What This Article Covers
- ASUG Article on Indirect Access
- Digital Transformation and SaaS Driving Indirect Access?
- ASUG as a Conduit to SAP on Indirect Access Concerns
- How ASUG Plans to Corral and Dilute SAP Customer’s Concerns
For some time I have questioned ASUG’s independence from SAP. And this questioning was reinforced through checking with several others who routinely go to ASUG conferences. There is all manner of problems with ASUG’s objectivity, with one prominent item being that SAP approves all of the documentation that is presented by other vendors or consulting companies at every ASUG conference. And SAP is quite particular what it allows to be placed into print at its conferences. ASUG is behaving much less like a user group, and far more like a marketing arm of SAP. This is another example of how information that may at first blush appear to be independent of SAP is controlled by SAP.
The latest article from ASUG on the topic of indirect access has been a real eye opener on how ASUG sides with SAP and obscures the issue when there is a point of contention between SAP and its customers. This was to such a degree that it seemed worthy of commentary.
Therefore in this article, I analyze the comments on indirect access made in an ASUG article on indirect access. This article by ASUG will demonstrate how yet again, ASUG primarily represents SAP’s interests against their customers rather than the other way around.
ASUG Article on Indirect Access
Geoff Scott: What should ASUG members know about indirect access and their SAP and non-SAP systems?
Joe Galuszka: Digital transformation is driving all companies—not just SAP customers—to buy third-party SaaS software—with CRM, HR or Financial applications being the leading customer-facing applications. At its simplest, indirect usage is those customers accessing data housed in SAP through those third-party SaaS applications, especially on mobile devices. – ASUG
This is wholly inaccurate. Companies have been connecting applications to SAP since SAP was first introduced. And the definition provided by indirect access is not correct. I cover the definition of indirect access in the article HANA Police and Indirect Access Charges.
Geoff: To me, indirect usage is any way that an SAP application is being updated or changed outside of an SAP-provided GUI or login. Digital transformation is the biggest place where you may find this, where you have CRM systems, e-commerce systems or IoT applications that are not SAP systems either feeding information into or taking information out of SAP. Customers may, or may not, have this type of access appropriately licensed. This is where the ambiguity begins, and where ASUG members are the most concerned. – ASUG
This definition would include every single application that has ever been integrated into a SAP system. According to Panaya.
40 percent of SAP shops have 20 to 50 systems interfacing wit their ERP. Of these less than 10 are SAP systems. Each of these systems have dozens of interfaces to the SAP system.
Once again, digital transformation has nothing to do with this topic. What is described in the response is standard application integration.
Some of the challenge is that the SAP product portfolio can be vague when it comes to terms and definitions, so a lot of this is open to interpretation, which is really the first thing we heard from our membership. They said: “I’m just confused.” – ASUG
A major reason why customers are confused is that SAP’s proposals on indirect access, in fact, their definition of indirect access is an expansion of indirect access, and other vendors do not share this definition.
Joe: Regarding the U.K. ruling, it’s important to note that the mySAP ERP contract was signed in 2004. At that point the understanding of SaaS-based applications and what the potential implications would be of integrating them into the SAP ERP ecosystem was not necessarily a primary factor in the acquisition. Of course, so much has changed based on the business value of SaaS applications and the significant growth in usage.
Geoff: True. Not too many were thinking about how the application world would look today. I know I wasn’t. The cloud business, as we know it now, was in its early infancy.
When the SAP contract was signed, and the rise of SaaS has nothing to do with indirect access. This is another thread along the logic of trying to propose that technology brought this to the front, rather than a policy change. SaaS is only the delivery mechanism of the software, and it has nothing to do with changing the integrations. SAP had many non-SAP applications connecting to it back in 2004. Other software vendors are not enforcing indirect access against their customers. SAP is doing so. Why?
Joe: That’s why it’s so important for ASUG to have this dialogue. Plus the fact that some SAP customers may be reluctant to go to their account team and open up this dialogue. This conversation should first happen within the confines of ASUG with the members, and then when you have the ability to consolidate and represent a view point, take that forward to SAP. ASUG should be the consolidated customer viewpoint. Otherwise this topic will continue to be vague and confusing to your members.
If ASUG is going to mislead SAP customers as to the nature of indirect access, it seems that the nature of the dialogue will be quite deceptive and tilted for SAP. Interesting how the topic should be consolidated and confined within ASUG, and entity that is not independent of SAP. If customers agree to do this, one can be assured that the outcome will be on SAP’s terms.
Joe: I know you had meetings recently with the Executive Exchange [ASUG’s community of C-level leaders]. What were you hearing from them?
Geoff: I took a couple things away. They were very animated about this topic. We could have doubled the time we had allotted for this conversation and still not covered all the viewpoints. What I took away is that there is a lot of concern. “What does this mean to me and my company? On the basis of this ruling, I may be in violation. I don’t think so, but now I am not so sure.” They are looking to ASUG to help mediate a fair and equitable solution to this challenge. – ASUG
“Animated” is an interesting description that is a politically correct euphemism for customers being infuriated and feeling betrayed by SAP.
It is ludicrous that ASUG, unable to even publish an honest article on the topic of indirect access, will be the entity to mediate a fair and equitable solution to the challenge. A challenge that non-SAP customers have yet to even see on the horizon.
Joe: What’s also interesting to think about is what causes this business situation to occur. To me it squarely falls on the digital transformation that is happening right now. The fact that companies are going out and finding cloud and SaaS-based solutions they think will provide best-of-breed apps or increase flexibility to provide better solutions to their business users.
And let’s also point out that so often now it’s the actual business user who is driving the demand for the new application in order to better serve their business unit and their users. The fact of matter is that users go out and buy competitive products which creates concern on the SAP side of the equation. Especially if data inside the SAP application is being assessed, created or modified.
And one more time with the “digital transformation.” The second paragraph is simply an endorsement of SAP’s viewpoint on indirect access.
Geoff: So be prepared and do your due diligence now so you are not surprised. What else should our members be doing?
Joe: This should be ASUG members’ main call to action: If they were avoiding this issue or not paying attention to it—that time period is over. This certainly tells the users they need to be aware of how their licenses are being used and whether or not there is a potential compliance issue.
The second would be to bring that information forward to ASUG to start having the conversations for the first time or again, so it creates a momentum that ASUG can take forward.
I think this customer fear and the emotional response should be acknowledged in the market place. Geoff, you’re just coming back from that meeting with a lot of CIOs, and there is no question there is a fear that is being generated in terms of what this means from a financial risk perspective.
So the first two paragraphs above are boilerplate.
Then the third paragraph points back to ASUG. Again, there is no indication that SAP is doing anything untoward, and there is no attempt to relate the indirect access definition applied by SAP to the non-issue of indirect access at other software vendors.
The last paragraph acknowledges the fear, but once again does not discuss legitimacy.
Geoff: Do think what happened in the U.K. will be applicable across the globe?
Joe: You have to remember that this court case is but one judge, one ruling, one case, one court and potentially not the definitive answer. There are a lot of factors, and this could have been decided in a different way by a different court, if the factors were weighed differently.
Regardless, we now have a ruling. Meaning, if you have contractual SAP agreements, you better read them and understand what are the legal implications of the agreement you signed.
This is one of two accurate sections in the entire article.
The UK judge did not appear even to review SAP’s definition of indirect access. But the last paragraph of the response is entirely dishonest. Indirect access as interpreted by SAP is not a legitimate claim. Companies that signed SAP contracts did read and understand the legal terms. SAP changed their policy and had changed the interpretation of indirect access.
Geoff: Is the “named user” even relevant in today’s world? Are we trying to use legacy definitions in a digitally transformed world, and perhaps that isn’t working?
Joe: Yes and no. If you look at Salesforce, for instance, they typically have three user categories based on the level of use and functionality required that follow similar conventions. As an industry, the named user is still the primary way that licenses are described. That doesn’t work as well when the named user may be an interface or a sensor, or some other device.
Way back when, for an on-premise system like SAP, the users were the employees of the company that accessed that system through a display device. It was all contained within the company environment. That was the only way you had access to the software. And it was easy to say at what level of access or functionality there was an equivalent fee based on the usage.
Today, that notion has become even more convoluted given outsourcing, e-commerce, partnerships and third-party customers.
ASUG is perpetrating or allowing a false framework to be promoted. A named user never applied to application integration. This is because SAP’s application and interpretation of an expanded indirect access definition are new. These two comments by Geoff and Joe are either completely misinformed, in which case Geoff and Joe are the wrong people to interview on these topics, or Geoff and Joe are lying, in which case again, they are the wrong people to interview on these topics.
The last two paragraphs have nothing to do with the topic. The last items listed, “outsourcing, e-commerce, partnerships and third-party customers” have absolutely nothing to do with indirect access or the Diageo v. SAP case.
Joe: I firmly believe user categories are still relevant. The fact is, previously, they were protected by the boundary of the company and the employees. And that certainly has been opened up in terms of this ongoing indirect issue. As we discussed, this is not a new issue. But this case certainly highlights the issue and brings it to a level of awareness that is probably unlike other things we have seen.
No kidding Joe. User licenses are still relevant! This is the insights that ASUG readers get from ASUG. And indirect access as applied by SAP is new. What is not new is that applications have been integrated with SAP since SAP started selling its applications.
Geoff: The other issue for customers might be ensuring they’ve got all their contracts lined up. For most SAP customers it’s probably not going to be one contract, but a series of contracts with amendments. Language layered upon language.
Customers have to cut through all of that and align back to how the software is being used today versus how it may have been licensed yesterday. Start thinking about this now, how you are doing business, and why you think you are licensed—or not.
No, incorrect. SAP’s application of indirect access is new. The use of the software is not “different’ on indirect access. ASUG keeps proposing this, but it is not true, and the participants to this article don’t seem to know enough to know on this topic or they are simply lying.
Geoff: ASUG members should not universally allow SAP to define what indirect licensing is. This has to be a collaborative discussion between the user community and SAP about what is equitable and fair.
One of the few true statements in this article. Everything that Geoff and Joe have said in this ASUG article has simply directly reinforced SAP’s position on indirect access.
Geoff: We, as ASUG, are happy to bring that banner forward. And to advocate on behalf of every one of our members for a fair way to understand, in today’s digitally transformed world, how complex licensing concepts should be applied and executed.
What’s interesting is that we were already speaking with SAP on this topic, along with the rest of the global user communities. The ruling in the U.K. brought this to the forefront. I promise our members that we are championing this topic on their behalf and that the ASUG Board, who are all SAP customers, are as vocal as the rest of the members.
I know personally that SAP isn’t interested in pursuing court action to resolve these conversations and would like to have a dialogue with customers on the topic, which is why these conversations are so important.
Look for a lot more from ASUG. ASUG advocating on these topics is what drives the value in being a member. And ASUG needs to hear your voice.
ASUG is patting itself quite a bit on the back here, but this article they have published indicates that they intend to be nothing more than a pawn for SAP.
ASUG Continues its Misinformation Campaign
ASUG published a second article with several other quotations.
As SAP has opened up its software to new data sources and software, the trend is poised to become a concern for SAP customers. The result of these types of unlicensed activities is, of course, a violation of SAP customers’ licensing agreements—which will not go unnoticed during a compliance audit.
Again, incorrect. This is a concern because has changed the interpretation of indirect access.
In general, the results demonstrate that “SAP is not doing a good job of educating their customers on this concept and what it means,” he says. “It reinforces why customers who have this issue—those customers who have had it brought to their attention—are completely caught off guard.”
This assumes that SAP wanted to educate its customers on this topic. What if by not educating the customers it puts itself in a better negotiating position? Has ASUG considered the possibility?
The majority of the respondents have more than five interfaces to non-SAP applications—with 12 percent claiming more than 50 interfaces. “Think about the number of potential users on the other end of those apps,” Blake says. “The magnitude [of indirect access fees], from an unbudgeted perspective, can be pretty significant.”
Right, except this has always been the case.
When asked about SAP’s legitimate indirect-access violation claims, most respondents perceive SAP to have a legitimate claim for indirect access in real-time and non-real-time (or batch) two-way communications. And a majority of survey participants indicated a willingness to pay additional license and maintenance fees under real-time, two-way communications between systems.
This is interesting.
Respondents were asked about their response if SAP notified their company that it would terminate their SAP license agreement for breach as a result of indirect access. Their responses: More than half (54 percent) would try to negotiate a settlement amount with SAP to resolve the dispute; 19 percent would pay nothing to SAP and dispute the claims in legal proceedings; another 19 percent were unsure; and 8 percent didn’t answer.
This shows how many companies are willing to come to the table with SAP on this topic.
Blake does give credit to SAP for working with its new customers on being more transparent in their licensing agreements, though he claims there’s still too much ambiguity in the contracts.
For the first article, I had interviewed Joe LaRosa, head of global pricing at SAP. He offered straightforward guidance for customers on indirect access, and it remains applicable in looking at these survey results. “Assume that with anyone who uses our software there’s going to be a licensing fee,” LaRosa said, during an interview for the first article. “What the exact fee is is something customers need to address with their account executive.”
Right, well the question is what is the use of the software. I do not agree with SAP’s definition of use, and other software vendors do not either. The “use” Joe LaRosa is referring to was until very recently referred to as “integration.”
“The problem [in many of these cases],” Blake says, “is that no one out there knows the answer to that except SAP, and right now SAP wants to be more selective in enforcement.”
Right. SAp enforces indirect access if the customer is shown as lower in the potential for new sales than the SAP account manager expects them to be.
Is this article intended to inform SAP customers on the topic of indirect access? If so, it seems to keep away from the topic of whether SAP’s interpretation of indirect access is even valid. This article is clearly attempting to propose that indirect access is due to some change in technology, such as digital transformation, rather than being a policy change on the part of SAP. In another article on this topic by Diginomica, the culprit was SaaS and not digital transformation. The people writing this either do not understand the topic in sufficient detail or are deliberately obscuring the issue.
If you are a SAP customer, ASUG clearly has no intention of fighting for your interests. They can’t even provide a balanced viewpoint on indirect access. How can they possibly be useful in this debate?
The primary use of ASUG will be to corral SAP users into channeling their efforts through SAP so that the impression can be given that ASUG is helping “solve the problem.” That is ASUG will sell out the interests of its members, to the interests of its real priority, which is SAP. This is the problem when an entity pretends to be independent but isn’t.
How Much do You Know SAP’s Treatment on Indirect Access?
SAP Indirect Access Quiz
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