Court Ruled: SAP Indirect Usage will cost millions!
Become pro-active and avoid non-compliance upfront!
The UK court recently ruled that Diageo Great Britain Ltd. is required to pay additional license and support fees for Indirect Usage as a result of integrating the SAP systems with software from Salesforce using SAP PI integrator software. As a result of this court ruling, any organization that has indirect usage of SAP software is exposed to substantial SAP penalties and ongoing maintenance charges.
Are you aware of the compliance risks you might be facing?
As with almost any software publisher, end users are typically not aware of the different financial risks they might face during an audit.
The most common issues we see include:
Incorrect User Counts – As per the terms and conditions of the SAP license agreements, the “users” refer to the different individuals that are authorized to make use of the software, however, it’s not uncommon that system users, generic users, or any other “user-names” within the SAP system are counted as licensable users.
Incorrect User Classifications – Many end user organizations allocate the more expensive Professional User licenses towards individuals/employees where a less expensive Named User license would be sufficient.
Indirect Usage – Non-compliance issues resulting from individuals that have indirect access to the SAP systems and which are as such required to be licensed separately.
Authorized vs Active Use – Many end users that do not perform periodic clean-up activities within their SAP systems often still count “old” user names for individuals that already left the organization.
License Requirements of Engines – Many SAP software programs are licensed on non-user metrics (e.g. Revenue, Turnover, Plants etc.).
Different Licensing Terms for the same SAP program – End users obtained licenses under different license metrics for the same type of SAP functionality.
Implemented Customizations – Customizations and modifications result in customized transactions and reports which can lead to wrong Named User allocations by the end user.
Shelve Ware – License and recurring maintenance fees are paid for software that is not in use.
What can you do to avoid costs and start saving money?
To understand whether you might face any compliance risks and to identify cost saving opportunities you should obtain accurate insight into your license entitlements and license usage.
License Entitlements – Gather all the paperwork you have agreed upon with SAP. This includes your license agreements, your ordering documents, your amendments, support agreements etc. Based on this you can perform a detailed contract analysis and create an overview of all the active and inactive licenses, the included products/components, the restricted usage rights included in these licenses, as well as the applicable license metric definitions.
License Usage – Look into the real deployment and usage of the SAP software programs. Next to performing a normal “measurement” of your SAP system, such an internal inventory will require you to evaluate your systems and interface environment in detail, to determine if any “usage” qualifies or could be interpreted by SAP as indirect usage.
You identified non-compliance issues, what’s next?
Once you have identified that you may have non-compliance issues, you can start investigating solutions that will come together in an action plan which includes a well-documented position, target outcomes and a negotiation strategy that reflect both the level and quantification of the risk identified.
Approaching SAP proactively, instead of waiting until SAP catches you during an audit, is always better. Keep in mind that although SAP does not advertise with the possibility to create special user types (which would result in a better fit solution for you as an end user), with the right documented approach you can negotiate the appropriate terms that work for your specific situation.
Licensing the indirect use of SAP software (like the other most common license compliance issues seen) will continue be an issue for the years to come. Especially since any license compliance issues identified will provide SAP commercial leverage to move you to their cloud solution. Don’t wait until you are the “next sitting duck” that is caught during an audit, become pro-active by identifying and addressing the issues.
After the UK court’s decision, a change in SAP’s behavior in the way they start or perform audits is already seen today. Being armed with valid information can help you make smarter decisions on your SAP licensing.
Richard is one of the managing partners at B-lay. He started to work in the license management industry in 2004 and worked for almost 10 years at Oracle as regional director of compliance. He uses his knowledge of enterprise software vendors (such as Oracle, SAP, IBM and Microsoft) to educate, equip and enable software end users in their challenges regarding proper software license management. Richard holds a master’s degree in IT, from University of Amsterdam in the Netherlands.