SAP S/4HANA Migration Negotiation: 40% Cost Reduction

The Situation

A European pharmaceutical manufacturer with operations across 22 countries had run SAP ECC 6.0 as its core ERP system for 14 years. As SAP's 2027 end-of-mainstream-maintenance deadline approached, the organisation faced a strategic decision: migrate to S/4HANA via SAP's RISE with SAP cloud subscription model, undertake a self-managed cloud migration, or negotiate an extended ECC support arrangement while deferring the decision.

SAP's account team presented a comprehensive RISE with SAP proposal valued at $47M over five years, encompassing software subscriptions, implementation services, and BTP entitlements. An internal SAP project team, led by one of the Big Four SI partners, had been engaged pre-competitively and had validated the RISE approach — creating a bias toward that path that the advisory team subsequently had to navigate carefully.

The CFO, concerned about the scale of the commitment and sceptical about RISE value, engaged a specialist SAP negotiation advisor to provide an independent commercial assessment before the board-level approval process.

Key Issues Identified

The advisory team's 60-day commercial assessment identified four material problems with SAP's initial proposal:

• RISE over-bundling: The RISE proposal included BTP credits, SAP Business Network access, and premium support tiers that the client's deployment profile did not require — effectively bundling approximately $8M of services with limited practical value to this organisation
• User licence over-classification: SAP had classified 4,200 users as Advanced Users (the highest licence tier) based on system access profiles rather than actual transactional usage — a common SAP tactic that the advisory team challenged via USMM measurement data
• Implementation services conflict: The Big Four SI partner attached to the project was also recommending the most complex implementation approach (full greenfield), which maximised their own services revenues while adding approximately $12M in avoidable implementation cost vs a brownfield/selective migration approach
• ECC extension leverage unused: SAP was offering ECC extended maintenance through 2030 to selected customers. The client had not explored this option, which provided meaningful negotiating leverage — particularly given the client's documented compliance requirements that made rapid migration genuinely complex

The Negotiation Strategy

The strategy was built around three simultaneous tracks: challenging RISE commercial terms, developing a credible self-managed alternative, and pursuing an ECC extension as a tactical fallback that extended the decision timeline.

• 1

  Commercial Assessment and User Licence Audit (Months 1–2)

  USMM (User and System Measurement Management) data was extracted and analysed to build a defensible classification of the 4,200 disputed users. The analysis confirmed that 2,800 users met the criteria for the lower Professional User tier and 1,100 could be classified as Limited Professional users — reducing the Advanced User count from SAP's assumed 4,200 to approximately 300 genuinely qualifying users.

• 2

  RISE vs Self-Managed TCO Model (Months 2–4)

  A detailed 5-year TCO model was built comparing RISE on Azure (SAP's preferred hyperscaler for this client) against a self-managed S/4HANA deployment on the client's existing Azure enterprise agreement. The model showed self-managed was approximately 22% cheaper over five years, accounting for implementation premium and operational overhead. This model was shared with SAP's deal desk, providing a documented commercial alternative that SAP needed to respond to.

• 3

  ECC Extension and Timeline Leverage (Months 3–5)

  The advisory team formally requested SAP's ECC extended maintenance offering and the associated pricing. SAP's response — confirming availability through 2030 at a 20% maintenance premium over standard rates — was used as direct leverage in RISE negotiations. The implication was clear: the client had a viable multi-year deferral option that reduced urgency and undermined SAP's end-of-maintenance pressure tactics.

• 4

  Structured RISE Renegotiation (Months 5–7)

  With the TCO model and ECC extension option in place, the advisory team engaged SAP's commercial team directly. Three counter-proposals were exchanged. SAP ultimately agreed to restructure the RISE bundle, remove unused BTP credits from year one (converting to a consumption model), reclassify user licences based on the USMM audit, and cap annual maintenance escalation at 2%.

Key Negotiation Levers

• USMM-based user reclassification: SAP's Advanced User classification was based on t-code access profiles, not actual transactional usage. USMM measurement data showing actual usage patterns provided a contractually valid basis to downgrade approximately 3,900 users to lower licence tiers, saving $6.2M over the contract term
• Self-managed TCO model: The 5-year cost model showing self-managed deployment at 22% lower TCO than RISE was the single most effective lever. SAP's deal desk had to close this gap commercially or risk losing the cloud subscription revenue entirely
• ECC extension request: Formally requesting and documenting SAP's ECC extended maintenance offering disrupted SAP's urgency narrative. It signalled that the client had a credible deferral path — reducing SAP's leverage and improving the client's negotiating position materially
• BTP consumption model: Converting BTP from a bundled credit commitment to a consumption-based model removed approximately $4.1M from the upfront commitment while retaining the client's access to BTP services. SAP accepted this because the consumption model still captured revenue — but later and only if genuinely used
• SI partner competition: Introducing a second SI partner into a competitive evaluation for implementation services reduced the implementation cost by approximately $6M through a combination of lower day rates and adoption of a brownfield migration approach

The RISE with SAP Trap

This case highlights a dynamic that affects many enterprises evaluating SAP S/4HANA migration: RISE with SAP is presented as a simplified, all-inclusive cloud migration path — but its commercial structure is designed to maximise SAP's contracted revenue from the migration event. Understanding RISE's commercial architecture is essential for organisations that want to evaluate it objectively.

RISE bundles infrastructure, software subscriptions, Business Network access, premium support, and BTP credits into a single subscription. The bundling obscures individual component pricing, making it difficult for buyers to assess value. Organisations that disaggregate the bundle — as this client did — frequently find that 20–40% of the bundled value is not relevant to their deployment scenario.

The self-managed alternative is rarely presented by SAP's account team but is technically viable for many organisations with existing hyperscaler relationships. Building a credible TCO model for self-managed deployment gives buyers both a genuine alternative and a benchmarking tool for the RISE commercial negotiation.

For a detailed analysis of RISE vs self-managed migration options, see our SAP RISE review and S/4HANA migration negotiation guide. Our SAP S/4HANA migration white paper provides the full commercial framework.

Lessons for Enterprise SAP Buyers

Organisations facing SAP S/4HANA migration decisions can apply several principles from this case to improve their commercial outcomes.

• Run USMM before accepting SAP's user counts: SAP's opening position on named user classification is almost always based on access profiles rather than transactional usage. USMM data typically reveals significant downgrade opportunities that translate directly to lower licence fees
• Model self-managed as an active alternative: Even if RISE is your preferred migration path, building a credible self-managed TCO model gives you a benchmarking tool that SAP's commercial team must respond to commercially
• Request ECC extended maintenance terms before negotiating migration: SAP's ECC extension offering disrupts the artificial urgency that SAP uses to compress migration negotiation timelines. Even if you intend to migrate, having the extension option documented changes the power dynamic
• Introduce competition for SI services independently: SAP's preferred SI partners have a financial interest in complex, high-cost implementation approaches. Introducing a second SI into competitive evaluation — even late — typically generates significant implementation cost reduction
• Resist BTP upfront credit commitments: BTP credits bundled into RISE as upfront commitments carry genuine risk of wastage if deployment timelines slip or use cases change. Consumption-based BTP models are achievable and materially reduce financial exposure

For SAP spend above $5M annually, specialist advisory support on S/4HANA migration negotiation consistently delivers 8–15x ROI on fees. See our rankings of the best SAP negotiation firms to identify qualified advisors for your situation.

Related Case Studies