Whlie many buyers end up bundling their software licensing into a single package, this often hides risks and creates the potential for unwelcome lock in. However, with an increasingly complex landscape, the UK&Ireland SAP User Group is expressing concern over SAP's licensing practices.
As a side note, SAP pricing has been notoriously difficult to fathom and Michael Doane has said that you often need many years' experience working with SAP pricing to understand how all the moving parts fit together. If the UK&Ireland SAP User Group survey is representative of the general state of play, then things are not getting any easier.
From the top line numbers - my notes in brackets:
- 95% of SAP users believe that the company’s software licensing policy is overly complicated.
- 88% of respondents believing that SAP should make its price list public. (That's already happening in part via the G-Cloud Store but that's limited to 22 items.)
- 89% of users stated they would like SAP to reduce complexity by offering software that is only limited by one licence or usage metric.
- 97% stated they should have the ability to ‘park’ unused licenses for support periods. (SAP will fight this one tooth and nail because it directly impacts higher margin maintenance revenue.)
- 77% of respondents also said that they found the entry point too high when they were looking to deploy extra modules or functionality to their core SAP systems. For example, if they only wanted specific functionality for a small group of employees, but are still required to buy more licences than they actually need. (This is the classic minimum numbers trick to ensure SAP gets the license and maintenance revenue it needs.)
- 67% of users stated that as SAP’s product catalogue has continued to expand they have found it increasingly difficult to keep track of licence usage, especially as certain SAP modules can be installed automatically. As a result they had found themselves paying for modules they weren’t even using. (Shelfware is common. The problem comes in figuring out how you can get credit for it while still remaining license compliant elsewhere.)
- 97% of users don’t believe that SAP has effectively explained the migration path of moving from on-premise to its mobile or cloud offerings and how this impacts on their existing licensing agreements. (I can tell readers that on the basis of what I have seen, SAP is flying by the seat of its pants and has little clue where to pitch appropriate prices, especially on mobile.)
Philip Adams, vice chairman of the UK & Ireland SAP User Group is quoed as saying: “SAP users are no different and these findings illustrate that they would like to see licence costs and conditions that are transparent and flexible. Encouragingly SAP has acknowledged these concerns and is starting to work with SUGEN (SAP User Group Executive Network) to engage on a topic that is clearly challenging for both parties.”
In response, Tim Noble, Managing Director SAP UK and Ireland said: “We acknowledge the results of this survey and are continuing to address some of the perceived complexities around SAP’s software licensing through a number of measures. These include standardising our terms and conditions globally so that the same licensing terms apply, no matter which country our customers reside, as well as publishing our software rights online for all SAP products and services – including the full Sybase suite.
Analysis
One of the user group's aims is to bring SAP more in line with other vendors that produce price books. That is not necessarily going to translate into transparency and simplicity but it is a start. SAP must know it is only a matter of time before they have to fully come out into the open on this ongoing and vexing topic. However, for Adams to give SAP a virtual pass on poor customer communication is no more than a sop to concern over the broader issues.
Noble is being somewhat disingenuous when he says 'perceived complexity.' Having been part of a group involved in attempting to get simpler developer licenses on a variety of SAP technologies, I know only too well just how hard SAP's legal team fights to maintain the status quo. In our case it took close to three years hard graft before someone inside SAP finally woke up to what was a nonsensical situiation regarding NetWeaver licenses. Admittedly, other license issues have not been so difficult to resolve, especially on the mobile developer side.
But there are still plenty of gotchas for SAP as it hashes this topic out. The acquisition of SuccessFactors (and now Ariba) has not made life any easier. While that is understandable from a business model perspective, it doesn't give SAP an excuse for not working out something that is equitable for all sides. .
What's more, the precise treatment and understanding of licenses often varies from region to region - as do prices. It is hard to see how SAP can claim internal victory on this matter when there are huge price disparities depending on where servers are located, let alone user counts.
One of the biggest problems as I see it is that SAP loves nothing better than to attach a value to anything it can claim as IP. In a world of more flexible business models and a demand for some things like mobile versions of on prem apps being free instead of chargeable in most cases, the clamor for radical change will only get louder.
Nonetheless, sunshine is often the best disinfectant and the results of this survey should spur SAP to greater efforts. As always - we will have to wait and see what the real outcomes are and in that SUGEN will be severly tested.
See also: Complex and non-transparent Oracle licensing costing firms millions (ComputerWeekly)