For SAP ECC and S/4HANA customers, SAP is pushing hard on RISE with SAP. SAP leadership told their investors they want to convert their remaining ~€11 billion maintenance stream to RISE with SAP cloud revenue, which will be worth 2x-3x revenue for them.[1]
Cloud and subscription-based contracts may be good for shareholders, but are they good for customers?
The market appears to be voting no.
There are good reasons many SAP customers are holding back from the RISE with SAP program. When your current SAP system is stable, secure, performant, compliant and highly customized, it can be difficult to create a business-driven, ROI-positive justification for what is typically a multi-million-dollar migration project. The costs, risks and disruption just aren’t worth it.
Perhaps that is why as of Q2 2024, nearly two-thirds of ECC customers had yet to purchase or subscribe to S/4HANA.2 A RISE with SAP contract may span financial, commercial, technical and operational risks, and knowing why will help you make the best decisions for your business and IT roadmap.
10 Reasons why a RISE with SAP contract might not serve your needs
You’ll give up your perpetual licenses for ECC or S/4HANA
Ownership has its privileges. SAP wants you to surrender your perpetual licenses for subscription licenses, changing you from an owner to a renter. And that means they can raise the rent in the future without reason. See From TCO to TCC: Don’t Give Up Cost Control to a Vendor “Landlord”.
You’ll get locked into a bundled subscription contract
When your right to use software is inextricably connected to your contract for running and supporting the software, your ability to exit any portion of that bundled contract may be limited. It could also limit your future flexibility for shifting investment to technologies other than SAP’s. See Understanding RISE Contracts – Beware of the Vendor Lock-In Bundle.
You won’t have a direct contract with a hyperscaler; it will be through SAP
A RISE with SAP contract allows you to select your hyperscaler, but the relationship is owned and managed by SAP as part of a bundled agreement. Making service level or scope changes as your business needs change could be problematic. To keep your options open, we recommend organizations own and manage their hyperscaler relationships directly.
You’ll be forced into a costly, risky and disruptive migration
These migrations can typically cost tens or even hundreds of millions of dollars and can take from six months to several years. With limited people, time and money, this new cost and delay could put you behind your competition and impact your growth and profitability goals, or worse yet, you could end up with a failed project.
You’ll have to pay extra to get the most anticipated new features (e.g., AI, GenAI, Green Ledger)
SAP’s AI, GenAI and sustainability features are only available with the S/4HANA Premium Plus package. The entitlements to these features are subject to usage limits, which, if exceeded, will incur even more costs.3 These features are not even available to S/4HANA on-premises customers.4 An easier, faster and more cost-effective path would be to innovate around the edges of your existing system by selecting one of many solution players in the market.
You’ll have to wait until you complete your migration to put SAP AI into production
SAP’s AI capabilities in S/4HANA and other applications are reliant on specific versions of their cloud-based products. To get the AI features, you need to migrate or upgrade to the minimum required version, deferring your AI benefits until that is done. More waiting time, more impact to your innovation timeline.
To stay current on S/4HANA releases, you’ll eventually have to remove and rewrite your customizations (“Clean Core”) to adopt the latest releases
You can bring all your customizations with you to the S/4HANA Cloud, private edition with a “brownfield” migration. But with the private edition, SAP can’t automatically install upgrades, so you will be responsible for upgrading to stay supported. On the other hand, a one-size-fits-all approach could mean discarding your competitive advantage and differentiation – something many are reluctant to give up.
You’ll have to pay additional consumption charges to run workloads on SAP BTP (Business Technology Platform)
“BTP is the technical foundation of the entire SAP ecosystem.”5 Customizations, automations and AI functions running on BTP will incur consumption charges that can be difficult to predict and control. The less control over your IT budget, the more chance you’ll have to continue going back to the board to ask for more funds.
You may limit your future options for technology adoption
If you’re locked into an SAP subscription that includes the right to use their software along with the cloud computing and infrastructure services to run it, you may not have the financial or commercial freedom to adopt new technologies from other vendors. Limiting your roadmap can lock you out from new innovations, of which there are many debuting in the market. See CFO to CIO: “Give Me Options”.
You can innovate faster and extend the life of and value of your existing systems with Rimini Street and ServiceNow, Inc.
Why wait to innovate? Instead of taking on a costly and lengthy migration or re-platforming project before adding new capabilities, you can innovate on and around your existing systems with capabilities that span your software portfolio. With the deep ERP expertise of Rimini Street and the Now Platform® from ServiceNow, enterprise AI, improved UX and processes, and flexibility for additional modernization can be achieved within months rather in years, at a much lower cost than RISE with SAP.
Organizations using SAP software can achieve Transformation without Disruption™
ServiceNow and Rimini Street have formed a strategic partnership to enable AI, automation and modernization across existing enterprise software estates.
The partnership between Rimini Street and ServiceNow allows our clients to:
- Orchestrate disparate systems into new digital workflows
- Receive unmatched support and managed services for the full landscape of ERP and software that flow across and into the new UX layer
- Extend the life of existing systems and redirect vendor support costs to invest in innovation and scaling productivity
Key Takeaways
Enterprise technology is changing fast. More than ever, taking control of your roadmap and your costs will give you the flexibility and stability to innovate boldly and strategically. Locking yourself into single-vendor bundled contracts like RISE with SAP could jeopardize your ability to achieve your business short- and long-term goals.
Maximize the life and value of your existing systems and, with the latest Rimini Street and ServiceNow partnership, you can leverage the Now Platform® to innovate on and around your software landscape, delivering enterprise-scale AI, automation and modern user experiences. Learn more about what the Rimini Street and ServiceNow partnership can do for you.
Understanding RISE Contracts – Beware of the Vendor Lock-In Bundle
In this 12-minute video, you’ll see that RISE with SAP contracts are vastly different from traditional agreements for licenses and support. What’s included in them? What might incur extra cost? What costs are most likely to increase in the future? How does it increase “vendor lock-in”? What are the implications of putting licenses and multiple services in a single contract?
FAQs
When does mainstream maintenance end for SAP ECC6?
Answer: It depends on which enhancement pack you’re running. For ECC6 EHP0-5, mainstream maintenance ends December 31, 2025. For ECC6 EHP6-8, mainstream maintenance ends December 31, 2027. Watch our vodcast entitled 2025 or 2027? for more details.
When does mainstream maintenance end for SAP S/4HANA?
Answer: It depends on which enhancement pack you’re running. For versions 1511 through 1909, mainstream maintenance already ended five years after the release of those versions. For version 2020, mainstream maintenance ends in 2025. For version 2021, it ends in 2026. For version 2022, it ends in 2027. Now, for version 2023, they extended the life to a 7-year cycle, so its mainstream maintenance ends in 2030. Watch our vodcast entitled 2025 or 2027? for more details.
What’s the adoption rate of S/4HANA by ECC customers?
Answer: According to a Gartner report as of Q2 2024, only 37% of ECC customers have bought or subscribed to S/4HANA. See the report here: Gartner – Quick Answer: What Is the Level of Adoption of SAP S/4HANA in 2Q24? – 10 September 2024 – Denis Torii, et al – ID G00816538
[1] SAP Presentation Q2 2024 – https://www.sap.com/investors/en.html?pdf-asset=fa94e0d2-ca7e-0010-bca6-c68f7e60039b&page=8