SAP launches new pricing model on indirect access; SUGEN flags unresolved issues for existing customers

Christian Klein, SAP

In response to widespread customer concern over indirect licensing in the wake of several high-profile court cases, SAP has introduced a new sales, audit and pricing model for its digital access licensing policies (otherwise known as indirect access).

While historically, customers paid for the SAP ERP applications based on the number of users, as more systems began to access SAP software systems, this became problematic.

The new pricing model, which will cover S/4HANA, S/4HANA Cloud and SAP ERP, will distinguish between direct/human users and indirect/digital access, which covers access via third party, Internet of Things (IoT), bots and other digital access that can be licensed based on transaction or documents processed by the system.

Following SAP’s successful pursuit of Diageo, although many customers were unsure of their license compliance position previously, there was reluctance to clarify this with their account managers as the consequences were uncertain.

SAP has also now introduced organisational changes that will separate license sales departments and procedures from the auditing function. This is expected to enable customers and SAP to have more transparent conversations about reconciling previous licensing agreements with the evolving requirements of their digital systems and procurement of new software. The vendor also plans to introduce features to enable customers to manage their own usage and license consumption.

“We believe that especially in the age of digital transformation, an adjustment was necessary after listening to our customers. By offering a new pricing and licensing model, we provide enhanced transparency, predictability and consistency to our customers. I trust that these three aspects will encourage our customers to continue to invest in digital business models,” said Christian Klein, COO and member of the executive board of SAP SE, global business operations.

The new approach, which SAP has already begun rolling out, has also informed by consultation with user groups.

While a statement by the SAP User Group Executive Network (SUGEN) welcomes the level of transparency the new model providers, it also notes there has been little progress in providing reassurance on the long-term financial impact to existing long-term customers, particularly those who until recently believed they were adequately licensed. SAP will be rolling out measurement and auditing tools over the course of 2018, meaning that customers will only be able to measure potential cost impact in Q1 2019.

“With this in mind, we urge SAP to publicly reiterate the promise it made to SUGEN in November 2017 when it said customers would be able to adopt the new model without incurring further costs if the business value/scope of their usage of SAP stays the same. This would go a long way to reassuring customers and rebuilding trust,” said Gianmaria Perancin, SUGEN chairman and USF representative.

SUGEN’s statement noted that the company has been aware of challenges regarding indirect licensing for at least six years, during which time “customers have in good faith connected SAP to third-party systems believing they were compliant due to a number of factors”, including:

  • SAP personnel being aware of a third-party system connecting to SAP and not raising a potential licensing problem,
  • SAP providing assistance for projects that involved connecting to third-party systems and not raising licensing implications,
  • The lack of any license type for third-party system connectivity, and
  • Audits being carried out by SAP that did not highlight a problem.

“Customers who believed they were compliant have been rightly been concerned after the high-profile legal action SAP took Diageo and InBev. SAP is moving in the right direction to make it easier to do business with it.

“However, expecting customers to talk to and trust account managers in an environment where SAP has admitted to having lost customer trust is asking a lot. If SAP publicly provided reassurances that customers won’t be asked to pay more for use cases and implementations that were undertaken in good faith, this would go a long way to encourage customers to engage with SAP proactively,” Perancin said.

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