All Posts by Shaun Snapp

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?
  • Where is the Published Pricing from SAP?
  • 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?
  • How SAP Will Monitor Their Customers
  • Indirect Access to Coerce Purchases of Lagging Products
  • A New Definition of Transparency, Opacity
  • When Does Secret Pricing = Transparency?
  • Operation Coercion

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 on 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.

Where is the Published Pricing from SAP?

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.

The Definition by SAP?

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.

How SAP Will Monitor Their Customers

This following observation is from Voquz, a company that supports SAP customers in license matters.

“Starting November SAP will automatically begin measuring customer’s usage of the nine document types via their USMM tool, which SAP mandates customers run annually for self-declarations. The ability to discover IDA puts SAP in an unprecedented position to force non-compliance discussions as a routine step with all customers. In an official document from last week titled “SAP Global License Audit and Compliance Update”, SAP lays out its framework for future IDA License Fee enforcement. In their latest update, SAP also proclaimed that they separated Sales Teams from Audit Teams to prevent abuse. In reality, the criteria above will trigger audits as routine follow-ups based on your interactions with SAP’s Sales Team. an SAP-initiated License Exchange will override potentially beneficial terms from your old contract which creates additional audit opportunities for SAP, you’ll start paying for IDA when you haven’t in the past, and odds are high you will be rushed into an unsolicited S/4 migration project.” – Sebastian Schoofs

This is a very good analysis by Sebastian and Voquz.

If we look at the vast majority of coverage on this announced new policy, most of the entities in some way drew income from SAP. SAP announces something, something completely antithetical to how they have always operated concerning pricing, which is offering transparency. One analyst compared the new pricing as a “stepping stone to Oracle Cloud and AWS pricing,” even though SAP’s pricing is entirely secret. That is under both the old plan and the new plan.

How can this be similar to AWS or Oracle Cloud if the vast majority of SAP’s revenues still come from on-premises software? But that is the least of the problems with the proposed analogy. AWS (and to a far less degree Oracle Cloud) publishes its pricing. See this link.

See the monthly AWS calculator.

A New Definition of Transparency, Opacity

And what does SAP say about the new prices? According to CIO, which is owned by the ruthless media conglomerate IDG and is paid by SAP and overall SAP toadie.

“With this new model customers have a choice. They can remain as they are today with their existing contracts and pricing, but if they would like to modernize their pricing and move to a more predictable and transparent approach, then they we would recommend this new pricing. We will work with each customer individually.”

Transparent?

“SAP won’t say what bundles will be available, nor how much they will cost: The final price will depend on volume and customer discounts.”

Right. SAP will extract the maximum amount of money from each account based upon how good that account is in negotiating. SAP has always had secret pricing and will continue to do so.

Comparing this pricing to AWS is missing on the topic transparency of published pricing, the invasiveness to the customer, ease of access to pricing information, and on SAP’s pricing history. But if you are within SAP’s orbit or reality distortion zone, this apparently makes some type of sense.

As for being a stepping stone. SAP can publish all of its pricing right now. There need be no intermediate stones to step upon.

All of this brings up the following question.

When Does Secret Pricing = Transparency?

Here is when.

Secret Pricing = Transparency

….when you are paid directly by SAP or when you consult in SAP and place SAP’s interests ahead of your client’s interests.

Indirect Access to Coerce Purchases of Lagging Products

A major aspect of indirect access is driving customers to products that SAP is on the hook to show gains to Wall Street. These are trumped up poor value products that you can’t make any value argument for (S/4HANA is still incomplete and HANA is worse than what it would replace). And forget the customers, let’s focus on what is important.

McDermott and Enslin and Luca Mucic and many others at SAP have large numbers of stock options they must exercise at a high price because checking Outlook, lying and attending meetings must be compensated. But for these special snowflakes to accomplish this task, they must fake it. This is because of their over projections to Wall Street.

See this article which explains the expectations they have created with the financial analysts.

Operation Coercion

SAP can’t get these numbers by selling S/4HANA and HANA to customers even with enormous exaggerations the “old fashioned way” (i.e., without indirect access coercion).

Therefore as observed by this article by Voquz, they need to coerce purchases. And the best way to do so is to pretend that SAP is “moving towards transparency” and make an announcement that amounts to damage control, to recast indirect access in a positive light, and as part of choice and openness.

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. So far Voquz has been the only one that provided a detailed analysis of the policy and what it actually means. 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 (and in this case Voquz).

Our prediction is that this new policy will fail. It is very complicated to implement and has a number of booby traps. The types of usage pricing that are implemented by AWS make sense. But this pricing policy, which is entirely secret does not. This policy invites SAP into the customer’s environment to subject them to more monitoring, which is the last thing that any customer would want.

Customers should want to keep SAP as far away from their environment with as little information about the environment as possible. (SAP’s support is of so little value at this point, that this can mean reducing the opening of tickets).

The more SAP knows the more power is handed to them in finding ways to charge the account.

Indirect Access Contact

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References

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

https://www.cio.com/article/3268464/enterprise-resource-planning/indirect-access-sap-offers-a-new-way-to-pay.html

Digital Access + SAP’s „Global License Audit and Compliance Update“

SAP Indirect Access new policies aid transparency, users remain uncertain

Definition: toady n.
“servile parasite,” 1826, apparently shortened from toad-eater “fawning flatterer” (1742), originally referring to the assistant of a charlatan, who ate a toad (believed to be poisonous) to enable his master to display his skill in expelling the poison (1620s). The verb is recorded from 1827. Related: Toadied ; toadying.

http://www.dictionary.com/browse/toadies

The Problem with Corevist’s Presentation of SAP and Indirect Access

What This Article Covers 

  • Corevist’s SAP Quotes
  • The Myth of the Glorious SAP Community
  • A Love of Intellectual Property Law?
  • SAP is New to Monopolistic Behavior?
  • SAP is New to Stifling Competition and Mafia Style Sales Techniques?
  • SAP is New to Stifling Innovation?
  • SAP is New to Antitrust Law Violations?
  • Is the Press Actually Waking Up to Indirect Access?
  • The Limits of What Corevist Can Say and Write

*This is an in-process research design document. It will be updated as the design is refined.

Introduction

For over, a year Brightwork has been offering some of the most in-depth coverage into SAP’s application of indirect access. Recently, Corevist, a software provider of cloud-based B2B has begun to become prominent in its criticisms of SAP’s application indirect access.

Corevist’s SAP Quotes

“I love SAP. Always have, always will.

I love how SAP simplifies business, especially for midmarket firms. Where would we be without it?”

Well, IT would have a much more open environment. They would not have firms like Accenture and Deloitte ripping off customers globally using SAP as a way to do it. Other software vendors would flourish. Overall it would be a fantastic development.

What Sam is doing is presenting is the myth of the golden age of SAP.

We cover the myth of this golden age in the article The Myth of SAP’s Golden Age.

We find it to be a strange thing to pledge such loyalty to something that is not the primary thing you have focused on in your career.

The Myth of the Glorious SAP Community

“I love the SAP community, and I love the people who make the B2B market tick.”

And what is the SAP community?

Do we speak of the Oracle community or the SAS community? A little perhaps but nowhere near as much as we discuss the SAP community, often described as the SAP ecosystem by Vinnie Mirchandani in his book SAP Nation.

SAP’s ecosystems is enormous and enormously powerful. I describe it thusly in the intro to Brightwork’s S/4HANA Implementation Study.

SAP leadership perceptions are the result of a global orchestrated powerful ecosystem all with vested interests. System integrators, CIOs/CFOs, analysts and IT media defend the perception of SAP leadership to preserve their interests, which have been valued in trillions of dollars. (See the book SAP Nation and SAP Nation 2.0 by Vinnie Mirchandani for a fuller explanation of the financial implications of SAP’s ecosystem.) According to Gartner, Accenture has 46,000 SAP consultants, IBM has 36,000, can you count on their neutrality to give you advice on SAP? They clone what SAP says with no research or verification, what SAP says they repeat. This leads to zero objectivity and what should, logically at least, amount to zero credibility as to the viability of S/4HANA.

Its a coalition of companies built around making the most money as possible from a company that has a monopolistic power of its consumers. Accenture and Deloitte recommend SAP for the only reason that they can make the most money recommending SAP. Software vendors subordinate themselves to SAP’s partnership agreement, which controls the media output of these companies concerning SAP.

What no one seems to ask is why do other software vendors need to be “partners” with SAP? Systems are supposed to be freely connectible with other systems. But SAP does not work like that. To get into SAP accounts, other vendors often need to be “certified solutions.” This gives SAP enormous power over these vendors. In fact, before we get to the topic of indirect access, if anti-trust law were still enforced there would be many questions about SAP’s partnership program. That is, does SAP abuse its power over SAP software vendor partners? And why was this arrangement created in the first place?

Media entities write SAP friendly articles in return for cash. This is the community that Corevist defend.

But now Corevist has a complaint about this wonderous SAP community, and that is indirect access.

A Love of Intellectual Property Law?

Sam Bayer explains it like this.

“I love intellectual property laws. They protect the spirit of innovation that built our economy–the same spirit that undergirds the entire tech industry.”

Well not entirely. This is the cover story for intellectual property laws, but the reality is a far murkier affair.

Intellectual property laws in the US are used by pharmaceutical companies to extend patents on drugs when they expire. Indirect access is a perfect example of a ludicrous exaggeration of intellectual property laws. SAP defines violating its IP as any company that connects to their system. So it would seem strange that Sam would take this time to laud intellectual property laws. Furthermore, there is a large contingent of law that questions the validity of software patents. There has been the rise of unethical legal specialist firms called patent trolls. They run around looking for low hanging fruit, that is companies they can bring suits against and shake them down for settlements. The cost of defending even a spurious patent lawsuit runs between $1.5 and $3 million. This causes most defendents to settle.

Most patent troll lawsuits in the US are brought in a single district in Tyler, Texas. This is done even though neither the plaintiff nor defendant have offices there. The cases are brought there because years ago Texas Instruments found success bringing cases in a district with a small criminal backlog. Now patent troll lawsuits are big business for Tyler, TX.

Long story short, all is not well with software intellectual property rights. One cannot declare universal love for software intellectual property rights without qualifying what parts. Furthermore, SAP has much more IP protection than other software vendors because they have so much more money for IP attorneys.

SAP is New to Monopolistic Behavior?

“But I don’t like illegal monopolies.”

Sam makes it sound like this is something new.

SAP takes intellectual property from smaller vendors; they had a specific program for this called xApps that was partially designed to pull IP out of smaller vendors which you can read about in our article Its Time of the xApp Program to Die. 

We were one of the few entities to call for it to end, which that specific program did, but in conversations with some vendors, it is widely known that SAP will reverse engineer the solutions of their partners. This has been told to customers by SAP consultants in meetings, but perversely as a positive.

The following quote is a paraphrase of a comment made to roughly ten people in a meeting at one of my clients. It was meant to influence the customer from selecting what was in my view a far better application than what SAP was offering.

“You can go with a best of breed solution, but you have to understand that SAP is constantly surveying the landscape and eventually puts anything that it sees into SAP, so eventually you get the same thing in SAP’s software anyway.”

Now that is a lovable company.

But as SAP does not have a functioning PLM, MDM, warehouse management system and many others, while SAP do this, it is not true that SAP can pull this strategy off.

Software companies, consulting companies, media entities all line up to SAP show their fealty, because at the end of the day all of these companies are about profit maximization, and it is incredibly difficult to find any of them that will stand up to a multinational bully, a company utterly without honor or any ethical center.

SAP is New to Stifling Competition and Mafia Style Sales Techniques?

“I don’t like illegal bundling of goods and services that stifles competition.

I don’t like the 800lb gorilla pushing people around, isolating them, making them feel powerless.

I don’t like Mafia-style sales techniques that force unnecessary products on customers who are scared to buy an alternative.”

Once again, this is curious to isolate to indirect access, as it has always been how SAP operated. It just so happens that now it has reached Corevist. That is Corevist loses business because of SAP’s use of the false construct of Type 2 indirect access.

But let us be honest, at what point in SAP’s history did SAP not…

“use mafia style sales techniques to force unnecessary products on customers?”

They literally do this all the time. In fact, in many sales competitions on SAP accounts, the demos and vendor visits are just a pantomime to create the illusion of a software selection. In at least 1/2 the cases the winner has already been decided.

Let us review common tactics used by SAP over decades.

  1. Scaring Companies with Integration: Corevist is not aware that SAP has been using the false argument that non-SAP products are incredibly risky because they are so difficult to integrate to SAP to scare companies away from buying non-SAP products? And of course who did whatever they could to make SAP’s products difficult to connect to SAP? The reader can have one guess.
  2. SAP Partner (Biased) Recommendations: Corevist is unaware that SAP consulting partners constantly rundown non-SAP products in a formal conspiracy with SAP? And furthermore that these tactics go back to when SAP first began developing partnerships with consulting companies in the 1980s?

SAP is New to Stifling Innovation?

“I don’t like illegal activities that stifle innovation within the SAP community.”

SAP ranks as one of the lowest vendors in overall innovation by Brightwork.

This is covered in the article on innovation. After analyzing SAP, we gave them a score of 1 out of 10 in our Honest Vendor Ratings. In fact, SAP is one of the only vendors we have ever analyzed to be negatively innovative. That is they take innovations made elsewhere and made them worse when they implement them in their software. They are the only vendor we are aware of to create a false storyline about their co-founder inventing a new database, which we analyzed and found false in the article Did Hasso and PhDs Invent HANA? 

So if you don’t like companies that stifle innovation, you won’t like SAP. But it is not merely because of indirect access. SAP has always done whatever it could to stifle innovation.

They also perpetually lie about their actual level of innovation.

SAP is New to Antitrust Law Violations?

“I don’t like antitrust law violations, especially when they hurt my friends in the SAP community.

I don’t like SAP’s indirect access policy. Not one bit.”

Well as I stated, the only companies that benefit from SAP are SAP and their consulting partners. Virtually everyone else, including SAP’s customers, lose. But furthermore and specific to Corevist’s claim, SAP has been performing activities that violate the tying agreement clause in anti-trust law for some time. Even before indirect access, SAP would bundle products in a way that gave them an unfair advantage versus competing software vendors.

And what has been the implementation history of these bundled applications?

SAP’s products outside of ERP, which tends to hold companies back, is desultory. The typical non-ERP product from SAP will fail in implementation as is covered in the article How SAP is Now Strip Mining its Customers. 

These products have to lead to one of the largest wastes of IT dollars in the history of IT. In fact, it would be difficult find a close second. And there are hundreds of thousands of people who want to see the monumental waste continue, for no other reason than they can make money off of it. Deloitte, Accenture, Infosys want the status quo to continue, for obvious reasons.

Is the Press Actually Waking Up to Indirect Access?

“I’m glad that the press is finally waking up to the severity of this issue. Please read this article and pass it on.”

The press that Sam Bayer refers to is ComputerWeekly.

Also, if you read the article, we take issue with Sam’s interpretation of the press waking up. CW covered indirect access; they did little to illuminate the topic. They can’t. CW’s only real interest is in collecting email addresses and sharing that information with technology companies so they can market to prospects. CW is not real media outlet. CW is a honeypot used to attract contacts that it can resell to tech companies. CW sells these names to close to 1000 tech companies who are customers. Therefore it is extremely limited in what it can write about any one of its customers.

We covered ComputerWeekly in this article How Computer Weekly is a Front for Marketing Automation.

Conclusion

Corevist appears intent on presenting indirect access as some recent change of course on the part of SAP. But the evidence that we have gathered through a tremendous amount of research hours is that indirect access is just another form of abuse in a long-established pattern by SAP.

Corevist has a particular strategy planned out for how to raise the issues on indirect access. This seems based upon getting coverage in the standard IT media outlets. But Corevist’s strategy is based upon a foundation that is fundamentally supportive of SAP papering over all of SAP’s previous abuses and restricting the conversation to SAP’s enforcement of indirect access.

The Limits of What Corevist Can Say and Write

When we reviewed the Corevist website what do we find? We already we thought we would find this.

What does that mean? Well, it means that Corevist can only push so far on indirect access and that they had better be careful not to attack SAP generally, or be shown to be supportive of any entity or comments that do (like Brightwork for instance) because SAP can pull that certification at any time.

Interestingly, everywhere we look in the SAP community and IT media, we find some type of tie to SAP. Either its media funding or consulting revenue or in this case a valued SAP Certification. In interactions with both Corevist and Dennis Howlett (Howlett’s Diginomica receives funding from SAP), CW (CW is merely a front for marketing automation to roughly 1000 tech companies) we pointed out these connections, and as soon as we traced these connections we received ad hominem arguments in return.

Ad hominem arguments are a type of logical fallacy and are used as a distracting to circumvent the argument of the defendant. We are told that everyone has some type of bias, and therefore our evidence is not material. And who tells us this exactly? People with an undeniable financial bias or official tie to SAP.

This brings up the question of whether Corevist can bring the full story of SAP once the topic moves outside of indirect access. Also, it needs to be remembered that Corevist is not a research entity. They sell and implement B2B software. As with most software vendors, information is released to increase revenues. They have no adherence to any particular research standard or ability to make the observations that we make. Unfortunately, one cannot place indirect access within the proper context without having an accurate picture of SAP long-term behavior.

References

Indirect Access Contact

  • Interested in Independent Information on Indirect Access?

    Have you noticed that so much of the information published on indirect access is slanted in SAP's favor? We perform more research on indirect access than any other entity. Why not put that knowledge to work for you?

    • We can be used to answer a specific question.
    • We can provide more details on existing research or to perform new research.

    If you have an interest in hiring us to obtain independent research on indirect access, fill out the form below.

Draft Table of Contents for SAM Research

*This is an in-process research design document. It will be updated as the design is refined.

Introduction

There are many areas to be covered on SAM software that would be quite useful in a SAM guide which is combined with an explanation of SAM vendor offerings.

Research Intent

The intent of this research is the following:

  • Overall Level of the Study: The study is to provide a background on forecasting made understandable to a beginning audience (that is readable by executives and members of IT who in most cases have never used SAM software).
  • Differences with Previous Similar Work: To provide a level of explanation not found in previous similar work.
  • Explaining Foundational SAM Topics: To cover foundational topics that are often poorly understood. For instance, “is SAM still a thing now that companies are transitioning to Cloud?”
  • Specialized SAM Applications Versus Excel: Cover why specialized SAM applications have specific benefits over exports and Excel.
  • Software Characteristics Explanation and Review: Layout the important characteristics of SAM applications.
  • Highlight the Importance of SAM Software Characteristics: Explain why certain characteristics of SAM software are so essential to licensing success/licensing improvement using ServiceNow versus Snow Software.
  • Highlight Techniques in SAM Software That are Proven to Work: Explain what techniques in SAM tend to provide the greatest benefit.

Features of the Research for Vendors

The research would help vendors in several different ways.

  • Lead Generation: Standard lead generation, coverage in a credible source.
  • Category Promotion: The overall emphasis on the importance of the forecasting software category. The research is by its nature promotional of the overall software category. SAM software is essential and has many areas for growth both in potential customers that do not possess such software and in improvement in the use of expansion of the footprint of the software already purchased.
  • Current Account Enlargement: The research could be sent to any prospect and any customer? Why customers? Well even at accounts that have already been sold, there is the question of enlarging the footprint of functionality that is used. Areas such as the “Techniques in SAM Software That are Proven to Work” is a jumping off point for discussions at current accounts. Customers that use more functionality within a particular application tend to buy more software from software vendors, extensions, plug-ins, etc..
  • Separate Application Profiles: In some cases, vendors would like to be part of the overall research paper. However, in other cases, the vendors prefer to simply provide the vendor profile without the rest of the research. Currently, the thought is that the research article would have links to application profiles. This has the extra benefit of keeping the individual article from being too long. Therefore the application profile could be sent to customers/prospects rather than the overall research article. Some explanatory articles will also probably be linked to the main article for readers interested in more detail into a technical area of forecasting.

Funding and a Level Playing Field

The funding model for the research is designed (being designed) to keep larger vendors from receiving preferential treatment over smaller vendors. That is the issue with Gartner and Forrester.

The funding model is still being refined, but the emphasis is on keeping the exercise fair. That is, it is not to be profit maximizing.

Improving SAM Software Selection

Understanding What SAM Is

SAM as a Topic Area

SAM Software in an External Application Versus Within the Application

Characteristics of SAM Products

a). The License Visibility Provided of SAM

b). Using SAM Output

c). SAM and Vendor Negotiation

d). The Types of Software Managed by SAM

e). Oracle License Management Functionality

f). SAP License Management Functionality

g). Microsoft License Management Functionality

h). IBM License Management Functionality

Conclusion

Analysis of Snow Software on SAM + SAP Square Peg Article

What This Article Covers

  • Article Quotations
  • As SAP Landscapes and Licenses Have Become More Complex
  • SAP Specific Issues for SAM
  • The Deploy Phase of SAM
  • High Effort Required to Manage SAP Licenses

Introduction

In 2016 Snow Software published the white paper SAM + SAP How Does the Square Peg Fit in the Round Hole?

In this article, we will analyze Snow Software’s white paper.

Article Quotations

As SAP Landscapes and Licenses Have Become More Complex

All around the world, enterprises are realizing that SAP’s growing offering of application software is they must employ Software Asset Management consuming an ever larger share of the enterprise IT(SAM) to assure compliance, improve procurement budget.

But what about SAP? Enterprises running SAP are now looking to SAM to help them better manage their usage and costs. Starting with their dominant position in Enterprise Resource Planning (ERP), SAP’s growing offering of application software is consuming an ever larger share of the enterprise IT budget. In fact, in the last decade, SAP customers have experienced double-digit increases in their annual costs through increased maintenance and licensing charges. In addition, over the past 10 years with Sarbanes-Oxley (SOX) and ISO/IEC 19770-1, managing IT and software assets has become critically important. Since SAP’s deployments are complex, understanding and managing SAP contracts, deployments and license usage can be challenging. Now, it is absolutely essential.

SAP’s footprint has become increasingly complicated in companies. SAP has also grabbed more and more of the IT spend. And, SAP’s support fees are continually increasing. They have moved from 15% to a minimum of 22% of the license price. SAP is increasingly looking to harvest its current account base and is one of the most difficult vendors to negotiate with.

SAM software is greatly underutilized.

SAP Specific Issues for SAM

For those who want to integrate SAP licenses with their Software Asset Management (SAM) best practices, there are challenges that must be overcome. Some consider this analogous to putting a square peg into a round hole. While it may not be as impossible as that, integrating SAP licenses into a SAM program must combine processes with powerful software tools to assist in discovery, metering, compliance, optimization and retirement/recycling. Several key considerations regarding SAP licensing from a SAM perspective are:

  • No support for Software ID Tags: As a result, inventory control and management is more challenging. SWID Tags are part of the ISO 19770 standards (ISO 19770-2 and 19770-3) and supported by vendors such as Microsoft, Adobe and Symantec. With SAP, each license is associated with a named user which can be used to identify and manage that license throughout the life cycle. Conventions and standards for the allocation of users and their names must be standardized. Discovery software is necessary to develop a SAM baseline of licenses that have been issued and deployed.
  • Different License Types: License types such as Professional, Limited Professional, Developer and Employee Self-Service have no clear-cut delineation between them. As a result, assessing compliance is difficult and puts enterprises at the mercy of SAP’s annual audit process. Software for metering of user-activity is needed to assure compliance and “best-fit” the license types through actual usage patterns.

  • Indirect Usage Fees: An increasing concern for SAP deployments, indirect usage fees are challenging to identify, assess and control. When 3rd party applications provide access to SAP data through the SAP application programming interface (API), an annual charge is applied. It’s critical for enterprises to track the level of activity and the financial exposure of these indirect license costs, which can come from B2B or mobile applications that are connecting to the backend SAP ERP system.

  • Challenge of Recycling SAP User Licenses: When an employee leaves a firm, that person’s license remains in use even though it may be marked “inactive” to prevent access to the system. Identifying duplicate, erroneous and obsolete user licenses requires sophisticated software tools that automate what can be a complicated, six-step process to recycle the license for future use.

SAP follows an approach of making license management as difficult as possible in order to gain the upper hand. The case of indirect access is a perfect example of how SAP keeps things deliberately opaque….when it benefits SAP to do so.

The Deploy Phase of SAM

  • Proper License Type for Each SAP User: Make sure the license supports the capabilities of each user. Compliance must be balanced against over licensing monthly self-audits of SAP license activity should be which can result in a 10X to 20X difference in price per carried out to best understand how the enterprise will license. Using powerful software, metering of the exact fare on an upcoming vendor audit. Usage optimization usage is the best way to “right-size” the license type. should be carried out to assess potential over-licensing from redundant, obsolete and erroneous users.
  • Indirect Usage: It’s a potentially explosive expense that must be understood and managed in the SAM context. SAP generally has a very novel provision in each of its contracts which says, “if a third party application uses the SAP system to access data, then an indirect user license is required for each user”. This can apply to mobile, B2B and B2C e-commerce applications, as well as internal portals and even point-of-sale (POS) systems. The Manage phase of an SAP deployment under SAM should involve a constant monitoring of both contractual activity and usage activity to assure the two are in balance. With automated software tools, monthly self-audits of SAP license activity should be carried out to best understand how the enterprise will fare on an upcoming vendor audit. Usage optimization should be carried out to assess potential over-licensing from redundant, obsolete and erroneous users. Metering should occur to assure both license type/role compliance and the “right-sizing” of license types. Finally, the Retire/Recycle phase of the SAM process for SAP is very important from both a financial and compliance perspective. It is not unusual for up to 25% of all SAP licenses to be obsolete, duplicate or erroneous. Following usage optimization, SAP administrators can use software tools to retire these licenses and recycle them for subsequent use. This will likely liberate some acquisition costs for new SAP licenses since the inventory on-hand should reflect the available retired and recycled licenses.

And in addition, as now SAP has every type of connection to SAP except for something called static read as being indirect access. SAP will apply indirect access when the sales it is currently obtaining and plans to obtain from an account is less than its Expected Sales Target.

High Effort Required to Manage SAP Licenses

Understanding what SAP licenses have been contractually purchased across a global enterprise and over several decades can be challenging. The deployment of SAP systems across the enterprise can also be remarkably complex and difficult to understand. Powerful discovery tools such as the Snow SAP Optimizer can be configured to look across dozens or hundreds of SAP systems within the enterprise, and create a coherent, unified and comprehensive inventory of licenses authorized for use within the SAP system.

Yes…and deliberately so. The more complex and time-consuming SAP can make license management, the more they can take advantage of the situation.

A discovery tool should generate a comprehensive summary of what user licenses have been allocated across the inter-linked SAP servers in your system.

Using automated SAP discovery software can also be helpful in understanding the license allocation by both the SAP license types and the department or cost-code. This more detailed summary information is essential during the SAM procurement phase where the enterprise has full knowledge of (a) what it has already contractually purchased, (b) what licenses have been deployed and are active, and (c) what the real usage profit is for each license.

Right, this is what SAM software can provide.

Conclusion

This is a good quality article from Snow that brings up the knowledge level of the reader.

References

Indirect Access Contact

  • Interested in Independent Information on Indirect Access?

    Have you noticed that so much of the information published on indirect access is slanted in SAP's favor? We perform more research on indirect access than any other entity. Why not put that knowledge to work for you?

    • We can be used to answer a specific question.
    • We can provide more details on existing research or to perform new research.

    If you have an interest in hiring us to obtain independent research on indirect access, fill out the form below.

Sikka, Brian. SAM + SAP How Does the Square Peg Fit in the Round Hole? Snow Software.

Analysis of Snow Software on SAP’s LAW Transaction

What This Article Covers

  • Article Quotations
  • Who Was the Law Transaction Designed For?
  • Pretending LAW is SAM
  • How SAP Presents the LAW Transaction to Customers
  • SAP’s Self Centered Approach to “Compliance”
  • The Idea that SAP Offers Everything You Need – – Even the Software to Negotiate Against Them
  • SAM Being Designed for the Customer
  • How SAP Keeps the Licensing Information at an Aggregate Level
  • Indirect Access and Snow

Introduction

Snow Software published the white paper SAP’s License Administration Workbench is NOT a Software Asset Management or License.

In this article, we will analyze Snow Software’s white paper.

Article Quotations

Who Was the Law Transaction Designed For?

C-Level management is increasingly scrutinizing the trajectory of spending on legacy platforms across the enterprise such as SAP. They are evaluating SAP licensing optimization and management tools, processes and solutions as a means to tackle the escalating costs.

We have LAW, which is free from SAP, why would we need another tool? are often the first words coming from the SAP Administration team. The problem with this response is that SAP’s LAW (License Administration Workbench) is a measurement and reporting tool, not an optimization tool. LAW makes plenty of assumptions that favor SAP, and provides almost no insight into the efficiency of the licensing assignments and deployment. As a self-audit tool, its primary purpose is to provide a foundation from which SAP evaluates the potential for an additional true-up of license sales annually.

True, LAW is for SAP’s use. Actually, SAP misrepresents what the LAW transaction is to customers in their online technical documentation in order to give customers the impression that LAW is for the customer, when in fact LAW is primarily for SAP.

Pretending LAW is SAM

SAP’s License Administration Workbench known as L-A-W is used as a tool to prepare audit data for SAP* to review. LAW collects and consolidates SAP license-relevant measurement data (users, engines, self-declaration products) for the component and central system.

System Administrators can get a more consolidated overview of the licenses provisioned and deployed. SAP uses LAW measurement data to bill customers when additional licensing is required. It’s important to note that LAW is NOT an optimization tool and does not indicate which users are inactive or over-licensed.

An SAP administrator at a large global enterprise commented recently that: LAW feeds SAP’s internal audit team of engineers, contract lawyers and salespeople with the data they need to escalate your charges every time.

That is a powerful assertion and one based as much on emotion as fact. But the passion does not belie the fact that SAP’s LAW tool and SAP-focused Software Asset Management/License Optimization solutions do very different things. Comparing the two is like comparing the proverbial apples and oranges.

This is all very much true. But SAP does not want its customers to know anything about this.

How SAP Presents the LAW Transaction to Customers

SAP describes its License Administration Workbench (LAW) with precision: The License Administration Workbench (LAW) is a tool for the central consolidation of license audit data and supports you in the SAP license audit process for complex system landscapes. In particular, the LAW simplifies the classification, combination, and consolidation of data for users that work in multiple systems and clients.

As you can see, SAP itself has never tried to position LAW as anything other than a tool to aggregate audit data for contract compliance.

I see it a bit differently. It looks like SAP intends to obscure who the LAW is there to serve. If you read the SAP text, it makes it seem as if LAW is for the customer. It is actually natural for the customer to come to that conclusion. That is why the next comment is not at all surprising.

However, in meetings between CFOs, CIOs and SAP administrators, you will often hear SAP administrators say something along these lines: We have the SAP LAW tool to manage our SAP users, engines and license types, so we don’t need a Software Asset Management/License Optimization solution.
Does this assertion stand up to the facts?

Exactly. The explanation of LAW by SAP leads SAP customers to do exactly what SAP wants them to do, which is to not investigate SAM tools.

The SAP contract expressly requires the customer to provide the LAW data as part of the audit process. In most cases, if the company is unable to provide this data, it will permit SAP to connect to its SAP systems to collect the data.

That is not a good idea. Companies don’t want SAP anywhere near its systems. This is the problem with Solution Manager as well. Solution Manager, if setup correctly to do so, allows SAP to monitor your system.

SAP’s Self Centered Approach to “Compliance”

We do not dispute that SAP’s LAW is used to help monitor compliance. If the company has users out of compliance, SAP will detect this and come up with a renegotiated set of fees for the company to bring itself back into compliance with its contract.

Which will in 100% of cases be highly SAP centric with SAP taking maximum advantage of any customer that does not offer resistance.

But what the LAW tool does not do is provide data for the purpose of optimizing the number of named SAP users, optimizing access and use of engines in a deployment, or optimizing the roles and license types assigned to users.

LAW does not provide information to the customer that they need to use against SAP. That is by design.

SAP’s LAW is classified as an audit compliance tool and serves that exact purpose.

As I said, I don’t see that SAP is being clear about what LAW is really designed for.

The Idea that SAP Offers Everything You Need — Even the Software to Negotiate Against Them

The data collected and painstakingly merged is used by SAP’s internal audit team to determine the company’s compliance with its existing contracts and to set out the best strategy moving forward to optimize additional revenue from the customer. In this respect, the emotional outburst from the SAP administrator quoted in the introduction is a fair reflection of the truth.

Right. But also, there is something else at play.

This issue extends out to software far beyond SAM. IT departments that use SAP have a very strong bias against non SAP tools. The idea is that even if the SAP tool that is offered lacks what the other tool has, one should always go with SAP. I have dealt with this sentiment repeatedly in my consulting experience.

More than half of SAP’s annual revenue and more than 75% of its profits come from its installed base of customers and the annual maintenance fees flowing from those contracts. SAP, not unlike any other software vendor, has a clear purpose for the audit data provided by the LAW.

SAP is increasingly relying upon its support revenue because it is selling less of its core products. In a word, it is saturated in its customers, and many emerging areas in IT, like IoT and Big Data have little to do with SAP or ERP systems generally.

SAM Being Designed for the Customer

The SAP user and usage data collected by the Snow Optimizer for SAP Software is substantially more comprehensive than the systems measurement data displayed by SAP’s LAW tool and can provide a substantially better picture of what usage is really happening across the company.

SAM software, unlike the LAW transaction, is actually designed for the customer.

How SAP Keeps the Licensing Information at an Aggregate Level

The License Administration Workbench does not provide a way to distinguish between a named user that logged into the system last week or two years ago, and is only focused on gathering (not analyzing or optimizing) audit-related data for future billing.

SAP does not want customers optimizing its use of licenses.

SAP’s LAW software can consolidate licenses across multiple SAP systems into a consolidated view based on the logon name and a number of other fields. By default, it aggregates user licenses by the logon name. LAW does this for audit purposes and does not provide any detailed information or analysis to isolate, detect or correct unintended duplicate users in the system.

In this case, a higher level of aggregation suits SAP, so that is what LAW provides.

Duplicate users involve one actual user having more than one unique named SAP user login. There may be valid reasons why a user has been assigned multiple SAP licenses, but in many cases, this was not the original intent.

A simple example is if a woman changes her last name after marriage and is assigned a new SAP login name. Care must be taken to consolidate these two user names into one by ultimately retiring the original one.

Again, there will be a major difference in the design of software if it is designed for the vendor to maximize their license draw from the account, versus designed for the customer and designed to minimize this draw. However, Snow’s examples here repeatedly show that the more detailed information provided by SAM software is actually more accurate.

Indirect Access and Snow

SAP’s LAW tool captures usage data which is analyzed by the SAP Audit team to determine if there is potentially indirect access activity occurring and if the enterprise is properly licensed for such activity. In most cases, the enterprise is not, and SAP will push for additional indirect license purchases which can add up to a meaningful cost.

The Snow Optimizer for SAP software collects the same usage data, and also looks to isolate potential indirect access violations. The difference is that with Snow Optimizer for SAP Software the company can (a) determine the exact source of the indirect access violation, and (b) be aware of it in advance of SAP and correct it ahead of the audit.

Brightwork publishes the most information on SAP indirect access. And indirect access is something that SAP (in our view) plans to increase in the future. Therefore, this functionality described by Snow is more important than ever.

The company may take licensing or programming action to address the compliance issues in advance of an on-site SAP visit. Companies should develop an architectural diagram of all applications and portals connecting to SAP that documents the inter-connection, the direction of the flow of information, and the number and type of users of the application.

Quite true.

Conclusion

This is a good quality article from Snow that brings up the knowledge level of the reader.

References

Indirect Access Contact

  • Interested in Independent Information on Indirect Access?

    Have you noticed that so much of the information published on indirect access is slanted in SAP's favor? We perform more research on indirect access than any other entity. Why not put that knowledge to work for you?

    • We can be used to answer a specific question.
    • We can provide more details on existing research or to perform new research.

    If you have an interest in hiring us to obtain independent research on indirect access, fill out the form below.

SAP’s License Administration Workbench is NOT a Software Asset Management or License, Snow Software.

Analysis of Snow Software on Determining SAP Indirect Access Exposure

What This Article Covers

  • Article Quotations
  • So What is Indirect Access?
  • SAP Add Ons
  • IoT and other Databases
  • Fee or No Fee?

Introduction

In this article, we will analyze Snow Software’s article on whether it is possible to determine your internet access exposure.

Article Quotations

SAP licensing is complicated. License entitlements can be open to interpretation and contract amendments can mean that financial liability for one customer may be very different in comparison to another, even if their usage and requirements are identical. It often depends on what deal was struck at the time of purchase.

Traditionally SAP licensing reviews and system measurements have focused on direct usage of an organization’s SAP environment. Direct usage on an individual level describes one user accessing SAP data directly through the SAP interface. The transactions which they perform determine what license type (or types) the user should be assigned. This in turn determines the associated cost for that user to perform their required tasks within the SAP system.

Even correctly managing licensing of direct users is more complicated than it might first appear. An organization with 10,000 users of its SAP environment could have many groups of users who transact in very different ways. The users may change jobs and so need to use the SAP environment differently from one year to the next. Other users leave the organization and of course it’s no longer necessary to have a license assigned to them.

Very true. Actually, most of what SAM software does is actually manage direct user licenses.

If your organization’s doesn’t keep on top of this and effectively manage licenses, you’ll almost definitely be paying over the odds for your licenses or you will be hit with a big fee following system measurement (LAW) submission or a more comprehensive SAP audit.

And this is in fact very common as most SAP customers do not use SAM software.

The risk becomes even greater when you consider Indirect Usage. That’s because you may face licensing liability for a far greater number of users compared to those who you know directly access the SAP system. That 10,000 user license requirement could two, three, even four times more if a third-party application accesses your SAP data.

There are really two ways to look at this. One is that the type of indirect access most often enforced by SAP is called Type 2 indirect access. Brighwork has repeatedly questioned the validity of SAP’s creation of Type 2 indirect access.

The second way of looking at it is that SAP does enforce Type 2 indirect access, although it does not actually have the right to do this.

One thing is clear. The better prepared your organization is, the better you understand overall usage of your SAP environment from every user and the better you can map this to existing entitlements, the stronger you will be when it comes to an audit or a negotiation. To do this effectively, you need a system that can automatically consolidate all of the necessary data and automate the required tasks.

That is certainly true.

So What is Indirect Access?

A simple example of Indirect Usage is where an SAP system is accessed or queried through a third-party application. The way in which that third-party system interacts with the SAP system, whether the interaction originates from a users’ actions and whether data is manipulated or changed within the SAP system all contributes to whether SAP defines the need for an additional license and, therefore, additional cost.

If you had to read that sentence twice, you’re likely not to be the only one. The fundamental issue is that SAP “Indirect Usage” changes definition from company to company and that is causing confusion amongst the SAP user community.

And the answer as to why is that SAP selectively applies indirect access in order to maximize the revenue taken from its customers. In some cases, it is not in SAP’s sales interest to bring up the topic, in other cases, it is.

In a rather ironic twist of fate, the push from the large SAP user communities across the globe for more clarity on Indirect Usage has actually led to potentially greater financial exposure. That’s because SAP made changes to their enforcement of the price and conditions list (PCL) in October 2016. More on this below. Indirect Usage is categorized in a few different ways depending on the technical method used to access the SAP environment. To add to the opacity around this, there is also a greater or lesser likelihood that SAP will choose to charge additional license fees dependent on the “type” of Indirect Usage there is.

That may be true. It seems that whenever SAP releases more information on indirect access, it expands what its definition of indirect access is.

External Third Party Systems

Common examples of this type of Indirect Usage include large ISVs like SalesForce.com, Workday and QlikView; Business Intelligence systems and payroll systems. This may also include smaller systems to perform a particular task not possible in default SAP software.

In this instance, the third party systems are accessing the SAP environment, pulling data and often writing it back via a connection to the SAP environment. Here a “user” must be set up to gain access to the SAP system. On the surface then it can appear like only one user (or a small number of users) is performing actions on the SAP system. In reality though, the “user” will be performing far more tasks than is possible for a single person to undertake.

Multiple users are indirectly using SAP data to perform tasks. The challenge that someone investigating this type of Indirect Usage often faces is that they are unaware of these third-party systems within their organization’s IT estate. To identify such systems requires either surveying application owners or looking for anomalous usage directly within the SAP system.

Once again, this is Type 2 indirect access. It is not historically what has been called indirect access.

Flags to look out for include:

#1: “Work time” check for all users: Checks rolling two-day time windows for constant activity without a pause of at least eight hours

#2: “Volume of work” check: Looks for users with an extraordinary amount of activity (measured by changed or newly created DB table entries)

#3: “Cross-component usage” check: Looks for users which changed DB table entries or newly created them from different SAP modules in the same second.

In practice, the interviewing process alone is insufficient and attempting to analyse the SAP system manually is impractical for a system with over a certain amount of users. This is because it requires manual consolidation of numerous data sources before any possible conclusions can be made.

The more efficient approach is to use a system which can automatically consolidate the data meaning that anomalous activity can be identified much faster.

This method of Indirect Usage is the clearest cut and we covered this in a lot more detail last year. If a system accesses SAP in such a way, you are likely to be financially liable. It’s extremely important to understand precisely how the interaction takes place, how may third-party users may require a license and what type of license they will require.

Yes, SAM software is one of the primary ways to determine the Type 2 indirect access that the customer is performing. Although this still may not provide the details of all the indirect access exposure.

SAP Add Ons

In October 2016, SAP made changes to their enforcement of the price and conditions list (PCL) with the intention of clarifying some of the definitions around SAP and based upon pressure from the various user groups across the globe. This is where the irony lies because it has, in fact, led to a new license requirement for third-party add-ons.

Within the PCL, SAP added that users, in addition to the Runtime usage right of the SAP NetWeaver Foundation, must acquire an additional SAP NetWeaver Foundation for Third Party Applications.

This means that users of a third-party system which is an add-on to SAP and installed via the NetWeaver platform must pay an additional license fee on top of their existing Named-User license.

So SAP charges double for NetWeaver? One to run SAP apps and one to run non-SAP apps. This double purchasing is very similar to SAP’s policy on HANA, which is covered in the article The HANA Police and Indirect Access Charges.

Many customers see this as a shift of the goalposts and it will be particularly frustrating to organizations who were recommended to develop customer-specific solutions into their landscape by SAP itself.

SAP has been constantly shifting the goalposts on the topic of indirect access. And this is something that my research indicates will continue in the foreseeable future.

Because this enforcement is new, many organizations will not be immediately exposed to financial liability and SAP typically takes a staggered approach to enforcing licensing rules.

The best advice and option would be not to rest easy because of the lag between rule creation and rule enforcement. Make sure that you understand what your potential liability might be. Consider whether there are named user licenses which are assigned to inactive users and making up shelfware. If there’s a potential for this shelfware to use a third-party add on, there may be a case for SAP to charge your organization the additional fee. If your shelfware is properly expired and retired, there is no risk. Again, an automated system which can do the leg work for you will ensure you are in a stronger, optimized position.

These are all very good points.

IoT and other Databases

The third and final category to consider is also the least well defined. However, it still absolutely should be taken into account. This category concerns “things” writing data to the SAP system. “Things” could mean sensors in a warehouse measuring temperature throughout the building and alerting when that temperature moves outside of defined parameters. It could mean data transferred from mining vehicles when they return to base, tracking usage of the vehicle and distance travelled to estimate when tyres need changing or when the truck must be serviced. In this real example, the customer wasn’t liable for any additional named user license because there is no human interaction. The data is transferred automatically when the vehicles cross a threshold.

On the other hand, a scenario where additional licenses were required was in a slightly different form of data exchange via Electronic Data Interchange or EDI. In this case, warehouse scanners were used to read data from barcodes into the SAP system. The difference was that humans click the button to read activate the scanner. The customer in this case was told that they needed named user licenses for each user who could potentially use the barcode scanner and hence “use” the SAP system.

The reason this requires drawing ludicrous distinctions is that SAP’s proposal on Type 2 indirect access makes no sense. If the scenario above means that SAP is owed indirect access fees, then all systems that connect to SAP also should receive indirect access fees as well.

”From a legal perspective, the issue of indirect usage and SAP’s respective license types is complicated as its assessment involves questions of contract law, copyright law and possibly also of competition law. What matters is that companies using SAP software are aware of the risk that is attached to indirect usage of the software.

In order to be able to evaluate such risks, technical tools that help to get an idea of the intensity of indirect usage helps. If a company believes that it has a high risk with regard to this issue and does not want to meet SAP’s additional payment request, an individual legal analysis may help to clear the picture.“

Fee or No Fee?

So that is the distinction. Involve a human user in some way and you may be asked to license that user. Remove any human interaction and you are unlikely to need to pay for additional licenses (at the time of writing). As in all of the examples above, however, this won’t stay the same forever and if your organization is embracing new technologies at a rapid rate, just remember that SAP might want a cut of the pie at some point down the line.

Again, the advice remains the same. Understand usage, understand the architecture of your environment and continually optimize. Do not let things change over time without tracking it. If you do, you could be faced with a substantial unbudgeted bill.

Conclusion

Snow Software has made a good effort in getting into the details and have provided some very good information in this article. There is a lot of detail in this article that does not appear to have been published elsewhere.

  • At Brightwork, our perspective on Type 2 indirect access enforcement by SAP is inconsistent with what all other software vendors do, and what has been the historical interpretation of indirect access.
  • It also is the case the indirect access is applied so differently by SAP based upon factors related to the sales situation at the customer, that it does not only come down to technically whether a customer meets the definition of Type 2 indirect access.

References

Indirect Access Contact

  • Interested in Independent Information on Indirect Access?

    Have you noticed that so much of the information published on indirect access is slanted in SAP's favor? We perform more research on indirect access than any other entity. Why not put that knowledge to work for you?

    • We can be used to answer a specific question.
    • We can provide more details on existing research or to perform new research.

    If you have an interest in hiring us to obtain independent research on indirect access, fill out the form below.

https://www.snowsoftware.com/int/blog/2017/01/30/sap-audits-it-really-impossible-accurately-determine-your-financial-exposure

Analysis of SAP’s 2017 White Paper on Indirect Access

What This Article Covers

  • SAP’s Executive Summary
  • Background Information
  • New On Premise Licensing Policy for Common Indirect Use Scenarios
  • Order-to-Cash Scenario
  • New Policy for SAP ECC Customers
  • New Policy for SAP S/4HANA Enterprise Management Customers
  • Procure-to-Pay Scenario
  • New Policy for SAP ECC Customers
  • New Policy for SAP S/4HANA Enterprise Management Customers
  • Frequently Asked Questions

Introduction

In this article, we will analyze SAP’s white paper on indirect access to measure its accuracy, as well as what the paper says about how SAP will enforce indirect access going forward.

SAP’s Executive Summary

This white paper is intended to communicate the Indirect Access on-premise pricing policy changes made in Q2017, as well as outline the future direction with respect to the licensing of Indirect Access.

The technology landscape has changed dramatically over the years and so has the way customers consume and use SAP software. Unlike the past when most use of SAP ERP involved employees of our customers logging into the SAP ERP system directly, there are now a multitude of scenarios related to ERP usage as shown in Figure 1.

  • Populations using SAP ERP: In addition to employees, there are business partners, consumers, devices, automated systems, bots, etc. that now use SAP ERP.
  • Access to SAP ERP: Direct access by users logging into the system, as well as access via other SAP and 3rd-party applications, platforms, multiple layers, etc.

While SAP maintains its position that any use of SAP Software needs to be properly licensed, we are embarking on a journey to modernize our licensing policy. Policy changes discussed herein are designed to focus on outcomes related to SAP customers’ use of our software based on the value delivered. This outcome-focused approach will eliminate the need to count individual users or other parties indirectly accessing SAP ERP in certain scenarios. This approach will ensure greater pricing transparency, predictability and consistency.

SAP has a storyline on indirect access they are presenting that puts them in the best possible position to extract unrealistic amounts of money from their customers. But to do this, they must get them to accept certain false assumptions. Part of SAP’s storyline is that for the first time so many other systems are accessing or connecting to SAP.

That is not exactly what is being said, but it is implying many more connections to SAP. The truth is that SAP was always deeply connected to many applications. And at that time, they did not charge indirect access fees.

In order to modernize SAP’s licensing policies, we started a project in 2016 and have been working with user groups, customers, industry analysts and other stakeholders to understand and address the concerns related to indirect access. We identified the three most common indirect access scenarios: (1) order-to-cash, (2) procure-to-pay, and (3) indirect static read. These common scenarios cover the majority of indirect access scenarios we have observed over the years. The pricing changes for these common scenarios is our first step in the longer journey of modernizing our licensing policy. We will continue this journey by working with the relevant stakeholders in order to comprehensively address all indirect access scenarios.

That was not the intent of “starting” this project. SAP has never been focused on modernizing licensing policies. In fact, SAP is the only vendor I am aware of (please comment if you know of another one) that states in its pricing list that releasing its pricing information would cause it damage. Companies that want to modernize their licensing policies don’t release media material about how they want to do it, they just do it.

What SAP tried to do, which is covered in the article, How to Best Understand SAP’s Faux Change in Indirect Access Policy, is to address customer’s concerns about SAP’s strange implementation of indirect access, which has kept as secretive as it could (in order to be able to use it against customers). SAP’s intent of releasing new information about indirect access, which was done at SAPPHIRE 2017, as to get customers to reduce their defensive posture regarding the topic.

However, as I covered in the article The Danger In Underestimating SAP’s Indirect Access, when SAP was asked about how much it would charge per sales order and purchase order, it replied that it would not publish any information and that everything would be on a case by case basis. Is that “modernizing” its licensing policies?

Secondly, what SAP is calling indirect access, is not actually indirect access by the definition of any other software vendor.

We encourage customers to engage with us. We are committed to working with customers who are under-licensed or interested in reconfiguring their licenses per the new policy. SAP assures customers who proactively engage with us in good faith to resolve such under-licensing, that we will not pursue back maintenance payments for SAP Software for such under licensing.

Customers should not engage with SAP. SAP cannot monitor indirect access with their license transactions, and so they depend on customers to reach out to them and to willingly provide information, which SAP will frequently use against the customer.

This sounds like a “carrot” but in fact, it hides as “stick.”

Background Information on Indirect Access

Use” is defined in SAP’s current contractual documents as: “to activate the processing capabilities of the Software, load, execute, access, employ the Software, or display information resulting from such capabilities.” Additionally, “Use may occur by way of an interface delivered with or as a part of the Software, a Licensee or third-party interface, or another intermediary system.” Use is defined broadly to cover both direct and indirect access scenarios and any use of the SAP Software requires an appropriate license.

Indirect Use / Indirect Access” are a commonly used terms throughout SAP and our ecosystem that describe the same thing. Indirect acess is use which occurs by way of a non-SAP frontend or non-SAP intermediary software. The picture below shows the difference between use via direct access and use via indirect access

This graphic is a keeper! Basically, any system connected to SAP is indirect access. This would include all custom built applications that were at the customer before SAP was implemented. Therefore, SAP should be, under this definition, able to charge for these connections as well. 

All use of SAP software requires a license. This includes use which occurs directly (direct access) by way of a user interface delivered with or as a part of the Software or indirectly (indirect access) through a non-SAP front-end or non-SAP intermediary software.

  • “Direct access to ERP is licensed based on users.
  • Indirect access to ERP historically has also been primarily licensed based on users. However, as mentioned earlier, we have embarked on a journey to move away from user-based licensing to a more transparent and predictable licensing model focused on outcomes related to our customers’ use of the SAP ERP system.”

Really, well that is a change. If SAP had used this graphic back when it was rising as a software vendor, no one would have purchased their software. This is the type of policy that only a monopoly vendor can employ after it is already in the account.

Secondly, indirect access has historically only been what is shown as “scenario 1” above, where an app is developed by the customer to bypass paying a user license — something which has historically been quite uncommon. Two two other scenarios described in the above graphic, are only considered to be indirect access by SAP.

New On Premise Licensing Policy for Common Indirect Use Scenarios

Order-to-Cash Scenario

In an order-to-cash scenario different classes of individuals (e.g., employees of licensee, employees of business partners of the licensee and/or consumers), devices, automated systems, etc. use SAP software to participate in the licensee’s order-to-cash process.

In the past:

  • “Every employee of the licensee and every employee of a business partner of the licensee who used the SAP software directly or indirectly was required to be licensed as a Named User in order to participate in the licensee’s order-to-cash process
  • Any consumer participating in the licensee’s order-to-cash process was licensed based on the number of sales or service orders placed by the consumers. Note: both “Business Partners” and “Consumers” are terms which are defined in each licensee’s software contracts.”

No, that is incorrect. In the past, say prior to 2012, users that would use say Salesforce, and then sent information to SAP would not have been required to purchase an SAP license if they never logged into SAP. Order to Cash was priced per sales order? I am scratching my head to when that was.

SAP’s price list states that S/4HANA Enterprise Management is charged per user. Cash Management is priced for per revenue unit, but that is the only pricing that is not user based that I could find. My price list may be out of date, but SAP is talking about the past here.

New Policy for SAP ECC Customers

Instead of requiring the licensing of users, this new policy allows certain indirect order-to-cash scenarios to be licensed via “orders”, as outlined below.

Orders” in an order-to-cash scenario is defined as the number of sales and service orders processed by the system annually; a metric that is more transparent and predictable compared to Named Users.

Going forward

  • “Any employee of the licensee who uses the SAP ECC software indirectly (through a non-SAP front-end or non-SAP intermediary software) to participate in the licensee’s order-to-cash process will continue to be licensed as a Named User.
  • Any employee of a business partner of the licensee who uses the SAP ECC software indirectly (through a non-SAP front-end or non-SAP intermediary software) to participate in the licensee’s order-to-cash process does NOT need to be licensed as a Named User for such use. Instead, the Use of the software would be licensed based on the number of Orders as defined above.
  • Any Use of the software by consumers participating in the licensee’s order-to-cash process would continue to be licensed based on Orders.
  • Any Use of the software by devices, robots, or automated systems participating in the licensee’s order-to-cash process would also be licensed based on Orders.”

This may be SAP’s policy, but it is entirely inconsistent with the entirety of the history of the software industry. Connecting a non-SAP system to SAP is not “using ECC software indirectly.” If that were true, then the non-SAP software vendor would also be due licenses because the customer is using (under that set of assumptions) their software indirectly through SAP!

It’s encouraging to see that SAP will not be charging indirect access fees for SAP to SAP connections. However, this illustrates one of the primary issues with SAP’s application of Type 2 indirect access. If customers are only charged when non-SAP applications are connected to SAP application, then this creates a barrier to entry to purchasing non-SAP applications. This is a violation of the tying agreement clause in US antitrust law. In fact, this issue is covered in the article, SAP Indirect Access and Violation of US Anti-Trust Law.

This certainly makes it appear as if SAP is extremely insecure about competing on the strength of its offerings, and is seeking to coerce its customers into buying SAP applications and databases. As a policy question, why would the US allow larger vendors to force anti-competitive controls like this on companies?

New Policy for SAP S/4HANA Enterprise Management Customers

  • “Unlike in SAP ECC, any employee of the licensee who uses the SAP S/4HANA Enterprise Management software (S4) indirectly (through a non-SAP front-end or non-SAP intermediary software) to participate in the licensee’s order-to-cash process does NOT need to be licensed as a Named User. Instead, such indirect access by these individuals would be licensed based on Orders.
  • For employees of a business partner of the licensee, consumers, and devices, the new pricing approach is the same as described under SAP ECC.”

Right, that is SAP’s plan. It is unclear why customers should accept this. SAP may be persuaded to change their position if it were explained to them that this policy will lead to outsourcing support to a non-SAP provider.

Orders are licensed via a a traditional perpetual license model, similar to how we license other on premise products today. The pricing is tiered, meaning that the price per order decreases as the volume of orders increases. The pricing is also differentiated for business to business (B2B) vs business to consumer (B2C) scenarios, taking into account different order volumes and values.

Except, SAP won’t publish the pricing as it will be applied on a “case by case basis.”

Procure-to-Pay Scenario

In a procure-to-pay scenario, different classes of individuals (e.g., employees of licensee and/or employees of business partners of the licensee), devices, automated systems, etc. use SAP software to participate in the licensee’s procure-to-pay process.

New Policy for SAP ECC Customers

Instead of requiring the licensing of users, this new policy allows certain indirect procure-to-pay scenarios to be licensed via “Orders”, as outlined below.

Orders” in a procure-to-pay scenario means the number of purchase orders processed by the system annually; a metric that is more transparent and predictable compared to “Named Users.”

Going forward:

Here the same policy that applied for sales orders applies for Order to Cash.

Indirect Static Read Scenario

Indirect static read is a scenario in which information has been exported from an SAP system (other than SAP Analytics Packages) to a non-SAP system pursuant to a predefined query that meets the following criteria:

  • “Was created by an individual licensed to use the SAP system from which the information is being exported
  • runs automatically on a scheduled basis, and”

the use of such exported information by the non-SAP systems and/or their users does NOT result in any updates to and/or trigger any processing capabilities of the SAP System

SAP’s new policy is that the use of such exported data in 3rd-party non-SAP systems does not need to be licensed, as long as all of the above criteria for indirect static read are met.

Indirect static read scenarios are applicable in the context of data exported out of the SAP ERP system or any non-analytics package from SAP. SAP Analytics packages that are excluded from this policy are: SAP BusinessObjects Enterprise; SAP BusinessObjects Lumira; SAP BusinessObjects Predictive Analytics; SAP Business Warehouse.

Of the various ideas presented in SAP’s 2017 indirect access announcement, the concept of “static read” is the most deliberately misleading.

Scenario Indirect Static Read?

SAP then provides the list of read access actions that would and would not classify as an indirect “static read.” However, the way SAP listed them is confusing so I have reorganized them below.

Indirect Static Read Actions (Allowed)

  • “An employee of SAP’s customer views reports (e.g. financial statements, forecasts, etc.) in a non -SAP system where such data was transmitted from an SAP system prior to employee accessing the non-SAP system.
  • A licensed employee of SAP’s customer downloads information from SAP ERP to a 3rd party software system so that others can view that information in the 3rd party software
  • Customers of SAP’s customer view a product catalog on a portal built on and operating on the SAP Cloud Platform, where product and pricing info originating from an SAP ERP and/or SAP S/4HANA system was transmitted to the portal prior to the individual accessing the portal.
  • An employee of SAP’s customer views his customer’s master data in a table within 3rd party application where such information originated in SAP ERP and was downloaded to 3rd party application prior to the employee accessing it.
  • An employee of SAP’s customer accesses a 3rd-party data analysis tool to sort, filter and analyze data that was transmitted from an SAP application prior to the employee accessing the 3rd-party tool.”

Basically, customers can report on data that was generated in SAP using a non-SAP system.

Not Indirect Static Read Actions (Disallowed)

  • “An individual (not licensed to access SAP ERP) adds information to a predefined query, specifying a particular attribute to be included in such query, which was created by an individual licensed to access SAP ERP, which was set-up to run on an automated, regular basis.
  • Data stored in the SAP system is transferred to a 3rd-party planning and consolidation application prior to an employee viewing and processing the data in the 3rd-party application
  • An employee of SAP’s customer accesses a 3rd-party application to sort data that was transferred from an SAP application prior to the employee accessing the 3rd -party tool and this employee subsequently initiates a transaction within the 3rd -party application which in turn triggers the updating of information in an SAP Application
  • Customers of SAP’s customer or a sales associate of SAP’s customer, accesses a custom portal which is built on and is operating on the SAP Cloud Platform, where information such as product inventory or customer data which originated in an SAP ECC and/or SAP S/4HANA system was transmitted from SAP in direct response to the inquiry from such individual
  • An employee of SAP’s customer accesses a 3rd-party application to view a report which has been downloaded from SAP Business Warehouse
  • An employee of SAP’s customer views his customer’s order status in 3rd party application, where such information originated in SAP ERP and was loaded from SAP in direct response to the customer’s inquiry
  • A sales associate of SAP’s customer checks inventory status of several products in a custom-built inventory system where such information originated in SAP ERP and was downloaded from SAP ERP in direct response to the inquiry.”

Basically, anything but passively reviewing SAP information is indirect access. In fact, even adjusting a query is indirect access, which means that companies that use external reporting applications that are not from SAP can very easily run afoul of SAP’s rules and regulations on indirect access.

Frequently Asked Questions

Order-to-Cash (O2C) and Procure-to-Pay (P2P)

If the customer is properly licensed for these scenarios today, does he / she need to do anything? No, customers properly licensed today do not need to do anything.

Right, of course. This is actually another propagandistic statement. Being properly licensed means, according to SAP that you agree with SAP’s application of Type 2 indirect access. SAP will beat this horse until it is absolutely dead, and until no one questions the assumption. SAP repeatedly does this in its literature, but its literature on indirect access may how one of the most extreme examples of it.

Can existing customers purchase more of the same if they have previously licensed Orders to cover consumer scenarios and envision increase in order volumes? There is no change to SAP’s practice of allowing existing customers to license “more of the same”.

SAP needs to work on writing more clearly because this is the type of sentence you have to guess as to its meaning.

How is indirect Use addressed when SAP cloud applications are used in conjunction with SAP on premise ERP (ECC or S/4 HANA) systems? Properly licensed individuals using an SAP cloud application (e.g. SAP SuccessFactors, SAP Ariba, etc.) connected to a properly licensed SAP ERP system, can generally access such ERP system to the extent necessary to operationalize the SAP cloud application without any additional ERP licenses.

Why did SAP feel the need to point this out?

This is a pattern on the part of SAP to conflate cloud with indirect access. SAP has conflated the two, and ASUG has also done this. The two things have nothing to do with each other. SAP had all kinds of applications connecting to it (or in SAP’s vernacular, engaging in scurrilous indirect access violations) when SAP was first introduced in a major way in the 1980 before anyone had ever heard of SaaS.

How are indirect access scenarios that utilize EDI for receiving orders licensed? Going forward, such scenarios will be licensed via orders triggered through EDI. However, if a different approach was used in the past, SAP will not require customers to change the approach or re-open this discussion.

SAP’s wants to be paid for each EDI message now into SAP.

How are indirect access scenarios that utilize SAP Exchange Infrastructure (XI), SAP Process Integration (PI), or SAP Process Orchestration (PO) licensed? The license for XI, PI, or PO covers the various integration scenarios and not the underlying value provided by ERP. Indirect access of ERP via XI, PI, or PO, if it occurs, still needs to be licensed.

That would be consistent with everything else SAP has said. This was, by the way, the argument presented by Diageo to defend itself against SAP’s claims. However, this is a highly illogical argument. Whether an SAP integration application is used to connect to SAP is not the issue.

Indirect Static Read

Must a current contract be amended for a customer to take advantage of Indirect Static Read use rights? SAP intends to apply its Indirect Static Read policy to customers even if the contract does not include Indirect Static Read language.

Right. But why is that legal? SAP will enforce a term that is not in the contract because static read is not any contracts. But they will enforce it anyway. Sure, that makes sense. Customers should be able to push back on this for rather obvious reasons.

SAP will enforce a term that is not in the contract because static read is not any contracts. But they will enforce it anyway. Sure, that makes sense. Customers should be able to push back on this for rather obvious reasons.

If a customer has previously licensed Named Users for what is now defined as Indirect Static Read scenario, what are his / her options going forward? If such Named Users are not needed for other scenarios, customers can leverage SAP’s existing extension policies to replace the associated maintenance payments with either (1) a cloud solution purchase or (2) an on-premise solution purchase.

That is the desired outcome for all indirect access claims made by SAP. SAP will horse trade for licenses. Particularly for licenses that Wall Street wants to see SAP sell including HANA and S/4HANA.

Above you note that Indirect Static Read scenarios are applicable in the context of data exported out of ERP or any non-analytics package from SAP. Does this imply that anyone viewing data in a 3rd-party application that was exported from an SAP Analytics package requires an SAP license? Indirect Static Read requires appropriate analytics package licenses, if the data is exported out of SAP Analytics package (e.g BOBJ) given the value add of organizing data in an intelligent and easy-to-consume manner, which is provided by such analytics solutions. However, the individuals participating in such scenarios do not need to be additionally licensed to use SAP ERP.

This paragraph is lunacy. SAP is confusing customers here because its entire claim regarding Type 2 indirect access has nothing to do with “value add.” But this paragraph does communicate that you can export data using an SAP analytics application (but apparently, not ECC, if the logic follows) and use it in say Excel without being charged. But this brings up the question of SAP’s charge for export from a non-SAP application. This is another very bad sign for customers.

This paragraph is a very bad sign for customers. 

Conclusion

This is yet another in what has become a pattern of deceptive articles about indirect access emanating both from SAP and from ASUG. The white paper is a type of negotiating propaganda put out as something to “educate” customers. It desires the customer to accept a number of false assumptions in order to allow SAP to better leverage indirect access into SAP’s financial advantage.

Software vendors that compete with SAP should be put on high alert by this white paper. SAP is clearly intent on pushing its customers very hard on indirect access and in excluding other vendors as aggressively as they can. Vendors that compete with SAP should begin doing things in a collaborative manner to thwart SAP, as SAP’s type 2 indirect access claims and the Byzantine logic for how they justify indirect access is becoming more and more extreme.

To this end, I have begun the Brightwork Indirect Access Alliance (BIAA for short).

This is an information sharing service that vendors can join that is designed to help defend against these tactics by SAP.

Contact me for details.

References

https://www.snowsoftware.com/int/blog/2017/03/27/indirect-usage-your-questions-answered

Analysis of Snow Software on SAP Optimizer

 What This Article Covers

  • An Analysis of Snow’s Web Page on Snow Optimizer
  • SNOW OPTIMIZER FOR SAP SOFTWARE AT A GLANCE:
  • INDIRECT USAGE
  • INVENTORY & ANALYZE SAP USAGE TO ELIMINATE WASTED SPEND
  • MINIMIZE ONGOING SAP LICENSE ADMINISTRATION OVERHEADS
  • AVOID MISTAKES WITH ‘WHAT IF’ PLANNING

Introduction

Part of what we do at Brightwork Research & Analysis is review the accuracy of media output of IT entities. In this article, we will focus on Snow Software’s media output on SAP indirect access.

SNOW OPTIMIZER FOR SAP SOFTWARE AT A GLANCE

  • “View consolidated usage data across all SAP systems
  • Automate SAP user license administration
  • Identify and trace indirect usage
  • Centrally manage contracts and addendums
  • Contain HANA license costs
  • Optimize BusinessObjects licensing
  • Install and manage within the SAP environment (SAP certified)”

This is interesting in that it shows licensing for HANA and for BusinessObjects. It is curious that it is called out separately.

INVENTORY & ANALYZE SAP USAGE TO ELIMINATE WASTED SPEND

Snow Optimizer for SAP Software provides deep-dive analysis into transactional and individual usage data, identifying opportunities to reduce costs and liabilities by eliminating duplicate users and unused licenses.  The solution can automatically recommend ‘best-fit’ license types based on user behavior, making it easy to switch from expensive licenses to cheaper ones where appropriate.  Automatic monitoring frees up SAP administrators to focus on core duties and ensures information is always up-to-date in case of an audit or review. Contract Management and compliance reports can provide guidance and insight as well as help achieve savings through better negotiations with vendors.

This is what SAM software for SAP provides users. SAM software should allow companies to “right size” their licenses.

INDIRECT USAGE

Through this functionality, Snow Optimizer for SAP Software provides comprehensive data about Indirect Usage which enables the organization to significantly reduce financial exposure and to highlight risk in the future.

Another important reason for SAM software is indirect usage. Indirect usage from SAP comes quickly, which is why it is important to have SAM software already installed.

MINIMIZE ONGOING SAP LICENSE ADMINISTRATION OVERHEADS

Snow Optimizer for SAP Software maintains up-to-date details on all SAP license allocations, giving SAP administrators the ability to adjust license types and distribution on-the-fly. Automated rule sets quickly align individual users with the correct license in the correct system based on their activities.

Alerts can be triggered when the organization nears license limits under current contracts or specific activity restrictions.  Pre-defined rules help organizations prevent actions that would incur unexpected or unacceptable costs.

The concept of SAM software is that it is constantly used, to provide an accurate picture of usage versus the customer’s licensing. Alerts are particularly helpful in keeping logic working in the background that can tell the customer when a change occurs.

AVOID MISTAKES WITH ‘WHAT IF’ PLANNING

Snow Optimizer for SAP Software can be used to test a variety of “what-if” scenarios that enable the organization to model how changing the deployed license types would affect SAP licensing and support costs. Scenarios can be played out in the solution without making any changes on the live system until the organization is happy with the results, avoiding potentially costly licensing mistakes.

What if planning has quite a lot of uses. For instance, knowing what the costs will be when making changes to the software and the usage of the software that is planned.

References

https://www.snowsoftware.com/int/products/snow-optimizer-sapr-software

How Accurate is the Certero Article on Software Audits?

 What This Article Covers

  • An Analysis of Certero’s Web Article Accuracy on SAP Software Audits
  • Virtualization
  • Monitoring Usage
  • Indirect Access

Introduction

Part of what we do at Brightwork Research & Analysis is review the accuracy of media output of IT entities. In this article, we will focus on Certero’s media output. Certero is a software vendor that offers SAM software.

Virtualization

Virtualization is a mature technology that can help you save money, time and carbon emissions. Consequently, just about every major organization has adopted it in one form or another, somewhere on their IT estate.

But, there is a major issue with virtualization that many organizations overlook – the impact it has on your software licensing. Unless you are fully aware of these implications and are able to manage your license position, you could end up paying more for additional software licenses (and fines if the shortfall is discovered during a vendor audit) than you saved through virtualizing in the first place.

That is quite true. In fact, a major motivation for virtualization was to save money on software licenses. However, eventually the software vendors became savvy to virtualization and they changed their license terms to account for it. This greatly reduced the incentives to virtualize as the potential software cost reductions were always greater than the hardware cost reductions.

And vendors do know how to audit and determine penalties on their software when virtualized.

Monitoring Usage

Dependent on the terms of your license grant, the need to measure the usage of your software could be important in ascertaining whether you are compliant and also what you have to pay. Certain software vendors, like SAP and Oracle, charge for software based on metrics that can be unique to your business. For example, if you are a car manufacturer, the metric could be based on the number of cars you have built.

Yes, that is also true. And SAP and Oracle as well as other differ from each other as well.

Indirect Access

As if the licensing agreements of the likes of Oracle, SAP and Microsoft were not complicated enough already, many user organizations fall foul of something called indirect usage and end up owing significant amounts as a result of licensing non-compliance.

Indirect usage, indirect access, or multiplexing as it is sometimes called, is where your software (be it Oracle, SAP, Microsoft etc.) is accessed indirectly by a non-named third party, which can either be a person or machine. For example, an organisation has created a system that allows all their employees to enter their expenses. That system then sends all that employee expense information to a second system using a single named user account.

True.

Key to getting to grips with indirect access is the ability to correctly classify users of your software as direct or indirect and so make sure they are given the correct license type. Identifying indirect access can be tricky without the help of an automated monitoring tool.

This is another way of saying monitoring usage also, which is what SAM software does.

However, there are tell-tale signs that make indirect access easier to spot. These include things like a user accessing a system all day long (no human user would do that) or a very large volume of work processed within a set period by one user (again, no human could conceivably process such a volume within that time).

That makes a lot of sense.

One way to avoid indirect access problems in the Oracle world, for example, is to license via processor, rather than Named User. Sadly, there is no such corresponding license in the SAP world, where you are limited to Named User.

The distinction that I would want to be drawn here is that SAP enforces indirect access quite a bit differently than Oracle. SAP is the only vendor I have yet observed charge for what I have called Type 2 indirect access.

Conclusion

This article by Certero earns a Brightwork Accuracy Score of 9.5 out of 10. There is nothing inaccurate in the article, and the only area that could be adjusted is adding some specificity.

References

Indirect Access Contact

  • Interested in Independent Information on Indirect Access?

    Have you noticed that so much of the information published on indirect access is slanted in SAP's favor? We perform more research on indirect access than any other entity. Why not put that knowledge to work for you?

    • We can be used to answer a specific question.
    • We can provide more details on existing research or to perform new research.

    If you have an interest in hiring us to obtain independent research on indirect access, fill out the form below.

Software Audits: What can go wrong? – Part 2 Virtualization & Monitoring Usage

Interpreting SAP’s Misleading Support Video

What This Article Covers

  • SAP’s Video on Support
  • The Enormous Costs of SAP On Site Support

Introduction

In previous article such as What to Do About SAP’s Declining Support, we have brought the support issue front and center. SAP has cut support costs to the point where they have 90% margins and most the support personnel work in 3rd word nations that SAP pays around $25 to $35 per day.

SAP Support Video

This is why it is either sad or amusing (depending upon your perspective) to see support videos like the following from SAP.

This video is simply highly misleading. As a a consulting who has often used SAP support, SAP’s underinvestment in support is quite apparent. Secondly, in the video, SAP mentions MaxAttention, but what they leave out is that MaxAttention is even more expensive than the base 22% of license revenue support. And it leads to consultants coming to the client to pitch their services, so its unclear how it is really support.

The Enormous Costs of SAP On Site Support

The costs that are implied in the design towards the end of this video are enormous. It also brings up the question of why so many support personnel would be necessary for SAP, when this support overhead is really not replicated at the vast majority of other software vendors.

Conclusion

Customers should not be confused by this video. SAP support has declined significantly over the past 10 years in particular. And SAP is not giving its support sufficient resources to do the job properly.

References

 

Indirect Access Contact

  • Interested in Independent Information on Indirect Access?

    Have you noticed that so much of the information published on indirect access is slanted in SAP's favor? We perform more research on indirect access than any other entity. Why not put that knowledge to work for you?

    • We can be used to answer a specific question.
    • We can provide more details on existing research or to perform new research.

    If you have an interest in hiring us to obtain independent research on indirect access, fill out the form below.

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