Since RISE is still relatively new to the market, there is a lot of uncertainty around what the pros and cons of RISE are and how to know whether it is the right move for you. It also doesn’t help that SAP is still struggling to produce valid references for clients who consider RISE.
Adopting RISE is a complex decision, and many companies are unaware of the implications it will have on their environment and go-forward strategy. While RISE may be a great fit for your company, it’s important to be aware of the potential risks this bundled subscription offering presents. Here are some of the top risks to consider when evaluating whether SAP RISE is the right fit for you.
Maintaining Custom or Third-Party Products
You may run into some issues with RISE if your environment contains custom or third-party products. SAP does not support customizations or integrations through the RISE model, so customers don’t have the luxury of deploying out of the box in S/4HANA. This can be further complicated by the requirement to maintain a highly customized environment.
RISE could require serious changes to the environment you have been working with, so it is not necessarily the best fit for those with highly customized environments or environments with customer or third-party products.
Because customers do not have the ability to maintain third-party products in the RISE environment, SAP’s RISE offering may not be as comprehensive as advertised. Customers will have to manage any additional services through SAP or other third-party providers.
Impact on Vendor Relationships
If you have an existing relationship with other vendors or resellers, selecting RISE can negatively impact your go-forward strategy with them. You need to ask yourself where your relationship with SAP stands compared to your other vendor relationships. You also need to assess whether you will be operating with SAP at the right level so that they can empower you in your transformation without taking the lead and making decisions for you that mostly benefit them.
Additionally, if you already have a third-party offshore provider doing all your BASIS support and application maintenance, carving out your SAP load and giving it to RISE may not be efficient. In fact, it will likely add complexity and impact the commercial relationships you’ve made with these other vendors that negatively impact your operating model.
Since the RISE offering involves moving from the traditional CapEx model to an all OpEx model, customers may be more averse to transitioning to RISE from a cost perspective. Current customers who are considering shifting away from the Perpetual model in favor of the RISE SaaS model may require a complete re-integration or transformation when adopting RISE. Understanding the long-term financial impact for a business is important, as there are new skill sets that are required in making the transition from SAP Perpetual to RISE.
Complex Contract Negotiations
Commercially and financially, RISE can be quite complex to negotiate. In addition to the commercial and financial aspects of a RISE deal, customers will have to navigate their way through SAP’s extensive services and operation RACI while trying to understand what services are in and out of scope for the project. Without a comprehensive strategy, customers can overlook the nuances of the RISE deal and assume they have more predictability than they currently have. Renewals, swap rights, price protections, and other previously negotiated terms may not be applicable under the RISE model, so it is critical to understand what is included and negotiate these items into your RISE agreement.
Isolates Your IaaS Strategy
Customers who already have their own Infrastructure-as-a-Service (IaaS) strategy sometimes find it challenging to implement RISE, since RISE is not a simple add on to their IaaS strategy. RISE could create an island around their cloud strategy, which is unappealing to customers who already have their strategy in place and do not want to isolate it. In some cases, customers will have to sometimes re-negotiate their existing hyperscaler contracts based on the implications of RISE.
Thus, an impact assessment is imperative to assess your organization’s operating environment to understand how RISE will adjust your IaaS strategy. From there, you can determine whether isolating your IaaS strategy to make room for RISE would be beneficial in the long-term for your environment.
Lack of Hyperscaler Cost Transparency
Hyperscaler incentives and investments are provided. However, these incentives and investments are not usually made transparent for clients, and they may cause uncertainty around the benefits the client is actually receiving. Clients may be under the assumption that they are getting a good deal, but do not have transparency into the hyperscaler costs outside of the RISE deal. It is critical to assess whether a DIY approach or negotiating the hyperscaler separately may lead to a better and more transparent deal.
Inability to Revert to Perpetual Model
Lately, the right to revert to a Perpetual model is not typically provided once the client decides to go with RISE. If you choose the RISE route, you are committed to that moving forward. That’s why it is so crucial to be honest about where your company stands and whether you are ready for a RISE environment.
Clients want more flexibility with their infrastructure landscape and do not have complete confidence in SAP’s sizing approach when it comes to the RISE model. SAP may under or oversize the client environment, leading to significant risk exposure throughout the lifecycle of your program.
SAP has said that they are purposely going to limit their investments in their Perpetual license model and have set expectations with Wall Street around the associated decreases in perpetual revenue. Perpetual licenses have always been important to them and their maintenance stream, but SAP is absolutely tailing that off currently to drive cloud increase and not providing customers the option to revert is part of that.
The Bottom Line
SAP is pulling multiple levers in their aggressive push to drive RISE adoption and any customer considering S/4HANA will likely need to evaluate a RISE proposal. We have seen RISE be the great fit for certain customer’s journey and goals, but we have also seen RISE be a complete mismatch for a customer’s objectives. When evaluating whether RISE is the right fit for you, keeping these risks in mind and assessing whether you are equipped to handle them is a critical part of the process.
At UpperEdge, our team of dedicated SAP advisors and SAP RISE experts are available to help guide you through your SAP initiative. With over 100 years of combined experience and 1000 transactions, our team has used their experience to develop their Integrated Sourcing Strategy to help customers navigate the complexities of the journey to S/4HANA, including evaluating whether RISE is the right fit for you. Reach out today to learn more about how this integrated approach can work for your company.