Modelling RISE versus brownfield S/4HANA over seven years.

The choice between RISE with SAP Cloud Private Edition and a brownfield S/4HANA conversion is the most consequential SAP decision a CIO will make this decade. The comparison is also the easiest one to get wrong, because the two options carry different cost structures, different cash flow profiles, different operational obligations, and different exit positions. A side by side seven year TCO comparison is the only honest way to resolve the decision, and it has to be built with the same rigour on both sides of the line. This article documents the comparison framework, the variables that decide the answer, and the structural traps that distort the comparison when the buyer side leads cut corners.

The two options have to be modelled at the same scope

The most common error in a buyer side TCO comparison is to scope the RISE option against the SAP supplied bundle, and to scope the brownfield option against whatever the internal IT team can size in two weeks. The two sides arrive at different scopes, the comparison is not apples to apples, and the answer the model produces is the answer that reflects the scope error rather than the deal economics. The fix is to define the scope before the numbers are entered. Same workload definition, same user count baseline, same hyperscaler tier, same support coverage scope, same BTP roadmap, same growth schedule, same horizon.

The workload definition has to cover compute, storage, network, backup, and disaster recovery, at the same tier on both sides. If the RISE side carries a production plus disaster recovery configuration, the brownfield side does the same. If the brownfield side carries a three site disaster recovery model, the RISE side carries the equivalent. The same discipline applies to the test, development, and staging environments. Each environment is sized at the same scale on both sides, and the cost of each environment is captured in the same cost category on both sides.

The user count baseline has to be sourced from the SAP estate user log, with the role mapping applied to both sides identically. The RISE side allocates the role mapped user count to the FUE bands. The brownfield side allocates the same user count to the named user licences inside the existing SAP agreement. The same growth schedule applies to both sides, with the same drift assumptions across the seven year horizon. The growth schedule is the single largest source of scope drift in comparison models, and it has to be defined and locked before the model is built rather than after.

Year one through year three is where RISE looks cheaper

The RISE cost curve in years one through three is artificially compressed against the brownfield curve. The RISE proposal carries migration credits, FUE ramp pricing that sits below the steady state rate, and BTP credit allocations that consistently exceed actual consumption. The brownfield option carries the migration cost as an up front capital outlay, with the on premise infrastructure replacement or the hyperscaler reserved capacity commitment recognised in the same window. The result is a year one through three comparison that consistently shows RISE running fifteen to thirty percent below brownfield on cash basis.

The buyer side discipline is to recognise the compression. The year one through three savings under RISE are real, and they are usable for the business case, but they are not the full picture. The model has to carry the year four through seven curve, where the RISE cost rebases at the steady state rate, where the FUE recategorisation begins to bite, where the BTP overage rate becomes the operative rate rather than the bundled allocation, and where the hyperscaler markup is fully recovered against the brownfield reserved capacity benchmark.

The brownfield option in years one through three carries the bulk of the migration cost. The SI partner cost, the parallel run cost, the change management cost, and the training cost are all recognised in this window. The on premise infrastructure replacement or the hyperscaler reserved capacity commitment is also recognised here, with the depreciation or the reserved capacity amortisation running across years one through five or three. The brownfield year one through three view looks expensive against the RISE view because the brownfield curve is front loaded, not because the brownfield total is higher.

Year four through year seven is where the curves cross

The year four through seven curve is where the comparison actually resolves. The RISE side rebases at the steady state subscription rate, with the FUE recategorisation, the BTP overage rate, and the hyperscaler markup recovery all running at full rate. The brownfield side flattens as the migration cost is behind the curve, the on premise infrastructure or the hyperscaler reserved capacity is in steady state operation, and the SI partner cost rolls off to the support and maintenance baseline. The brownfield steady state cost is consistently lower than the RISE steady state cost in this window, by between twelve and twenty eight percent across the firm engagement base.

The crossover point typically sits between month thirty six and month forty eight, depending on the deal structure. A RISE deal with aggressive year one through three pricing and a steeper year four rebase will cross over earlier. A brownfield deal with a heavier migration cost and a slower on premise depreciation curve will cross over later. The model has to identify the crossover point explicitly, because the crossover point is the inflection that decides the seven year total, and it is also the inflection that decides the optionality conversation.

The optionality conversation runs in parallel with the cost comparison. The brownfield option preserves the buyer ability to renegotiate at year five or year seven without operational disruption. The RISE option binds the buyer to the SAP contract through the renewal cycle, with limited ability to renegotiate without a credible exit posture. The seven year total cost is not the only output of the model. The optionality at each year is a separate output, and the comparison resolves on both outputs together.

The hyperscaler line decides the bundled comparison

The single line item that most distorts the RISE versus brownfield comparison is the hyperscaler cost line. Inside the RISE bundle, the hyperscaler price is opaque, sized at between eighteen and thirty two percent above the open market reserved capacity rate, and bundled into the subscription so the buyer cannot decompose it. Inside the brownfield model, the hyperscaler line is transparent, priced at the open market reserved capacity rate, and the buyer retains the ability to renegotiate the hyperscaler choice at any point.

The buyer side discipline is to model the hyperscaler line independently on both sides. The brownfield side carries the hyperscaler reserved capacity at the open market rate, sized against the workload definition that applies to both sides. The RISE side carries the bundled hyperscaler at the SAP supplied rate, with the implied markup documented as a separate line. The bundled comparison shows the markup, and the markup is the negotiation surface. A buyer who walks into the RISE conversation with the hyperscaler markup explicitly documented will routinely concede an eighteen to twenty eight percent reduction on this line.

The hyperscaler line also drives the optionality conversation. Inside the brownfield model, the buyer can switch hyperscaler at the end of the reserved capacity term, with a defined switching cost. Inside the RISE bundle, the buyer cannot switch hyperscaler without renegotiating the RISE contract, which is the structural lock the bundled framing produces. The model has to capture the optionality cost on both sides, with a defined switching cost on the brownfield side and a defined renegotiation cost on the RISE side.

FUE versus named user drift over seven years

The FUE entitlement on the RISE side and the named user licence model on the brownfield side carry different drift mechanics, and the seven year comparison has to capture both. The RISE side carries a banded FUE schedule, with recategorisation latitude that sits with SAP, with a growth schedule that is priced inside the contract, and with an annual escalation that runs on a defined cap. The brownfield side carries the existing named user licence model, with the maintenance escalation that applies to the SAP support contract, and with the user growth carried as named user additions at the in contract rate.

The drift on the RISE side is structurally upward across the seven year horizon. Across the firm engagement base, a RISE deal that closes with the SAP supplied FUE allocation will see the total FUE cost rise thirty to fifty percent across the term, driven by user growth, role drift, and band recategorisation. The drift on the brownfield side is structurally lower, because the named user model has fewer categorisation degrees of freedom, and the maintenance escalation runs on a capped basis inside the existing contract.

The buyer side discipline is to model both drift schedules independently, with the same growth schedule applied to both. The role mapping baseline produces the FUE band allocation on the RISE side, and the same role mapping produces the named user allocation on the brownfield side. The drift on each side is sized against the contract mechanics, with the recategorisation clause on the RISE side and the named user uplift schedule on the brownfield side. The model output shows the seven year FUE total against the seven year named user total, with the delta documented as a discrete line in the comparison summary.

Exit cost is the line nobody models and everybody regrets

The exit cost line is the most underweighted line in the RISE versus brownfield comparison, and it is the line that decides the value of the optionality conversation. Inside the RISE option, the exit cost is a function of the contractual transition assistance, the data extraction terms, the knowledge transfer obligations, and the early termination penalties. Inside the brownfield option, the exit cost is a function of the on premise infrastructure disposal, the SAP licence return obligations, and the data migration cost to whatever replaces the SAP estate.

The buyer side discipline is to model the exit cost at three points across the horizon, at year three, at year five, and at year seven. The year three exit captures the early termination scenario, where the buyer has discovered that the chosen option is not delivering against the business case. The year five exit captures the mid term renegotiation scenario, where the buyer is testing the market against the incumbent. The year seven exit captures the end of term scenario, where the buyer is making the renewal versus replacement decision.

Across the firm engagement base, the exit cost at year three on the RISE side runs between fifteen and twenty eight percent of the total contract value, driven by the early termination penalties and the parallel run cost of standing up the replacement. The exit cost at year three on the brownfield side runs between eight and fifteen percent of the equivalent total, driven by the on premise asset disposal and the data migration cost. The exit cost differential is a structural component of the comparison, and it has to be modelled on both sides if the optionality conversation is to be honest.

The model decides the deal, not the headline price

A side by side RISE versus brownfield comparison built with this discipline produces an answer that survives the boardroom. The two options are scoped identically, the cost categories are sourced from independent benchmarks, the year by year curves are visible, the crossover point is identified, the hyperscaler markup is exposed, the FUE drift is captured, and the exit cost is modelled at three points across the horizon. The answer is the answer the model produces. The deal closes around that answer, against the contract surfaces that the model has identified.

Across the firm engagement base, this discipline has resolved the RISE versus brownfield comparison in favour of RISE in approximately thirty percent of deals, in favour of brownfield in approximately thirty five percent of deals, and in favour of a hybrid model in approximately thirty five percent of deals. The decision turns on the workload composition, the user role mix, the BTP roadmap, the hyperscaler choice, and the optionality cost the buyer is willing to accept. The decision does not turn on the headline price of either option. The headline price is the input to the conversation. The seven year side by side TCO model is the conversation.