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Business Solutions with SAP
SAP Software License Guide

SAP Software Licensing

Many SAP customer license contracts contain either a direct or an indirect reference to SAP’s third party usage licensing requirements.  That requirement is referred to as “indirect usage” and carries a hefty potential financial penalty.  The basic idea is that if you use any non-SAP system to access SAP data the user of that external system must acquire an SAP Named User License.

While I understand SAP’s argument that if you use portions of the SAP software (BAPIs, RFCs, Function Modules, etc.) that you are using their Intellectual Property (“IP”) then they should be paid for that–, it still frustrates many customers.

Where is the Reference to Indirect Usage?

Unless you have explicitly negotiated OUT (or around) the indirect usage it is most commonly contained in SAP contracts in 1 of 2 ways.  It is either explicitly spelled out in the contract language, OR it is buried in some boilerplate language related to the order in which any contract confusion (or dispute) is to be resolved.  Frequently that language lists a hierarchy which references the SAP Price List. 

The SAP price list (in its January 2012 form) is currently over 120 pages AND contains detailed language related to indirect usage.  When it comes time to Untangle SAP Software Licensing your organization should become very familiar with its various provisions.  Like it or not most contracts do subject you to the price list’s terms.  You might as well consider that 120+ pages part of your contract.

SAP Indirect Usage or Third Party Usage Enforcement

Recently SAP has gotten more aggressive about customers paying for third party system connections to SAP applications.  The current push is that you must have a Named User License for any user who gains access to SAP data – even from external systems.  While there are some narrow exceptions the push is to just license any user who acquires the data.

From a customer standpoint Indirect Usage or Third Party Usage creates no value.  It only creates friction, frustration, and mistrust between SAP and their customer base.

In a recent license and contract negotiation with SAP and a fair sized customer, with a significant annual license and maintenance spend rate, this issue came up.  It became a major hurdle to reaching a reasonable agreement that everyone could be happy with.  While SAP was willing to concede special Named User licenses for the Indirect Usage (at a very low cost) it was still a problem.  The customer perspective is that if they decide to use another vendor’s product, and are not engaged in some unethical means of SAP software use to avoid paying SAP licenses there shouldn’t be any fee.  This is becoming a serious issue because from a customer standpoint Indirect Usage or Third Party Usage creates absolutely no value.  It only serves to create friction between SAP and their customer base.

The current focus seems to be on going after third party applications such as Salesforce.com which serve to displace SAP’s own CRM solution.   The SAP User Experience has become a big part of the reason many customers choose alternative solutions and SAP has got to do a better job of addressing that.  Because of SAP’s CRM application shortfalls I have also suggested SAP consider SugarCRM as The PERFECT SAP Acquisition Target, but the real issue is that sales people and customer facing processes want “pretty.”  The SAP CRM option comes up short in the “pretty” and usability category.

There are options for SAP customers, and there are better options for SAP as a software vendor.  Yes SAP, there actually is a way to grow your revenue, increase your software footprint AND have happy customers too!  There really is a way to “have it all” if you will consider it!

The discussion next week is around an SAP Sales and Marketing option which can significantly change this customer pain point.  It will help set SAP further apart from competitors while still growing the application footprint AND increasing revenue.  SAP, if you’re reading this, you don’t want to miss next week’s post!

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Contact me today through our site contact form ( http://www.r3now.com/contact ), phone, or e-mail.

Bill Wood
+1 (704) 905 – 5175
Bill Wood contact

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