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

Executive Summary

  • TechTarget produced an article with contributors of varying accuracy on S/4HANA and indirect access.
  • This includes Massimo Pezzini at Gartner, Cindy Jutras, President of Mint Jutras LLC, Josh Greenbaum or Enterprise Consulting, Holger Mueller of Constellation Research, Ray Boggs of IDC, and Duncan Jones of Forrester Research

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.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

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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

Executive Summary

  • SAP’s produced a highly misleading 2017 white paper on indirect access.
  • In the white paper, SAP introduced a new policy for SAP ECC customers and S/4HANA.
  • We analyze SAP’s proposal regarding indirect static read scenario as well as Order-to-Cash (O2C) and Procure-to-Pay (P2P).

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.

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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

Executive Summary

  • Corevist which pointed out issues with SAP indirect access. However, as context Corevist creates a mythological idea of a glorious SAP ecosystem. In this parallel universe, SAP is new to monopolist behavior, is new to stifling competition, new to antitrust law violations.
  • What Corevist does not mention is that Corevist is restricted due to its partnership agreement as to what it can say.

*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.

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  • Have Questions About SAP Indirect Access and Licensing?

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References

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

Analysis of Snow Software on Determining SAP Indirect Access Exposure

Executive Summary

  • SAM software helps software companies manage their licenses and control predation on the part of software vendors. Indirect access, but what is really Type 2 indirect access is a type of license control that is enforced by SAP.
  • Snow Software provides this helpful article in how to deal with SAP indirect access.
  • SAP, with the help of compliant media entities, have “shifted the goalposts” a to the official definition of indirect access so they can coerce customers into not being disloyal and purchasing non-SAP applications and databases.

Introduction

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

Article Quotations

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

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

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

What SAM Software Does

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

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

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

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

The Type of Indirect Access Enforced by SAP

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

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

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

That is certainly true.

So What is Indirect Access?

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

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

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

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

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

External Third Party Systems

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

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

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

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

“Flags to look out for include:

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

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

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

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

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

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

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

SAP Add Ons

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

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

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

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

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

The Shifting Goalposts of Indirect Access

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

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

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

These are all very good points.

IoT and other Databases

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

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

All Systems Should be Subject to Indirect Access Fees…or Only SAP?

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

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

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

Fee or No Fee?

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

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

Conclusion

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

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

References

SAP Licensing Contact Form

  • Have Questions About SAP Indirect Access and Licensing?

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

SAP’s Recycled Indirect Access Damage Control for 2018

Executive Summary

  • SAP has absorbed considerably negative pushback from customers since introducing indirect access.
  • This lead SAP to engage in damage control by providing more deceptive information to customers.

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

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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

*http://blog.voquz.com/language/en/digital-access-saps-global-license-audit-and-compliance-update/

https://diginomica.com/2018/04/10/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

How SAP’s Partnership Agreement Blocks Vendors from Fighting Indirect Access

Executive Summary

  • Understanding the SAP partnership system is necessary to how SAP controls both partners and their customers.
  • This story of the partnership is hidden from view in media.
  • SAP partnership agreements are anti-competitive tools, and it means the competing vendor loses freedom of speech with respect to SAP and to indirect access.

Introduction to How SAP Controls its Partner Network

At Brightwork we have written quite a few articles on SAP implementation of Type 2 indirect access.

In this article, we will cover the topic of how constrained software vendors that are both official SAP partners as well as victims of SAP’s indirect access campaign due to their partnership agreement with SAP.

Understanding the Partnership System

We are probably the only media or research entity to have published on how the SAP partnership program works in reality versus the standard explanation of how it works. The SAP partnership program is presented as a happy co-agreement between other software vendors and SAP which is designed to help best serve customers. This is a completely inaccurate explanation of what the partnership agreement actually is. But before we get into that topic, let us point out an important point of distinction so as not to lump in consulting partners with software partners.

Consulting Partners Versus Software Partners

Consulting partners have very different incentives and a very different relationship with SAP than software partners. For this article, we will be focusing on SAP’s software partners. SAP does not treat its consulting partners how they treat their software partners, and the consulting partner relationship is far more mutually beneficial. (although not for customers — which is a different topic area) Software partnership with SAP is a particular subcategory of being an SAP partner.

The Real Story on SAP and Software Partnership

Sometimes the partnerships are called the “SAP community.” The one question that is never asked is why the SAP software community even exists. This is because if we think it through, in a normal competitive software market, there would be no necessity for a system where vendors receive approval and certification from SAP. Remember, any system can be connected to any other system. There is no need for the larger vendor to approve integration to its applications from other vendors.

Indeed, SAP is not a normal or ecosystem.

SAP’s Major Strategy

A major strategy of SAP has been to tell its customers that integration to SAP is extremely difficult. (this is something that also repeated by SAP’s consulting partners) This means that many customers that already own SAP will often not purchase software from another vendor unless that vendor is a certified provider. This is the trick that gives SAP so much power over its vendors. The requirement for certification is a racket. A racket is the premeditated creation of a problem from which the entity creating the scenario then offers the solution. The conundrum is the problems integrating to SAP. The solution is SAP’s “certification.” This is a certification which is meaningless technically. SAP’s blessing or certification does not mean that the adapter between SAP and the other vendor’s application actually does much more than pass a single field between the systems. The entire software certification offered by SAP is a formality into which SAP invests the absolute minimal effort.

The vital component of partnership for SAP is to get the partner to sign its partnership agreement.

The Partnership Contract

SAP offers a partnership contract to their prospective software partner. This contract limits what the partner software vendor can say about SAP. SAP enforces the control of the partnership contract through the threats of removing the vendor’s partnership status. The details of this are covered in the article the Control on Display within SAP’s Partnership Agreement.

This leads to the problem with vendors being silent, even as they are victimized by SAP on indirect access. There are other topics as well that relate to how through partnership, SAP can get vendors to alter their marketing vis-a-vis SAP. SAP demands that the partner vendors describe their applications as complementary to SAP’s applications rather than competitive (even though in almost all case the applications are competitive and not complimentary) SAP is highly effective in getting SAP partner vendors to market against their strengths. SAP’s partnership management group is highly effective at manipulating software vendors to work in their own worst interests.

Silencing Software Vendors

As I have pointed out on several previous occasions, the US has been backsliding on much of the regulation that it had at one time. This has been true for both parties, although accelerates more under Republican control because Republicans are opposed to almost any regulation of companies. This has left the US economy as essentially a jungle, with the largest companies being able to use power against smaller companies. Over the past several decades companies have concentrated power as elite institutions like the University of Chicago, and Harvard among others have worked aggressively to undermine antitrust laws.

SAP Partnership Agreements as Anti Competitive Tools

The SAP partnership program is highly deceptive. It not only allows SAP to exert control over software vendors, but it deceives customers into believing that they are receiving something of value in return for the certification. Again, SAP invests the minimal effort into validating any adapters created by vendors. It creates another problem which is that SAP is not required to certify any one particular vendor or any one vendor’s product.

For example, Oracle’s database had a long history of being quickly certified for R/3 or ECC. Then as soon as SAP developed a competitive database in HANA, Oracle could no longer get its database certified for the new version of SAP’s ERP system S/4HANA. This is quite curious, as in our research we have found no evidence that HANA is superior in any way to Oracle 12c or IBM Blu as is covered in the article What is SAP HANA’s Actual Performance?

In fact, the most likely explanation is that SAP refuses to certify Oracle, IBM or Microsoft for entirely commercial reasons, as is covered in the article SAP HANA Used to Block Out Other DB Vendors.

Limiting Speech

Thus, we call into question whether the SAP partnership agreement is merely an anticompetitive mechanism, as well as being a speech limiting device. The outcome is that concerning SAP, the software partner gives up its 1st amendment rights (on the topic of SAP that is) as an independent entity.

These are serious claims indeed. But a question might arise do we see vendors who are SAP partners being unwilling to publish information that shows them being better than the SAP applications and databases that they are competing against? Indeed this is what we find. Either on vendor websites or in the IT media, SAP software partners are very careful not to challenge SAP. SAP makes partner do ridiculous things like including the trademark symbol when mentioning SAP.

Is SAP Only Able to Control Smaller Software Vendors?

No, it is not simply smaller software vendors that SAP has this power over.

As an example for years, SAP has been releasing false information on HANA. Every item promoted by SAP regarding HANA has been extensively analyzed by Brightwork. We have found all of their claims except for one (which is that HANA can perform better for analytics, but what is untrue that it can outperform competitive databases even in this area) to be inaccurate. (for details on this research, see my LinkedIn article listing, or reach out to me).

And IBM and Oracle, vendors who make the primary databases that compete with HANA have been throttled from saying very much that would contradict SAP’s false claims. However, IBM’s consulting practice makes a great deal of money on SAP consulting, and Oracle has other financial benefits of being a partner with SAP, so leaving the SAP partnership is not a feasible option, so they restrict their critique of HANA.

However, these claims are known to be false within both IBM and Oracle. I published an article a little while ago about how IBM finally began to contradict some of SAP HANA’s claims although within a restricted area of criticism in the article IBM Finally Begins to Fight Back.

That is the power of SAP’s and SAP’s partnership agreement. That is how far down the rabbit hole goes.

Loss of Freedom of Speech on SAP and Indirect Access

Very few software vendors have said much publicly on indirect access. However, recently one software vendors have done this. This is only one vendor out of hundreds that are negatively impacted by SAP.

The vendor that is doing this is taking a chance by doing it, but this vendor has been careful to only focus on indirect access while otherwise praising SAP and the overall SAP community. The story the vendor presents about SAP (outside of indirect access) is fairytale where SAP never behaved in a manner abusive of its power before, until it began enforcing indirect access against SAP customers. It leaves out SAP’s overall history and focuses only on the area of abuse that affects this vendor individually, that is indirect access.

This vendor even stated.

“where would we be without SAP?”

After a careful examination of this vendor’s media output on indirect access, it appears this is because the vendor has the partnership with SAP as a limitation on their criticism. Plus the other areas of SAP’s abuse don’t affect them, so why point them out?

That is, they are restricted from freedom of speech by SAP, but are acting as if they aren’t.

Praising Stalin?

While often cursing SAP in private one on one conversations with me, vendors that are SAP partners perform a quick about-face when discussing anything publicly.

In public, they demonstrate fealty to SAP; they support incorrect assertions made by SAP. This shows the degree of control that SAP marketing exerts over these vendors. They, in essence, have a type of Stockholm Syndrome, at least in public statements.

It is difficult to forget this photo with Saddam Hussian from the first Gulf War. This is similar to how vendors react when faced with being put in a position to contradict SAP.

It is important to keep up appearances.

Through recent research, we have correlated some statements made by both SAP consultants and SAP vendors that show a pattern to another historical antecedent.

“Everybody had to praise Stalin, all the time. Newspapers credited him with every success. Poets thanked him for bringing the harvest. People leaped to their feet to applaud every time his name was mentioned. His picture was everywhere parents taught their children to love Stalin more than themselves. They dared not do anything else.” – BBC

To anyone who has listened to declarations of how “innovative” SAP is, this should sound familiar. SAP is credited with many things that it has never done and values it never embodied, and not only by its marketing department but also by outside entities.

This is not because it is true, but because of the following reasons:

  1. The entity is either paid by SAP (as in the case of ComputerWeekly, Forbes, etc..)
  2. Because the entity made a great deal of money from SAP (Deloitte, Accenture, independent SAP consultants)
  3. Because the entity fears SAP (and or has some type of partnership agreement with SAP).

I could provide many examples, but many platitudes commonly offered about SAP are false. They are regularly repeated, often by people who have never researched them and are simply repeating things they heard from someplace. If we look at SAP consultancies, they not only repeat false platitudes about SAP to their clients, but they actively try to keep indirect access as quiet as possible.

Why?

Hiding Indirect Access Issues from Customers

Talking about indirect access is bad for their business, and their business is billing hours for SAP consultants at the highest possible margins.

On several companies where SAP was not yet installed, but SAP was being analyzed as a new purchase, I learned that the prospect found out about the indirect access and SAP from the competing vendor. That is not from the consulting company that was advising them (and that wanted them to select SAP). This is a concerted effort by SAP consulting companies to do this and another reason why SAP consulting companies act more as sales arms of SAP than as independent advisors to their “clients.”

The entire system acts as giant echo chamber as SAP consulting companies repeat pro-SAP statements, paid off IT media and IT analysts repeat pro-SAP statements, and now through partnership agreements, even competing vendors repeat pro-SAP statements.

People who do not have the time to engage in research projects and do not study these statements in detail are quite likely to assume that since there appears to be a consensus, these statements must be true. And that, of course, is the point.

Occasionally a point is made in a different subject matter area that applies so perfectly to the present subject area that it would be a loss to leave it out.

The following is a quotation from the progressive economist Richard Wolff.

“We are a country that questions the systems of our society. We debate our school system, we debate our transportation system, why we even got off the last couple of years debating things like health insurance and what marriage is.

But when it comes to capitalism there is no debate. Look at the records of the US Congress for 50 years. Try to find a debate about the strengths and weaknesses of capitalism. You won’t find it. We treat capitalism as beyond debate. You can’t ask the obvious questions like what are its strengths and what are its weaknesses.

And like any system sprared debate, it becomes possible for it to indulge its worst tendencies. We strengthen a society by debating its systems. We don’t do ourselves any favor by exempting capitalism.” – Richard Wolff

It would seem that if the term “capitalism” were removed and replace with “SAP” in each instance in the quotation above, the paragraphs would be equally true.

Who Creates Fake Histories?

We know that Stalin would create fake history, where Stalin was exalted in some way, and his accomplishments exaggerated. SAP does the same thing. SAP is the only vendor we are aware of that created a wholly fabricated explanation for how a product was developed to exaggerate the accomplishments of their co-founder. That is the false storyline that Hasso Plattner invented HANA. This is covered in the article Did Hasso Plattner and PhDs Invent HANA?

Media entities paid by SAP repeated this story ad nauseam, without ever checking if it was true. This story is important because it shows that SAP’s statements about Hasso and HANA are not only impossible but that they were a premeditated attempt to create a false history. And furthermore, this worked.

Conclusion

Let us review what has been laid out in this article.

  1. The vast majority of software vendors are silent on indirect access, which helps SAP normalize type 2 indirect access through its control of IT media and consulting companies, and false fronts like ASUG (the SAP User Group).
  2. The fact that a software vendor is fighting back publicly against SAP is a good thing, but one cannot drive to a truthful conclusion by hiding details about SAP because they do not happen to serve your particular cause. When an entity challenges SAP, but then hides details or alters other details to keep from fully challenging them, (because they have a pre-existing partnership agreement), this is self-censoring.

Keeping the Criticism Narrow!

The IT media entity that is paid by SAP (which is nearly all of IT media) is much more willing to pickup quotations from another entity that restricts criticism to a very narrow range because they are looking not to offend their sponsor.

In this case, both the IT media entity, as well as the software vendor, hide their bias from the reader, while in the vast majority of cases the reader believes they are getting information from unbiased sources.

Interestingly, just about every entity that serves as an information source on SAP turns out to have some identifiable financial bias or partnership agreement with SAP. When I articulated this connection, I am often told that

“Everyone has a bias, “

and that

“Informed readers can discern the difference.”

This is quite curious because this does not seem to be the case. These supposedly “informed readers” are routinely tricked by financially biased stories by SAP. How is a reader of Forbes to know that most of the articles that Forbes writes about SAP are paid placements? That is the article was paid for SAP but is not declared as an advertisement. How should the reader figure that out exactly?

These responses are merely excuses used to defend bias and the dishonest presentation of information. This should be indefensible and is used by a person or entity who themselves have this easily traceable bias. In fact, every single person who has used this argument has turned out to have their own financial connection back to SAP.

People that don’t have such a connection do not use this argument with me.

Ordinary Bias — as in a Preference Based on Experience or a Financial Bias?

The use of the phrase.

“Everyone has a bias.”

..is an attempt to conflate the normal biases that a person or entity has regarding life experience, professional experience or generalized views, with specific, traceable financial bias. No one is saying that people do not have a right to like chocolate ice cream. That is not a bias, that is a preference. The issue is if someone is being paid to promote chocolate ice cream then they have a financial bias. The question being would that person promote chocolate ice cream and promote it so aggressively if they were not paid to do so.

I don’t even waste time analyzing people’s other biases.

Why?

Because economic bias already provides all the information that necessary to understand why people misrepresent and self-censor.

This is the problem with what the partnership agreements and what they do to the ability of software vendors to fight back against SAP or to even tell the truth about SAP’s history.

A Case Study on Quality Problems of the SAP System of Information

I phrase this as the SAP system of information because it includes all information that comes to people. The advice offered to customers on-site by consulting companies, IT media, IT analysts, vendor publishing, etc..

In an overall sense, the SAP system of information has demonstrated its profound weakness on the topic of indirect access. Indirect access is a critical case study of the entities that provide information on SAP.

It demonstrates clearly that even when SAP is 100% in the wrong, that those that provide information on SAP will be extremely reticent to call SAP out.

This has allowed SAP to normalize what is a ridiculous proposal by SAP.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

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References

Indirect Access Services for Vendors

See our indirect access services for vendors.

http://www.bbc.co.uk/schools/gcsebitesize/history/mwh/russia/stalinpurgesandpraisesrev_print.shtml

https://en.wikipedia.org/wiki/Stalin%27s_cult_of_personality

https://www.theguardian.com/artanddesign/2012/aug/29/fake-photography-before-photoshop

How Accurate Was Snow Software on their Optimizer for SAP?

Executive Summary

  • Snow Software covers topics related to SAP indirect access and how to minimize the ongoing SAP licensing overhead. In this article, we evaluate Snow’s article for accuracy.

Introduction

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 critical reason for SAM software is indirect usage. Indirect usage from SAP comes quickly, which is why it is essential 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 continuously 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.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

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  • Have Questions About SAP Indirect Access and Licensing?

    Our independent experts get no compensation from SAP, so we can deliver you honest answers about indirect access and licensing.

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

References

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

Enterprise Software Risk

See our free project risk estimators that are available per application. The provide a method of risk analysis that is not available from other sources.

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.

Financial Disclosure

Financial Bias Disclosure

This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.

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References

Virtualization & Monitoring Usage

How to Interpret 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.

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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.

How to Understand SAP’s Faux Policy

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 under report and de-emphasize what is really a widespread usage of indirect access.

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