SAP Digital Access is not (yet) feasible

In his May 2019 blog article, Christian Klein, CEO and member of SAP's Executive Board, described how SAP is addressing concerns from its customers, who perceive digital access as a significant business risk and have therefore established a discount program for digital access adoption. This 90 percent discount program was supposed to end in April 2020 and will now be valid at least until the end of 2021.

Is this a step back from SAP's Digital Access pricing model? Digital Access was SAP's response to the changing technology environment. Both IoT and RPA threaten the classic user-based licensing model: a robot can now replace more than 500 users and requires only one user license in the traditional model.

2000 IoT devices would use a technical user and do not even need a single user license as technical users are free. So SAP's reaction is understandable and perhaps a step in the right direction - but here we want to defend the position that digital access is not yet a mature pricing model.

SAP and the other major software vendors have long had perpetual license agreements in place based on metrics such as number of employees, total revenue, and so on. All vendors have always looked for metrics that allow them to adjust their fees to reflect the growth of software usage by the customer over time.

Obviously, there is no perfect pricing model, and each of them must be adapted to the situation and business specifics of each customer. It is the responsibility of both the software vendor and the customer to find a suitable model for each situation. Defining and adapting certain metrics is crucial for a successful business agreement.

What does all this mean for SAP customers? Although SAP's thoughts are understandable and the licensing model with IoT and RPA needs to be adapted to the new technology environment, we suggest SAP to make a few changes.

First, it should change digital access pricing to include both documents and the customer's SAV value (the sum of the total license value of a customer named SAP Application Value) instead of a simple fixed document price.

It is not acceptable for digital access to grow to the same or even a higher amount than the customer's total annual expected value. Consideration should also be given to reducing user licenses when selling digital access. SAP always presented digital access as a way to reflect new technologies with decreasing user licenses and growing digital access. However, currently digital access is only an additional and relevant revenue stream for SAP and a cost risk for their customers, penalizing customers for using EDI, non-SAP CRM systems or non-SAP warehouse systems.

In addition, the counting of subsequent documents should be eliminated - although SAP's technical teams are already working on this, subsequent documents are still not correctly excluded today, which sometimes leads to a multiplication of digital access costs.

As a customer, keep in mind that SAP is still working to correctly count digital access documents and that this pricing model simply does not adapt to every customer's situation. Therefore, ask SAP's sales and pricing teams for flexibility to find an appropriate price for you and your specific digital access use case, and don't consider the number of documents you have as the only determining metric for digital access. Be determined to negotiate a price that is fair to both parties.