Look­ing for the lat­est updates on the top­ic of indi­rect access and SAP licens­ing? Vis­it ASUG­’s Licens­ing Resource Cen­ter.

ASUG’s Vice Pres­i­dent of Con­tent, Ann Marie Gray, had a con­ver­sa­tion with CEO Geoff Scott and board mem­ber Ron Gilson to get their per­spec­tives on SAP’s changes to its sales, audit, and pric­ing mod­el. As the CIO of John­sonville Sausage and a long-time SAP cus­tomer, Ron helped us decon­struct the new mod­el to raise ques­tions about sce­nar­ios oth­er SAP cus­tomers may face. Both Geoff and Ron worked close­ly with SAP to rep­re­sent the voice of the cus­tomer and share the ASUG point of view through the months of dis­cus­sions lead­ing up to the model’s release.

Ann Marie: What is ASUG­’s per­spec­tive on the work SAP is doing to make its licens­ing and audit process­es more transparent?

Geoff: In North Amer­i­ca, we were hear­ing per­sis­tent feed­back from mem­bers regard­ing licens­ing con­ver­sa­tions they were hav­ing with SAP that were rais­ing anx­i­ety, con­cern, appre­hen­sion, and in some cas­es, even anger. We con­sol­i­dat­ed this feed­back and raised ques­tions to SAP about the mix­ing of sales con­ver­sa­tions with licens­ing audits. We took the stand that we should resolve those first, before dis­cussing the new licens­ing model.

Ron: Cus­tomers now have a clear set of expec­ta­tions around the role of sales and the role of audit, which should pro­vide a bet­ter cus­tomer expe­ri­ence. Per­son­al­ly, I would like to see some type of annu­al report on audits and audit results. If you real­ly want trans­paren­cy, that’s the way to do it. As for the new doc­u­ment-based licens­ing mod­el, on paper, the doc­u­ment-based approach for indi­rect access makes a lot of sense and is rel­a­tive­ly straight­for­ward. There is a lot of detail lack­ing, how­ev­er, espe­cial­ly for cus­tomers think­ing of con­vert­ing from the old user-based mod­el. Unfor­tu­nate­ly, the con­ver­sion process for cur­rent cus­tomers will require a great deal of work to under­stand exist­ing terms and con­di­tions, pre­vi­ous­ly nego­ti­at­ed enti­tle­ments, and over­all val­ue at the time of con­ver­sion and over the long term.

Geoff: The rea­son for more trans­paren­cy is twofold: First, to ensure that SAP cus­tomers min­i­mize their sur­prise and anx­i­ety by being bet­ter edu­cat­ed on licens­ing mat­ters and, sec­ond, to make sure that the licens­ing con­ver­sa­tions are bal­anced between SAP and the cus­tomer community. 

Ann Marie: Ron, what would you like to see SAP do dif­fer­ent­ly?

Ron: I think what I would like SAP to say is, ​“Look, we [SAP] were part of cre­at­ing the cur­rent sit­u­a­tion relat­ed to indi­rect use. We’re going to take respon­si­bil­i­ty for the role we played over the past 20-plus years. This is not an issue cre­at­ed sole­ly by cus­tomers — we are all in this togeth­er.” That’s the ​“line in the sand” posi­tion that ASUG and the oth­er user groups have been dis­cussing with SAP. Exist­ing cus­tomers have part­nered with SAP for decades on the pur­chase, imple­men­ta­tion, and inte­gra­tion of SAP tech­nolo­gies using indus­try best prac­tices. Unfor­tu­nate­ly, the dis­cus­sion around indi­rect access, license enti­tle­ments, and prop­er licens­ing have only recent­ly become top of mind.

Geoff: So, your per­spec­tive is that cus­tomers might face some uncom­fort­able sit­u­a­tions that we haven’t been aware of before?

Ron: Exact­ly. I think every cus­tomer needs to sit down and read through the def­i­n­i­tion of indi­rect access. There are going to be some ​“oh no” moments when peo­ple real­ize they may have com­pli­ance gaps based on the more-refined def­i­n­i­tion of use and indi­rect access.

Geoff: I think it is essen­tial that we all rec­og­nize that ​“use is use,” mean­ing that if you are using an SAP process, you must have a license for it, whether that license is of zero cost or greater.

Ann Marie: What are the most impor­tant things that cus­tomers need to know about what’s changing?

Geoff: Num­ber one, make sure you’re com­fort­able with and under­stand the licens­ing def­i­n­i­tions from SAP. If you don’t, raise your hand and ask for clar­i­ty from ASUG or SAP. I think we need to con­tin­ue as a com­mu­ni­ty to press SAP when we don’t under­stand some­thing or con­sid­er it fair. To the customer’s ben­e­fit, con­tracts have always been high­ly cus­tomiz­able to indi­vid­ual cus­tomer needs and wants. While that is great, we also have to rec­og­nize that this brings a lot of com­plex­i­ty. But no mat­ter how com­plex it is, you need to know what’s in your contract.

Num­ber two, make sure you real­ly under­stand what your con­tracts enti­tle you to and where you may face risk. Once you deter­mine that risk, what do you want to do about it? You can do noth­ing. You can buy addi­tion­al licens­ing to make up the dif­fer­ence, or you can inves­ti­gate the new doc­u­ment-based licens­ing mod­el as a poten­tial solution.

Ron: I agree, you’ve got to know your con­tracts. If you haven’t pulled them out, you’ve got to get back into them and know what your enti­tle­ments are. You need to doc­u­ment and map where your inte­gra­tions are with non-SAP sys­tems, as well as with busi­ness part­ners out­side your orga­ni­za­tion. Once you ful­ly under­stand your inte­gra­tions, go back into your con­tracts and deter­mine what the licens­es enti­tle you to use.

Ann Marie: What are the top things that cus­tomers should do now in response to these changes? How can cus­tomers be their own best advocates?

Ron: For new cus­tomers and cus­tomers embark­ing on new ini­tia­tives, I would say you need to be proac­tive with SAP about get­ting its audit orga­ni­za­tion involved in the process of cer­ti­fy­ing the design, archi­tec­ture, and licens­ing of new projects. 

And all cus­tomers should know that your annu­al licens­ing review is not a full and com­plete audit. Even if you com­plete it suc­cess­ful­ly, that does not guar­an­tee that you won’t face a future com­pli­ance issue if you are sub­ject to an enhanced audit by SAP’s audit team. From my per­spec­tive, there are a lot of folks (myself includ­ed) who feel if they passed that annu­al licens­ing review, they’re good to go. We have learned through these dis­cus­sions, how­ev­er, that is not nec­es­sar­i­ly true.

If you have con­cerns, you need to start prepar­ing for that poten­tial audit. What doc­u­men­ta­tion can you get togeth­er? Under­stand what’s been done in the past on con­tract terms. Under­stand what assump­tions were made. Get that doc­u­ment­ed. Be proac­tive and ready for it.

Ann Marie: Does the new mod­el put us in a good place to con­tin­ue to adapt to the next big leap for­ward in tech, whether it’s arti­fi­cial intel­li­gence, or voice user inter­faces, or some­thing we’re not even aware of yet?

Ron: Per­son­al­ly, I think it’s a good first step. A licens­ing mod­el that’s met­rics-based, like the doc­u­ment-based mod­el, sets SAP up for the future as we con­sid­er emerg­ing tech­nolo­gies because they are based on hard met­rics every­body can mon­i­tor. But I ful­ly expect this licens­ing mod­el to evolve over time as SAP hears feed­back from cus­tomers on what’s work­ing and what’s not.

Geoff: The Achilles’ heel of this con­ver­sa­tion is we keep com­ing back to these two words: ​“it depends.” I per­son­al­ly look for­ward to our com­mu­ni­ty being able to erad­i­cate those words and move toward speci­fici­ty. But we need to care­ful­ly bal­ance this desire for speci­fici­ty with the notion that every cus­tomer approach­es their busi­ness dif­fer­ent­ly, and there­fore, their licens­ing agree­ments depend on their indi­vid­ual needs. We can’t swing too far, or we’ll only get a one-size-fits-all mod­el. One of the advan­tages we’ve had as SAP cus­tomers is that we’ve had sup­port from our account exec­u­tives at SAP in con­struct­ing licens­ing terms that are rel­e­vant to how we do busi­ness. With clar­i­ty, we may see less cus­tomiza­tion and we have to be will­ing to accept that. 

Ann Marie: So, what’s next? We’ve trav­eled to Wall­dorf. We’ve con­tributed to count­less con­fer­ence calls and reviewed dozens of doc­u­ments. How will we make sure this con­ver­sa­tion keeps going?

Geoff: Our abil­i­ty to give cus­tomers clear guide­lines and under­stand­ing through edu­ca­tion is going to be hyper­crit­i­cal. We owe the ASUG com­mu­ni­ty real­ly good infor­ma­tion with prac­ti­cal steps about how to respond to this top­ic. This also means that the com­mu­ni­ty voice is more impor­tant than ever.

Ron: The fact that we’ve con­tributed our insight and per­spec­tive on the new licens­ing mod­el is all very pos­i­tive. This will lead to a bet­ter mod­el for new cus­tomers and exist­ing cus­tomers as they make future invest­ments. I think those are great wins gen­er­at­ed through some great dia­logue and con­ver­sa­tions with SAP. But I don’t think we can ignore the fact that it’s not a com­plete solu­tion. We haven’t seen much about how folks are going to con­vert from very, very old con­tracts to the new mod­el and still trust that they are retain­ing the val­ue of their pre­vi­ous investments

What’s next is that we have to stay in tune with feed­back and the per­cep­tions from cus­tomers. Tell us: What did you like? What didn’t you like? What are you still con­fused about? Make sure that we’re able to, through edu­ca­tion or what­ev­er it hap­pens to be, address those ques­tions quick­ly and clearly.

Geoff: It’s very dif­fi­cult for an indi­vid­ual cus­tomer to feel that you have a sub­stan­tial voice against a com­pa­ny the size of SAP. At ASUG, we know the only way to make a real change is to ele­vate cus­tomers’ ques­tions and con­cerns and share them with SAP. What SAP has demon­strat­ed through­out this process is their will­ing­ness to lis­ten and make change, which means we’re mak­ing for­ward progress.

Ann Marie: Thank you both for your time today. It’s going to be inter­est­ing to see what hap­pens next.

To learn more about SAP’s new licens­ing mod­el and asso­ci­at­ed def­i­n­i­tions, vis­it ASUG’s Licens­ing Resource Cen­ter. Send your ques­tions to licensing@​asug.​com and we’ll cov­er them in the resource cen­ter.