The Dirty Tricks They Play: SAP’s “Indirect Licences” Fiasco

SAP’s “Indirect Licences” Fiasco

Failing to be properly licensed for your ERP system isn’t a good idea. If the provider finds out, it’s likely going to cost you a pretty penny to set things right.

But what about if you are fully-licensed? Does that mean you’re safe?

Not if SAP have anything to say about it.

In this series, we’re taking a look at some of the most common dirty tricks used by Oracle and SAP, and explaining what (if anything) customers can do about them.

Today, we’re taking a closer look at a high-profile court case between SAP and global beverage provider Diageo (a major SAP customer) and wondering who will be next on SAP’s hit list.

A Problem Shared is a Problem Profited From

In 2017, the judge in a high-profile legal battle between SAP and Diageo found in favour of SAP. The case, which centred on software licensing, found Diageo liable for more than £54 million in back-dated licence fees.

When they first implemented SAP in 2004, Diageo purchased licences for all their employees. In 2011 they connected their SAP systems (via the fully licensed SAP PI interface agent) to two systems built on the Salesforce platform, enabling their customers to create sales orders directly.

Relying on tricky clauses in their licensing agreement, SAP argued that in addition to licensing their employees, Diageo should also have purchased SAP licences for their customers. This despite the fact those customers never directly accessed Diageo’s SAP system and were using Salesforce licences Diageo had paid for.

The ruling sent shockwaves through the SAP community. Diageo is a multinational giant with revenues of £12 billion per year. Even though Diageo had fully licensed their employees — and are clearly a high-value ERP customer — they were still found to be under-licensed as a result of what SAP called “indirect access”.

In 2018, SAP developed a “solution” to the indirect access problem they had created. Customers concerned they might be hit with expensive demands for back-licensing fees can choose to purchase “indirect licences” to cover documents created by interfaces to their SAP systems. These additional licences must be purchased annually in advance based upon the customer’s estimation of the number of documents to be created.

Leaving aside the obvious difficulty of making these estimations, SAP have pulled off a coup. They have successfully scared customers into purchasing additional licences simply to continue using their SAP systems — A clear case of extracting more money from customers without providing any additional value.

What Can You Do About It?

As complex as they are, understanding your licensing options is essential. Following the Diageo case SAP have bolstered and empowered their audit function, so SAP customers should be extremely careful to ensure they are fully licensed for their level of SAP usage.

If you’re struggling to determine whether your organisation is properly licensed, some external consultancies that specialise in licensing can provide independent audits to help you identify possible issues.

Don’t Stand for Dirty Tricks

If you’ve had enough of the dirty tricks Oracle and SAP use to keep you paying over the odds for poor quality support, we can help. Recently, we published a report on their most common dirty tricks and what customers can do to protect themselves.

In the report, we cover:

  • Why Oracle’s seemingly reasonable support SLAs don’t stand up to close inspection—as their customers discover at the most inopportune moments.
  • How SAP’s track record of providing new features and functionality for supported products doesn’t quite match their promises.
  • What customers can do to protect their interests against the barrage of dirty tricks employed by Oracle and SAP—including how to save at least 50% on annual support contracts while receiving a higher level of service.

And much more.