California Tech Manufacturer Rejects RISE with SAP and Moves to Hybrid Hosting with Tier 2 Cloud Provider

Introduction: The Structural Trap

RISE with SAP is not a hosting service. It is a contractual architecture designed to consolidate cloud, license, and support decisions under a single SAP-controlled commercial umbrella. On its surface, this appears convenient—one vendor, one bill, unified responsibility. But for large enterprises with existing SAP infrastructure, RISE creates a structural problem: it removes the leverage that comes from separating infrastructure decisions from license decisions.

A California tech manufacturer—a division of a larger publicly traded company—discovered this when SAP commercial advisory specialists presented a RISE proposal as the "recommended path" for their ECC environment. The proposal was commercially aggressive and came with assertions about industry best practice. What the manufacturer's finance and architecture teams found, however, was that RISE locked them into a contract structure that would prevent them from negotiating S/4HANA license terms independently once they were committed to the platform.

This article examines the structural and contractual mechanics that drove that manufacturer to reject RISE and build an alternative: a perpetual ECC license retention strategy paired with independent hybrid cloud hosting through a tier-2 provider. The result was not only a 35% reduction in annual cost but also preserved the ability to negotiate S/4HANA license terms on their own terms, at the point where they choose to migrate.

The ECC End-of-Life Crisis and the Pressure to Move

SAP's ECC environment is under scheduled end-of-life pressure. Extended Maintenance for EHP (Enhancement Package) 6–8 ends December 31, 2027—a hard deadline now less than two years away. For the majority of SAP's 35,000 ECC customers, this deadline creates a forced choice: migrate to S/4HANA or enter Extended Maintenance and then move to the Private Edition Transition Option (released Q1 2025).

The mathematics of this timeline are significant. Extended Maintenance for 2028–2030 costs approximately 2% of annual license value uplift, representing roughly 24% of the base license cost annually—compared to 22% under standard maintenance. For a large manufacturer with a substantial ECC footprint, this can translate to hundreds of thousands of dollars annually.

SAP's commercial messaging around this deadline has been aggressive. The pressure is presented in terms of industry readiness: "By 2027, companies should have migrated or have a migration plan in place." The implicit message is that delay is risky and that RISE with SAP provides a bridge solution. But the California manufacturer's team recognized a hidden agenda in this framing: the pressure to move creates an opportunity for SAP to lock in contract terms that would be unacceptable under normal negotiating conditions.

According to research by Horváth published in 2025, only 37 of 200 surveyed companies had completed S/4HANA migration, and 60% of those that had migrated exceeded their budgets. Of the 35,000 ECC customers, only 39% had licensed S/4HANA by the end of 2024. This suggests that roughly 17,000 companies are not on track to migrate by the 2027 deadline—a massive cohort facing forced decisions under time pressure.

Why RISE with SAP Fails Structural Analysis

RISE with SAP bundles four elements into a single contract: infrastructure (hyperscaler-hosted), cloud platform (BTP—Business Technology Platform), application support, and annual increases. On paper, this appears to simplify procurement. In practice, it creates three structural problems.

Problem 1: Infrastructure Markup Is Hidden in the Contract

SAP does not disclose its hyperscaler infrastructure markup in RISE contracts. Customers are quoted SAP's list price for cloud infrastructure—the same price SAP would charge a customer buying direct from AWS, Azure, or Google Cloud. But SAP negotiates enterprise rates with hyperscalers; customers pay the markup as part of RISE pricing without visibility into the actual cost of the underlying infrastructure.

For the California manufacturer, this was a critical discovery during contract analysis. Their finance team modeled what the raw infrastructure cost would be if purchased directly from the hyperscaler. They found that SAP's quoted price for compute, storage, and egress was roughly 35% above what a tier-2 cloud provider would charge for equivalent services. This markup was not itemized; it was baked into the overall RISE fee.

When infrastructure is bundled into the license agreement, there is no mechanism for the customer to shop the market for alternatives. The customer pays whatever SAP negotiates with the hyperscaler and passes through—plus margin.

Problem 2: The BTP Clean Core Trap

SAP's "Clean Core" strategy—promoted as a best practice—requires customers to move all custom code and extensions to BTP (Business Technology Platform) rather than keeping them in the ECC instance. On the surface, this sounds prudent: keep the core system clean and maintain upgrade paths. But there is a commercial trap hidden in this architecture.

In a traditional ECC license model, custom code sits in the ECC system and is covered under the ECC maintenance agreement. When you move to RISE with SAP and adopt Clean Core, that custom code moves to BTP, which is metered and charged separately as a consumption service. This is the recurring cost structure SAP has been building: ECC licenses are perpetual and one-time, but BTP consumption is an ever-growing operational expense.

The California manufacturer's architecture team estimated that migrating 45% of their custom code to BTP would create an additional $200,000–$300,000 in annual operational spend—on top of the RISE fees. This expense was not initially apparent in the RISE proposal; it emerged only when the team began to understand what "Clean Core" actually meant in contractual terms.

Problem 3: Migration Credits Disappear Over Time

SAP offers migration credits to existing ECC license holders who purchase S/4HANA licenses. These credits are typically applied as a discount against the first-year S/4HANA license cost. However, migration credit values decrease approximately 10% per year. This creates a structural incentive for customers to migrate on SAP's timeline, not their own.

If the California manufacturer entered a RISE contract now and committed to migrating within the contract term, they would capture the full migration credit value. But if they deferred the migration decision and negotiated separately with SAP (under a non-RISE structure), the credit available in 2028 would be 10% lower than it is today.

RISE eliminates this timing leverage. Once locked into RISE, the customer has already paid for the transition in the bundled contract. If they later want to negotiate independent S/4HANA terms, SAP's position is that migration credits have already been "used" through the RISE discount structure.

The Alternative Model: Decoupling Infrastructure and Licensing

The California manufacturer's strategy was to reject RISE and instead execute a three-part plan: retain perpetual ECC licenses, separate infrastructure into an independent hosting contract, and preserve the ability to negotiate S/4HANA license terms separately at a future point.

Component 1: Perpetual ECC License Retention

Rather than purchasing S/4HANA licenses immediately or entering Extended Maintenance, the manufacturer negotiated a perpetual license agreement that extended their ECC environment ownership. This is not unusual for large enterprises, but it is often overlooked during RISE discussions because SAP's commercial advisory specialists frame the conversation around managed services rather than license terms.

The perpetual structure provided three advantages:

• No forced migration timeline: The manufacturer gained the ability to migrate to S/4HANA on their own schedule, not SAP's deadline.
• Preserved credit value: Holding perpetual ECC licenses meant that migration credits remained available in future negotiations and would not be consumed by a bundled RISE agreement.
• Negotiating leverage: With their own license ownership, the manufacturer could shop alternative S/4HANA license terms and compare total cost of ownership across different contract structures.

Component 2: Tier-2 Cloud Provider for Infrastructure

With the license decision decoupled from infrastructure, the manufacturer issued a separate RFP for cloud hosting. Rather than accept SAP's implied hyperscaler assumption (AWS, Azure, or Google Cloud), they evaluated tier-2 providers: DigitalOcean, Linode, Vultr, and others offering comparable infrastructure at lower cost.

The comparison showed that a tier-2 provider could deliver equivalent compute, memory, and storage for approximately 35% less than SAP's RISE pricing for the same workload. This is not because tier-2 providers offer inferior infrastructure—they offer commodity cloud services at commodity pricing. SAP's higher cost reflects either hyperscaler-specific features the manufacturer did not need or margin that SAP applies in the bundled RISE model.

The manufacturer selected a provider based on three criteria: SAP certification (the provider had published certified configurations for ECC), support SLA (99.95% uptime guarantee), and contract flexibility (no multi-year lock-in, ability to scale up or down within 30 days).

The resulting hosting agreement was straightforward: monthly fees for compute, storage, and backup, with technical support bundled. No markup on infrastructure. No consumption meters for BTP. No forced escalation to S/4HANA.

Component 3: Third-Party Maintenance for Support

With perpetual licenses and independent hosting, the manufacturer faced a support decision. SAP's standard approach would be to maintain their ECC support contract with SAP itself. However, they explored a third-party maintenance option through Rimini Street, which offers SAP ECC support at costs up to 50% below SAP's standard maintenance fees.

Rimini Street's offering includes SAP database, application, and infrastructure support, with response time SLAs comparable to SAP's direct support. For the manufacturer, this option provided two benefits:

• Additional cost reduction (approximately $150,000–$200,000 annually, depending on system size).
• Vendor diversification and reduced dependency on SAP for system health and uptime.

The manufacturer did not abandon SAP technical relationships entirely. Instead, they structured an advisory contract for strategic questions (architecture, best practice) while outsourcing operational support to Rimini Street. This is increasingly common for large enterprises seeking to reduce SAP maintenance costs while preserving technical expertise.

The Economic Impact: 35% Cost Reduction

The combined effect of these three decisions generated measurable cost savings:

• Infrastructure savings: Moving from SAP's bundled RISE pricing to tier-2 cloud hosting saved approximately $400,000–$500,000 annually (the 35% reduction on the infrastructure component of RISE).
• Support savings: Switching to third-party maintenance from SAP direct support saved approximately $150,000–$200,000 annually.
• License continuity: Perpetual ECC licenses eliminated the forced upgrade to S/4HANA licensing before migration planning was complete, deferring a $500,000–$700,000 license cost by 2–3 years.

The net effect was an annual operating cost reduction of 35% compared to the RISE proposal SAP had submitted. The manufacturer's finance team modeled the savings over a 5-year period and found cumulative savings of approximately $2.5 million before considering the timing benefit of deferring S/4HANA license purchases.

This calculation assumes stable system configuration and no major scaling events. For organizations with volatile workloads, the savings would be even greater because tier-2 providers offer more granular scaling options and simpler pricing than SAP's bundled RISE model.

Negotiating Leverage: The S/4HANA Question

The most significant strategic advantage of this approach, however, was not the immediate cost savings—it was the preserved ability to negotiate S/4HANA terms independently.

By retaining perpetual ECC licenses and deferring S/4HANA migration, the California manufacturer created a future negotiating scenario that differs fundamentally from a RISE customer's position. A RISE customer who has already paid for cloud infrastructure and platform through SAP is in a weak position to negotiate S/4HANA terms; SAP's argument will be that the customer is already paying for the cloud platform and should migrate to use it.

In contrast, the decoupled manufacturer can approach a future S/4HANA migration with a clean commercial slate. They can:

• Negotiate license terms independently: S/4HANA licensing can be structured as a separate agreement, allowing the manufacturer to shop terms with SAP commercial advisory specialists from a position of leverage.
• Deploy migration credits: With perpetual ECC licenses retained and preserved credits, the manufacturer can negotiate the full migration credit value against the first year of S/4HANA licensing.
• Evaluate alternative cloud infrastructure: The manufacturer could migrate S/4HANA to the same tier-2 provider (if SAP certified) or to a hyperscaler, based on total cost of ownership rather than lock-in mechanics.
• Manage BTP adoption on their own timeline: Rather than being forced into Clean Core architecture as a condition of RISE, the manufacturer can evaluate which customizations genuinely need to move to BTP and which should remain in the S/4HANA core.

The Contractual Pattern: Key Lessons

What emerged from this case study is a contractual pattern that organizations should be aware of when evaluating RISE proposals:

Lesson 1: Bundle Contracts Create Hidden Lock-In

When infrastructure, platform, application support, and licensing are bundled into a single agreement, the customer loses the ability to optimize individual components. The customer cannot shop infrastructure separately, cannot choose whether to adopt BTP, and cannot negotiate license terms independently. The bundled contract appears convenient, but it is expensive in terms of lost leverage.

Lesson 2: Infrastructure Pricing Is Not Transparent

SAP does not itemize the infrastructure cost within RISE proposals. This makes it impossible for customers to compare RISE infrastructure pricing against direct hyperscaler pricing or tier-2 alternatives. Any customer considering RISE should model what the infrastructure cost would be if purchased independently and compare that figure against the bundled RISE price. The difference is often 30–40%.

Lesson 3: Migration Credits Are Leverage

Migration credits from ECC to S/4HANA are one of the few tangible concessions SAP offers to existing customers in license negotiations. These credits are valuable and become more valuable as the customer size increases. RISE contracts typically consume these credits through bundled discounting, making them unavailable for future negotiation. Retaining perpetual ECC licenses preserves these credits for deployment at the point when S/4HANA migration actually occurs.

Lesson 4: Support Can Be Decoupled

Many organizations assume that SAP systems require SAP-provided support. This is not accurate. Third-party maintenance providers like Rimini Street offer comparable support services at lower cost. For large enterprises with mature ECC implementations, third-party support is a proven, low-risk option that reduces vendor dependency and operational cost.

Implementation Considerations and Risks

The California manufacturer's decoupled approach is not risk-free. Implementation requires careful planning and vendor evaluation:

Tier-2 Provider Evaluation

Not all tier-2 providers have published certified configurations for SAP ECC. The manufacturer's team conducted a formal evaluation that included:

• Verification of SAP certification for the provider's infrastructure (published in SAP's partner directory).
• Review of performance benchmarks (SAP systems running on the provider's infrastructure, measured by response time and throughput).
• Assessment of support responsiveness (response time SLAs, escalation procedures, technical depth).
• Financial stability check (verifying that the provider was unlikely to be acquired or shut down during the contract term).

This evaluation took 8–10 weeks and was conducted by the manufacturer's infrastructure team in parallel with the strategic contract decision. It is not a decision to be made lightly or quickly.

Third-Party Maintenance Onboarding

Switching from SAP direct support to third-party maintenance requires a transition period. Rimini Street typically provides a "warm handover" where SAP and Rimini Street support teams collaborate during the first 60–90 days, ensuring that incident handling, escalation procedures, and technical documentation are properly transferred. The manufacturer scheduled this transition during a planned maintenance window, minimizing risk to production systems.

SAP Relationship Management

By rejecting RISE and moving to a decoupled model, the manufacturer effectively signaled to SAP that they were not receptive to the proposed contract structure. This does not damage the relationship, but it does require careful communication. The manufacturer's CFO and CIO maintained ongoing dialogue with SAP to clarify that the decision was structural and commercial, not a signal of dissatisfaction with the product. This messaging proved important when the organization later engaged SAP for S/4HANA consulting services.

Strategic Timing and the 2027 Deadline

The California manufacturer's decision was made in 2024, roughly three years before the 2027 ECC end-of-life deadline. This timing proved critical. By making the decision early, the manufacturer had sufficient runway to:

• Negotiate perpetual ECC licenses (which is easier when not under time pressure).
• Conduct a proper tier-2 provider evaluation (8–10 weeks).
• Plan a migration from existing infrastructure to tier-2 hosting (2–3 months).
• Onboard third-party maintenance support without rushing the transition.
• Begin S/4HANA migration planning without the psychological pressure of an imminent deadline.

For organizations currently under pressure to make migration decisions, the timeline is tighter. However, the structural analysis remains valid: decoupling infrastructure from licensing decisions creates more favorable negotiating conditions than accepting RISE as presented.

The Broader Pattern: SAP's Commercial Strategy

The California manufacturer's experience reflects a broader shift in SAP's commercial strategy. With 39% of its 35,000 ECC customers still unlicensed for S/4HANA as of end 2024, SAP faces a large cohort of customers who are economically rational to stay on ECC longer. RISE with SAP is, in part, a mechanism to convert this cohort from perpetual license holders into recurring revenue customers—to shift from a license-sale business model to a subscription-service model.

This is not inherently problematic. Subscription models can deliver value. But they also create the risk of lock-in and opacity, which is exactly what the California manufacturer identified and rejected. By separating infrastructure from licensing, the manufacturer preserved their ability to optimize economics and maintain commercial flexibility.

Conclusion: Reject RISE on Structural Grounds

The California tech manufacturer's decision to reject RISE with SAP and build a decoupled alternative—perpetual ECC licenses, tier-2 cloud hosting, and third-party support—is not universally applicable. Smaller organizations may lack the technical capability to manage infrastructure independently. Organizations deeply embedded in AWS or Azure ecosystems may find hyperscaler integration with RISE valuable. Organizations facing imminent ECC end-of-life deadlines may lack the time for alternative evaluation.

However, for large organizations with mature ECC implementations, sufficient technical depth, and runway to make deliberate decisions, the decoupled model offers clear advantages:

• Cost reduction of 35% or more annually.
• Preserved negotiating leverage for future S/4HANA migration.
• Reduced vendor lock-in and improved contract flexibility.
• Elimination of hidden infrastructure markups and forced BTP adoption.

The key insight is this: RISE should be evaluated on structural and contractual grounds before commercial terms are discussed. If the contract architecture—bundled infrastructure, platform, licensing, and support—does not align with the organization's need for flexibility and independent optimization, then RISE is the wrong vehicle regardless of the discount offered.

The California manufacturer made this decision before SAP commercial advisory specialists applied time pressure and financial incentives to accelerate the decision. Organizations still evaluating their options should do the same: examine the contract structure, understand what lock-in mechanisms are embedded, and compare total cost of ownership against decoupled alternatives before committing.