Since SAP RISE was announced in January of 2021, I am commonly asked questions like these. “What is RISE? Is my company a good candidate? How do I upgrade to RISE?” These are great, relevant questions, given the number of companies still running SAP ECC 6.0. As a reminder, standard SAP support for ECC ends at the end of 2027. From there, if you still are running ECC, SAP will continue to provide support for an additional 2% on your maintenance base until the end of 2030, at which point ECC will no longer be supported by SAP, and customers will have to secure their own support. As part of this series, another insight will be published on the considerations company leadership should make when considering their own move off of SAP ECC.
SAP S/4 HANA
To fully understand SAP RISE, we must first explain what SAP S/4 HANA is. SAP S/4 HANA is SAP’s 4th generation of their ERP software offering. It runs on SAP’s High-performance Analytic Application (HANA), SAP’s in-memory relational database management system. S/4HANA, or S/4 for short, is the successor to SAP ERP Central Component (ECC), the 3rd generation of their ERP offering.
S/4 was first released in 2015 for finance only and has expanded to cover all core functions that ERP users are used to having; supply chain, manufacturing, customer service, logistics, project management, and more. S/4 provides numerous upgrades over its predecessor, including ever-expanding process support, embedded analytics, and a much-needed UI refresh. In terms of hosting, before RISE, customers could host S/4 in the data center or cloud hyperscaler of their choice (AWS, Azure, Google, etc.). Also, before RISE, S/4 licensing looked exactly like ECC licensing. Customers must navigate a complex menu of perpetually licensed options and pay 22% of that initial licensing cost in annual maintenance. Having assisted clients negotiating these types of agreements, I can say first-hand that this licensing process is challenging, frustrating, and costly if not done correctly.
SAP RISE: What it is
Now that we understand S/4 HANA, we can begin explaining RISE. RISE does not stand for anything, and I do not have a nifty explanation for where the name came from. The simplest way I can describe RISE is that it is a cloud hosting contract, a technical managed services contract, and an S/4 HANA licensing agreement wrapped in one subscription agreement. Customers choose a cloud hyperscaler from AWS, Azure, GCP, IBM, and Alibaba. SAP will provide and maintain the cloud infrastructure for the S/4 environment, including 99.7% uptime for the production environment. SAP also offers 24×7 technical support for the production environment and 24×5 support for non-production environments. Additionally, SAP will provide technical upgrade support but nothing on the application layer.
From a licensing standpoint, RISE simplifies the S/4 licensing process by providing an annual subscription. No more perpetual licenses, maintenance bases, database charges, or complex discounting processes where you need an advanced analytics degree to determine your license expense. In the RISE model, depending on the types of users your company needs, every user type translates into “full-use equivalent” licenses. Self-service resources such as warehouse personnel consume the smallest number of full-use equivalents, whereas developers will consume the most. Your ERP software BOM should go from several pages to half a page. From an implementation timeline standpoint, RISE provides marginal benefit compared to other cloud deployment approaches. SAP will perform the provisioning and installation instead of the customer needing to do this themselves, speeding up the deployment by a few weeks. As mentioned earlier, RISE offers no benefit to the application’s business process configuration.
SAP RISE: What it is NOT
With a basic understanding of what RISE is, it’s equally important to discuss what RISE is NOT. RISE is NOT a multi-tenant SaaS offering of S/4, where the software offers you fixed configuration options and little customization. S/4 through RISE provides the same application layer experience without RISE. Other than core code modifications, customers can still customize S/4 to their hearts’ content with RISE (although that’s definitely not recommended). Customers still must do everything to set up and maintain the application. That means requirements gathering, designing, configuring, developing all RICEFWs, testing, deployment, change management, project management, security role design, etc., are all still the customer’s responsibility. All application maintenance is the customer’s responsibility, so once you’ve gone live, that support ticket comes in requesting a new report or a security role change will still be on the customer. So even with RISE, a customer will likely need a Systems Integrator partner for the initial implementation and an Application Managed Services partner for post-go-live support if they do not have that capability internally.
SAP RISE: When a company should choose SAP RISE
So when are companies good candidates for RISE? First, a company should have already decided to move to S/4. Liberty can help guide a company through a thoughtful yet rapid ERP software selection process. Once this decision has been made, think about your long-term technology goals for your company. If you’re a company that has already been moving infrastructure to the cloud, RISE is likely a good fit. Additionally, suppose you want to run a leaner SAP support organization. In that case, RISE will help reduce the number of resources or vendors you need by providing you with the cloud infrastructure and partial support resources. If you’re a mid-market company with significant technical debt in an older SAP ECC environment, you’re probably an excellent candidate for RISE. Lastly, while not a primary factor, consider the accounting for such a move to S/4 through RISE. There are dozens of opinions out there on how to capitalize IT expenditures. Still, the consensus is that perpetual licenses can be capitalized, whereas subscription and software maintenance costs cannot.
When are companies not a good fit? If you’re already running S/4 HANA in the cloud, moving to RISE likely isn’t worthwhile. If you already have a large cloud infrastructure footprint and a mature support organization, RISE may not offer the necessary value needed to move to this model.
How Liberty can help in your SAP journey
In conclusion, SAP has caught up with its peers in the ERP space in terms of offering a cloud-hosted solution while simplifying the licensing process and helping to reduce support complexity. While RISE is optional for customers moving to S/4, we are seeing SAP push customers towards RISE and away from the perpetual licensing model through the offered commercial terms in the mid-market space. If you’ve already decided on RISE, you can negotiate with the hyperscalers to get better terms. Do this BEFORE signing your RISE agreement with SAP. If you aren’t beholden to Microsoft or Amazon, include Google in this process. We’ve seen clients get favorable terms for GCP.
If you are considering SAP RISE and want an objective, independent opinion, don’t hesitate to reach out to me or another of our advisors. Liberty has no financial arrangements with any software or other company mentioned in this post, and we pride ourselves on providing candid advice to our clients. Also, please stay tuned for my next post discussing key considerations when planning an upgrade from SAP ECC to S/4.