Indirect use: Yesterday, today and tomorrow

In the good old R/3 world between 1992 and 2001, the world was comparatively manageable and assessable from the perspective of IT users and SAP licensing.

Users who worked in dialog mode with SAP standard functionalities required a Named User license, depending on their needs and design as Professional or Limited Professional User or as other user classes.

The professional user usually included the application functionality of the other "lower-level" classifications in terms of importance. Third-party systems that exchanged data with SAP systems synchronously or asynchronously (reading or writing) could do this via various technical procedures using a so-called technical user, which was not charged separately.

For the implementation of program modifications and preliminary corrections as well as the development of new functionalities in addition to the SAP standard, the programming language Abap was available, for which a development license was required for the creation of programs.

These functions were operated within the framework of the SAP Basis, which was licensed anyway, without any additional charge. This was covered by the developer license for the Abap programming tool and the underlying license for the SAP Basis.

Since 2001, the existing R/3 licenses have been gradually exchanged for the successor license product mySAP.com or SAP Business Suite, the main focus of which was, among other things, the interaction or collaboration of SAP systems from different companies.

Those who accepted SAP's new license offer at the beginning of the 2000s received a new license based on the then-current SAP GTCs, whereby the software application value of the previous SAP R/3 license was credited to the new license price, so that only a surcharge had to be paid.

With the new mySAP Business Suite, the former SAP Basis was renamed SAP NetWeaver with the addition of functionalities. The new licenses were based on SAP terms and conditions, which also addressed the issue of indirect use for the first time in such a way that it was not automatically included. However, it was not clearly outlined or defined what was meant by indirect use.

In the user community and in discussions with SAP at the time, indirect use was understood to mean the following: if there was dialog communication with the SAP system via a third-party system and real users had logged on to the third-party system and had read or write access to the SAP system, regardless of the method used.

At that time, the user-controlled recording of clock-in and clock-out times via time recording terminals with access to the SAP system was considered an example.

The creation of modified or newly programmed functionalities in the SAP system itself was not explicitly dubbed as indirect use at the time, but was frequently the subject of sales in agreement with SAP, whether via SAP customer projects or the sale of SAP developer licenses.

SAP knew that herewith modifications or new developments of functions within the SAP system were carried out by developers from the customer or consulting companies, and partly also knew the concrete projects and purposes.

Today's definition, laid down in the current SAP GTC and the Price and Conditions List (PKL), defines indirect usage much more comprehensively.

Any form of development of new functionality with third-party software or SAP development tools (Abap), regardless of whether it is done by the customer (e.g. Z transactions) or third-party software that directly accesses the SAP database (also via BAPis, RFCs, web services, etc.), is therefore generally understood as indirect use.

The right of use required for this has been offered since the end of the 2000s via the SAP NetWeaver Foundation for Third Party Applications (NW FTPA), whereby this right was also included for a time within the named user types of the platform user license.

Knowing this history, the current dilemma of many long-time SAP customers can be seen, who have trusted that what they have purchased once in the licensing will not change over time, that subsequent purchases are possible for this purpose and, in particular, that the scope of use will not be curtailed.

Basically, the older the existing contract with SAP and also the contract history through acquisitions with respect to the original license, the more the question of today's licensing obligation of indirect use in the current definition (not in the original!) arises.

Watch out:

The software license product SAP NetWeaver Foundation for Third Party Applications includes the right to use the customer's own developments and also those of third party companies, but explicitly excludes any associated database licenses that may be required.

Originally, i.e. in older contracts, no explicit differentiation was always made here. Only a well-founded contract analysis reveals the extent to which there is still a further licensing and thus cost risk here.

The fact that the licensing obligation represents an extremely cost-relevant risk is demonstrated by the spectacular proceedings brought by SAP in connection with additional demands for license costs, some of which are in the six- to eight-figure euro range.

As part of the new annual license measurement process, SAP now consistently asks customers about the extent of indirect use and subsequently identifies "gaps" in indirect use according to the current definition - insofar as SAP Sales focuses on specific areas of use at the respective customer.

At first glance, purchasing the core-based variant of the SAP NetWeaver Foundation for Third Party Applications promises licensing within a manageable cost framework, although SAP's price and conditions list defines in more detail how cores are counted.

However, from the point of view of users, it is precisely this multiplication effect that leads to sometimes horrendous, absurdly high demands that are surprising and unpredictable.

With alternative user-based licensing, the phenomenon also arises that the owner of a Professional User License was allowed to use everything in dialog with SAP systems in the past, but now requires supplementary, additional user licenses in order to also be allowed to use additions to the SAP standard. This makes the usage scenario of many companies considerably more expensive.

On August 4, 2017, as a joint result of SAP and DSAG, DSAG specified the licensing requirement of SAP NetWeaver Foundation for Third Party Applications in a news item.

According to this, there is no licensing obligation when creating modifications of SAP standard functions. This also includes customer-specific reports, views and so-called upstream transactions.

Likewise, however, there is no licensing obligation in cases where APIs are used and, in addition, new and SAP system-independent functionalities are added that do not access the information contained in the database.

However, this last SAP restriction contradicts SAP's June 2017 publication, in which static access to customer information (this includes, for example, cost centers, charts of accounts, company codes, and the like) was presented as not requiring licensing.

Thus, every publication and clarification leads to new questions again. Particularly with regard to the commercial aspects of the license obligation for SAP NetWeaver Foundation for Third Party Applications, which are currently being clarified internally at SAP. This is precisely where the licensing history of every longer SAP existing customer plays a role.

Unfortunately, the latest statement does not differ fundamentally from what SAP had already stated in a similar form in 2016, but which was partially relativized in 2017.

Is that all, or what else might the future hold? Unfortunately, SAP's more recent price and conditions lists have for some time included additional license products that are not defined beyond doubt in detail and thus cannot be clearly interpreted. Future concretizations of definitions could bring clarity or further annoyance.

What to do about it? How to limit the risk?

A detailed contract analysis, which for existing SAP customers includes a detailed "historical" representation of the last decades, is essential in order to clearly outline the inventory of existing SAP licensing and to be able to conduct target-oriented contract discussions with SAP.

In addition, the determination or inventory of indirect usage scenarios according to the older definition from the early 2000s is just as essential as according to the current definition from SAP in order to be able to perform a transparent compliance status for all sides.

It also makes sense to use supplementary software for this purpose in order to create an overview and identify optimization options. However, this is not sufficient. The knowledgeable expert is required to show the way through the licensing jungle.