Texas-Based Oil & Gas Enterprise Rejects One-Size-Fits-All RISE with SAP Proposal and Negotiates Phased Migration Model
Industry: Oil & Gas Location: Texas Employees: 65,000
Challenge
A Texas-based oil and gas giant with 65,000 employees was charting its path to modernize on SAP S/4HANA. As SAP ECC (the company’s long-standing ERP system) approached its end-of-support date, SAP’s sales team presented a RISE with SAP proposal to facilitate the move to S/4HANA Cloud.
However, the offer was a classic one-size-fits-all deal: a massive, all-encompassing contract that assumed the enterprise would migrate its entire global operations to SAP’s cloud in one big bang.
The proposed RISE subscription bundled software, cloud infrastructure, and services for every user and system — carrying an enormous price tag and rigid terms.
From the start, the oil & gas company had reservations. Committing to a full cloud migration on SAP’s aggressive timeline posed significant risks. They had complex upstream and downstream applications integrated with SAP, some of which were not ready for cloud transition. An immediate switch could jeopardize critical business processes (from refinery management to distribution logistics) and leave expensive assets underutilized. Moreover, the standard RISE contract left little room for flexibility in user counts or phased implementation, meaning the company would pay for the whole package even if large parts of the business weren’t cloud-ready for years.
“SAP’s initial RISE proposal was essentially ‘move everything now and trust us’,” says the CFO. “It ignored the reality on the ground — our landscape, our timelines. We were looking at a hefty bill and a lot of uncertainty if we went their way.”
Determined to avoid a costly misstep, the enterprise brought in Redress Compliance to advise on contract negotiation and strategic planning. The goal was to reject the cookie-cutter approach and negotiate a phased migration model that fit the company’s technical readiness and transformation roadmap.
Solution
Working closely with the client’s IT and procurement teams, Redress Compliance reshaped the conversation with SAP entirely. Rather than accepting SAP’s migration playbook, they built a custom strategy that put the customer’s needs first.
Key tactics and negotiation focus areas included:
- Baseline Assessment & Right-Sizing: Redress conducted a thorough audit of the company’s current SAP ECC usage. They identified inactive users, duplicate licenses, and modules that could be retired or consolidated. By right-sizing the user count and eliminating waste, the team drastically lowered the baseline for the S/4HANA subscription. This analysis showed that the enterprise didn’t need as many Full User Equivalents (FUEs) as SAP’s proposal assumed, immediately strengthening the company’s bargaining position.
- Phased Migration Roadmap: Together with the client’s executives, Redress crafted a multi-year migration plan dividing the journey to S/4HANA into manageable phases. For example, Phase 1 would move the finance and HR systems to RISE with SAP S/4HANA in a private cloud, while manufacturing and supply chain systems would migrate in later phases. They even planned a pilot migration for one regional business unit to S/4HANA to prove out the process before company-wide rollout. This roadmap became a powerful negotiation tool: it gave SAP a clear vision of when each part of the business would transition, justifying a contract that ramped up over time instead of charging for everything from day one.
- Hybrid Landscape Agreement: Redress negotiated terms to allow a hybrid IT landscape during the transition period. Under this arrangement, the company could continue running SAP ECC on-premise for certain operations while gradually moving other systems to the cloud — without incurring double licensing costs. SAP’s standard proposal didn’t explicitly allow this, but Redress pressed for contract clauses that recognized the co-existence of legacy and cloud systems. This meant, for example, a plant maintenance module could remain on ECC for a year longer while finance moved to S/4HANA, all under a coherent license framework.
- Customized RISE Contract Terms: Perhaps most critically, Redress fought for flexibility in the RISE contract. They negotiated subscription adjustments aligned to the phased schedule: the initial subscription covered only the first phase scope (a subset of users and systems), with options to expand in predefined increments as each new phase went live. The contract included safeguards like the right to reallocate or even reduce license counts if business needs changed, and a cap on annual price increases for renewal periods. Additionally, they secured assurances that any indirect access between on-premise systems and cloud (during the hybrid period) would not trigger extra fees. These protections converted the RISE deal from a rigid package into a living agreement supportive of the company’s evolving needs.
“Our negotiation stance was that flexibility had to be baked in,” notes the Redress Compliance lead consultant. “We knew SAP is eager to get customers onto RISE, but we made it clear that value for the customer comes first. We used data to show what the client truly required and insisted on a phased approach. In the end, SAP listened.”
Throughout the process, Redress facilitated open dialogue with SAP while leveraging industry benchmarks. The team came prepared with examples of other large enterprises that negotiated custom RISE arrangements, which added credibility to the requests.
They also timed the negotiation strategically: with the ECC support deadline looming, SAP was keen to secure the client’s commitment, a leverage point that Redress used to win concessions on critical terms.
Results
By rejecting the one-size-fits-all proposal and pursuing a fact-based negotiation, the Texas oil & gas enterprise achieved a RISE with SAP agreement tailored to its transformation journey.
The results were transformative for both cost management and project success:
- Phased Migration Contract: The company signed a phased RISE with SAP contract that mirrors its migration roadmap. Instead of an up-front commitment for 65,000 employees, the initial subscription covers the first wave (for instance, 20,000 users in Phase 1), with contractual options to onboard additional users and systems in Phase 2 and Phase 3 at predetermined rates. This phased model ensures the company pays for cloud capacity as it actually uses it, not years in advance.
- Cost Avoidance and Savings: By right-sizing and phasing, the enterprise avoided an enormous immediate cost. Compared to SAP’s original all-in proposal, the negotiated deal is expected to save tens of millions of dollars over the migration period. Funds that would have been spent on idle licenses are now freed up to invest in training, change management, and process optimization to make the S/4HANA transition smoother.
- Hybrid Operations with No Disruption: Thanks to the hybrid landscape agreement, the business can keep critical operations running on ECC until they’re ready to move. This prevented a rushed cutover that could have caused downtime. For example, during Phase 1, while core finance is in the cloud, the production plants continue on ECC seamlessly. Users have the access they need in both environments without compliance headaches. The negotiated terms ensure that this parallel run is compliant and that the company isn’t penalized for maintaining a dual environment temporarily.
- Strategic Flexibility and Risk Mitigation: The final contract includes the flexibility to adjust to the unexpected. If market conditions or corporate strategy shifts, the company can slow down or speed up later phases, and the contract will adapt (within agreed boundaries) rather than break. Importantly, renewal terms were locked in to prevent a price spike after the initial term. The enterprise also obtained clarity on ancillary costs: for instance, SAP agreed to include a baseline of SAP Business Technology Platform credits and transparent pricing for any excess, eliminating surprises in case the company builds new cloud extensions. Overall, the negotiated deal de-risks the transformation.
“We achieved what we set out to do — a tailor-made journey to S/4HANA,” reflects the CIO. “Instead of a forced march, we have a flexible migration in stages that our business can absorb. And we didn’t have to pay for SAP licenses we won’t use right away. It’s a win-win: SAP gets our commitment to the cloud, and we get the right terms to make it successful.”
Results Summary: The Texas oil & gas enterprise turned a daunting, inflexible RISE with SAP proposal into a customized phased migration agreement. This strategic negotiation resulted in a scalable contract that aligns with the company’s timeline and hybrid cloud needs.
The company avoided unnecessary spend by only committing to what it needs when it needs it, all while securing the runway to complete an S/4HANA transformation by its target date. What could have been a disruptive, high-cost project is now a well-controlled, business-aligned transformation program, underpinned by a fair and flexible SAP contract.
