SAP released a revised policy for Indirect / Digital Access (IDA) licensing last week. The introduction of outcome-based licensing brings with it nine new types of business documents, that customers will soon have to license. Existing customers have the option to ‘do nothing’ and continue under their existing license agreement – but did you notice the fine print?
Starting November SAP will automatically begin measuring customer’s usage of the nine document types via their USMM tool, which SAP mandates customers run annually for self-declarations. The ability to discover IDA puts SAP in an unprecedented position to force non-compliance discussions as a routine step with all customers. In an official document from last week titled “SAP Global License Audit and Compliance Update”, SAP lays out its framework for future IDA License Fee enforcement. We’ve included the most critical passages from the document for you.
Figure 1: Decision Tree for License Auditors to Verify Indirect Access Scenarios
Quotation 1: Nomination of Audits – All license audits will be initiated according to one of the following criteria:
• Analytics criteria: For example, time elapsed since the last audit or consumption (cloud) of licenses since the last audit
• Proactive initiation: For example, campaigns focused on specific industries or based on merger and acquisition activity
• Reactive initiation: For example, conversion to a new license model or cloud extensions
• Random spot checks
Separation of Sales and Audit Teams as PR-ploy?
In their latest update, SAP also proclaimed that they separated Sales Teams from Audit Teams to prevent abuse. In reality, the criteria above will still trigger audits as routine follow-ups based on your interactions with SAP’s Sales Team. We’re concerned that separating these two teams on paper, could be a PR-ploy to appease frustrated customers without real consequence. We will monitor the situation in the field closely to gather customer feedback.
A tripple whammy
In many ways these changes are a tripple whammy. SAP’s ’empathetic’ option for existing customers to ‘do nothing’ in light of the new document-based licensing is a head fake. If you’re lulled into a false sense of safety, SAP will force the IDA conversation after your next annual USMM measurement, which will likely persuade you to perform a License Exchange. Here’s why that progression bears risk:
1. SAP automatically detects and measures IDA during your next annual self-audit
2. If you chose to ‘do nothing’ SAP’s amnesty offer of ‘no back maintenance’ won’t apply to you, giving SAP more leverage at the beginning of the discussion
3. Once SAP presents you with your open-ended IDA exposure under the legacy licensing guidelines (i.e. there was none, remember Diageo and Anheuser-Busch?) you will be tempted to accept the new document-based policies
4. This way SAP surprises you by initiating a License Exchange before you had the opportunity to investigate your License Position (1. review your contractual language and what you own, 2. optimize license consumption, 3. determine shelf-ware for maximum trade-in credit)
5. When your contract is restructured for the new licensing model, additional language will be introduced that overrides beneficial legacy language that was part of your original agreement (obligatory authorization-based user licensing is one example)
6. Half-way through your License Negotiation you notice the added cost and complexity of reworking your contractual framework, and SAP will tempt you to migrate to S/4 as the fastest resolution of your non-compliance issue
And there you have it, a triple whammy: an SAP-initiated License Exchange will override potentially beneficial terms from your old contract which creates additional audit opportunities for SAP, you’ll start paying for IDA when you haven’t in the past, and odds are high you will be rushed into a premature S/4 migration migration.
No two SAP contracts are alike
With virtually all US wireless carriers, customers enjoy the prerogative to hold on to a beneficial grandfathered plan. SAP is taking a more forceful approach, in a perceived effort to override existing customer contracts due to the missing language to entitle SAP to Indirect Access fees. SAP delivered on making IDA licensing more transparent – which is a big improvement for new customers. For existing customers however, the root cause behind IDA dissatisfaction has always been perceived greed and bullying tactics on SAP’s part.
An ‘empathetic’ long-term solution should have prioritized customer satisfaction and retention, exempting existing customers from IDA altogether until S/4HANA is the only way forward.
As an existing customer, you can still emerge victorious from a license compliance negotiation. Our samQ License Optimizer for SAP automatically optimizes your License Position – giving you objective date to drive the best deal and future-proof your SAP investment.