Preparing for SAP RISE Contract Renewal: Strategies for Future Savings

Preparing for SAP RISE Contract Renewal

Key negotiation steps for RISE with SAP (understand the offering, identify negotiable terms, align contract to goals).

SAP RISE is a subscription-based, “business transformation as a service” model for SAP S/4HANA that bundles software, cloud infrastructure, and basic services into one contract.

Instead of perpetual licenses, you pay quarterly or annual fees (OpEx) based on Full User Equivalents (FUEs) – a weighted metric aggregating user roles.

Key differences from traditional SAP licensing include:

• License model: Perpetual on-prem licenses + annual maintenance (CapEx) vs. RISE’s pure subscription (OpEx) with no software ownership.
• Contract term: Traditional SAP requires ongoing maintenance renewals (there is no contract end for usage), whereas RISE contracts are fixed-term (commonly 3–5 years) with renewal or heavy exit penalties at term end.
• Scope of services: RISE covers the S/4HANA Cloud software, hyperscaler hosting, SAP support and updates, plus often a pool of SAP Business Technology Platform (BTP) and Business Network (Ariba) credits, all under a single SLA. In contrast, on-prem models separate software, hardware, and hosting contracts.
• Usage metrics: RISE charges scale with committed FUEs, HANA database sizing, storage, and other consumption (e.g., BTP credits, transaction volume). You must understand these drivers. For example, SAP’s bundle typically has a 10–20% premium over raw cloud hosting costs.

A simple comparison table illustrates these points:

Common Renewal Pitfalls and Early Planning

Many enterprises sign a RISE contract with minimal focus on renewal, only to face surprises later. Common pitfalls include overlooking escalator clauses, neglecting usage trends, and locking in inflexible terms.

For example, not negotiating a cap on future price increases can lead to “sticker shock” at renewal when SAP has full leverage.

Similarly, committing to a high FUE count “just in case” means paying for unused seats – RISE contracts generally forbid mid-term downsizing. Hidden costs (unused BTP or Ariba credits, indirect access fees, optional modules) can inflate the bill if not assessed upfront.

To avoid these traps, future savings planning must start before signing the first contract. Negotiate key renewal and flexibility provisions at the outset. Build awareness of these risks by senior IT and procurement teams early, even at quarter-end negotiations, so that renewal term caps and notice periods are locked in.

Common renewal pitfalls include:

• No price cap: SAP could raise subscription fees dramatically after the initial term without a negotiated ceiling (e.g., tied to inflation or a fixed %).
• Over-commitment: Overestimating needed FUEs or cloud capacity inflates costs; any excess becomes dead money until renewal.
• Rigid terms: Standard RISE agreements usually lack rights to reduce users mid-term, swap services, or scale down resources. Failing to secure these flexibility clauses means no relief if business needs change.
• Inadequate notice: Accepting vague renewal timelines can force rushed renewals. A clause requiring SAP to provide renewal pricing 6–12 months in advance gives you time to plan or walk away.
• Neglecting hidden costs: Failing to model indirect-access charges or additional service needs (like integrations) can result in surprise fees. Always ask “what is not included?” and require clarity before signing.

By anticipating these issues at the start of the contract, you retain leverage and budget certainty over the full lifecycle.

Negotiating Price Escalation Caps and Cost Drivers

Effective renewal savings hinge on controlling price escalation. Industry experts recommend negotiating firm limits on price increases upfront. For instance, inserting a clause such as “renewal price increases shall not exceed X% per year” or fixing the first renewal price locks costs beyond the initial term.

In practice, clients have pushed to cap increases at inflation (CPI) or low single digits, far below SAP’s uninhibited list hikes. Secure a cap or fixed increase for the first renewal at minimum; SAP may resist an indefinite price lock, but even a one-time cap (e.g.,5–7%) is widely advised.

It’s also critical to understand what drives the subscription cost. RISE pricing has multiple components – the S/4HANA software subscription (tied to FUE count), cloud infrastructure (HANA database, CPU, storage), SAP’s managed services, and any bundled credits (BTP, Ariba).

During negotiation, break down the quote by component. Question how much of the per-FUE price is pure hosting versus SAP’s margin.

We’ve seen analyses showing that SAP’s bundle carries roughly a 10–20% premium over raw AWS/Azure costs. Use that insight to challenge high marks or to argue for a better split (e.g., host on smaller cloud sizing and reduce service scope).

Key tactics include:

• Lock in volume pricing: If you negotiated a deep discount for this FUE tier, additional users in year 2+ must be priced at the same rate, not at a reset list price. In other words, carry forward the discounts into renewal.
• Demand transparency: Ask SAP to detail how increases are calculated (CPI, list price, etc.). If the contract ties escalation to a custom index, scrutinize it. If possible, rebase pricing to simpler terms.
• Require advance notice: Include a clause that SAP must give written renewal terms well before the current term ends (e.g., 6 months). This avoids a “take-it-or-leave-it” scramble.

Example—Escalation Scenario (illustrative): Suppose the Year 1 subscription is $100k. Without caps, a 10% annual hike would make Year 4 cost ~$133k.

But with a 5% cap, Year 4 is only ~$116k. Securing a fixed renewal price (keeping it at $100k) would save $33k by Year 4. This underscores how even modest caps compound into real savings over a multi-year term.

Rightsizing Strategies Pre- and Post-Renewal

Rightsizing – aligning what you pay for with your use – is a continuous task. Before signing and before each renewal, audit your actual usage and retire or reassign unneeded licenses. For example, remove inactive or duplicate user accounts, and reclassify users into lower-cost categories if their roles allow.

One client found that eliminating dormant users trimmed its required FUEs by ~15% before finalizing the deal. Similarly, review each FUE type: if many users only need basic inquiry access, reclassify them from “Professional” to “Employee” to reduce the FUE tally.

On the infrastructure side, confirm cloud sizing against historical metrics. Do not just accept SAP’s default server sizing. Negotiate the next lower tier if your HANA database is well under CPU or memory limits.

When phasing in RISE, consider a step-in model: subscribe to a conservative base (e.g., first-cut users and capacity) and add more only when needed under an agreed-upon pricing scheme. For example, you might agree to “500 users at $X in Year 1, with an option to add up to 800 by Year 2 at the same per-user rate.” This avoids penalties for scaling up mid-term.

Throughout the subscription, implement usage monitoring (SAP’s license dashboards or third-party tools). If you discover that only 70% of users actively use the system, you can negotiate renewal to adjust commitments.

Likewise, track BTP credit and Ariba transaction usage: Unused credits represent wasted money, so negotiate to lower entitlements or roll them over. In short, set up a regimen of periodic rightsizing reviews—do it now and yearly—so you can push costs down instead of being locked into inflated baselines.

Renewal Term Options, Extension Clauses, and Leverage

The renewal process can offer strategic choices. First, choose the initial term length wisely. A 5‑year RISE deal may come with a higher up-front discount, but it ties you in longer. Conversely, a 3‑year term provides an earlier exit point and renegotiation chance (at the expense of a smaller initial discount).

Balance your organization’s appetite for commitment versus savings. Whichever term you select, negotiate renewal options. For example, try to include a one-year extension right or an early-renewal option at pre-agreed pricing.

Align your renewal timing for maximum leverage. If you have other SAP agreements (e.g., Basis support, third-party maintenance), consolidate their renewal dates. Experts note that synchronizing multiple contracts simplifies management and strengthens bargaining position. A unified renewal event commands more attention from SAP’s sales organization and may secure better overall terms.

Also, scrutinize renewal notification and expiration clauses. Require a clear, ample notice period (commonly 6–9 months) for renewal pricing disclosure. Avoid auto-renewal traps: make it explicit that if you choose not to renew, SAP must confirm end dates well ahead so rollovers don’t blindside you. The goal is to enter the renewal discussion as a free agent, not under the gun.

Exit Strategies and Competitive Alternatives

Even as you commit to RISE, plan your “plan B” if circumstances change. Begin by negotiating exit rights in the contract. For example, ensure you retain full ownership of your data: require SAP to provide a complete data export (database dump or equivalent)

if you terminate. Build in a transition assistance clause: at least 30–60 days of read-only access or technical support post-termination lets you migrate systems or extract critical information without abrupt downtime.

Address the cost of exit. Since RISE abandons any old perpetual licenses, buying new licenses is the only way to continue S/4HANA on the cloud. Estimate that cost as the “penalty” for leaving. In negotiation, you might even try to secure the right to purchase perpetual S/4HANA at renewal (or a credit toward it).

At a minimum, document internally each scenario’s licensing and infrastructure costs (renew under RISE vs. move to another model). This arms you with facts: knowing that moving on-prem would cost $X million provides leverage in discussions.

Define contractual termination triggers if possible. Standard RISE SLAs tend to offer service credits for downtime, but you can still ask for an escape hatch in case of repeated failures or legal changes. For example, propose a “termination for cause” clause if uptime falls below a threshold or new regulations force an on-premise move. SAP may resist, but the exercise highlights the risk to both sides.

Finally, keep competitive alternatives in play. Consult with procurement on other ERP/cloud options or extended third-party support ahead of renewal. Even if replacing SAP is impractical, knowing the costs of alternatives (Oracle Cloud ERP, Workday, third-party SAP support) strengthens your hand.

As one guide notes, analysts warn that moving off RISE later can incur huge expense, so use external benchmarks or proposals to push SAP for better renewal terms. Ironically, making SAP work for the renewal as if you have a credible “Plan B” can yield concessions.

Benchmarking, Scenario Modeling, and Analytics

Data is your ally in renewal talks. Gather benchmark data: third-party reports, industry surveys, and advisor insights can reveal what peers pay.

For instance, if you learn that comparable companies typically get 40–60% off list price, or routinely cap renewals at low single digits, use that as proof in negotiation.

Independent licensing experts (like Redress Compliance) often have anonymized deal data you can reference. Quoting these benchmarks signals to SAP that “you know the market rate,” preventing them from hiding behind “firm best offer” claims.

Model future scenarios to challenge the contract. Build best-case, expected, and worst-case usage projections (e.g., user headcount growth or contraction). Apply your RISE pricing model to each scenario: how much would your subscription cost if you add 20% more users? What if you divest a business unit?

This will highlight where costs could spike and inform which negotiation points to push (such as adding an adjustment window or tiered pricing). A recommended practice is to involve finance and procurement analysts early to run these projections.

On the technical side, continuous license usage analytics is now set up. Use SAP’s License Metrics tool or a third-party license management solution to monitor user activity, document (indirect) usage, and cloud resource consumption.

For example, if you detect that 30% of your professional users never log in, you can plan to relicense them as self-service users. If BTP services are underutilized, you might reduce your credit commitment at renewal.

Proactively true-up anomalies: Incorporating an annual true-up right (using SAP’s tools) can adjust your numbers gradually instead of yielding a surprise audit mismatch. This “continuous compliance” approach ensures that by renewal time, you have clean, optimized metrics to demand fair pricing.

Finally, review cloud consumption metrics: track database growth, CPU hours, and storage. Negotiate a smaller tier next term if your system runs at 60% of allocated capacity.

Monitor BTP and Business Network consumption: Any unused credit is a wasted budget—if many go unused, insist on lowering them or rolling them forward.

Before each renewal, revisit all critical clauses against the current business reality (shifts in product lines, M&A, strategy) and insist on adjustments to keep the deal relevant. You convert abstract contract terms into data-driven negotiations by benchmarking, modeling, and applying analytics.

Recommendations: CIOs and procurement leaders should start well before the first SAP RISE term ends to safeguard future savings.

Key actions include:

• Establish a renewal team immediately. Involve IT, finance, and sourcing in mapping out RISE usage today. This cross-functional team should begin at contract start and monitor progress, as analysts advise planning ahead to model scenarios and budgets.
• Conduct a usage audit today. Use SAP or third-party tools to track active users, FUE counts, and cloud resources. Clean up unused accounts and rights, and put processes in place for ongoing monitoring (alerts for sprawl, dashboards for key metrics).
• Lock in renewal protections up front. Negotiate the original agreement’s price caps, fixed renewal rates, volume protections, and extension rights. Getting these clauses at the signature is far easier than after you’re locked in.
• Plan phased capacity. Commit only to what you need in year one. Negotiate a stepped commitment (e.g., option to add licenses later at today’s rate) if possible. Preserve any flexibility for mid-term changes: at least seek a one-time true-up window or the ability to reassign seats.
• Define exit contingency. Include terms for data export, conversion rights, and termination assistance in your contract. Simultaneously, have internal budget figures for alternative paths (on-prem licenses, other vendors) so you know your break-even “walk-away” cost.
• Leverage benchmarks and experts. Reach out to independent advisors or tap industry benchmark reports to set targets. Prepare alternative scenarios (best case/worst case) and use them to justify demands in price discussions. Knowing peer deals in advance prevents overpayment.
• Stay vigilant after go-live. Track cloud spend and license usage continuously. Use the data to drive future negotiations: for example, if you discover unused headcount, request an adjustment. Also, revisit the contract well before year 3 or 5 to see if amendments are needed, given changed business needs.

By taking these steps now, you build long-term leverage and ensure your RISE investment remains cost-effective beyond the first term.