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Since September 2017, ASUG and other global user groups (including DSAG and SUGEN) have brought the voice of the customer into some crucial discussions and decisions at SAP to address mounting concerns we were hearing within the SAP user community around licensing and sales practices. Leadership at SAP actively engaged with us in these discussions and frequently referenced objectives that ASUG set out to guide the conversation.
Through the process, ASUG remained focused on what we consider the top three objectives:
- Define and clarify the key terms related to licensing, especially indirect access (also known as indirect use).
- Identify the actions customers can take to understand whether they’re compliant based on these definitions.
- Explain what customers can do if they find licensing gaps.
ASUG’s Take on the SAP Licensing Discussion
So, where are we now? Overall, we believe we’ve made substantial progress in these three areas:
1. The Formal Separation of Sales and Audit: Based on the input of ASUG and other user groups, SAP made significant organizational and policy changes to move all audit-related decisions and activities to a separate global audit organization. Now, any audit must come from SAP’s audit team and can’t be initiated as a sales tactic. SAP has also provided clarity on what to expect from an audit. We believe this change will result in a much better sales and audit experience for SAP customers. As a customer community, we feel strongly that we need more awareness and transparency in the audit dialogue.
2. Clarification of Indirect Access/Use: The most difficult conversations we had with SAP revolved around getting clarification on the indirect access language in most customer contracts and SAP’s position that “use is use and all use must be licensed.” This is a highly sensitive topic on both sides. SAP firmly believes they have the right to monetize and protect their intellectual property, while customers know they need to be able to protect and leverage their past investments. ASUG continued to push these conversations forward until we felt that customers would be able to fully understand SAP’s definitions. SAP has now clarified the existing language that defines what it views as indirect access, as well as the intent behind it. SAP also outlined multiple scenarios to help customers understand how indirect use would appear as common use cases within their IT operations.
3. A Future-Oriented Pricing Model: SAP has introduced a new licensing model that includes a way to address some of the new digital challenges that come from indirect use through technologies like EDIs, APIs, bots, IoT sensors, and more. Rather than measuring use by the number of “hands on keyboard” users, the new model counts the total number of documents created through indirect methods and licensing. This new document-based pricing model provides an opportunity for simplified licenses in the future or for net-new customers. Customers with existing contracts and contract language will need to evaluate the costs, benefits, and overall value of a license conversion. ASUG recognizes that this conversion will not be easy for customers who have an extended history with SAP, as contracts can be long, complicated, and consist of multiple appendices signed over multiple decades.
We are making progress, but this is a journey that will take some time to complete. Most importantly, ASUG will continue to actively engage in a dialogue with SAP regarding licensing practices and policies. That will not stop. The recent announcements are just an important first step forward for SAP and their customers.
How the User Groups Got Involved
In 2017, a couple of lawsuits against SAP customers sent ripples of anxiety through the user community and raised difficult questions related to indirect access. At ASUG, we were concerned about the lack of a clear definition from SAP about what it considers indirect access and what constitutes non-compliance. So, we sent a letter in collaboration with the global user groups to the SAP board of directors, letting them know that this topic needed to be discussed and resolved.
As a result of the letter, ASUG and other global user groups (including DSAG and SUGEN) were invited to Walldorf in late 2017 to begin a dialogue on the broad topic of licensing. As we started our discussions, more issues surfaced related to sales and audit practices, especially for long-standing customers who were likely to be most affected by potential licensing issues. We dug in and remained committed to resolving these issues. We joined weekly conference calls. We debated the meaning of indirect use within the context of today’s interconnected technology. We reviewed documents and sent our feedback. We continue to take this topic very seriously and plan to work on it until the customers in our community understand it fully—a process that we expect will take some time.
What the Test of Time Will Say
What can SAP do better? The new licensing model is a step in the right direction, but customers need more help evaluating whether the old user-driven model or the new document-based model will be best for their business. Candidly, the new document-based model doesn’t have the test of time behind it yet, so there are a lot of unknowns. As customers begin the licensing conversion process with SAP, new questions about these definitions and the value of the new licensing model will undoubtedly arise.
The definitions around licensing may be set, but helping customers understand whether they’re compliant or not is an area where we still have gaps. This is an issue that, unfortunately, could affect the customers that have been the most loyal and most committed to SAP for decades. New customers won’t need to worry about the issues that come from old contracts that haven’t evolved to keep up with the customer’s latest digital business model. Customers may feel forced to figure this out on their own, but ASUG is an independent, neutral party that can help.
What’s Next for SAP Licensing at ASUG?
The bottom line is that we have a level of clarity that we did not have a year ago. We don’t have all the answers. But we at ASUG have pushed for a framework of how to think about and resolve these issues.
We’re going to take that framework and share what we know so far. In return, we’d like to ask a few things from you, our community members. We’d love to hear about some of the licensing and audit scenarios that your organization has faced. We encourage you to ask us questions. And we’d like to take your anonymous feedback to SAP as we continue to discuss this topic. If there’s something you’re worried about or don’t quite understand, let us know. Hearing about your real-life examples is critically important to us.
We’re fully committed to continuing this dialogue so it doesn’t slip back into the darkness. When the voice of the customer goes quiet, it’s very difficult to make this kind of change. A passionate and engaged customer base united in a common community is a powerful force for change. Individually, each one of us has a limited voice, but collectively we have a very strong voice as ASUG. Please or join the conversations about this going on within our community. There’s a lot more to come from us on this topic.