RISE with SAP and SAP Private Cloud License Models and Costs

RISE with SAP & SAP Private Cloud Licensing in 2025: Models, Costs, and Strategies

Introduction:

SAP’s push to move customers into the cloud has brought new licensing models that can dramatically impact your ERP budget. RISE with SAP is SAP’s flagship cloud offering for SAP S/4HANA, bundling software, infrastructure, and services under one subscription.

It promises simplicity – one contract, one set of SLAs, and SAP-managed cloud operations – but the fine print can hide complexity and cost drivers that CIOs and procurement leaders must grasp.

In this comprehensive guide, we explain what RISE with SAP is, how SAP Private Cloud licensing works, what it costs, and how to optimize your SAP licensing in 2025.

We take a straight-shooting look at SAP’s pricing models, recent 2025 licensing changes, and negotiation tactics so you can make informed decisions and avoid overspending.

Introduction to RISE with SAP – What It Is and Why SAP Launched It

What is RISE with SAP? RISE with SAP is an all-in-one cloud subscription offering introduced by SAP in 2021 to accelerate customer migration to SAP S/4HANA in the cloud.

SAP calls it “business transformation as a service,” essentially a bundle of everything a company needs to move their ERP to a modern cloud platform.

RISE with SAP packages the S/4HANA enterprise software, cloud infrastructure (on SAP’s data centers or hyperscalers like AWS/Azure), and additional tools and services into a single offer.

The goal is to simplify the transition from legacy SAP ECC systems by providing a single subscription contract with SAP as the sole accountable vendor.

Why did SAP launch RISE? SAP launched RISE to address customers’ challenges in digital transformation. Many organizations were hesitant to upgrade to S/4HANA due to the complexity of licensing and migration costs.

With RISE, SAP aimed to remove barriers by bundling licenses with hosting and providing migration assistance. It shifts ERP spending from large upfront capital expenditure (buying perpetual licenses and hardware) to an operating expense (an annual subscription).

RISE was also a strategic response to market pressure: cloud-based competitors and customer demands for more flexible, outcome-based pricing.

In short, SAP introduced RISE to speed up cloud adoption, ensure recurring subscription revenue, and keep customers on SAP’s platform by making the transition “at your speed and terms” under SAP’s guidance.

Overview of SAP Private Cloud (S/4HANA Cloud, Private Edition)

SAP Private Cloud refers to running SAP S/4HANA in a single-tenant cloud environment dedicated to one customer. In SAP’s cloud portfolio, the private cloud option (officially “SAP S/4HANA Cloud, private edition”) is the counterpart to SAP’s multi-tenant public cloud (the “public edition”).

Both are delivered as a service, but the private edition gives you your isolated instance – akin to your traditional on-premise system, but hosted by SAP or its cloud partners.

This means you can customize and configure S/4HANA extensively and control the timing of upgrades, unlike the public SaaS version, which is standardized and updated on SAP’s schedule.

SAP’s private cloud suits enterprises that want cloud benefits (outsourced infrastructure, subscription pricing, rapid scalability) without compromising the flexibility of a dedicated SAP system.

It is a core component of RISE with SAP for larger or more complex customers.

Under RISE, SAP’s private cloud offering provides the hosting (in SAP’s cloud or a chosen hyperscaler) and technical managed services, all governed by SAP.

This cloud-first, single-tenant model is how SAP is moving its vast ERP customer base forward: existing SAP ECC customers can convert to S/4HANA in a private cloud, retaining customization and integration capabilities. At the same time, SAP handles the infrastructure and basic operations.

In summary, SAP’s private cloud is a middle path in the cloud portfolio – offering more control than the public SaaS version, yet offloading the data center burden to SAP.

SAP Private Cloud License Models Explained

SAP’s licensing has shifted away from the old perpetual licenses toward subscription-based models.

In a private cloud (RISE with SAP) scenario, you no longer buy SAP software licenses outright. Instead, you subscribe to the software for a term (typically 3 to 5 years).

There are a few key licensing model concepts to understand:

• Subscription Model: RISE with SAP utilizes a subscription model, where you pay an annual fee for the right to use SAP S/4HANA and its included services. You don’t own the license – if you stop subscribing, your rights to use the software end. This represents a shift from traditional SAP licensing, where users would purchase perpetual licenses and pay annual maintenance fees. Now, it’s a cloud subscription that covers both software and infrastructure.
• Term Licensing: RISE contracts are usually multi-year commitments. You might sign a 3-year or 5-year agreement for a certain level of usage. In practice, this is a term license – you’re locking in that subscription for the term. Longer terms often yield better pricing per year (as SAP rewards the commitment), but they also lock you in for that duration.
• User-Based Metrics (FUEs): Licensing in SAP’s cloud is measured by Full User Equivalents (FUEs). Rather than purchasing individual named-user licenses, you subscribe to a total user capacity. Different types of users (e.g., Professional vs. Casual users) count differently toward that capacity. For example, a heavy “Professional” user might count as 1.0 FUE, whereas lighter “Productivity” users might count as 0.1 FUE each – it takes 10 of them to equal 1 FUE. This FUE model enables SAP to bundle all necessary software functionality into a single metric. You simply contract for a certain number of FUEs, and that covers your access to S/4HANA and related components for that many users (in aggregate). Understanding the FUE composition is important because it influences cost and how you allocate user types.
• Custom Enterprise Agreements: Large enterprises often negotiate custom agreements that bundle multiple SAP products (cloud and on-premises) into a single deal. For example, a global company might sign an enterprise agreement covering RISE with SAP S/4HANA Private Cloud, along with SuccessFactors, Ariba, or other SAP cloud services. These custom contracts can have bespoke terms, but they will still be based on a subscription model rather than perpetual licenses. SAP may offer such agreements to strategic customers, allowing some flexibility in how credits are allocated across services or providing enterprise-wide usage rights. If you are a very large SAP customer, you might have leverage to structure a more tailored licensing deal – but the core principle remains subscription over ownership.

How does SAP Private Cloud licensing work?

In practical terms, SAP Private Cloud licensing works by you committing to an annual subscription fee for a certain number of FUEs (user capacity). SAP provides the S/4HANA software rights, the HANA database, and the infrastructure as part of that subscription.

You can add users as needed up to your FUE count, but you cannot drop below the contracted count during the term.

If you need more, you purchase additional FUEs (often at pre-negotiated rates). If you have fewer users than expected, you’re still paying for the committed amount – so careful sizing is critical.

There is no traditional “named user license” to manage; the cloud subscription entitles your organization to create user accounts until your usage hits the FUE limit.

This model simplifies license management in some ways, but places the onus on you to right-size the contract to avoid paying for unused capacity or, conversely, running out of capacity and incurring additional charges.

What’s Included in RISE with SAP (Private Cloud Edition)

One of the key selling points of RISE with SAP is that it bundles a range of components and services into a single package.

Here’s what’s typically included in a RISE with SAP subscription for the Private Cloud edition:

• SAP S/4HANA Software: The core ERP software (SAP S/4HANA) is included as a service. You get rights to use SAP’s flagship ERP modules (finance, logistics, etc.) as needed, rather than licensing each module separately. The subscription also includes the underlying SAP HANA database license required to run S/4HANA.
• Cloud Infrastructure & Hosting: The subscription covers the cloud infrastructure and basic technical management. Whether your system runs in an SAP data center or on a public cloud (AWS, Azure, Google) arranged by SAP, those costs are built in. SAP (or its partner) handles system provisioning, backups, patching, and standard maintenance tasks behind the scenes. This means you don’t have to separately pay for servers or a third-party hosting provider – it’s all in the bundle.
• SAP Basis Support & SLAs: RISE includes standard support and service-level agreements. SAP serves as the primary support contact for the environment. Typical inclusions are a guaranteed uptime (for example, 99.7% or higher, depending on your tier) and disaster recovery provisions. Software updates for S/4HANA are included as well, ensuring you have access to new releases (you schedule them in a private cloud, giving you flexibility on timing).
• SAP Business Technology Platform (BTP) Credits: Most RISE with SAP contracts include a chunk of SAP BTP usage credits. SAP BTP is the platform for building extensions, integrations, or analytics apps. The bundle might include, for example, a certain dollar value of BTP credits per year to use for cloud services such as integration flows or Fiori app development. This is a starter amount – enough for initial projects. If you consume beyond that, you would pay per use or need to purchase extra BTP capacity.
• SAP Business Network Starter Pack: SAP often bundles limited access to its Business Network portals. For example, you may get a set number of Ariba Network documents or transactions included (e.g., a few thousand supplier invoices or purchase order transactions on Ariba). This is intended to kick-start your use of SAP’s procurement, logistics, or supply chain networks. As with BTP, if you exceed the included transactions, you’ll have to buy additional throughput.
• Process Discovery and Tools: RISE with SAP typically includes various tools to support your business process transformation. SAP acquired Signavio (process mining software) and often provides a business process analysis/report as part of RISE. You may receive a one-time process discovery workshop or access to Signavio tools to analyze your current processes and benchmark them against best practices. These tools help identify where you can improve processes when moving to S/4HANA. While often included initially, extended use of these tools (beyond basic reports) could require additional licenses later.
• Technical Migration Support: As part of the RISE program, SAP offers technical services to support your migration to the cloud. This can include automated tools to scan custom code for compatibility, guidance on data migration, and services to facilitate a smooth transition from your old system. Note that full implementation services (consultants configuring S/4HANA for your business) are not included – you’ll likely need a system integrator for the heavy lifting. However, RISE may bundle certain migration evaluations and assistance, such as readiness checks, to facilitate a smoother technical transition.

In summary, RISE with SAP (private edition) is fairly comprehensive, as it bundles together software, infrastructure, basic support, and some value-added tools.

This “one hand to shake” approach means you don’t have to separately contract for cloud hosting or software licenses – SAP handles it all.

However, it’s important to know where the bundle stops: project implementation, extensive training, advanced add-ons, and ongoing application support are outside the RISE subscription and need a separate budget (more on these costs later).

RISE with SAP Pricing Overview

How is RISE with SAP priced?

The cost of a RISE with SAP private cloud subscription is primarily based on two factors: the number of users (FUEs) and the service tier.

SAP will calculate an annual price for your contract based on the number of FUEs you need to license and the level of service and resources your system requires.

Here’s an overview of key pricing factors and how they affect the cost:

• User Volume (FUE count): The more users you have, the higher your total subscription fee; however, SAP applies volume discounts at specific breakpoints. For example, the per-user cost for 50 users will be much higher than the per-user cost for 5000 users. As your FUE count grows, the unit price per user tends to drop in tiers. Enterprises should leverage this in negotiations; if you are near a tier threshold, bumping up your user count slightly could significantly lower the per-user rate.
• Edition and Service Level: The private edition of S/4HANA Cloud costs more per user than the public (multi-tenant) edition. You pay a premium for having a dedicated system and greater control. Additionally, within a private cloud, SAP may offer different service levels or packages (for instance, standard vs. premium offerings). Higher SLA guarantees, dedicated hardware resources, or advanced features (like high availability setups) will increase the cost. Recently, SAP has restructured its packages (rebranding RISE tiers into a new “Cloud ERP, private edition” model). Still, the principle remains the same: more robust service or additional bundled capabilities come at a higher price.
• Contract Duration: The length of your subscription term impacts pricing. A longer commitment often results in a lower annual price. For instance, a 5-year contract might come with an additional discount compared to a 3-year term, as SAP locks in your business for a longer period. Be cautious: while a longer term saves money per year, it also limits flexibility if your needs change. Ensure the discount justifies the commitment and consider negotiation of exit clauses or mid-term adjustments if possible.
• Add-Ons and Extra Usage: Your base RISE subscription includes a certain quantity of resources (such as a specified number of systems, storage, BTP credits, and transactions). If you require add-ons beyond the standard bundle, those will add to the cost. Common examples:
  • Additional environments (e.g., an extra sandbox system or additional test systems beyond the default DEV/QAS/PRD).
  • More storage or higher performance infrastructure if your database size or workload is above normal thresholds.
  • Extra SAP products or cloud services not in the base package (for example, adding SAP Analytics Cloud, or extra SAP SuccessFactors modules integrated with S/4).
  • Exceeding included quotas (using more BTP credits than provided, or more Ariba documents, etc.). Excess consumption is usually charged per use or requires an upgraded subscription level.
• Example Pricing Range: Although SAP doesn’t publish official price lists for RISE, rough industry benchmarks are available. In private conversations, customers have cited figures ranging from several hundred to a thousand dollars per user per month for private cloud subscriptions, depending on volumes. For example, a deal for ~1,000 users of the S/4HANA private edition might be valued at around $1.5 – $2 million per year (after discounts). That same user count on the public cloud edition could be maybe 15–20% cheaper due to the shared environment. These numbers are highly variable, but the key takeaway is that RISE is a significant investment – and also highly negotiable. List prices might be steep, but SAP will often provide discounts, especially if you’re a competitive win or migrating a large existing ECC footprint.
• Negotiation and Discounts: Almost everything in a RISE deal is negotiable: the per-FUE rate, volume discount tiers, and even credits for your existing licenses. SAP licensing 2025 is a buyer’s market if you have leverage – SAP wants cloud commitments. Customers moving from on-premises ERP can often negotiate conversion credits, where some of the value of their unused on-premises licenses or the maintenance fees they’ve been paying is applied as a discount against the new subscription. Be sure to ask about these incentives. Additionally, consider price protections such as caps on annual price increases for renewals and clarity on how adding users later will be priced (lock in those rates upfront).

In summary, RISE with SAP pricing is a complex mix of user counts, service choices, and negotiations.

Always model your total cost over the full term (5+ years) – sometimes the year-1 cost seems attractive, but over 5 years the subscription can sum to more than what your old on-prem system might have cost.

Ensure the extra value (in terms of agility, innovation, and included services) is worth it, and negotiate aggressively to optimize the deal.

SAP Private Cloud Cost Components (What You Pay For)

When budgeting for an SAP S/4HANA Private Cloud (RISE) project, it’s critical to understand all the cost components. Some are included in the subscription fee, while others are not.

Let’s break down the major cost elements:

1. Subscription Fee (Bundled Costs):

This is the annual RISE with SAP fee, which typically includes:

• Software licensing: Rights to use S/4HANA (and possibly related SAP software like SAP HANA DB, and limited use of SAP BTP and other included tools).
• Infrastructure & basic operations: The cloud hardware, data center, and SAP’s basic support services to keep the system running (monitoring, patches, backups).
• Standard support: Access to SAP support for issue resolution and the standard SLA commitments.

This subscription fee is the headline number you negotiate with SAP. It’s usually charged annually (or quarterly) and is the core recurring cost.

2. Implementation and Migration Costs (External to Subscription):

The process of actually deploying S/4HANA in the cloud and migrating from your old system is a significant cost that RISE doesn’t cover.

You will likely hire a system integrator or use internal project teams to handle:

• Data migration from legacy systems to S/4HANA.
• Configuration and customization of S/4HANA to meet your business requirements.
• Testing, change management, and training users on the new system.
  These costs often rival the subscription fee in the first year, depending on the scope of the project. They are typically one-time (project-based) costs, but they need budget allocation. SAP may provide some technical guidance or automated tools as part of RISE, but you should plan for a comprehensive implementation project beyond what SAP includes.

3. Integration and Additional Software:

Many companies run a constellation of systems around their core ERP. When moving to SAP private cloud, consider:

• Integrations: If you need to connect S/4HANA with other systems (third-party apps, on-premises systems, etc.), you may require middleware (such as SAP Integration Suite on BTP or other iPaaS solutions). The licensing or usage fees for those integration tools are extra.
• Additional SAP cloud products: RISE might only cover S/4HANA. If your landscape utilizes other SAP cloud solutions (such as SuccessFactors for HR, Ariba for procurement, and Concur for travel), these have their own subscriptions. They don’t automatically become cheaper because you have RISE; they remain separate contracts (unless you negotiated a broader bundle). Similarly, advanced analytics (SAP Analytics Cloud) or planning tools (SAP IBP) would be separate subscriptions if required.
• Third-party add-ons: Any third-party software (such as tax engines and reporting tools) will require separate licenses as well. Budget for those if you plan to integrate them into your SAP environment.

4. Ongoing Support and Management:

While SAP covers the technical infrastructure support, you may still need functional support for your users and maintenance of configurations:

• You may maintain an internal IT support team for SAP or hire an Application Management Services (AMS) partner to provide ongoing help desk support, minor enhancements, and user management after go-live.
• If your internal team handled these duties on-prem, the need remains in the cloud – the cloud subscription doesn’t include a team to, say, manage your finance closing process or master data daily. Allocate budget for either internal resources or a support contract.

5. Future Growth or Upgrades:

Consider potential growth:

• If your user count grows, you’ll pay more (either via a true-up at contract renewal or by amending the contract to add FUEs). It’s wise to have some contingency budget if you foresee growth.
• If you acquire another company or expand, you might need to incorporate additional users or possibly additional SAP modules – plan how that would be handled in your contract and budget.
• On the other hand, if you divest or downsize, remember that you cannot reduce your subscription costs until the next renewal, so there’s no direct cost savings if usage drops mid-term.

6. Overages and OPEX Surprises:

Cloud models sometimes lead to unexpected costs if not monitored:

• Digital Access (Indirect Use): If external systems or bots access your SAP system (creating or querying data), SAP may require a Digital Access license (often measured by documents like sales orders, invoices generated by non-SAP applications). This is not automatically covered by RISE unless explicitly included. Failing to account for it can result in an additional bill.
• Excess consumption: As mentioned, exceeding included BTP credits or transaction counts will incur charges. For instance, if you blow past the included Ariba documents, you’ll need to purchase additional document packs.
• Upgrades in requirements: Perhaps two years in, you realize you need a higher SLA or additional sandbox systems – adding those features will raise the subscription cost.

In short, the total cost of ownership for SAP private cloud is comprised of the following components: Subscription Fee, Implementation Project, Integration/Extra Software, Ongoing Support, and Contingency for growth/overage. Be wary of focusing only on the subscription price.

Many a CIO has been caught off guard by assuming “RISE covers everything,” only to find significant costs in consulting, add-ons, or post-go-live support.

By planning for each component, you can build a realistic budget and also negotiate with SAP with the full picture in mind.

SAP Licensing Changes in 2025 – What’s New and What It Means

SAP’s cloud licensing landscape is not static. In 2025, notable changes to RISE with SAP and related cloud license models will occur, which customers need to understand.

These changes reflect SAP’s evolving strategy and can impact your costs and contract approach:

• RISE Rebranded to “Cloud ERP” Packages: In early 2025, SAP phased out the specific “RISE with SAP” package branding (like RISE with SAP S/4HANA Cloud, private edition – Base, Premium, etc.) and introduced a new packaging called SAP Cloud ERP, private edition. Essentially, SAP retired the old RISE tiered packages (there used to be RISE Base, RISE Premium, and a Premium Plus offering with extra features). Now, there’s a consolidated private cloud offering, sometimes referred to simply as Cloud ERP Private. This is more than a name change – SAP reconfigured what’s included in the base package versus what’s an add-on.
• Unbundling of Previously Included Features: Under the new 2025 Cloud ERP packaging, certain capabilities that were previously bundled in higher RISE tiers have been removed from the base and are now sold separately. For example, advanced AI and automation features (such as SAP’s AI assistant, “Joule,” or certain machine learning services) that were previously included in a Premium Plus package are now available as add-ons. Similarly, SAP Datasphere (a data management/warehouse cloud service) and certain sustainability or advanced analytics tools that were once in the all-in package may no longer be included by default. The result is that customers now need to pick and choose (and pay extra) for these components if they want them, whereas previously they might have received some as part of a bundle.
• Changes to FUE Pricing Tiers: SAP adjusted its volume-based pricing tiers for cloud subscriptions. According to user group reports and analysts, some user-count bands now have higher list prices per FUE than they did under the old RISE pricing. In practice, this could mean that if you were originally quoted $X per user at your volume, the “same” deal in 2025 might come out higher unless you negotiate larger discounts. SAP essentially tweaked the knobs of the FUE model – for instance, they might have increased the FUE cost for mid-sized deployments while perhaps simplifying the categories of users. Additionally, user classification changes were made: some user roles that previously counted as cheaper (low-tier) users now might require a higher-tier (more expensive) user license. This is a subtle change that can increase costs for the same mix of users, effectively resulting in a price increase unless managed.
• Discontinuation of RISE Premium Plus: SAP’s highest-tier package (often referred to as Premium Plus), which included enhanced capabilities such as extensive AI, “green ledger” sustainability tracking, and supplier portals, was discontinued. Those elements are now modular. For example, if you want the advanced sustainability (Green Ledger) functionality or certain supplier network extras, you add them separately. This modular approach can be good (you don’t pay for what you don’t use) but also means extra line items in your contract (each potentially with its own cost) for things that were once one line item. Customers evaluating RISE now must build a more detailed bill of materials, including these extras, which complicates the cost comparison with older RISE quotes.
• Rise in AI and Automation Costs: As SAP integrates AI features (such as intelligent forecasting and RPA bots) into its cloud products, it’s looking to monetize them. Initially, SAP tempted customers by bundling some AI usage in the subscription and only charging for excess use. In 2025, SAP pivoted to charging separately for AI services more clearly. For instance, any significant use of AI/ML algorithms or digital assistants in SAP may require purchasing “AI units” or a specific add-on license. The takeaway: the base subscription might not include future innovative features – those could come at an additional cost, so plan accordingly if AI is on your roadmap.
• Pressure to Move Off ECC by 2027: A policy shift that indirectly affects licensing is SAP’s firm end-of-mainstream-support date of 2027 for SAP ECC (Business Suite 7). SAP’s leadership has been adamant: no further extensions beyond 2027 (except costly extended maintenance to 2030). In 2025, this deadline looms larger, and SAP introduced some “bridge” options. For example, an offering in 2025 allows customers who commit to RISE but can’t fully migrate by 2027 to get support extensions via a subscription (essentially paying an extra fee to run ECC a bit longer while in transition). This underscores that SAP is using carrots (RISE incentives) and sticks (end of support and higher maintenance fees for legacy systems) to encourage cloud adoption. Licensing for on-premise is getting less favorable (maintenance cost increases, no innovations) while all new investment is in cloud offerings. By 2025, SAP also stopped enhancing the perpetual licensing model – in fact, new customers are generally funneled into cloud subscriptions rather than sold older perpetual licenses for S/4HANA.

Impact on Customers:

The 2025 changes mean that if you evaluated RISE with SAP even a year ago, you should re-evaluate your contract under the new terms. The structure of what’s included and how it’s priced may have shifted.

You’ll need to:

• Review which components you need and see if they’re included or now extra.
• Push for appropriate discounts to offset any list price increases or lost bundles.
• Be extra diligent in building your business case – ensure the quote covers all necessary pieces (some might be buried as add-ons now).
• Keep an eye on user license classification – if SAP changes some user definitions, ensure your FUE count calculation is updated so you’re not surprised by needing more FUEs.

In essence, SAP’s licensing in 2025 is more cloud-centric and continues to evolve.

The trend is clear: more modular pricing, emphasis on subscriptions, and subtle shifts that often favor SAP’s revenue.

CIOs and procurement must stay alert to these changes to avoid getting locked into an unexpectedly high-cost arrangement.

It’s wise to involve SAP licensing experts or utilize benchmarking data from Q1 2025 deals to assess how the changes may impact you.

Cost Optimization Strategies for SAP Private Cloud

Moving to a cloud subscription model doesn’t automatically save money – you have to be proactive to optimize costs.

Here are key strategies to reduce SAP Private Cloud costs and get the most value from your RISE with SAP investment:

• Right-Size Your User Licenses: Before signing a contract, conduct a thorough audit of your current SAP usage to ensure optimal license allocation. Identify the number of users who are truly active and determine the level of access they require. Eliminate or reassign any idle accounts. In the FUE model, this ensures you’re not overestimating the number of FUEs. Rightsizing can save millions by avoiding the cost of users you don’t need. Remember, once you commit to several FUEs, you’ll pay for them for the entire term – so start lean. You can always purchase a bit more capacity later if needed (preferably at a pre-negotiated rate).
• Negotiate Volume Discounts and Tier Breaks: SAP’s initial quote might not reflect all potential discounts. Treat it as a starting point. Leverage any volume you have – if you’re a large customer with many users or multiple SAP products, use that to push for better per-user pricing. Ask SAP for pricing benchmarks and challenge them if your price per FUE seems higher than industry norms. If increasing your user count marginally moves you into a better discount tier, consider making the change. Additionally, longer terms (5+ years) can often yield higher discounts, so consider this option if it aligns with your strategy (but be cautious about potential lock-in).
• Explore Incentive Programs: SAP frequently runs incentive programs to encourage cloud moves – especially as 2027 approaches. These can include credits for unused maintenance, trade-in programs for your existing licenses, or extra discounts if you sign by a certain quarter (SAP’s sales targets can be your friend). Don’t shy away from asking: “What promotional programs or incentives can we qualify for?” For instance, SAP might offer to waive certain fees, provide free additional BTP credits, or give a one-time discount if you commit to RISE this year versus next. These incentives can significantly offset costs.
• Negotiate Flexibility Clauses: One downside of subscription contracts is their rigidity, but savvy negotiators can incorporate some flexibility. Try to include clauses that allow for adjustments, such as the right to reduce user counts by a small percentage at renewal without penalty, or the ability to swap certain cloud services if your needs change (for example, exchanging unused BTP credits for another service value). At a minimum, negotiate a transparent process for adding capacity at the same discount rate as initial, so if you need 100 more users in year 2, you pay the same per-user rate, not a higher ad-hoc price. Also seek to cap price increases on renewal (e.g., “no more than X% increase on the subscription fee if we renew for an equivalent term”).
• Plan for Extra Needs Upfront: If you already know you will require more of something than the standard bundle, it’s often cheaper to negotiate it now rather than later. For example, if your business will heavily utilize SAP BTP for custom development, consider negotiating a larger block of BTP credits at a discount in the initial deal. If you foresee the need for additional test systems or a larger database size, bring that into the discussion. It’s better to bake those into the contract (potentially at a bundle discount) than to pay piecemeal later. This prevents the scenario of unexpected mid-term surprises.
• Monitor and Optimize Continuously: Cost optimization doesn’t end at signing. Once live, establish governance to track your usage versus entitlement. Monitor user count growth, inactive accounts, and utilization of included resources. Suppose you find you’re under-using some allotment. In that case, you might adjust processes to make use of what you’re paying for (for instance, leverage all your included BTP credits for valuable projects instead of letting them lapse). Conversely, if you’re trending toward overage (say your document transactions are higher than anticipated), you can engage SAP early to discuss adding capacity at a reasonable rate rather than paying steep overage fees. Regularly reviewing usage can also strengthen your hand at renewal – you’ll have data to argue for adjustments or prove your value as a customer.
• Avoid Over-licensing & Shelfware: The ease of a single bundled contract can lead to purchasing more than you need. Be wary of SAP sales proposals that bundle in extra software “for free” that you won’t deploy – nothing is truly free, it usually raises the FUE count or cost baseline. Only include products and services in your subscription that align with a clear plan or requirement. It’s okay to start with fewer modules or smaller user counts and grow later; SAP will always be willing to upsell mid-term. What’s harder is paying for shelfware (unused capabilities) because it sounded good during negotiations. Stay focused on your business case.
• Engage Experts or Benchmarking Services: If your organization lacks deep SAP licensing expertise, consider hiring a third-party advisor or utilizing tools to benchmark your deal. SAP licensing and RISE contracts can be full of nuances – an expert can spot hidden costs or overly restrictive terms. They can also share what discounts and terms similar companies have achieved, which bolsters your position in negotiations. While there’s a cost to consultants, the savings on a large SAP contract often justify it. The goal is to ensure you’ve left no money on the table and that your contract protects you from nasty surprises (like audit clauses or indirect usage traps).

By following these strategies, you can significantly reduce the total cost of owning a SAP Private Cloud. The key is diligence – do the homework on usage, push SAP for the best deal, and continually optimize.

Risks and Pitfalls to Avoid in SAP Private Cloud Deals

Adopting RISE with SAP and the private cloud model can bring numerous benefits, but organizations should also be aware of the associated risks and common pitfalls.

Here are some major ones to avoid:

• Vendor Lock-In Without an Exit Plan: When you go all-in with SAP’s cloud, you are entrusting a critical system to SAP’s managed environment. It’s effectively a form of lock-in – moving out (to another provider or back on-prem) later would be complicated. To avoid regret, ensure your contract has clear exit provisions. For example, what happens if you don’t renew at the end of the term? You should have the right to retrieve your data and sufficient time/support to transition somewhere else. Not planning the exit could leave you with few options and high costs if you ever decide to leave RISE.
• Overcommitting on Users/Resources: A very common pitfall is overestimating your needs and signing a contract that is too large. Since you generally cannot reduce your subscription during the term, overcommitting means you pay for capacity you don’t use. Some companies sign up for, say, 10,000 users expecting growth that never comes – and end up significantly overpaying. Avoid this by right-sizing (as discussed) and perhaps starting a bit conservative. You can usually increase if needed, but you’re stuck with overestimates. Similarly, don’t let SAP bundle in extra components “just in case” unless you’re sure you’ll use them.
• Underestimating Implementation Effort and Cost: As mentioned, RISE doesn’t magically make the implementation easy. Some organizations underestimate the complexity of migrating to S/4HANA. They might assume that because SAP is handling infrastructure, the rest is straightforward – then timelines slip and costs balloon. Pitfall: not allocating enough budget or time for data cleansing, process redesign, testing, and training. The migration is a major business transformation effort. Underestimating it can lead to project overruns or, worse, business disruption. Make sure your business and IT teams (or partners) have a solid, realistic plan for the migration phase.
• Assuming “All Inclusive” and Ignoring Exclusions: SAP markets RISE as “all-in-one,” but be very clear on what’s not included. For example, indirect access (Digital Access) licensing for third-party applications is a gray area – it is often not included by default. If your e-commerce site generates sales orders in SAP, those may require separate document licenses. If you assume everything is covered and don’t address it, an audit could reveal a compliance gap. Likewise, routine tasks such as daily user administration or custom development are not covered by SAP – you need your personnel or partners. Always read the RISE contract and service descriptions carefully to know the boundaries.
• True-Up and Overage Surprises: Many fall into the trap of not monitoring usage and then facing a “true-up” at renewal. True-up is when you’ve exceeded your contracted FUEs or usage and must reconcile (usually paying for the excess, sometimes at a premium rate). If you don’t keep track, you might get hit with an unexpected bill or face a tough negotiation where SAP knows you are using more than you purchased (weakening your position). Similarly, consumption-based elements (such as BTP) can incur unnoticed costs. Avoid this by implementing internal controls and alerts for license usage, and by negotiating upfront how extra usage will be charged.
• Automatic Renewals with Price Hikes: Some cloud contracts include auto-renewal clauses where, if you don’t cancel or renegotiate by a certain notice period, the contract extends, potentially with a price increase. If you’re not careful, you could miss the window to renegotiate and be stuck with a higher price or unwanted terms. Always diarize renewal dates well in advance, avoid auto-renewal if possible, or at least ensure the renewal cap on price is reasonable (e.g., no more than CPI or a single-digit percentage increase).
• Poor Performance or SLA Mismatch: Not exactly a licensing issue, but a pitfall nonetheless: assume the standard SLA is fine without checking your business needs. If your manufacturing plants run 24/7 on SAP, is the offered 99.7% uptime sufficient for your needs? Do you need disaster recovery in a different region, and is that included or an additional cost? Some customers opt for the base package to save money, but then find it doesn’t meet their performance or availability needs – upgrading later can be more expensive. Ensure that the service levels and infrastructure sizing in the contract align with your requirements for peak loads, backup restore times, and other critical factors to avoid potential issues in production.
• Neglecting Data Ownership and Compliance: When SAP hosts your data, ensure the contract clearly defines data ownership (it should remain yours) and outlines compliance responsibilities. If you’re in a regulated industry, you might need specific provisions for data handling. A pitfall would be assuming SAP handles all compliance – in reality, you still own your data and must ensure the cloud setup meets your security and privacy standards. Lack of clarity here could cause trouble in audits or legal situations down the line.

Being aware of these pitfalls is half the battle. With careful planning, clear contract terms, and active management, you can effectively mitigate the risks associated with a cloud subscription model and enjoy its benefits without any unpleasant surprises.

Negotiating Your SAP Private Cloud Contract

Negotiation is where you can turn an average deal into a great deal. Given SAP’s sales targets for cloud, customers have leverage – but you need the right approach.

Here are tactics for negotiating your SAP Private Cloud (RISE) contract to get better terms and lower costs:

• Do Your Homework (Benchmarking): Before engaging in negotiations, gather relevant data. What are similar companies paying per user for RISE or SAP private cloud? Use any available benchmarks (analyst reports, user groups, consultants). This gives you a realistic target and signals to SAP that you’re an informed buyer. If SAP quotes $800 per user/month and you know others got $400, you can confidently push back. Also, be aware of your current costs (license maintenance, infrastructure, and support) to determine what a viable cloud cost looks like for you.
• Create Competition or Alternatives: Even if you intend to go with SAP, it helps to appear as though you have alternatives. For example, consider hosting your SAP on a hyperscaler with a third-party provider if you have kept perpetual licenses (a different model), or staying on ECC with third-party support for a couple more years. If SAP senses that you might delay moving or consider a different approach, they’ll be more inclined to offer a compelling discount to secure your commitment now. Leverage the fact that SAP wants cloud conversions; a hint that your board isn’t fully convinced or that another vendor’s ERP is being considered can sharpen their pencil.
• Leverage Existing Investments: If you have already spent millions on SAP licenses and maintenance over the years, bring that into the conversation. SAP often offers programs that allow you to credit a portion of your existing license investment toward the RISE subscription. Make it clear you expect recognition of that value. For instance, if you have unused SAP ERP user licenses, negotiate how those will be treated – maybe SAP can take them back or “park” them during the subscription with an option to revert if needed (even if you never will, it’s a chip). At a minimum, ensure that maintenance fees stop once you transition to RISE (they should, as you won’t be using the on-premises licenses).
• Focus on the Total Package (and Total Price): Don’t get bogged down haggling line by line – look at the entire package cost over the term. You might trade off a bit: perhaps accept a slightly higher FUE price if SAP includes some extra BTP credits or an additional test system at no charge, which would cost a lot separately. Aim to maximize what’s included for the money. If something is important to you (e.g., a second sandbox environment, or a block of training hours from SAP Consulting), ask if it can be bundled in “at no additional cost.” SAP might have leeway to include such extras to sweeten the deal without officially cutting the software price further.
• Nail Down Future Pricing: A big negotiation point is how expansions or renewals will be priced. Get it in writing that if you need more users, you can buy them at the same discount percentage or even at a fixed price. Define the rate for additional FUEs now so there’s no gouging later when you’re committed. Similarly, set expectations for renewal by negotiating a cap, such as “price will not increase by more than 5% at renewal, provided the scope remains similar.” Without this, you could face a nasty hike after your initial term when you have little leverage.
• Clarify Treatment of Unused Components: If SAP includes components you’re unsure about, discuss their removal or swap options. For example, if the new Cloud ERP package includes a Master Data Governance license by default but you don’t plan to use it, see if excluding it lowers the price (even if SAP says “it’s free,” nothing truly is). Or ensure that having it doesn’t inflate your FUE count. You can even request the right to swap certain components later – e.g., if you find you need a different SAP cloud service, or more than one that’s included, can you reallocate some value? You might not always get this flexibility, but asking shows SAP that you’re scrutinizing value.
• Protect Against Indirect Use Fees: Bring up the topic of Digital Access during negotiations. If you know that external systems interact with SAP, consider including a specified number of digital access documents or an enterprise license for indirect use as part of the deal. It’s better to negotiate it upfront (where you can bundle it into the overall discount) than to deal with it after an audit. SAP has been somewhat flexible for RISE customers here, sometimes including a starter pack of document licenses. Ensure it’s addressed so you’re not left vulnerable.
• Review Key Contract Clauses: Price aside, some contract terms are worth negotiating:
  • Termination and Exit: Ensure you have clarity on how you could exit the contract at the end of the term or in a breach scenario. While you likely can’t terminate early without incurring penalties, you may be able to negotiate a shorter renewal notice period or receive assistance when transitioning off.
  • Service Level Penalties: If uptime is critical, negotiate stronger SLA penalties (credits) if SAP fails to meet them. This holds them accountable and gives you a bit of recourse if things go awry.
  • Data Handling and Security: If necessary for your company, include specific language on data protection, support locations (e.g., “all support will be provided from EU locations” if applicable), or any other concerns your risk/legal team may have
• . Don’t just accept the boilerplate if it doesn’t meet your standards.
• Timing and Quarter-End Pressure: SAP, like many vendors, has targets and gets especially flexible at quarter-end or year-end. Plan your negotiation timeline to coincide with when SAP is hungry to close the deal. If you can push the final signature to late Q4 or Q2 (SAP’s big quarters), you might extract an extra few percentage points of discount or additional goodies, as sales leadership approves special concessions to hit numbers.

Negotiating an SAP private cloud deal is a complex dance, but by being prepared, assertive, and detail-oriented, you can substantially improve the outcome.

Remember, no matter how friendly your SAP account rep is it’s a business transaction – you need to advocate for your organization’s best interests. Once the contract is signed, changes are hard, so get it right the first time.

Future Outlook – SAP’s Cloud-First Strategy and What to Expect

Looking ahead, SAP’s direction is unmistakably cloud-first, and this will continue to shape its licensing and pricing strategies in the years to come.

Here’s what CIOs and IT procurement should anticipate:

• Continuous Evolution of Licensing Models: The changes we saw in 2025 (repackaging RISE, adjusting metrics) likely won’t be the last. SAP is expected to further refine its cloud offerings. There’s talk of new “Business Suite” cloud constructs emerging around 2026+, which could bundle S/4HANA with more line-of-business cloud apps in industry-specific packages. This means customers might see new bundle options or required transitions to updated packages as SAP adjusts to market demands and competitive pressures. Staying informed through user groups and SAP announcements is crucial; you don’t want to be caught off guard by a change that impacts your contract or future costs.
• End of Perpetual Licenses: By 2025, SAP will have essentially stopped selling new perpetual licenses for core ERP to most customers. We can expect that by the end of this decade, the perpetual model will be fully phased out for SAP’s main products. All new features and innovations will be delivered via cloud services. For customers, this means if you’re not on a subscription, you might miss out on new tech. It also means less flexibility to delay upgrades or avoid maintenance fees – once on subscription, you’re continuously paying. SAP’s strategy is to make cloud subscriptions the only viable choice, which could result in on-premise maintenance becoming increasingly expensive (to nudge remaining holdouts). Plan for a future where your SAP spend is entirely OpEx, and consider how that affects your IT budgets and approval processes.
• Greater Emphasis on Consumption and Value: We might see SAP move towards more consumption-based pricing in some areas. For example, instead of solely per-user pricing, you might encounter models based on actual system usage, transactions processed, or business outcomes. Elements of this are already present (BTP is consumption-based, Digital Access is document-based). As cloud technologies enable granular tracking, SAP (and other vendors) will experiment with pricing aligned to usage or even performance metrics. This could benefit those who optimize usage, but it could also penalize inefficiencies. Keep an eye on any pilots or announcements around usage-based pricing for ERP or modular components.
• Integration of AI and New Tech – at a Price: SAP is weaving AI, machine learning, and advanced analytics into its product roadmap (e.g., the SAP Joule AI and other intelligent features). While some baseline AI capabilities may be bundled to stay competitive, truly powerful features will likely be offered as premium add-ons. The future SAP licensing might include specific add-on licenses for AI-driven modules or high-volume predictive analytics. Additionally, as industries demand more specialized cloud solutions (such as Industry 4.0 and IoT integration for manufacturing), SAP may offer these as separate cloud services. In essence, as the product offerings expand, expect the licensing catalog to expand as well – and not necessarily included in your core ERP subscription.
• Potential Cost Increases and Need for Governance: Historically, SAP has increased prices over time (even maintenance saw annual uplifts). With cloud subscriptions, SAP might introduce annual price indexation or new service fees. Moreover, once most customers are on the cloud, the negotiating leverage could shift back to SAP (since switching vendors is still a massive move). That’s why it’s crucial to secure favorable terms now and maintain active vendor management and governance. The future likely holds more frequent renewal negotiations – perhaps every 3-5 years – at which point you’ll evaluate a new deal. Companies will need to treat SAP relationship management as an ongoing strategic activity, not a once-in-a-decade event. This includes cultivating alternative options (even if just as a backup plan) to avoid complacency on SAP’s side.
• SAP’s Cloud-First Benefits: On a positive note, SAP’s focus on cloud means faster access to innovation for customers. No more waiting years for the next major release – updates and new features roll out continuously. Over time, this could reduce internal costs of performing upgrades or maintaining outdated customizations (if you adopt standard processes). Additionally, SAP’s ecosystem (partners, support, and skills) will increasingly be geared toward the cloud, which could drive down the cost of cloud-related services due to increased competition and maturity. In other words, while SAP cloud subscriptions might seem pricey, the value delivered could increase as the ecosystem builds more automation, best practices, and efficiency around cloud operations.
• The 2027 Wave: We’re currently approaching what many call the “2027 wave” – a significant number of SAP customers must decide on their path (upgrade to S/4HANA, continue with ECC on third-party support, or migrate to a different platform). How this plays out will influence SAP’s pricing strategy. If too many delay or consider alternatives, SAP might introduce even more attractive RISE deals or flexible models to capture them. Conversely, if the majority rush to RISE, SAP could become less flexible. It’s a dynamic situation. Being aware of where the market is trending (through SAP user groups or analyst insights) will help you time your negotiations for the best outcome.

In summary, the future of SAP licensing is characterized by cloud dominance, continuous change, and the need for vigilant management.

SAP’s cloud-first strategy will bring great capabilities, but also requires customers to be forward-looking in their contract strategy.

By staying proactive and informed, you can ensure that as the landscape changes, your organization isn’t caught off guard and continues to derive fair value from SAP.

Conclusion & Call-to-Action

SAP’s RISE with SAP and Private Cloud offerings represent a new era of ERP licensing – one that replaces the traditional upfront license model with a flexible, yet sometimes opaque, subscription paradigm.

We’ve explored what RISE with SAP is and why it was created, broken down the SAP Private Cloud license models, and shed light on costs, pricing, and what’s included.

We’ve also tackled the crucial aspects of 2025 licensing changes, optimization strategies, pitfalls to avoid, and negotiation tactics to empower you as a buyer.

The key takeaway is that knowledge and preparation are your best allies. SAP’s licensing in 2025 can be complex and is continually evolving.

To make it work for your organization, you should:

• Review your current contracts and usage – know where you stand and what you need.
• Stay skeptical and ask hard questions – don’t accept boilerplate quotes; drill into what’s driving costs.
• Negotiate proactively – everything from user counts to renewal terms can be on the table.
• Plan for the long term – consider how today’s contract will look in 3-5 years and build in safeguards.

As a CIO, procurement lead, or program director, you have the responsibility to ensure your company gets the best value out of SAP.

That means not only securing a good deal upfront but also establishing governance to keep those costs optimized over time.

If you’re unsure about the fine print or how to leverage your position, explore negotiation support – whether that’s consulting experts, legal counsel for contracts, or peer benchmarks.

A few insightful tweaks to a contract can save millions and prevent headaches down the road.

In conclusion, SAP’s cloud licensing is a double-edged sword: it offers unprecedented capabilities and simplicity on paper, but it demands vigilance and strategy to avoid overspending.

By using the guidance in this article, you can confidently steer your organization through the RISE with SAP journey, optimize your SAP Private Cloud costs, and turn SAP’s licensing model into an advantage rather than a liability.

Now is the time to review your SAP plans, align them with your business goals, and take control of your SAP licensing destiny – before it controls you. Good luck, and may your SAP negotiations be ever in your favor!