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SAP UK v Diageo – an important ruling for customers with indirect access issues

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Late last week, a UK court ruled in favor of SAP in the case of SAP UK v Diageo. This is a rare occasion where SAP has chosen to take its efforts to secure license fees for what is commonly termed ‘indirect access’ through the legal system. I spent the weekend digesting the text of the ruling, which I found remarkably lucid and devoid of mind numbing legalese.

In the analysis that follows, I will avoid much of the technical detail, sticking to a relatively simple way to explain the problem and what the judge in this case determined.

How does indirect access arise?

The ‘indirect access’ issue has been a running sore among SAP customers for some years. Essentially it boils down to this: SAP wants paying additional license fees where a third party system accesses data generated by SAP systems. This normally happens through a machine-to-machine interface but will likely mean that users who are not licensed by SAP on the originating system get access to data generated by the SAP system, albeit inside the third party system. To that extent, those additional users are not necessarily aware that they are accessing SAP data.

Diageo represents a fairly typical case where SAP systems generate data that is subsequently fed into Salesforce systems for the purpose of self service by customers rather than routing via SAP systems to Diageo call center agents.

In order to win, SAP had to show that the terms and conditions of the contract with Diageo contained language which allows SAP to make an additional charge. The judge ruled that is the case. Diageo for its part argued that the manner in which the data was transferred to Salesforce meant that the SAP enabling technology was acting as a ‘gatekeeper’ for the data rather than providing a means to access the data by additional users.

The pertinent points in SAP UK v Diageo

The ruling goes through the pertinent contract terms and from my point of view  and regardless of any other argument, it seemed clear to me that SAP is on good ground. In defining a named user, (the basis upon which SAP can levy fees), the appropriate clause says that a named user is:

“…an individual representative (e.g. employee, agent, consultant, contractor) of the Customer, a Group Company, an Outsource Provider or a Supply Chain Third Party who is authorised to access the Software directly or indirectly (e.g. via the Internet or by means of a hand-held or third party device or system). The extent to which a Named User is authorised to use the Software depends upon his user category as set out in the schedule.”

In the ruling, the judge said:

“Only named users are authorised to use or access the mySAP ERP software directly or indirectly. Named user pricing is the only basis on which the mySAP ERP software was and is licensed to Diageo.”

So far so good. But the judge chose not to rule on the quantum of fees that apply in this case, saying that:

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