Licensing: Purchasing At A Crossroads
Blog License and Price

Licensing: Purchasing At A Crossroads

SAP’s new product and licensing model is a challenge for purchasing. Fewer functionalities versus more costs, migrating to S/4 Hana versus using external procurement systems - is that how it has to be?

The migration to SAP’s new application suite S/4 with database Hana certainly has a lot of business benefits – but not for purchasing. For example, on-premise SAP Supplier Relationship Management (SAP SRM) users can only leverage a functionally reduced module, S/4 Hana Sourcing and Procurement.

Whoever wants to continue to benefit from the entire SRM functionality spectrum but does not want to use the public cloud platform SAP Ariba could use solutions from partners or third parties – if SAP didn’t have a new pricing model.

More costs for purchasing through Indirect Access

SAP’s new pricing model was called Indirect Access, and then it was renamed Digital Access. It does not matter what you call it, as its principle is always the same: Customers have to pay more for using third-party systems with SAP.

But why? Traditionally, SAP’s licensing models only concerned the number of users, meaning direct/human interactions (SAP Human Access). Now, however, it is not just humans anymore. Automated systems, bots, and machines accessing SAP through non-SAP frontends, customized solutions, or third-party applications also count. Users have to pay licensing fees depending on document type and line.

At first, this licensing model seems manageable, but it actually tells users very little about future licensing payments. SAP itself is still working on generic IT tools (LAW) to make predictions about how much users will have to pay based on document lines and types.

The example of one company in purchasing using a third-party solution shows just how much money some SAP users have to spend because of Indirect Access. This company already licensed 500 users that can access SAP systems to create procurement documents. Now, the company wants to use a third-party solution, and, of course, all 500 users can access that, too. If this third-party system accesses the SAP system, SAP recognizes the 500 existing users as new.

This means that SAP’s Indirect Access forces the company to pay for 1000 users instead of 500 – although they are one and the same. Consequently, the company has to pay much more and cannot control what the systems recognizes as access. And that even though SAP wanted to make digital accesses more transparent with its new pricing model.

Maybe SAP was trying to do the right thing with its new model. However, all Digital Access is doing is confusing customers.

The benefits of upstream user management

The only way to avoid additional costs is to be able to differentiate between SAP Human Access and SAP Digital Access. Intelligent SAP add-ons make it possible. Besides the full integration in SAP systems, they also offer a user management module which runs on an upstream non-SAP server. This allows for the flexible and cost-efficient use of the new SAP licensing model.

How does it work? Well, when users log in, they can choose between SAP’s user management (directly accessing the system) and the SAP add-on (indirectly accessing the system); the decision is always based on which choice is more cost-efficient.

Therefore, whoever is thinking about replacing their SAP SRM system with a SAP-based add-on should choose one that offers the possibility to flexibly choose between direct and indirect SAP access. That is the only way a company can escape SAP’s Digital Access.

E-3 Magazine February 2019 (German)

About the author

Mike Ruebsamen, 2bits

Mike Ruebsamen is founder and CEO of SAP consultancy and Silver Partner 2bits.

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