Category Archives for "Indirect Access"

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

Software audits: What can go wrong – 2?

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

The Danger in Underestimating SAP Indirect Access

 What This Article Covers

  • What SAP Would Like Customers to Believe
  • The Real Use of Indirect Access
  • Listening to ASUG on the Frequency of Indirect Access Frequency
  • The Frequency of Indirect Access
  • The Size of Indirect Access Claims

Introduction

Indirect access tends to only be known companies that have not been subject to an indirect access claim when a major indirect access (IA) public event occurs, such as a court case documents being filed. Good examples of this are Diageo and InBev. However, what is the prevalence of indirect access?

In this article, we will discuss information that has been coming in from the field. But first, we will begin with what SAP would like their customers to believe about the prevalence of indirect access. 

What SAP and SAP Consulting Partners Would Like Customers to Believe

Generally, both SAP and the SAP consulting partners would prefer that their customers do not know anything about indirect access. It is amusing to see IBM, Deloitte or Accenture comment on how to manage indirect access, a consulting company that has a partner relationship with SAP may be able to run a SAM software project, but none can represent their client’s interests against SAP. Consulting companies to compete to see how to ingratiate themselves to SAP, they don’t dare risk offending them. As an example of a recent pursuit which the client was not told about indirect access and had to find out about it from a competing vendor. The customer asked the consulting company why they had not informed them of the indirect access liability.

How much does SAP want customers and prospects to lower their guard?

At SAPPHIRE SAP produced an announcement that was intended to assuage their customer’s concerns about indirect access.

I analyzed this announcement in the article How to Best Understand SAP’s Faux Policy Change on Indirect Access and concluded that it was really no change in policy aside from more specific charging of customers when SAP brings and indirect access claim. DSAG, which is the German SAP user group, and UpperEdge, were two of the only other media entities willing to call out SAP when they are wrong on indirect access, came to the same conclusion that I did on the announcement.

Since that article, I have learned that SAP will not even publish what it intends to charge per purchase order or sales order for indirect access, which was a major part of the announcement. Instead, SAP has stated that customers would be charged “on a case by case basis.” Of course, they will be. This increases the secrecy of the cost of indirect access. The announcement made it seem like SAP is opening up, but then when asked questions, SAP goes back into secrecy mode.

Listening to ASUG on the Frequency of Indirect Access?

ASUG, which is supposed to be a user group, but is actually a marketing arm of SAP, has been telling members that indirect access is rare and that it is merely the high-profile cases (such as Diageo and InBev) that push it to the forefront. This is covered in more detail in the article Is ASUG Lying About the Frequency of SAP Indirect Access? 

As ASUG is really just SAP in “sheep’s clothing” what we can take from ASUG’s stance, is that this is in fact what SAP wants customers to think about IA. I have never been in an SAP-ASUG meeting, but by the looks of it, they get together and SAP basically tells ASUG exactly what messages they want to relay, and ASUG relays those messages no questions asked.

All of this is curious, because ASUG members pay membership fees, and fly to ASUG conferences to be told information that is inaccurate, is 100% beneficial to SAP and to the customer’s disadvantage and is what SAP wants them to believe. ASUG cannot both represent the interests of SAP and of their members.

  • As I stated in the “Faux Policy Change Article,” SAP’s overall intent is to get its customers to lower their guard.
  • The less that their customers are prepared, the more SAP is able to use indirect access as a hammer against them.
  • Time is of the essence. SAP uses restricted timelines to get customers to acquiesce to their demands. The less preparatory work they have done before SAP drops an indirect access claim upon them, the more likely they will end up doing what SAP wants, and this is covered in the article The Time Issue Faced with Indirect Access.

The Reality of Indirect Access Frequency 

SAP has been quite effective with indirect access to drive license revenues, so they don’t have a very good reason to stop doing it. They are catching customers off guard and there is a very poor defense normally available to customers. And vendors that are affected by indirect access are uncoordinated. Essentially the issue is dealt with by individual account teams, that are in most cases not coordinated even within a single software vendor with respect to indirect access.

There are several other reasons for the success SAP is having against customers in indirect access.

  1. Source Issues and Finding Unbiased Representation: Many of the sources relied upon for information on indirect access have already aligned with or are in some way remotely controlled by SAP. This is covered in the article Taking a Multidimensional Approach to Indirect Access.
  2. Confusion with the Roll of Attorneys: Few attorneys know anything about indirect access. Unless the issue is going to court, and this is unlikely and unknown by anyone early in the process, unless the attorney already has a strong familiarity with indirect access, hiring an attorney is not going to help very much. There are several steps that do help. And keeping good notes is important whether an attorney is eventually contacted or whether they are not engaged. Secondly, bringing up attorneys that are unfamiliar with the topic is a lengthy process. If an indirect access claim is brought, time is of the essence in getting control over the situation.
  3. The Lack of SAM Software: Surprising as it may seem, most SAP customers still don’t use SAM software. So when SAP drops an indirect access claim on them, they aren’t even in a position to know what their overall license usage is or to know their specific indirect access exposure. SAM covers all usage measurement, indirect access being just one. Customers really don’t want to not have SAM software installed and then have to deal with both going through a SAM project, negotiating with the SAM vendor, then learning how SAM software reports look, all with SAP and an indirect access claim and their short timelines for response putting extra pressure on the company. SAM software and projects are measured in the hundreds of thousands and are good for more than just indirect access. Indirect access claims are measured in the millions, and sometimes tens of millions.

Indirect Access Frequency

The information I am getting from the field is that indirect access is actually increasing.

I have been tracking indirect access for around a year and a half. This is the point when vendors first started communicating to me that SAP would bring up the topic of indirect access charges as soon as it looked like the other vendor was about to get a contract from SAP.

And what is also interesting is that the indirect access issues brought up to me have been all over the spectrum of the different software categories. Although CRM does seem to be one of SAP’s favorite areas to bring indirect access claims. SAP seems to have an anger management issue when losing to Salesforce.

However, the outcome of these indirect access claims is normally the same. The customer is forced to purchase software from SAP it never wanted to purchase. When SAP reports sales to Wall Street it implies that 100% of them are voluntary. However, with SAP’s use of indirect access, and increasing percentage are sales motivated by indirect access claims.

The Size of Indirect Access Claims

The size of indirect access claims is also increasing. I am now learning of tens of millions of dollars in indirect access claims. I have individual case studies, but I do not want to publish the specific multiple of tens of millions. SAP benefits if these case studies are kept as secret as possible.

The size of these claims is changing behavior and is allowing SAP to win license sales that they had lost prior to bringing the claim.

I am working on research into indirect access which I will publish, and the announcement is described in this article. Vendors and customers that are impacted by indirect access have to share their story. The more that it is kept secret, the more SAP wins. If vendors fear reprisal by SAP, that is what anonymous sourcing is all about. I have yet to expose any source that I kept anonymously.

Conclusion

SAP is ramping up, not ramping down its indirect access claims against its customers, and the claim sizes are growing. One should not be lulled into a false sense of security by Bill McDermott’s happy face at SAPPHIRE on this topic. As I said previously, Bill McDermott was specifically chosen by Hasso Plattner, because he had a “happy face.” But McDermott’s pleasant demeanor is stark contrast to the hard edge I witness in SAP’s use of indirect access for many SAP customers.

SAP customers are receiving a large amount of inaccurate information from sources ranging from ASUG to Deloitte, to Diginomica and this is because so many entities in IT are in some way dependent upon SAP for their revenues. The money is very clearly on the side of agreeing with SAP. I was told by one reader recently to switch sides and to begin writing in favor of SAP, as the pay is much better.

Companies that are dependent on SAP for their revenues cannot be expected to write objectively or to provide objective advice about SAP. Other entities like JNC Consulting do not even seem to question (in their articles) whether the Type 2 indirect access employed by SAP is actually valid or its historical context.

All of this combined with the timelines imposed by SAP on indirect access claims means that the deck is firmly stacked in their favor. And one of the ways of keeping it this way is to underreport and de-emphasize what is really a widespread usage of indirect access.

Is ASUG Lying About the Frequency of SAP Indirect Access?

What This Article Covers

  • What SAP Would Like Customers to Think About AI
  • What is Indirect Access Frequency?
  • What are ASUG’s Incentives?

Introduction

I have critiqued ASUG in several previous articles such as ASUG’s Biased and Inaccurate Coverage of SAP Indirect Access. My observation of ASUG’s media output is that ASUG is uniformly repeating SAP’s marketing messaging, that it appears to have no independence from SAP whatsoever, and that it writes false information about SAP. This article will explain what has happened to ASUG. This article will cover what ASUG says about how frequently customers actually face an indirect access claim by SAP. But first, we need to get into what SAP would like customers to think about indirect access.

What SAP Would Like Customers to Think About IA

We don’t have to search very far to determine what SAP would like customers to think about indirect access. In the article How to Best Understand Faux Change on Indirect Access, I covered that SAP created their announcement as a way to make customers minimize their preparation regarding indirect access. I won’t go over the entire article, but in the conclusion, I stated the following:

SAP intends to mislead the SAP customer base into lowering their guard by making a few slight modifications to indirect access that may end up amounting to as close as possible to zero change in SAP’s enforcement of indirect access.

Therefore, it is clear that SAP does not want customers to worry their “pretty little head” about indirect access. And the reason for this is very simple. If customers do not prepare for indirect access, SAP can spring indirect access on their customers and receive less prepared pushback from customers. In fact, I concluded that the entire reason for the announcement on indirect access that occurred at SAPPHIRE was to make many customers that were concerned about it, become less concerned. The entire announcement did not do anything to reduce the concern that customers should have regarding indirect access but instead was worded in a way that it seemed like it did.

The Frequency of Indirect Access Claims

Apparently, when asked directly about indirect access, ASUG seems to have several answers.

  1. One is to state that few customers actually receive an indirect access claim, and the reason that customers have been hearing so much about it is that those scenarios tend to be “noisy.”
  2. Secondly, ASUG will offer their services as mediators if a customer faces an indirect access claim from SAP.

As for the second response, I cover that in the article on the “faux change to indirect access,” so I won’t repeat it here. But for the former answer, it is interesting how well this dovetails with what SAP would like customers to believe. This is a constant issue with ASUG that they state exactly what SAP wants to be stated. However, an independent entity would not perfectly match up with another entity on every single issue like this by chance. And it is well known that SAP uses ASUG as an outlet for publishing SAP marketing material. For example, if Brightwork were to suddenly begin to have talking points that are copied from the press releases of a software vendor on the website one would be right to question our independence. For this reason, we have ceased to see ASUG as having any independent voice from SAP.

Therefore, ASUG’s statements on any topic, can simply by seen as SAP’s statements on any topic, and there is no reason to assume that ASUG is filtering this message in any way.

Conclusion

We don’t know exactly how prevalent indirect access is. However, entities like ASUG and Deloitte or Accenture want indirect access to be as silent as possible. When Deloitte or Accenture are helping a company with a software selection, they do not inform their client of indirect access liabilities that come along with SAP. Why would they? It reduces the likelihood of the customer choosing SAP. And this is the problem with entities like ASUG and like Deloitte or Accenture. They pretend to represent the interests of their members or clients, but ultimately they are all simply tools of SAP.

References

The statements by ASUG on indirect access were brought by several anonymous sources that attended ASUG meetings on indirect access and that corroborate the statements made by ASUG.

Are SAP Customers Actually Under Licensed After Indirect Access?

What This Article Covers

  • SAP’s Obsession with the Term Under Licensed
  • The Likelihood of Being Overlicensed

Introduction

SAP has written a great deal about customers that are “under licensed” with respect to indirect access. This is a quotation from their announcement at SAPPHIRE on indirect access.

 If you’re fully licensed, there’s no action for you. However, if you’re questioning whether you are under-licensed, let’s talk about it. We want customers to proactively engage us on this topic. SAP assures customers who proactively engage with SAP to resolve such under-licensing of SAP software that we will not collect back maintenance payments for such under-licensing.  We will look at your specific circumstances when resetting your licensing agreement, including providing you the opportunity to receive credit for certain products you may have already licensed so you can update to the new metrics.

SAP loves to pitch the narrative of being under licensed. A full analysis of this announcement can be found at the article An Analysis of SAP’s Faux Policy Change on Indirect Access.

Being Overlicenced

SAP will never speak about customers that are over licensed. However, being over licensed is quite common. There are several reasons for this. Users are created, but then sometimes abandoned. People leave the company but their users are still in the system. Consultants come and go. In fact, in most instances, over licensing is more common than under licensing. SAP will not give back money to a company, so being over licensed means having a “bank” of unused licenses that can be used in the future.

Being Overlicensed and Indirect Access

Over the past 4 years, SAP has greatly ramped up the concept of Type 2 indirect access. SAP has been promoting customers to reach out to them, as is shown in the following quotation also from their SAPPHIRE announcement.

However, if you’re questioning whether you are under- licensed, let’s talk about it. We want customers to proactively engage us on this topic. SAP assures customers who proactively engage with SAP to resolve such under-licensing of SAP software that we will not collect back maintenance payments for such under-licensing.

Once again, SAP uses the term under licensed. SAP wants customers to proactively engage us, and to share information with them so that SAP can place an indirect access charge upon them. One may not have to pay back maintenance, but they will be paying forward maintenance of course.

What SAP does not address, and will not address is whether a SAM software analysis by an independent entity would show that the customer is actually over-licensed and if that over-licensing would cover even the faux or Type 2 indirect access that SAP has become known for. SAP has no interest in any customer purchasing SAM software. Instead, they want to present their interpretation of how “under licensed” their customers are, without independent verification.

Conclusion

Companies should never accept SAP’s self-serving analysis of their licensing state. Companies should not simply accept the assumption regarding Type 2 indirect access. However, even if SAP does bring an indirect access claim against a company, the company may be able to cover that claim (if it intends to not fight the claim through other means) with the licenses that it already owns. But the only way to know for sure is to have the information in hand that can only come from using SAM software and performing the analysis.

References

Modern Pricing for Modern Times

Analysis of Snow Software on Ways to Cut Spending

What This Article Covers

  • Quotes from Snow Software
  • Analysis of the Quotes

Introduction

Snow Software wrote a paper titled 5 Ways to Cut Spending on SAP Software. In this article, we will analyze this paper.

Quotes from Snow Software’s Article

SAP has more than 40 named user license types in its standard definitions, ranging in price from $60 to $7,000 per license. These license types determine what transactions the user is permitted to perform in the environment. SAP puts the onus on its customers to assign the appropriately named user license type to each user account. Without the right data upfront, the only way to do this is to generalize and attempt a best-fit. The work that individuals perform can change year on-year. This means that a license type which once fit well beforehand is no longer compliant

It is in fact quite interesting that SAP has such a broad continuum of user license prices.

Organizations typically end up overspending because they do one or both of the following:

  1. Purchase unnecessarily costly named user license types to ensure coverage of user’s requirements, but also cover them for use of transactions that they do not need.
  2. Keep user-license assignments static until the next SAPmandated system measurement, and then pay the fees that SAP requests for any shortfall.

So basically customers have a hard time optimizing their licenses. I think there is a common misimpression that the company’s contract or purchasing arm will perform license optimization. This is not the case. And one does require software to provide the necessary information. This also keeps SAP from leading the discussion, which will, of course, lead to more of what SAP wants, rather than what the customer needs.

During a proof of concept, Snow typically discovers around 20% of licensed users in an organization who have been inactive for more than 90 days. Users who have been inactive for more than 90 days (or whatever date is deemed appropriate) can have their license returned to a pool (re-harvested) for reassignment as and when they are required.

This was quite interesting. This means that many customers are over licensed. This is also interesting because SAP only ever discusses the potential of being “under licensed.”

This environment evolves over time as new systems are added. Users must be licensed to access these systems and so they are often provided with a new account, the username of which may be different from the username they have for other systems.

Another issue where SAM software can assist.

Indirect Usage is, in simple terms, where an SAP system is accessed or queried through a third-party application. The way in which that application interacts with the SAP system and underlying data can have a significant impact on licensing requirements and financial exposure at the point of audit. If any individuals are accessing SAP-stored data through third-party software, organizations must ensure that they have an SAP named user license of the right type provisioned for them.

Why this is true. The assumption presented here is that all integrations to SAP applications mean that the customer needs to have licenses. This is an endorsement of SAP’s Type 2 indirect access. However, Brightwork has repeatedly questioned whether this type of indirect access is even valid. This is the concerning feature of SAP, that they can make a proposal which breaks with the legal precedent in licensing, and pretty soon everyone from consulting companies to SAM vendors is repeating it.

Organizations should build up an architectural diagram of Indirect Usage across the SAP environment. This places them in a strong position when SAP audits because any additional fees are based upon real usage, not an estimated and perhaps overinflated value which is indefensible because of lack of visibility.

Yes, this is true, SAP sets about to cheat its customers whenever possible. So SAM software is necessary because the customer must have access to usage information that is independent of SAP.

SAP licensing is not only based on per-user metrics, but includes software engines as well. SAP engines (aka packages, modules and add-ons) are optional applications for which additional licenses must be purchased. The metric used for licensing differs by engine, and is based upon the objects that exist within that application or its total CPU consumption. For example, the metric for SAP Payroll Processing is number of master records, while the metric for SAP E-Recruiting is number of employees.

This is apparent from reading the SAP Price List. It is so complex to price many of SAP’s applications, that even account executives rely on a professional pricing expert that does nothing but pricing within SAP. What Snow software is saying is that this pricing is built into their software. We are not validating this, but if true it is an impressive accomplishment given SAP’s pricing complexity.

SAP licensing is both complex and open to interpretation. Typically, environments have been running for many years, so it is difficult to get a handle on which licenses are assigned to which users, whether those licenses are correct for the user and indeed whether a license is required at all.

This quotation highlights how licensing must be run occasionally as the usage of the SAP system changes over time.

Conclusion

Snow Software’s paper was quite helpful and educational. The indirect access quotations are a concern for reasons already listed in this article.

References

http://go.snowsoftware.com/rs/377-PWR-208/images/5Ways_To_Cut_Spending_On_SAP_Software_en_aug.pdf?aliId=12824339

Using Outsourced Support to Gain Privacy from SAP

What This Article Covers

  • The Issue with Indirect Access and What Triggers Indirect Access
  • Sharing Information with SAP
  • SAP Knowing What You Are Doing with their Software

Introduction

Brightwork Research & Analysis has covered indirect access extensively. It is one of our primary research areas. One of the things we have been researching lately is what tends to trigger indirect access claims. We will cover this topic, and then suggest a possible response to the trigger.

Sharing Information with SAP

And what we have come to learn is that SAP uses specific areas to trigger an indirect access audit. Gartner provided some coverage of indirect access, however, Gartner’s coverage of this topic is restricted by the fact that they probably receive around $100 million every year from SAP. Yet there are still some interesting things to learn from Gartner.

In reviewing the Gartner recommendations on indirect access I noted the following point:

“Proceed carefully. When audited by SAP (or any vendor), share the minimum amount of information required to comply with the audit terms in your contract, as SAP will use information provided regarding third-party interfaces to justify indirect access compliance fees.”

This got me thinking about the following tactics for reducing your risk of an indirect access claim.

  1. Use only internal or contract SAP resources to evaluate your indirect access exposure.
  2. Use a SAM vendor to evaluate your indirect access exposure.

But indirect access basically supports the idea that the less your SAP account executive knows about your use of SAP the better.

This gets into the topic of support. The more that a company uses SAP support, the more SAP knows about how their customers are using their software. However, SAP is the only software vendor that enforces Type 2 indirect access claims. And this is increasing on the part of SAP. SAP produced a misleading announcement on indirect access, which is covered in the article How to Best Understand SAP’s Faux Change on Indirect Access. SAP will continue to apply indirect access because it is driving license revenue. Secondly, because SAP is able to steer customers to buy specific applications based upon an indirect access claim.

SAP’s Support Quality

SAP’s support quality has continued to decline over the past 15 years. SAP takes over 22% of what the customer paid for all of their licenses (there are a number of areas of support that are not covered in the standard 22%, which is why 22% is the minimum that a customer can pay. However, with most of SAP support workers being based in countries like India, where the average pay is between $25 to $35 per day, the margin on the support is immense. This is covered in the article What to Do About SAP’s Declining Support.

There are really two reasons to keep SAP’s support. One is for the actual support, which as discussed has declined to such a point that it is a very poor value. The second reason is to obtain the newest versions of software. However, SAP is not coming out with very much new that is useful. SAP’s only really good application was its ERP system, and most of the non-ERP applications have proven to be quite uncompetitive. This is covered in the article How SAP is Now Strip Mining Customers.

For this reason, there is little reason to continue to pay SAP’s support with its 90% margin when there are entities that can support SAP better than SAP at around 1/2 the cost.

Privacy an Indirect Access

Another benefit to outsourcing support away from SAP is that you gain privacy from SAP. Now certainly, SAP can come in and audit you at any time. However, the less that SAP knows about how you use SAP, the better.

References

Roberto Sacco, Alexa Bona, Derek Prior, Lori Samolsky, SAP Indirect Access License Fees Can Be Significant and Unexpected,  31 July 2014

Bill Ryan, Roberto Sacco, Derek Prior, Lori Samolsky, Customers Must Resolve SAP Indirect Access Risk When Investing in SAP Functionality, April 5, 2017

Should You Listen to Gartner on Indirect Access?

.What This Article Covers

  • Gartner’s Relationship with Indirect Access
  • Gartner’s Conflicts of Interest with SAP
  • Evaluating Gartner’s Material on Indirect Access
  • Gartner on Triggers for Indirect Access
  • Gartner’s Article: Customers Must Resolve SAP Indirect Access Risk When Investing in SAP Functionality

Introduction

In a previous article titled Taking A Multi-Dimensional Approach to Indirect Access, I explained that information on indirect access comes from a number of sources. However, some of these sources have a significant pro-SAP bias and therefore publish inaccurate information on the topic of indirect access. One article that showed how biased this information can be is a critique of an article by ASUG which I critiqued in the article ASUG’s Biased and Misleading Coverage on Indirect Access.

Now in this article, we will review Gartner as a provider of information on indirect access.

Gartner’s Relationship and Conflict of Interest with SAP

Gartner has been a long-term recipient of large amounts of money from SAP. However, Gartner will not declare how much they get from any software vendor. All that can be traced is how much money they get in total from all vendors which is roughly $800 million, or one-third of their revenues. I have spoken on this topic with many who have worked for Gartner or vendors that pay Gartner, and the common estimate that I arrive at when you include all vendor advisory services, conferences, everything — that Gartner receives around $100 million from SAP every year. Furthermore, when Gartner writes articles on indirect access, they do not disclose the fact that they receive money from SAP. They are actually obligated to do this. Yet, as with everything that Gartner does, they do not follow the rules and do what they please. Their lack of rule following regarding research, for instance, is why they can’t be classified as a research entity and are closer to a combination of a fashion magazine, as is described in the article Gartner and the Devil Wears Prada.

  1. The Conflicting Nature of the Topic: The problem is that the topic of indirect access pits SAP against its customers. Therefore, it is a difficult topic to come offer a balanced perspective, especially considering that SAP’s application of indirect access has no real precedent in enterprise software, and in fact for the history of enterprise software, indirect access meant something entirely different from SAP’s current definition of indirect access. This topic is covered in the article Type 1 Versus Type 2 Indirect Access.
  2. Closeness to SAP: Gartner cannot provide customers with a way to fight indirect access that won’t get back to SAP. However, Gartner greatly prizes its relationship with SAP and they yearly funding that it brings.

Evaluating Gartner’s Material on Indirect Access

Gartner has a conflict of interest, so let us check Gartner’s material on indirect access. The first is the article SAP Indirect Access License Fees Can Be Significant and Unexpected. Let us see how much truth Gartner is willing to tell when the subject is one of their biggest vendor sponsors.

SAP has been inconsistent with its definition, interpretation and measurement of indirect use, resulting in ambiguity and confusion. In particular, the SAP System Measurement Guide and SAP Licensing Guide contain interpretations of indirect use inconsistent with many contracts. SAP’s more recent move to standardize General Terms and Conditions and Software Use Rights (SUR) provides globally consistent and all-encompassing indirect terms that could increase unwary SAP customers’ cost exposure when purchasing products on an order form.

This is true, but Gartner has not explained why this is the case. SAP does this to keep indirect access as opaque as possible to use it as leverage against customers. It applies its interpretation of indirect access inconsistently because indirect access is a hammer used against customers that do not meet SAP’s targets for sales revenue.

Gartner has the following recommendations.

Proactively seek the details of clauses relating to indirect use in SAP contracts, and defend your position based on your contract language, rather than the SAP System Measurement Guide criteria.

  • Protect broader or vaguer definitions, and avoid signing away these rights if asked to move to Web-based usage rights when making new purchases.
  • Utilize Gartner’s principles of licensing fairness to counter SAP’s indirect use fee approach.

This appears to be good advice.

Client calls indicate SAP has become more aggressive in its pursuit of indirect use fees. Although SAP indirect use has been an issue for SAP customers for many years (we started writing about this issue more than 10 years ago), Gartner has been receiving a large number of client calls related to significant and unexpected indirect use fees since December 2013.

That is true. It is interesting to see Gartner’s view on this as they have an enormous client base, so they are in a very good position to know how indirect access is trending.

Indeed, in its 2010 licensing guide, SAP gives an example of indirect use requiring limited professional user licenses simply to access/view data within the SAP system SAP customers are often surprised by the timing and engagement process for fee discussions.

And the timing of those fee discussions is critical.

Most perplexing is where SAP recommended and performed integration work, and did not reveal large indirect use fees that could result from its work. Those customers are only now being told of this liability. SAP has noted that its services consultants are not license experts; they recommend the best possible solutions at the request of customers, and are not obliged to reveal license fee ramifications, however large. This, SAP suggests, is solely the customer’s responsibility.

Why are SAP’s service consultants not educated on license fee ramifications or not obligated to reveal license fee ramifications? Secondly, in the past, integrations to SAP did not used to lead to indirect access liabilities.

This would have to violate the standards of care of a contract for work. This is the definition of standard of care by Wikipedia:

In certain industries and professions, the standard of care is determined by the standard that would be exercised by the reasonably prudent manufacturer of a product, or the reasonably prudent professional in that line of work.

 Gartner does an excellent job of bringing this up. As it leads to all manner of other questions. For instance, in the Diageo case, SAP was aware the entire time that Diageo was integrating ECC to Salesforce. Did SAP warn Diageo of the indirect access liability during the integration? It is not only the consultants that are aware of the integration to a non-SAP application but the SAP account manager as well.

Gartner on Triggers for Indirect Access

Gartner laid out the following reasons for indirect access claims by SAP.

  • Audit Activity: In some cases, SAP customers who have had integrated applications for many years, and were never questioned for indirect license compliance when submitting prior LAW reports, are now being asked for indirect license fees.
  • Lack of New License Demand: SAP customers who have not made purchases in the past 12 months and who have no articulated future demand for license spending are being examined. Likewise, discussions surround applications or integrations that have been in existence for many years and for which fees had never been suggested.
  • Looking at Competitive Offerings: Customers submitting a competitive RFI or RFP documents in markets where SAP has a competitive offering, especially in areas like CRM and human capital management, are being reviewed. SAP sales have used indirect access language to suggest that if competitor’s offerings were selected, and then interfaced into SAP, license fees would be due from the competitor and SAP, and that it would be more cost effective to simply pay SAP, rather than paying twice for the same functionality. In some other cases, neither vendor mentioned the additional fees until after the third party was selected and contracts signed. SAP would then use sales or audit activity to approach the organization about incremental fees.
  • Signing the New SAP Order Form: Historically, SAP customers buying new software would add a new exhibit to the originally negotiated master contract. However, SAP customers now are being asked to sign order forms, rather than exhibits, and these order forms require compliance with the standard general terms and conditions (GTC) and SUR on SAP’s website. These contracts have reference to use rights and indirect use. SAP’s new online terms are contractually agreed for only products on each specific order form. Use rights appear in the GTC under Section License Grant Section 2.1.2 and in the SUR under Section 1 — Licensing Principles and Rules of Use and Designate Use in 1.1.1 (7). It states ‘”Use’ means to activate the processing capabilities of the software, load, execute, access, employ the software, or display information resulting from such capabilities … 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.” The latest SUR also adds a specific definition for a license for SAP NetWeaver Open Hub, which is required for data extraction from SAP BW, and which was not detailed in many prior contracts.

While Gartner does not state it, this is damning evidence against SAP.

If SAP were applying indirect access honestly, they would bring an indirect access claim against every client that were “in violation.” However, that is not what they do. They define indirect access so broadly that every customer is guilty, and then selectively enforce IA-based upon maximizing license revenues. The very act of submitting a competitive RFP to other vendors can trigger an indirect access claim. And in some cases “neither vendor mentioned the additional fees until after the third party was selected and contracts signed.” This allows SAP to either block the sale by bringing up the IA issue, or wait, and then bring the claim for AI after the purchase.

SAP’s precise contractual language related to indirect use, and SAP interpretations of these terms, has varied over the years and by signed contract location. In many cases, it was not explicit what scenarios would generate indirect use fees, and what metrics should be used for indirect use fee pricing. In some contracts the word “‘indirect” was not even mentioned, rather simply a statement that use must be paid for.

Yes, that is correct. Indirect access was changed in its definition by SAP. And the problem with the statement that “use” must be paid for is that SAP did not interpret any integrated non-SAP system as use.

Use was usually when the processing capabilities of the software were activated, or to load, execute, access, employ, utilize or store the software, or display information resulting from such capabilities.

As I said the definition was changed by SAP.

SAP has strategically opened its software to new data sources and software platforms, resulting in a potential licensing compliance challenge to its customer base. Historically, SAP encouraged customers to build out its partner network and heavily integrate SAP with other applications, especially in “white spaces” where SAP had no equivalent offering.

I don’t think this rings true. SAP always proposed that integration was a problem and in all cases that the customer should use SAP applications. This was true even when SAP’s applications were not ready to be implemented. This has cost SAP customers enormously.

While it is true that SAP was not very concerned if it has no offering in a particular area, but even this oversimplifies SAP’s position.

SAP, when they did not have advanced planning applications (back in the 1990s and before APO) would undermine the need for the application, stating that everything could be done in their ERP system. And this goes back to the 1980s when SAP as well as other ERP vendors that their systems would not only replace ever single legacy system the customer had, which is covered in the article How SAP Misused the Term Legacy,

SAP customers typically require hundreds of interfaces on their SAP ERP systems when integrating them into their business application landscapes to create collaborative end-to-end business processes with customers, partners, suppliers and distributors. Indirect use complications arise when multiple systems are connected and information is transferred between them. But there are conflicting views on what is a fair and reasonable interpretation of indirect use across these complex interfaces. This has led indirect use to be an ambiguous gray area. To try and bring some clarity to the situation, Gartner has compiled a set of five principles of licensing fairness with respect to indirect use of SAP business applications. In our experience, SAP customers who have used these principles have achieved substantially improved outcomes in their negotiations.

At this point Gartner proposes that it can provide advice that can essentially keep customers out of some of the trouble with indirect access.

Customer Owns the Data: The customer is the owner of all customer business data, including historical business data; this is shared across the customer’s business application portfolio. Simply accessing this data, or exposing it through a portal, should not attract license fees. SAP, however, owns the software intellectual property — that is, SAP is the owner of all intellectual property relating to its software products, including data models, data structures, configuration data and metadata for its business applications.

Unfortunately, this has changed since this article was written. SAP imposes indirect access rules for data stored in the HANA database. This is covered in the article The HANA Police and Indirect Access Charges. Secondly, SAP in its SAPPHIRE 2017 announcement proposed that customers only own a “static read” of the data, which is covered in the article. How to Best Understand SAP’s Faux Indirect Access Announcement. Static read access turns out to be so restrictive that literally, the only way to perform a static read is to make a copy of the data and archive it without ever accessing it again.

This is not to say that what Gartner provided was inaccurate, but instead points to the fact that SAP is continually modifying the rules of indirect access to be more restrictive.

Infrequent (Daily, Hourly) Batch Data Transfers Should Not Be Charged: Interfaces implementing batch data transfers (data in, data out) between all business applications, including SAP and non-SAP systems, in general does not constitute indirect use of SAP software, and should not be charged. When a customer’s business data is retrieved from an SAP system, the SAP intellectual property is not accessed and, therefore, the expectation is that there should be no licensing impact. SAP is, however, demanding an additional licensing cost for its customers to extract their own data (emphasis added). It references its vague indirect use definition. It is our opinion that this is not fair practice because customers have SAP user licenses when they originally created the data. Such data is owned by the customer, not SAP; hence, the customer should have the right to access its own data via non-SAP processes for its own use. SAP has tried to charge some customers a specific Business Warehouse (BW) Open Hub license for data extraction specifically from BW.(emphasis added) However, we believe this simple data extraction should not be subject to charges. “Frequent” batch data transfers (e.g., same data transferred every minute, or faster), however, may effectively be defined as near real time in nature.

It is unclear why Gartner draws this particular distinction. If we look at all other vendors, they only charge for users of their application through the user interface. Data is sent between applications all the time, and every applications is connected to other applications. It is difficult to see why in the case of SAP, that a number of rules have to be put into place when customers want to integrate to SAP.

Real-Time, Synchronous and Bidirectional Use of SAP Software Can Be Charged: Interfaces implementing real-time data transfers to support interactive bidirectional user access between all business applications, including SAP and non-SAP systems, potentially does constitute indirect use. Fees should be paid, although possibly at lower rates than the standard named user fees. In general, SAP Remote Function Call (RFC), Java Connector and Gateway technologies are more likely to be used for real-time, synchronous type of interactive interfaces. SAP IntermediateDocument (IDoc), Enterprise Services or PI messaging technologies tend to be used more for datatransfer-type interfaces.

Once again, this seems to be drawing distinctions that no other vendor would draw. If you perform a real-time, synchronous and bi-directional data integration to any other vendor, there will be no indirect access issue. This seems to normalize hat SAP is doing.

If we evaluate these terms (real-time, synchronous and bi-directional) this describes standard application integration. Why does the fact that data is sent in batch versus real-time change whether SAP’s version of indirect access, called Type 2 indirect access is valid?

Indirect Users Should Be Identifiable Users, Not Devices: Gain an understanding of how SAP identifies your licensing and product scenario, and argue that only identifiable people are paid for as indirect users. The term “Named User” suggests an identifiable person, given the digitalization trend and the introduction of many more smart devices (see “Digital Business Requires a Change in Software Licensing Models or Higher Costs Will Prevail”) This would set a potentially very costly precedent to accept smart devices as named users, direct or indirect.

This seems to make sense on one hand, but unfortunately, it seems to support SAP’s interpretation of indirect access without probing any deeper.

Multiplexing Front-End Applications Built for the Express Purpose of License Fee: Avoidance Should Not Be Acceptable to Either Party, and Does Constitute Indirect Use: It should be acknowledged that a small number of companies have deliberately developed their own sophisticated software applications to intensively extract data from SAP business applications, and then used them to support large numbers of interactive users with their user interfaces. This would constitute SAP license avoidance, and compliance-related fees should be paid in this scenario. Gartner believes that the majority of SAP’s clients do not set out to do this, and are greatly surprised by the indirect use issue when it arises in license audits.

True. This is actually the definition of Type 1 indirect access. However, it is uncommon. And it is not related to the type of indirect access which is enforced by SAP, which is Type 2 indirect access.

To be prepared for indirect use conversations, we recommend working with SAP solution or enterprise architects to ascertain exactly which interfaces you have into SAP systems, as well as future planned interfaces, and categorizing them where possible according to the Gartner fairness principles. Because many customers will have tens, if not hundreds, of integrated applications, it can be a daunting task. There are third-party tools that will assist customers in defining to various levels what kind of indirect use they may have (see Note 7 and Note 8).

I am not sure this is a good idea. Although it depends upon what Gartner means. If this means contacting SAP resources that SAP this is probably not a good idea as it communicates to SAP what you are thinking and that you are thinking of protecting yourself. Finding independent sources makes sense. But those must be truly independent sources.

The indirect use fees initially proposed by SAP may suggest that all interfaces be licenses with higher-priced user categories, such as Professional User. One should negotiate on category or package type, should the value derived from the indirect use be lower than the usually high price points associated with these user or package categories.

This continues to assume that type 2 indirect access is valid. This seems to imply that indirect access can be covered by a user license. However, in the Diageo case, the UK judge noted that she could not find any user license that applied.

Lower-cost named user fees that SAP has adopted should be considered examples of these named user types: Retail User, Worker User, Industry Portfolio User. Older agreements may have Limited Professional, Shop Floor User or Customized User categories that could be used. In total, there are approximately 50 different named user definitions that have been sliced and priced into smaller functionality use rights definitions. Gartner is not claiming that value has been extracted from this extensive slicing of definitions, but it offers a representative expectation that SAP would negotiate varying degrees of indirect use licenses based on individual value propositions.

Same issue as the previous comment.

Gartner’s Article: Customers Must Resolve SAP Indirect Access Risk When Investing in SAP Functionality

This next analysis is based upon the article of the name above.

SAP does not make indirect access transparent during the sales cycle or use a consistent approach to resolve it. Therefore, sourcing and vendor management leaders face unpredictable financial exposure if they do not explicitly negotiate to contain SAP indirect access license costs.

SAP shows a lot of delicacy in its description here. SAP lies to customers about indirect access during the sales process, and then uses indirect access inconsistently depending upon how it maximizes its sales revenues from an account.

Indirect access exposure is likely to increase and become more difficult to resolve due to the rapid growth of IoT offerings, partner ecosystems, digital business platforms and analytics solutions, which all contribute to increased system connectivity.

It’s unclear if this is attempting to be deliberately inaccurate. But it is false. SAP systems already are connected to many systems at customers. The liability is already there.

When possible, preserve older Use definitions that do not reference third-party systems.

This is good advice. SAP seeks to have Type 2 indirect access made legitimate and to change history by having customers look at new interpretations that were never part of the original contracts that the customer signed. Preferring to steer them to new documents that the customer never signed.

Proactively engage enterprise architects and internal SAP experts to identify, document and place a value on existing third-party interfaces now, before SAP raises it during an annual audit.

Notice the term “internal.” Gartner is saying don’t use SAP resources as they will function as spies. But because SAP is a customer for Gartner, they have to write in code.

Use SAP’s desire to sell new licenses for strategic products as the incentive to resolve indirect access cost uncertainty. This is especially critical for SAP’s IoT and Cloud Platforms, which may exponentially increase financial exposure via large-scale device and application connectivity.

This was addressed previously. It is not true. SAP applications are already connected to many non-SAP applications at customers.

Although other software and SaaS providers incorporate indirect access language in contracts, our interactions with megavendor customers suggest that it is much more likely to arise with SAP than with other vendors, and that SAP activity in this area is growing (see Table 1).

It is difficult to determine if this is deliberately misleading or if the authors do not understand the distinction between Type 1 and Type 2 indirect access. The indirect access clauses in the clauses of other vendors are for Type 1 indirect access — or legitimate indirect access. SAP’s enforcement is primarily to do with Type 2 indirect access. SAP is the only software vendor that I have seen enforced Type 2 indirect access.

Gartner includes a table that has the following numbers:

  • SAP 29%
  • Microsoft 5%
  • Oracle 2%
  • Salesforce 3%

However, because Gartner does not differentiate between Type 1 and Type 2 indirect access it is not possible to say what types are covered in this table. Most likely the other vendors are enforcing Type 1.

It is SAP’s reference to Use occurring by way of a “third-party interface or other intermediary system” that is the basis for the indirect access concept. Because several years have elapsed since SAP standardized its contractual terms and conditions, we believe most SAP customers have agreed to  the indirect access concept, sometimes without fully understanding the implications when signing Order Forms containing the current Use definition within the hyperlinked SUR document.

Right, but did the customers agree to the traditional definition of indirect access (Type 1) or to SAP’s broadened definition (Type2)?

Gartner estimates that a small but material percentage of SAP customers (we estimate fewer than 20%) either hold legacy terms where SAP defined Use inconsistently, or have successfully incorporated indirect access language during past negotiations. Examples include customers with contracts dating back to the early 2000s, which may have less prescriptive Use definitions, thus improving customer negotiating positions, and customers who were able to modify Use language during prior negotiations. Vigilantly protect older, less all-encompassing definitions of indirect access (particularly those with Use definitions that do not explicitly reference “third-party interfaces or other intermediary systems”) by negotiating the extension of those less onerous terms and rejecting the newer SUR definitions incorporated in all future purchases.

So keep the old definitions as much as possible.

We believe SAP provides strong incentives for its salespeople to pitch new-generation technologies such as the Hana database, S/4HANA, cloud line-of-business solutions, BusinessObjects analytics solutions, and its IoT and cloud platforms. The significant pressure on the SAP sales force to sell these solutions strengthens customers’ ability to negotiate a low or no-cost resolution to the indirect access issue by making the new investment contingent on resolving indirect access risk.

Translation: SAP has a lot of products that they are hot to sell, but which don’t make much sense to buy. So if you can buy one of these at a reduced rate, then SAP can go back and tell Wall Steet that they sold the item, and the client can then keep the application as shelfware.

Proceed carefully. When audited by SAP (or any vendor), share the minimum amount of information required to comply with the audit terms in your contract, as SAP will use information provided regarding third-party interfaces to justify indirect access compliance fees.

True. SAP is a dishonest organization, and it makes little sense, to be honest with them. The less they know about you the better, which is why it can also make sense to get SAP out of supporting your applications and into a non-SAP support.

Make it clear at the outset that the potential deal will not occur without a permanent resolution to the indirect access issue.

This seems like sound advice, but why would SAP agree to it?  For example, purchasing a single-metric product such as the SAP Sales and Service Order Processing package or SAP Purchase Order Processing package, with pricing based on order volume, enables the customer to cover a large population interacting with the SAP software, but without named user license administration, which would be onerous. If this 8 approach is attempted, then the contract must clearly state that named user licensing is not required, and that this is intended as a proxy for indirect access by a certain user population, rather than as a license for just that functionality.

This assumes that Type 2 indirect access is valid.

Conclusion

Due to the zero sum game nature of indirect access, it is critical that Gartner reveals their funding from SAP. However they don’t do this, and they don’t do it because they know what it would do their credibility. Gartner’s publishing actually comes down to getting customers to contact Gartner so that they can gain advisement business from it. This is not in itself a problem, but it is a problem in that Gartner has a conflict of interest and it cannot advocate for an SAP customer on indirect access as it has already sold out to SAP.

Once we move to the material created by Gartner on indirect access several things become apparent from a detailed review.

  • Gartner has very good access to what is happening in the marketplace with respect to indirect access.
  • Gartner has accurately described the increase in indirect access.
  • Gartner normalizes SAP’s approach to indirect access by not point out that other vendors do not seek to enforce Type 2 indirect access and by accepting SAP’s proposal that certain user licenses should be an accepted way to compensate SAP for Type 2 indirect access. Gartner fails to point out that under this concept, SAP would owe indirect access fees to the client, as the data was originally loaded into SAP’s systems from the client’s legacy systems. Gartner seems unwilling to point out obvious inconsistencies in SAP’s logic with regards to indirect access.

References

Roberto Sacco, Alexa Bona, Derek Prior, Lori Samolsky, SAP Indirect Access License Fees Can Be Significant and Unexpected,  31 July 2014

Bill Ryan, Roberto Sacco, Derek Prior, Lori Samolsky, Customers Must Resolve SAP Indirect Access Risk When Investing in SAP Functionality, April 5, 2017

https://en.wikipedia.org/wiki/Standard_of_care

The Issue with Time When Faced with Indirect Access

What This Article Covers

  • ASUG Biase and Indirect Access
  • Tactics Used by SAP to Maximize The Payment
  • The Time Given by SAP to Respond to an Indirect Access Claim

Introduction

One is the interesting features of indirect access is that SAP does not actually want its customers to know about. And which of course all of the consulting companies help SAP hide from their clients. This is the feature of the time constraints that an indirect access claim by SAP will place on the customer.

Tactics Used by SAP to Maximize The Payment

SAP will analyze a company’s indirect access “liability” and will use several tactics in order to extract the most from the account. It uses several techniques. The first is a miscalculation of the indirect access “liability.” Whatever SAP estimates, one should be confident that the amount calculated by SAP is not actually the correct amount if the liability is calculated by an independent entity.

The Time Given by SAP to Respond to an Indirect Access Claim

The second tactic after lying to the customer about their liability, even under SAP’s extreme views of indirect access, is to put the customer under a time constraint. They give their customer a 2 to 3 weeks deadlines to respond. This, of course, puts the customer on the backfoot and really what is the relevance of this deadline. Clearly, this deadline is designed to pressure the customer. Customers that receive an indirect access claim will normally not be accustomed to dealing with such a claim. They will need to perform their own investigation and become educated on the indirect access issues in a very short time if they have not educated themselves on indirect access up to that point. And here is the point.

I often have companies reach out to me and ask if this or that is indirect access. Connecting any SAP system to any non-SAP system is indirect access. This means that every single SAP customer has indirect access liability. SAP does not bring indirect access claims against all of its customers. But the potential is always there. And what this means is that companies need to investigate the indirect access claim before they receive a claim, not afterward.

This is an issue that can cost a company millions, but if they are properly prepared for an indirect access claim, they can always reduce the claim. Remember the claim is designed to shock the customer into acquiescing as soon as possible. If possible, SAP would like to limit the client’s options to search for outside advice and will have a series of false assumptions that they would like the customer to accept regarding the validity of what I call Type 2 indirect access. Companies that they either control like ASUG or Diginomica have written articles that reinforce SAP’s proposals about indirect access. A previous article, ASUG’s Biased and Inaccurate Coverage on SAP Indirect Access covers one example of this. will then offer a menu of choices to their customer and an incentive to purchase quickly. In particular, they are interested in the customer purchasing either S/4HANA or HANA.

Conclusion

Actual implementation differs by account executive that the SAP customer has. However, SAP typically leverages of any knowledge gap in their customers in order to get the most money out of them. How SAP does this is substantially different from any other software vendor, because SAP has a vise like control over both the IT media entities as well as the large SAP consulting companies. This allows SAP to create a fictional reality that seems all encompassing. And SAP marketing is highly skilled in the distribution of misinformation in order to then later take advantage of that misinformation at great cost to its customers. In fact, SAP has the most sophisticated marketing department that we have ever analyzed in enterprise software. There is simply no other marketing department that is able to actually get customers to buy into its messaging, which is particularly impressive (or depressing depending upon whether you work for or compete against SAP) when one considers how poor in quality the information that SAP marketing provides, and how it can be discredited through historical research.

For example, in a recent announcement SAP specifically designed a release to make companies lower their guard. In the announcement, SAP gave nothing of substance to customers. But it was designed to appear as if they had. This is covered in the article the How to Best Understand SAP’s Faux Change on Indirect Access.

If you can convince people that something which is specifically designed to obscure a topic is actually designed to clarify it, that is message control of the highest order.