RISE, Repricing, and Risk: What SAP’s Q2 Results Mean for Customers

SAP’s Q2 earnings announcement continued the streak of strong growth in current cloud backlogs and cloud revenues, showing that SAP is continuing to double down on its cloud-first strategy.

As a result, the pressure on customers is increasing. From shifting support policies to repackaged offerings and ever-rising costs, recent announcements make one thing clear: preparation is no longer optional.

Organizations evaluating RISE or renegotiating existing agreements must come to the table with a clear strategy, real leverage, and a deep understanding of SAP’s evolving playbook. Below are the key takeaways organizations must consider as they evaluate their SAP strategy.

SAP Q2 Financial Performance

During the investor call that accompanied the release of their second quarter results, SAP’s CEO Christian Klein cited global macroeconomic uncertainty and extended approval cycles as major headwinds that the company continues to face.

Some key results include:

• 22% increase in current cloud background
• 24% increase in Cloud revenue
• 9% increase in total revenue
• 2% increase in predictable revenue (now at 86%)

Despite cloud revenue’s continued growth, total revenues missed expectations leading SAP’s stock to drop.

RISE Adoption

At Sapphire, SAP laid out the strategic roadmap they are following to drive sales, and it appears to be working. The focus on converting on-premise customer to the cloud has resulted in 1,400 new customers making the move in the last year, bringing the total number of global RISE customers to over 8,500. Notable wins in Q2 include GSK, Alibaba, and Mercedes-AMG.

While EMEA, MEE, and APJ under Manos Raptopoulos continued to build momentum with strong cloud revenue growth, the Americas under Jan Gilg are still seeing slowed growth.

SAP’s Pricing Strategy: Shifting the Burden to Customers to Preserve Margins

While SAP continues to tout the business case for organizations to move to RISE, Klein was adamant their focus will remain on protecting SAP’s margins and recurring-revenue stream, even if that means placing additional burdens on their customers.

During the Q&A portion of Tuesday’s investor call, Klein was asked about SAP’s cloud pricing strategy. Klein began by addressing SAP’s preference for one-time Transformation Credits over steeper discounts but then surprised everyone with a blunt pivot and stated plainly that improving margins is SAP’s top priority.

More specifically, Klein said that “prices after discounts go constantly up” when referring to SAP’s pricing strategy. “That’s our goal, which is super important for our margin and the long-term.” Klein followed these remarks by stating, “prices are increasing quarter-over-quarter and that’s what we are achieving.”

While it is surprising to hear it put so bluntly, this rhetoric is aligned to what we’ve seen across SAP’s Cloud Agreements over the last year plus. SAP’s tactics include mandating in-term fee uplifts instead of deferring them to renewal, favoring credits over deeper discounts or unit price reductions, and raising list prices on a quarterly basis. These moves are creating a challenging commercial negotiation dynamic, leaving customers to absorb the cost of SAP’s margin-driven strategy.

If you’re heading into a RISE evaluation or renegotiation, this is your signal: come prepared. Now more than ever, customers need leverage, insight, and a clear strategy.

UpperEdge is here to help.

Revisiting Strategic Questions for SAP Customers: Two Months Post-Sapphire

In our Sapphire recap blog, we highlighted seven key questions for customers that were evaluating their SAP transformation. Two months out and with Q2 results published, we’ve captured a refreshed perspective on these questions and real-time insights into what we’re observing in the market as we support customers evaluations:

1. Pressure on On-Premise Customers: Cloud or Else?

SAP’s shift away from supporting on-premise customers is only accelerating. Key commercial terms such as swap rights, price protections, and maintenance locks are being retired.

For customers nearing end-of-mainstream support, we’ve seen SAP mandate execution of risk waivers to continue running legacy systems. This tactic effectively absolves SAP of any SLAs or delivery accountability. The message is clear: stay on-premise at your own risk.

2. Cloud Push: Strategic Shift or Commercial Play?

While over 85% of RISE adopters continue to favor the private cloud model, SAP has begun positioning a two-tier cloud strategy for certain customers. This model deploys public cloud in business units with fewer compliance requirements, while divisions with stricter requirements rely on private cloud.

While this shift supports SAP’s margin objectives, it introduces further complexity for customers to evaluate. We expect SAP customers will be met with higher labor and services costs given the nature of managing hybrid, multi-tiered environments.

3. Repackaged Cloud ERP: Flexibility or Lock-In?

The bundle now includes twice the number of standard solutions, but it remains unclear how much flexibility customers will have to unbundle offerings they don’t need or may have previously purchased.

Adding to the repackaging trend, SAP is set to release CAS for SAP Cloud ERP Private, a new offering bundling several operational services into a single SKU. Customers will need to closely evaluate the implications and business case for the suite of service offerings.

4. AI at Scale: Promise or Proven Value?

While Joule will soon be available across SAP and non-SAP applications, Klein shared that 20% of deals now include premium AI, suggesting that customers are still evaluating the ROI prior to adopting these solutions en masse.

Given the immaturity of SAP’s commercial offering, it’s important that customers consider piloting usage of SAP’s AI functionality prior to fully investing in an unproven suite of AI solutions.

5. Business Data Cloud (BDC): Next Big Bet or Bold Bluff?

SAP is making a bold bet on Business Data Cloud (BDC), projecting it will evolve into a multi-billion-dollar product family within the next few years. With over 100 data products already rebuilt, and plans to double that by year-end, BDC is fast becoming a cornerstone of SAP’s cloud roadmap.

We’ve observed SAP embedding BDC into RISE and LOB cloud agreements. Klein projects a 20–30% increase in Annual Contract Value once BDC is included.

Customers should anticipate BDC’s presence in future deal structures and prepare to scrutinize both the business case and long-term cost implications.

6. SLA Competitiveness: Earning Trust or Charging for It?

Despite sustained customer pressure, SAP has not aligned its SLAs with broader industry standards. Instead, customers must weigh the additional costs associated with the Premium SLA against the perceived value of these enhanced services.

7. Leadership Accountability: Real Change or Rhetoric?

At the beginning of the quarter, Jan Gilg made additional changes to the leadership in the Americas:

• Adriana Aroulho has been appointed President of SAP LATAM & Caribbean.
• Cathy Tough is now Country Manager for Canada, reporting to Chris Luistro, who has expanded his remit to include Canada as part of his Northeast territory.

Whether these changes will drive tangible results for customers remains to be seen, but after the second quarter of trailing EMEA and APJ on cloud revenue growth, Gilg is likely to intensify his leadership team’s focus on execution.

The Bottom Line

As SAP accelerates its cloud push and sharpens its commercial strategy, customers are being asked to absorb more risk, cost, and complexity. Whether you’re evaluating RISE, renegotiating terms, or navigating new offerings, success will hinge on preparation, insight, and a strategy grounded in real market intelligence.