Pill against homemade disease

ERP Pricing for the Digital Age aims to regulate indirect usage more transparently. The model was developed in close collaboration with user groups, partners and analysts.

However, it seems questionable to us whether the new pricing model for indirect use - as SAP claims - is actually "fair and transparent" and "to the benefit of customers".

What's new?

The model is a real novelty and is no longer based on the number of users for indirect access (digital access), but relies on a transactional metric.

Indirect access occurs when devices, bots, or automated systems access SAP, or when people, devices, or systems use SAP indirectly through intermediary third-party software such as a non-SAP front end, a custom solution developed in-house, or a third-party application.

Unlike in the past, Digital Access now licenses so-called "documents" on the basis of the transactions/documents processed by the system itself. Here, the creation of such a document counts; reading, updating or deleting are not charged.

Where do problems lurk?

In our view, SAP's new model is primarily based on a "transactional" licensing system in the medium term, which ultimately only works in one direction: Revenue growth for SAP.

If, for example, the customer needs more SAP licenses due to increasing orders, the additional costs for indirect use plus the associated maintenance fees can be absorbed.

The situation becomes critical when the number of orders managed with SAP declines due to a lack of orders. SAP does not refund the license costs previously paid - no matter how badly the customer is doing.

What's next?

SAP has been rolling out the new sales, audit and pricing model since April and has announced that it will make additional training materials available in the coming months to facilitate understanding of the new licensing requirements.

Basically, existing customers can decide whether they want to stay with the previous model or switch to the new one - depending on which fits better with their SAP and third-party applications. However, customers who have not yet licensed or new customers are not offered this choice.

In our experience, 30 to 40 percent of SAP software in use today, both in midsize companies and in corporate groups, is inadequately or incorrectly licensed, which can have drastic financial consequences in the event of an audit.

What remains is the continuous optimization in order not to buy too many or the wrong licenses and end up paying for these wrong decisions for years.

Our recommendation is: Get Audit Ready!

Experience shows that an as-is inventory is not sufficient for long-term license-compliant use, since the IT structure in the company changes and develops continuously in line with the business processes.