Software licensing: SAP nods to user pressure for flexibility

Software licensing: SAP nods to user pressure for flexibility

Summary: SAP says it's giving users more flexibility and choice by letting them switch spending from unused software licences to other selected on-premise systems.


SAP has shifted its stance on on-premise licensing after protracted lobbying by user groups for greater flexibility and transparency.

The enterprise software giant is now allowing customers to terminate unused licences to minimise wasted maintenance fees.

But companies will still have to take the spending assigned to the unused software and reallocate it to selected SAP on-premise products.

The licensing changes follow an announcement last month that SAP customers would be able to replace on-premise licences with cloud subscriptions, as part of its unified SAP HANA Cloud Platform initiative.

"Customers can now decide to evolve their existing on-premise landscape with other solutions from the SAP on-premise portfolio. The on-premise extension model requires the new maintenance resulting from the reallocation to, at a minimum, remain the same," SAP said in a statement.

"The described model is optional and does not have any effect on existing contracts with SAP unless a customer decides to benefit from one of the options."

Partial termination of SAP licences

UK & Ireland SAP User Group chairman Philip Adams said the change is a step in the right direction.

"Along with making it easier and more attractive for existing customers to move to cloud solutions, we've also been pushing SAP for a couple of years to enable the parking or partial termination of licences," Adams said in a statement.

"Until now, if a customer had one contract from SAP covering all their licences, they could not choose to turn off some of those licences and the associated maintenance costs," Adams said.

However, he pointed out that the change does not allow customers to park licences.

"Customers need to be careful and consider whether they are likely to need licences they are not using at the moment in the future. Once licences have been terminated they cannot be switched back on," he said.

"Essentially, if a customer needed those licences in the future they would need to purchase them again and at potentially lower discounts."

Adams said the changes will help organisations whose workforces have shrunk during the recession, provided the licensing revisions lead to lower maintenance fees.

"For other customers, the existence of a formal policy from SAP that clearly states they can reallocate existing investments to newer on-premise or cloud solutions from SAP will be welcomed," he said.

Long-standing user demands

According to the German-speaking SAP User Group (DSAG), the ability to terminate certain licences under certain conditions met one the group's long-standing demands.

"A primary condition of this will be a reassessment of the remaining maintenance base for the non-terminated licences," DSAG said in a statement.

SAP emphasised that it had worked jointly with DSAG on the changes.

In a survey by the UK & Ireland SAP User Group of its members last October, 95 percent of users thought the company's software licensing policy was overly complicated and 97 percent wanted the ability to park unused licences for support periods.

More on SAP and HANA

Topics: Enterprise Software, Cloud, SAP

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  • Strong incentive to optimize licenses

    This is great news for any SAP customer who has optimized their SAP licenses and is sitting on a surplus of unused licenses. Until now the only sure way to reduce ongoing maintenance costs has been to retire all licenses and re-purchase a smaller amount, with the timeframe for a positive ROI largely dependent on the discount given to new license purchases.

    These changes open up additional avenues for enterprises to reduce the ongoing costs of their SAP investment. A license surplus can now be used to reduce ongoing maintenance costs or to offset the costs of implementing additional SAP solutions such as cloud, mobile, etc.

    There are a range of proven techniques for optimizing SAP licenses including detection of inactive and duplicate users and optimizing license type assignments based on real usage data. With SAP's policy changes, converting license optimization into genuine cost savings just got simpler.

    Chris Hughes
    Product Manager, FlexNet Manager for SAP Applications
    Flexera Software
  • SAP Customers are the Winners- One more Chance to correct their mistakes

    There are customer who have purchases too many licenses or want to retire some of the systems. But the first step will be for the customer to realize if they are over using the licenses or not having enough licenses.

    Some of the Simple Steps they can take are the following
    1. Locking the users for Inactivity on a Regular basis and removing the Roles
    2. Reviewing the User list on a Regular basis to make sure they do not have unwanted users in the system
    3. Assigning License Type to Every user in the system
    4. Assigning License Type to Roles

    Selva CISA CGAP