SAP Digital Access: A severe financial risk?

SAP Digital Access: A severe financial risk?

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Let’s recap: What is Digital Access?  

Definition by SAP:

Digital Access is defined by SAP as a new pricing model […] that provides an approach to licensing Indirect and Digital Access to the SAP Digital Core.

  • Direct/Human access (existing), which will be charged for by number of human users.
  • Indirect/Digital Access: Access via third party, Internet of Things (IoT), bots and/or other digital access that can be licensed based on transactions/documents processed by the system itself (new).

Source: SAP Digital Access | Home

Our „layman’s“ definition:

When you connect, via interface, non-SAP application/s to SAP, which transfers one or more of 9 different kinds of pre-defined data objects into SAP, you will have to acquire additional licenses from SAP.

What are the consequences to your business?

Some business sectors are at higher financial risk with their licensing costs for Digital Access: Whenever key data objects are held in non-SAP systems and forwarded to SAP ECC or SAP S/4HANA, SAP will charge you for creating the resulting documents in SAP tables. Such digital access license charges will be required by SAP when you use non-SAP software like sales systems, service systems, point-of-sales systems, manufacturing systems, and many others.

In SAP centric company with few non-SAP systems, this may not create as relevant a financial risk; however, companies with non-core SAP business applications could face substantial unplanned financial risk. 

Your application landscape and its mix of non-SAP and SAP Applications is a determining factor in your potential financial risk from SAP Digital Access. 

Let us look at the example of a retail company. 

Cost example: Retail sector

In this example, we analyze a retail company with a non-SAP point-of-sale system. The company produces sales receipts in its 100 shops. Each receipt has an average of 3.43 products in it (line items). Every month, the company processes 1,561 sales transactions; that is, 1,561 times a customer comes to the shop, purchases one or more products, and obtains a receipt.

With every sales receipt, SAP obtains the corresponding data as a sales order; then, the SAP warehouse application executes material movements to replenish the shop. New products will be later purchased to fill-up the warehouse. The SAP accounting system will also obtain some data reflecting the sales transaction assigned to the specific shop. And so on.

Table 1

The model in Table 1 shows a digital access TCO of 16 M USD over ten years. With SAP’s Digital Access Adoption Discounting Program, TCO drops to 1.6 M USD. This 1.6 M USD is the potential unplanned Financial Risk that this retail company would need to account for over ten years – always assuming that there is no growth in their sales volumes. 

Interested to learn more?

Watch here a 5-minute video to understand how we can help you.

But this case shows only a theoretical cost model – What are the findings of real business cases from our Advisory Competency Center:

Broad view: Costs in multiple business sectors

From a sample of 22 digital access advisory projects from 10 business sectors, we identified document creation counts per year between 0 (only in 2 cases) and 43 M documents. Taking an amount of 25 M documents as an example, we obtain approximately 7.5 M USD one-time payment plus 22% maintenance per year, so a total cost of ownership (TCO) of approx. 24 M USD over ten years. The number of documents named here represents the number after cleaning up SAP’s estimation from licensing exceptions like indirect static read, subsequent documents, SAP-to-SAP communication, and others.

IMPORTANT NOTE: There is no correlation between the company size in employees and digital access costs; one of the participants shows 16 M documents per year with a total of 800 employees. 

VOQUZ Advisory Recommendations

What does that research mean for your company?  

SAP’s digital access pricing model should not be considered as a vague or improbable financial business risk. Many SAP clients are already being audited and charged for this by SAP. 

Be adequately prepared, put in place a plan to negotiate better with SAP on the result of your Digital Access. Don’t wait for an overly motivated key account manager to tell you, how much you have to license: Instead, prepare yourself, analyze the risk – if existing – and do your own risk and demand estimation before approaching SAP – the VOQUZ Advisory team will support you with this objectives: 

  • Understand SAP’s Digital Access licensing model rules.
  • Find the implications of its use cases and their exceptions for your company.
  • Perform an accurate and appropriate technical measurement.
  • Estimate your company’s future consumption for the next five years.
  • Provide an expert independent advisory perspective.

Reducing your financial risk 

Now, what happens if you have already had a Digital Access assessment from SAP, and the outcome produces financial risk exposure, which seems unreasonable? Our Advisory team are experts in providing remediation, including technical and economical solutions for such circumstances. We will gladly support you in finding the optimal Digital Access result to minimize your financial risk exposure. 

Summary

Avoiding or minimizing your financial risk exposure is part of many organizations‘ key objectives and goals. Making sure you have the best advice regarding the SAP digital access license model from our expert team ensures that you can achieve these objectives and goals. We help companies plan the best route forward and also remediate where the outcomes are not desirable. 

In both cases, we will be glad to support you getting the most out of your SAP investment and helping your company maintain their SAP Licenses in both lean and agile state.

Sources:

  • Vends Retail Benchmark Report 2019
  • VOQUZ Digital Access result of projects 2019

Francisco Hansen

Francisco Fernández Hansen has been Head of Advisory at VOQUZ Labs since 2019. He is responsible for sales in the USA and Latin America. Francisco leads the team and the offices in New York and Mexico City.

Francisco Hansen

Francisco Fernández Hansen has been Head of Advisory at VOQUZ Labs since 2019. He is responsible for sales in the USA and Latin America. Francisco leads the team and the offices in New York and Mexico City.

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