This week SAP announced the creation of their new Digital Access Adoption Program (DAAP). The ERP giant introduced the Indirect/Digital Access pricing model last year, and since then approximately 800 customers have switched to the digital access model, which is just 0.2% of the customer base. In an effort to accelerate adoption, DAAP provides a financial incentive if customers opt for SAP’s digital access model within the next year.
Understanding the Digital Access model
SAP recognized that in the age of digital transformation, value creation is increasingly taking place without human interaction. In this new model, transactions and documents form the basis of the digital access license measurement. Pricing is based on the result, or added value, achieved by creating and triggering certain transactions and documents in the ERP and S/4 HANA Digital Core.
An example of document-based licensing could be that while reading an address from the SAP system is not value-adding and therefore does not have to be licensed and paid for, creating a customer order is value-adding and therefore must be licensed and paid for accordingly.
That appears straightforward enough. But another example is if a machine in an IoT environment sends status messages to the central system, this is also not currently subject to licensing. However, if a status report on the condition of the machine results in a service order, such as requiring a new battery, this must be licensed. So, if a sensor reports that it needs a new battery, this also requires a license, which starts to stretch the definition of adding value.
SAP had defined nine document types and items, which as a result represent value-generating access to the ERP system and have to be licensed in the course of indirect/digital use.
|Sales Document||Sales Order Line Item
Sales Contract Line Item
Sales Quote Line Item
Sales Scheduling Agreement Releases
|Purchase Document||Purchase Order Line Item
Purchase Requisition Line Item
Purchase Scheduling Agreement Releases
|Invoice Document||Billing Document Line Item
Billing Document Request Line Item
Supplier Invoice Line Item
|Manufacturing Document||Production Order
Repetitive Manufacturing Confirmation
|Material Document||Material Document Line Item|
|Quality Management Document||Defect
Inspection Point Result
|Service & Maintenance Document||
|Financial Document||Financial Document Item|
|Time Management Document||Time Sheet Record
Time Management Record
In addition, there is a factor for calculating the license fee for each document type. This factor is 0.2 for financial and material documents and 1.0 for all other documents. According to SAP, the license calculation is based on the initial creation of a document. Read, update and delete access are not counted.
The implications of DAAP
The new DAAP approach consists of two steps:
SAP wants to “help” customers determine the extent of Indirect Access of their SAP systems.
For cloud environments (A), SAP's Global License Audit and Compliance Team (GLAC) will help customers determine the number of documents relevant to licensing.
For on-premises systems (B), the customer implements Support Packages that contain the SAP Passport Tool. They estimate the number of currently created documents. These Support Packages are planned, but not yet available, for all releases that are currently under maintenance. As the chart shows, some of these are already late.
In addition to tool support, SAP also wants to offer its Customer Services teams to help. The GLAC team should support users in using the tools or installing the Support Package.
SAP is also offering its customers massive discounts when switching to Digital Access. Those who license 115% of the counted documents, e.g. to secure their future growth, should only have to pay the 15%. The customer gets the licenses for the currently required documents virtually free of charge.
Any history, whether contractual history or actual use over the last few years, is ignored. Customers who choose the results of the count as a basis for licensing should receive discounts of up to 90%.
However, if you want to benefit from the financial credits, you must have undergone one of the forms of document evaluation by SAP/GLAC as described above.
The option of having licenses for Indirect Access that have already been acquired credited to Digital Access is still available.
What is really new?
I have to admit, I had to read the PowerPoint three times. I did not immediately understand what the new system was and what had changed. Frankly, it doesn’t appear that anything has changed, and concerns raised last year still exist.
If you use an SAP app that requires a license to create sales orders, time documents or invoices in ERP, you would pay SAP twice. Once for the app license and again for the documents you create in ERP and maintenance on top.
Since the introduction of the new pricing model last April, there have been heated discussions about questionable clauses, transparency and double licensing. The enormous potential for antitrust complaints that the introduction of the new SAP license model entailed already manifested itself in October 2018 when The Federal Association of IT Users e.V. (VOICE) filed a complaint with the Bundeskartellamt (BKartA) against SAP concerning the planned new license terms for indirect use/digital access. VOICE believes that SAP's planned fees for indirect access to devices and third-party applications are illegal and that SAP is abusing its strong market position in the business software market vis-à-vis its customers.
In an open software market, no dominant supplier should dictate the conditions. Additionally, SAP's licensing behavior damages the market for third-party applications: The costs for their use are artificially inflated and the cost risk is incalculable.
The extent to which the complaint will be investigated is currently still open. One thing we can be sure of is the result of indirect use is almost always the same – the customer is forced to buy licenses for products they would not have bought previously.
Negotiating licenses with DAAP
SAP customers should pay close attention during upcoming license negotiations to create contractual clarity through appropriate additional regulations. This applies equally to existing and new customers. If unsolicited license measurements or considerable after-licensing costs are imminent, it is advisable to carefully examine all options for action – both from a technical and legal point of view. As a result, technical, copyright, and antitrust limitations may make the new SAP license model vulnerable in many ways, giving customers considerable room for negotiation.
You should also take SAP license management and license optimization into your own hands with an SAP software license management tool that helps you analyze the data connections from and to RFC or HTTP connections, IDocs, or batch input that cause indirect usage. In addition, with the right tool, you could consolidate your Named User licenses, verify usage, determine the most cost-effective Named User licenses, and most importantly, save a lot of time.
Snow Optimizer for SAP® Software displays digital receipts on selected data sources. Period, document type and user can be selected on a consolidated basis to narrow down the results based on real data. If you know your risks with regard to indirect SAP use, you have a clear advantage because you know more about your indirect use than SAP. This allows you to counter SAP's measurements with your own and make informed decisions when it comes to your licenses. Not every SAP customer can say the same.
To find out how Snow help you manage your SAP licensing in this changing business landscape, contact us.