Innovation killer indirect use

Every SAP license purchase is based on an individual contract, the applicable General Terms and Conditions (GTC) and the SAP Price and Conditions List (PKL).

SAP revises and changes this list of prices and conditions once a quarter. These changes include prices, products and metrics. New SAP products are added or options are removed, such as the named user license "SAP Limited Professional User".

Rights of use can be redefined! This means that a previously free-of-charge license can become subject to a fee after the change. Or the SAP key account manager unexpectedly asks his customers to relicense usage rights that they have been granted free of charge for years as a "gesture of goodwill".

One such case is "indirect use". For a long time, it was a gray area that nevertheless caused many projects to fall through - partly due to a lack of definitions and delimitations, partly for cost reasons.

Example:

An existing customer with around 100 Named SAP users wanted to implement a service portal using an externally programmed website (Java). The task would be independent data maintenance by the company's B2B customers. Customer data would be imported into the SAP system via the web portal and also maintained by the portal.

An estimate revealed around 10,000 expected web logins that could access SAP "indirectly". According to the price list at the time, the "NetWeaver User" was required (approx. 150 euros). This price specification ruined the whole project from a cost-benefit perspective!

After lengthy negotiations, it was possible to agree on a "symbolic euro" per planned portal user, i.e. a total of 10,000 euros.

In recent PKL changes, SAP has further specified the definition of "use" - which ultimately amounts to tightening a thumbscrew.

The goal is clear: either additional revenue from licenses and maintenance fees or a move to the cloud. This raises various legal issues for existing on-premise customers:

Are SAP customers really legally obliged to report indirect use to SAP and, if necessary, to make additional payments, even if this has been done free of charge for years?

Are clients aware of the financial risk and is this taken into account accordingly in risk management? What mechanisms are used and are reserves set aside for this purpose?

In order to find out how existing customers deal with changing license conditions and what effects such contract changes have, Guido Schneider, Managing Director of SecurIntegration and experienced SAP licensing expert, conducted an online survey among SAP customers and DSAG members. A total of 61 companies answered questions about their previous experiences and risk assessment.

The starting point

According to Guido Schneider, existing customers, but also many SAP key account managers, are often unable to define indirect use precisely:

"This is probably one of the reasons why no corresponding usage rights, SAP licenses, were bought or sold in the past."

If we examine the price and conditions lists from 2006 (or at the time of the introduction of SAP NetWeaver 2004) and compare them with the current PKL from Q3/2015, we see the following:

SAP differentiates between whether applications are accessed via SAP's own technology, i.e. "within" SAP (Abap or Java stack), or not. If access is via customer developments or third-party software, SAP requires an additional right of use in the form of the "NetWeaver Foundation for Third Party Applications" license.

The customer can decide once on which basis he wants to purchase the license: core-based (number of CPU cores on which the application runs) or user-based (number of users who use the application).

According to the current PKL, it is not possible for the user to mix the calculation approaches or switch from one license model to another.

The core license costs 30,000 euros, the user license with a minimum purchase of 120 units costs 450 euros per user for the databases MaxDB, IBM DB2, Sybase ASE and Hana.

Existing customers must therefore purchase the "NetWeaver Foundation for Third Party" license if they wish to operate third-party software based on SAP technology.

Irrespective of this, he also needs a suitable right of use, the named user license. If this is not available, the "SAP Platform User" license must be ordered for 1,300 euros. The SAP Platform User for Productivity Apps costs 250 euros.

USMM & LAW

SAP has not yet been able to measure usage or access with the existing measurement tools USMM (Transaction: User System Measurement) and LAW (License Administration Workbench)!

In individual cases, it must therefore be determined technically/manually which form of access exists and which usage rights the respective "SAP user" requires for this access.

From a legal point of view, it would also have to be examined whether a copyright infringement actually exists if users do not use any functions within the SAP software code, but only access (read or write) the company's own data.

A system measurement becomes even more opaque if there have been subsequent purchases, as different GTCs and PKLs then apply: So what may have been permitted and free of charge a few years ago is now subject to a charge.

However, there is no historical allocation of SAP licenses to the results from USMM and LAW! Guido Schneider says: The moment a company acquires SAP licenses, it also recognizes the current GTC and thus the current PKL.

This PKL and the conditions described therein (rights of use) apply to the licenses currently purchased. Whether they also apply retroactively to licenses already purchased would have to be legally reviewed. The question is relevant for those cases in which a company programmed its own developments before the introduction of the PKL 2006 and still uses them.

Theoretically, these are not subject to licensing, as a corresponding license did not exist at the time. However, if the company acquires SAP licenses this year, thereby accepting the current PKL, and puts a new in-house development into operation the following year, the company would have to acquire an "SAP NetWeaver Foundation for Third Party Applications" license for this new in-house development.

If this is provided for in the contract rules and is legally valid, the question arises as to whether all companies are aware that they may be subject to additional charges. Is SAP obliged to inform its customers of this fact? (End of quote)

SecurIntegration's survey revealed that over 80 percent of respondents were not aware of the current PKL, nor were they informed by SAP about the relevant changes.

Guido Schneider is generally unable to answer the legal question of whether this is even necessary in the B2B environment or whether existing customers themselves are obliged to actively inform themselves about possible changes. However, it is clear that many customers are unclear about their current contract conditions.

SAP solution is called Cloud

Not only existing customers are unsettled, SAP key account managers also appear to be ignorant. E-3 Magazine is receiving more and more reports that SAP wants to lure its existing customers into the cloud with the argument that there will then be no license costs for indirect use - which is of course complete nonsense from a technical point of view, but seems understandable from a corporate policy perspective from Walldorf:

If the existing customer moves to the expensive SAP cloud, they receive the indirect use as a discount in kind. The change to the GTC and PKL must also be understood from this perspective. SAP is fighting for real added value for the cloud business.

However, cloud computing is not a solution to the issue of indirect use for existing European SAP customers. This exacerbates the conflict and has a direct impact on innovations at partners and customers as well as the further development of business processes.

A summary from the DSAG environment is therefore also that many innovative SAP customer projects have been destroyed due to this unresolved license issue. The frequently mentioned topics of investment protection, sustainability and innovation capability are marginal and insignificant from this perspective.

Many DSAG members are in favor of finally resolving the issue objectively and sensibly for both sides. With regard to IoT (Internet of Things/Industry 4.0), IT experts are sceptical about how to implement the sending of messages from machines to SAP (M2M) if they are not convinced by SAP's (license) technical platform.

(Text by Peter M. Färbinger using the SecurIntegration/DSAG survey and numerous letters to the editor)