SAP S/4HANA Migration: 40% Cost Reduction

The Situation

A €2.8 billion industrial conglomerate with operations across Europe and North America had committed to migrating from SAP ECC 6.0 to SAP S/4HANA following SAP's end-of-mainstream-maintenance announcement for ECC. The migration was a strategic imperative with a five-year implementation window.

SAP's commercial team had proposed a migration pathway through SAP RISE (Private Cloud Edition) — a bundled cloud subscription that included licences, infrastructure, and migration services. SAP's proposal valued the five-year RISE commitment at $27.5M, representing a 58% increase over the client's existing on-premise SAP ECC licence and support costs.

The client's IT leadership accepted the migration need but challenged the commercial model. Specifically, the group CTO was concerned about the indirect access exposure created by the client's integration landscape — including 14 third-party systems that interacted with SAP data via middleware — and SAP's assertion that this exposure needed to be resolved through the RISE contract at significant additional cost.

IT Negotiations was engaged three months before the SAP commercial deadline, with a mandate to challenge the indirect access exposure claim, evaluate RISE versus alternative migration paths, and reduce the total migration commercial commitment.

The Challenges

• Indirect access exposure quantification. SAP had provided an informal estimate of $8M in indirect access liability arising from the client's 14 integration points. The validity of this figure — and the legal basis for the claim under the client's existing licence agreement — had not been independently assessed. The exposure was being used as leverage to close the RISE deal quickly.
• RISE vs. on-premise vs. hyperscaler lift-and-shift. SAP's RISE proposal was not the only migration path. A hyperscaler-hosted S/4HANA on AWS or Azure with a traditional licence structure would have delivered comparable functionality at potentially lower total cost. The client had not been presented with a like-for-like commercial comparison.
• RISE contract term lock-in. SAP's standard RISE contract included a five-year take-or-pay commitment with limited exit rights and significant penalties for scope reduction mid-term. The client needed contract protections that would accommodate business change over a five-year period — including potential divestitures of operating units.
• Digital access and API model charges. SAP's proposal included charges for "digital access" based on document volumes generated by non-SAP systems touching the SAP data layer — an additional cost structure that the client's internal team had not modelled and that could add $1.5M+ annually at projected growth rates.

Our Approach

IT Negotiations assigned a senior SAP licensing specialist — a former SAP regional account director — alongside a contract lawyer with SAP licensing experience. The engagement ran across four workstreams over 12 weeks.

Indirect Access Liability Analysis. We reviewed SAP's indirect access claim against the client's existing licence agreement terms, the 14 integration point architectures, and SAP's published indirect/digital access policy documentation. Our analysis found that SAP's $8M estimate relied on a methodology that over-counted document creation events and incorrectly classified several integration patterns as indirect access when they operated within the named-user count already licenced. Our defensible counter-assessment reduced the quantifiable exposure to $1.4M. We presented this analysis formally to SAP's licence management team, which triggered a reassessment of SAP's position. The final agreed indirect access settlement was incorporated into the RISE contract at a cost of zero — absorbed into the migration commitment.

RISE vs. Alternatives Commercial Modelling. We built a five-year total cost of ownership model comparing SAP RISE Private Cloud against a hyperscaler-hosted S/4HANA deployment on AWS. The model included licence costs, infrastructure, SAP support, implementation services, and internal resource costs. The analysis showed that at the client's scale and usage profile, RISE offered a modest operational simplification benefit but not a compelling TCO advantage over a well-negotiated traditional licence structure. We used this analysis to create commercial leverage — SAP's account team understood that the client had a credible alternative and that RISE was not a foregone conclusion.

RISE Contract Restructuring. Armed with the TCO comparison and indirect access analysis, we renegotiated the RISE contract across four dimensions: (1) a 30% reduction in the RISE Annual Recurring Revenue baseline through right-sizing of included services and infrastructure tiers; (2) the inclusion of a formal divestiture accommodation clause allowing operating unit removal without penalty; (3) a fixed cap on digital access charges at current document volume levels, with a renegotiation trigger at 25% volume growth; and (4) a termination-for-convenience right after year three with a defined fee schedule. See our detailed SAP advisory service for more on how we approach SAP negotiations.

Support Cost Optimisation. We also secured a migration-period support discount during the parallel run phase — eliminating two years of full ECC support fees while both systems operated simultaneously. This alone delivered $2.1M of the total saving.

The Results

The final SAP RISE agreement was signed at $16.5M over five years, against SAP's original demand of $27.5M — a saving of $11M representing a 40% cost reduction. The breakdown:

Beyond the financial outcome, the client received contractual protections that significantly reduced commercial risk over the five-year migration period — the divestiture clause, digital access cap, and year-three termination right being particularly valued by the board-level risk committee.

The group CTO described the indirect access resolution as "the single most important outcome — not just for the $8M we avoided, but because it forced SAP to stop using it as a negotiating weapon." IT Negotiations has since been retained for the client's ongoing SAP licence management advisory.

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