RISE with SAP, and whether to

Laura: The number that should scare you in a RISE proposal is not the price. It is the FUE count. Because the user equivalent count they put in the proposal is padded, routinely, by twenty to forty percent, and almost nobody rebuilds it from their actual usage.

Bill: And you are signing a five year subscription on that padded number. The pad does not go away. You rent it for the whole term.

Bella: Today, the SAP migration, the deadline doing the selling, and the two metrics that decide your bill, the user count and the documents. This is Off List. Read the paper before you sign it.

Bella: Welcome back. Bella here, with Roger, Bill, and Laura. Last week we took apart the Microsoft agreement. Today, the other giant, and the harder one, because it is not a renewal, it is a migration with a clock on it. We will cover what the bundle actually contains and why the pieces are cheaper apart, the deadline and why it is the best salesperson SAP has, how the flagship offer compares to the newer cloud offer and to staying put, and the two metrics that quietly decide the whole bill, the user equivalent count and the document based indirect access charge. Bill, you carry the ERP scars. Frame it honestly.

Bill: Honestly, the destination is usually right. The old platform has a real end of support date, the newer technology genuinely is a generation ahead, and for most large companies modernizing is the correct call on the merits. So this is not a story about a pointless migration. It is a story about being moved on the vendor's timeline, in the vendor's vehicle, at a price set by your lack of alternatives, and how to claw back some control. Most companies negotiate the destination, which was never really in doubt, and forget to negotiate the journey, which is where all the money is.

Roger: And the journey has more moving parts than any deal we cover on this show. There are four separate cost lines braided into one subscription, and if you cannot pull them apart, you cannot negotiate any of them.

Bella: Roger, name the four lines. Someone gets a RISE proposal. What is actually braided together in that one subscription price?

Roger: Four things, and they used to be four negotiations. One, the application itself, the newer generation of the core system, priced on a user metric we will get to. Two, the cloud infrastructure it runs on, which is really a hyperscaler underneath, resold to you inside the bundle. Three, the platform and integration tooling, the credits you use to build extensions and connect other systems. And four, the indirect access, the document based charge for other systems touching your SAP data. Application, infrastructure, platform, indirect. Four lines, one number, and the number is theirs to blend.

Bella: And the case for pulling them apart is not just principle. There is a real number on it.

Roger: There is. When you rebuild a RISE proposal as its own components, buy the infrastructure straight from the hyperscaler, license the core system on its own, take the platform tooling discretely, the disaggregated version comes out meaningfully cheaper. In the proposals I have seen rebuilt, the separated approach landed somewhere in the mid teens to high twenties percent below the bundled RISE price, in a solid majority of cases. So the convenience of one throat to choke is costing you, call it, fifteen to twenty five percent, and it is invisible because you never see the components.

Bill: And that is the whole design of the bundle. When infrastructure and application and platform are three line items, you can benchmark each, push on each, walk away from parts. When they are one subscription, you get one percentage off one blended number and the blend is constructed so you cannot tell where the margin is. My rule going into any RISE conversation is a demand, not a request. Show me the four lines. Decompose the bundle in writing. If they will not, that refusal tells you exactly where the margin is hiding.

Laura: There is also the ownership shift underneath all of it, which is easy to miss in the pricing fight. The old world, you bought licenses, you owned them, maintenance was a percentage on top, painful but yours. RISE converts that into a subscription you never stop paying, and the day you stop, you have nothing. That is a genuine strategic change in your relationship to the software, and it should be a conscious board level decision, not a thing that happened because the migration bundle was the easiest path off the old system.

Roger: Negotiate it like a permanent relationship, because it is one. This is not a three year deal you revisit casually. For most companies the core ERP is a twenty year commitment, and RISE makes it a twenty year subscription. Every clause you wave through today, you live with for a very long time.

Bella: The deadline. Bill, you opened with the clock. Give people the real dates, and then how you take the power out of it.

Bill: The real dates first, because the sales conversation blurs them on purpose. Mainstream maintenance for the old core platform ends in twenty twenty seven. That is the date everyone quotes at you. But there is extended maintenance available past that, through twenty thirty, at a premium. And after twenty thirty, that is genuinely end of life. So the honest picture is not a single cliff in twenty twenty seven. It is a mainstream date in twenty seven, a paid extension window to twenty thirty, and the real end at the end of the decade. The vendor conversation compresses all of that into, you must move now, and now happens to be this quarter, in this vehicle, at this price.

Roger: And watch how the incentive is timed against that clock. The migration discounts tend to be richer earlier and thinner as the deadline approaches. SAP has openly used deep discounts to pull on premise customers onto the subscription, and those sweeteners are front loaded. Move early, get the incentive. Wait, and watch it erode as your options narrow and your deadline closes. It is a beautifully built squeeze, front load the carrot, own the stick, and let the calendar do the closing.

Laura: So how do you take the air out of it, since you cannot argue the date away.

Bill: You attack the urgency, not the date. Three moves. One, know your real fallback precisely, including the paid extension to twenty thirty and third party support options that exist outside SAP entirely. When you genuinely understand your fallback, the twenty twenty seven cliff becomes a twenty thirty slope, and a slope is negotiable. Two, and this is the important one, separate the engineering deadline from the commercial deadline. The date by which you must be off the old technology and the date by which you must sign this particular RISE offer are not the same date, no matter how hard the conversation fuses them. You can commit to a modernization timeline without committing to their vehicle at their price this quarter. Three, start early enough that you are not deciding under the gun, twelve to eighteen months before your renewal anniversary, because that is when you can still negotiate the four lines independently instead of as a panicked bundle.

Roger: The reframe I give every client. The engineering deadline is a real constraint on your architecture. It is not a constraint on your negotiation. Pull those two apart, out loud, in the room, and half the pressure evaporates, because now you are negotiating a large modernization on your terms instead of racing a clock the vendor is holding.

Bella: The engineering deadline is real. The commercial deadline is manufactured on top of it, and the whole squeeze depends on you not noticing they are two different things.

Bella: Let us talk about the metric, because Laura opened the show with it and it is the number that decides the application bill. The Full User Equivalent. Explain it, and then the pad.

Laura: So SAP does not just count named users the simple way anymore. It converts your user population into Full User Equivalents, FUE, where different user types carry different weights, a heavy professional user counts as a lot, a lighter self service user counts as a fraction, and they roll it all up into one FUE number that the application price is built on. And here is the thing that should have everyone rebuilding their proposal. The FUE count SAP puts in the proposal is, in our experience and across a lot of engagements, padded above what your actual usage can defend, and not by a little, by something like twenty to forty percent. They classify users into heavier categories than the work justifies, and the whole application tier is priced on that inflated count.

Bella: And you can fight it.

Laura: You can rebuild it from the ground truth. Pull the actual transaction logs, see what people genuinely do, and reclassify from evidence instead of accepting their categories. When companies do that rebuild, they recover a real chunk of the application tier, in the range of fifteen to nearly thirty percent, just by correcting the classification. That is not a discount you beg for. That is the vendor's own metric, corrected with your own data. And almost nobody does it, because it is tedious, and the tedium is exactly what they are counting on.

Bill: The whole industry runs on the hope that you will not read the logs.

Roger: This is the SAP version of the Microsoft baseline point from last week. The metric is padded, the pad gets committed for the whole term, and correcting it is worth more than any discount percentage. Bring your own measured count. Make them justify their classification against your logs. It is the single highest value hour of work in the whole negotiation.

Bella: Now the three paths. The flagship managed offer, the newer public cloud offer, and staying put. Roger, who is each really for, with the price shapes.

Roger: Broadly, and every estate deserves its own analysis. The flagship RISE offer is aimed at the large, complex enterprise with heavy customization, and it prices on the FUE model we just described, roughly a couple hundred to a few hundred dollars per user equivalent per month depending on mix and scale. The newer public cloud offer, GROW, is aimed at net new mid market buyers willing to adopt standard processes with light customization, and it is materially cheaper per user equivalent, call it the low hundreds, because you are giving up flexibility for standardization. And staying put on the paid extension is for organizations who have genuinely concluded the timing is not right and are prepared to manage support deliberately rather than by neglect.

Bill: The trap I see most is a company that should be looking hard at the cheaper standardized path getting steered to the heavy flagship offer, because the flagship is a bigger deal for the vendor. If a lot of your customization is historical accident rather than genuine differentiation, you may belong in the cheaper lane, and nobody on the sales side is paid to tell you that. The question to force internally, before the vendor is in the room, is what of our customization actually differentiates us and what is just twenty years of nobody cleaning up. That honest, expensive question changes which product you belong in, and it can change your bill by more than any discount.

Bella: Now the one that genuinely frightens people, and it should, because it is the least understood charge in the entire SAP relationship. Indirect access, priced on documents. Laura, explain it plainly.

Laura: So this is the charge for other systems touching your SAP data, and years ago it was a nightmare of ambiguity, people getting billed for indirect use nobody could predict. SAP moved to a cleaner model that prices it on documents instead of users. Nine document types are counted, the big ones being sales documents and invoice documents, and then purchase, service, manufacturing, quality, financial, material. The document is counted once when it is created, and importantly, reads and updates are not recharged, so it is creation events, not activity. That part is actually fairer than the old world.

Bella: And the pricing.

Laura: The pricing is where the negotiation lives. Listed, a document runs somewhere around a third to a half of a dollar, call it thirty five to fifty five cents each. Negotiated, and this is the spread that matters, buyers get it down to something like eight to twenty two cents. So the negotiated rate is a fraction of list, often less than half, sometimes a third. If you accept the list rate on documents, you are leaving an enormous amount on the table, because this line is more negotiable than almost anything else in the deal.

Bill: And the count is the trap, exactly like the user count. When you run the estimate on an integrated landscape, all your integration flows, your third party applications, your direct interfaces firing documents into SAP, the real document count comes in at two to four times the buyer's own internal estimate. So companies budget for indirect access based on a guess, and the actual measured count is triple. You have to instrument this and measure your own document volume before you negotiate, because if the first time you learn your real number is in their proposal, you have already lost the argument.

Roger: And there is a transition program, the Digital Access Adoption Program, that offers discounted conversion for companies moving off the old indirect model, with credit for indirect or named user licenses you already bought. Which is genuinely useful, but it is also timed, and the pitch is move now for the good conversion rate. Same front loaded incentive as the migration itself. Do not let the conversion discount rush you into a document count you never independently measured.

Bella: What are the other levers people miss?

Roger: Two more that are pure money. First, the platform credits. RISE bundles a pool of platform and integration credits, and those pools strand. In the deals we have looked at, something like a quarter to over forty percent of the bundled credit pool goes unused at the end of the cycle, pure waste you paid for up front. Consolidate what you actually need and run a quarterly burn down review, the same discipline as a cloud commitment. Second, the region lock. The infrastructure underneath is in a specific hyperscaler region, and the contracts often carry a clause that if you need to move region mid term, there is a price uplift, on the order of fifteen to twenty percent. If there is any chance your data residency needs change, you negotiate that region flexibility at signing, when it costs nothing, not later when it costs twenty percent.

Bill: And the dual run cost, which ambushes everyone. There is a period where you are paying for RISE and still running the old system because you cannot cut over instantly. If you do not negotiate that overlap deliberately, you can pay for your core system twice for a year or more. On a system this size that overlap can be one of the largest numbers in the whole deal, and it is invisible if you only look at the subscription rate. Get the transition pricing and the overlap terms in writing, up front.

Bella: Round to close. One sentence. The single highest value move for a company facing this migration. Laura.

Laura: Rebuild the Full User Equivalent count from your own transaction logs. It is padded twenty to forty percent, you recover fifteen to thirty, and it is the vendor's own metric corrected with your own data.

Bill: Separate the engineering deadline from the commercial one. Twenty twenty seven is mainstream, there is a paid extension to twenty thirty, and you must modernize on a timeline but you do not have to buy this vehicle this quarter.

Roger: Demand the four lines in writing. Application, infrastructure, platform, indirect. The bundle runs fifteen to twenty five percent above the parts, and you cannot negotiate what you cannot see.

Bella: And mine. Measure your own document count before they hand you theirs, because on an integrated landscape the real number is two to four times your guess, and the negotiated rate is a fraction of list. Next week, negotiating a whole book of vendors when you are one person. This is Off List. Read the paper before you sign it.