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Mobile devices and enterprise apps: how to license them if they access the SAP® back-end

Does "user-based" or "outcome-based" licensing pay off?

Mobility is transforming business sharply and substantially: we are seeing, in recent years, a massive introduction of tablet and smartphone applications into the enterprise. Through the so-called "rugged devices" and enterprise apps, companies are improving their processes and gaining in effectiveness.

Mobile technology was first adopted by companies with a large field workforce, such as the utility and oil and gas sectors. Large players (recall the historic partnership between IBM and Apple in 2014) are investing with the aim of conquering the mobile enterprise with hundreds of dedicated enterprise apps.

Every day, more and more SAP® customers (large manufacturing, service and even SMB industries) are seeing the appeal of mobile for their operations and asset management.

These third-party mobile solutions can be integrated with SAP® directly or indirectly, synchronously or asynchronously, through BAPI or a batch process. They can be designed for use by subcontractors/suppliers or internal teams. The "open" nature of the SAP® system (see the Open Data Initiative promoted by Microsoft, Adobe and SAP) facilitates the exchange of information-reading, updating, deleting data-with these external applications.

This facilitates processes because access to the SAP® Core by these mobile applications allows other elements such as service requests or sales orders to be created in an automated manner within the tool. Without time-consuming and redundant paper or e-mail steps.

SAP® licensing in an app-driven economy

In the traditional SAP® licensing model, customers need a user license for each user ("Named User") accessing the SAP® back-end system. This arrangement applies to both internal and external employees (suppliers, subcontractors, etc.).

In the "Named User" definition we also read, "Named users are also technical systems that exchange information with the SAP system, and their users".

However, while user-based pricing works well for direct human access because it is predictable and well understood, it is not easy to apply when the ERP system is used indirectly (e.g., by a user accessing a mobile application that then uses the power of SAP® Digital Core to execute the business process) or digitally (e.g., an RPA bot using the system). Indirect access occurs when people or bots/automations use the Digital Core, without directly accessing the system.

According to SAP®, use should be licensed regardless of the method of access. Thus we read in the contractual definition of "use":

''Use' is defined as to activate the processing capabilities of the software, load, execute, access, employ the software, or display information resulting from such capabilities. Use may occur by way of an interface delivered with or as a part of the software, a licensee or third-party interface, or another intermediary system. All 'use' of SAP software, regardless of the method of access, requires an appropriate license."

If you create service requests or transactions in SAP®, that is a use. This is how SAP® protects its intellectual property. An article on news.sap.com states that "ambiguity related to usage (ed: should every access to the 'core' by mobile applications be licensed?) has led to inconsistent licensing and auditing practices (ed: some even ended up in court, recall the Diageo UK case) that ended up shaking customer confidence."

A new licensing model

n 2017, SAP introduced the concept of "Indirect Static Read" to qualify cases where access to the "core" by mobile applications does not require a license.

This policy provides a scenario whereby information exported from a non-SAP® system to an SAP® system does not require a license if it occurs via a query that meets these criteria:

  • It was created by a person authorized to use the SAP® ERP system.
  • It is performed automatically on a scheduled basis.
  • Use of such exported information by non-SAP® systems and/or their users does not result in an upgrade of the SAP® ERP system's processing capabilities.

The following year, the German multinational company launched a new "outcome-based" licensing model, Digital Access: under this model, SAP® customers can license their indirect access to SAP® based on the number and type of documents they create, regardless of the number of users connecting to the SAP® system.

The new model leaves no room for doubt: pricing is determined by the total number of documents produced and their type (for which there is a fee multiplier)

The counting of documents -for which SAP provides specific tools - takes into account two elements:

  • The creation cost is a one-time charge: SAP charges for the creation of the document; all subsequent operations (reading, updating and deleting the document) are included in the creation cost.
  • The total number of licensed documents applies to each document created, regardless of type.

Enterprise App: is the Digital Access model the solution?

How can companies that rely on mobile applications that interact with SAP® ensure compliance with the most cost-effective licensing model?

In an article, SAP® made it known that the new Digital Access model goes beyond Indirect Static Read:

This new pricing policy for indirect digital access of ERP goes above and beyond the Indirect Static Read** policy introduced in 2017. By the new policy definition, SAP only counts and charges for the creation of documents by the ERP system triggered by indirect digital access, therefore eliminating the need for a separate Indirect Static Read policy for ERP.

At WEGG, we are experienced SAP® licensing consultants, and before deciding to switch to the new model driven by fear of not being compliant, it is good to make the appropriate assessments. If the indirect use meets the first condition of the Indirect Static Read (the query created by a person already covered by a user license), the compliance requirements are already met.

Would it be appropriate to reason about the convenience of licensing all users who use the mobile app or the documents that are the result of such interactions? These considerations must take into account several elements:

  • technological evolution of the company: are there other mobile apps planned that will require licensing? Have we mapped them all, today and in the future?
  • type of interaction: what actions on the SAP® "core" does the interaction produce? Are there any digital automations operated by bots within these applications? And here we would need to elaborate the type of automation (whether assisted or unassisted)
  • user licenses already issued: do they also "cover" indirect access?

Considering that the use of enterprise applications that interface with business management systems (including SAP®) will be increasingly widespread, with the aim of offering digital services to internal and external users from wherever they connect, now is the time to think about it.

Mobility, Enterprise Service Management, and SAP® licensing are sides of the same coin, and SAP® customers are at a crossroads: better "user-based" or "outcome-based" licensing contracts?

In December 2022, the financial incentives to join the new Digital Access model will expire, and there are several options for choosing whether to keep or revise your SAP® contract. We will discuss this in a webinar (in italian language only) scheduled for September 15th!

                                                User-based or outcome-based licenses?                          
                                            SIGN UP FOR THE SOS SAP® LICENSING WEBINAR

*SAP®and other SAP® products and services® mentioned are registered trademarks
of SAP SE (or a company affiliated with SAP®) in Germany and other countries.

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