SAP - show(ing) empathy

Dear Mr. Klein,

sometimes it takes a crisis to remember one's strengths. In times of the corona pandemic, it becomes clear who is a good leader and a good crisis manager and who can assume entrepreneurial and economic responsibility.

This applies to municipalities and governments and, of course, to global companies like SAP. The measures you are taking as sole CEO in the current situation, Mr. Klein, are reminiscent of SAP's glory days. Nearly 48 years ago, SAP was founded with a clear goal: to improve the operations of the global economy and the lives of people. Until the late 1990s, SAP succeeded in doing just that. Back then, the Group was more than a software manufacturer from which people bought their ERP software; it was a partner. That also applied to internal cohesion. Anyone who has personally experienced Hasso Plattner's management style knows what I'm talking about. That's why the community is pleased that SAP is seizing the opportunity presented by the Corona crisis to strengthen the bond with partners and customers again. With your strategy of focusing on the integration of purchased software products in the future, you, Mr. Klein, have rightly placed yourself at the helm of SAP.

A round of immediate measures

The list of measures you have already taken is long, and the examples given here could be continued at will. There are the quick measures to protect your employees and the guarantee of global operations and support, with which SAP has lived up to its exemplary role.

There's the federal and state support with free platforms. On March 12, 2020, SAP ensured that supply chains could be maintained with free access to SAP Ariba Discovery and TripIt for existing, new, and non-customers ("Open to All"). The free access to the openSAP learning platform should also be mentioned. All SAP training courses can be taken free of charge in the home office via the "SAP Live Class". With partners EY and Qualtrics, SAP is supporting governments around the world so that they can handle "the most urgent tasks in dealing with the consequences of the pandemic." Among the tools offered is "Covid-19 Pre-Screening and Routing," an online questionnaire for people who fear they may be ill.

Mention should also be made of the implementation of the new smartphone app to support the repatriation of German holidaymakers. On behalf of the German government, you and Deutsche Telekom are performing another important task with the development of the "Corona app". This creates trust and confidence.

According to some economic experts, the corona pandemic will be followed by a global recession. Short-time work and the insolvencies of numerous companies are already the order of the day. This is why some SAP customers will or probably have run into financial difficulties. To avoid having to file for insolvency, their boards and managers will have to cut costs quickly. However, this is not easy in view of ongoing payment obligations under SAP contracts. In addition, SAP's customers continue to depend on legal certainty in order to avoid also becoming (unintentionally) liable to prosecution in these times.

Below are some ideas and suggestions on how you, Mr. Klein, could help your customers even more during the crisis and demonstrate the "empathy to action" much cited by Bill McDermott in May 2017.

More Corona support

Enable partial decommissioning of licenses immediately and without restriction: Due to the crisis, software is being used or required less in some industries. In addition, SAP customers have put shelfware in the cupboard over the years that they cannot decommission due to SAP's current contract practice. With the upcoming SAP S/4 Hana migration, customers can convert their investments 1:1 into new products by means of so-called "contract conversion". This includes shelfware - even if it is the "wrong", too expensive user license types that were never needed. I suggest bringing forward the "unwinding" of legacy products and allowing customers to do partial decommissioning now, immediately and without restriction. This could immediately reduce maintenance costs for licenses that are currently no longer needed.

Suspend audits: When IT and Basis administrators return to work, they will have their hands full ensuring the operation of their SAP systems. No one will have the time or nerves for an audit then. With less usage, audits will also find just that. Therefore, I suggest suspending the audit cycle once for all customers. Customers who want to start new projects or migrate to S/4 Hana will do so without an audit. Trust your customers, Mr. Klein, and your customers will trust you.

Committed to legal certainty: In the last five years in particular, SAP's reputation has suffered greatly in my opinion. This was primarily due to the aggressive behavior of numerous account managers, who suddenly and often incomprehensibly to many customers demanded extensive relicensing for usage scenarios that, according to the understanding of the customers concerned and their respective legal departments, are part of the licenses purchased. The price and conditions list (PKL) is unclear in many places and leaves room for interpretation. Ensuring license compliance has become a game of roulette in recent years, even for conscientious customers who are professional in SAM. For this reason, at least the following changes to the PKL are strongly recommended:

Delete "SAP NetWeaver Foundation for Third Party Applications" without replacement. This factually unjustified license type (material number 7009523 and 7009524) is still in the current PKL. Under SAP S/4 Hana, this license type will no longer exist. On-premises customers should no longer be committed to this license type.

"SAP NetWeaver OpenHub" (7009506) and "SAP OpenHub for S/4 Hana" (7019816) should be deleted without replacement. "With these usage rights, data from SAP BW may be exported asynchronously and not in real time to non-SAP software applications." (Source: PKL Germany Q2/2020). If you have properly licensed your SAP BW, then you are also supposed to purchase an additional license for exporting data that you have previously generated yourself. According to some renowned legal experts, this license requirement is not in line with copyright law. Customers who have purchased this license could decommission it now and convert it later as part of the S/4 Hana migration.

Indirect use and digital access

The list prices for so-called "digital access" must be eliminated or at least significantly reduced. The issue of indirect use is known to be the main reason why the SAP community has been unsettled and angered in recent years. Here, too, the legal situation is complicated. Both on copyright and antitrust grounds, the licensing model can be challenged. Under copyright law, court rulings have so far been avoided through commercial settlements. Under antitrust law, a complaint by the IT user association Voice is currently still pending before the German Federal Cartel Office. If SAP customers add third-party applications with no added functional value to their SAP systems simply to save SAP license costs, this is certainly an unacceptable form of license circumvention, which SAP obviously cannot accept. However, where third-party applications deliver functional added value for the customer, their communication with SAP software is an intended use of SAP software for which no separate license fees should be charged. Software must be interoperable not only technically, but also economically. "Interoperability" is an important buzzword in this context. It is certain that SAP software would be economically successful on the market even without charging separate license fees for indirect use because it is functionally convincing and technically capable of exchanging data with other software components via standard interfaces. With the PKL Q1/2017, SAP has increased the price for "Sales & Service Order Processing" by a factor of 200. Thereby this is the counterpart (precursor) to Digital Access. Now would be opportunity to roll back this price increase. Just change the block price from 1000 to 200,000 documents (factor 200).

You have already extended the Digital Access Adoption Program (DAAP) until December 31, 2021, otherwise I would have recommended this one as well.

Dear Mr. Klein, I was pleased that the measures mentioned at the beginning reminded me of SAP's mission at the time of its founding. With the stroke of a pen, you could now improve the operations of the global economy and the lives of many people. Imagine this headline: "SAP shows empathy in the crisis - and inspires its customers". How much trust would you win back? How many customers would you be able to help out of the crisis? The financial damage to SAP would probably remain manageable and might even be offset by a rising share price. And you would not only be a good crisis manager, but a real hero for the entire global SAP community. And beyond.

Sincerely yours,
Your Guido Schneider