SAP’s Recycled Indirect Access Damage Control for 2018

What This Article Covers 

  • A Review of The Sources
  • How SAP Creates and Echo Chamber
  • The SAP Indirect Access Announcement
  • SAP Leading the Industry in Transparent Licenses and Pricing?
  • SAP Built on Trusting Relationships with Customers?
  • SAP Sales Separate from Auditing?
  • SAP Sales Separate is Now from Auditing?
  • What SAP is Doing With This Announcement?
  • Damage Control 2.0
  • The Framing of the Announcement by Diginomica
  • SAP’s Claims Regarding Indirect Access are True?
  • SAP’s Previous Policy Was Pre-Digital Age?
  • Indirect Access as a Virtual Non Issue
  • SAP Consultants Are in a Quandary Regarding Who’s Interests to Prioritize?
  • Is SAP Scrambling to Come Up With Solution to Indirect Access?
  • SAP “Believes XYZ” Now Considered Evidence?
  • SAP Is Often Not Fairly Compensated for Its Value?
  • How the SAP Consulting Market Works
  • SAP Account Executives Can No Longer Initiate Audits?
  • SAP Believes Account Executives Act With the Customers’ Best Interests in Mind?

Introduction

SAP has just released new information regarding indirect access.

In this article, we will not only analyze this information but also analyze the sources that are reporting on this information.

A Review of The Sources

I was first made aware of the official new information about indirect access from Jarret Pazahanick.

In his LinkedIn share, he provided links to the following entities.

  • SAP
  • Dennis Howlett (Diginomica)
  • ASUG
  • Vinnie Mirchandani
  • ComputerWeekly

Before we get to analyzing the content from various sources, let us review each regarding their relationship to SAP.

  • Diginomica: SAP pays Diginomica. How much we don’t know.
  • ASUG: ASUG has no independence from SAP and ASUG is simply another outlet through which SAP releases the same information that can be found on SAP’s website.
  • Vinnie Mirchandani: One of the very few true SAP’ critics and does not appear to take money from SAP.
  • ComputerWeekly: A fake journalistic entity that is simply the web front end for the marketing automation apparatus controlled by TechTarget. Counts SAP as one of the many customers for its marketing automation information. This was covered in this article.

How SAP Creates and Echo Chamber

Our research into SAP has found that the entities that cover SAP are highly biased in favor of SAP. They almost all have financial ties to SAP, and they only very rarely declare these financial connections (Diginomica is the only one in the list above that does).

This allows SAP to create an echo chamber and not to have its statements analyzed critically. SAP has the most advanced media manipulation apparatus that has ever existed in enterprise software. They are not only supported by almost all media entities but are supported by all of the major IT consultancies that have enormous SAP consulting revenues and who parrot whatever SAP says.

And here again, with this announcement on indirect access we have almost all of the sources were either funded by SAP or controlled by SAP (as in the case of ASUG).

Now that we have established the bias of the sources available on this topic let us get into the analysis of the announcement.

The SAP Indirect Access Announcement

As per usual with all SAP press releases, the SAP announcement on indirect access is riddled with falsehoods.

Here are a few examples.

SAP Leading the Industry in Transparent Licenses and Pricing?

“SAP is shaking up the industry and raising the bar on software licensing practices by tackling ERP licensing for the digital age with new licensing practices, new rules of engagement for usage and compliance, and a new pricing model — all developed jointly with our customers, user groups, analysts, and influencers.”

Uuuuum……utterly false.

Along with Oracle, SAP is known for having the most confusing and extractive licensing in enterprise software.

We have the SAP pricing list/spreadsheet, and it is challenging to determine what the price of something should be. SAP account executives cannot price software themselves, but must rely upon internal pricing specialists. And that is before the discounts are applied, which is an entirely different topic.

SAP not only restricts its price list, but it declares that revealing its pricing is an actionable offense.

This is covered in the following article.

If SAP is so dedicated to transparency, why isn’t the new change to publish the pricing list on the Internet?

The answer is simple. SAP wants to create the impression of transparency while maintaining its long-held opaque pricing. For readers who like to see an example of pricing transparency…

See the PlanetTogether pricing page.

This is transparent pricing. You can tell exactly what you will pay.

Last we checked PlanetTogether did not even employ any salespeople. True SaaS applications provide pricing transparency, this is yet another reason SAP is not cloud/SaaS. (Note: PlanetTogether does not bring indirect access claims against its customers)

SAP Built on Trusting Relationships with Customers?

“SAP built its business on long-term, trusting relationships with its customers. To address this, we listened to extensive customer feedback and thoroughly reviewed our processes and practices around indirect access. As a result, SAP is introducing new organizational and governance changes to further consistency in our sales and audit practices.”

False. And a backdoor brag to boot.

SAP has this pattern where they combined false information about their history that you are forced to read through to get to the actual meat, which is just disrespectful to the reader. Imagine if I made my readers wade through a bunch of false claims that I had a.) Won a Nobel prize, b.) Finished 2nd in Figure Skating at the Sochi Olympics, c.) Was voted the best dancer in San Diego County.

Also, for a relationship that is supposedly based upon so much trust, we have documented an enormous number of lies told by SAP to their customers over the years, as you can verify for yourself in our A Study into SAP’s Accuracy.

Indirect access itself is one of the most brazen examples of illegally harvesting and misleading a customer based in the history of enterprise software.

SAP Sales Separate is Now from Auditing?

“We are imposing a separation between license sales and license auditing, both from an organizational and from a process-governance perspective to promote objectivity and neutrality. Only the Global License Audit and Compliance (GLAC) organization will initiate, approve or terminate license audits.”

This is going to end up being false, but it is not the primary issue with SAP licensing.

First, let’s look at the reason for this statement.

This is SAP’s attempt to mitigate the perception that there is a complete lack of independence between sales and auditing — which happens to be true (there isn’t any). But, SAP does not use auditing the same way that the worst offender, Oracle does. It has been known for some time that SAP uses indirect access claims when the account manager has determined that they are not getting as much sales out of the account as they think they should.

The bigger issue with SAP is how indirect access is applied…..not auditing. And indirect access is entirely at the discretion of the account executive along with their VP. That is, it is a sales decision whether to bring an indirect access claim against a company. Indirect access has one purpose — to scare SAP customers away from purchasing non-SAP software.

Therefore, ultimately all auditing, indirect access is quite obviously tied to sales targets.

What SAP is Doing With This Announcement?

Ahmed Azmi made the following observation about the announcement.

“This issue isn’t going anywhere because SAP keeps trying to mislead everyone.

“This is NOT indirect access. This is third party access tax. Even in the “new” model, a PO triggered by Salesforce CRM is taxable but the same PO triggered by Callidus isn’t. The tax applies only to third-party product access. An indirect SAP product access is exempt.

This is a tax on third-party software. It has nothing to do with business value. It’s anti-competitive and will only make customers’ SAP estate radio-active.”

Ahmed is 100% correct in this observation. And his labeling of the SAP estate as “radioactive” is a contribution to the framework of interpretation of indirect access.

Ahmed noted that SAP has most the people writing on this topic using their vernacular and definitions. Indirect access is not a non-SAP system calling functionality or data in SAP. That is called application integration.

SAP is using the new applications like IoT and CRM to posit that this creates a new issue of applications accessing their systems, but that is a smokescreen. This is designed to trick people who are not technologists as to the reason for coming up with the falsely repurposed term indirect access. Indirect access has a specific definition, which we covered in this article.

And it is not the definition that SAP is using. SAP’s definition of indirect access is undifferentiated from application integration.

SAP’s sequence of dealing with indirect access looks like this.

  1. Step 1. Introduce a false construct perverting the definition of the term indirect access to mean as Ahmed observes, a “third party access tax.”
  2. Step 2. Receive blowback from using this anti-competitive tactic in both lawsuits and in pressure sales.
  3. Step 3: Attempt damage control by releasing additional false information, with proposals that the new false information is in the customer’s best interests.

Damage Control 2.0

This is also not SAP’s first attempt at damage control. At the previously SAPPHIRE, SAP introduced a new policy regarding indirect access along with a white paper on indirect access which we analyzed in this article.

Bill McDermott gave a highly deceptive presentation regarding indirect access that was widely applauded by the SAP echo chamber. Bill McDermott cynically stated that SAP needed to be “empathetic towards customers.”

SAP released a new pricing structure for transactions which was hailed as a positive development for customers by SAP’s compliant and paid off media echo chamber.

What these entities never questioned is why any customer should have to pay anything for what is undeniably application integration.

The Framing of the Announcement by Diginomica

One of the articles that covered this announcement was by Diginomica. Some of the coverage in this article seemed even-handed, but there are several problematic statements by Diginomica which have to make one wonder how much SAP’s financial contribution to Digninomica affected its coverage.

Here are some examples.

SAP’s Claims Regarding Indirect Access are True?

“Until around six-seven years ago, IA to SAP systems was a non-topic. SAP claims that IA has always been part of contractual arrangements and therefore customers were on the hook for IA licensing costs.”

SAP claims this, but it is not true.

SAP had indirect access in its contractual arrangements, but SAP deceptively changed the definition of indirect access to mean something else than its agreed-upon meaning.

This is why the often declared advice offered to SAP customers to “check their contracts” is not helpful. The answer is not in the contract. The answer is in the perverted definition of indirect access.

SAP’s Previous Policy Was Pre-Digital Age?

“The problem is that this policy developed during a pre-digital age. It is easy to see how in modern systems landscapes, where we’re talking about machine-driven data input, that the number of ‘users’ could explode. From SAP’s perspective, that didn’t matter. The contract says ‘user’ (with numerous and lengthy definitions), and that was an end of it.”

When was SAP selling software that was in a pre-digital age? SAP never sold a general paper ledger. There was no pre-digital policy that SAP’s license covered. SAP has always been a software company. Software and the data it creates is stored digitally. It is not stored any more digitally in 2018 than it was when SAP became very popular in the 1980s.

This commentary about SAP developing pre-digital age policies is misdirection and deception, pure and simple.

Second, what is machine-driven data input? Is that application integration? Sounds like it.

  • When did SAP not have application integration?
  • Also, why would it cause the number of users to explode?

There is no evidence of greater uncompensated usage due to any new technology change.

When SAP was first purchased, it was integrated with the legacy systems of its customers. Right from the first implementation. (oh yes, and even R/2 was…….say it with me now, “DIGITAL”)

Indirect Access as a Virtual Non Issue

Something which apparently few are interested in bringing up is that true indirect access is only very rarely an issue.

Indirect access is when a UI is used by a company to circumvent the named users on the software. It is so infrequently an issue that almost no one today actually knows its trued definition. In fact, no other vendor but SAP bothers worrying about it. We are quite serious, try to find another vendor that enforces indirect access claims. We are aware of one other who tried to copy SAP, but they were too small, and they failed to enforce not true indirect access but SAP’s perverted definition of indirect access.

We can count our hand the number of times we have heard of this as an issue and all the cases where with companies based in Asia.

SAP Consultants Are in a Quandary Regarding Who’s Interests to Prioritize?

“Consultants and advisors were equally in a quandary because it became difficult to adequately advise customers considering alternatives in areas like CRM, non-strategic sourcing, and HR. This was especially true where customers were considering IoT projects where the number of connected devices that could trigger an SAP transaction was often unknown.”

This is also false.

SAP projects are only implemented by SAP partner consulting firms. I have worked with these companies for the better part of 20 years. I have never run into a single company that ever served as anything but a repeater of whatever SAP said. They have repeatedly shown zero concern for their clients and may as well be the consulting arm of SAP. Most of them compete with how much they can show their subservience to SAP.

Therefore the idea that consultants and advisors are in a “quandary” is just false. They take the side of SAP in nearly all cases. In fact, we have several documented examples of SAP partner consulting companies hiding indirect access liabilities from customers. (it would have reduced their potential to make the sale, so better to keep it quiet).

Is SAP Scrambling to Come Up With Solution to Indirect Access?

“In our yearlong conversations with SAP, it is clear that despite the problems, the company was busy scrambling to find a solution that would be fair on all sides, handing this unenviable task to Hala Zeine, with whom I’ve had the most contact.”

Really?

Let’s take a step back.

Indirect access is an illegal and false claim of usage on the part of SAP. And Diginomica’s impression after speaking with a major funder of theirs is that SAP is “scrambling to find a solution that would be fair on all sides.” That is SAP is “scrambling” for a solution that is fair — to redress is a policy that is both based upon a bed of lies and is illegal as it violates the tying agreement clause of US anti-trust law? (as we cover in this article)

Is this what we are supposed to believe?

We have a way to redress this issue immediately. SAP could, for example, stop enforcing the illegal sales tactic called faux or Type 2 indirect access.

All of this is a bit like saying that a man who abuses repeatedly abuses his wife is “scrambling” to find a solution to the problem of spousal abuse. The fastest way to do this is to stop punching his wife in the face.

SAP “Believes XYZ” Now Considered Evidence?

“Today, SAP believes it has come up with a fair answer and the noises coming from SUGEN and other user groups are encouraging.”

SAP believes? As in Trump believes that 3 million illegal aliens voted in the US Presidential election?

How would this sentence work in the opposite?

Would for example SAP ever say that “we believe we have come up with a completely unfair answer?”

Probably not right?

SAP Is Often Not Fairly Compensated for Its Value?

“SAP still wants to be paid where it thinks it adds value. Whether that is real or imagined is a whole different story, but it does mean a fundamental shift in the way this topic is priced.”

SAP has $23 billion in yearly revenues. Is getting paid a habitual problem for SAP? If so, it is the first we have heard of it.

In fact, the evidence works in the opposite direction. We have observed and documented numerous cases where SAP and their consulting partners should offer refunds to companies for software that has failed.

This includes software that never should have been released or purchase. Here are some examples:

  • SAP EWM
  • SAP SPP
  • SAP SNC
  • SAP TM
  • SAP PP/DS
  • SAP PLM
  • SAP SRM
  • SAP CRM
  • SAP BW

This is an abbreviated list, but all of these products are so deeply flawed they either fail or they add extremely little value for the companies that use them. In our Study Into S/4HANA Implementation, we found that SAP had lied to numerous companies about the readiness of S/4HANA, and that those implementations almost all failed.

So, what about the value that was promised by SAP with these applications and other applications that are either complete write-offs or long-term maintenance money pits? We still get requirements for recruiters for skills in SAP applications that have no hope of being taken live.

Why?

How the SAP Consulting Market Works

Because they continue to be recommended by Deloitte, Accenture, Infosys, etc.. that could not care less if any application is ever taken live, so they recommend SAP applications where they can bill customers. No matter how many times the big consulting companies fail, they will always be in included in the next round of selection, because customers think they need a big name consulting company. This is an unbreakable feedback loop that removes the major consulting companies from needing to be successful in implementations.

Many of those implementations would have been successful if the non-SAP software had been selected (implementations tend to be more successful when the software is functional).

In fact, it is difficult to find more waste than in the SAP ecosystem. And one does not exist, because there is no other software vendor that enjoys the continued support and protection of the most influential and corrupt consulting companies.

We argue, and can demonstrate that SAP is hugely overpaid for the value it adds to companies.

Therefore, SAP can say whatever it likes, that they believe this or believe that, that they believe the moon is made of green cheese, but Diginomica should not repeat what SAP says without critique.

SAP Account Executives Can No Longer Initiate Audits?

“The much hated ‘surprise’ audit is going away. SAP has explicitly split audit and sales from one another. This means that while routine audits are a part of ongoing contractual obligations, EAs cannot initiate an audit because sales are not part of the audit organization and vice versa.”

And we previously stated, we found this highly unlikely to be true. But Diginomica states this as a fait accompli.

How does Diginomica know if this is true? The ink is not dry on the statement and it is now in the rearview mirror?

SAP Believes Account Executives Act With the Customers’ Best Interests in Mind?

“In closed conversations, SAP has made clear to me that while it believes the vast majority of EAs act with the customers best interests in mind, those who violate SAP’s audit policy will be punished. If that means letting go of an otherwise rock star performer then so be it.”

Really?

What a thunderbolt courtesy of Diginomica! That access is really paying off as Diginomica is truly sharing the inside scoop with us mere mortals.

Would SAP admit that the vast majority of it’s EA’s do not act in the customers best interests? If not, then what is the point of this sentence? It is axiomatic and therefore carries no information.

Also, rest assured, no rock star performers will be let go — SAP has repeatedly demonstrated that it does not care about anything but money.

Conclusion

This release of information is riddled with falsehoods and is primarily being analyzed by entities that are financially tied to SAP. As one would predict, the coverage by the media entities runs the gamut between highly SAP deferential to somewhat SAP deferential. There are extremely few entities — such as Brightwork, or such as Vinnie Mirchandani that will outright challenge SAP and call them out for their behavior.

References

Indirect Access Contact

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http://news.sap.com/wp-content/blogs.dir/1/files/Pricing_for_Digital_Age_Overview.pdf

SAP Indirect Access new policies aid transparency, users remain uncertain

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