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May 8, 2019

SAP Reveals New Licensing Details – Users Still Confused, Concerned

"Financial options still need to be described in a much clearer way, with realistic and concrete examples of how each would play out in the real world" say user groups.

By CBR Staff Writer

SAP has updated its licensing terms, after the April 2018 release of a new sales, audit and pricing model dubbed “Indirect Access” was roundly criticised for being opaque, confusing and likely to result in increased charges for users.

The new “Digital Access Adoption Program” (DAAP) released this week is the result of a year’s engagement with user groups. SAP said it has made a raft of “radical” changes to last year’s model, based on “candid” conversations with customers.

Users had complained that 2018’s terms made it entirely unclear how they would determine their SAP licensing demand, how SAP was going to measure compliance, and even how much Digital Access would cost, in the absence of a price list.

The “Indirect Access” licensing shift aims to help SAP monetise third-party application interactions with SAP software. It comes after SAP sued Diageo in 2017 for enabling SAP’s ERP system to be accessed via Salesforce software, with the courts ruling that Diageo should pay SAP £54,503,578 worth of damages. The case was settled out of court.

SAP Licensing: “We’ve Made Radical Changes”

“SAP decided to make radical changes to its previous digital access licensing policies. As a result, we developed an outcome-based pricing model that differentiates between direct human access and indirect digital access,” [e.g. engagement with SAP software by third-party applications] the company said.

Pledging a user-friendly approach, the company added in a blog: “The days are over in which customers believed, fairly or not, that any discussion of indirect access, could lead to a confrontation with SAP and the assessment of financial penalties for inadequate licensing.”

“In fact, SAP expects that for many customers a conversion to the new licensing program will largely come at little to no net-new costs and will ensure that no customer will be penalized for violating license rules.”

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See also: SAP User Group Turns 30; Licence Concerns Linger

SAP is trying to sweeten the pill of moving to “digital access” licensing with these discounts

New SAP Licensing Structure: What you Need to Know 

SAP’s guidance on determining licence demand had been that users would need to  count the number of documents generated annually, by type, created by third-party applications. (SAP, somewhat controversially, had demanded licences for non-SAP systems that activate the processing capability of SAP software).

Yet while some businesses can count the number of purchase orders or invoices which are created in SAP, it can be a significant challenge to count line items in those documents and a major complaint had been that SAP did not provide tools to do this. This is one issue that has been fixed in this week’s release.

The company has also announced a 90 percent discount on Digital Access for customers licensing least 100 percent of current document volume.

Philip Adams, Director of the UK and Ireland SAP User Group, told Computer Business Review: “When SAP announced its new digital access licensing model last April, we –  alongside other user groups – globally asked SAP to publicly reiterate the promise it made to SUGEN [the SAP User Group Executive Network] in November 2017 when it said customers would be able to adopt the new digital access licensing model without incurring further costs if the business value/scope of their usage of SAP stays the same.”

He added: Over the last year we’ve continued to ask SAP for these reassurances and highlighted members’ concerns about the financial impact of the new model… Key areas of focus have been predictability, transparency, consistency, and fairness.”

“During this time there have been delays in SAP rolling out measurement and auditing tools that enable customers to analyse the financial impact of the new licensing model. As such, our members have continued to be concerned about their license positions. With the announcement of the digital access adoption programme, SAP is giving customers a way to measure the financial impact of adopting the digital access licensing model and seems to be providing a level of financial predictability.”

“Not the Solution Our Members Want”

Philip Adams continued: “While this is not the solution our members want, we are glad we’ve been able to influence SAP and improve the situation for customers who until now have had no real idea of what the cost implications of the digital access model might be. Many elements of the programme still need to be clarified, not least the need for the financial options to be described in a much clearer way, with realistic and concrete examples of how each would play out in the real world.”

“We also need clarity on whether we really are talking about two licence scenario’s – the legacy and the new document-based model, as from discussions and feedback it seems there will be scenarios where customers will have a mix of document and user-based licensing. For customers this creates concerns around double charging.”

SAP has provided a PowerPoint presentation on the changes here. 

The new SAP licensing details came as the company unveiled a host of new tools at its SAPPHIRE NOW event in Orlando, including 10 new offerings built on Qualtrics and SAP technology – and a tie-up with Apple that brings CORE ML, Apple’s on-device machine learning technology, to the SAP Cloud Platform SDK for the first time.

Read this: SAP Pledges Root and Branch Operational Overhaul


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