Even the playing field by engaging independent SAP licensing experts (e.g., Redress Compliance) who know the common pitfalls and benchmark standards. They can provide valuable insight into what discounts and terms other customers are getting, which arms you with data to challenge SAP’s proposals. An independent advisor works for you (not for SAP) and can spotlight biased contract language or hidden costs that a casual review might miss.
• Document Everything: Ensure that all promises made during negotiation (be it a performance assurance, a migration service, or a price incentive) are included in the final contract. Verbal assurances or slide decks mean nothing once you’re locked in. It must be written in clear contractual terms if it’s important to you.
• Plan for Governance: Finally, set the stage for the ongoing relationship. Negotiate governance provisions like regular executive check-ins, the right to audit usage/cost, and continuous improvement commitments. A RISE contract starts a long relationship – make sure SAP is obliged to pay attention to you after the ink dries, not just before.

Following these recommendations, we’ll create a more balanced RISE contract that delivers on its transformative promise without putting your organization at undue risk. You’ll thank yourself later when your SAP environment runs smoothly, your costs are controlled, and you retain the flexibility to adapt or exit as your strategy evolves