On April 1, SAP publicly announced changes to its licensing and auditing practices. Coined as “Project Trust,” these announcements are a direct response to the PR nightmare and customer trust issues invoked by SAP’s prior approach to the now-notorious concept of “indirect access.” (IA)
My colleague Den Howlett has already posted substantial analysis on this topic:
- SAP Indirect Access new policies aid transparency, users remain uncertain – an in-depth analysis including user group responses
- SAP Project Trust – a stepping stone towards consumption based pricing – a look at how these policies could lead to modernized SAP pricing
These announcements had two main components:
- The unveiling of a new, opt-in “document-based” pricing structure that customers can choose as an alternative to user-based licensing. No software upgrades to S/4HANA are required, but it is an all-in model, meaning you can’t mix user-based and document-based licensing. SAP says its goal is to make transitions to document-based pricing “cost neutral” compared to the existing user licenses (assuming the licensing is currently accurate). A key goal of the document-based model: provide a predictable and transparent approach to licensing costs, one that accounts for new, data-intensive digital scenarios, e.g. processing IoT-based transactions in SAP-based systems. As Den Howlett has written, this is a move towards the consumption-based licensing we believe is the future of enterprise software pricing. This model applies to S/4HANA, S/4HANA (public) cloud, and SAP ERP.
- The formal separation of sales and auditing on a global level. SAP now audits independently; there are consequences for any rogue salesperson that attempts to leverage the fear of audits for new software purchases, an all-too-common practice in enterprise software. SAP will be providing customers with tools to track their own licensing use, including a dashboard currently called “Entitlement-to-Consumption,” which is still in development.
Last week in its New York City offices, SAP’s leadership, including all of its cloud presidents, conducted an SAP Influencer Day, intended as a dialogue on SAP’s strategic priorities heading into Sapphire Now in June. A smaller group – including myself and diginomica colleague Phil Wainewright – remained for a day of discussions with the team responsible for SAP’s licensing announcements. Needless to say, the talks were spirited.
The licensing day included group and 1:1 sessions which hit on how these announcements will impact SAP sales, auditing, and user licensing. We also honed in on the challenges SAP will face going forward. ASUG, “North America’s SAP User Group,” made a thirty minute NDA presentation on their views.
Dialogue with users groups and externals has been central to these changes
I’ve seen loads of misconceptions about SAP’s announcements on social media. That’s understandable when you consider after last summer, SAP went publicly silent on this topic, giving the unfortunate impression they were making very little progress.
CEO Bill McDermott set the right tone at Sapphire 2017 in his keynote by vowing SAP would address indirect access and regain customer trust. Soon after Sapphire Now, SAP released an underwhelming and tone deaf white paper, explaining new policies on the three most common “indirect access” scenarios, which SAP calculated as 80 percent of the problem: order-to-cash, procure-to-pay, and indirect static read.
Though the document was a step forward, I was disappointed with the communications around it. I got the impression SAP considered the matter closed; communications fell off. Adding to the sense of disconnect, SAP’s handling of pricing questions during the fall TechEd season at public press sessions was also inadequate.