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Innovation or a Step Backwards? The Rationale Behind SAP’s Digital Access Licensing

 

In Q2 of 2017, SAP introduced Digital Access, a new Indirect Access Licensing Model, that allows for the exchange of data by way of (1) systems (e.g. bots, sensors, IoT devices), and/or (2) users accessing SAP through 3rd party applications (e.g. SalesForce.com). In this article, we will summarize Digital Access and provide our assessment of the supporting documentation and guidance provided by SAP.

Despite the industry “buzz” about the challenges and complexities surrounding Indirect Access, the basic principle of Digital Access licensing is actually quite simple. In short, it is all about how much data is created and/or managed in SAP.

Since ERP data is typically represented or managed in data entry forms or views, SAP concluded that Digital Access (Indirect Access) would be better managed, measured, and sold using document metrics, or “documents”. In layman terms, documents are forms or views created within SAP. Digital Access defines these documents into (9) distinct categories, which range from sales documents to time and material documents, and are sold in bands and tiers with their own individual pricing and volume discounts. In summary, SAP added new documents licensing model on top of the previous Named Users model.

These new changes, of course, inevitably led to a slew of new questions. The most common of which, being, “Is this new model more expensive?” Well, to best answer this, a bit of context is in order. Historically, a licensee’s primary option was to purchase Named Users to mitigate Indirect Access, costing as much as $5,000/user. Compared to the price points offered with the Digital Access licensing model, which has a starting point of ~$.80 USD/document or ~€.50 EUR/document, the real answer is, “It depends”. In the end, it comes down to how many documents are being created versus how many users are needed. These two factors will dictate the true licensing cost of the new model and if it is price competitive for your organization to transition to Digital Access licensing.

A more general question is, “Is this new document metric model better?” Unfortunately, like the previous question, there is not a simple “yes” or “no” answer. Here is why:

In the past, SAP asked customers to answer questions for each 3rd-party application connection where Indirect Access was suspected. For example:
– How many users interact with the 3rd party application?
– How many users are business partners or end customers?
– How many users trigger input for devices that feed data into SAP?

While these questions may have seemed simple at first, answering them quickly and with a high degree of accuracy, was not an easy task for any SAP administrator. So, from the get-go, dealing with SAP Indirect Access is no walk in the park. To help reduce frustrations and create a simpler and more palatable approach, the new document model was created.

Regarding this new model, SAP’s CEO commented that it would be, “a measurable business outcome for any business.” While that may prove to be so in time, there still are no clear instructions for how SAP will measure the creation of the various document types or how licensees are to calculate the demand for Digital Access. These, among other areas of confusion, are leaving customers with a long list of questions.

As you can imagine, the unknowns are very concerning, but what we do know so far does not seem to be creating “a measurable business outcome”. Confusion is still prevalent and licensees expect further clarification from SAP before many are willing to commit. In the end, and in response to the question at hand, the new model may be a better model for some customers, but things will likely become more confusing for the vast majority.

Despite all this, SAP is eager to push the new licensing model on the market, typically with conversion and license exchange specials for existing license agreements or as an audit settlement option. Suffice it to say, a deeper look into Digital Access licensing is, without a doubt, a worthwhile time investment.

When exploring/researching the document model, here are some key questions to keep in mind:
1. What are the main differences of Digital Access in comparison to the legacy model, i.e., licensing of named users and packages?
2. How does SAP support the measurement of documents or line items? Are there updates (SAP notes) for the system measurement?
3. What should existing SAP customers consider as a way forward with SAP and Indirect Access?

To help aid those searching for answers and a better understanding, over the next 3 weeks we will be answering these questions through a series of blog posts and webinars. Want to read the next article? Find it here