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November 22, 2016updated 13 Jan 2017 11:41am

Enterprise software licensing and IoT – UK SAP users want clarity

Licensing is commercially sensitive for all but in a fast moving market a lack of planning could leave your business paying the price

By James Nunns

Anywhere between 20 and 30 billion connected devices are predicted to be in place by 2020 and it’s going to impact everything – especially licensing.

Plenty of the excitement and buzz around the Internet of Things is understandably tied to the consumer side but serious issues need to be addressed at the enterprise level when it comes to licensing agreements.

While the figures from analysts will be the ones grabbing the headlines, it is the impact on licensing agreements which enterprises and vendors need to look at before they can truly cash in.

The subject matter was raised by Philip Adams Chairman, UK&I SAP User Group, who spoke of needing clarification from SAP when it comes to indirect usage.

Adams said: “We understand the benefit of a connected economy but we need clarity on what it means for our licenses.”

As Adams recognised, this isn’t an easy fix.

Picture the example of a broken fridge, in a connected world that fridge could pre-empt it breaking down and call for maintenance, if that fridge pinged back to SAP then how is the company charged?

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Hala Zeine, Senior VP of SAP Portfolio and Commercialization Strategy, SAP, said in a

Hala Zeine, Senior VP of SAP Portfolio and Commercialization Strategy, SAP.

Hala Zeine, Senior VP of SAP Portfolio and Commercialization Strategy, SAP.

roundtable attended by CBR that details of this can’t be revealed because it would give away the pricing which is not published.

Licenses will need to be created that is fair to both the customer and the tech vendor and Zeine pointed to the challenge saying: “What happens over time because this area is moving so quickly is that you have certain components that are licensed separately and the question is how do you make it in a way that is more meaningful for customers.”

The SVP went on to say that the company provides software which has value and it licenses against that value, “from a total policy point of view that will not change.”

While the IoT could still be considered to be very much in its embryonic stage with real world production deployments still trying to gain traction, even these smaller deployments should represent a considerable concern.

The risk is that examples like this indirect use could be in breach of license terms and result in a fine. Or if the license is not carefully crafted then it could see much higher fees being paid for usage than would have been budgeted for.

Adams told CBR that while it is early days he wants to make sure users are prepared: “There would be examples but we’re not going to get them because that would be very commercially sensitive between the customer and SAP, I’m quite sure this has happened in the past and will happen in the future.

“I just want to make sure it doesn’t get worse.”

Why don’t SAP customers have any plans to use S/4 HANA?

As Zeine said, the area is moving very quickly, and Adams said that 20 years ago an SAP deployment was much simple, “the connectivity wasn’t there, it kind of sat in a box in the corner and did what it said on the tin.”

The pace of innovation has seen technology move much faster than licensing agreement, or regulations can keep up with. Take for example the approach to artificial intelligence.

The reality is that AI has been in the market in some form or other for a number of years, just look at Apple’s Siri or Microsoft’s Cortana. It wasn’t till the 10th of November that the Government released a report on the impact of AI.

Rather than sitting back and waiting for issues to arise before any significant action, SAP and other vendors that will have customers impacted by IoT need to put plans in place.

Adams said: “It’s a case of be aware now, when you’re putting your plans in place, when you’re having that conversation at the buying time rather than three months or three years later and it comes to an audit and you’re caught out.

“That would be the worse case scenario, you want to know total cost of ownership today for the next X number of years and you don’t want to find out half way through that lifespan that there’s another cost there as a result of how you use it.”

The tech industry can frequently get ahead of itself without really considering all the details of how a tech innovation could impact customers negatively.

Figuring out how the Internet of Things will impact licensing is an issue that will need to be solved globally and preferably before businesses are hit with unexpected costs.

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