SAP's latest changes to its Indirect Access pricing model - what SAP customers need to know

Snow Software's Joachim Paulini examines SAP's latest attempt to quell user unrest over high licence fees

Earlier this year, SAP announced a comprehensive new pricing model for Indirect Access.

The existing user-based licence models (with the "Platform User" as the designated licence type in SAP's price list) will be replaced in their current form.

This followed on from Bill McDermott's address at the SAPPHIRE user conference last year when he announced that SAP would like to change the policy around Indirect Access, specifically around two types of orders: procure-to-pay and order-to-cash.

However, it was quite obvious something was missing from McDermott's presentation as it doesn't make sense to only count orders. SAP has since evolved the proposition and come up with nine different objects that need to be counted.

SAP's customers should carefully assess if they should move onto to this new model or stay with the old one. What they need to consider is that whether this new pricing model will benefit them depends upon their specific situation.

It's not something its customers should ignore, last year a UK court ruled in SAP's favor against one of the world's largest drinks companies, Diageo, in which it claimed £54 million ($70 million) in unpaid fees for Indirect Usage of SAP systems by third-party applications.

In March, drinks giant Anheuser-Busch InBev settled a licensing dispute with SAP that had unsettled the SAP community.

SAP had been looking to wring $600 million in what it claimed was unlicensed use of its software related to indirect usage - believed to be a Salesforce.com implementation by AB InBev. That was settled out of court, with both companies keeping the details of their settlement to themselves.

What's changing?

The new licence models are designed to focus on the value added that SAP customers generate by creating certain documents in the SAP system. Whether, and to what extent, these are advantageous for a customer cannot yet be assessed. The new model is difficult to evaluate, especially as the prices have yet to be fixed.

But even were prices fixed, companies would first have to check whether switching to the new model would be worth their while. This is anything but easy, especially for organisations still using older versions or Service Packs from SAP. The SAP tools that help with the measurement might not be available for them.

Indirect and digital Access

Indirect Access occurs when a non-SAP system triggers the creation of processes and documents within an SAP system. In the old user-based Indirect Licensing model, just reading data from an SAP system in an interactive way constitutes Indirect Access.

Examples include:

Interestingly, Indirect Access does not occur if the customer uses other SAP applications such as Fieldglass, Hybris, SuccessFactors, Concur or Ariba to access data from the main SAP system.

What should you do next?

The best thing that SAP customers can do now is prepare themselves.

Organisations with legacy contracts in which licence fees for Indirect Access had not yet been created, as well as companies that still have contracts with SAP for user-based licence types, such as NetWeaver Foundation for Third Party Applications or Platform Users, should carefully examine whether the new regulation is advantageous or disadvantageous for their SAP landscapes.

Businesses have to look at what external systems are connected to the SAP environment, how many users are connected, and what they pay for each user depending on their specific licence type.

The future direction of the company should also play a role: Should more suppliers and customers be networked in the future? The more data is exchanged, the higher the fees may be.

Using the new model, organisations can fire up and use the new measurement routine, and based on what they can see make some small adjustments to their license allocation based on usage. Consequently, they can see how much they will owe SAP.

As the reporting is now transparent, SAP no longer has to replicate the customer's analysis, and the audit team will find it more straightforward to assess whether any true up is needed.

Joachim Paulini is lead architect of Snow Optimizer for SAP Software

Paulini has ten years of experience in SAP covering development, consultancy, project management, SAP add-on development, software architecture design as well as implementing license management, contract management and Software Asset Management systems for a large number of major customers. He designed the Snow Optimizer for SAP Software and leads its development.