Rise-with-SAP license chaos

The IT scene often and carelessly talks about paradigm shifts with dramatic consequences. Revolution instead of evolution is the order of the day! Where no stone is really left unturned, those responsible are often quieter and more reserved: SAP sells Rise as just another ERP solution without pointing out the dramatic consequences. With a sweet voice, SAP lures existing customers into a new ERP world - caution is advised!
Rise with SAP is a service and rental offering that has never been offered by SAP before. The SAP ERP past is based on purchase contracts. The existing customer purchased licenses for users, engines and maintenance. The entire model consisted of a one-time license purchase plus annual maintenance costs. It was a good deal for SAP because with each license sale, the future annual maintenance fee could be calculated in advance. The maintenance revenue for the following years was transparent.

However, the existing SAP customer also had the option of suspending software maintenance or transferring it to another provider. Naturally, SAP did not appreciate this process and legal disputes often arose when SAP's maintenance fee was reintroduced. A shadow economy emerged consisting of so-called used licenses. A purchased right of use rarely has an expiration date. Nevertheless, there was an extensive discourse about second-hand licenses. Not only SAP was unhappy about this second-hand market, Microsoft, Adobe and Oracle also tried to defend themselves against it. Ultimately, courts confirmed the legality of passing on purchased licenses under certain and technically logical conditions.

IT providers began to think about new license models. The alternative to a purchase model is, of course, renting. The advent of cloud computing technology almost automatically opens up a paradise of control, efficiency and sustainable income for software providers. Cloud for rent is a classic vendor lock-in. SAP has implemented this combination of rental and cloud in several Rise contracts to the advantage of the ERP world market leader (see current SAP share price). In the vast majority of cases, a Rise contract is to the disadvantage of existing customers and SAP knows this. If you start license negotiations on a Rise contract in good time and without time pressure, you can achieve many concessions from SAP. Unfortunately, it is probably already too late for that this year!

Rise is a service and rental agreement. Existing customers can still sign a purchase contract for SAP licenses on December 31. However, because Rise also has a technical component and the cloud must be provided for this, the notional end of the year for Rise contracts was the end of November. As always in sales, there will be exceptions here too, but experience shows that a serious contract negotiation regarding Rise-with-SAP takes up to six months.

SAP doesn't make it easy: a Rise contract is a paradigm shift and consists of at least two parts. The first part is the cloud subscription (rent), which must always be paid from a defined point in time, regardless of whether the existing SAP customer has also arrived there with their ERP and moved in. The second part is a service contract, the migration service to the cloud. In the first step, the existing customer hands over their on-prem licenses and completely hands themselves over to SAP (vendor lock-in), then the work for the move begins (lift and shift). If the existing customer is lucky enough to be assigned an experienced SAP cloud team, everything can go well. However, there are also cases where projects are canceled or lift-and-shift contracts are terminated - but the cloud rental still begins at the scheduled time.

There is something else that existing SAP customers should bear in mind when giving up their on-prem licenses and moving to the SAP Rise cloud. SAP does not currently have an exit strategy. Naturally, every existing SAP customer may and can download their data as a CSV file at the end of the rental contract (cloud subscription) and try to sort it in Excel, but this is not a realistic approach. The EU has also recognized this and introduced a cloud law that obliges hosters and hyperscalers to ensure the user's business operations even after the end of the rental contract. Model contracts will be available in fall 2025. It remains to be seen whether SAP will offer a counter-proposal or bow to EU legislation. The fact remains that the termination of a cloud software contract will be one of the more complex challenges for an existing S/4 customer.