Category Archives for "Indirect Access"

The Accuracy of TechTarget’s Article on S/4HANA and Indirect Access

What This Article Covers

  • Questions to IT Analysts on SAP and S/4HANA and AI for 2018
  • Answer from Massimo Pezzini Vice President and Fellow, Gartner
  • Can SAP Make the Move to S/4HANA Compelling and Easy?
  • Answer from Cindy Jutras, President, Mint Jutras LLC
  • Is It True that S/4HANA is the Right Choice for Large Enterprises
  • Answer from Josh Greenbaum, Principal, Enterprise Applications Consulting
  • Josh Greenbaum as a Reliable Source for Misleading Information for SAP and ASUG?
  • Josh Greenbaum is Shocked to Learn About Lying at SAP
  • Combining Good Advice on S/4HANA with Bad Advice on Indirect Access
  • Answer from Holger Mueller, Vice President and Principal Analyst, Constellation Research
  • Answer from Ray Boggs, Vice President of SMB research, IDC
  • Answer from Duncan Jones, Vice President and Principal Analyst, Forrester Research
  • Some Unusual Bravery From Forrester

Introduction

In this article, we will review the accuracy of TechTarget from its article SAP S/4HANA Cloud and indirect access will dominate 2018.

Something to remember is that TechTarget is not a real journalistic entity. They are a front end for hundreds of vendors and exist to capture email addresses which are then shared with their marketing automation backend.

Questions to IT Analysts on SAP and S/4HANA and AI for 2018

The question asked of various analysts by TechTarget is the following:

“We asked several prominent industry experts for their opinions on what may be in store for SAP in 2018. We were primarily interested in two questions: What do you expect from SAP in 2018, and what does SAP need to do in 2018?”

Answer from Massimo Pezzini Vice President and Fellow, Gartner

“SAP has made significant investments in machine learning over the past two years, which has begun to manifest in the form of add-ons to their established applications (S/4HANA, SuccessFactors, etc.) in the course of 2017. In 2018, the use of AI and [machine learning] technologies will become more pervasive and more widespread (for example, in the context of the user experience layer), thus moving SAP towards the notion of “intelligent enterprise” that Bernd Leukert (head of SAP’s products and innovation) started to depict toward the end of last year.”

Gartner is, as TechTarget, the recipient of income from SAP, which like TechTarget, they do not disclose.

But if we look at this quotation, it reads like a direct quote from SAP’s marketing department. There are not ML add-ons to the S/4HANA or SuccessFactors. In fact, SAP is little involved in ML or AI of any kind. Massimo refers to Bernd Leukert, who has been profiled in previous Brightwork articles as providing highly inaccurate information to the market about SAP.

Massimo goes on to say.

“I also expect a further strong commercial and marketing push for cloud ERP, in particular through SAP S/4HANA Cloud and, to a lesser extent, SAP Business ByDesign. Cloud ERP is one of the hottest battlegrounds in the business applications space, where SAP is facing tough competition from Oracle, Workday, Microsoft and other smaller, aggressive competitors. SAP’s chances of maintaining its leadership in ERP depends on how successful it will be in cloud ERP.

SAP needs to focus on making SAP ERP Central Component (ECC) customers’ move to S/4HANA as compelling and easy as possible. Paradoxically, we found that it’s easier for non-SAP ERP organizations to adopt S/4HANA than for ECC users. Most established SAP ERP clients, especially large and global organizations, are finding it difficult to justify the adoption to S/4 from a business case perspective and are concerned by the cost, complexity and time required by the migration project. SAP must work hard to remove these obstacles to make S/4 the success they want and need it to be.

SAP also needs to improve their relationship with clients. Although most SAP clients are reasonably happy with the products and technologies, they often complain because of obscure pricing, confusing product roadmaps and uneven support quality. In 2016, SAP launched the “Empathy to Action” set of initiatives to address such concerns, and in 2017, they released some initial results, such as SAP Transformation Navigator, to provide product roadmap visibility and a couple of new SAP indirect access policies. However, in 2018, SAP needs to show significant progress across the three areas mentioned above to maintain the loyalty of their clients as they engage in digital transformation initiatives.”

Can SAP Make the Move to S/4HANA Compelling and Easy?

SAP cannot make the move of SAP ECC move to “S/4HANA as compelling as easy as possible.” First, there is little reason to move to S/4HANA, and it locks customers into the inferior HANA and high maintenance database. Secondly, there are many factors that make the transition to S/4HANA the most trouble-prone migration in the history of SAP’s primary ERP system. It’s not a “paradox” that S/4HANA is easier for non-previous ECC customers. Its a natural outcome of the difficulty in migrating from ECC. Massimo is correct that companies have trouble justifying the move to S/4HANA because there is no value to moving to S/4HANA. The functionality is lower than ECC, Fiori is barely used by anyone, and the implementing company gets stuck with HANA. There is not much that SAP can do on any of these fronts. They can make S/4HANA more implementable, so S/4HANA implementations don’t keep failing. (For more on this topic see our article on S/4HANA’s implementation history.)

As for improving relationships with customers, SAP needs to harvest as much out of customers to meet earnings objectives, but they have very few areas of growth in their applications. Therefore, SAP will need to become even more extractive, which will take a toll on the customer relationships. We predict customer relationships will get worse, not better.

Answer from Cindy Jutras, President, Mint Jutras LLC

“I think we’ll see an emphasis on cloud and intelligence. In addition, I’d like to see more emphasis placed on delivering last-mile functionality, in addition to more intelligence, but with less of a custom, tools-oriented approach.

I think SAP needs to get some clarity on segmentation of their three different ERP solutions. They have now moved all three under one umbrella, supposedly to reduce contention and confusion. It’s clear that S/4HANA is the right choice for the large enterprise, and Business One is aimed at small businesses. However, there needs to be more clarity on the positioning of Business ByDesign, or the market will continue to make up its own story. And the fabricated story for years now has been that it’s dead. SAP needs to be more vocal about the real intention, because the S/4HANA messaging is adding to the confusion rather than resolving it. More clarity is required around cloud, growth orientation and two-tier ERP for subsidiaries.

In addition, I would like to see the messaging around SAP Leonardo start to be integrated into the ERP story. It can’t be effective and impactful if it continues to be separate because then it will only be a message for the IT staff of large enterprises. For SMBs, the technology itself will need to be blended as well. SMBs, who are a large portion of the SAP installed base, don’t have deep enough pockets or the technical expertise on staff for innovative, design thinking projects that define the value. The Business One platform approach is right on target and could easily be applied upmarket.”

Is It True that S/4HANA is the Right Choice for Large Enterprises

It’s not at all clear that S/4HANA is the right choice for large enterprises, for reasons already given. The positioning of ByDesign is that it was supposed to be sunsetted, but was revived. ByDesign has always been a bad application and companies that use it dislike it. Overall, ByDesign is not relevant for SAP’s future. But Cindy is correct that ByDesign is cloud and S/4HANA Cloud’s only customers are small, which would put them into the ByDesign target customer, but SAP’s likes to pretend that S/4HANA Cloud can service larger customers also.

SAP has tried to integrate Leonardo into ERP. This is the only way that SAP can make any headway in IoT as they lack a competitive offering. However, the problem is that IoT has nothing to do with ERP. And trying to force fit IoT into ERP will simply increase the costs and reduce the flexibility of any IoT system.

Answer from Josh Greenbaum, Principal, Enterprise Applications Consulting

“There are a lot of gaps to be closed between the forward-looking technology strategy and the reality on the ground for customers, and SAP Leonardo is a good example. The issue of SAP S/4HANA Cloud migration is another. I talked to a customer who was looking at SAP S/4HANA Cloud until they saw how limited the functionality was in a couple of key areas, so they pulled back and are now looking at doing an S/4HANA on-premises or private cloud because they can’t get what they want out of public cloud in the time frame that they need it. Also, a lot of companies are looking at SAP Leonardo functionality and are embracing it for a proof of concept. But we are not seeing a lot of real enterprise cloud deployments, and that’s going to hurt if SAP can’t convert that desire into a lot of serious revenue. And that’s a huge chunk of their strategy.

One of the big issues that SAP has to settle in 2018 and really put to rest is the problem of SAP indirect access licensing. That came up at the end of the year in so many conversations with customers, many of whom were saying that they don’t really trust what’s in their contracts anymore. They don’t know if they can go back to the board for more SAP money considering there’s this potential indirect licensing fiasco looming over them. So, that’s something that SAP should deal with.

It’s a leadership moment for SAP. I think they should also see that this is something that’s endemic to the entire industry, so it’s happening across the board and is not just an SAP issue. SAP could actually turn this into a real leadership moment if they chose to, and I think they should.”

Combining Good Advice on S/4HANA with Bad Advice on Indirect Access

This is also good and realistic advice on S/4HANA. This acknowledges the limited S/4HANA Cloud functionality. Josh Greenbaum actually answers the question of what SAP needs to do, rather than simply what “we will see from them.”

It would be nice for SAP to shut down indirect access, but how will SAP meet is revenue objectives? SAP is a vendor in decline which has been misrepresenting itself as an innovative vendor for years to Wall Street. (see how SAP misrepresents its business to Wall Street in this article.

Most of SAP’s revenues come from support now.

Indirect access was developed because SAP has not been able to grow through selling software the normal way. The last part of Josh Greenbaum’s statement is either incredibly misinformed or a lie. SAP is the only vendor that employs indirect access. Oracle uses audits in an unethical manner, but not indirect access.

For Josh Greenbaum to say this is an “industrywide problem” is asinine. And the idea that one of the few vendors that employ indirect access (Type 2 indirect access), and the one that employs it in the most extreme manner can show “leadership” in dealing with an issue that it solely created is just upside down.

Josh Greenbaum as a Reliable Source for Misleading Information for SAP and ASUG?

Josh Greenbaum has made SAP friendly and inaccurate statements in favor of SAP before. Here he is explaining the lack of S/4HANA customers to ASUG.

“As independent enterprise software analyst Josh Greenbaum notes, SAP S/4HANA deals are signed in advance, perhaps attached to a product for which a company has a more pressing need. He also points to the dearth of qualified partners, as well as questions around SAP indirect licensing as reasons for the gap between SAP S/4HANA licenses and implementations.”

Interestingly Josh Greenbaum left out that many customers own S/4HANA not because they wanted it, but because they purchased it under coercion in order to satisfy an indirect access claim.

Secondly, nowhere does Josh Greenbaum point to S/4HANA’s maturity problems as a reason for the lack of S/4HANA implementations. Nor does he disclose S/4HANA’s very high numbers of failed implementations.

And, yes a “dearth of qualified partners” is going to occur when software has been lightly implemented. Therefore this answer puts the blame on consulting partners, but without explaining why there are so few of them. Of course, if he had explained any of those things, he would not have been quoted in ASUG’s article.

Josh Greenbaum as an SAP Truthteller?

On the other hand, Josh Greenbaum wrote a quite accurate and quite critical article on the deceptive way that SAP has positioned S/4HANA Cloud for large enterprises.

“The problem is that SAP is trying to get S/4 HANA Cloud to punch above its weight class by claiming it can meet the needs of a large enterprise, and in the process the company is setting the stage for some serious customer confusion about which version of S/4 HANA is the right one for the job. The irony of these efforts is that in sowing this confusion SAP fails to see that the very thing they’re trying to hide by overselling S/4 HANA Cloud is the very thing that actually imbues the overall S/4 HANA product line with the exact attributes that customers need.

Unfortunately, SAP only has itself to blame for the confusion. The official messaging, to be perfectly honest, seems designed to obfuscate rather than enlighten. I had to go three rounds with SAP to get the story straight, and at times it felt like I was deposing a reluctant witness, rather than having a forthright conversation about what will always be a complicated decision for SAP’s customers.

Here’s the gist of the problem. SAP’s official storyline is that S/4 HANA Cloud is as well-suited to run a large, global enterprise as the on-premise and private cloud versions. This is due to the simple fact, SAP officially maintains, that the on-premise and private cloud editions of S/4 HANA are built off the same code line as S/4 HANA Public Cloud, which means that a customer can chose either one for their upgrade or migration because they are functionally equivalent.” 

That is right, SAP is lying on this topic.

Josh Greenbaum is Shocked to Learn About Lying at SAP

Then Josh Greenbaum finishes his article with a strange fantasy land statement.

“Overselling, underdelivering, obfuscation, confusion – these are the paths to customer dissatisfaction and competitive disadvantage. In this case, this functional equivalence concept is made all the more useless by the fact that what SAP is trying to hide – a product line, based on a single code line, as diverse as the customers it’s trying to serve – just happens to be its biggest strength.

Just tell the truth, the whole truth, and nothing but the truth. It’s really that simple.”

This must be some subtle irony. There is no way SAP is going to tell customers the truth Josh. A primary reason why SAP comingles S/4HANA on-premises and S/4HANA Cloud is to cloudwash S/4HANA. It called pretending to Wall Steet.

Answer from Holger Mueller, Vice President and Principal Analyst, Constellation Research

Constellation Research has in the past provided balanced information on SAP. For example, they were one of the only analyst entities to call out SAP on indirect access.

However, this concerning regarding Constellation’s independence.

If an analyst is listed on a vendor’s website as a source, this places the analyst entity in question for bias. Notice that SAP is promoting a Constellation report that praises S/4HANA Cloud. Would SAP also include a link to Constellation and such a prominent showcasing of Constellation if the report was negative? Does this give Constellation an incentive to publish a favorable report? How much traffic is being driven to Constellation though a link to SAP’s website? 

Here is Constellation’s statement on SAP from the article.

“I expect to see more push on S4/HANA and more push on SAP Cloud Platform, as [platform as a service] is the security blanket for enterprises in the era of business process uncertainty. They want to know what’s the PaaS that they can use to build what they need, but what their SaaS does not have or where their SaaS is not yet a fit.

SAP needs to develop more [infrastructure-as-a-service] partnerships and potentially formalize with all of the Big Three IaaS vendors: Microsoft Azure, [Amazon Web Services] and Google.

It also needs to solve the Hadoop vs. HANA challenge. SAP must have in-house, native and supported access to big data applications that run not only in memory but also on [hard disk drives], where the bulk of business-relevant data is.”

That is true.

SAP should not be hosting or be in the IaaS market at all. Their only way forward is through the types of connections to the IaaS vendors listed above.

As for the Hadoop vs. HANA challenge, there is nothing to solve. Hadoop does not need HANA. Hadoop has its own open source analytics and creates a pricing scenario for which SAP cannot compete. SAP is best served to apply its resources elsewhere. Any area of enterprise IT that is dominated by open source means choice and low cost, and this is like alcohol to an amoeba.

Answer from Ray Boggs, Vice President of SMB research, IDC

“SAP will sharpen its SMB efforts with an updated segment definition and name, the new General Business (GB) segment, which is defined as firms with under $1 billion in annual revenue. This segment will be served by channel partners and already represents 80% of SAP’s 365,000 customers worldwide (over 250,000). Of course, that’s not the same as share of revenue since large businesses spend much more per company. We expect SAP to refine this definition depending on region, and the company indicates that it will be dividing the group into Upper GB (revenues of $300 million to $1 billion) and Lower GB (revenues under $300 million). As part of its efforts to be more efficient in serving those GB customers, we expect SAP will continue to expand its direct digital efforts through SAP Digital offerings. But this will likely be more a supplement to channel-led deployments rather than a true alternative.

The diversity of SAP product offerings makes it hard for customers and channel partners to have a clear idea about the SAP product portfolio. Key ERP products designed for the SMB customer — SAP Business ByDesign, SAP Business One and S/4HANA for SAP Business All-in-One — are a natural starting point. But SAP has other resources that have special appeal to firms that have grown to midsize — Concur, Hybris, BusinessObjects, SuccessFactors, Ariba — and providing a series of natural deployment paths with a strong vertical orientation is what SMB customers will be looking for.”

IDC is a major recipient of undisclosed income from SAP through its various advertisements and paid placements into the parent company of IDC, which is IDG. This does not count payments directly to IDC from SAP. And notice how promotional this answer is. It could just as easily have been stated by an SAP spokesman.

Here is IDC prominently showcased on SAP’s website. Does the introduction of IDC disclose that SAP pays large amounts of money to IDC’s parent IDG for SAP adveritzing? No it does not. 

Answer from Duncan Jones, Vice President and Principal Analyst, Forrester Research

“SAP’s customers need it (SAP) to put a stop to misselling, which is by no means universal, but is lamentably common. SAP needs to publish clear rules for its new, modern licensing, which is a good starting point but which currently leaves too much latitude for sales to abuse the gray areas. It’s no longer acceptable for SAP to claim confidentiality and let salespeople interpret the rules as they see fit. This should include fair discount tables, based on the total [annual recurring revenue] relationship, not on the size of the incremental order.

SAP’s customers need some sort of independent ombudsman service, outside the sales channel, so they can report allegedly unfair or dishonest behavior. They need SAP to start publicly firing salespeople who pursue unacceptable tactics, especially those that may be in breach of competition law. They also need SAP to fire the sales managers and territory heads who allow it to go on. Customers can start by refusing to speak with any salesperson they don’t trust. SAP has many honest, customer-centric salespeople, so don’t assume that all SAP salespeople will be the same. My advice to clients is: If an [area manager] tries to use indirect access or compliance audits to bully you into buying an SaaS product, then have them immediately ejected from the building and don’t let them back on site.”

Some Unusual Bravery From Forrester

Forrester is another recipient of undisclosed amounts of income from SAP.

Nice ideas, but SAP has been misselling or should I say overselling for decades. Is that going to change now?

The idea that SAP will create an impartial ombudsman where customers can take complaints is ridiculous and will not happen. SAP will not fire people who pursue unacceptable tactics, because these tactics are considered acceptable at SAP. The lack of ethics comes from the top. Hasso Plattner and Bill McDermott and all of the top executives that we track lie in every public statement that they make. Forrester seems to be confusing SAP with a company that is ethical or cares if their salespeople rip off customers.

This broadside against SAP by a VP of Forrester is quite surprising. Good for Duncan Jones to bring the reality. So, we have them assigned per analyst.

Conclusion

We usually provide an accuracy score for an overall article. But because the bulk of the article is comments from different individuals, we broke the score down per analyst.

  • Massimo Pezzini: Gartner: 2 out of 10
  • Cindy Jutras: Mint Jutras: 8 out of 10
  • Josh Greenbaum: Enterprise Applications Consulting: 5 out of 10 (This is a difficult rating to give. His explanation on S/4HANA was good, but his explanation of indirect access was so inaccurate that it negated the S/4HANA information)
  • Holger Mueller: Constellation Research: 6 out of 10 (Same issue as with Josh Greenbaum. Holger Mueller was correct on IaaS but then missed the boat on HANA to Hadoop.
  • Ray Boggs: IDC: 1 out of 10. Ray Boggs may as well work for SAP with the answer he provided. The gig is up with IDC as we see them as nothing more than an entity with its hand out which will publish anything for money from a vendor.
    Duncan Jones: Forrester Research: 8 out of 10. Bravery showed from an analyst for a company on SAP’s payroll. Duncan Jones loses points for implying that SAP cares if its salespeople are unethical. But he at least brings up the issue of SAP’s sales force misdeeds.

What is clear once again, is virtually every IT analyst kneels to SAP.

References

https://searchsap.techtarget.com/feature/SAP-S-4HANA-Cloud-and-indirect-access-will-dominate-2018

https://www.asug.com/news/sap-s-4hana-customer-adoption-live-customers-implementations

https://www.linkedin.com/pulse/fog-innovation-marketing-sap-obscures-s4-hanas-true-joshua-greenbaum/

Analysis of SAP’s 2017 White Paper on Indirect Access

What This Article Covers

  • The Truth of SAP’s Connections to Many Applications
  • Actually Indirect Access?
  • Background Information on Indirect Access
  • How SAP Sets Up the False Construct Around “Use of SAP”
  • New On-Premise Licensing Policy for Common Indirect Use Scenarios
  • Order-to-Cash Scenario
  • New Policy for SAP ECC Customers
  • Are These Assumptions Proposed by SAP True?
  • Hmmmmm……is SAP Insecure About its Offerings?
  • New Policy for SAP S/4HANA Enterprise Management Customers
  • Procure-to-Pay Scenario
  • New Policy for SAP ECC Customers
  • Indirect Static Read Scenario
  • Scenario Indirect Static Read?
  • Indirect Static Read Actions (Allowed)
  • Not Indirect Static Read Actions (Disallowed)
  • Frequently Asked Questions
  • Order-to-Cash (O2C) and Procure-to-Pay (P2P)
  • Indirect Static Read
  • Horse Trading for Licenses

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 of SAP’s Connections to Many Applications

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” it’s licensing policies?

Actually Indirect Access?

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. 

How SAP Sets Up the False Construct Around “Use of SAP”

“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 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

SAP does on to say about Order to Cash 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.

Are These Assumptions Proposed by SAP True?

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.

Hmmmmm……is SAP Insecure About its Offerings?

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 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, what this amounts to is that 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.”

What this means is that 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?

Conflating Cloud with Indirect Access

This is a pattern on the part of SAP to conflate cloud with indirect access. SAP has conflated the two, and ASUG (a surrogate of SAP) has also done this also. 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.”

Horse Trading for Licenses

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.

SAP Licensing Contact Form

  • Interested in Independent Information on Indirect Access & Licensing?

    Have you noticed that so much of the information published on indirect access and licensing 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, just fill out the form below.

    100% Privacy Guarantee: We don't share your contact details with anyone.

References

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

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 Coalition of the Billing
  • A Love of Intellectual Property Law?
  • Patent Trolls as Wide Eyed “Entrepreneurs”
  • 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 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 of 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 ecosystem is enormous and enormously powerful. I describe it like this 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.”

A Coalition of the Billing

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 defendants to settle.

Patent Trolls as Wide Eyed “Entrepreneurs”

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.

Is SAP 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. Teradata, a longtime partner of SAP, filed a lawsuit against SAP alleging (among many others things) IP theft, as well as using monopoly power in the ERP market to coerce customers to purchase HANA instead of Teradata’s products.

138. Teradata has been harmed and will continue to suffer irreparable harm as a consequence of SAP’s conduct. Teradata is entitled to an injunction on restraining SAP from engaging in the unlawful tying of upgrades to its ERP Applications with HANA. Unless and until SAP is enjoined, SAP will continue to engage in the unlawful tying set forth above.

149. Moreover, SAP’s conduct has immediate and significant anticompetitive effects.
As set forth above, customers cannot justify paying for EDAW products with substantially overlapping functionality. As the result of this conduct, Teradata and similarly situated vendors will be forced to exit the market.

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.

How SAP Promises to Constantly Copy IP From Othe Vendors

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 does 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.

Is SAP 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 this 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?”

Sam seems to have little experience with SAP account executives or SAP sales cycles. SAP does 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.

Common Tactics Employed by SAP

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?

Is SAP 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.

This is probably a new term for readers. So what is negative innovation?

Negative innovation is when a company takes innovations made elsewhere and make 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 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.

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 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, and for obvious reasons, ComputerWeekly 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.

This is the IT media that is “waking up.”

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 regarding Corevist’s press freedom?

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 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.

SAP Licensing Contact Form

  • Interested in Independent Information on Indirect Access & Licensing?

    Have you noticed that so much of the information published on indirect access and licensing 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, just fill out the form below.

    100% Privacy Guarantee: We don't share your contact details with anyone.

References

Complaint for Copyright Infringement, Trade Secret Misappropriation and Anti Trust Violations, Teradata v SAP.

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 no 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. Secondly, their subordination to SAP on messaging is spelled out in the partnership agreement.

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.

SAP Licensing Contact Form

  • Interested in Independent Information on Indirect Access & Licensing?

    Have you noticed that so much of the information published on indirect access and licensing 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, just fill out the form below.

    100% Privacy Guarantee: We don't share your contact details with anyone.

Indirect Access Services for Vendors

See our indirect access services for vendors.

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

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