SAP Licensing: Disobedience Comes Easy

It’s a simple conclusion: Even SAP won’t find nearly enough new customers in the coming years to achieve the growth it has promised. SAP CFO Luka Mucic has projected new, high revenue targets, but has not revealed in detail where the money is supposed to come from. Only this much have SAP CEO Christian Klein and Luka Mucic revealed: The cloud is going to fix it!

And during the digital Sapphire Now conference 2021, the chairman of the supervisory board, Professor Hasso Plattner, backed the two board members up, saying, “The whole idea of cloud systems means a gigantic improvement.” Plattner has been admonisher, innovator, and constructive critic – but never the bearer and herald of an SAP marketing message.

This year, Sapphire Now was not only an engaging online event, but, under the direction of new executive board member Julia White, also a perfectly choreographed promotional event. This happy-go-lucky façade should make SAP customers skeptical.

The cake is a lie

SAP has erased all real innovation and achievements of the past years and is now trying a marketing-driven new start: Rise or Fall with SAP!

This is not an entirely new concept. Former Chief Technology Officer Vishal Sikka once leveraged the stage at Sapphire to announce “real real time”, promoting the real-time enterprise. The difference is that his vision had a strong foundation: database Hana. What does CEO Christian Klein have? He swears by the Intelligent Enterprise, but a solid foundation for his vision has been lacking. SAP has all but cancelled the Leonardo program and the partnership with Nvidia has come to nothing, meaning there is no basis for the Intelligent Enterprise at SAP. Regarding artificial intelligence, machine learning, blockchain, and IIoT, SAP is dependent on cooperation and acquisitions – it doesn’t have any core competence of its own.

What is Christian Klein doing wrong? He has his foot in the door everywhere, but no fields of expertise of his own. He has carelessly abandoned the outstanding unique selling point of the real-time enterprise. However, despite this lack of a core competence and a unique selling proposition, SAP wants to achieve revenue growth in the coming years that, according to expert analyses, cannot be achieved with new customers alone – leaving existing customers to shoulder the burden. Accordingly, Rise with SAP is supposed to become SAP’s big moneymaker. Experts from the SAP community have calculated that in the case of a technical release change from SAP Business Suite 7 to S/4 Hana with cloud subscription and Full User Equivalent (FUE) – i.e., a one-to-one transfer – the respective existing SAP customer will then bear between 20 and 50 percent higher licensing costs.

This calculation behind Luka Mucic’s planned SAP growth is easy enough: The FUE transformation to the SAP cloud platform should significantly increase revenue. Consequently, it’s only logical that SAP would cancel the Embrace program. A transformation with SAP on-prem licenses to the MS Azure cloud has no positive impact on SAP revenue.

Fight back!

FUE is key to SAP’s future success. However, existing customers can fight back and don’t have to accept a one-to-one transfer. Those who consolidate and harmonize their on-prem licenses can use FUE to save up to 20 percent of their licensing costs. Sounds simple, but it’s complicated: A more intensive study of the FUE transformation rules is a prerequisite. This disobedience to SAP won’t kill the company, but Luka Mucic will have to revise his revenue targets.