Texas-Based Oil & Gas Enterprise Rejects One-Size-Fits-All RISE with SAP Proposal and Negotiates Phased Migration Model

Client Background

The client is a mid-sized exploration and production company headquartered in Texas with operations spanning upstream drilling and production, midstream pipeline management, and downstream refining support. With approximately 4,200 employees and revenues of roughly $3.2 billion, the company had run SAP ECC as its core ERP platform for over a decade. Its SAP estate was complex: multiple company codes covering different operational divisions, custom developments for drilling activity management, and integrations with field data acquisition systems, SCADA platforms, and trading and risk management applications.

Facing SAP's end-of-mainstream-maintenance timeline for ECC — extended to 2027 — the executive team recognised that a migration decision could not be deferred indefinitely. SAP's account team had been building momentum for a RISE with SAP proposal over the preceding twelve months, and by mid-2025, the company was under active commercial pressure to commit.

SAP's Initial Proposal: The One-Size-Fits-All Problem

SAP presented a standard RISE with SAP contract covering the entire enterprise in a single five-year subscription. The key characteristics of the initial proposal were as follows:

• Total contract value: approximately $22 million over five years, inclusive of subscription, BTP credits, and migration support credits.
• Scope: all 4,200 named users converted to Full User Equivalents (FUEs) on day one, regardless of when each division would actually migrate to the RISE environment.
• Infrastructure: SAP's preferred hyperscaler region, with no option to specify the primary cloud provider for operational data sovereignty reasons.
• Flexibility: no FUE reduction rights mid-term, no downward adjustment mechanism if headcount fell, and standard annual uplift language that would allow SAP to increase subscription costs at renewal.
• Migration timeline: a single go-live target covering all divisions simultaneously, with migration support credits that would expire if the timeline slipped.

The problem was structural. The client's operational divisions did not have equivalent levels of migration readiness. The finance and HR functions were process-standardised and could have moved to RISE within twelve to eighteen months. The upstream drilling and production division, by contrast, had complex custom developments that would require at least twenty-four to thirty months of remediation before migration was viable. The midstream division operated under different regulatory reporting requirements that necessitated a separate implementation workstream.

Signing a single RISE contract on SAP's timeline would have meant paying for all 4,200 FUEs from day one while only the finance and HR users were actually running in the RISE environment for the first two years. The remainder would be running ECC on existing perpetual licences — meaning the company would pay double for those users during the transition period.

Why the Standard RISE Model Fails Oil & Gas Operators

Oil and gas companies face a specific set of challenges when evaluating RISE with SAP that generic enterprise software assessments do not capture. Understanding these challenges is essential for structuring a contract that reflects operational reality rather than SAP's preferred deal mechanics.

Operational Technology Integration Complexity

Upstream operations depend on integrations between SAP's plant maintenance and materials management modules and operational technology (OT) systems — SCADA platforms, production data historians, and drilling engineering tools. These integrations are typically custom-built, rely on specific API architectures, and may involve third-party industrial software vendors with their own release cycles. Migrating these integrations to RISE requires not just SAP project work but coordination with multiple OT vendors, creating timelines that are inherently longer than standard enterprise RISE migrations.

Under SAP's digital access model, the DDLC (Digital Document Licence Count) metric applies to documents created in SAP by external systems — including SCADA-generated plant maintenance notifications, production volume confirmations, and materials consumption postings from field systems. Oil and gas operators often generate very high DDLC volumes due to the automated nature of their field data flows. A phased migration must be carefully structured to ensure that DDLC coverage is maintained for both the legacy ECC system (used by unmigrated divisions) and the new RISE environment simultaneously.

Regulatory and Data Sovereignty Requirements

Texas-based operators with offshore production assets or Gulf of Mexico operations may be subject to BSEE (Bureau of Safety and Environmental Enforcement) reporting requirements that impose specific constraints on where production and safety data can be hosted. SAP's default RISE infrastructure assignment may not satisfy these requirements without a specific contractual carve-out specifying the permitted hosting regions and data handling arrangements.

Commodity Cycle Sensitivity

Oil and gas companies operate in a highly cyclical business environment. Headcount at this client had varied by up to 20 percent over the preceding five years in response to commodity price movements. A five-year RISE contract with no FUE reduction mechanism is a fixed cost that cannot be adjusted when the business contracts. The standard RISE contract terms, which allow subscription increases but not decreases, are particularly poorly suited to the industry's economic characteristics.

The Phased Migration Model: How It Was Structured

Redress Compliance engaged with the client's procurement and IT leadership teams to develop an alternative proposal. The core principle was that the RISE contract should be structured around actual migration readiness, not SAP's preferred revenue recognition timeline.

Phase 1: Finance, HR, and Procurement (Months 1–18)

The first phase covered the approximately 800 users in finance, HR, and procurement — the divisions with the highest process standardisation and the lowest volume of custom SAP developments. The RISE subscription for Phase 1 was scoped to cover only these users, with FUE counts calibrated to actual role classifications rather than SAP's standard conversion ratios.

SAP's initial FUE conversion methodology had classified many HR self-service users as full FUEs. After a detailed role analysis, a significant proportion of these users were correctly classified as self-service users, reducing the Phase 1 FUE count by approximately 15 percent from SAP's original estimate.

Phase 2: Midstream Operations (Months 19–30)

The second phase covered the midstream division, with its specific regulatory reporting requirements addressed through a dedicated implementation workstream. The contract included a pre-agreed FUE addition at defined pricing — locking in the Phase 2 expansion rate at the time of Phase 1 signing, rather than leaving it to a future negotiation when the client's leverage would be lower.

Phase 3: Upstream Drilling and Production (Months 31–48)

The most complex division was deferred to Phase 3, with a contractual go-live target but no penalty mechanism if technical complexity extended the timeline. The client retained the right to run the upstream division on existing ECC perpetual licences through the end of Phase 2 without triggering additional SAP licence fees.

S/4HANA Migration and Licence Baseline Changes

The move from SAP ECC to S/4HANA through RISE with SAP fundamentally changes the licence baseline in ways the client had not fully modelled in its initial business case. S/4HANA migration changes the licence baseline in three distinct ways that all oil and gas operators should understand before signing a RISE contract.

First, S/4HANA eliminates certain legacy ECC licence types that may have been efficiently priced under older contract structures. ECC-era limited professional users and casual users convert to self-service FUEs at conversion ratios that do not always reflect actual system usage, potentially increasing the effective per-user cost even after negotiated discounts are applied.

Second, S/4HANA introduces embedded analytics capabilities through SAP Analytics Cloud integration that, depending on how the contract is structured, may require additional licences beyond the RISE subscription base. The client negotiated explicit written confirmation from SAP that embedded analytics access for existing FUE holders would not trigger additional licence requirements during the contract term.

Third, SAP BTP credits included in the RISE subscription are sized for standard use cases and may be insufficient for the integration workloads typical in oil and gas. The client's integration architecture — connecting multiple field data systems, a trading platform, and legacy materials management databases — required a BTP credit allocation approximately 2.5 times the RISE standard baseline. This was negotiated as a contract amendment before signing rather than left as a consumption item to be purchased at list price during implementation.

What RISE with SAP Includes — and What It Doesn't

A persistent source of confusion in RISE negotiations is the scope of what the subscription actually covers. SAP's sales materials present RISE as an all-inclusive cloud transformation platform. The contractual reality is more limited, and oil and gas operators need to understand these boundaries explicitly.

RISE with SAP includes: S/4HANA Cloud Private Edition, SAP Business Technology Platform credits at the standard baseline, SAP Signavio Process Intelligence (process mining and workflow tooling), SAP Business Network Starter Pack, and SAP Premium Engagement services for migration support.

RISE with SAP does not include: SAP SuccessFactors (HR cloud), SAP Ariba (procurement network), SAP Concur (travel and expense), SAP Customer Experience products, industry-specific add-ons for oil and gas such as SAP Oil & Gas (IS-OIL), SAP Asset Performance Management, or any third-party integrations beyond the BTP standard allocation. These must be licensed separately, and the costs were material for this client — SAP's IS-OIL module alone required a separate licence negotiation.

For the Texas operator, the full picture of what RISE covered versus what required separate licensing materially changed the total cost comparison against the alternative of extending ECC support through SAP or a third-party maintenance provider. Third-party maintenance for ECC from providers such as Rimini Street or Spinnaker Support typically costs 50 percent of SAP's standard maintenance rate — approximately 11 percent of net licence value versus SAP's 22 percent annual support fee — buying the client additional time to complete its migration without the immediate financial pressure of a full RISE commitment.

Negotiation Tactics and Outcomes

The negotiation achieved the following specific outcomes against SAP's initial proposal:

• Contract value: reduced from $22 million to approximately $17.8 million over five years, representing a saving of $4.2 million, or 19 percent of the initial proposal.
• Phase 1 FUE count: reduced by 15 percent through accurate role reclassification, eliminating approximately $1.1 million in annual subscription cost for the first three years.
• Pre-agreed Phase 2 and 3 expansion pricing: locked in at a 25 percent discount to SAP's then-current list price, protecting the client against SAP's list price increases between Phase 1 signing and Phase 3 expansion.
• Annual price cap: SAP agreed to a 5 percent annual cap on subscription cost increases at renewal, replacing the standard contract language that would have allowed SAP to reset pricing to current list at each renewal event.
• FUE reduction right: the client secured the right to reduce FUE counts by up to 10 percent in any phase if headcount fell due to commodity cycle effects, protecting against the fixed-cost exposure that the standard RISE contract would have imposed.
• BTP credit uplift: the contract included a BTP credit allocation 2.5 times the standard RISE baseline, covering the client's integration workloads without additional consumption charges.
• SAP annual support: the client's legacy ECC perpetual licences retained their standard 22 percent annual support rate during the ECC-to-RISE transition period, but this was offset by credits applied against the RISE subscription cost — a mechanism Redress negotiated as part of the overall deal structure.

Leverage Points That Made the Difference

Three factors gave the client meaningful negotiating leverage in this transaction. Understanding these leverage points is useful for any enterprise approaching a RISE negotiation.

First, SAP's ECC support deadline creates urgency for SAP, not just for the customer. SAP's revenue model transitions as customers move from perpetual licence and maintenance to cloud subscription. Each customer that remains on ECC with third-party maintenance is lost subscription revenue for SAP. The client's credible alternative — extending ECC with Rimini Street — was a genuine option that SAP's team recognised as such.

Second, SAP's fiscal year ends on 31 December. The negotiation was timed to conclude in Q4, when SAP's account team was under revenue target pressure. Deals concluded in October through December consistently achieve better commercial terms than deals concluded in Q1 or Q2 because the account team's incentive to close is highest.

Third, the client had done its homework on benchmarking. Industry data showed that well-negotiated RISE contracts consistently achieved 15 to 30 percent reductions from SAP's initial proposal. Walking into the negotiation with this data — and demonstrating willingness to challenge SAP's FUE conversion methodology with actual usage data — shifted the dynamic from a vendor-led pitch to a buyer-led commercial process.

Lessons for Other Enterprises

This case illustrates principles that apply broadly to any enterprise approaching a RISE with SAP negotiation, particularly those in asset-intensive industries with complex operational technology landscapes.

SAP's standard RISE proposal is optimised for SAP's revenue model, not for your business requirements. The phased migration model, the FUE reclassification, the BTP credit uplift, and the price cap were all available — but none was offered voluntarily. Each required evidence-based negotiation by a buyer-side team that understood SAP's commercial structure and the client's operational constraints in equal measure.

The investment in independent advisory for this transaction was recovered within the first year of the contract through the savings achieved. Redress Compliance operates exclusively on the buyer side and has no commercial relationship with SAP that would compromise its advice.